Amplitude (AMPL 3.03%) went public toward the tail end of the pandemic boom, and that timing has been unfortunate for the digital product optimization specialist.

The company, which provides tools that help companies enhance and refine their digital products and customer-facing interfaces, has struggled with post-pandemic-related headwinds for much of its publicly traded history. Like other software companies, many of Amplitude's customers overbought its services during the pandemic and have been rightsizing their needs since then.

However, the company said that this trend started to fade in the middle of last year, allowing it to get back to growth, and it did just that in the fourth quarter. Revenue rose 9% to $78.1 million, ahead of the consensus at $76.7 million, and annual recurring revenue was up 11% to $312 million, showing faster growth on an annualized basis.

On the bottom line, adjusted earnings per share fell from $0.04 to $0.02 but still beat estimates at $0.01. And free cash flow was flat at $1.5 million.

Investors seem to sense that a turnaround is afoot, as the stock has risen more than 50% since its low in August. And shares popped on the earnings report last week, jumping 22%, though they've since given back most of those gains.

Image source: Getty Images.

What's new with Amplitude

In October, Amplitude closed on its acquisition of Command AI, a start-up that provides artificial intelligence (AI)-powered user assistance that makes software easier to use.

Amplitude acquired the start-up to add a new feature it calls guides and surveys to its platform, and it did just that earlier in February, four months after the acquisition. Guides and surveys provide pop-up bubbles and other icons to assist users as they engage with a product online and go through their customer journey.

CEO Spenser Skates explained in an interview with The Motley Fool that guides and surveys were the last major component the company needed to round out its digital product optimization platform. Meeting all its customers' needs in product analytics is key for the company to grow revenue, cross-sell new products, and attract business away from point solutions, which its customers have traditionally used to fulfill some of the objectives that Amplitude's digital analytics platform accomplishes.

Additionally, management said it would launch an AI agent in the second half of the year, which could significantly accelerate customer insights and utility. Such an agent could look at the whole body of data to gain insights rather than just what the management team sees. This product could be a game-changer for Amplitude, as it seems well positioned to capitalize on the benefits of AI, and its customers are already looking for insights to improve their products.

Amplitude also announced it would host an Investor Day conference in New York in March. Companies typically do this when they have good news to share or a bullish forecast they want to give investors. It's likely to discuss the AI agent at the conference as well.

Is Amplitude a buy?

With the post-pandemic headwinds fading away, revenue growth accelerating, and the company's product suite where management wants it to be, Amplitude is in a good position. Meanwhile, a recent version upgrade with meaningful system changes at Google Analytics has turned some users off that product, causing them to go elsewhere to meet their analytics needs.

Investors typically have high growth expectations for software stocks, but Amplitude's guidance calls for similar growth to what we saw in the fourth quarter. For 2025, the company sees revenue of $324.8 million to $330.8 million, reflecting 9% growth at the midpoint.

At this point, I'd like to see more evidence that Amplitude's growth is accelerating before calling it a buy. However, the stock certainly has the potential for a breakout now that its platform has all the major components it needs and is looking forward to launching an AI agent later in the year.

Keep an eye on the company's investor conference next month, as that could be the catalyst for another leg up in the stock.