Ayx Just Released Preliminary Results..

Looks like the numbers are out early on Alteryx.

-Plan to report 59 million in revenue for growth of 53%

-Dollar based retention revenue 129% growth compared to 131% previous quarter.

https://www.sec.gov/Archives/edgar/data/1689923/000119312519…

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After hours does not like it, but not a disaster. To me the slow down in customer growth is a material issue. This is a land and expand market with winner take all in each land. 38% growth in customers, when total customers are less than 5000 is disappointing. We are talking about a product that is the Excel for data analysis, with 100s of thousands of customers and growing customers at 38% with fewer than 5,000, that is not taking over the world as one might hope.

That could indicate a Chimp. A company with a protected and lucrative niche but never becoming a world beater because the market never gets past the niche.

This customer growth is an issue to dig deeper into, because of course I am making an inference as to what it means, but that is what caught my eye immediately.

Tinker

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To me the slow down in customer growth is a material issue. This is a land and expand market with winner take all in each land. 38% growth in customers, when total customers are less than 5000 is disappointing. We are talking about a product that is the Excel for data analysis, with 100s of thousands of customers and growing customers at 38% with fewer than 5,000, that is not taking over the world as one might hope.

Tinker,

Ummm Where are you pulling their customer growth numbers from exactly?

It is not in their early release that I saw.

Perhaps you’re rehashing Q3 results?
Just a Fool

As of December 31, 2018, the Company expects to have nearly 4,700 total customers, an increase of approximately 38% over December 31, 2017.

This is from Mauser on NPI who had a link and copied from it. Please review it and let me know if Mauser made a mistake in his copy and paste.

Thanks.

Tinker

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I now see it.

Small phone.

Old eyes.

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In Q3 they added 375 new customers to have 4315. If new number is 4700 then they added 385 which is more than Q3.

I like that. Obvious this is preliminary but the numbers are classic Alteryx. Really awesome.

Darth

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Agree, this looks really good. Wonder why the early announcement to it? They were due to report on 2/21.

From the filing.

Contemporaneous with the change in the independent registered public accounting firm of Alteryx, Inc. (the “Company”) described below under Item 4.01, the Company decided to provide preliminary results for its fourth quarter and full year ended December 31, 2018. The preliminary results provided below are based upon the Company’s estimates and subject to completion of the Company’s financial closing procedures.

More detail in the 8K

Brian

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They actually added more customers in Q4 (385) than in Q3 (375).

The billing growth in Q4 is 60%. Not sure how much in Q3. Cannot find it. The reason they gave billing growth for Q4 probably is due to accounting rule change for subscription revenue recognition. So maybe 60% is the number we should look at.

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If indeed billing is more important than revenue, we should adjust retention rate as well using billing. So the revenue recognition method change probably caused both revenue growth rate and retention rate lower than they actually are.

This appears to be a great quarter.

First: They are reporting early because PWC, their old accounting firm INCREASED their use of Alteryx’s platform/services (Thank you for increasing that net expansion rate PWC!). So in order to avoid any conflict of interest, they switched to Deloitte as a new accounting firm which drove the early release.

This was the right thing to do…and it means PWC wanted more of AYX’s services!

  1. Beat the high end of their Q4 guidance

  2. Beat the high end of FY 2018 guidance

  3. Added more customers in Q4, than Q3.

  4. Net expansion rate was 129%…that’s awesome.

I’m hesitant to even post this because it means I can’t buy more in the next two days which is something I would strongly consider if the stock price drops for some reason.

I see no reason to sell.

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Here is the customer growth for the past:


Cust	Added	Gr(seq)	Growth(y/y)			
1578			
1834	256	16.2%	          Q2 2016
2047	213	11.6%	          Q3 2016
2328	281	13.7%	          Q4 2016
2565	237	10.2%	62.5%     Q1 2017
2823	258	10.1%	53.9%     Q2 2017
3054	231	8.2%	49.2%     Q3 2017
3392	338	11.1%	45.7%     Q4 2017
3673	281	8.3%	43.2%     Q1 2018
3940	267	7.3%	39.6%     Q2 2018
4315	375	9.5%	41.3%     Q3 2018
**4700	385	8.9%	38.6% <<< Q4 2018**

Doesn’t look like a big slowdown in growth to me.

Chris

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Net expansion rate was 129%…that’s awesome. if that keeps up and compounds they don’t need a lot of new customers… Are they still pre-chasm?

