Two months ago I predicted (in the first post of this thread) that I believe AYX will grow 40%+ this quarter, and I still believe that. What is starting to worry me is guidance for the next quarter, and the next few. AYX has always enjoyed an extremely high NER because its customers use it more and more over time. Some of those customers are hurting in this recession.
Now, there’s a case I’ve made in the past that you don’t stop spending on AYX if you can spend a dollar with them and turn it into 3 dollars because the product creates value. This works in a booming economy, because growth abounds, so there are always 3 more dollars to grab if you spend 1 more. In other words, in good times AYX’s customers’ customers are buying. Example: PWC doing consulting projects using AYX. If there are less of these projects, maybe their “expand” with AYX goes down. Then there are customers like Coca-cola who (I assume) are using AYX only internally, rather than for consulting. If these companies are hunkering down and spending on essentials (like cybersecurity) then perhaps they don’t “expand” as much as usual with AYX. We saw NER tick down last quarter…could it fall further? Looks like data science might not be a priority right now: https://www.zdnet.com/article/developer-data-scientist-us-te…
Contrast the AYX customers I’ve outlined above with FSLY whose customers (Shopify, Amazon, etc) are thriving in the current environment.
Contrast CRWD and DDOG and ZM whose customers may include both thriving and struggling companies, but who need CRWD and DDOG and ZM to help them survive in a cloud world.
In summary, is AYX’s product essential, or is it more related to business growth and expansion, which may be on hold right now?
To be clear, I have no idea what to expect from the growth numbers in the near future (and that’s what scares me). Alteryx was so attractive because growth was actually accelerating. 60% or 70% growth is game-changing, but we can’t expect that any more. If the growth for the near future is really going to fall to 20% or below, we could see a world of pain, but that’s not what I expect, either. So if we end up in some sort of middle-ground scenario where AYX grows in the 30% or 40% range for the foreseeable future, I’m not sure AYX is a knockout “buy” right now with a PS ratio around 25. To me that seems like about the most we can logically expect, but I’m open to other thoughts!
I’ve trimmed some more and my AYX position is under 8%, and I am considering if I should be trimming further.
Bear