AYX q1 2019 and CC

Investment Analysis Clubs Saul’s Investing Discussions
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I did this while cooking dinner so please forgive the brevity.

I’m not going to sum up the numbers. AYX does a great job of it. Have a read here.
https://investor.alteryx.com/news-and-events/press-releases/…

TL:DR; Good to very good quarter. q1 revenue is in line with typical seasonality. Customer adds are much larger customers than in the past NER of 134% (up significantly from 129%) reflects their focus on large customers.

My previous post about the competition (no real competition) -https://discussion.fool.com/i39ve-lookedeach-time-a-press-releas…
My previous post about ASC 606.
https://discussion.fool.com/ayx-asc-606-and-q4-34146055.aspx

Conference Call
Expect to see sam seasonality of revenue in 2019 as 2018

Convertible is now listed as a short term liability because it is now convertible.

Increased focus on large enterprise which is why you see NER is so high but customer growth is steady. Large increase is global 2000 customers.

Focus on RPO,( same comments on seasonality)

Larger deal activity, more top-down activity instead of bottom-up (when a chief data officer is present)

Clearstory - spark expertise, data harmonization (spark tooling, auto inferencing to automatically clean up a data set) Good visualizations that they aren’t sure how they are going to use yet. Silicon Valley presence.

82% growth global 2000, 62 % of that was international

Switch from NRR(revenue) to NER(contract value), NER is based on ACV that is unaffected by 606.

Elevated opex ( front-loaded hires in the year so some seasonality) . AYX sees a “significant opportunity” so as long as they see large opportunity they will continue to do that. They expect to be able to generate significant cash flow over the long term.

Focuses on current verticles (healthcare and tax and audit). See opportunities in university, manufacturing,

Competitive environment - SAP is generally the incumbent but not necessarily a head to head. Corporate culture is the biggest competition. Not worried yet about competition. Look at them from an M&A standpoint.

CEO’s focus
Follow the signals (use ayx )
Refining the process
Remove the friction

They offer discounts for longer-term contracts but they limit this.

My Take

Very good quarter, not an amazing quarter ,just continued amazing performance. I was initially worried that they only added 277 customers but in the CC they are focusing on their largest customers (global 2k) which they have been very successful with. THeir G2k adds were up 82% which they seemed pretty excited about. I was also very pleased to see their Net expansion ratio increase to 134%. Thisn’t isn’t an apples to apples comparison because they were using a dollar-based ratio instead of a contract based ratio…either way, this is good. THey expect to see the same seasonality that they saw in 2018 which is revenue backloaded in the year. Just a reminder, with the move to asc 606 we won’t see as “smooth” of revenue (see my post linked above) which is why we are going to see the exaggerated seasonality now.

AYX continues to move from success to success. I’d buy some if i didn’t own so much of it, it is reasonably valued in comparison to the other SaaS stocks.

Best
EThan

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I was initially worried that they only added 277 customers but in the CC they are focusing on their largest customers (global 2k) which they have been very successful with. THeir G2k adds were up 82% which they seemed pretty excited about.

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Nice notes, thanks. The above is what stands out for me, and what I was looking for from them.
I have seen a lot of angst/notes regarding # of client adds, which I think is a bit misplaced. Their bus model is not akin to TWLO, MDB or ESTC or SMAR or TEAM that grows virally thru the developer community. Rather, they focus on the Bus Unit owners, like decision-makers in HR or Finance. I see these as C/V-level type conversations along with key analysts and BU heads along with developers vs many just developers.

So the types of clients they add, in larger Enterprises (and/or Govt) is key imo. I am listening to replay now, and he focuses on those G2k as you point out. “accurately aware of where the TAM lives” is his quote, I believe. 60% of their 82% growth in G2k was in the International space, if I understood him correctly. International + G2k are great signs for me. Look forward to the CC transcript.

Dreamer

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An analyst question touched on the sales strategy and who they are selling to for the land, then expand…

"Derrick Wood

Thanks. So Dean you’re talking a lot about end to end platform, larger deal activity. I’m just curious from a go to market standpoint, if you guys have historically taken more of a bottoms up land and expand approach, as you kind of get more scale and awareness and broader adoption are you starting to see deployment decisions kind of bubble up higher or in the organization and become more of a top down agenda?

Dean Stoecker

Well, I think that’s only evident when there is a Chief Data Officer in the mix or a proxy thereof. We are beginning to see more of that because we’re hanging out more on the Global 2000. Our playbooks haven’t really changed, whether we’re talking about any aspect of our global team, they’re still very focused on the $10 to $12,000 two seat land in 45 days. Even when we closed 40 of the Global 2000 this quarter, that invariably the majority of those ended up in that same land cycle. And so we get excited just to land them on a couple of seats, so that we can begin the top down selling motion.

So the playbook hasn’t changed .The DNA of the sales rep hasn’t changed. We’re cognizant of the fact that the land and expand model works and because we’re at relatively low penetration rates in any of our most penetrated accounts we see the opportunity for a big expansion over a very long period of time in most of these customers."

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