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Alteryx, Inc. (AYX) CEO Dean Stoecker on Q4 2019 Results - Earnings Call Transcript

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About: Alteryx, Inc. (AYX)
by: SA Transcripts
Subscribers Only
Earning Call Audio

Alteryx, Inc. (NYSE:AYX) Q4 2019 Earnings Conference Call February 13, 2020 5:00 PM ET

Company Participants

Chris Lal - Investor Relations

Dean Stoecker - Chairman and Chief Executive Officer

Kevin Rubin - Chief Financial Officer

Conference Call Participants

Brent Bracelin - Piper Sandler

Brad Sills - BofA Securities

Tyler Radke - Citi

Derrick Wood - Cowen & Company

Kevin Kumar - Goldman Sachs

Steve Koenig - Wedbush Securities

Ittai Kidron - Oppenheimer

Michael Turits - Raymond James

David Griffin - William Blair

Joey Marincek - JMP Securities

Rishi Jaluria - D. A. Davidson

Taz Koujalgi - Guggenheim Partners

Operator

Greetings. Welcome to Alteryx’s Fourth Quarter and Full Year 2019 Financial Results. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

At this time, I’ll turn the conference over to Chris Lal from the Investor Relations. Please go ahead.

Chris Lal

Thank you, operator. Good afternoon and thank you for joining us today to review Alteryx’s fourth quarter and full year 2019 financial results. With me on the call today are; Dean Stoecker, Chairman and Chief Executive Officer; and Kevin Rubin, Chief Financial Officer.

During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainty. Our actual results could differ materially from expectations reflected in any forward-looking statements.

For a discussion of material risks, and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC’s EDGAR system and our website, as well as the risks and other important factors discussed in today’s earnings release.

Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release in the Investors section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measures.

With that, I’d like to turn the call over to our Chief Executive Officer, Dean Stoecker. Dean?

Dean Stoecker

Thanks, Chris. Alteryx delivered a strong finish to another year of a remarkable growth, driven by both favorable market trends and excellent execution. On today’s call, I will give you an overview of these results and the key factors that drove them, as well as provide additional color on major trends that we believe will benefit Alteryx in 2020 and beyond.

Kevin will then walk through our Q4 and 2019 financial performance and our outlook for the full year 2020. We once again raised the bar and set many new records in 2019. We generated record Q4 revenue of $156.5 million, up 75% year-over-year. We booked approximately $290 million in total contract value, up 81% year-over-year, posted 33% operating margins and generated $21 million in positive operating cash flow. Net expansion remained strong at 130%.

We added 474 net new customers, including 36 of the Global 2000 and now have approximately 6,100 customers including 36% of the Global 2000. Some notable Global 2000 Q4 lens include Caesars Entertainment, Canadian Pacific Railway, Emerson Electric, Halliburton, Komatsu and NASDAQ.

For the full year 2019, we saw our revenue growth of 65% year-over-year to $418 million and total contract value bookings growth of 70% to approximately $600 million. Additionally, we added just under 1,400 net new customers and posted positive operating margins of 18%. Finally, we generated $34 million in positive cash flow from operations.

The strength in the quarter was driven by both strong global execution as well as continued favorable market trends. Competing let alone winning in this data-driven world requires global enterprises to either disrupt themselves or be disrupted by others.

It requires reimagining themselves, wherein data is valued as an asset and analytics as a prowess. This is not achieved by leveraging incumbent technologies and existing processes that made them great in their first place. And it cannot, in our view, be achieved by advocating analytics to only the trained statisticians, working on edge cases, even with the best AI, and ML capabilities.

It can only effectively be achieved by harnessing the networking effect of people, data and technologies, which allow companies to build a culture of data science and analytics that drives value across all functional areas of the organization.

We believe this is best achieved with a human centered platform that is code-free and code-friendly, deliberates thinking, enables creativity and prosecutes analytics to address hundreds of use cases in every organization. We believe that this next wave of digital transformation efforts by global organization will help fuel our growth for you years to come.

Last quarter, we discussed the convergence of analytic personas that we believe represent a positive trend that favors Alteryx. We have long discussed the two main analytic personas, the 47 million citizen data scientists that live in the line of business with limited or no analytics training, and the 2 million data scientists with deep quantitative and coding expertise.

The line between these two categories continues to blur, as a citizen data scientists are raising the bar in order to meet the business challenges of the day, by performing more sophisticated analyses and the data scientists are looking for more efficient ways to build automated data pipeline to drive their model.

With our strong net expansion rates that move us closer to IT over time, there was a third persona emerging, it is the data engineers typically doing a lot of data work for IT. Over time, we see these three personas morphing into a category of workers to drive meaningful business change and unlock according to PwC’s most recent Global Artificial Intelligence Study, the $15 trillion of value currently locked up in the data throughout enterprises around the world. With thoughtful leadership and large global organizations, we believe this convergence will continue to accelerate and benefit Alteryx for years to come.

