Alteryx Conference Call

I’m currently listening to the Alteryx Conference Call, and what I hear is that they make it clear that they are being very conservative because they can’t see the future clearly, BUT over and over they imply that they are amazed at how well things are actually going, even in hospitality and oil and gas, etc, and that April results were consistent with last year’s results, which also kind of surprised them. US sales were up 53% I think he said, but Europe was only up 22%, which they ascribed to a lot of their European sales being through partners, many of whom were small firms weren’t very quick in adapting to work during the pandemic.

At the midpoint they are predicting 13% increase in revenue for the June quarter, and I would expect, from their tone of voice anyway, that a 26% increase would be the bottom of what I would expect, but that’s just me. A quote: “There are massive opportunities for expansion”.

Saul

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A quote: “There are massive opportunities for expansion”.

Hi Saul,

Agreed - I don’t get a sense of gloom and doom at all. Quite the opposite in fact. They mentioned something just now along the lines of “If this isn’t a wake up call to executives, then I don’t know what is”. Also, they’ve only penetrated 1% of their target market of data scientist folks who hate their jobs and intend to “own” that market!

Best,
Matt

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I’m currently listening to the Alteryx Conference Call, and what I hear is that they make it clear that they are being very conservative because they can’t see the future clearly, BUT over and over they imply that they are amazed at how well things are actually going, even in hospitality and oil and gas, etc, and that April results were consistent with last year’s results, which also kind of surprised them. US sales were up 53% I think he said, but Europe was only up 22%, which they ascribed to a lot of their European sales being through partners, many of whom were small firms weren’t very quick in adapting to work during the pandemic.

At the midpoint they are predicting 13% increase in revenue for the June quarter, and I would expect, from their tone of voice anyway, that a 26% increase would be the bottom of what I would expect, but that’s just me. A quote: “There are massive opportunities for expansion”.

Saul

Thanks for the update, Saul, since I didn’t have a chance to listen to the CC.

The picture going forward seems significantly brighter than short term numbers and guesstimates. This might be why the stock is moving up significantly off its after hours lows.

Anyway, AYX is best judged by its pre-pandemic picture a couple months ago - dominant leader in its niche, growing rapidly, massive TAM. The pandemic doesn’t change this. It’s still on sale, well off its highs, with a lot of FUD priced in.

Dave

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So this is all great but at the same time a company like TWLO huts it out of the park tonight with fantastic earnings and guidance. Up 30 bucks AH to an all time high.

Proof is in the numbers isn’t it?

TMB

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I don’t get a sense of gloom and doom at all. Quite the opposite in fact.

Hi Matt, I agree! I heard plenty of caution as far as concrete quantitative predictions, but as you say, I didn’t catch any worry at all.

Their qualitative outlook definitely doesn’t include even a smidgeon of gloom and doom.

Saul

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"So this is all great but at the same time a company like TWLO huts it out of the park tonight with fantastic earnings and guidance. Up 30 bucks AH to an all time high.

Proof is in the numbers isn’t it?"

With respect, I believe that is a little short-sighted. W and PTON are also up big on their earnings, but those aren’t companies I’m interested in being invested in the long-term.

This was one quarter in the middle of COVID-19 which has shut down large parts of the economy. AYX continues to move forward and maintain a very positive outlook. YoY they are still growing in this environment and providing guidance which many companies are not. They could have easily not provided Q2 guidance and my guess is that it would open $10 higher. Instead, they were transparent and have pulled-forward the Q2 headwinds related to COVID-19 into Q1 ER.

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So this is all great but at the same time a company like TWLO huts it out of the park tonight with fantastic earnings and guidance. Up 30 bucks AH to an all time high.

Proof is in the numbers isn’t it?

TMB

Yes, TWLO is a nice example of why some shouldn’t abandon their bullish view of AYX. TWLO is a dominant cloud communications company which is flourishing in this environment overall. But it seemed to be languishing at one point and was a laggard. Like AYX, it seems to have dominance in its niche with longer term trends in its favor.

Dave

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I’m currently listening to the Alteryx Conference Call, and what I hear is that they make it clear that they are being very conservative because they can’t see the future clearly, BUT over and over they imply that they are amazed at how well things are actually going…

Some quotes from the transcript when addressing their guidance:

" We don’t have visibility. April is fairly strong."

“We’re being conservative.” (repeated twice)

While I’m not as bullish short term on AYX, I’m certainly not bearish at the current price and potential upside. As visibility improves, it won’t take much to move AYX.

Dave

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Believe or not, AYX is one of the only few high flyer SaaS stocks that didn’t perform. The other one I can think of is PAYC.

