AYX reports - results

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https://seekingalpha.com/pr/17682693-alteryx-announces-third…

65% rev growth! Basically looking at $400m for year. Called 47% growth for next Q, which is pretty high when you factor in sandbagging.

Normally this would be a 20% pop…market wants to go way up here, but recent trends are fighting it right now.

Third Quarter 2019 Financial Highlights

Revenue: Revenue for the third quarter of 2019 was $103.4 million, an increase of 65%, compared to revenue of $62.6 million in the third quarter of 2018.
Gross Profit: GAAP gross profit for the third quarter of 2019 was $93.8 million, or a GAAP gross margin of 91%, compared to GAAP gross profit of $56.8 million, or a GAAP gross margin of 91%, in the third quarter of 2018. Non-GAAP gross profit for the third quarter of 2019 was $95.3 million, or a non-GAAP gross margin of 92%, compared to non-GAAP gross profit of $57.5 million, or a non-GAAP gross margin of 92%, in the third quarter of 2018.
Income from Operations: GAAP income from operations for the third quarter of 2019 was $11.9 million, compared to $9.4 million for the third quarter of 2018. Non-GAAP income from operations for the third quarter of 2019 was $22.0 million, compared to non-GAAP income from operations of $14.3 million for the third quarter of 2018.
Net Income (Loss): GAAP net loss attributable to common stockholders for the third quarter of 2019 was $(6.2) million, compared to GAAP net income of $10.8 million for the third quarter of 2018. GAAP net loss per diluted share for the third quarter of 2019 was $(0.10), based on 64.0 million GAAP weighted-average diluted shares outstanding, compared to GAAP net income per diluted share of $0.17, based on 65.6 million GAAP weighted-average diluted shares outstanding for the third quarter of 2018.

Non-GAAP net income and non-GAAP net income per diluted share for the third quarter of 2019 were $16.4 million and $0.24, respectively, compared to non-GAAP net income of $11.9 million and non-GAAP net income per diluted share of $0.18 for the third quarter of 2018. Non-GAAP net income per diluted share for the third quarter of 2019 was based on 69.5 million non-GAAP weighted-average diluted shares outstanding, compared to 65.6 million non-GAAP weighted-average diluted shares outstanding for the third quarter of 2018.
Balance Sheet and Cash Flow: As of September 30, 2019, we had cash, cash equivalents, and short-term and long-term investments of $986.5 million, compared with $426.2 million as of December 31, 2018. Cash provided by operating activities for the first nine months of 2019 was $13.5 million compared to cash provided by operating activities of $11.7 million for the same period last year.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures and Operating Measures.”

Third Quarter 2019 and Recent Business Highlights

Ended the third quarter of 2019 with 5,613 customers, a 30% increase from the third quarter of 2018. Added 335 net new customers in the third quarter of 2019.
Achieved a dollar-based net expansion rate (annual contract value based) of 132% for the third quarter of 2019.
Raised $800 million of additional growth capital via a convertible note offering in August 2019.
Acquired Feature Labs to further enable Alteryx to address the data science and machine learning talent gap in October 2019.
Financial Outlook

As of October 31, 2019, guidance for the fourth quarter 2019 and full year 2019 is as follows:

Fourth Quarter 2019 Guidance:
Revenue is expected to be in the range of $128.0 million to $131.0 million, an increase of 44% to 47% year-over-year.

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Normally this would be a 20% pop…market wants to go way up here, but recent trends are fighting it right now.

Dreamer,

I completely agree. I said the exact same thing – 20% – when I saw the results. Can’t believe it’s only up a few percent. It’s a great opportunity.

I listened to the call and didn’t catch any red or yellow flags. The biggest concern was probably simply the new customer adds. They actually added fewer new customers this quarter (335) than they did in Q3 of last year (375), but they’re confident they are adding the right customers, ie customers who will be able to spend a lot of money with them. I’m inclined to think it’s working as we’ve seen revenue accelerate.

The biggest beat in my opinion was the EPS. They had guided for 9 cents, down from 18 cents last year, in line with all they’ve said about how this year would be an investment year. So it was great to see EPS come in at 24 cents anyway. They also gave solid lowball guidance for 30 cents in Q4.

Bear

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I keep count of the Alteryx customer count in this table.

https://docs.google.com/spreadsheets/d/1C1C3EW6LMjYcfFQuh_F-…

This was the best conference call I have heard this quarter - this company appears to have a product that no one can match.

I keep wondering if the stock price stays down, 35% off its 52 week high, if it will be acquired by someone like Microsoft.

Frank - long AYX, see profile for all holdings

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Just about as perfect a quarter as one could expect from any company. Accelerating hyper growth. Profitable solid guidance.

They have it all.

The standard in enterprise.

