Kevin Rubin, Alteryx’s CFO is very bullish long term and sees “ginormous” opportunity ahead. Parsing through this interview, most points were a reiteration of the conference call. One section caught my attention. I’ve edited for clarity.
Capital Market Labs: “Would you say there is a long term impact on your business of COVID-19 along the lines you mentioned — digital transformation is something that may give increased focus. What puts and takes are there long-term for the business as a result of what’s going on?”
KR: "That’s a great question. Look I think long term, our conviction in the prospects of the business are as strong as ever.
I don’t think that what’s going on with the coronavirus or the macro economic slowdown is necessarily going to have any impact on the long term.
Obviously, on the short-term, that’s a bit different. Where I think COVID-19 is going to be somewhat beneficial — and I certainly don’t mean to be insensitive when I say that — is just the idea that I think it really is waking companies up to the idea that if they hadn’t thought about digital transformation, if they didn’t think about how they can leverage data to better their business before, they certainly are today.
So it has become an accelerant to those conversations within companies as well as companies with vendors. We do think that it will be net beneficial as companies try to figure out how to better leverage basically assets available to them to perform better."
Capital Market Labs:
“This is the first time since May of 2017, the first time, ever, correct me if I’m wrong, based on FactSet, this is the first outlook for quarterly sales for you that was below consensus. Is that correct?”
Kevin Rubin: "I didn’t go back and look. But I believe that to be true.
If you just look at what’s going on in the world, and behavioral changes within customers as a result of the macro-economic slowdown, it wouldn’t surprise me that it’s the first.
CML: “How do you, in your broad history as the person who oversees finance, and oversees investment, and oversees the flow of the business, how do you take an event like that?
Does it feel significant to you in the life of a company, especially since you have generally guided fairly well above the Street consistently? How should investors think about this event? Does it mean anything?”
KR: "Well, I mean, first off I mean I can’t imagine anybody would be surprised that companies today are seeing less activity than maybe they saw a year ago. Our process for setting guidance and setting expectations with the Street doesn’t change.
We have a different business — excuse me, we have a different revenue recognition model than typical subscription companies. And that revenue recognition model requires us to take some portion of our bookings upfront. It varies based on product mix.
And when we’re in a robust buying pattern that tends to be a tailwind, if you will, to revenue growth. But when you start to see companies slowing their buying that tends to be a little bit more pronounced in our particular model.
Which is evident in guidance, and to your point, coming down below consensus.
But having said that, look, we’re trying to provide the best information we have so investors can understand our business."
Overall a very positive interview. While March sales slowed, April restarted and felt more normal. But the last section leads me to believe this current quarter’s results could be soft. How much of a deceleration vs previous growth, is the question.
Long AYX (23% of my portfolio)