I am concerned not only about this quarter but also about guidance for the next quarter and the remainder of the year.
We talk about how companies are already halfway through the current quarter by the time they report the previous quarter’s results. AYX guided to $105-108 million in their Q4 report on Feb 13 (six weeks into the quarter) and barely topped the high end of that when they reported on the quarter ending in March. In the US, there were only 2 weeks of pandemic-related shut down in their first quarter.
Gary quoted:
CFO: “Although we saw a fairly abrupt slowdown in March, we did see activity in April of 2020 fairly consistent with the level of activity we saw in April 2019. So conversations with customers became more productive, we saw new logos around the same level we had seen in April…. So there was a resumption in business activity in April, in spite of the abrupt slowdown that we experienced in March.”
I don’t know whether this started on April 1 or just by the end of April, so maybe only half of April was back to business.
Gary also posted:
CFO: “We’ve had [a small number of] customers with outstanding invoices who have reached out and asked for accommodations, which we’ve generally provided. So we’re working with customers specifically in what we’ve defined as impacted verticals – travel, hospitality, manufacturing, retail, etc. – we will work with them on a payment program that will meet their business needs given the impact they may have had.
Again, the wording here is unclear. A small number of their customers basically couldn’t pay their bill by the end of March, before most of the economic impact from the pandemic occurred. (Unless I have this wrong and he was talking about guidance.) A scroll through Alteryx’s customers page (https://www.alteryx.com/community/customers) shows numerous companies that are in the hardest-hit industries. Airlines, hotel groups, retailers, universities. Sure there are others, but I can’t help to think back to what AYX does – it democratizes data science, allows non-technical users to do what otherwise requires advanced coding. The one main trend of the pandemic related economic downturn is that the companies thriving are those that are technologically advanced, who generally will have no shortage of coders and a reason to create their own analytics tools. I wonder if it simply requires more hands-on training to teach a “citizen data scientist” to use the tools, even if they are easy to use.
A dollar based net expansion rate of 130% is fantastic, but that only works to provide baseline growth if the businesses stay in business.
I’m guessing they were ultra-conservative with their guidance but not much has really changed in terms of the business outlook for many of their customers. Even if they come in at 40% growth ($115m), their Q3’19 and Q4’20 reports were incredible, and considering the economic outlook, I have a hard time believing they will be able to guide to very much growth. For them to reach 40% growth on the year ($585m) they’d then have to book $360m in the next two quarters.
Given the abundance of good companies that are widely expected to grow faster and may have business further accelerated by any ongoing pandemic (ZM, CRWD, DDOG, FSLY, LVGO, NET) or at least not appearing to have been materially hurt (OKTA, MDB), AYX is kind of lower down on the list for me.
I’ve lightened up substantially with only a 2% position remaining.