The Number 1 Reason to Believe:
“Microsoft and the others will have no choice but to either concede market share to Alteryx year in and year out or buy them out for quite the premium.”
By the Numbers:
· $10.6B Market cap as of this post
· Up over 900% since IPO in 2017
· Customer retention on a net dollar basis: 125%+
· Tripled revenue in the last 3 years
· 37% of its clients are in the Global 2000
· Only owns about a less than 1% market share of its total addressable market
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Alteryx was founded in 1997, so they have been in business for over 23 years. However, they only recently went public in 2017, starting at a share price of $15.50. Currently, Alteryx’s Stock (AYX) now sells for about a $11.56 Billion market cap (as of the date of this post) as of this writing post. We here at Phull Plate think that price tag is too low, Alteryx and its capabilities are worth far more. Alteryx sees a total addressable market of $73 Billion between big data, business intelligence, and data analytics. Presently, Alteryx owns about a less than 1% market share of its total addressable market. We fully expect Alteryx to continue to take market share from their competitors at increasingly higher rates over the next decade. It is no secret that Alteryx products are industry leading and capable of transforming a company’s data solutions. This has been proven by their dollar-based net expansion rate exceeding 125% for the last 13 quarters in a row as of the end of Q1 2020. This means that Alteryx has not only been able to retain 100% of their customers but their customers have spent an increasing amount of more money on Alteryx products on a dollar-basis. Alteryx’s products allow companies to solve their increasingly complex data issues and make projects that were once considered impossible now be possible, incredibly simple, and repeatable. The abilities of Alteryx are increasing, scalable and reach across multiple industries in 90 different countries. We strongly believe that every company in the world would operate significantly more efficiently if they utilized Alteryx’s products. Alteryx’s “land and expand” business model ensures that it is only a matter of time for other companies to come to their senses and realize the benefits of their capabilities, just as we have here at Phull Plate. Alteryx has a strong engaging community that is constantly growing. See what it has to offer quoted below from their most recent annual report:
“Alteryx Community currently offers: discussions and knowledge bases that help users, customers, and channel partners learn about topics of interest, ask questions, and share ideas and insights; user groups, which are independent volunteer organizations that provide a platform for users to meet locally throughout the year and provide other users with an opportunity to network with peers and share ideas, experiences, and best practices; an avenue for users, customers, and channel partners to share product suggestions with us; interactive lessons, live trainings, weekly challenges and an opportunity to become certified via Alteryx Academy; and blogs and news and events portals. 10 We also organize events to engage and foster our user community. At such events, our users, customers, potential customers, and channel partners have the opportunity to network, learn best practices, attend training sessions and workshops, and present their questions and suggestions directly to our software developers, executives, and other employees. We also host roadshows and workshops domestically and internationally with our channel partners to teach our users how self-service data analytics simplifies and automates the analysis of data.”
Although, we have intense optimism for this company and its abilities, they do suffer incredible competition; the likes of Microsoft, IBM, Oracle, and SAP, all can be considered behemoths in their industry. Normally, these companies would crush their competitors, but Alteryx is a diamond in the rough. Alteryx is the ultimate disruptor in an industry where Microsoft’s has arguably dominated the last 35 years since replacing Lotus 1-2-3 in 1985. The creation of Microsoft Excel sparked generations of new small businesses and big business efficiencies. Quite simply, Alteryx products have a significant edge over its competitors due to its ability to compute calculations significantly faster and handle a seemingly endless amount of data. Including, connecting to several different sources with complete customization tools available and giving the ability to do all of that without needing to know how to write a single line of code. Microsoft and the others will have no choice but to either concede market share to Alteryx year in and year out or buy them out for quite the premium. Alteryx’s products will be the Microsoft Excel of its generation, proving to be the next step in big data organization and analysis.
The following lines are pulled and directly from the most recent annual report filed by Alteryx:
“Our platform democratizes access to data-driven insights by expanding the capabilities and analytical sophistication available to all data producers, ranging from business analysts to expert programmers and trained data scientists. We unify the analytic process into one simple self-service experience by combining tasks that were previously distributed among multiple tools and parties. Our platform allows a single user to easily discover, access, and prepare data from a multitude of sources, perform a variety of analyses, and deliver analytical output to drive data-driven decisions and improve business outcomes. This is done through visual workflows and an intuitive drag-and-drop interface that can reduce tedious, time-consuming tasks to a few mouse-clicks while eliminating the need to write complex software code. The resulting opportunity is significant, as our platform can enable millions of underserved data workers to do their jobs more effectively."
"Organizations of all sizes and across a wide variety of industries and geographies have adopted our platform. As of December 31, 2019, we had approximately 6,100 customers in more than 90 countries, including over 700 of the Global 2000 companies. Our customers include All Nippon Airways, Chevron Corporation, Federal National Mortgage Association, Nasdaq, Inc., Netflix, Inc., salesforce.com, inc., Siemens AG, Toyota Motor Corporation, Twitter, Inc., Uber Technologies, Inc., Viking Cruises, and Xerox Corporation.
We employ a “land and expand” business model. Our go-to-market approach often begins with a free trial of Alteryx Designer and is followed by an initial purchase of our platform offerings. As organizations quickly realize the benefits derived from our platform, use frequently spreads across departments, divisions, and geographies through word-of-mouth, collaboration, and standardization and automation of business processes. Over time, many of our customers find that the use of our platform is strategic and collaborative in nature and our platform becomes a fundamental element of their operational, analytical, and business processes."
"Customers license our platform under a subscription-based model, and we have seen rapid expansion as adoption spreads across an enterprise through an increase in the number of users, additional use cases, and additional products. For each of the last twelve quarters, including the quarter ended December 31, 2019, our dollar-based net expansion rate has exceeded 125%. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” for additional information regarding our dollar-based net expansion rate and customers. We have made significant investments to grow our business, including in sales and marketing, infrastructure, operations, and headcount.”
Alteryx deploys an especially useful product for big business, as their customer base contains 37% of the Global 2000. They are clearly organized and know the exact approach they want to take in their industry. Also, on top of their high-quality clientele, their product is high quality and has goes beyond the capabilities of their current competition in Microsoft, IBM, Oracle, and SAP. Therefore, at the worst they get bought out for their advances in the industry or they become a powerhouse and completely takeover the sector as the leading company. Phull Plate is paying remarkably close attention to their attitude and moves to see which ways they are leaning. Either way, their products are the most sought after in the industry and that is what counts the most beyond all other factors.
I/we are long Alteryx. Any assertions made are opinion and we are not receiving any compensation for this post other than ad revenue from WordPress and personal donations. Phullplate.com has no business relationship with any stock mentioned in this article. Phullplate.com is not a registered investment, legal or tax advisor or a broker/dealer. All investment/financial opinions expressed by Phullplate.com are from the personal research and experience of the owners of the site and are intended as educational material. Although, best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.