High Estimate was for $77 from Q1 Earnings Report (~50% growth yoy)
Actuals: $82 mil
Revenue Growth: 59%
Keep killing it
High Estimate was for $77 from Q1 Earnings Report (~50% growth yoy)
Actuals: $82 mil
Revenue Growth: 59%
Keep killing it
A few notes I made after going through the CC and release.
• 34% Customer increase YOY at 5,278
Last 4Qs of customer increases (starting with the most recent): 34%, 35%, 38%, 41% These are somewhat decelerating, but they are going after much larger enterprise business and also investing heavily in international expansion.
• 50% increase in deals larger than $250,000!!!
• They now have 33% (656) of Global 2000 customers
• 143% Net Expansion Rate with Global 2000 customers
• Huge demand from customers for increased seats at inspire conference
• International revenue growing, up 58% YOY / 30% of total revenue (Last 4Qs: 24.3,23,18,15.7)
In response to a question on increased OpEx spending:
We’re still very early in our entry into the Asia and Latin America markets. In EMEA, we’re a little bit more mature and starting to focus our sales efforts a little bit more on the enterprise side. And as Dean just mentioned, over half of our new lands in the Fortune 2000 this past quarter were in international markets. So we feel really, really good about the investments we’re making. We’re constantly evaluating them. But we’re bullish on our opportunities moving forward.
And I found this to be fairly impressive looking at longer term net expansion.
Our 2014 customer cohort increased their investment in Alteryx 270% over 4 years. Our data shows that our 2015 and 2016 cohorts performed better.
They have multiple entry points to their platform, which seem to flow naturally as companies scale with them - designers leading to servers, which lead to connect and promote services.
We don’t break it down, but the reality is most of the expansions occur with additional designers in the same department, additional designers in adjacent departments. And again, 15 or 20 designers lead to a server that sparks the interest in Connect and Promote. So it’s a combination of both seat expansion of Designer and then the necessity to get to scaling and security and governance and automation.
And finally, I thought this exchange was telling. First, with mention of the Deloitte survey on the outdated reliance on spreadsheets and then with Stoecker’s answer, especially the last portion, which basically summarizes their business model.
Rishi Jaluria: First, I want to start off more with a market-type question. So I believe there’s a recent Deloitte survey saying that something like 2/3 of companies are still relying on spreadsheets for their analytics. And that tells me there’s clearly a big market opportunity for you to go after. Help me understand, what are you seeing out there and what needs to happen? Is it a cultural thing? Is it a skills gap thing, to be able to replace a lot of those manual processes and a lot of that kind of lack of analytical maturity, so to speak, at these businesses and really increase your penetration there?
Dean Stoecker: Sure. Rishi, thanks for the question. I think it’s important to recognize that almost all the researches are pointing to the same thing. We commissioned our IDC study earlier this year to try and understand this ourselves. The truth is that data workers spend 90% of their time each week in data. 44% of their time is completely wasted, 18 hours a week per analyst is wasted doing all the things that should be pretty easy to do. Searching for data, getting it ready for analysis, analyzing it. Then performing model building and app development and trying to deploy these analytic processes.
And the system is just completely broken. And it’s waste across the board. And so I think it’s a combination of the people skills, the technology that they’re leveraging, most of which is just spreadsheets, sort of Excel largely, and internal awareness around where data lives, how it can be leveraged, the IT’s willingness to open it up to more people. Again, which is why they’re interested in parts of our platform like Connect.
So I think that we’re overcoming it by providing a self-service environment that is an end-to-end process, code-free for the citizen scientists who doesn’t know how to code or may do some light SQL coding or light Python coding. And it’s the same platform that we’ve delivered to the scientist in a code-friendly approach so that they can write code all day long. And the comfort that the C-suite have now is that everyone’s leveraging a single platform to amp up the skills so that they can get rid of this tens of billions of dollars of wasted effort that’s sitting in spreadsheets today. We are in the perfect storm, and Alteryx is there to pick up the pieces in most organizations.
AYX 143% Net Expansion Rate with Global 2000 customers that is an outstanding figure . It probably costs very little for those sales, and 43% compounded for only a few years works out to some very handsome growth, like 4x in 4 years.
outdated reliance on spreadsheets many millions of people depend entirely on spreadsheets so if they are really obsolescent that is a huge untapped market. But spreadsheets are way cheaper, are they comparing a BMW to a Yaris? And if true why is YOY customer count not accelerating?
And if true why is YOY customer count not accelerating?
It is true that customer count growth has been slowing, percentage wise. However Splunk grew it’s customer count 500 per quarter for years and maintained a 40%+ revenue growth rate (growing customers linear rate).
Alteryx says they are going to be targeting the larger enterprise and focusing on growing the size of customers rather than quantity of customers. Virtually every company I know of out there in the enterprise software space tends to growth their customers at a linear rate (ie growing customers better fit a number growth rather than percent or staying at for example 35% year after year.
Still it’s worth watching. But Alteryx just posted it’s highest revenue growth percentage rate in quite a long time despite this.
