Will Alteryx Tap Into The Hyperactive Startup Pool?

Summary

• The SaaS market is a healthy, robust, exciting cauldron of innovation.
• There's a pool of hyperactive bootstrapped or seed-funded startups that could be diamonds in the making.
• Which of them can Alteryx invest in or acquire? What other partnerships can it form?

According to IDC, the worldwide market for big data and analytics software reached approximately $49.1 billion in 2016 and is expected to grow at a five-year CAGR of 10.6%. Within the broader business analytics software market, Billion-Dollar Unicorn Alteryx (NYSE:AYX) addresses the business intelligence and analytic tools, analytic data integration and spatial information analysis markets that accounted for $18 billion in 2015 and are expected to grow to approximately $27 billion in 2020.

Alteryx's Journey

Irvine, California-based Alteryx was founded in 2010 by CEO Dean Stoecker, CCO Olivia Duane Adams, and CTO Ned Harding. They had originally registered the company as SRC LLC in 1997 with a vision to build tools that would allow customers to engage in strategic applications and conduct tactical execution against those strategies. They started out as system integrators offering cloud-based analytics applications. It was in January 2006 that they rolled out the first version of the Alteryx product. It grew out of the need to create one single tool with many capabilities that could manage various technologies with fewer resources.

Today, Alteryx is a leading provider of self-service data analytics software. Its subscription-based, end-to-end analytics platform allows organizations to easily prepare, blend, and analyze data from disparate sources and come up with data-driven decisions. This is done through visual workflows and an intuitive drag-and-drop interface that can eliminate the need to write code and reduce time-consuming tasks to a few mouse-clicks. It aims to make the platform as ubiquitous in the workplace as spreadsheets.

Alteryx was bootstrapped initially with a little help from family funds. In 2011, the company raised $6 million in funding from SAP Ventures. Since then, it has raised $163 million from investors including Insight Venture Partners, Iconiq Capital, Meritech Capital Partners, Sapphire Ventures, and Toba Capital. It raised $85 million in its latest round in October 2015 at a valuation approaching $1 billion. The company went public in March last year at a valuation of about $840 million.

Alteryx's Financials

For the fourth quarter, Alteryx reported revenue of $38.6 million, up 55%. GAAP net loss $(1.5) million, an improvement compared to $(8.1) million a year ago. Non-GAAP net income for the fourth quarter was $1.4 million or $0.02 per diluted share. Analysts expected loss of $(0.03) per share on revenue of $35.89 million.

For full year 2017, revenue grew 53% to $131.6 million. GAAP net loss was $(19.5) million, compared to $(30.7) million for 2016. Non-GAAP net loss per share was $(0.11).

Alteryx ended the year with 3,392 customers, up 46%. It added 338 net new customers in Q4 and achieved a dollar-based net revenue retention rate of 131%.

For the first quarter of 2018, revenue is expected to be in the range of $39 million to $40 million. Non-GAAP net loss per share is expected to be in the range of $(0.06) to $(0.07).

For full year 2018, revenue is expected to be in the range of $176 million to $179 million. Non-GAAP net loss per share is expected to be in the range of $(0.24) to $(0.29).

As of December 31, 2017, Alteryx had cash, cash equivalents, and short- and long-term investments of $194.1 million, compared with $182.6 million as of September 30, 2017.

Questions For The Board

Alteryx currently has partnerships with Tableau (DATA), Qlik (QLIK), Cloudera (CLDR), Microsoft (MSFT), and Amazon (AMZN) Web Services. But as I said in a recent post, there's an unprecedented opportunity for SaaS companies. The SaaS market is a healthy, robust, exciting cauldron of innovation. There's a pool of hyperactive bootstrapped or seed-funded startups that could be diamonds in the making. Which of them can Alteryx invest in or acquire? What other partnerships can it form?

Following the strong results, its stock is trading at a 52-week high of $36.63 with a market cap of $2.17 billion. Its 52-week low is $14.61, its list price when it went public nearly a year ago.

Comments

[JKB2004]

Thanks Sramana. Tell me, there's more to the story here than ETL (ala Infomratica and Mulesoft) and Visualizaitons (ala Tableau)....correct? What else besides that is this company? I feel like there's something more around data science as they market to data scientists yet can't quite figure out the total picture on that. If you can explain that or what a potential "full use case" of AYX might be that would help a ton. Thank you.