AYX at Raymond James

Note that the recent dissing of AYX by the market happened hours before this conference as noted in Steve Symington’s Fool article and noted on this board…as well as the Spruce Point rumour thing. I’m going with the bots argument…

Fool coverage here: https://www.fool.com/premium/coverage/investing/2019/12/11/w…

Also note there’s a fool.com bearish side article condemning AYX on valuation (SMH).

Reasons for the drop? – refer to Austin’s recent post on Saul’s board: paraphrase… “don’t focus on day-to-day.”

As many have concluded here, it may be a chance to buy or add.

Key takeaways from AYX portion of Raymond James Tech Conference follow:

First, it wasn’t all rosy but it was generally positive, with no ah-ha! or oh s___! announcements.

Michael Turits, RJ Analyst, covered AYX months ago and seems a respected analyst. His performance on Tip Ranks is in the 99th%ile. He put AYX on hold – his last action – 10 months ago (Feb 2019). It will be interesting to see if he publishes something soon. He conducted the interview on the RJ side. He acknowledged AYX popularity and success with “citizen data scientists” as well as trained analytics folks. He talked to his folks about (re) initiating coverage of Alteryx. The main focus of his questions seemed to be on competition.


Scroll down on this AYX events page to find the webcast (sound only)…only 27 minutes. Transcript is $125 but I found it in my brokerage (IBKR) news feed…format less than desirable and as stated I’m not a tech guy and .pdfing it didn’t help. So scroll, scroll, scroll. But I digress…


Kevin Rubin, CFO was the only AYX representative. If I didn’t know, he could have been CEO based on his knowledge and understanding of the corporate mission.

Accolades started the session:
Turits, Raymond James Analyst
…everybody from people we meet in bars who say, “Oh, my God, my life, but don’t take that away from me” to large corporations that are deploying them from one department to the next, and typically tell us – almost all those tell how much more it could be used internally and in how many more different types of departments.

when we were rolling out coverage, I had one of the guys on our team said, I just was at the bar last night, and I ran into somebody using Alteryx and he said just never take this thing away from me.

Then Kevin Rubin responds …Well, when you have net expansion numbers of 130% for many straight quarters…

BAM (remember Turits had been bearish—I imagine based on “valuation” though I don’t have access to RJ reports)

The 1st part of the interview was about what Alteryx does and that, as those who own should know, is to easily encompass all data in seemingly any form and make it easy to analyze. Note I am not in any way a tech guy.

Next questions dealt with M&A and how the latest AYX forays were a fit.

Kevin: we’ve been long saying that the market for data science and analytics was going to consolidate and consolidate rather quickly. We’re beginning to see that.

He went on to state AYX balance sheet is strong so they’re taking advantage when opportunities to follow their strategy present themselves. He stopped short of detailing that strategy. Though he did talk about two “vectors.”

  1. Challenge to make analytics simple for 47MM “citizen analysts”
  2. Challenge to develop uses for 2MM trained data analysts. The Feature Labs acquisition fits here.

The earlier Clear Story acquisition was to get some visualization IP but mostly to grab talented people. It’s difficult to get talent with 3.5% unemployment but well exacerbated by the occupations that are subjects of AYX searches.

Then not yet having introduced the competition portion of the interview, Turits alluded anyway to Tableau (& its new owner Salesforce).

Kevin: …we love the vis vendors, for sure. We have partnerships with Qlik and Tableau and Power BI. It’s sort of a bloody ocean at the top of the stack, the consumption layer for diagnostic and descriptive analytics…

And because of the “bloody ocean” AYX is not going there (yet).

Now here is where AYX is making a difference (Joe’s adage: if it weren’t hard, they wouldn’t ask us to do it)…

Turits: …being able to be both code-free and code friendly. Code-free, if you think of the citizen data scientist, code friendly, data scientists. How hard has this been to balance? Are you able to keep investing in both areas?..

Kevin:… on distant franchise analysts who hate their jobs, who are just trying to become better stewards for organizations, you have to make this platform easier to use. And as we start to expose more capabilities like Python, where people are now building new tools on the platform, it’s incumbent upon us to make sure that the user experience is drop-dead simple, drag-and-drop, click-and-run. So that’s one of the vectors. And you’ll see, for example, in the future, in the not-too-distant future, you’ll see assisted modeling capabilities … we’re training the citizen data scientist to what auto modeling is all about because you can’t black box anything for the analyst who doesn’t know what an R square means or what’s needed to prepare for an auto modeling service. So making it easier is clearly important.

For the trained statistician, we have to have continuously improve sophistication in the platform. And we’re doing that throughout our life cycle of the platform. We started off with native R a few years ago. We’ve last year rolled out Python with Jupyter Notebook support. Our acquisition of Feature Labs will end up with more capabilities around automated feature engineering in the platform.

