Amplitude (AMPL): A Strong Earnings Catalyst or a Market-Driven Mirage?

As Amplitude (NASDAQ: AMPL) prepares to report its Q2 2025 earnings on August 6, 2025, the question of whether the stock is poised for a rebound hinges on a delicate balance of fundamentals and sentiment. The company has long been a poster child for resilient SaaS growth, but recent underperformance has left investors questioning whether the current valuation reflects its long-term potential—or discounts its near-term challenges.

The Case for Optimism: Recurring Revenue and Enterprise Momentum

Amplitude's financials tell a story of disciplined execution. For Q1 2025, the company reported $80 million in revenue, a 10% year-over-year increase, with Annual Recurring Revenue (ARR) surging to $320 million (up 12% YoY). Enterprise customers, now accounting for two-thirds of ARR, have been the engine of growth. The number of enterprise clients paying over $100,000 annually grew to 617, a 18% YoY increase, and the dollar-based net retention rate improved to 101%, up 5 points from a year earlier. These metrics suggest a company that is not only retaining its largest clients but also upselling within them—a critical edge in a competitive market.

The Q2 2025 outlook is equally compelling. Analysts expect revenue of $81.35 million, a 11% YoY increase, which would mark the 12th consecutive quarter of revenue growth. Amplitude's ability to exceed expectations—historically beating revenue estimates by an average of 1%—positions it as a strong candidate to outperform. Moreover, the company's recent product innovations, such as Guides and Surveys, have driven faster adoption and incremental ARR, signaling a product-led growth flywheel.

Peer Comparison: Outperforming in a Slowing Sector

While the broader SaaS sector has seen a 28% decline in net new ARR year-over-year, Amplitude's performance stands out. Similarweb, a key peer in product analytics, reported 14% revenue growth and a 111% NRR for high-ARR customers, but its free cash flow remains modest compared to Amplitude's $284 million in cash reserves. For companies with ARR exceeding $50 million, expansion ARR now accounts for 40% of total new ARR, a trend Amplitude has leveraged effectively. Its focus on enterprise expansion—where 65% of ARR comes from clients with multi-year contracts—creates a durable moat.

However, not all peers are struggling. Hyperscalers like AWS and Azure continue to outperform in net new ARR, though their declines are less severe. This highlights a key risk for Amplitude: while it excels in enterprise retention, it faces steeper competition from larger cloud providers expanding into analytics.

Market Sentiment: A Stock at a Discount?

Despite strong fundamentals, Amplitude's stock has lagged. Shares have dropped 5.9% over the past month, underperforming the broader SaaS sector, which has declined 3%. The current price of $11.96 trades at a discount to the average analyst price target of $13.89, implying a potential 16% upside if expectations are met. Yet, this discount may reflect skepticism about the company's path to profitability. Amplitude's free cash flow remains negative, and its non-GAAP operating loss for Q1 2025 was $2.1 million, up from a profit a year ago.

The $50 million share repurchase program announced in Q1 could help, but it's a small dent in a $2.8 billion market cap. Investors will be watching Q2 results closely for signs of improved unit economics. A 101% NRR is solid, but it's not best-in-class (130%+ is the gold standard for SaaS). If Amplitude can demonstrate that its expansion is driving higher retention or gross margins, the stock could see a re-rating.

The Verdict: A Buy for the Long-Term, But With Caution

Amplitude's Q2 earnings will be a critical inflection point. A beat on revenue and guidance for improved retention could reignite investor confidence, particularly if the company shows progress in reducing free cash flow burn. However, the stock's current valuation reflects a market that remains wary of its path to profitability. For long-term investors, the company's 12% ARR growth, strong enterprise traction, and $284 million in cash make it a compelling candidate. But for those seeking near-term gains, the stock's underperformance and sector headwinds warrant caution.

In the end, Amplitude's story is one of resilience and innovation. Whether it can translate that into a share price rebound will depend on its ability to prove that its growth is both sustainable and scalable. As the August 6 earnings date approaches, all eyes will be on whether the company's fundamentals can finally close the gap with its market perception.