I suppose if it “craters” to merely 50% growth this year that’s still pretty good if they maintain 92% margins.
They lowered their pro forma 2020 Op Margin 4% below consensus, just fyi.
Long AYX,
And to have confidence in your convictions.
Monkey is riding fast and high in his banana mobile along with the re$t of you this AM, thanks to our cumulative good sleuthing on AYX, the little banana daiquiri that could and did.
But let’s be very careful about the humanoid propensity for hindsight bias: had things not worked out so hot, for whatever unforeseen reason, the adage would have been “had we only been more cautious and skeptical, we would have sold before earnings after the big rise.”
Confidence in our convictions cuts both ways, in other words: we ought to have confidence in our work, but we also need to maintain proper humility––ALWAYS––that confidence is not enough to overcome that which is not in our power to see or understand. The fundamental nature of the universe is probability, not predictability, remember.
So, yeah. AYX seems like a shower and a grower and for now, we celebrate. But we do so with heads bowed and full of gratitude to Saul and Co, the lovers and haters who make us better investors and, hopefully, more giving and generous creatures to one another.
Smooches,
Monkey (long AYX) and wondering whether to add to DDOG…
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It was already my #1 position so I was cautious in adding. Now, I just wish I had bought more!
AYX (and OKTA) always seemed to me to have strong appeal with sticky and somewhat viral business models. If was for this reason that I purchased FULL positions of both in January 2018 after becoming aware of them. I did the same with Tesla in 2012. Those three positions are now up 400%, 325% and 2,250%, respectively.
I mention this not to brag, or to call into question anyone’s investment decisions or timing, but rather to suggest that buying in thirds (or on some other graduated basis) may not always be necessary if you have enough conviction in your LTBH investment rationale.
Food for thought.
Fool on…!
-Rockleppard
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Just reposting to correct my poor use of italics. Apologies.
It was already my #1 position so I was cautious in adding. Now, I just wish I had bought more!
AYX (and OKTA) always seemed to me to have strong appeal with sticky and somewhat viral business models. If was for this reason that I purchased FULL positions of both in January 2018 after becoming aware of them. I did the same with Tesla in 2012. Those three positions are now up 400%, 325% and 2,250%, respectively.
I mention this not to brag, or to call into question anyone’s investment decisions or timing, but rather to suggest that buying in thirds (or on some other graduated basis) may not always be necessary if you have enough conviction in your LTBH investment rationale.
Food for thought.
Fool on…!
-Rockleppard
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As some have pointed out, they benefited from recognizing this revenue up front, so that was kind of artificial growth a year ago. But now they grew 75% on top of that! Alteryx sales are gaining momentum.
Hi Bear,
I don’t think that I’m following you here. When they switched to ASC606 they went back to compare their past quarters using the same accounting method. Here are the numbers:
**Qtr ASC605 ASC606 Growth**
Q317 34.155 52.1%
Q417 38.588 54.6%
Q118 42.821 50.329 50.0%
Q218 46.800 51.506 54.4%
Q318 54.200 62.589 58.7%
Q418 60.508 89.150 56.8%
Q119 76.020 51.0%
Q219 82.040 59.3%
Q319 103.397 65.2%
Q419 156.450 75.5%
The $156.5m that was just reported is compared to the $89.2m from Q4 2018 and both are ASC606 numbers. Maybe I’m missing what you were trying to say, but I don’t see any problem here.
Chris
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So remmdawg trimmed SHOP to by AYX and has some regrets. I sold SHOP outright because of what looked to me like overvaluation.SHOP and Mongo among others seem to continue increasing in price despite overvaluation,the negative earnings and other negative metrics. So many seem to believe that current growth rates are predictive of future profitability. Some of this has got to be wishful thinking, or market euphoria. Of course Saul was quite clearly negative on both companies in his recent monthly summaries. But we see that prices continue to rise… I wonder how others on this board view the matter.
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Trimmed a little AYX on the rise and added to DDOG on weakness.
Probably wrong, but did it anyway.