OKTA, MDB, TWLO, ZS, SHOP, FSLY, TTD, COUP, TWLO, etc., are all doing great.

I agree that AYX came across as confident, informed and knowing that they are at the right place at the right time. The business is going great guns. They are seeing a normal April which is unbelievably strong short term guidance in these days, and on a medium term perspective they pointed to digital transformation picking up speed.

As to the next couple of quarters, no one can guess what the virus and governments will be doing, so I am happy they managed the numbers down but their ambition is as high as ever: to be the leader in this space (and they believe now is the time to lead).

TWLO is made for times like these (not my quote:)) and unlike AYX no one needs to sign another PO to use TWLO APIs a bit more (will listen to their call now)… Sinch is also on all time high and more comparable to TWLO.

Thanks for all the commentary,
Nik

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April results were consistent with last year’s results

I was not able to hear the conf call. But intrigued by this statement. What did he mean buy this?

  1. April rev. was similar to April 2019 - this is bad
  2. April rev. grew at 50% over 19 - this was pre covid expectation unlikely can discount thsi right away
  3. April - we booked similar new cust as April 2019 - not sure this is good either. Did’nt they say they grew customers 30% QoQ?

I must say I didn’t appreciate how much of their revenue was upfront from sales, as they noted on the call. I had not expected forecast and actual revenues to fall (Dec Qtr 156m Mar Qtr 109m). It would be good if we had a better picture of what was/is recurring and what is upfront. Has anyone seen a breakdown of this?
Still doesn’t change long term thesis, just some short term pain.

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This actually happened - I listened to the Alteryx call & took a nap - was up at 5 AM for SHOP’s report this morning (live in California) - first thing I thought of - doesn’t Alteryx only have about 60 million shares outstanding? Turns out Alteryx had 65,519,000 average diluted shares in computing its Q1 non-GAAP diluted EPS - keep that number in mind.

On the conference call CFO stated that in Q1 the company had $6 million in non-recurring operational expenses due to a global sales kickoff event it held and the costs associated with it cancelling its EMEA and U.S. annual users conference normally held in Q2 - remember how ever second quarter Alteryx would take a big marketing expense for holding the users conference (Saul taught us to watch for that expense as it distorted the numbers for Q2) - that expense was pushed to Q1 this year due to the COVID-19 pandemic & shows up as a cancellation cost.

I cannot tell how much of the $6 million was for the sales kickoff vs. the cancellation of the user conferences. In any case $6M/65.519 million is about $0.09/share. The company missed Q1 earnings by one penny/share losing $0.10/share vs. analyst expectations of losing $0.09/share.

You can decide how much of the one time operational expense can be attributed to COVID-19 - my guess is it would have beat earnings expectation by at least 2 cents if it were not for the cancellation of the user conferences.

Just my two cents - took a while but I finally got to the punch line.

Frank - long AYX, see profile for all holdings

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April results were consistent with last year’s results

I was not able to hear the conf call. But intrigued by this statement. What did he mean buy this?

1. April rev. was similar to April 2019 - this is bad
2. April rev. grew at 50% over 19 - this was pre covid expectation unlikely can discount thsi right away
3. April - we booked similar new cust as April 2019 - not sure this is good either. Did’nt they say they grew customers 30% QoQ?

Hi Tex Mex,

Matt and I and others who listened to the call, were trying to give information and help to those who couldn’t listen. But you can go to the website now and listen if you wish.

They came back often to mentioning [with glee and surprise] that the [momentum of] their business last month was as good as it was in the year ago April! Now you can try and pick all the details apart all you like, but it’s the perceived glee that we were reacting to.

Best,

Saul

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Frank posted a really good recap on the AYX board including an explanation of the one-time expenses.

https://discussion.fool.com/4056/ticker-guide-take-q1-results-34…

I hope Beth & Co are still selling tomorrow because I’m buying on a dip.

Mike

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Alteryx had costs associated with holding and cancelling scheduled marketing events for 2020. That is a one-off cost. Alteryx also suspended all travel so that is a saving that will have offset some of those expenses. On the call, management seemed pleasantly surprised that business was picking up again in April, even in industries affected by the virus and possibly oil prices. I believe management was purposely conservative in their outlook because it is unclear whether this virus is going away permanently or only temporarily. It is clear that their business is impacted by the health of their customers’ business, whether that is their ability to pay or subscribe. I believe that this is why their visibility, which they were pressed on by one analyst, is not good. Though the virus’s lack of predictability was not mentioned explicitly, I felt it was implied. Some payments seem to have been deferred or have at least seen some price negotiation. This could also continue if business does not rebound as expected.

