Consolidation of Saul's Alteryx write-up

Saul posted the below in 5 parts (board posts 34874 through 34878), but to have it all on one page, I am pasting the five parts here in a single post......hopefully it will work.

I just started a new stock at a full position

As you well know, what I usually do with a new stock is take a tiny starter position and then add to it slowly and cautiously. Well last week I discovered Bert’s September write-up on Alteryx (AYX), which IPO’ed just nine months ago, and is still largely unknown to investors, then read the few comments to Bert’s article (which were mostly by people who use the product), then looked at the last earnings releases and the investor presentation, and fell wildly in love with the investing opportunity this stock represents, and took a 6.0% position over the past week. By the way, don’t waste our time criticising the stock or my pick unless you’ve read Bert’s article:


I'm going to post this in pieces as I'm having trouble posting.


Here are some reasons I got excited, from that write-up:

Alteryx is attempting to build a new category - a platform that combines both data integration and high end analytics, targeting the emerging category of citizen data analysts.

It feels that its TAM is about $10 billion.

It is cash flow positive, and its loss level is far less than some other well-known vendors in the data analytics space.

Its valuation in comparison to other hyper-growth vendors is moderate at less than 6X EV/S.

Some notable current users include Accenture, Coca-Cola, BP, and Ford.

The dollar based net revenue retention was 134%, a very strong number compared to many other companies with similar sales strategies.

Overall, the basic strategy is land and expand. The cohort analysis suggests that it is working effectively.

Customers placed Alteryx almost at the top for overall customer satisfaction and delivery of business value according to Gartner

Alteryx was cash flow positive in both of the first two quarters of this year and it forecasts that it will be cash flow positive going forward

Bert thought it was a potentially very profitable investment with a reasonable set of risk and rewards and worth starting at least a starter position.

And from one of the comments to Bert's article:

Asteryx has best in class: 
gross margins, 
CAC (customer acquisition cost), 
LTV(long term value)/CAC, 
net revenue retention and 
overall revenue growth and is 
less than 1% penetrated

After all that enthusiasm, here are some of the figures I got from the December Investor’s Presentation:

TTM Revenue - $118 million, up 52% from $78 million
Subscription Revenue – over 95% of total revenue
TTM Dollar Based Retention Rate – 133% and accelerating.
Cohort Revenue Growth: -

2014 cohort revenue grew to 170% of base revenue in one year, and to 270% of base revenue in two years.
2015 cohort revenue grew to 190% of base revenue in one year. 

Adj Gross Margin – 86%
Total Customers – 3054 plus
Customers include Ford, GE, Microsoft, Shell Oil, HP, BBC, etc, etc 

Adj Op Margin was 
-36% in 2015 
-23% in 2016
-9% in first 9 mo of 2017


And now some fundamentals:

2014:			   =  38
2015:                 14   15  =  54
2016:   18   20   22   25  =  86
2017:   29   30   34

Trailing revenue is now 118, and estimates for the year are 129 (at least), which would be up 50% (again, at least).

Revenue growth percent  (Looks very solid)
2015:			       =  42%
2016:                 57   67  =  59%
2017:   61   50   55

Dollar-Based Retention Rate  (Increasing from already high levels)
2015:   123%   124%   125%   122%                 
2016:   126%   127%   129%   135%
2017:   133%   134%   133%

Customers  (Increasing at an amazing rate)
2015:    760    961   1140   1398                 
2016:   1578   1834   2047   2328
2017:   2565   2823   3054

Operating Cash Flow  (Has turned reliably positive. Means no need for dilution)
2016:   +3.0   -7.0   -5.2   
2017:   +5.0   +0.7   +0.7

Deferred Revenue at end of 
2014:         $29 million
2015:         $44 million
2016:         $71 million
Q3 2017:      $79 million

Adjusted EPS  I figured 2016 (pre-IPO) as if they had the same $62 million shares they have now, to make figures comparable.
2016:   -10    -11    -05   
2017:   -06    -09    +02

So what do we have? A company little understood by investors, which hasn’t yet been run up to astronomical levels, and in a category of its own (more or less) with a TAM 100x larger than its revenue, and growing revenue at over 50% per year in the 9 months its been public, and this actually seems to be accelerating, as they only grew revenue 42% from in 2015 over 2014. With an enormously rapid rate of customer acquisition, with a very low cost of acquisition. With many household names among their customers. With positive Operating Cash Flow. With an Adjusted Operating Margin moving up rapidly towards breakeven, and having perhaps just started having positive adjusted earnings. With a land and expand strategy, which is working like gangbusters, with the highest Dollar-Based Retention Rate I’ve ever seen (133% to 135%), and with 2014 and 2015 cohorts growing take by 70% and 90% in the second year. With a gross margin of 86%. With a reasonable EV/S ratio for a rapidly growing company. With high customer satisfaction and happy customers who keep signing up for more and more. What more could I ask for?

Hope you find it helpful


For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776. 
We had to post it in three parts this time.

A link to the Knowledgebase is also at the top of the Announcements column
that is on the right side of every page on this board