Cheers
Qazulight
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I mention this not to brag, or to call into question anyone’s investment decisions or timing, but rather to suggest that buying in thirds (or on some other graduated basis) may not always be necessary if you have enough conviction in your LTBH investment rationale.
I guess timing is everything, right?
In January 2018, or December 2019, taking a full position at once worked out great.
But if someone had first discovered AYX in August 2019, they would have been MUCH better off buying in thirds, vs taking a full position right then.
-mekong
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Amazing Q. Looks like AYX OCF margin was 8.2%. Is there an easy way to calculate FCF margin?
https://s22.q4cdn.com/730379107/files/doc_financials/2019/q4…
Ok found it. It is OCF minus Purchase of property and Equipment. FCF margin for TTM comes to 5.4% (34.19-11.45)/417.9
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I don’t think that I’m following you here. When they switched to ASC606 they went back to compare their past quarters using the same accounting method.
Exactly, Chris. I didn’t mean that they had done anything wrong, or even that they had shown out-sized growth percentages. I was just talking about the bump from 605 (where they had $204m in 2018 revenue) to 606 (where they had $254 in 2018 revenue). That accounting change changed their PS ratio. It made me and surely others realize that there was hidden value.
Bear
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Over the last year (and this happens every year) we are told to be cautious, that companies will never reach their old highs, that its not smart too own too much of this or that, “wait until Microsoft decides to get into the market,” and I have to find new stuff to invest in.
We discuss all the other ones all the time, so I am discussing the bolded part real quick. I am often asked to point out new and upcoming companies to invest in. And yeah, I keep a cursory watch on them from the periphery, but I don’t really get into them until it is time to sell what we got. Why dilute our minds and create unnecessary anguish and stress constantly needing to find something new?
This is investing, not collecting. I don’t need to own everything at all times. Just need to own what I need to own and I have found simplify and focus to be the best means to make sure that what I own is systematically what is best for my investments, and I have no interest in collecting stocks as if it were a game.
Fro those who fall into that trap, see if collecting stocks has hurt your returns or helped them? Who knows, maybe it helps. Doubt it, but maybe. You don’t see Saul collecting stocks, but rather holding the best of the best and suffering from anxiety that he always has to find something new.
At the beginning of 2018 I actively looked for new things to own as ANET and NVDA had reached their nadir and I said it in real time, “I need to find investments to accelerate my portfolio.” Or near verbatim. And you know what, I found them at that time. But I mostly ignored these alternatives prior to needing to move on from what I had because it was compelling to sell and move on.
Perhaps others have not suffered from this sort of thing (I’ve been known to try to perfect everything and constantly search the world), but I feel it is a real detriment to your returns. Alteryx is a current example of that. It is difficult to imagine being a better investor by collecting all this new blood while distracting from the old blood that is at the peak of its game, at the peak of its growth curve.
Focus and simplify. Btw/ no one copy the way I invest (except me) but Saul manages extremely well with an in-between portfolio management style. But if even that does not allow you to sleep easily, then do it your way, but with a real bias for appreciating what you have without adding undue stress in your life by constantly having to find something new.
Tinker
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As a general rule, there is no such thing as “artificial growth” as a result of a change in accounting policy or a correction of errors. Both of those types of changes are applied retrospectively to all periods presented.
On the other hand, changes to estimates are generally applied prospectively, which can lead to “artificial growth,” but, that is not what occurred here. ASC 605 to 606 was a policy change.
Nothing misleading occurred at any point (this year or last) as a result of Alteryx’s move to ASC 606. When Alteryx first reported under ASC 606 (Q4 FY18), they also retroactively applied ASC 606 to Q4 FY17 for comparative purposes so that their growth was always apples-to-apples, and have done so in every quarter thereafter.
Eric Przybylski, CPA
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So remmdawg trimmed SHOP to by AYX and has some regrets. I sold SHOP outright because of what looked to me like overvaluation.SHOP and Mongo among others seem to continue increasing in price despite overvaluation,the negative earnings and other negative metrics. So many seem to believe that current growth rates are predictive of future profitability. Some of this has got to be wishful thinking, or market euphoria. Of course Saul was quite clearly negative on both companies in his recent monthly summaries. But we see that prices continue to rise… I wonder how others on this board view the matter.
