Can the amplitude compete with the big technologies

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Digital optimization specialist Amplitude (NASDAQ: AMPL) became the latest cloud title to cause a stir in public markets, landing on the Nasdaq Tuesday by direct registration.

The software publisher goes public with strong momentum with sales up 57% in the first half to reach $ 129 million in the last four quarters. It is also being made public at a time when interest in cloud stocks has skyrocketed as the so-called “digital transformation” has accelerated business demand for cloud software. However, Amplitude faces stiff competition in analytics, including established players like Adobe and Google, which offer their own packages under Adobe Experience Cloud and Google Analytics. Let’s take a look at how the plans to differentiate itself as it carves out a new niche in digital optimization.

Image source: Amplitude.

Marketing vs product

Some investors who rate Amplitude believe the company is facing a crowded area, competing with Google Analytics, which is widely adopted and offers a popular free tier. However, there are some important differences between Amplitude and its big technological competitors. In S-1, the company argues that “companies have used a range of point solutions designed for other use cases in an effort to meet their needs, but none of them offer the breadth and depth of capabilities offered by our digital optimization system. “

According to Amplitude CEO Spenser Skates, what sets his company apart is that it focuses on providing step-by-step data on the performance of a digital product rather than analytics for marketing. what Adobe and Google are focusing on. Amplitude sells to the Chief Product Officer, while competitor offers call on the Chief Marketing Officer.

In an interview with Motley Fool, Skates explained, “The biggest thing we run into is Adobe and Google Analytics. It’s sort of the previous generation of marketing-centric tools that were designed for the CMO. (Chief Marketing Officer). Product. Teams are forced to use them and they’re frustrated and that’s when they end up coming to us. ” Skates added, “The issue for us isn’t competition. It’s the magnitude of this trend,” which is leading a product team through data.

This focus on the product finds a large following as Amplitude now has 1,280 clients, including 26% of the Fortune 100 and 22 with annual recurring revenues over $ 1 million, as well as 311 with an ARR over $ 100,000. The company has also shifted from sales to tech companies such as Twitter and Atlassian for sale to consumer oriented mainstream businesses like Walmart, Ford, Burger King and NBC because these companies realized the importance of tracking the performance of their digital products.

For example, Amplitude helped Anheuser-Busch transitioning from its sales model to a digital one, and the company’s retail customers now receive daily personalized AI-based recommendations to store the right assortments.

The opportunity ahead

Skates sees the opportunity that presents itself to its business largely as a new opportunity or an emerging untapped market. The company estimates its total addressable market to be valued at $ 37 billion, which is based on a bottom-up estimate extrapolating data from its current customer base to the larger market.

It will take time for the market to evolve as the company has generated less than 1% of this revenue value in the last four quarters, but the pandemic has accelerated “digital transformation”, or the process of every company. building a technological infrastructure. For Skates, digital optimization is the next step in this evolution. Once companies like Anheuser-Busch have the technology infrastructure in place, they will look for ways to use it to improve their business.

As competition is a risk for almost any business and the competitive arena evolves in digital optimization, the threat from Google or Adobe doesn’t seem big enough to avoid the stock. The biggest challenge for Amplitude right now is running the business and making the sale to the Chief Product Officers.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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