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This is a good number, not necessarily great. I told someone earlier today, I believe AYX is running a little ahead of itself. Yes, the company is saying there is no real competition out there, yet it can only muster a slight increase in its land grab strategy. I believe it’s the price they charge for their product! I spoke to few folks in the IT world about AYX, and their first comment is, it’s expensive (at least compare to the other options like Excel, Power BI and Tableau). However, they all agree it’s powerful, easy for everyone to use, and save lots of time in data prep.

With the share price at 70.49, and TTM at $203M, and using 61500 for number of shares, I get a P/S of just over 21. This is not cheap but this is a growing field. A change in price strategy to attract more customers will hurt margin. I trimmed a little last week (~10%), but this is still my #2 position @ 10%. Will look to add if it drops in the next few days.

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JPM-- Key Takeaways: 1) Preliminary Q4 revenue slightly exceeded previously provided guidance, although the beat was softer than the prior few quarters (3% vs 7% average); 2) Alteryx expects billings to grow 60% y/y on top of a very tough comp and well ahead of our expectation of 35% y/y growth, underscoring solid ongoing business momentum; 3) Dollar-based net revenue retention is expected to be 129% for Q4, a slight downtick from 131% last quarter and a year ago, but still a very robust number and marks 9 quarters of that metric being at or above 129%; 4) Alteryx also expects to have 4,700 total customers at the period end, implying 38% y/y growth vs. 46% y/y growth last year…

Overall, Alteryx’s results continue to demonstrate very solid execution, which is appreciated and in our judgment fairly valued by the market, and we await further data points regarding the evolution of the competitive landscape."

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I see a lot of people here comparing Alteryx to Tableau and Excel, and drawing various conclusions on that basis. This is a rather inaccurate comparison (my firm uses all 3). Here is an attempt to clarify.

Alteryx’s core strength is in what is variously termed data preparation, data wrangling, data transformation, data manipulation. These are all things you have to do to data -before- you actually analyze it, chart it, make reports out of it, etc. The “old school” product that compares most closely is actually something like Informatica (which is used for data transformation at scale, to build data warehouses and the like). Alteryx is the new age Informatica targeted at end-users sitting in the business area, not professional developers sitting in IT. While it has some basic ability to chart, it is NOT a charting tool or a data visualization tool at its core.

Tableau, on the other hand, IS a data visualization tool first and foremost. It overlaps with Alteryx a little in that it does have some data transformation capabilities as well, but that’s about 10% it’s power, with 90% being in the charts, graphs, dynamic filters, and other things that are about viewing, visualizing, slicing and dicing and presenting data, along with a well thought out infrastructure for sharing and collaborating on such visualizations. Alteryx is exactly the reverse - 90% of its power is in the data transformation space, 10% in presentation and visualization. So the two products are extremely complementary and make for a great pipeline, where you collect, transform and process data in Alteryx before handling the final presentation and sharing/collaboration via Tableau. The two companies have even built technical integration into their products with exactly this in mind, where Alteryx can actually put out data into a Tableau format as an [often final] step in one of its workflows.

Now Excel is actually the true hybrid of the two, because it can do a fair job with both data preparation, through its formulas and macros, and presentation, with it’s extensive charting support (and there are add-on many products that can “boost” this aspect of basic Excel even further). It’s also arguably the most user-friendly of the three (although Tableau comes close, and can be argued to produce more attractive results). But make no mistake - Excel is actually one of the most brilliant products to have ever come out of Microsoft in terms of user productivity. There is a reason it is as popular as it is - it is super visual, super-flexible, and (up to a certain point) can serve as a database, a transformation engine and charting package all in one. That’s very powerful.

For these reasons, Excel is the #1 competitor of both Alteryx and Tableau, in my opinion, while Alteryx and Tableau are really more complementary than competitive (with each other).

Now there are a couple of things that Alteryx and Tableau have on Excel (in their respective areas), and these advantages are becoming much more pronounced in the age of big data, which explains why Alteryx and Tableau are actually doing well. Since this is Alteryx thread, I’ll focus on how Alteryx and Excel compare and contrast, and save Tableau vs. Excel for a different board.

