One of our old favorites, Alteryx, might be turning a corner:
https://seekingalpha.com/article/4435218-alteryx-sighting-of…
10 Likes
Zeke, I’d be careful about hoping for a turnaround with Alteryx. Bert is VERY good at finding companies and analyzing them, but he is much MUCH worse at getting himself to say “Goodby” to a company. He tends to hold, and hold, and HOPE. For example, he’s still in Nutanix and hoping. He bought in May of 2018. Nutanix hit its top of about $62 in June 2018, exactly THREE YEARS ago. It is now at $37 something. Bert is still holding. Just think of the profit he could have made with that money in the last three years, think of what we have done in those three years, instead of holding and hoping for a turnaround.
Saul
93 Likes
I thought the article was well-reasoned. Opened a small position for an “emerging” growth stock. I’m not quite as concentrated as Saul. 14 positions here. But should winds change next quarter, I’ll either add or exit.
🆁🅶🅱
post tenebras lux
For not in my bow do I trust, nor can my sword save me.
7 Likes
In this particular case, I don’t consider it as much a turnaround as a “picking up where they left off.”
In this particular case, I don’t consider Alteryx as much a turnaround as a “picking up where they left off.”
On the contrary, they are trying to transform the business into almost a new, entirely different business. Changed the CEO, as well as other high level people (head of Sales and Marketing, CFO?, etc?), I can’t remember exactly who but they were constantly replacing senior personnel last year, and trying to change from an “on-premises(sp?)” business to a hybrid, cloud and on-premises business. Business has been in chaos for at least six months (growth rate dropped from 70% a year or so ago to 9% last quarter!!!) And trying to change into a SaaS company at the same time (they weren’t before)!!!
If it works out it will be great, and I wish them well, but don’t kid yourself into thinking this is just picking up where it left off. It’s an attempt to entirely redesign the business on the fly.
Best,
Saul
65 Likes
If it works out it will be great, and I wish them well, but don’t kid yourself into thinking this is just picking up where it left off. It’s an attempt to entirely redesign the business on the fly.
Inside the Motley Fool paywall I have the role of being the Ticker Guide for Alteryx. Saul, as usual, is 100% correct - this is a turnaround story of turnaround stories. Rumor has it that back in mid 2019 the company was actually up for sale. Then Dean Stoecker, CEO and founder, left the day to day business and became the Chairman - the company’s search for a new CEO led them to appoint a board member, Mark Anderson, as CEO in October 2020 - as far as I can tell other than being on the Alteryx board he had no experience specifically related to this company or its market, although he did have prior hi level management experience as president of Palo Alto Networks.
The company very late in the game is trying to develop a cloud based product. I cannot tell you how many times on conference calls management kept saying that their customers were perfectly happy with an on prem solution. This company has been extremely inconsistent in its messaging as to what it wants to do when it grows up.
The one thing this company has is very high gross margins - above 90%. They are targeting 2022 to get the cloud based product into the market - then we will have a year of transition comparisons as the accounting/revenue recognition model will change from the on prem product. This one is even testing my patience and I tend to hold stocks far longer than many on this board.
This is going to be a wait and see company at best - I have much higher conviction companies with regard to investing any new money - over time I have sold about 60% of my shares, currently less than a 1% portfolio position.
Frank - long AYX, see profile for all holdings
77 Likes
Saul, as usual, is 100% correct - this is a turnaround story of turnaround stories.
Absolutely! The best time to have recognized this and acted upon it, as Saul had done, was when they first missed their numbers. Nobody can accuse Saul of hanging onto companies too long when their business changes for the worst.
I’d be careful about hoping for a turnaround with Alteryx.
This time, however, Bert may be right. Historically, Alteryx has been a “land and expand” company that started with a few licenses anywhere in an organization and let the product sell itself to to the rest of the organization. This had worked really well until it stopped working.
While the lack of a real SaaS business model has been a drag on growth, another big problem was the lack of focus on the enterprise, which involves selling much higher in an organization to start with much higher volumes. Even with the right management team, changing the company’s sales culture is really difficult.
