I wanted to chime in with some thoughts on AYX. I have seen many posters/post on the boards talking about recent earnings.
First let me start off with AYX is a great company and if willing to hold for next 3 to 5 years I think you will make money on your investment.
However I believe it is dead money for next 6 months, possibly longer depending on Covid. In fact for those that are currently buying, I believe the price is going lower in the short run.
I have to admit I find it a bit insulting that a poster would brag about buying share after this recent fall and act as if they were smarter than most of the AYX investors on this board. Many of us have been holding for 2 years or more and bought the stock between 35-50 dollars. All you have to do is go back and look at monthly portfolio reviews. I sold with well over 70% annual return on AYX.
Lots of talk about ARR and many people pointing to 40% ARR and why that points to healthy business for AYX. Problem is not ARR, problem is bookings. Bookings were flat. Bookings are the tip of the spear for revenue coming into your company. Why did this happen?
From the earnings call: As with new business, we saw expansion business sales cycle slow.
As we discussed on our Q1 call, we once again experienced high customer churn, particularly in smaller organizations in highly impacted verticals and regions mostly impacted by COVID.
Many of these new sales reps had very limited, if any, time on-site at one of our offices, and haven’t ramped up as quickly as historical cohorts.
However, as we have typical software linearity in our business, meaning the majority of our bookings are generally concentrated in the back half of the quarter, changes in customer buying behavior did not become apparent to us until later in the quarter. These changes included elongated sales cycles resulting from customers having more robust approval processes and higher levels of scrutiny, smaller deal sizes and less favorable linearity with some transactions slipping into Q3.
Hannah Rudoff – D.A. Davidson – Analyst
Hi, guys. This is Hannah Rudoff on for Rishi today. First, Kevin, maybe could you walk us through the factors that are contributing to the delta between ARR growth and revenue growth?
Kevin Rubin – Chief Financial Officer
Yes. Sure. Thank you. That’s a great question.
If you remember, we’ve spoken for quite some time, our revenue mechanics and ARR are disconnected. Revenue is driven by bookings, which is TCV and an upfront portion based on product mix, and ARR is really just the accumulation of ACV over time. So the two are very disconnected in that regard.
ARR is basically up 40% due to the fact they were booking more new business a couple of quarters ago. Does not lend itself to justify values of a hyper growth company IMO.
I posted this on the AYX paid boards the other day:
was at ~$91.50 on 10/31/19 when they announced Q3 results.
They reported 65% Q3 yoy revenue growth
They projected 47% Q4 yoy revenue growth
They predicted total 2019 revenue of 392m or 55% yoy revenue growth
Now they are $169 nine months later with 17% revenue growth
Q3 predicted revenue growth of 11% what is predicted as negative revenue growth in Q4
Annual predicted revenue growth of 2020 11%
I think they have a potential long fall coming on stock price.
If Wall Street had them at 91.50 when they were actually in hyper growth mode, what will they value them at now? I am not sure but I feel strongly this stock in going down before going back up. I could be wrong but tough decisions have to be based on the information given. The earnings call had a lot of explaining of why the business is stalling.
Again in long run great business, in short run I see more pain ahead. Justifying the business is strong because of 40% ARR, sorry I disagree.