We believe our platform is well suited to enable these analytic personas to unlock tremendous business value. As a reminder, you can discover the hundreds of use cases where this value is discovered by visiting community.alteryx.com. You will find examples like British American Tobacco, who expanded their footprint of Alteryx to include Server last year and generated a $9 million return in just one year by automating analytic processes.

We also believe there is another positive movement underway, and that is the hyper focus and automated data pipeline, smart algorithms and business processes. These used to be discrete processes performed by multiple tools, from multiple vendors, with multiple people across multiple departments. We have long said that Alteryx hasn’t changed the analytic process. We simply unified the experience in one end-to-end, easy-to-use platform.

As we enter the age of digital transformation 2.0, to focus just from simply improving efficiency to improving outcomes. Better outcomes happen when you combine the imagination and ingenuity of humans, the power of data and the speed of modern computing. Everyday Alteryx is amplifying human intelligence in enterprises around the world, which in turn is delivering better results for our customers.

For example, a large global bank has established an Alteryx Centre of Excellence as part of their digital transformation efforts and is seeing meaningful ROI, each seat of designers saving 400 hours per worker each year. They’re optimizing millions of square feet of office space, enabling better cost controls and they are pushing forward with replacing expensive legacy analytic solution. Enormous efficiency gains are being delivered at an overall lower cost.

Last quarter, we also discussed our expanding ecosystem. We are pleased to recognize PwC as our first global elite partner and are committed to working closely with them to accelerate digital transformation across the Global 2000. PwC will advise clients in establishing strategy and governance around their automation program, building solutions on the Alteryx platform via hands on business focused training, process assessment, data design and a variety of other means.

By doing so, PwC will help clients across industries, gain an introduction to the practice of automation analytics and transformation and empower them to solve complex data processing challenges with the Alteryx platform. We are excited about the strategic relationship with PwC to accelerate digital transformation across the Global 2000. They’re uniquely equipped to help clients unleash the full power of analytics, data science and process automation with the Alteryx platform.

As a leading standalone end-to-end data science and analytics platform in the market today, we have a unique value proposition for a variety of partners, including independent software vendors, large systems integrators and global advisory and analytic consultants. Given the multiple avenues of growth available to us, we plan to continue to invest in our platform in our go-to market model in order to capitalize on the significant opportunity in front of us.

We have the right team and the right platform that continue to scale Alteryx for many years to come. And speaking of the right team, I’d like to thank the extended Alteryx community, our customers, our partners and all of our associates around the world for making 2019 a great success. As we have long said, analytics is a social experience and we are all better together.

With that, let me turn the call over to Kevin to discuss our Q4 and full year 2019 financial performance and the outlook for 2020. Kevin?

Kevin Rubin

Thank you, Dean. As Dean mentioned at the beginning of the call, Q4 was a strong finish to 2019. Q4 revenue was $156.5 million, an increase of 75% year-over-year and net expansion remained strong at 130%.

Revenue upside in the fourth quarter was due to the following factors. First, we had another quarter of strong execution. As previously mentioned, our Q4 bookings grew 81% year-over-year. Second, we closed a record number of large deals with an over 150% growth and deals over $1 million and an over 80% increase in deals over 500,000. Third, we did see a modest sequential increase in contract duration. For the full year 2019, our average contract duration was exactly 2.0 years.

I’d like to once again remind investors of how our revenue is determined under ASC 606. Revenue is determined based on the total amount of bookings in the period, total contract value or TCV. As a reminder, we typically enter into either one-year or three-year agreements with our customers. TCV includes the full dollar value of multiyear agreement. Of our TCV booked in the quarter, we recognized between 35% and 40% of that amount upfront. The percentage recognized upfront is solely based on product mix.

Sales of our designer products skewed toward the lower end of the range, while sales of Server, connect and Promote skewed to the higher end. Thus as we experienced more enterprise wide deployments that include Servers, connect and/or Promote are upfront percentage skews towards the higher end of the range.

We recognized revenue upon the later of contract signing or contract start date. As we’ve discussed in prior earnings calls, this factor is important to keep in mind since we have a number of renewal contracts that expire on December 31st, which renew on January 1st. These dynamic results in Q4 TCV bookings that will not translate into revenue until Q1 2020. This impact was evident last year as well. Finally, revenue includes the recognition of the ratable portion of our bookings.

Q4 international revenue was $45.9 million, up 84% year-over-year, as we continue to benefit from the strong global demand for analytics. Of our 719 Global 2000 customers, approximately half are non-US based. This validates our continued investment in our global go-to market and support organizations.

In Q4, we added 474 net new customers and now have 6,087 total customers, including 719 or 36% of the Global 2000. Notable customers that transacted with Alteryx during the fourth quarter included; Chevron Corporation, Federal National Mortgage Association, Fannie Mae, Salesforce.com, Splunk, Inc., Ulta Beauty and Xerox Corporation.

Before moving on, I want to remind everyone that unless otherwise stated, I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP results.

Our Q4 gross margin was 93%, consistent with Q4 2018. Gross margin was positively impacted by our strong fourth quarter revenue performance. Our Q4 operating expenses were $94.8 million, compared to $56.7 million in the same period last year. A year-over-year increase in operating expenses was primarily due to additional headcount in other investments and scaling our global operations.

