Alterex involved in data breach

Investment Analysis Clubs Saul’s Investing Discussions
#3

This data breach reeks of amateur hour. Essentially what Alterex did was take a bunch of sensitive information and placed it online with no safeguards to keep other people from accessing it. However, from what I have read we don’t know the severity of the leak yet as we don’t know if anyone with malintent has accessed it. I’m sure amazon logs are being poured over as we speak. Back to my earlier point, what they did is the height of stupidity and bizarrely I was just talking with my dad about this company and one risk I had brought up was if they mismanaged data, especially HIPAA data (which this isn’t).

In response to the above post, I find management’s response to be inadequate and borderline dishonest. This could be a large issue if the wrong people got their hands on the data.

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#4

Market reaction:

Who did what now? Al T-Rex? Never heard of him.

#5

It’s pretty clear that privacy and data security is mostly non existent for most of us. If one company does not screw up it will be another.

I hate to propose more federal laws since they enforce the ones they have haphazardly and selectively, but would a stiff fine on the CEO and barring the culprit employees responsible for the security breach from working in a data business for the next 20 years do any good? Probably not, the hackers are smarter than the employees.

Agree downplaying corporate screw ups is very bad policy. Companies never seem to learn from the Tylenol case.

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#6

Holy hell! Somebody call Homeland Insecurity.

Information on more than 120 million American households was sitting in a massive database found left exposed on the web earlier this month, Forbes has been told. It included an extraordinary range of personal details on residents, including addresses, ethnicity, interests and hobbies, income, right down to what kind of mortgage the house was under and how many children lived at the property. In total, there were 248 different data fields for each household, according to the researcher who uncovered the leak data this week.

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#7

I suppose if Alterex could gather this much data so could anybody else willing to spend a little time and money.
So maybe anybody who really wants it either already has it or can get it.

I don’t think there is much we can do about it except accept it as part of life in the digital age.

As investors the key is does this really impact the outlook for the stock price past the next couple of weeks? Probably not, though it does show some inept management tendencies.

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#8

I find this serious and inexcusable. I sold my position this morning.

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#9

I find this serious and inexcusable. I sold my position this morning.

What do you feel about this situation Saul?

#10

In this post (http://discussion.fool.com/hi-saul-when-i-look-at-a-new-company-…) I asked about whether Saul had considered the integrity of Alteryx management (since he hadn’t mentioned that in his writeup). Nobody responded, which made me think it’s not a high priority for most here.

Am I wrong?

-IGU-

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#11

IGU,
You are not wrong as far as I’m concerned, though I admit I did not look into this very much before I took a position in AYX. My bad. I consider management integrity one of the most important factors when it comes to making an investment. It’s also pretty hard to investigate most of the time.

#12

I find this serious and inexcusable. I sold my position this morning.

As did I.

#13

With all the data breaches that have occurred over the years…crap, what’s one more? Our data is not secure and the more we use the Internet, the more exposed we are.

Short of using cash and living in a cave under an assumed name, I don’t see a way around it. Prayers, changing passwords a lot, no sharing on Facebook or getting on public wi-fi.

I’m not selling my shares over this.

Lucky Dog

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#14

I’m not selling my shares over this.

Same here, Lucky Dog.

#15

I just looked on GlassDoor and couldn’t find any evidence of unethical behavior in senior mgnt at AYX. Is this breach an isolated (albeit damaging) incident, or is there any evidence of a pattern?

…Marc

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#16

My 2 cents…

I’m a lifelong IT profession that has worked with confidential information in the federal government and also in the private sector with HPPA/PHI (health care info).

I am familiar with aggregation data techniques employed to protect individual level information (identity theft usable or other undesirable level of gleaning of personal info - like how much money does the guy next door make).

Unless the break was at the raw data level from Experian data provided sources(or other like source), the breach appears that it was actually free (unpaid/unlicensed) access to the market product. Data aggregation (into “marketing data”)is not a tricky or new technique. It’s well understood and widely used, especially in our ever increasing data saturated world.

While it’s a stupid mistake to permit your expensive product to have been potentially accessed for free, I would less consider this to be a identity level break, but more of a product or marketing data level breach. And since this type of data becomes “stale” fairly quickly, the “possible” damage (I’m guessing not much if any) they did to their product offering is limited.

All this has NOTHING to do with how Mr. Market will treat the stock price. My guess would be suppressed stock share price for a quarter or two at worst.

JMHO… Bob

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#17

Thanks for your post, Bob. Its always good to have the perspective of someone with significantly more knowledge than I do!

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#18

I find management’s response to be inadequate and borderline dishonest

This has become standard operating procedure that companies never acknowledge nor provide any information on the breach.

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#19

With all the data breaches that have occurred over the years…crap, what’s one more? Our data is not secure and the more we use the Internet, the more exposed we are. Short of using cash and living in a cave under an assumed name, I don’t see a way around it. Prayers, changing passwords a lot, no sharing on Facebook or getting on public wi-fi. I’m not selling my shares over this.

While it’s a stupid mistake to permit your expensive product to have been potentially accessed for free, I would less consider this to be a identity level break, but more of a product or marketing data level breach. And since this type of data becomes “stale” fairly quickly, the “possible” damage (I’m guessing not much if any) they did to their product offering is limited.

I agree with Lucky Dog and Bob about this. I wouldn’t dream of selling my position over a data breach. I don’t see in any way that it makes management unethical to have had an employee of theirs temporarily leave data exposed in error, a “data breach” of marketing data (that presumably people can rent or buy anyway). But even if it’s not data for rent, data breaches happen in our society. This is not like finding evidence that bad guys got inside your systems and stole data. That’s a data breach. We don’t even know whether any bad guys noticed the data was left online available during that time that it was available, in other words we don’t even know if whether it was actually “breached”.

Asteryx has tools that are very much in demand. I have built my position into a medium/large position (9.5%). I didn’t buy or sell any today because I already had enough.

Best,

Saul

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#20

couldn’t this be the excuse to sell a highly (over?) valued stock?

This does not look good at all. It certainly expose some issues with using this tool.

tj

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#21

Couldn’t this be the excuse to sell a highly (over?) valued stock? This does not look good at all.

Hi tj, maybe you are right. Let’s see:

EV/S about 7. Clearly an outlier as far as value for a fast growing SaaS company (maybe on the low side?)

Revenue growth only 58% for the trailing four quarters: obviously a slow grower.

Recurring subscription revenue only 95+% of total revenue: we better worry about that last 4.5%!

Dollar-based retention rate only 133%: I must have seen a higher one somewhere?

Number of customers only 268% of what they were two years ago: Hard to acquire customers obviously.

But no big name customers: Well, only: Ford, GE, Microsoft, Shell Oil, HP, BBC, etc

Adj Operating Margin -36% in 2015, -23% in 2016, -9% first three quarters of 2017: nope, no path to profitability.

Adj gross margin only 86%: what a shame.

2015 cohort of customers only grew their spend to 190% of their 2015 spend in 2016: Customers clearly don’t like the product.

Gartner had to create a new award for them in customer satisfaction: Gartner named Alteryx the Gold Winner in its first-ever Gartner Peer Insights Customer Choice Awards for Business Intelligence and Analytics, a rating of vendors by verified end-user professionals

Yep, you’re right, it doesn’t look good at all!

Saul

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#22

So, holding steady with the full position I would presume, Saul?

I still haven’t gotten a chance to dig in as closely as I would like, but this piece of news may allow me to get a better deal than what you got a week or so ago.