Actually, I oversimplified my moves. It wasn’t a one to one trade. I trimmed SHOP by a total of 10% over time as it rose from the low 300’s to the current price. So I didn’t lose all the upside. I prefer to make small moves. I initially started buying SHOP in the 20’s and then sold it all just above 100 due to valuation concerns. I read some more opinions on it (some on this board) and not only bought it right back (at just a couple dollars more) but more than doubled my position. In the meantime, it hasn’t always risen. It’s had some major pullbacks.
I think it will have a significant pullback again, possibly soon, but the longer term picture and my prior experience selling SHOP tells me not to try to trade it too much. I know growth will slow but like Mongo and AYX, it has such a strong competitive position in a strongly growing sector that it’s hard to apply traditional valuation parameters.
Dave
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Thank you Dave. I see the wisdom in your tactics…Personally I think there has got to be an entry point for SHOP somewhere down the line. Mongo is a bit more problematic.
This is investing, not collecting.…I have no interest in collecting stocks as if it were a game…You don’t see Saul collecting stocks, but rather holding the best of the best and (not) suffering from anxiety that he always has to find something new.
This is the secret sauce and nailing the discipline of this is key to the big returns so many of us have enjoyed over the last few years. Thanks for spelling it out so simply and perfectly here.
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This is investing, not collecting…I have no interest in collecting stocks as if it were a game…You don’t see Saul collecting stocks, but rather holding the best of the best and (not) suffering from anxiety that he always has to find something new.
This is the secret sauce and nailing the discipline of this is key to the big returns so many of us have enjoyed over the last few years. Thanks for spelling it out so simply and perfectly here.
I agree completely. I don’t have to invest in every stock that’s going to go up! There will always be thousands of stocks going up that I don’t own, and probably dozens that do better than mine. So what, as long as mine are high confidence and are doing great!
Saul
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This is my favorite bit of the conference call. People keep talking up Alteryx’s competition. Alteryx keeps saying it has none. Either Dean has a lot of Hubris, or he understands his product and market better than the analysts. I’m banking on it being the later. Here are his comments from the conference call on the competition…
Michael Turits – Raymond James – Analyst
Hi, good evening, guys. Dean, could you talk about competition among other data science platforms. Oracle made an announcement today. Databricks has been more visible companies like data robots are out there. So a bunch of private companies. But maybe you could just schematize it and tell us what the key components you think are in that platform? Whether it’s auto ML, prep, putting production tools, and where you think you stand up against some of those competitors?
Dean Stoecker – Chairman and Chief Executive Officer
Yes, it’s a great question. I think what we’re beginning to see is a rapid consolidation in the space and it’s because of the need of organizations to have a platform. So everyone wants to be a platform, and everyone wants to be a platform today in what I think is inarguably the largest sector of the tech sector that we’ve ever seen, data science and analytics. So we’ve long said that analytics is a continuum. The foundation of the continuum is built around expert data prep and blending capabilities, something we did extraordinarily well and continue to do very well. But it is the on-ramp for everything else. And so if there are players out there that want to call themselves platforms and their these vendors at the lowest value chain in the continuum, descriptive and diagnostic analytics. There’s those that are involved in predictive modeling, there’s those that are providing AI and ML capabilities that almost, in all cases, are requiring trained statisticians.
So we see everyone kind of jumping into the space. It’s affirmation that what we’ve built is, in fact, what people need. And I believe that when we don’t really do bake-offs. We don’t really compete other than with staff, and it’s kind of an incumbent compete more than anything. But it’s clear to us that everyone wants to be a platform, and they have to have the entire continuum. They’ve got to have data prep and blending. They’ve got to be able to touch any database living anywhere in any container. They’ve got to be able to clean it, organize it, standardize it, prosecute the entire spectrum of predictive machine learning processes. They need to be able to play their algorithms. And if they have that, we haven’t seen it. But you’ll I’m sure there’s a lot more noise from all kinds of vendors about having a platform. We welcome them to the mix.