Our Q4 operating income was $51 million or an operating margin of 33%. Net income was $44.2 million or $0.64 per share based on $69 million non-GAAP, fully diluted weighted average shares outstanding. Our net income assumes a non-GAAP effective tax rate of 20%.

Briefly summarizing the results for the full year, revenue was $418 million, an increase of 65% year-over-year. Gross margin for 2019 was 92% in line with 2018. Operating expenses for the year were $309 million compared to $184 million in the same period last year.

Full year operating income was $75 million or an operating margin of 18%. Net income was $65 million or $0.94 per share based on $68.7 million non-GAAP, fully diluted, weighted average shares outstanding.

Turning now to the GAAP balance sheet. As of December 31st, we had cash, cash equivalents, short-term and long-term investments of $975 million, compared with $986 million as of the end of Q3 2019.

Cash as of December 31st reflects the cash paid for the purchase of Feature Labs which closed in October. Finally, we ended the quarter with 1,291 associates, up from 1,176 associates at the end of Q3 2019 and 817 associates at the end of Q4 2018. Our increase in headcount is reflective of the pace of the investments we are making and expect to continue to make to capture the meaningful opportunity we see globally.

Now, turning to guidance. As a reminder, please note that our guidance assumes the following. The average duration of our subscription agreements will be two years consistent with the levels we saw in 2019. Approximately 35$ to 40% of our TCV booked in the quarter will be recognized upfront with the remainder recognized ratably over the life of the contract.

Quarterly revenue seasonality will be consistent with what we experienced in 2019. Capital expenditures of approximately $45 million, which includes the cost associated with the build out of our new headquarters and additional offices globally. No material changes to the overall macroeconomic conditions.

For Q1 2020, we expect GAAP revenue in the range of $105 million to $108 million, representing year-over-year growth of approximately 38% to 42%. We expect our non-GAAP operating loss to be in the range of $6 million to $9 million and non-GAAP net loss per share basic and diluted of $0.07 to $0.11. This assumes $66 million non-GAAP weighted average shares outstanding basic and diluted.

For the full year 2020, we expect GAAP revenue in the range of $555 million to $565 million, representing year-over-year growth of approximately 33% to 35%. We expect our non-GAAP operating income to be in the range of $71 million to $81 million and non-GAAP net income per diluted share of $0.80 to $0.91. This assumes $71.5 million non-GAAP fully diluted, weighted average shares outstanding and an effective tax rate of 20%.

And with that, we’ll open up the call to questions. Operator?

Question-and-Answer Session

Operator

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Thank you. And our first question is from Brent Bracelin with Piper Sandler. Please go ahead with your question.

Brent Bracelin

Thank you and good afternoon. I’ll start with Dean and I had a follow-up for Kevin. Dean, could you provide additional color on what’s driving kind of broader Alteryx engagement at some of these larger global SIs? I know you announced the strategic alliance with PwC last week, but our checks all show pretty healthy engagement at Accenture, IBM and Deloitte. So, I guess the question here is, why are you seeing these large global SIs engage more broadly? What are the drivers and kind of why now?

Dean Stoecker

Well, thanks for the question, Brent. I think there’s a couple of vectors that are occurring kind of simultaneously here. First of all, the quarter I think and the year were largely driven by just improve execution by the company. We have been spending quite a bit of time on our top down selling motion and I think that’s reflected in the strategic alliances that we’ve formed in the execution in G2Ks that we’ve established.

The second thing I think that’s driving this is, all the factors that are falling under the umbrella of what we’ve been referring to recently as digital transformation 2.0. I think over the decade between 2010 to 2020, there was a lot of money spent on digital transformation, a lot of things didn’t go well. Most organizations did not see success or at least sustainable success.

And it’s for a variety of reasons, many organizations had sort of outward in approach as thinking they could digitally transform others before digitally transforming themselves a kind of a selling out of the humans in the digital transformation effort and probably an overreliance on machine. And I think that’s completely changed. We’re seeing now an inside out approach, we’re seeing the requirements to upskill data workers having the human in the mix, which means, you’ve got to have a human centered platform available to them.

We believe we’re best human centered platform. And the emergence of DDoS or the proxy DDoS that we’ve been talking about now for well over a year on these very calls. And these folks in the organizations see and understand this networking effect of people data technologies and processes in organizations. And it turns out that the global analytics consulting firms in the Big Four are all beginning to realize that digital transformation has to be inside out.

So we’re seeing these firms focused more on automation, we see them focusing more on the convergence between the personas that matter and digital success like the convergence of the citizen data scientists, the trained statisticians, and this new profile of the data engineer that has always existed, writing [indiscernible] mostly closer to IT. And as we engage with more companies in a net expansion model or net expansion number of 130%, we’re starting to see the data engineers arrive more often.

We also have been talking about the other factor that is extraordinarily important, that is the fact that analytics is a social experience. And that’s at the heart of digital transformation. So, community is extraordinarily important. And that’s what’s driving this ecosystem build out is that we’ve executed and the time is now we’re seeing digital transformation 2.0 arrive in extraordinary fashion.