Darth

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All-
I was thinking about AYX P/S to see how valuation is trending. If I use the revenue run rate (i.e. extrapolate 4Q at the current quarter’s revenue) I get the following P/S:

Q4 18 P/S = 24.2
Q1 19 P/S = 24.0
Q2 19 P/S = 18.3
Q3 19 P/S = 14.2 using tonights closing price.

If we take the high closing price of 147.19 (9/5/19), we have a P/S = 22.8 for this quarter. I’m delighted that the valuation keeps improving, though I think AYX deserves a higher multiple. Love, love, love AYX (I know that we shouldn’t fall in love with stocks, but tonight Im infatuated ;o) Long 20.5% and a happy owner since 12/14/17.

Best,

bulwnkl

PS I’m not loving TWLO anymore, sigh.

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Re: I keep wondering if the stock price stays down, 35% off its 52 week high, if it will be acquired by someone like Microsoft.

I just listened to the conference call and heard that notable new customers this quarter include Microsoft , Amazon EMEA, Canada Post and Uber Technologies to list few.

Also, from my valuation calculation, other than after Q3/2018 earnings, we are at the best point valuation wise and I was lucky to get some (I think) after hours around $91. This is going nowhere but up.

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There was a point when Shopify was a $4 billion dollar “horrendously overvalued” company that was nearly risk free for those who knew anything as the buy out value floor was already set but acquisition of its inferior competitor.

At this point, although we don’t have a similar comparison, to the eye, it seems with great confidence (never certainty of course) that Alteryx is worth more as a buy out than it present is valued at.

I moved most of my Zscaler money into Alteryx over the last few weeks (some in the low hundreds unfortunately, and some in the low $90s) to add to what I had. It is not difficult to make this case. The share price will follow. The after hour reaction today, I’d give odds, will probably accelerate upward tomorrow as the morning goes on. Ive seen it multiple times before in circumstances like this over the last year. Let’s see if that happens or not.

But otherwise, with such predictions that don’t really matter, someone argue against Alteryx at this point in time. It will not be easy other than someone who is not accustomed to growth investing or uses the term “darling” in reference to a stock.

But absent that, does anyone here see a legitimate reason that AYX is not as described above?

Tinker

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Sorry for the short post, but this one is utterly fascinating to me. It’s like we’re watching AYX climb a wall of worry in real time this morning. I wonder where in the world the closing price will be today…

Bear

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Yep,

There it goes. I jumped in this morning when it opened down like that and sure enough, as predicted last not, momentum took off. Have seen it multiple times in this scenario. Don’t know why it does this. But oh well. I am not buying more shares to trade, but fun to get it right anyways

Tinker

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JPM: 'Alteryx’s Q3 is underpinned by strong P&L metrics combined with a slightly confusing and open-to-interpretation set of forward looking metrics which range from 38% to 65% y/y growth.

Key Takeaways: 1) Q3 revenue grew 65% y/y, marking 14% upside vs. consensus, driven by strong execution as well as a higher than expected mix of upfront revenue recognition due to favorable product mix, a large increase in contract assets, and a slight sequential increase in contract duration, per management; 2) Contract assets (revenue recognized but not billed) grew $12M sequentially, thus potentially accounting for a vast majority of the upside, although it is difficult to know what consensus was modelling for this account; 3) PF EPS came in 15c ahead, driven primarily by the revenue upside and slight gross margin improvement;

  1. Based on our math, calculated billings, when adjusted for contract assets, grew 38% y/y, which is a deceleration from 46% y/y growth last quarter; However, it is possible that bookings based on RPO (backlog) grew closer to the rate of revenue growth in Q3; 5) Dollar-based net-expansion rate (based on ACV) came in at 132%, 100 bps downtick from last quarter but up 100 bps y/y; 6) Number of customers grew 30% y/y, marking a deceleration from 34% y/y growth last Q, as Alteryx added 335 net new customers as compared to 375 customers in Q3 of last year;

  2. Headcount adjusted for the acquisition of Clearstory grew >50% y/y, which is another strong barometer for forward growth; 8) Alteryx raised full year revenue guidance above the Q3 beat and 4% above consensus and now expects to grow about 54% at the mid-point; and finally, 9) Alteryx also raised its PF operating margin guidance for the year by >300 bps to 13% and above consensus expectations of 11.5%.

Net/net, we continue to be impressed with Alteryx’s results, demonstrating solid execution; we carry a positive fundamental bias, noting that shares are slightly below our price target, and we believe that the true growth glide path of the company lies somewhere between 38% and 65%, which is appreciated and in our judgment essentially fairly valued by the market.’

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Billings growth was reported as 38% yoy. This was asked in the QA but management said rev. was a better metric as billings growth varied seasonally. Generally lower billings growth portends slowing rev growth in future. Has AYX billings varied a whole lot in the past?

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Billings growth is for sure why the stock hasn’t taken off and was down initially. Some confusion about future growth. We saw the same thing with ZS.

