A number of posts upstream reference Alteryx growing its customer count by 27% in relation to the number of total customers it had at the end of Q2 2020 (6714) to the number of customers it had at the end of Q2, 2019 (5278). Sure enough you do the arithmetic and the company now has 27% more customers.
Now I am long Alteryx, not selling my shares, plan on holding through the valley of the pandemic and seeing what happens on the other side.
On the customer count though, I think it is more valuable to look at this on a sequential basis for Alteryx’s business model. The company has a land and expand strategy and the new customers each quarter are at the top of the “land” pipeline. Over time those customers become larger customers and the new customers take their place in the pipeline. If the front of the pipeline slows down it stands to reason so will the back end revenue.
In light of this view I keep a spreadsheet on the customer count by quarter, the sequential growth, and the global 2000 customer count. You can see the data here:
You can see that on a sequential basis Q2, 2020 is the slowest net customer additions we have seen at 4.21% growth. There are two potential factors that effect this number as it is net new customer additions. One is churn and the other is new customers that are being added since the end of Q1.
My guess is churn has increased as a result of the pandemic and the elongated sales cycle has reduced the new customers brought into the pipeline. The combination results in the reduction in sequential net customer growth.
Thought it was worthwhile to make this point as I don’t think the year-over-year customer count is as important as the sequential customer growth for a company with Alteryx’s business model. A business model where the year-over-year customer count would be more important would be a more seasonal business such as installation of swimming pools.
Frank - long AYX, see profile for all holdings