Brent Bracelin

Helpful color there. It sounds like we need a little more time understanding what’s happening there, but certainly interesting. Kevin, just for you here on RPO, we have the first year-over-year growth metric now that came in at over 80%, which is a little higher than, well quite a bit higher than I anticipated. Help us understand the put and takes as you think about that really strong RPO number versus your duration or other kind of factors that maybe are driving that above the call it, true kind of ratable growth rate of the business?

Kevin Rubin

Yeah. Thanks, Brent. So a couple of things. You know, I think if you look at the growth rate in RPO is was obviously very consistent with the growth rate in bookings. And you would expect those to be somewhat similar. As I mentioned in our prepared remarks, we did see a modest increase in duration in the quarter. And I shared a similar set of colors in Q3 as well. So duration you know, generally has been a favorable component to our bookings. And then I guess lastly, you know, I did provide the clarity in terms of, you know, for 2019 average duration was exactly 2.0.

Brent Bracelin

Great, thank you so much.

Kevin Rubin

Thanks, Brent.

Operator

Our next question is from the line of Brad Sills with BofA Securities. Please proceed with your question.

Brad Sills

Oh, great. Thanks guys. Wanted to ask about the net dollar basic expansion. The one-third numbers just holding on very nicely here at 130% you know, 130% plus range. How much is Connect and Promote now contributing to that metric? Is it coming in more increasingly I guess, any color on just how those two like the cross bell motion has been going there with Connect and Promote?

Dean Stoecker

There today, Brad, there’s still very little impact from Connect and Promote. I think we, at the time of acquisitions and the product launches, we indicated it would be quite some time before we began to see impact on these.

I would imagine that as we continue to get the global advisory firms pitching digital transformation efforts that might pick up in the future, it’s still kind of unknown, a lot of the expand is still with designers. We’re beginning to see the focus on automation drive more Servers as we become part of the analytic fabric of large global enterprises.

I will say that the conversations about Connect and Promote is the end caps for the platform continue to elevate, they happen sooner. The digital journeys that organizations are going down through tend to start with the same as that we’ve always had, it’s a couple of pizza designer at 10 or 12 grand at 45 days. And, you know, you get 20 designers, you get a Server.

And at some point, in time there’s an inflection point where people decide that they don’t want to lose sight of the assets that are being created by this new class of scientists, citizen scientists, so Connect comes into the picture. And then of course, if our pieces way back when we bought Yhat is true, then eventually, all of these citizen scientists are going to be creating machine learning algorithms and deployment is going to be critical.

Brad Sills

That’s great. Thank you. Thanks for that. Very helpful. And then I wanted to ask one last one on this new persona, the data engineer. If you could elaborate a little bit on you know, what’s driving that? Why now? What it was different in their needs versus the data scientists and you know citizen data scientists?

Dean Stoecker

Well, I think that if you think back to systems of record, even IT, the scientists typically need access to data step to drive algorithmic processes and they typically relied on data engineers to go do that work. Usually writing SQL or using SSIS it’s other kinds of capabilities that required coding.

And I think organizations are beginning to realize that these data engineers, I think morphing into DevOps people are beginning to become a really critical component to get the digital transformation to step faster, rather than the convergence between the citizen and the trained statistician, I think is going to accelerate with the emergence of the data engineers.

Brad Sills

That’s great. Continue.

Dean Stoecker

Yeah, and let’s not forget this, that digital – core components of digital transformation is the necessity of organizations to see data as an asset and analytics as a prowess. And those data engineers typically are the ones who understand data as an asset first. And so they’re going to be able to help the PhDs get more productive, and they’re going to help get these citizen data scientists more literate around data as an asset.

Brad Sills

Very helpful. Thank you so much.

Operator

Thank you. Our next question is from the line of Tyler Radke with Citi. Please proceed with your question.

Tyler Radke

Hey, good afternoon, guys. Thanks for taking my question. I apologize if I may have missed some commentary on this earlier, but I wanted to touch on a couple of things. First, maybe Dean, you know, it seems like in the, you know, the past call and at a recent Investor Conference you’ve been talking a lot more about digital transformation and automation rather than data and analytics.

I’m curious if that's, you know, a function of a change in you know, in terms of use cases that you’re seeing with your customer and then, I’d be curious, you know, obviously the change in the beginning of the year to increase the price on Alteryx Server. I’m curious if that was a reflection of you know, some of the more you know, maturing of the use case you saw and maybe just help us understand the puts and takes of that? And then, you know, maybe Kevin, if you want to jump in and just help us understand the, you know, the financial framework in terms of you know, the impact on 2020, that the price increase may have? Thank you.

Dean Stoecker

Great question. I truly believe that the focus on automation has everything to do with success in data science and analytics. I think what organizations are beginning to realize is there’s so much value that can be had by automating processes that are now easily being created by more people across all functional areas of organizations that rather than waiting for analysts to push the go button every morning at 8 am or 10 pm or whatever it is to get their reports and analytics and KPIs and dashboards and models built. That automation is just critical.