Virtually every company I know of out there in the enterprise software space tends to growth their customers at a linear rate
How about Zoom (just off my hat, without thinking, there must be lots more examples):
**Customers with ARR over $100,000** **2017 54** **2018 143 up 89** **2019 184 344 up 201** **2020 405 up 221 this fiscal year, after just one quarter** **Customers with over 10 employees (in thousands)** **2017: 10.9** **2018 25.8 up 15** **2019 31.5 50.8 up 25** **2020 58.5 up 27 this fiscal year, after just one quarter**
Clearly increasing number of adds every quarter… How about Smartsheets. We can actually see the increases in customer numbers sequentially, each quarter, over the year before, starting with quarter one of fiscal 2019, when customers increased by 139. The next quarter sequentially they increased by 177, then 215, then 255, then 279. Awesome. They now have over five TIMES as many as they had just two years ago. Here it is:
**Customers with ACV over $50,000** **2017:** **2018 100 121 145 189** **2019 239 298 360 444** **2020 518**
It is very possible that a lot of SaaS companies are growing their customer base over a certain threshold (ACV over $100k for example) at a high rate, as high as or higher than revenue growth. I know, for example, DocuSign is growing their larger customers over $100k a year at a faster rate than their overall number of customers, for example, and faster than revenue growth overall. But I have seen a lot of companies that are showing TOTAL customer count grow nowhere near as fast as overall sales, and may be growing them at, say, 1000 per year, or quite possibly go from 1000, to 1100, to 1200 growth by year for example, which I acknowledge is not “linear” but still a falling growth rate percentage wise yet the company just keeps growing fast.
Smartsheets is an odd example because they have so many customers based on “domain” and now the ACV per customer has been skyrocketing and lifting the number of customers over certain dollar spend thresholds very quickly even though their total customer count has not gone up in any significant manner (I know this was cause for concern for a lot of people but I think we got over that because they had such a huge base of customers to begin with).
Twilio seems to be growing it’s total customer base at a smaller rate than sales, and has done so for quite some time. When I said linear rate, I didn’t mean so much as growing the same number of customers every single quarter like Splunk, but the total customer count growth was much slower percentage wise than overall sales growth.
OKTA. Okta grew total customers by 39% to 6500 in Q1 2019, but accounts with ACV of greater than $100k grew 53%.
This has been a cause for concern for Alteryx for a while now and when I ran the numbers of Alteryx and other companies, I found the same thing, a lot of companies can continue to grow despite a falling growth percentage rate wise in their total customers. I cannot find the historic total customers for AYX with ACV over $100,000 but would like to track that, I am willing to bet that metric is growing as fast or faster than overall sales and especially faster than overall customer growth. I am holding AYX despite this concern but realize it’s a threat. This is the reason I brought this up, because I want to say I know of people who sold a few quarters ago because of this metric of falling growth rate of customers in AYX, but while it does seem like cause for concern, I am not ready to sell yet because of it.
But I have seen a lot of companies that are showing TOTAL customer count grow nowhere near as fast as overall sales
I am not sure I get the concern on % of # of customers gained each Q or Y.
Not every company wants all manner of clients.
Many companies target certain client types: fed, sled, smb, consumers, larger enterprises, intl, healthcare, cloud providers, etc etc
Arista cares more about growth within cloud providers, for example, as that can really move the needle up or down.
Lockheed and other defense contractors are unsurprisingly focused more on spend within Fed branches, and not with getting new customers outside of Fed/govts.
ZEN and SHOP, while pivoting lately, largely grew off of smaller SMB companies, and both now want to target, ideally, the larger companies.
AYX finds themselves in the boat of wanting to focus on Global 2000 or whatever they refer to as their top enterprise customer list.
I think I read somewhere that JPM/Chase had an IT budget of something like $6b. Think of how many companies it takes in the SMB space to equate to JPM’s spend on security/cloud/IT.
TTD has consistently grown for years, with a focus more on increasing the share of wallet within existing accounts vs constantly adding net-new accounts.
Consumer-facing companies are different. Apple or Samsung always wants more human beings, whether directly as a consumer or via work, to be purchasing phones and devices.
Netflix is also different…subscriber numbers need to grow to provide an avenue for growth beyond raising prices or providing new for-fee services (streaming gaming, etc) to existing customers.
So it really depends on the business model and the targeted TAM of that business.
AYX wants to increase spend within top 2000 global accounts, and many of those still aren’t customers. So they want to add the ones that aren’t yet customers, and increase spend within the existing customers. Adding more customers outside of the global 2000 is not a priority or focus for sales resources. They won’t turn that down, but they won’t task a sales rep to hunt down the small company with limited data analytics needs.
I had an SAP sales mgr explain to me once how they cut off customers by amount of their revenues, and I believe it was something like $50m…if a company didn’t do more than that, their direct sales force wasn’t touching it. I had a CEO once pivot from trying to grow TAM to asking sales teams to focus only on a finite list, once they realized we were burning valuable/expensive time/resources on ultimately lower revenue-producing accounts.
This is a long-winded way of saying the 80/20 rule really is a thing. For AYX, 80% of their revenues will likely come from 20% of their clients. So they want to just get more of the type/size clients that make up the 20%.
Metrics like # of cust over $100k, 500k, 1m, and metrics around how much more a client spends after year 1, year 3…those are all useful to watch, I believe.
have a good weekend all,