So those 2 vectors of ease of use for the citizen and continued sophistication for the 2 million trained statisticians, it is a tough challenge, but we’re actively pursuing both vectors.

Bold by me. Joe recalls from college statistics (back when dinosaurs roamed) R-squared is a measure of fit of the data to a statistical regression model.

We’ve said here AYX has no clear competitor. Mr. Turits, by his questions, is not a believer.

Kevin Rubin explains: The competitive market hasn’t really changed much at all since the IPO. And that is we typically see SAS as the incumbent, even though we don’t go head-to-head with SAS… to be a direct competitor in an end-to-end platform, you would need 5 or 6 best-of-breed tools strung together, and you’d have to take out all the friction of movement between those tools to be considered a direct competitor.

Alteryx’s secret sauce (IMO) is what Kevin called “democratizing” the data itself.

On Salesforce/Tableau…I think they’ve affirmed the need for good data to visualize anything. And in their case, I think they’re hoping that people will live in Tableau longer, so they don’t migrate out…

On data science competitors and auto modeling – now popular…geared towards the trained statistician, black box environment. Clearly, there’s a market there. They wouldn’t be growing if there wasn’t. We see hundreds of start-ups in this space where people are trying to create the next best black box, auto modeling service. Our belief, though, is that it’s – the $10 trillion to $15 trillion of value that’s locked up in data isn’t going to emerge with auto modeling capabilities, unless you’ve actually figured out the feature engineering. And so our acquisition of Feature Labs was a direct result of seeing the success of data prep and blending for the citizen data scientist and the corollary of automated feature engineering in order for transparent auto modeling to be successful.

On competition from AWS and cloud titans…
Kevin: I would consider them partners more than anything else. I think that we’re still struggling with data gravity movement to the cloud…

Switching to financial questions, the 605 v 606 accounting rule was reiterated and of course, billings vs revenue…Kevin But revenue at the end of the day is kind of the equalizer of all, and so that’s where we tend to focus.,

Next subject: Further acquisitions and R&D investment as a trade off for profit recognition…Alteryx recognizes they’re still in the very early part of the potential market opportunity and are growing and developing internationally and must support this structurally…

Kevin: so we have tended to lean towards investment towards what we would think of as kind of a land grab. So the first one into a market, get as much penetration as we can, and that’s how we generally think about investments. So long as we’re not seeing a deterioration in unit economics, and we’re still seeing an appropriate return on that investment, we’re going to continue to invest.

Last question in the session was about the new COO Scott Davidson

Well, Scott brings a dearth of talent with him in his last role as COO of Hortonworks in his previous roles and financial roles at Citrix, and Quest, brings a great set of knowledge to us to help us scale globally. He’s going to be responsible for corp dev and all the functional areas around corp dev. We see IT as part of that, our business systems, as we continue to scale out infrastructure to support our growth around the world. He’ll own HR. We see that both – benefit for both organic growth as well as any inorganic growth that might occur through M&A.

My conclusion was to add last week to an already fair sized position for me.

Owner AYX


But it wouldn’t surprise me if the market in general has become so gun shy of some high flyers like Alteryx that it may have to go way in down price multiples before resuming the run up.

Perhaps the “market in general has become so gun shy of some high flyers”; but I don’t think in this particular instance that Alteryx is one of those “high flyers” to be concerned about now or in 2020. Moving forward, I believe that the market will begin to reward companies similar to Alteryx…meaning, companies that are showing high growth and solid EPS growth.

In 2020, as the market continues to closely scrutinize high growth companies more closely and demand a pathway to profitability; in search of safer investments, I think Alteryx will shine and accelerate.

That is my thesis and I’m sticking to it.


you know, every year we get “this is it,” the parties over…etc. And every year there is a crash preceding this. And every year those that are the best of these market “darlings” that may now be ignored because earnings, or sector rotation, or recession, or whatever is now in vogue, go on to thereafter kick the balls out of the market over the next 6 to 12 months.

Perhaps this time it is different (as critics often derisively state, "this time it is different…right, right?), but probably not.

In the end the market goes with fundamentals (if you are not in a bubble, and I’m not having that bubble discussion again when clearly we are not) - PERIOD. In the interim sector rotations, crisis, recessions, etc may get in the way, but in the end the market will toss its money at fundamentals. Unless of course THIS TIME IT IS DIFFERENT.

Let me know, specifically, why Alteryx should probably have a single digit multiple? I would like someone, anyone, to explain to us what Alteryx, as it is, with its margins, with its growth, with its CAP, with its very large market, should sell for 8x revenues and no more, ever.