So it’s the affirmation that, that we have, in fact, amplified human intelligence and put the capabilities into more people’s hands. And the second part of your question is then why the price increase. I think by illustration, if you go through community.alteryx.com, you’ll see tons of use cases and customers writing about the value that they’ve received, much like the BAT example, driving $9 million in automating even routine kinds of processes. And it’s not really sure what the impact will be on this, but we do see is that we’re creating real value for customers with our Server product and that price implementation actually occurred here in Q1.

Tyler Radke

Great. And maybe if I could ask the follow-up for Kevin. So you know, you talked about the very strong bookings growth, you know that in Q4 here, we obviously have revenue growth that, you know, 75% and I appreciate the granularity on the duration, you know of 2.0. But maybe could you help us understand what duration has been at a granular level maybe a year ago. And you know, just as a way to think about, you know, the duration adjusted or annualized bookings growth for the full year of 2019, just so we can kind of help, you know, understand the impact of duration on overall bookings growth? Thank you.

Kevin Rubin

Yeah, thanks, Tyler. So, you know, we’ve been talking even as we were kind of preparing for the IPO and going through conversations that the average contract duration has been two years. Obviously, that’s an average and so we thought it would be helpful to provide a little bit more precision for 2019. But I think the point is that, you know, going back, you know, as early as 2016 you know, our average duration has still been in that range.

Now, we have seen some improvements in the back half of 2019, but not to the extent that it actually affected the averages. So, in any event, I think you know, that at least illustrates the stability, you know, in the customer decision around duration that we’ve seen over you know, three or four years.

Let me also add that, that it’s an expected effect of becoming a critical component of their analytic framework in organizations you can expect them as they see more and more value to one of the networks for longer-term deal. Again, affirmation that the strategy we put together for many, many years now is paying off in spades.

Tyler Radke

And Kevin, so just to jump in real quick. So the 2.0 is that a kind of total contract duration of everything on the books or was that – is that a bookings duration for the renewals and new deal signed in Q4? Thanks.

Kevin Rubin

Oh, that’s an average for the whole business.

Tyler Radke

Okay. Appreciate the color. Thanks.

Operator

Our next question is from the line of Derrick Wood with Cowen & Company. Please proceed with your question.

Derrick Wood

Great, thanks. I guess I’ll pick up on that topic. So the spread, Kevin between reported revenue and reported billings growth has really expanded in Q3 and more in Q4. It sounds like it’s mostly due to duration and product mix, but you did make a comment that you have, you know, more bookings that have invoices in – on January 1st. So I guess was that kind of an unusual mix that caused you know, a higher percentage of bookings that didn’t get invoiced until January 1 and we should see that in deferred revenue in Q1? Anyway to provide some more color on that?

Kevin Rubin

Yeah, thanks, Derek. So as we’ve mentioned before, you know, the calculated billings number that I think you – you’re referring to, you know, it has noise in it, you know, one of the dynamics that you described is in fact, correct. You know, we have contracts that, you know, their billing schedules are different, if you will or fall over into the next quarter. So it does provide a difference in between, you know, the billings growth count that you’re looking at and the actual revenue growth.

We have coterminous contracts where customers are adding on mid cycle that often will drive a less than an annual billing, because you’re billing them just through the next period. So there’s a number of reasons why those numbers you know, maybe different.

There wasn’t anything per se in Q4 that was unique other than, you know, as we’ve called out both last quarter and this quarter, just the dynamic that we do have a large number of year end deals that ultimately trigger in January.

Derrick Wood

And just to clarify, the 35% to 40% recognized up front, it was again at the high end of that range?

Kevin Rubin

I didn’t actually provide any color on that in the prepared remarks, but it did skew to the high end of the range.

Derrick Wood

Got it. And then Dean, one for you. How should we think about how you guys are going to roll out assisted modeling this year and what kind of monetization strategy that could come with that?

Dean Stoecker

Those plans are all in the works today, we’re in a final beta of assisted modeling. We’re confident in the value that it will drive for our customers, particularly the citizen data scientists who need to understand in a transparent way, what modeling is all about and how to prepare data and how to decision off of it.

It would be premature for me to tell you how we’re going to do it on this call we haven’t notified customers of what we’re going to do. But in the next couple of months, you’ll see some materials that describe one, the value that we’re going to provide and how we’re going to package this modeling. We see it as a much better approach to amplifying the skills of the non-trained statisticians. And it will give us the springboard into an auto modeling capability at some point in the future.

Derrick Wood

Okay, all right. Thanks, guys.

Dean Stoecker

Thank you.

Operator

Our next question is from the line of Christ Merwin with Goldman Sachs. Please proceed with your question.

Kevin Kumar

Hi, this is Kevin on for Chris. Thanks for taking my question. International saw strong growth this quarter. Was the performance broad-based and can you talk a bit about adoption trends that you’re seeing across the different regions?

Dean Stoecker

Well, the adoption trends are pretty consistent. I think the only factor that changes any of it is the duration of our time in market. But it’s clear that the Global 2000 in particular, have the same challenges worldwide, whether you’re, you know, an Alpha team in Dubai or you’re E&A in Tokyo, it really doesn’t matter or everyone’s got the same issues around eking out the estimated $10 trillion to $15 trillion of value that’s locked up in data.

