AYX Q1 2018 update

Hi all, there seems to be lots of angst about AYX’s q1. In short their quarter was very very good and they are very excited about their future prospects.

Q1 revenue at 42.8 million, up 50% which was a large beat of 39% expectations
-international revenues increased 92% to 11.4 million.
Free cash flow of 10.5 million dollars!!! This is a huge 25% of their revenues. Just huge and a really good sign.
Gross profit margins up to 90% from 84%
Added 281 customers, now near 3700 active customers
Maintained dollar net revenue retention 132%
Operating loss of 1.3 million (magin of -3%) improved from negative 3.6 million(13%)
Net loss per share of 0.01.

Balance sheet
Cash/cash equivalents of 205.7 million, up from 194.1 million (due to the free cash flow)

Guidance was raised to the following:

Next quarter revenue of 43-44 million which i am confident they will beat
Full year revenue of 183-186 (~40% yoy growth) which they should beat.

Were asked how they grew 50% when they guided 32%. Their answer (paraphrased) cracked me up.
“we saw strong momentum in both sides of our business…we had a lot of momentum in terms of the land portion of the business, and on the expansion side, that continue to work well, 132% net revenue retention…… I don’t know that I would necessarily characterize it as surprised us, but we were encouraged to see strength in both aspects of the go-to-market.” So basically they guided 32% but knew they were going to grow much faster.

On how big they can grow and their opportunity.
“art of this is the market just opening up. You remember that we’re early on in this cycle. We’ve got a $30 billion TAM, $10 billion net new in line of business. Today, were sitting at that trailing 12-month number of $146 million, so this is really early on.”

They also are hinting at being able to maintain their dollar net revenue retention for quite a while with new products. The overall read of their earnings call was very very very positive.

My take is this was a hugely good quarter. Their cash flow was huge and amazing, i would guess we see some variability over the year so we may go FCF negative later but should be positive for the year. This is my largest holding and I added significantly today. Their efficiency score(revenue growth+FCF/Revenue) is an astounding 0.75. That is better than SHOP’s incredible quarter. Their gross margins are huge.

AYX’s marketcap is 1.94 billion - 200 million for cash on hand give you an EV of 1.74 billion. Using a sensible revenue growth of 45% that means they would have about 192 million for the year. With the above they would have have an EV/S for 2018 of about 9, possibly lower. Not expensive for a company growing this quickly that doesn’t need to raise money and has minimal competition.

Things to watch, net customer adds, dollar net revenue retention rate (this will have to come down over time), and gross margin.

This is a business that is in the right place, right time, and executing superbly. Don’t be discouraged over the stock price going down. The company did amazingly well.



Thank you Ethan, that’s mostly how I read it. Didn’t add today though. Yes. RGFCF at 0.75!!! Wow.

Really got punished today for no reason, but one day doth not a market make…Onto Nvda… Congrats Dreamer with TTD.


Thanks for much your perspective and analysis. I was trying to decide if it’s a buying opportunity or if I missed a new and severe threat. I may buy more shares.

Thanks for the great post! I love what AYX does and will be looking to add. Seems like stocks go down after a good earnings call and start coming back up again as folks digest the ER.


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