This eight minute video features Dean Stoecker speaking with Jim Cramer earlier today - among other topics they talk about today’s price decline.
https://www.cnbc.com/video/2019/09/09/alteryx-ceo-data-analy…
Frank - long AYX, see profile for all holdings
I just find it extraordinary that some complain or wonder why for example AYX has had a few “bad”(what’s your definition of bad?)weeks when it has(had)escalated a whopping 677% since it’s IPO. 20-50% fall is nothing in its short history. Just ask yourself why you brought it in the first place and try to look at the bigger picture.
Long AYX and don’t care if the price drops further in fact would relish it!
Deans says $24 B addressable market in data analytics. He believes it’s winner take all and AYX is trend to be the winner.
Deans says $24 B addressable market in data analytics. He believes it’s winner take all and AYX is trend to be the winner.
AYX current market cap of about $8 billion is already 1/3 of his calculation of TAM. Interesting metric to contemplate.
TAM $24B = projected $24B annual rev from the targeted market. AYX annual rev is now less than $0.5B.
Market cap is how much you are willing to pay to buy the entire company and you have to pay multiple of annual rev to get it.
“AYX current market cap of about $8 billion is already 1/3 of his calculation of TAM. Interesting metric to contemplate.”
And during that contemplation, include AYX 90%+ gross margins in your musings and consider also the very low dilution from low SBC. That means much more of the top line will get to the bottom line over the longer term.
Most here will be on the other side of the dirt before AYX stock sells below 8X sales again.
My guess is if/when they get to $5 billion in sales, market cap will exceed $50 billion. I plan to be holding…or my beneficiaries will.
If the CEO wasn’t just puffing today on Cramer about the winner take all market, it could turn out better than that for AYX shareholders.
It’s tough predicting who the winners will be in any tech revolution. I try to improve the odds by betting on the most outstanding leaders even more than which companies currently have the best technology.
Back of the envelope calculation, very rough numbers. Let’s say TAM is $24 billion & Alteryx captures 50% of that number or $12 billion.
Keep in mind that the company’s gross margin is 88%. (88%)($12 B) = $10B & change
If the company has operating costs of 25% of revenue or $3 billion that would leave $7B before taxes or about $5.5B after taxes. (21% tax rate)
If we use a P/E of 20 the company would eventually be valued at $110B. Currently it is valued at about $8 B so a 13 bagger.
My guess is it will never happen - this company, IMHO, has a high probability of being acquired.
The magic question for me is what is the downside risk? How low can the enterprise value become for Alteryx before an acquirer comes a knocking in a world of 1.646% ten year Treasury Notes - cheap money abounds.
My guess is Microsoft may try to buy this company - it would simply add the product/platform to its offerings and achieve immediate synergistic cost reductions around sales and marketing.
Frank - long AYX, see profile for all holdings
Just a quick clarification of semantics, as it is a topic that I tend to harp on considerably:
Market cap is the price that it would take to purchase all outstanding shares (share price times number of shares).
Enterprise Value (EV) is the price it would take to purchase the entire company.
Enterprise Value is the Market Cap PLUS the net debt position (which is “minus the net cash position” for some companies).
Soapbox descended from,
volfan84
Market cap is the price that it would take to purchase all outstanding shares (share price times number of shares).
Enterprise Value (EV) is the price it would take to purchase the entire company.
Enterprise Value is the Market Cap PLUS the net debt position (which is “minus the net cash position” for some companies).
This is important and huge.
Thanks!
Depending on the stock price and debt, a company might be bought for 1/10 the debt if the company is in bankruptcy and the debt is senior obligated debt.
My best deal was preferred convertible stock in a utility company that went bankrupt.
The biggest miss was an oil field service company in the early 1990’s. It’s cash on hand was greater than its market cap. In other words, it could have taken itself private with cash on hand and liquidated its assets and made money.
As many of these SAAS companies have a positive cash/debt balance it may be important to watch this in a sever down turn. A company floundering and hated may be the bargain of a lifetime.
Cheers
Qazulight
Market cap is the price that it would take to purchase all outstanding shares (share price times number of shares).
Further clarification. Market cap is a formula that is the total number of shares x the current market price.
Buying all the shares is an entirely different exercise (not everyone would be a seller at current prices).
tecmo
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Frank I have had those same thoughts about Msft buying them out. They are a natural fit for a world where so much work is done on excel and now power BI. I read in the ZS call this little nugget Office 365 has been a big driver because Office 365 almost requires that you do local breakout and that’s because the amount of traffic generated by Office 365 is far, far bigger than all other SaaS applications combined. Not sure if the context is For ZS or if he was saying that 365, and I am guessing the lions share of 365 is excel, is the biggest SaaS traffic on the internet.
I would be interested in data confirming or denying that. But the information resident in excel properly interpreted can lead to business insights that helps business decisions. My son is a Power BI expert and looking to see if AYX gets him anything more than he is able with power BI.
Msft has a big stake in what comes next, buying AYX might make a lot of sense.
Flygal
Long Ayx, and Msft
See all my holdings on my profile
I am guessing the lions share of 365 is excel, is the biggest SaaS traffic on the internet.
Flygal, its Microsoft Outlook that is the main concern when going to O365. That usually requires a lot of bandwidth across the internet, a lot more than Excel. It often times so much traffic that corporations dont want to build out their own infrastructure when they can just get a subscription with ZScaler and also have better security than their old model.
-AJ