GauchoChris and others are much better with the detailed analysis, but I do notice the details that matter to me. One such detail is how the CEO is straight-forward and does not speak with hyperbole or generalities.
In at least the last two earnings calls (I’m not all the way through this current one, but have gone far enough for this point) - maybe more than 2 - the question has been asked about if Server, or Promote or Connect (their more expensive products - with Designer being the core product that is licensed to each desk) are essentially gaining traction, relatively speaking.
This is important for many reasons, but one reason is that Designer contracts tend to be 1 year in duration (that is tend, so not exclusively, but tend that way) and Server and Promote and Connect tend more to 3 year licenses.
The answer each time is that most of their business is still Designer. Designer is what it in demand and what is making the company. Server is starting to pick up more (you get 15-20 Designer licenses in a company, you get a Server subscription), and Server is starting to pick up (but it does not sound like materially). Meanwhile Promote and Connect are still out there, but not really moving the needle yet.
The CEO does not hide this fact, or obfuscate this fact, where like with Zscaler they will say their secondary product is “fastest growing product in our history” and leave it at that, or how Pure did the same with their AI product (that ended up disappointing by quite a bit despite language to the contrary).
So the purposes for this discussion. (1) gives more credibility to the CEO and his communications with us.
(2) The more Server, and Promote, and Connect they sell, the more contract lengths will tend towards 3 years instead of 2. There has been some measurable (but not earth shattering movement) over the last quarter or two or so of longer contracts (which is probably indicative of the Server comment I spoke about above).
(3) Automation is the future, Server and Promote and Connect become more important when SIs (System Integrators) start building products to automate analytics. Promote and Connect are complicated (unless Designer, which we all know creates its value by providing so much power in such a simple package). Thus to move the needle on Promote and Connect you have to overcome much more complexity. SIs make their money making the complex manageable for their clients.
When yo listen to the Alteryx CEO he has had macro themes moving his business. He is now on Analytics 2.0 where they are moving from digital transformations to (I forget the exact verbiage - but automations, and socialization, of analytics).
So long and short, if the greater complexity of explaining, selling, and utilizing Promote and Connect can be handled by the SIs that are jumping on board (one analyst said it was all across the board, not just PwC), and the trend of automation and socialization of analytics takes hold as the new paradigm being pushed for analytics, then we might finally start to see Promote and Connect start to become more material products. These products sell for 3 year contracts (again, mostly), are higher cost products, and under 606 would really move the needle because RPOs would increase because (1) higher contract price than Designer, and (2) average contract duration longer.
I put that out there as a trend to follow over the next year or two to see if it happens or not.
Finally, in regards to competition we don’t necessarily have to take the CEOs word for it, we can see what they did in the real world. They INCREASED the price of their Server product (back in Q1 of last year). Alteryx is not discounting their software, but rather the opposite, and even at this growth is accelerating.
Some things to watch play out. It could be Promote and Connect turn out to be failed products (to date they are not what we might have hoped). AYX believes that are the corner stones of their PLATFORM from end to end that no one can match. That Analytics 2.0 is just starting and Connect and Promote should become more relevant (of course with their AI open source tech they purchased from MIT as well).
If this plays out, Alteryx will be one of those companies killing it with Designer, and then able to upsell and expand with Server (which is already an established trend with 15-20 Designer seats) and with Promote and Connect, and start selling platforms instead of just Designer seats.
I am not being facetious when I say “we can hope”. That is the company plan, but there are not facts out there right now to support that Promote or Connect will start to take off more than they have already. Management, however, is not forgetting those products and has its philosophical road map and sees those products becoming more important down the road. So we can hope, but its not something to bank on at this time.