So our teams are executing almost identical playbook, there are cultural differences, both bottoms up selling and top down selling. The engagement models with the global advisory firms is pretty consistent, internationally and we continue to see the traction pretty much everywhere we go.

Kevin Kumar

Great. And can you just talk about hiring trends as you enter 2020, is sales capacity where you would like it to be and how are you thinking about incremental go-to market investments this year?

Kevin Rubin

Yeah, so I mean as we’ve talked about in the past, we do tend to front-load our hiring as we enter into a new calendar year. So, you know, we are expecting, you know, to see that dynamic again, continue here in Q1.

You know, we have, you know, continued to focus on investments that I think is evident through kind of our guidance on continuing to invest in go-to market is our kind of primary focus. You know, there’s still a tremendous opportunity within the Global 2000 around the world, we only have 36% of them today. So being able to, you know, continue to build out that global infrastructure. And then we’ll continue to also invest in other areas of business, including business specifically product and engineering.

Kevin Kumar

Great, thank you.

Kevin Rubin

Thanks.

Operator

Thank you. [Operator Instructions] Your next question comes from the line of Steve Koenig with Wedbush Securities.

Steve Koenig

Thanks, guys. I had two, but I’ll save one for the callback. So I guess I’ll ask you, I'm intrigued by the comments about the data engineer persona. And I’m wondering, you know, to what extent has the increasing visibility of that persona to Alteryx be a function of you guys, you know, really briefing IT fortress and taking over from EPL, from other IT-centric tools from custom programming and how big could that opportunity be for you guys?

Dean Stoecker

Well, we’re actually going through the process now of sort of sizing that aspect of the market we don’t really have tons of detail. We do see the persona emerging more and more often. I think it’s a critical element, they are using other tools. I don’t think you’re going to see a sea change. In our approach, you’re not going to see, you know, we’re not going to wake up one day and see a gigantic shift in their adoption.

I think it’s for the firms that are in the digital transformation effort. I think it will happen a bit after DDoS or proxies begin to really understand the importance of data engineers. I don’t think it necessarily increases the TAM I think it actually allows the TAM to occur in a more seamless fashion.

We’ve always talked about the 47 million different franchisees, the analysts in the line of business and that $25 billion that sits over in IT and that the winner of the productive minds of the line of business would be the natural beneficiary of the sheer shift. I think they aid in that sheer shift. And perhaps we’ll see it sooner.

Steve Koenig

Got it. Great, well thank you very much.

Dean Stoecker

Thank you.

Kevin Rubin

Thank you.

Operator

Your next question comes from the line of Ittai Kidron with Oppenheimer. Please proceed with your question.

Ittai Kidron

Thanks. Kevin, I wanted to dig into the expansion rate, still holding up quite nicely, but maybe you can give us at least qualitatively some color on how much of the movement there is tied into designer seat expansion versus new product sales like you know, Server or Promote or Compose – Connect, I’m sorry?

Kevin Rubin

Yeah, thanks Ittai. So continuing on some of the comments that Dean had made. We still can continue to see you know, the lion’s share of expansion through seat expansion so that you know that it is a combination of designers in Servers. But it is fundamentally, you know, more use cases, more users, greater use of automation within accounts, you know, Connect and Promote on their own are still contributors. But the success that we’re continuing to see with the designer Server product is certainly driving the lion's share of expansion.

Ittai Kidron

Very Good.

Kevin Rubin

Thank you.

Operator

Our next question is from the line of Michael Turits with Raymond James. Please proceed with your question.

Michael Turits

Hey, good evening guys. Dean, can you talk about competition among other data science platforms? Oracle made an announcement today, Databricks has been more visible, companies like DataRobot are out there. So a bunch of private companies, but maybe could you just schematize and tell us what the key components you think are in that platform, whether it’s auto ML, prep – production tools and where you think you stand up against some of those competitors?

Dean Stoecker

Yeah, it’s a great question. I think what we’re beginning to see is a rapid consolidation in the space. And it’s because of the need of organizations to have a platform. So, everyone wants to be a platform. And everyone wants to be a platform today in what I think is inarguably the largest sector of the tech sector that we’ve ever seen, data science and analytics.

So, we’ve long said that analytics is a continuum. The foundation of the continuum is built around expert data prep and blending capabilities, something we did extraordinarily well and continue to do very well, but it is the onramp for everything else.

And so, there are players out there that want to call themselves platforms and their biz vendors would be at the lowest value chain in the continuum, descriptive and diagnostic analytics, there’s those that are involved in predictive modeling, there’s those that providing AI and ML capabilities, almost in all cases, requiring trained statisticians.

So we see everyone kind of jumping into the space at the affirmation that what we’ve built is in fact, what people need. And I believe that when – we don’t really do bakeoff, we don’t really compete other than with staff, and it’s kind of an incumbent compete more than anything. But it’s clear to us that everyone wants to be a platform.