Given that April saw a bounce back to business as usual, I am confident that this is a sign of that Alteryx is adding immense efficiencies to businesses. Stoecker talked about “creative destruction” taking place in this environment. A term coined by Schumpeter referring the replacement of old industries with new more efficient industries. Alteryx being part of this new economic structure means a lot of growth ahead as more and more businesses are digitising as they finally realise it is essential to their survival (this was also touched upon in the call). I see tailwinds. I see some temporary transitional headwinds.

Long AYX.

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Just reading over the c.c. this morning. I had not seen anyone post this or discuss this as of yet on board. Bolding is my emphasis.

Andrew – Cowen & Company – Analyst

Great. Thanks. It’s Andrew [Phonetic] on for Derrick. Hope you’re all well. Maybe just wanted to touch on the larger expansion deals and maybe how have reps adjusted to selling virtually? How do closure rates look? And yeah, any playbooks or anything looking forward in this expansion motion in particular?

Dean Stoecker – Chairman and Chief Executive Officer

Well our playbooks are well established. I think they work regardless of whether it’s in office or work from home environment. When we put into place our own shelter-in-place plans, largely driven by local jurisdictions’ requirements we’ve got people up and running right away be it with collaboration software, access to our enterprise business systems portal. We’re largely a cloud-based organization. There are some things that are on-prem but accessible through VPN. So that part, I think, was to our advantage.

I think the more challenging part, particularly in the last two weeks of the quarter, was it was work from home dealing with work from home. We illustrated the large European financial institution to illustrate the complexity of deal management. If you have all the signers in a single office or even in offices that are remote, it’s a little bit differently than getting signers all working from home in 16 different locations.

So I don’t think our – our expand motions are fairly frictionless as well. Much of our driving expansion in accounts is actually driven by customers getting excited over the benefits that they’re seeing in the platform. Yes, we do go on site. We’ve actually turned to not just our virtual solution center, but we’ve seen in the last 30 days a record attendance and registration on our Community. We’ve long talked about the impact of Community on expansion. I think we’ve said on a number of occasions that customers who have registered for Community expand three times more than people who are customers of ours who are not involved in Community. And so we saw a record number of unique registrations for Community in the last 30 days. And so – and that Community is accessible in the UI of the platform. So again it supports a work from home environment pretty nicely.

We also have pivoted many of our user groups around the world. Our Community is made up of both online and offline community. The offline component we talked with you about pushing our users’ conferences this year to next year. But our user groups around the world have also gone virtual. So if you care to see them you can join them, go to Community and you’ll see them, you’ll see them all over Twitter and LinkedIn. So we have made it pretty easy for customers to get the expertise they need, the support that they need to drive greater expansion.

The only challenge there, of course, is organizations who are trying to figure it out what end is up themselves and that may pause things for a short bit.

I really like the sounds of this. Sounds to me like AYX had a small speed bump with Covid and it most likely leads to acceleration in the future based on historic business meterics like their Community registration.

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I have sent an e-mail to the IR asking why they do not consistently report ARR. Given the unusual revenue recognition method of Alteryx, revenue is not moving in line with the ARR. For instance, Q2 2020 revenue is expected to be lower than Q3/Q4 2019 whereas ARR will obviously be higher.

ARR was reported in Q2 2018 to be 200 million and now in Q1 2020 exceeding 400 million, implying approx. 50% annual growth in ARR. I believe this is the best metric to assess actual performance of Alteryx. I am therefore somewhat frustrated that they are not reporting this consistently.

Other than that, I am satisfied with the results. 30% customer growth in line with previous quarters and 128% net revenue retention is at the high-end of the SaaS universe. Also happy that Kevin mentioned that he expects >120% NRR for a long time.

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Compared to other SAAS companies Alteryx has one problem: High touch sales process.

During the conference call:

“even closed a seven-figure transaction with a European financial institution in the last week of the quarter despite having to coordinate with 12 different buying entities and 16 different signers located in 16 different locations, all done remotely”

12 different buying entities in Europe! So even with strong demand for products like Alteryx get in trouble.

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Compared to other SAAS companies Alteryx has one problem: High touch sales process.

“even closed a seven-figure transaction with a European financial institution in the last week of the quarter despite having to coordinate with 12 different buying entities and 16 different signers located in 16 different locations, all done remotely”

12 different buying entities in Europe! So even with strong demand for products like Alteryx get in trouble.

That doesn’t sound like an Alteryx specific issue. It sounds like a large European international bank operating in 12 countries in the EU, with each national entity being semi-autonomous and having to agree to a new service. That’s the way it is in Europe. It would be as if Chase Bank NY and Chase Bank Conn, and Chase Bank Mass each was in a different country and had to sign independently. It’s insane. The EU has never become a central government like the US.

Saul

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