Hi everyone - (I looked for an existing AYX post and didn’t find one after looking for a few minutes…)
Looking for some feedback on Alteryx. Alteryx’s Q1’20 quarterly revenue dropped about 31% to $109M, from a Q4’19 revenue number of $157M. I read the transcript of the Q1’20 earnings call and learned the QoQ revenue decline was related to some lengthened sales cycles as customers paused spending in response to COVID-19 and the macroeconomic slowdown. AVX also experienced a moderate increase in their churn rate, most notably in Europe. Does this trend continue if the COVID dynamic persists, I wonder. The metrics I look at, for SaaS companies, are:
- Revenue growth, QoQ and YoY: -31% and 43% respectively for AYX. The -31% QoQ concerned me.
- DBNER: 128% for AYX, which is very healthy.
- Operating margin. Negative is okay, if it is improving year/year. (SaaS companies seem to get a nice multiplier once this goes positive. It’s like the market discounts for a negative value and then gives an accelerator once it goes positive.) For AYX in Q1’20, this was -$3.2M (non GAAP), which was down from +$1.4M (non GAAP) the year before, so not great but they spent more money in trying to expand and land customers.
- Gross margin. Even if operating margins are positive, the market seems to discount valuation for companies with a lower gross margins. Confusingly, TWLO gets penalized for this (non-GAAP GM% = 57%, even though revenue growth is high and operating margins have turned positive. FSLY, which has been rewarded, has a non GAAP Gross Margin % around 58%)… Anyway, AYX had an impressive ~91% (non GAAP) GM%, by my calculations.
- Customer growth metrics. Investors like to see growth in customer counts, particularly those with higher spend. This is where we see metrics like xx customers with more than $100k ACV, up yy% year/year. I couldn’t find the actual ARR but their customer numbers are growing.
AYX’s Gross Margin % is very strong, as is the DBNER, and the Total Available Market is ~$49 billion. (that’s the addressable annual market opportunity for Alteryx: people/companies needing help analyzing data. But the market is very unforgiving. To me, AYX isn’t as attractive as ZM, LVGO, CRWD, COUP, DDOG, FSLY, but that group of 6 companies is operating at a very high level, collectively, right now.