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I just canceled a lengthy post with essentially the same message that Saul has put so succinctly. There will always be good investments that I don’t hold. There will always be companies with better performance than ones I hold . . . always.
At present I hold nine positions. There have been about 30 trading days so far this year and I’m up a smidge over 30% for the year. Adding a new position is not just buying stock in a company I don’t already hold, it’s a commitment of my future time to following this company.
Time is the most valuable asset any of us possess. Once consumed, it’s irretrievable. The ultimate wasting asset if you will. I speculate, that for some folks who maintain a presence here the accumulation of wealth is their primary motivator. That’s not what brings me here or to investing in general. I have numerous interests and activities that compete for my time. Investing is one of them but it’s not the primary one. Investing is more like the enabler for my other interests.
I am not a long time investor with several many years of experience to rest on. While I’ve dabbled in the market for a long time, up until recently my primary investment strategy was to act on tips. I treated my Motley Fool subscription more or less as a paid tip service with a fairly reliable track record (certainly not the first one I’ve tried). At one point, not long after I came into an inheritance I decided that my performance had been so dismal that I would turn the whole thing over to a “professional.” I liquidated almost everything (other than a few positions I couldn’t bring myself to part with) and transferred the cash to Edward Jones (the reason I went to cash is that Jones had exorbitant commissions on trades of stock - they advise you to put everything in mutual funds). It took a while, but eventually it became clear to me that the primary goal of Edward Jones was to generate commissions for their agents rather than returns for their clients. I decided that as poor as my past performance had been, if I devoted a little more time to managing my own investments it was unlikely that I could do worse than following the advice of an Edward Jones consultant.
That was 2016 and to my great fortune that was about the same time I discovered this board which was about two years old at the time. There were three factors that attracted me to this board: 1) Saul’s past performance (which I took to be honestly reported), 2) Saul’s candor, there were no apparent ulterior motives or hidden agendas, and 3) an easily understood methodology based on easily obtained public information. I did not anticipate doing as well as Saul with all his years of experience, but I was comfortable with the notion that I could benefit by following his style, advice and observations. I set a personal goal of 20% returns a year.
My first year, I lost money, but I was not discouraged. Most of the losses came from selling losing positions which I had been clinging to, waiting to sell when they recovered so as to avoid a “real” loss. This strategy, of course ignored opportunity loss; not too smart.
I won’t belabor it. I don’t engage in a time hungry search for the absolute best investment. If I actually felt I could find the best investment, then I would have only one position. The absolute best investment is an instantaneous assignment. Trading fees are not longer an issue, but capital gains tax still is. I would venture if your strategy was to always hold the best possible investment for the moment you would have no choice but to be a day trader. And that assumes you could accurately identify the best investment. I’ve not been acquainted with many day traders, but I’ve never met a long term successful one. So maybe it’s a futile strategy to begin with. For sure, the best instantaneous investment can be identified. The problem is that it can only be accurately identified in retrospect.
I’m satisfied with nine really good positions. I’m sure there are folks who follow this board, maybe even reading this thread who have better performance than I. Congratulations! I wish you all the best. If you are one of those who publish their portfolio on a regular basis I will read about your holdings and reasoning. I might even decide to study up on one or more of your positions if I don’t already hold it.
BTW, I do not publish my monthly performance - it’s not that I have secrets, it’s just that I don’t have anything new to add that others have not already asserted. And on those few occasions when I do have something I think worth posting about, I do it in the moment rather than as a monthly report.
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While this was an amazing Q couple of things to keep in mind:
- They had a price increase on Server in Q4 - see Dean’s answer to the last analyst Q. They did not clarify how much lift they got from the price increase. Price increases are great but they are somewhat less sustainable than organic growth imo.
- Under ASC 606 if their rev recognition changes from 35 to 40% it can provide a big lift to the current Q. Last 2 Qs they have said they have been at the higher end of that range.
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