Tech stocks had a boom year in 2021 as they rallied through the end of the pandemic. But tech stocks that went public during that year were stuck between a bull and a bear market.

Amplitude (NASDAQ: AMPL) is one such example. The software-as-a-service stock, which specializes in digital analytics and digital product optimization, went public in September 2021. The stock initially rallied on broader enthusiasm for the software sector and the company’s strong growth at the time of its market debut.

However, like the rest of the software sector, the growth rate declined rapidly as the economy reopened and businesses focused on other priorities. The stock fell in late 2021 and 2022 and has remained low ever since. Amplitude is now down 88% from its peak shortly after the initial public offering, but there are signs of a rebound. Let’s take a look at three reasons why the stock could rise in 2025.

Image source: Getty Images.

1. Customer churn is finally under control

Part of the reason for the company’s struggles in recent years is that many of its customers, as other software companies have experienced, have become overcommitted to the platform — and as a result, revenue growth has slowed and remained weak since 2021. However, the company has now overcome most of those customer defections, effectively beating the pack for a growth recovery in 2025.

Spenser Skates CEO said on the earnings call:

Annual recurring revenue in the quarter rose 8% to $298 million, slightly above reported quarterly revenue, which rose 6% to $75.2 million — a positive sign for accelerating growth . The company continues to expand its large customer base; those with annual recurring income of at least $100,000 rose 13% to 567.

Amplitude’s revenue growth figure has been artificially suppressed by post-pandemic customer churn, and as that wears off, the growth rate should return to double digits. As an indicator of this, remaining performance obligations (RPO, a proxy for backlog) increased 21% in the quarter to $286.6 million, and long-term RPO (contracts longer than 12 months) increased by 49% to $75.5 million. The company said this was the result of closer relationships with its customers and investments in the enterprise segment, meaning larger customers.

2. It can drive customers away from competitors

Amplitude offers a suite of tools to help companies understand how customers use their products so they can improve them, and sees its closest competition as AlphabetGoogle Analytics and Adobe Analytics.

According to CEO Spenser Skates, Amplitude’s customers are increasingly unhappy with Google Analytics, which Skates said “creates a long queue of opportunities for Amplitude” because customers are “unsatisfied with persistent usability issues (of at Google) and unresolved privacy issues.”

Amplitude can grow with the digital optimization market, but it can also grow by taking market share from larger competitors like Google and Adobe.

The company estimated its total addressable market at $37 billion when it went public, and it’s likely higher than that today. At its current revenue rate, Amplitude generates less than 1% of revenue, meaning the opportunity in front of it is huge if it can capitalize on it. Any challenges to Google Analytics should open the door to improved revenue growth.

3. Command AI acquisition should drive growth

Amplitude made its biggest acquisition to date in October, buying Command AI, a start-up that provides AI-powered user assistance. Command AI serves as a complement to Amplitude’s existing analytics platform and provides more of the features its customers are looking for. It will allow them to add things like nudges, tours, onboarding guides and surveys for users to use with their digital products. In an interview with The Motley Fool, Skates explained, “Many of our customers have been asking for this kind of functionality for a while,” and noted that the company plans to launch a combined product early next year.

Command AI is just one component of what Amplitude is doing to expand its product portfolio. The company also launched a new program called Amplitude Made Easy, which gives customers a single line of code to get up and running, and Web Experimentation, which allows users to run A/B tests in a self-service manner.

Overall, Amplitude’s third-quarter revenue growth of 6% won’t turn investors’ heads. But you can see the momentum building around the corner in the 21% RPO increase, customer churn, Google’s competitive weakness, and product improvement. If earnings growth starts to accelerate, the stock could rise.

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Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. Jeremy Bowman has no position in any of the shares mentioned. The Motley Fool has positions in and recommends Adobe and Alphabet. The Motley Fool has a disclosure policy.