Thanks, volfan for thinking of this and prodding me. I should have done it weeks ago. I didn’t even think of it.
I had to post my initial write-up on Alteryx in five parts on Dec 12th, because the board system was having trouble taking long posts. Here are the five posts again, modified and consolidated in full format:
I just started a new stock at a full position! As you well know, what I usually do with a new stock is take a tiny starter position and then add to it slowly and cautiously. Well, Alteryx (AYX), which IPO’ed just nine months ago, is still largely unknown to investors. I discovered it and fell wildly in love with the investing opportunity this stock represents. As of the end of December it’s become a 12% position.
Here are some reasons I got excited:
Alteryx is attempting to build a new category - a platform that combines both data integration and high end analytics, targeting the emerging category of citizen data analysts.
It feels that its TAM is about $10 billion.
It is cash flow positive, and its loss level is far less than some other well-known data analytics companies.
Its valuation in comparison to other hyper-growth vendors is moderate at less than 6X EV/S.
Some notable current users include Accenture, Coca-Cola, BP, and Ford.
The dollar based net revenue retention was 134%, a very strong number compared to many such companies.
Overall, its basic strategy is land and expand. The cohort analysis suggests that it is working effectively.
Customers rated Alteryx very high for overall customer satisfaction and delivery of business value.
Alteryx was cash flow positive in the first three quarters of this year and it forecasts that it will be cash flow positive going forward.
It seems to have excellent:
customer acquisition cost,
long term value per customer in relation to the acquisition cost,
dollar based retention rate,
overall revenue growth,
and it’s TAM seems less than 1% penetrated
After all that enthusiasm, here are some actual facts and figures:
TTM Revenue - $118 million, up 52% from $78 million
Subscription Revenue – over 95% of total revenue
TTM Dollar Based Retention Rate – 133% and accelerating.
Cohort Revenue Growth: -
**2014 cohort** revenue grew to **170%** of base revenue in one year, and to **270%** of base revenue in two years. **2015 cohort** revenue grew to **190%** of base revenue in one year.
Adj Gross Margin – 86%
Total Customers – 3054 plus
Customers include Ford, GE, Microsoft, Shell Oil, HP, BBC, etc, etc
Adj Op Margin was
-36% in 2015
-23% in 2016
-09% in 2017 (first 9 mo)
And now some fundamentals:
**Revenue** 2014: = 38 2015: 14 15 = 54 2016: 18 20 22 25 = 86 2017: 29 30 34 Trailing revenue is now 118, and estimates for the year are 129 (at least), which would be up 50% (again, at least). **Revenue growth percent** (Looks very solid) 2015: = 42% 2016: 57 67 = 59% 2017: 61 50 55 **Dollar-Based Retention Rate** (Increasing from already high levels) 2015: 123% 124% 125% 122% 2016: 126% 127% 129% 135% 2017: 133% 134% 133% **Customers** (Increasing at an amazing rate) 2015: 760 961 1140 1398 2016: 1578 1834 2047 2328 2017: 2565 2823 3054 **Operating Cash Flow** (Has turned reliably positive. Means no need for dilution) 2016: +3.0 -7.0 -5.2 2017: +5.0 +0.7 +0.7 **Deferred Revenue** at end of 2014: $29 million 2015: $44 million 2016: $71 million Q3 2017: $79 million **Adjusted EPS** I figured 2016 (pre-IPO) as if they had the same 62 million shares they have now, to make figures comparable. 2016: -10 -11 -05 2017: -06 -09 +02
So what do we have? A company little understood by investors, which hasn’t yet been run up to astronomical levels, and in a category of its own (more or less) with a TAM 100x larger than its revenue, and growing revenue at over 50% per year in the 9 months its been public, and this actually seems to be accelerating, as they only grew revenue 42% from in 2015 over 2014. With an enormously rapid rate of customer acquisition, with a very low cost of acquisition. With many household names among their customers. With positive Operating Cash Flow. With an Adjusted Operating Margin moving up rapidly towards breakeven, and having perhaps just started having positive adjusted earnings. With a land and expand strategy, which is working like gangbusters, with the highest Dollar-Based Retention Rate I’ve ever seen (133% to 135%), and with 2014 and 2015 cohorts growing take by 70% and 90% in the second year. With a gross margin of 86%. With a reasonable EV/S ratio for a rapidly growing company. With high customer satisfaction and happy customers who keep signing up for more and more. What more could I ask for?
Hope you find it helpful