I think billings growth is a bad metric, and I don’t understand why analysts put so much stock in it. It fluctuates depending on when customers pay. A yearly number would be ok.

When a company gives guidance for next quarter of 47% growth, and has beaten guidance by $3-12 M every quarter they have been public, why would anyone put more stock in billings?

Also, AYX is now giving an RPO (remaining performance obligation) metric. Up $33 M Q/Q (14% sequentially).

Company quarterly guidance and RPO are way more important to me than billings.

Who knows AYX the best?

AYX management

What does AYX management think?

50%+ revenue growth (47% + the normal margin of safety) next quarter with improving profitability.

Am I wrong here?

Jim

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Generally lower billings growth portends slowing rev growth in future. Has AYX billings varied a whole lot in the past?

Yes, absolutely. Recall from March when we struggled through the 606 stuff: https://discussion.fool.com/thanks-for-the-ayx-responses-3415537…

Billings are very seasonal. So Q4 is when they will get a lot of contracts billed for 2020. Maybe that’s even why they’ve recently been running down every sales lead they’ve got (like we’ve discussed). I’d expect another huge billings quarter like we saw last year. Will be interesting to see if the market overreacts to 50% or 60% just the opposite of how it’s overreacting to 38% now.

Bear

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If I recall correctly, AYX reached its YTD high via a slow, steady climb as opposed to large momentum swings up. I’d include myself in the consensus here that it was a pretty stellar report. So, while I’m surprised the market reaction today seems relatively tepid, I suspect they’ll be another steady climb for AYX in the coming weeks/months, barring possible macro issues.

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When a company gives guidance for next quarter of 47% growth, and has beaten guidance by $3-12 M every quarter they have been public, why would anyone put more stock in billings?

Yes, next Q is secure. But billings can forecast future Qs. TTM billings growth is a better metric as it will remove lumpiness (Docu had the same issue and people were worried about slowing billings and they explained it as due to lumpiness). The link below helps understand some of the differences:

https://saasmetrics.co/bookings-vs-revenues-vs-billings/

Note the following in the conclusion: “In SaaS, if you bill your customers upfront billings will be just like bookings, but if you bill monthly billings will be just like revenue”

Perhaps AYX is billing more and more monthly rather than yearly in the past which may explain why rev growth is so good while billings appears not in this Q.

ASC 606 should cause billings and rev to converge more. Because on their average 2 year contract they have to realize 35-40% of the rev in the current Q as opposed to say an average of 12.5% (100/8).

I hope mgmt had explained this bllings issue better. They also said on the CC that most of the contracts run into 12/31 and renewals may happen in Jan instead of Dec which may further confound this. Other than that the company is definitely firing on all cylinders. I sold my last of Arista, and a little bit of TWLO yesterday to add around 95.

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From the conference call, Kevin Ruben’S (CFO) reply to analyst Derick Wood (Cowen) struck me as rather important:

Both of those two factors [product mix & contract duration] certainly contributed to the strong revenue performance. But having said that, it was actually execution that really drove the lion share of the revenue that we put up this quarter.

In other words the bulk of revenue growth came from product sales while accounting gymnastics played a minor role. That’s exactly what we like to see.

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This is what the AYX news release states.

Remaining Performance Obligations (RPO)
Remaining performance obligations represent amounts from contracts with customers allocated to unsatisfied or partially unsatisfied performance obligations that are not yet recorded in revenue in our condensed consolidated statements of operations (in millions).

Dec. 31Mar. 31, Jun. 30, Sep. 30,
RPO $ 223.1 $ 214.0 $ 238.8 $ 271.8
Contract Assets. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue
recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice
becomes unconditional in our condensed consolidated balance sheets (in millions).
Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2018 2019 2019 2019
Contract assets $ 27.7 $ 34.5 $ 38.6 $ 50.4

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see below for excerpts from AYX news release.

It will be good to see RPO scale at the same rate as rev. If RPO is growing at 60% yoy we should see an RPO of $357M at end of this year.

If I am reading this correctly contract assets should inflate rev. but not billings. This may explain the slower billings growth vs rev growth in this Q. Not sure what else to make of this metric though. Do we want to see this growing??

Remaining Performance Obligations (RPO):
Remaining performance obligations represent amounts from contracts with customers allocated to unsatisfied or partially unsatisfied performance obligations that are not yet recorded in revenue in our condensed consolidated statements of operations (in millions).

Quarter Dec. 31 Mar. 31 Jun. 30 Sep. 31
RPO $ 223.1 $ 214.0 $ 238.8 $ 271.8

Contract Assets (CA):
Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional in our condensed consolidated balance sheets (in millions).

Quarter Dec. 31 Mar. 31 Jun. 30 Sep. 31
CA $ 27.7 $ 34.5 $ 38.6 $ 50.4

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