I have read through a number of the threads regarding Alteryx on the board and wonder if some of the concerns around customer count may be related to the company’s change in it sales organization. Having spent my entire career in hi tech sales and marketing heightens my sensitivity whenever I hear a company is making a change that effects the sales team which could cause a disruption with customer relations and translate to either a short fall in revenue of in this case customer count.
On January 15th CEO Dean Stoecker engaged in a fireside chat at the 21st Annual Needham Growth Conference.
You can listen to the 35 minute webcast here:
http://wsw.com/webcast/needham89/ayx/
There is no transcript of the webcast that I can post, however below is a copy of my notes. Take a look at item number 4 which says:
He was asked about a recent vertical sales reorganization. He said specifically the company has created two verticals - one is for the public sector or government. He did say the current government shutdown is slowing things down a bit in that vertical. They hired sales people who are experienced in dealing with government entities. He broke it down into Washington D.C., Department of Transportation, state and local government, and the Department of Defense.
The other vertical the company created is for healthcare.
He said that both verticals are similar to the rest of the company’s business in that they follow a similar land and expand sales strategy.
I can’t be sure, however, my guess is that this change in account coverage has at least ruffled some feathers within the company’s sales organization and as a result may disrupt the normal flow of events for a quarter or so. A sales organization that receives some portion of its compensation based on commission related to am assigned quota can be thrown off its game when accounts are shuffled if people feel they are not being treated fairly. This usually sorts itself out over time.
I will be listening very closely during the next quarterly conference call for any hints of upset in the sales or distribution channel - look for people changes in sales management as further evidence of a short-term problem.
This also reminds me of what Splunk went through back in early 2017. I’ll link to an article I wrote about Splunk’s sales issues at the end of this post. Splunk is up 104% since it had its sales reorganization.
Here are the notes from Alteryx webcast January 15, 2019.
- He started with a 30 second elevator pitch about the company - a self service data science company - code free and code friendly - a drag and drop user interface - get folks out of using excel.
He said the product is very horizontal with use cases across many businesses like banks, health companies, automotive companies, drug companies, government.
He said there are 167 use cases you can see at alteryx.com.
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Next he was asked about the tremendous growth of the company - he said it grew 59% in Q3 - feels it is experiencing tailwinds from its March 2017 IPO and the key factor that companies are actively looking to a digital transformation to turn the data at a company into an asset.
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looking to 2019 he feels that at a macro level he does not see a slow down in IT spending. He said Alteryx is focused on driving growth of its product around the world. He sees a great opportunity to drive the typo of growth they have seen in the U.S. to other regions.
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He was asked about a recent vertical sales reorganization. He said specifically the company has created two verticals - one is for the public sector or government. He did say the current government shutdown is slowing things down a bit in that vertical. They hired sales people who are experienced in dealing with government entities. He broke it down into Washington D.C., Department of Transportation, state and local government, and the Department of Defense.
The other vertical the company created is for healthcare.
He said that both verticals are similar to the rest of the company’s business in that they follow a similar land and expand sales strategy.
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He was asked about sale partnerships and he said the company derives about 20% of its revenue through resellers. He mentioned in Brazil, in particular, they have many local partners based on that market.
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He said that the playbook for international sales is very similar t U.S. sales. Data analytics is a global phenomena.
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Next came the question of competing with Tableau software. He said that tableau was more of a partner than a competitor and Tableau generates a lot of leads for Alteryx. He said that most customers are blending data from five to fifteen different sources. This is far beyond tableau’s simple solution. So in general if a company has a simple enough problem to use Tableau’s solution than that is what they should use. Alteryx is built for much more difficult problems which is where most of the business actually lies.
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Then they discussed on premises solutions vs. cloud solutions. He said that Alteryx can be used in either environment and today most of its customers are using the product on premises.
He said Alteryx has not seen a massive move to the cloud for its product as of yet.
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They talked about “Connect” & “Promote” - I simply did not understand most of this discussion - above my pay grade.
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He felt that Alteryx will retain its 131% net return numbers - around customers remaining customers and increasing their spend with Alteryx. I took this as an outcome of the land and expand strategy. You keep your customers and in time they add more seats and revenue increases.
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For me the highlight came right at the end when he explained ROI for three different businesses.
A. He said operational efficiency is a key outcome of using Alteryx’s solution. He said he recently saw a use case from a large global company everyone would recognize from its tax & audit department where they took a process that usually took a week and now run it in five minutes!
B. He said they see top and bottom line ROI - an automobile manufacturer runs its factory floor with Alteryx and saved $250 million in the first nine months.
An airline saved $60 million.
A retailer showed $177 million gross margin improvement.
C. The third area of ROI is around retention rates. This is where companies using Alteryx become better at attracting data scientists through fun and engaging work assignments. He said he cannot give specific metrics, however customers share anecdotally a better work environment for their employees.
Here is a link to the Splunk article.
https://www.fool.com/investing/2017/03/31/splunks-change-of-…
Frank - long AYX, long SPLK, see profile for all holdings