Alteryx Inc (AYX)
Price $58.29 November 8th, 2018 closing
Thanks to the Fool.com for the transcripts
Thanks to Tom Engle for the template
Alteryx, Inc. operates a self-service data analytics software platform that enables organizations to enhance business outcomes and the productivity of their business analysts. Its software platform includes Alteryx Designer for data preparation, blending, and analytics that could be deployable in the cloud and on premise; Alteryx Server, a secure and scalable server-based product for scheduling, sharing, and running analytic processes and applications in a Web-based environment; Alteryx Connect, a collaborative data exploration platform for discovering information assets and sharing recommendations across the enterprise; Alteryx Promote, an analytics model management product for data scientists and analytics teams to build, manage, monitor, and deploy predictive models to production; and Alteryx Analytics Gallery, a cloud-based collaboration offering that allows users to share workflows in a centralized repository. The company also provides technical support, instruction, and customer services. Alteryx, Inc. was founded in 1997 and is headquartered in Irvine, California.
November, 7th 3Q:2018 earnings highlights:
** Revenue was $54.179 million up from $34.155 million
** TTM Revenue was $182.384 million or $2.98 per share
** Earnings were ($0.00) up from ($0.06)
** TTM earnings were ($0.21) per share
** Diluted share count 61.103 million
** Cash $414.081 million: debt $170.927 million
** Cash flow for the quarter was $2.868 million up from negative (-$346) million
** Cash flow for nine months was $5.736 million up from $4.137 million
** TTM cash flow was $17.076 million or $0.28 per share
** Trading range between August 9th, 2018 and November 7th, 2018 was $42.23 to $63.18: PE ratio range was NA: PS ratio range was 14.15 to 21.17: Cash flow yield range was .4% to 0.6%
** The stock price decreased $.35 the day after the report to close at $58.29 per share on 11/08/2018
Q318 notes:
Alteryx has had eight consecutive quarters of revenue retention rates of above 130%. They also stated that they had their recently completed Net Promoter Score that was the highest ever. I contacted their IR board asking if I could have their Net Promoter Score for each quarter including this quarter. They responded and said this is something they track internally and do not give out externally. So with this response I do not think the Net Promoter Score means anything to investors but might help the company internally.
They increased their net new customers by 375 and now have more than 4,300 customers. Two regions stood out in this quarter, Latin America and Australia, Where in Latin America they just began a go-to-market investment in Brazil and their revenue doubled. But they do not break out this number so I am not sure exactly how big it might be so I assume it is small.
They recently created select verticalized sales group in two markets. The first sector is the public sector. They had strong land activity across Federal, State, and Local governments. The second sector was healthcare. The majority of their efforts will still be focused geographically instead of on verticals.
They claim they are bridging the gap between citizen data scientists who want to build analytic pipelines in a code-free environment and the code -friendly side of Alteryx that allows the PHD statisticians to leverage things like Python with Jupiter Notebooks so they can easily share Python code inside of Alteryx Designer. They see a growing number of PhDs sharing and collaborating inside the community.
They were asked if they needed to decrease price points like Tableau did and they stated that their primary competition was SaaS and that they were probably to cheap compared to SaaS. They said if they got to 40% to 50% penetration of the 30 million disenfranchised analysts around the work, or the 1 million quants they might then need to get verticalized solutions that are more inexpensively priced. But at this time, even in their most penetrated accounts, they were in the low single digits in penetration rate. They are very early in the game.
Ayx OpEx growth rate is increasing and they do not see it coming down anytime soon because they see a tremendous opportunity globally to take advantage of the land grab.
Ayx is the only publicly traded company on the leader side of the data science and machine learning quadrant and they are continually having to make the platform easier for the non-coder while advancing the platform for higher order analytics for the trained statisticians. So with the new 2018.3 release they rolled out more support for Oracl and SAP HANA. They added Spark support for Azure HD or HDInsight. They rolled out Python tool because they want more sharing between Quants and the citizen scientists. This allows people to instantly execute Python code in the Alteryx Designer. This allows PhDs and other people to create new tools in Alteryx. This is building out their platform.
Ayx is focused on higher order analytic processes , they are focused on the entire continuum of analytics, not just the descriptive and diagnostic side of analysts,which is probably the lowest value in the value chain for analytic processing. They believe that people as they move up the algorithmic processing and predictive modeling and cognitive sciences that they will move to a true end-to-end platform for their work. They also claim that their Tam is a $30 billion dollar space without any other competition.
Q318 Financials:
Income Statement:
They grew Revenue by 59%, they break their revenue out into 2 segments, US and International. The International revenue increased 99% YoY and represented 29% with Great Britain being the only country that was over 10% of revenue.
On a Non-Gaap basis their Gross Margins were 90.5%. They were able to maintain gross margins above 90% again this quarter but they expect increased investment in support and professional services organization to put some downward pressure on margins. Also they will no longer qualify as an emerging growth company after December 31st, 2018 and they will adopt ASC 606 when they file their 10k in early 2019. This, I believe, will effect their gross margins. In 606 usually anything you give away for free has to be calculated in your Cogs and will lower your GM’s.