And if they have to have the entire continuum, they’ve got to have data prep and blending, they’ve got to be able to touch many database living anywhere in any container, they’ve got to be able to clean it, organize it, standardize it, prosecute the entire spectrum of predictive machine learning processes and they need to be able to play their algorithm. And if they have that, we haven’t seen it. But you’ll I’m sure, there are a lot more noise from all kinds of vendors about having a platform. We welcome them to the mix.

Operator

Thank you. The next question is from the line of David Griffin with William Blair. Please proceed with your question.

David Griffin

Hey, good afternoon and thanks for squeezing me in. I wanted to quickly touch on the product to roadmap. So, you know, you’ve recently started to talk more about the opportunity to introduce new vertical solutions, which I think makes a lot of sense. But it also looks like there’s still some work to be done in the near-term around integrating some of the recently acquired technologies and bringing some of the recently announced capabilities from beta to, you know, kind of GA. So it’d be great if you could just talk a little bit about the innovation roadmap here and whether we could potentially see any of the new vertical solutions rolled out this year or is that something that’s a little bit further down the road?

Dean Stoecker

Sure. So when we talked about vertical solutions over the past few quarters, we addressed the first I guess, first wave of verticalization and that was a go-to market motion that was selling and marketing. So we stood up teams for CPG/Retail, we’ve done it for public sector, we’ve done it for healthcare. The verticalization beyond that has been things like what we call, kits. These are starter kits that allow an analyst in healthcare to be able to see four or five, six use cases within healthcare that are pretty typical across the provider community within healthcare.

The next wave, though, of vertical solutions is not just us building pure vertical solutions as SaaS services but when, I guess the ultimate value in the platform is when other people innovate on it, so the innovation isn’t necessarily restricted to us. And we’re beginning to see that around the world where customers are of course standing up solutions of their own, whether they’re in the advisory business or they’re in a vertical that just needs to have a tailored best practice for themselves.

Many of them are doing this on Server. So remember Server doesn’t allow you just to have a scheduler, Server allows you to deploy apps and APIs that can be controlled through UI and another app or via the mobile device or a browser. And we’re beginning to see a lot of these starts to appear.

While Alteryx will begin to produce more of these vertical apps going forward. Some of the verticalization is just repackaging our existing offerings that it’s going to be a little bit more tailored to vertical spaces and again, later this year you’ll begin to see early days of that next wave of verticalization.

Operator

Thank you. Your next question is from the line of Pat Walravens with JMP Securities. Please proceed with your question.

Joey Marincek

Hi. This is Joey for Pat, thank you for taking our questions. How should we think about your strategy for M&A moving forward? Thank you.

Kevin Rubin

Great question. As you know, we did our convertible back in, I think it was August of last year. And we saw the dynamics in the space and we recognized that a lot of really great technologies and teams are going to make it or are going to – wanting to be part of a broader platform like ours. Our pillars for M&A are pretty consistent with what we said when we did our first convertible a year and a half ago.

And that is IP first, if we can find the IP that’s written in an environment that makes it easier to integrate into both current and future technologies that we have. And it builds out where we believe this market is going around data science and machine learning, and we’ll look at those companies checking in a full employment economy, especially in the data science world we’re always looking for acqui-hires. Sometimes you get both acqui-hires and IT, we believe that most of our acquisitions have those two dimensions for sure.

And then the third is the, you know, the acquisition of revenue and customers that we can put into a net expansion number of 130%. I haven’t found those yet those would likely be it’s really more money. But we’re seeing lots of activity where people want to be part of the Alteryx platform. Again, affirmation that’s kind of what we set out to create many years ago is, in fact, being embraced by the broader markets.

Operator

Our next question is from the line of Rishi Jaluria with D. A. Davidson. Please proceed you’re your question.

Rishi Jaluria

Hey, guys thanks for taking my question. Dean just wanted to ask if you could maybe expand a little bit on the PwC partnership and with you know, the branding relationship with them. What do you expect maybe incremental out of that partnership that hasn’t been there before? Thanks.

Dean Stoecker

Well, first of all, I don’t know if I’d classify it as a partnership. I would classify it as a strategic alliance. They obviously signed up as our first global elite partner, now that may not adequately describe the opportunities for either PwC Alteryx or customers. And so this alliance will allow PwC to go-to market and really take digital transformation to what we would refer to as 2.0 to the broader Global 2000 community.

We don’t know exactly what we will expect. I think we’re working hard to align ourselves in the two teams to make sure that first and foremost we provide offerings to customers that provide tremendous value as they try to understand the data landscape that they have and trying to upskill the capabilities of organizations who actually do need to digitally transform or get disrupted by other people.

This is a new program. We put it together last fall and it’s part of a broader alliance program that we – and we’ve always had a great channel program 20% of our revenue is coming from resellers. A lot – more of our revenue is from influence revenue coming from the advisory firms. And we just never formalized it.

And this last fall we put together a team that created a more programmatic approach for alliances that we’ve got a global elite program and it’s anticipated to generate $1 billion in bookings to us over a five-year period, an elite alliance program that is expected to deliver $300 million in bookings to us over three-year period in a principal program that’s expected to deliver $100 million to us over a three-year program.

