Alteryx: A Bad Rap For An Excellent Company

Summary

• Alteryx beat on actuals but provided weak guidance according to analysts. The fact that they provided guidance at all for 2020 is a tribute to this exceptional company.
• The dollar-based net expansion rate of 126% and YoY ARR growth of 40% are impressive for this difficult economic environment.
• After the recent share price drop, Alteryx is now fairly valued relative to its software peers.
• With cash and cash equivalents of nearly $1 billion, the company will most certainly come out of the pandemic and recession in excellent shape.

Alteryx, Inc. (AYX) stock has been in a free fall since announcing Q2 results last Friday. It was not so much the company's performance that shook the investment community, after all, it did beat on both revenue and earnings. The poor reaction was more a case of the company management's future guidance, tales of poor sales execution, elongated sales cycles, and flat bookings, that shook analysts. The stock dropped from ~$180 down to ~$108 in a few days since the earnings call.

(Source: Yahoo Finance/MS Paint)

While the drop in Alteryx stock price is alarming, it is not without precedence. This company has survived other significant price drops, such as back in February-March of this year when the pandemic started and also in September 2019. Each time, the stock has recovered and reached a new high. I expect that Alteryx stock will recover again. It is a strong company and a leader in data analytics, an important factor in digital transformation. This company will bounce back, and I believe that savvy investors would be smart to take advantage of the price drop to load up.

Half Full or Half Empty?

It is really a case of the glass being half full versus half empty. Sure, analysts were expecting more from the company than the forward guidance of 11% YoY revenue growth for 2020 given that Alteryx has grown by 61% annually over the last 5 years. But let's keep in mind that Alteryx is actually guiding for revenue growth in this exceedingly difficult economic environment whereas most other companies have withdrawn guidance completely. I view any revenue growth as positive, especially when it comes to the management of a SaaS company which is known to be very conservative with guidance numbers.

Alteryx did admit to having sales execution issues, primarily due

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.