Total operating expenses were up 57% this quarter as the invest in programs to drive awareness and adoption and expand teams globally. This includes investments in additional salespeople, marketing, and support personnel.
On a Non-Gaap basis their operating margin was 8% up from 3% YoY and they made N-Gaap $.08 per share.
Balance sheet:
On the Balance sheet they had Cash of $414 million compared to $194 million a year ago. The increase in cash was primarily due to the issuance of $230 million in convertible senior notes due 2023. Cash provided by operating activities was $5.3 million vs $.7 million a year ago. They had debt of $170.9 million.
Cash flow statement:
On the cashflow statement they were positive FCF of $2.8 million.
Here are some numbers:
Q117 Q217 Q317 Q417 Q118 Q218 Q318
Rev. Gr 55.2% 51.8% 52.1% 54.6% 50% 54.4% 58.6%
Dollar Ret 133% 134% 133% 131% 132% 131% 131%
Cust Count 2565 2823 3054 3392 3673 3940 4315
GapMargin 83% 83% 84% 84% 88% 89% 89%
R&D%ofRev 21% 24% 23% 22% 25% 22% 19%
S&M%ofREV 55% 58% 45% 51% 54% 61% 49%
Gen&A%ofRev 27% 28% 22% 25% 23% 26% 23%
Conclusion:
Alteryx is growing there customer base at a very nice clip. I don’t think I have found a company that can grow it’s gross margins on a high 80% Gaap or low 90% N-Gaap. That is really amazing. With their Revenue growing at 59% they are guiding next quarter at 48%. That seems really light and I have to believe they are sandbagging. How could a company that has the market to themselves (their claim) drop that much in a quarter? Also their Revenue has been accelerating. I have to believe they are sandbagging it and we should at least be in the mid 50’s.
They claimed that they had the highest Net Promoter Score ever but they will not tell you what the number is or what numbers they have had in prior quarters. This, to me, doesn’t mean anything. I will just ignore this from now on unless they start producing numbers, besides their financials will tell the story.
The next quarter will be interesting because they will have to start under ASC606. This throws a little more clouds over their Gross Margins but shouldn’t affect anything else.
Overall this was a really nice quarter and I am long this company.
Andy
Historical:
February 21, 2018 4Q:2017 earnings highlights:
** Revenue was $38.588 million up 54.6% from $24.962 million
** Fiscal 2017 Revenue was $131.607 million up from $85.79 million
** TTM revenue per share was $2.22 per share
** 4Q earnings were ($0.03) up from ($0.25)
** Fiscal 2017 earnings were ($0.37) up from ($0.95)
** Diluted share count 59.363 million up from 32.59 million
** Cash and investments $194.1 million: debt 0
** Cash flow for the quarter was 11.34 million up from $2.24 million
** Cash flow for the year was $15.274 million up from negative ($10.34 million)
** Cash flow per share was $0.26 per share
** Stock based compensation $8.886 million up from $3.284 million
** Trading range between February 21, 2018 and May 9, 2018 was $30.45 to $39.21: PE ratio range NA: PS ratio range was 13.72 to 17.66: Cash flow yield range was 0.6% to 0.8%
May 9, 2018 1Q:2018 earnings highlights:
** Revenue was $42.821 million up 50% from $28.545 million
** TTM Revenue was $145.88 million or $2.43 per share
** Earnings were ($0.09) up from ($0.22) per share
** TTM earnings were ($0.24) per share
** Diluted share count 60.052 million
** Cash $205.743 million: debt
** Cash flow for the quarter was $10.69 million up from $4.52 million
** TTM cash flow was $20.44 million or $0.34
** Trading range between May 9, 2018 and August 8, 2018 was $30.71 to $47.82: PE ratio range was NA: PS ratio range was 12.64 to 19.68: Cash flow yield range was 0.7% to 1.1%
August 8, 2018 2Q:2018 earnings highlights:
** Revenue was $46.796 million up from $30.319 million
** TTM Revenue was $162.357 million or $2.68 per share
** Earnings were ($0.09) up from ($0.12)
** TTM earnings were ($0.21) per share
** Diluted share count 60.685 million
** Cash $405.223 million: debt $168.255 million
** Cash flow for the quarter was negative ($7.82 million) down from negative ($32,000)
** Cash flow for six months was $2.87 million down from $4.48 million
** TTM cash flow was $13.66 million or $0.23 per share
** Trading range between August 8, 2018 and the present October 19, 2018 was $43.06 to $63.18: PE ratio range was NA: PS ratio range was 16.07 to 23.58: Cash flow yield range was 0.4% to 0.5%
** Special Note: The stock price increased $7.53 the day after the report to close at $55.33 per share on 8/9/2018