They now have begun approaching opportunities with with proven and quantifiable value-creating use cases that make the first sale a much larger one and establish Alteryx as a strategic vendor a lot quicker where they sell. This, in addition to the shift to SaaS, is now a priority.
Another challenge lies ahead when they transition to SaaS. The more successful they are in the enterprise now, the more difficult it will be to transition to SaaS, which requires yet another way to run the business and sell products. MogoDB is doing this really well, despite the difficulties doing so.
So I’m pretty much in between Saul and Bert, having sold about half of my shares when things started to change and holding onto the rest, because I think that they can pull off the transition.
It’s too bad I didn’t sell all of my Alteryx to buy more Upstart shares when Saul recommended it. I also had plenty of opportunities to shift the investment to Crowdstrike or others too.
I suppose this is why I have trouble keeping up with Saul’s returns year after year.
DJ
13 Likes
Another reason I’m more cautious than before with being an AYX share holder is the performance it had during this Covid period. One of the reasons I hold these companies is they are sticky and mission critical and will not suffer business wise during a recession. They can actually save a company money by replacing legacy systems etc… We have all heard these claims with the whole digital transformation and COVID was a test. A lot of our companies thrived and passed with flying colors and I know, some got a tailwind from the whole WFH movement. But AYX let us down and new customers were hitting the pause button and moving their capitol to more mission critical projects. While we know AYX has a nice product, it seems that it’s not as essential as we thought. For me that’s an added risk I’ll be keeping it in mind the next go around. If I do reenter AYX when they get their act together it will definitely be at a smaller allocation.
2 Likes
We use this product. It is very good. We use is to enable “semi tech” people to help with data integration and reporting.
They operate in a very competitive market.
Companies like informatica, AWS, Snowflake, Talend etc. are higher end and are entrenched and support mission critical workloads. However it is easy for these to have a light weight version on cloud for semi-tech people and compete against AYX.
The emerging need is to expand in “feature extraction” for AI/ML applications (statistics) for model building. There are many startups who are in this.
This is complex and most companies spend 90% of their time to curate data than to do any real AI/ML work.
I don’t know if AYX is going for this market (need lots of Phds in stats). Quick look at their careers does NOT indicate that they are going into this space.
1 Like
Expanding on dividends20’s comment, first challenge for me with AYX, what differentiates AYX?
I don’t see anything specific here (https://seekingalpha.com/article/4435218-alteryx-sighting-of…) that answers this question even in a moderately compelling way. The article mentions two angles: [1] target citizen data scientists (“…user population targeted by Alteryx are the citizen data scientists of whom there are reputedly millions…”), [2] put their product in the cloud. Neither is convincing to me.
Like much of Business Intelligence (BI), AYX looks like a commodity product. Are any of these BI tools (Oracle BI, PowerBI and other Microsoft products, Tableau, Qlik, Alteryx) meaningfully different from the others? For example, Qlik and Tableau have ETL features in addition to data visualization, like Alteryx. Microsoft and Oracle have entire suites of tools. Everyone is trying to add AI and predictive modeling features. Maybe one tool is 5-10% better in one feature relative to another tool.
The article is not persuasive in its mentioning of other products. SAS has a 45 year statistical pedigree and calculation engines under the hood to match, is Alteryx improving on SAS? Microsoft has a whole ecosystem of products covering data and BI. Salesforce is building an ecosystem with its native CRM and add-ons like Mulesoft, Tableau, Slack. I don’t see a statement in the article that highlights a meaningful, specific advantage for Alteryx over its competitors. I don’t see where the mentions of other products really tell us much of anything, the article seems to mainly say that the products are different. That’s true, all products are different in some regard, what is the meaningful difference?
This is not too say that you cannot make money in commodities, but being commodity-like is a strike against it for me. Maybe their new management will figure it out. I’d be curious on other views on AYX or related products.
1 Like