Which Category AYX Belongs to Now?

First of all, I hope that everyone is not too dismayed from what we are going through this week. Personally, I thought this was bound to happen. Our companies are growing rapidly but their stock price appreciation outpaced the inherent growth this quarter either from excessive optimism that they will be benefited from the accelerated digital transformation during the covid while being unimpaired from the macroeconomic downturn.

My portfolio suffered like 10-15% drop in past few days. But as many pointed out the stock prices are not far too different from a couple week ago and my portfolio is where it was in July. That does tell us how much our stock prices were driven up in the past few weeks in anticipation of the ECs.

Some prudent people like Bert have been trimming their positions, but I am pretty sure many of you like me have investments in taxable accounts and did not want to pay for short term incomes :frowning:

I was rather impressed by DDOG and FSLY’s reports. It is just surreal to me that they are growing at that pace while many others are going out of business. While the market wants to bring down their EV/S multiples based on slower growth projected for next quarters, I feel like these are great companies to own and will get only better.

However, AYX seems to be hit quite hard by the virus. Their previous quarter guidance somewhat hinted this, but many of us assumed that the management was being conservative or prudent. But from yesterday’s report, slowing down is a reality and will persist for a while. I would like to ask everyone’s thoughts on the question which category Alteryx belongs to now.

For me, there’s no doubt that AYX is currently a clear leader in the market that is to be enormous in the future. But there is a major headwind, which we do not know how long will persist and the company’s growth is now way below our standard. Should it be still regarded as a hypergrowth stock? Secondly, will this be opportunities for other runner ups to catch up with AYX at least in terms of technology and set a foundation for acquiring the market share in the post-Covid era?

Sticking with AYX for next few years knowing that its growth is only hampered by a temporary event and that the company will be great is a Fool’s way of investing. But many of us share the belief that we should only hold the best companies in our portfolio and would not be weird to see people forgoing AYX at least momentarily.

Again, do not let this week’s correction ruin your weekend! :slight_smile:

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Maybe you should ask the people who held TTD, TWLO, or SHOP and did not bail when there were temporary deceleration in revenue growths, but held on because the underlying businesses were not permanently damaged… :slight_smile:

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Thanks! That’s what I plan on doing as well, but some of my acquaintances who also invested in AYX thought otherwise.

I got an email saying that I am intentionally misleading in my post. I am not sure where he got such impression, but if he feels offended, well, I apologize?

The post was out of curiosity whether people at the board would stick with his investment thesis given that AYX is a fundamentally strong company or would not expend the opportunity cost in it.

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Maybe you should ask the people who held TTD, TWLO, or SHOP and did not bail when there were temporary deceleration in revenue growths

Well, this is the very definition of cherry-picking, isn’t it?

How does one tell the temporary revenue deceleration from a permanent one? How do you know you have a Twilio and not a Cisco? [I know they’re in different industries but you take my point.] Or a BKNG: a category leader, a software company, 30% operating margins? Or Dropbox, which was the fastest to $1bn SaaS company?

I’m no genius though, I have sold out of ALL 3 of those names [with profits], even after I told myself to keep holding TTD and not sell too early. Okta, as well, sigh.

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Yes, I am cherry picking, but the cherries are coming from my own investing tree…

I am still holding TTD, TWLO and SHOP…

If you don’t want me to cherry pick from those names, which stocks do you want me to give as examples… I am still holding PAYC, MDB, WIX, OKTA…is that still cherry picking?

My point is not to argue. My point is to sometimes hold onto companies when the long term thesis isn’t broken. Covid-19 has created a difficult environment for most businesses.

If AYX was a great company pre-covid, why wouldn’t it be great after covid?

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If AYX was a great company pre-covid, why wouldn’t it be great after covid?

If you’re not judging high-growth software firms by their topline growth rates, how are you judging them?

Alteryx now expects Q3 revenue of $110-115M (+6% to +11% y/y) vs. consensus of $119.3M (+15% y/y) and full year revenue of $460-465M (+10 to + 11% y/y) vs. consensus of $504.9M (+21% y/y), respectively.

'Incremental takeaways from the call: 1) The company does not anticipate a “material improvement in business conditions in 2020.”
2) Supporting this viewpoint, Alteryx saw sales cycles elongate, initial lands turn smaller, and churn elevate in the quarter as a result of customers and prospects implementing higher levels of scrutiny across their spend.
3) Sales and marketing productivity declined for the quarter as the company re-adjusts to improving sales enablement in a remote environment.
4) Apart from net customer adds, which were down y/y to 271, a couple other metrics remained relatively resilient despite the confluence of headwinds: ARR grew +7.5% q/q and RPO grew +72%.
5) Full year revenue guidance implies a negative growth rate in Q4, something investors may not have conceived to be possible earlier in the year.’

It’s not like they make money either, in fact, GAAP eps showed a loss of 53c versus a loss of 24c last Q.

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This is just accounting confusion. I described in my posts earlier in they year what was likely to happen in Alteryx. It has little to do with the actual growth rate which likely still exceeds 35%.

Fastly is probably the other notable example on this board where there is a misunderstanding of their revenue recognition and probably towards the start of next year I will start discussing the specifics of that and how the abnormal usage this year flows into revenue as it will become important around 9 months from now.

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This is just accounting confusion. I described in my posts earlier in they year what was likely to happen in Alteryx. It has little to do with the actual growth rate which likely still exceeds 35%.

Hastan, you’re correct. ASC 606 has eluded a lot of us. You seemed to understand it better. Take your victory lap, but please don’t stop there. So many others freely share their knowledge on this board, and don’t ask for anything in return. Be one of them!

Fastly is probably the other notable example on this board where there is a misunderstanding of their revenue recognition and probably towards the start of next year I will start discussing the specifics of that and how the abnormal usage this year flows into revenue as it will become important around 9 months from now.

Again, please explain. What about FSLY’s revenue recognition is misunderstood?

Bear

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