Alteryx is down 8.5% right now, and all I can find is the announcement for the private offering of $200 million Convertible Senior Notes. Is that really such a big deal? Did I miss something else? I was looking to add a bit more to my AYX allotment. Looks like this might be a good time if nothing else is up.
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I am finding it very hard to find news about AYX. It has been a darling for me as I seem to have bought in at a great price ($26.60 in February) and have been up between 20%-42% at various times (right now, I am ‘only’ up 17%).
I can not make heads or tails of this roller coaster. Trying to understand this latest dip as well.
Here is a link to the company’s last quarterly filing dated May 10th with information valid through March 31st.
http://d18rn0p25nwr6d.cloudfront.net/CIK-0001689923/4cf80cf7…
As far as I can tell, from looking at the balance sheet on page 5, as of March 31st the company has no long-term debt and cash of $59 million + short term investments of $120 million, and long-term investments of $27 million for a total of $206 million.
from the press release dated May 9th:
Balance Sheet and Cash Flow: As of March 31, 2018, Alteryx had cash, cash equivalents, short-term and long-term investments of $205.7 million, compared with $194.1 million as of December 31, 2017. Cash from operating activities was $12.1 million compared to $5.0 million in the same period last year.
https://investor.alteryx.com/news-and-events/press-releases/…
So it makes you wonder, why does the company need another $200 million to $230 million? Management never brought this up in the quarterly release or conference call as far as I remember. The call was on May 9th - the filing for the converts was May 14th.
Is an acquisition about to happen?
It is not atypical for the price of an acquiring company to take a short-term hit to its stock price when it acquires another company.
My sense is Mr. Market is uncertain as to why three business days after the quarterly announcement, which I do not think mentioned anything about raising cash, the company has filed for the convertible offering. It is a pretty good bet that management knew they wanted to do the convert offering at the time of the quarterly webcast which makes me think the reason it was not alluded to or announced was to avoid questioning about the company’s intent with regard to the use of the funds.
So we will have to stay tuned to see what develops - Mr. Market hates uncertainty.
Frank - see profile for all holdings
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So it makes you wonder, why does the company need another $200 million to $230 million? Management never brought this up in the quarterly release or conference call as far as I remember. The call was on May 9th - the filing for the converts was May 14th.
Because it is very nearly free money. When free money is available you generally get as much of it when you can, not necessarily when you need it. 
These near zero coupon cvt note offerings have been very very popular of late (AYX, TWLO, NTNX, SHOP, PSTG, etc) and the dilution effects are pretty minimal if exercised. It’s definitely a modest amount relative to the company size, so maybe bolt on acquisitions down the road. Or just “rainy day” money as I like to call it. hahaha
Best,
Matt
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it was not alluded to or announced was to avoid questioning about the company’s intent with regard to the use of the funds
Having listened to the past couple of conference calls, this is directly in line with some of management’s color commentary. In their Q4 2017 call, they would not provide additional detail into the timing, amount, and/or geography of their Sales and Marketing investments, specifically noting that they would execute when they felt where the market opportunity was best.
They also specifically stated that they did not want their competitors to be the first movers.
I find it very interesting, as AYX is actually a category creator, and the strategy appears to be locking up the higher end of the data science spectrum (machine learning, etc) before pushing down into the market. As a category creator, I applaud this effort, as the higher end users will be able to provide the feedback that allows AYS to identify which services may be best scaled, how to best scale them, and further expand the market.
Analysts keep asking about TAM in AYX calls, and AYX keeps skirting the question, and nobody really knows how bright that future may be.
We’ve only just begun…
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why does the company need another $200 million to $230 million? maybe because it was nearly free and they might want to make an acquisition? This is a very small company with little real news so FUD finds fertile ground. Markets hate uncertainty but uncertainty is inherent in this investment.
was to avoid questioning about the company’s intent with regard to the use of the funds likely you are right but secrecy might be justified here. Who knows , you either trust management has the best interests of the company in mind, or you don’t. Me ,I will be buying more tomorrow.
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Analysts keep asking about TAM in AYX calls, and AYX keeps skirting the question,
personally I doubt if TAM is all that big in their present form, but this is a little company with room to grow a lot even in a modest TAM.
I do not understand the business well enough to make many guesses what they need the cash for, or why the secrecy .
Except that making things easier, reducing expertise requirements can lead to huge markets. For instance you could do the same things with DOS as with Windows, but it took easier to use Windows to make the PC really take off. Can they do the same with statistics and probability??
Bring it downstream to more average people, make it ever easier to use? Because for most of us the very word “statistics” makes us feel overwhelmed.
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The question about TAM has some validity since they are, to some extent, providing something that has not previously existed so one doesn’t actually know how many people need it. Historically, the “competition” was having some programmer provide custom code to get the info one needed. That meant time delays, time delays, likely inflexability, and frequent revisions. There have been other products to address this need like Data Direct Cloud and now Tableau Prep. We don’t really have a very solid basis for knowing what part of the market needs what kind of capability, especially since companies are only just discovering the need.
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I can not make heads or tails of this roller coaster. Trying to understand this latest dip as well.
Ugh - it plunged cos I went and topped up yesterday when it was down 3-4% thinking I was getting a good entry opportunity.
Aiyoh!
Ant
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I just compared this deal to the Nutanix deal from January:
Just as a reminder Nutanix borrowed $500 million for zero interest for 5 years and the conversion will only be dilutive above $73.46 a share (back then the share price was around $36, so financers thought that in 5 years Nutanix would be at least a double)
Alteryx borrowed $200 million for 0.5% interest for 5 years and the conversion will only be dilutive above $44.33 a share. The initial conversion price represents a premium of approximately 42.5% to the $31.11 per share closing price May 15.
As you can see NTNX got a bit better deal than AYX. Although what sticks out to me is that both deals are very favorable for each and are a reflection of the quality of the companies we have at our hands.
I also think that every financially healthy company that has growth opportunities would be insane to pass up a deal like that.
Added some AYX at $32.13.
Cheers!
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