Alteryx is MUCH more powerful than Excel as a data transformation engine. There are data transformation and manipulation things that you can do in Alteryx that you cannot do an Excel - but not the other way around. However, this is also what makes Alteryx an order of magnitude more complex than Excel. Excel is FAR easier to use for a lay user. You can think of Alteryx as visual coding - but its still coding. There are things like error handling and complex flow logic that can be hard for non-technical business users to grasp. So it’s a tradeoff between power and complexity, and certain users will always stay with Excel, because they aren’t trying to do very complicated things and Excel is perfectly fine for them, and the user friendliness can’t be beat.

The other thing that Alteryx has on Excel is ability to deal with a LOT more data. Excel is purely a desktop tool - it can only deal with as much data as you can stuff into your RAM. Base Excel is limited to a million rows of information. That’s a lot, but not in a big data world, where you may be working with tens of hundreds of millions or more. Alteryx has a server component that can scale to deal with data of those sizes, and so you can build something on your desktop using a smaller data set, and then deploy it to the server where the same logic is executed against a far larger data set. Excel does not have this capability. This is a huge factor in the big data world.

Similarly, because Alteryx has a server, it can reach higher levels of automation than Excel. To work in Excel, the user has to open Excel, so that the macros and formulas can run, the charts can populate, etc. With Alteryx, you can design a workflow, upload it to the server, schedule it to run, and it will do what you want it to do every day with zero input from you. You can turn off your desktop, go on vacation - it will keep doing the job automatically. You can’t really do that with Excel either.

Hopefully this helps people understand the Alteryx target audience better (and thus think more accurately about their strategy and results). Not every Excel user is a target Alteryx user. And there are target Alteryx users that are not users of Excel. Overall, Excel has a truly giant target user audience that Alteryx will probably never reach; nonetheless, Alteryx’s target use audience is still very very large as well, and it will only get larger as big data, AI, and data automation continue to take over the world.

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Nice feedback, thanks.

Do you leverage Alteryx Visualytics Insight Tool?
https://community.alteryx.com/t5/Engine-Works-Blog/Bring-You…
https://www.alteryx.com/solutions/analytics-need/bi-visualiz…

If not, are you planning to try it out.
If yes, feedback on if this improves the gap between Alteryx and Tableau a bit?

Dreamer

Here is the customer growth for the past:

Cust	Added	Gr(seq)	Growth(y/y)			
1578			
1834	256	16.2%	          Q2 2016
2047	213	11.6%	          Q3 2016
2328	281	13.7%	          Q4 2016
2565	237	10.2%	62.5%     Q1 2017
2823	258	10.1%	53.9%     Q2 2017
3054	231	8.2%	49.2%     Q3 2017
3392	338	11.1%	45.7%     Q4 2017
3673	281	8.3%	43.2%     Q1 2018
3940	267	7.3%	39.6%     Q2 2018
4315	375	9.5%	41.3%     Q3 2018
4700	385	8.9%	38.6% <<< Q4 2018

Doesn't look like a big slowdown in growth to me.

Not to rain on anybody’s parade and it’s a small correction only but AYX says in the prelim filing that they expect to have “nearly 4’700 customers, an increase of approximately 38%”. 38% would be 4’680 customers = 365 new customers. Almost the same but sequentially down.

Even without this small correction it is obvious that new customers are coming down over time (in % growth). They obviously made up for this in the past with $ retention and margin improvements but I’m not sure how long that will hold. I would therefore expect revenue growth to slow down a little sooner rather than later based on the above.

LNS

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We don’t currently, no. Will find our from our data team if they are planning to look in that direction. But, yeah, it definitely looks like Alteryx is trying to muscle in on Tableau with this (they are even mimicking the Tableau interface, judging by the screenshots). So it increases the overlap (i.e. increases the degree of competition between them). Whether this is a good area for Alteryx to expand into… questionable. Tableau is very strong there and very very focused. They constantly push the envelope and have left many would-be competitor behind over the years. I see a lot of companies that have an “adjacent” type product (like Alteryx) trying to muscle in on Tableau with this kind of stuff, and it’s rarely successful, I think. You may make a couple of customers who are not already users of Tableau and have modest visualization needs happy - but it’s not serious competition for Tableau, and I hope Alteryx is not spending a lot of resources on this stuff - they have plenty of customers to still win in their core space, and should be focusing the majority of their efforts on continuing to innovate in that space, IMO.

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My understanding was this was to be used during data processing not after.
Tableau may also move up market into data prep in a bigger way in future.
Also you mentioned Informatica. Talend has been frequently mentioned as competing with Informatica. Your thoughts on Talend for data prep?