It’s early days for the program, we’re super excited that that PwC stepped up to our global elite and you know we’re engaged with them now and we’re very excited about the prospects of helping customers around the world see success in digital transformation.

Operator

Thank you. Our next question comes from the line of Mark Murphy with J.P. Morgan. Please proceed with your question.

Unidentified Call Participant

Hey, thanks this is [indiscernible] filling in for Mark. Dean two-part question for you, I think have disclosed before that 60% of your customers have been involved in advanced analytics kind of use cases. Has that kind of picked up at the end of the year? And is it possible to understand excluding spatial analytics, what is that number?

Dean Stoecker

Well, we’ve not divulged that before off the top my head, I couldn’t tell you what it is. I’m not sure if it’s necessarily appropriate to separate one form of advanced analytics from another form of advanced analytics. We do have telemetry. So we do know for a large part of the user base, what they do engage in. We are beginning to see, you know, we’ve had our Python tools out there for about a year now and we’re beginning to see more and more people leverage Python or much more complex of use cases.

So I still think it’s pretty early in that transition. What we do know for certain is that, we are amplifying the skills of our customers and we’re seeing it in the way they react, we’re seeing in the motive feedback that we get. And see these use cases being far more strategic, particularly in the G2K. So it might be presumptuous for us to define what advanced analytics are. What we do know is that, we become much more critical fabric for the analytic framework of organizations in using any of the advanced analytic capabilities of the platform.

I mean, don’t – let’s not forget that there’s 270 some odd tools within the platform with Python, we have the ability for an infinite number of new tools. And for those tools, we actually don’t have visibility into telemetry, we know that they use the tool, we don’t know the extent of the advanced notion that that’s created in this tool.

Unidentified Call Participant

Right, understood. Just a follow-up with that. In that vein, how should we think or how do you think about Alteryx versus some of the cloud providers that are providing something like SageMaker or Azure ML Studio? Is that more of a very complementary product in your opinion to Alteryx?

Dean Stoecker

Well, we’ve always seen the ecosystem as complimentary. It would be somewhat silly to think that everyone’s going to use only our product. And so we have partnerships with, you know, the folks like a DataRobot or an H2O or an Azure ML. Well we don’t have a formal relationship with SageMaker, the folks over there at AWS.

We see the benefits of Alteryx and that rarely do our customers have all their data in one place. In fact, I think the motivations that the cloud vendors, is to get your data into their place and the reality is most customers aren’t going to do that. They’re going to be multi cloud forever. They’re going to be on-premise for a very, very long time. In fact, I think a lot of the narrative that we see out there now is that the data hasn’t moved nearly as fast as people once thought it would.

So having a set of partners in this ecosystem of data science and analytics we find very, very helpful. In fact, one of the things that you might have seen just recently days is the renaming of our conference call used to be called Inspire, it’s now called Analyticon or Global Conference.

And the whole purpose of Analyticon is to invite in this diverse and inclusive community of not just users, users of Alteryx and users of other capabilities from other vendors, but to bring in those other vendors, because I think one of the challenges that businesses face is that the market for data science and analytics is so fragmented, people get so confused, they waste so much time and money trying to get to meaningful outcomes.

We’re trying to bring that all back together in a cohesive environment. And I think you’ll find that if you come join us at Analyticon in June, in New Orleans, you’ll see the camaraderie even amongst the vendors who on surface might look like they compete be actually are far more friendly.

Operator

Thank you. Our final question is from the line of Taz Koujalgi from Guggenheim Partners. Please proceed with your question.

Taz Koujalgi

Hey, guys. Thanks for squeezing me in. Can you guys give some more color on the price increase? I believe there was a price increase on the several product. Was there a price increases on other products? And if you guys can give some more details on how much fullest would that give in fiscal ’20?

Dean Stoecker

Well that price increase went into effect this quarter. So we don’t know the full impact. I think the price increase was truly of a reflection of the value that we’re driving for customers more than anything else that you might think.

I’ll let Kevin address, you know, the impact on the model that we’ve presented to you for 2020. But the reality is we become an integral part of the strategic analytic framework organization and that we believe that there’s value in the Server products that we have.

Kevin Rubin

Yeah, just to touch on the model for a moment. So to Dean’s point, I mean as – and as we’ve mentioned as you know, the deeper that we penetrate organization and the more that they’re leveraging Alteryx for automating their analytic pipelines that is all being kind of on Server. And so Server is a key piece of that expansion cycle and it’s an incredibly valuable piece. And so, you know, I would just say that, you know, we expect to continue to see Server as a meaningful piece of expansion and overall revenue and you know, any impact of price changes would obviously be included in the guidance we provided.

Operator

Thank you. At this time – we’ve reached the end of our question-and-answer session. I'd turn the call back to Dean Stoecker for closing remarks.

Dean Stoecker

Thank you, operator. Thanks everyone for joining us today. We look forward to updating you on our continued success throughout 2020. Thanks for your time.

Operator

Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.