Keep Buying Alteryx on Pullbacks

Keep Buying Alteryx on Pullbacks

Alteryx (AYX) executives were in New York earlier this month to talk about big data and analytics. It went well.

CEO Dean Stoecker and CFO Kevin Rubin, told a compelling story to a receptive crowd.

To be fair, analysts and institutional investors at the 22nd Annual Needham Growth Conference understand the product. They see the bigger trends in data analytics.

This is a big reason why investors should buy Alteryx shares into any weakness.

Here are even more reasons …

The Irvine, Calif., company is in the right place at the right time. Alteryx makes software that allows business analysts — people without extensive coding knowledge — to easily build powerful data-analysis tools.

Related post: Next-gen Approach to Data Analytics is a Game-changer

In the past, the tool of choice for non-techies was a Microsoft Excel spreadsheet. This solution has become increasingly cumbersome and limited, especially with the growing number of data inputs available.

The Alteryx platform is drag-and-drop. An analyst can be up and running, finding actionable insights, within days. And the collaborative nature of the platform allows the easy sharing of the work.

It’s a no-brainer value-added solution for enterprises racing to transform their business models with digital data.


The Alteryx platform ticks another box …

Data scientists are in very short supply.

With Alteryx, companies need fewer of them because the platform requires no coding expertise. This means entire firms can get up and running quickly, without worrying about competing for expensive engineers.

“Data engineer” was the most in-demand job in 2019. One with more postings than qualified candidates.

Burning Glass’s Nova, which analyzes job postings, found that active listings for data scientists in 2019 surged 88%, according to a report from Dice, a website devoted to tech employment. This is a trend with a strong foundation.

McKinsey & Co., a global business management consultancy, found in 2017 that the shortage for employees with deep analytic skills reached 190,000.

Stoecker and Rubin mentioned those shortages in the webcast of their Needham conference. The imbalance puts Alteryx in a sweet spot. Its business model is “land and expand” — that is, gain a foothold in the enterprise and quickly grow subscriptions.

It’s a strategy Stoecker says the company chose in 2014. Then, managers were at a crossroads. They wanted to grow more quickly. So, they decided to reduce the subscription price per seat from $50,000 to $4,000.

Today, that strategy is leading to explosive growth. And all those seats sprinkled throughout the corporate world are creating network effects.

Analysts using the Alteryx gain a reputation for quick results and collaboration. That leads to even more seats. Sales reached $253 million in fiscal 2018, an increase of 93%. And those have only kept on growing.

Related post: Why Alteryx is on Every Analyst’s Holiday List

The company reported in November that third-quarter revenues grew 65% to $103 million. New corporate accounts increased by 335, to 5,613. More impressive, existing customers are spending 32% more on subscriptions. Fourth-quarter earnings will be announced Feb. 13.

Land-and-expand is working wonders. And it shows …

Today, Alteryx shares are up some 700% since the company’s 2017 Initial Public Offering. But last week, they were down around $20 from their all-time high of $147.79, set on Sept. 6.

Savvy investors should look for weaknesses to get in on this data analytics game-changer. For those of you who already own Alteryx, continue to buy pullbacks.

Best wishes,
Jon D. Markman

Leave a Reply

Your email address will not be published. Required fields are marked *