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On Wednesday, Piper Sandler expressed continued confidence in Amplitude Inc (NASDAQ:AMPL), maintaining an Overweight rating and a $15.00 price target for the company’s shares. The endorsement comes as the firm identifies Amplitude as a small-cap software investment to consider for the year 2025. The company’s stock has shown strong momentum, with a 63.34% return over the past six months and a 19.53% gain year-to-date, according to InvestingPro data.
Amplitude, which went public in September 2021, has been a popular choice for its real-time product analytics tools, particularly among digital-native companies during the pandemic. While the company has faced challenges with growth slowing down due to increased interest rates, economic headwinds, and reductions in digital spending, InvestingPro data shows the company maintains a strong financial position with more cash than debt and a healthy current ratio of 2.55x. The year-over-year growth for the last quarter was recorded at 6.5%, a decline from the 16.1% growth rate in 2023. Despite this, Piper Sandler notes early signs of stabilization as the company exits 2024.
The firm’s decision to reiterate the Overweight rating at the start of 2025 is based on several key factors. These include strategic leadership hires over the past 14 months, the introduction of a new self-serve product that has contributed to over 40% growth in customer logos by reaching smaller clients, anticipated product cycle tailwinds, an accelerated multi-product roadmap through acquisitions, and an attractive risk-reward profile with a 6.1x enterprise value to gross profit (EV/GP) ratio, which compares favorably to the Data & Developer sector’s median of 9.7x.
Piper Sandler’s analysis suggests that Amplitude is positioning itself for a stronger performance in the future, backed by strategic initiatives and product developments that could enhance its market position and financial metrics. The firm’s reiteration of the Overweight rating reflects a positive outlook on Amplitude’s ability to navigate the current economic landscape and capitalize on emerging opportunities.
In other recent news, Amplitude Inc. has been the subject of significant attention due to recent developments. Morgan Stanley (NYSE:MS) upgraded the company’s stock rating from Underweight to Equalweight, citing Amplitude’s adjusted revenue growth projections and recent management changes as key factors. Despite a decrease in revenue growth to approximately 8% for FY24, the firm believes the company has effectively navigated macroeconomic headwinds, as indicated by stability in key performance indicators.
In line with this, Amplitude reported a 6% year-over-year increase in third-quarter revenue, reaching $75.2 million, and an annual recurring revenue (ARR) of $298 million during its recent earnings call. The company’s customer base has grown to nearly 3,500 paying customers, including 567 contributing over $100,000 in ARR, reflecting a 13% increase from the previous year.
Amplitude’s strategic focus includes AI integration, product innovation, and targeting enterprise clients. The company has also raised its full-year revenue outlook to between $297.1 million and $298.1 million. These recent developments highlight the company’s resilience and commitment to growth amidst a challenging macroeconomic environment.
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