Note [Aug 15, 2020]: I just found an error in my example used about upfront revenue recognition and corrected it. I also clarified it in the comment section.
Alteryx (AYX) reported second-quarter 2020 numbers and it looked pretty ugly. The company reported only 17% growth in Q2 2020 and guided for only 11% growth for the full year, which is significantly lower than the growth seen in 2019 at 59% and 65% respectively. It is safe to say that COVID-19 has put Alteryx's growth journey at least on a temporary halt and management does not expect a material improvement in business conditions during 2020.
Shares immediately saw a huge sell-off and ended the day after the earnings announcement down 28% and dropped a further 10% as of this writing. At first glance, this seems warranted considering that Alteryx is held up to much higher standards by the market in terms of growth.
Many investors, including myself, will ask themselves now if Alteryx is still worth owning. This article tries to shine a light on the quarter and what can be expected going forward.
Guidance Implies Declining Revenue In Q4 2020
Since Alteryx is supposed to be a company in its highest growth phase, revenue growth is the most important metric to track as an investor. Alteryx used to be a poster child of the revenue growth metric in 2019. Its growth from Q1 to Q4 2019 looked like this: 51%, 59%, 65%, 75% - it was going up, up, up! The market loves that - rightly so - and has rewarded shareholders accordingly.
Alteryx reported revenue of $96.2 million in Q2 2020 (up 17.32% yoy), which was barely above their guidance of $95 million. What is even more disappointing is their full-year guidance (they didn't provide updated full-year guidance in Q1 2020 because of uncertainty), which calls for
