So if AYX posted 50% revenue growth and 132% revenue retention, I believe that suggests that new customers accounted for 18% of revenue growth, and 12% of total revenue (18/150).
That is OK, but not great for a company with such a large TAM to hit… any one else concerned that they need a new VP of Sales?
Cham
Hi Cham,
Good question. Having a high dollar net revenue retention rate (DNRR) like 132% implies that your newest customers are going to be your lowest paying customers and the longer they are with you the more they will be spending as they add products. I’m not at all concerned. The metric to watch is the DNRR in combination with net customer adds. AYX added 283 customers in q1 for a total of just under 3700 customers. Assuming they add ~ 1200 customers a year would be about 30% growth in customer count in combination with 32% increase spend gets you around the 50%+ revenue growth. They are doing great! You will notice in my AYX q1 update, http://discussion.fool.com/ayx-q1-2018-update-33062981.aspx under my “things to watch” i said. Things to watch, net customer adds, dollar net revenue retention rate (this will have to come down over time), and gross margin. So i totally agree with you that this is an area to keep an eye on.
best,
Ethan
So if AYX posted 50% revenue growth and 132% revenue retention, I believe that suggests that new customers accounted for 18% of revenue growth, and 12% of total revenue (18/150).
That is OK, but not great for a company with such a large TAM to hit… any one else concerned that they need a new VP of Sales?
I would try to recalculate by also considering deferred revenue.
Also, you may want to consider that new customers are added throughout the quarter and therefore were not contributing to the quarter’s result for the entire period.
Chris
Anyone have an idea how many customers are out there for a company like this?
Rate of customer growth and revenue retention rates seem to me to synergize to produce collective revenue growth and thus share price appreciation assuming maintenance of operating margin. However, I don’t have a feel for how many customers some of these SaaS companies (Ayx, Twilio, Talend) really have, and I anticipate that it quite varied based upon the software offerings. Does anyone graphically or numerically track customer growth or does that just get subsumed into the TAM?
Jack
Also, you may want to consider that new customers are added throughout the quarter and therefore were not contributing to the quarter’s result for the entire period.
As Chris says, some of the new customers haven’t been with them all quarter, but I think it’s even more than that. The reason that new customers contribute only 18% of the 50% revenue growth is because new customers haven’t ramped up yet – and that’s a good thing! An opportunity, not a threat. New customers don’t contribute as much of the revenue as the tried and true customers who are spending more and more. Yet.
But the new customers are coming in at a MUCH faster clip than 18%. AYX actually increased total customer count by roughly 47% YoY (3764 vs “2500+”), so the growth there is NOT a problem. This is a very, very good trend.
While I’m on AYX, let me thank Ethan for this post: http://discussion.fool.com/ayx-q1-2018-update-33062981.aspx
I liked it so much that I didn’t write one of my own like I did here last quarter: http://discussion.fool.com/alteryx-delivers-the-perfect-quarter-… …but only because Ethan had already covered everything. The one thing he didn’t emphasize that I would like to is that the 183m - 186m they’re guiding to now for 2018 revenue is greatly refined, and raised. Last quarter it was 176m - 190m. So it’s up from 183m at the midpoint to 184.5m at the midpoint, and also they’re subtly saying they now have a lot of clarity on what the year will look like.
Bear
Last quarter it was 176m - 190m. So it’s up from 183m at the midpoint to 184.5m at the midpoint, and also they’re subtly saying they now have a lot of clarity on what the year will look like.
Bear,
I think you had a typo. My notes show AYX previous guidance for FY2018 at 176m- 179m. So a guidance raise.
Bear,
I think you had a typo. My notes show AYX previous guidance for FY2018 at 176m- 179m. So a guidance raise.
Thanks, Jimbo. You are correct. Even better for AYX!
Bear