Alterex involved in data breach

Investment Analysis Clubs Saul’s Investing Discussions
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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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.

23

When a company’s fundamental story changes I get out. When it’s a one time data breach that doesn’t change the story at all, I don’t think of exiting. Think of the difference. It’s very clear.

Think of it this way. After the 9/11 attack, they closed the markets to prevent panic. When they reopened the next Monday the market sold off about 12.5%. It took just 19 days for the market to come back, because nothing was changed fundamentally. Do you think this “data breach” was more of a black swan for Asteryx than 9/11 was for the US? If so you have a short memory.

Best to you all,

Saul

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24

With all the data breaches that have occurred over the years…crap, what’s one more?

The data breach is small potatoes. What’s important in management’s response. Does it demonstrate integrity? Are you happy to have these guys responsible for your investment?

I still haven’t seen anybody say anything positive about that. Yeah, they’re doing really well. But are they good people you can trust? Bernie Madoff did really well too, until he was caught.

-IGU-
(I hold no position)

25

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)

Young companies make dumb mistakes. They are a bunch of smart people cranking away without time to worry about too many policies and procedures. That always changes after something like this. We have heard of a number of startups with sexual harassment issues and come to find out they did not really have an HR department. HR is a cost and might seem unncessary to a startup. Policies and Procedures take time to write, vet and enforce, if all is well, why worry too much.

I did not have a position yet, but after some study and this luck break I will start, but I will also save some powder in case it dips when all the law suits start. No individual could convince a court they were harmed, but anytime a stock goes down those blood sucking lawyers find a way to extract money.

P.

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No individual could convince a court they were harmed

Why you say so?

27

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

well if you put it that way. What can I say? The numbers do look great.

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

well if you put it that way. What can I say? The numbers do look great.

Thanks tj for taking it in good spirit. I thought after that I may have sounded a bit over the top.
Saul

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29

One of my good friends and hunting buddy was a co founder of a payments processing company called Heartland Payments (HPY). They were involved in a serious breach that at the time was the largest breach of credit card information. Stock fell from $27 to $5 within a couple of days. as I recall within 18 months it was at $35. They sold to Global Payments last year for about $100.

One of my biggest x baggers.

this too shall pass. I am looking at it as a buying opportunity.

I too am a IT professional. when I read the story it did not strike me as a platform issue.
I’ll bet management learns from this, if they don’t then I might sell.

Jim
Long AYX

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