Snow vs AYX, POffringa

The risk to the long-term revenue growth thesis for Alteryx is that some other factors emerge that dampen the need for their tooling. I think this is where competitive motions and the evolution of the analytics market could come into play. Next-generation data cloud platforms like Snowflake finally make full data convergence for enterprises feasible. These cloud platforms enable direct ingest of data from disparate sources and house toolsets for data cleansing, prep and aggregation. Additionally, they provide an ecosystem of third-party tooling to enable machine learning, automated training and visualizations. This removal of data silos and ecosystem of tooling risks rendering the Alteryx platform irrelevant. At minimum, as enterprises migrate data onto these platforms, they could siphon off some use cases that might have represented enterprise up-sells for Alteryx.

Then he goes on to recommend ‘pre-IPO write up on SNOW by Muji at HHHypergrowth.com.

Which is where I first read the threat to AYX (‘ingestion being half of what they do’) and SNOw making that irrelevant.

So thanks again Muji and Peter.

Jason

20 Likes

Thanks, Jason – great stuff from Peter – but please include a link next time:

https://softwarestackinvesting.com/alteryx-q2-2020-review/

Bear
Asst Board Mgr

15 Likes

These cloud platforms enable direct ingest of data from disparate sources and house toolsets for data cleansing, prep and aggregation. Additionally, they provide an ecosystem of third-party tooling to enable machine learning, automated training and visualizations. This removal of data silos and ecosystem of tooling risks rendering the Alteryx platform irrelevant. At minimum, as enterprises migrate data onto these platforms, they could siphon off some use cases that might have represented enterprise up-sells for Alteryx.

Then he goes on to recommend ‘pre-IPO write up on SNOW by Muji at HHHypergrowth.co

the
WillO208

It is difficult for me to draw conclusions from the Poffringa article on the impact of SNOW on future prospects for AYX except that AYX needs to be alert to the speed of migration to the cloud.

AYX emphasizes as selling points, improvement in top and bottom line growth, operational efficiencies , savings in analyst hours and upskilling attendant upon the enabling of “citizen” data scientists…

In the quarterly report and elsewhere the CEO of AYX notes the fact that many (most ) of his customers have not stored their data in the cloud but many do and he emphasizes that he believes that data storage will always be a hybrid phenomenon and that AYX is preparing to service cloud customers as they appear. AYX has some cooperative agreements with SNOW and it seems correct to assume that AYX will be able to incorporate data processing using the SNOW data warehouse and data lake when it becomes necessary. For now given Covid and the business slowdown the focus will be on existing customers and the methods they employ.

Poffringa makes the following argument.
l

So, in this regard, Snowflake isn’t a competitor to Alteryx per se, as some analysts keep asking. However, I think the right question is whether the ecosystem that Snowflake enables creates alternatives to Alteryx. That is the key consideration going forward. If enterprises continue to converge their data into a single instance on data cloud platforms, like Snowflake or even Databricks, does that supersede the position that Alteryx currently enjoys (which assumes enterprise data is in silos)?

So he raises the question as does muji, at least insofar as I am able to comprehend. Clearly AYX will have to take steps to deal with in-cloud data processing vendors, but why would anyone assume they would not be able to do so? It is beyond me to try to answer this question.

Again I refer to Poffringer:

At this point, it is too early to draw definitive conclusions about direct impact of centralized data clouds on Alteryx’s business, but it is something that we investors should monitor closely,/

So those of us who still have an interest in AYX have to watch this one.

cheers

arnie

18 Likes

Hi Draj,

I agree with you when you wrote, “Clearly AYX will have to take steps to deal with in-cloud data processing vendors, but why would anyone assume they would not be able to do so? It is beyond me to try to answer this question.”

I have what I believe is a healthy appreciation for the dilemma faced by incumbents when innovation changes how they do what they do fundamentally. The one reason I want to buy Snowflake is that they have a fundamental process improvement for maintaining data alongside compute better enabling half what AYX offers (see Muji’s DD on SNOW). With this data available (securely and more cost effectively) those innovators that currently exist (H2O was mentioned)now have a sandbox to play in.

It’s because the past is, and maybe for a while, full of silos that AYX will not have reason to reimagine their processes without their ingestion half of it. At the least I imagine they’d have to charge half of what they do with any competing cloud based product.

And then how long does it take for Enterprises looking for insights to breakdown their silos and remove the hassle of on-premises date storage, if Snowflake (and soon to be others as surely there will be) is as good as I believe they are.

Bottom line for me. I believe Snowflake is something that enterprises will move to quickly. Watching AYX closely is not something I feel I’m able to do well (see Bulwinkle’s post https://discussion.fool.com/hi-thinker-amp-saul-thanks-for-the-f…).

I love AYX as a company. With a limited number of spots in my portfolio (7), I just don’t value it enough, as an investment, to include it.

Jason

3 Likes