Why Alteryx is on Every Analyst’s Holiday List
It’s officially here. Thanksgiving marks the beginning of the holiday shopping season. By all accounts, companies that have embraced digital are winning, again.
Consumers spent $7.4 billion online during Black Friday, according to a report Saturday from Adobe (ADBE). That figure is up $1.2 billion from 2018. It also follows a robust $4.2 billion spent during sales promotions leading up to Thanksgiving.
Adobe Analytics is part of the Adobe Experience Cloud. The division helps companies measure customer outreach by tracking 55 million stock-keeping unit tags across 4,500 online sites.
These SKUs, coupled with other data points like engagement, tell the story of what products and strategies are working and why.
Customer relationship management (CRM) applications like Adobe Experience Cloud are the leading edge of the digital transformation, a movement to make digital information more actionable. Effective CRM helps enterprises become more competitive and innovative. It can also be easily measured across customer service, sales, marketing and digital commerce channels.
Gartner, a global information technology researcher, found the CRM market grew 15.8% in 2018. In a June report, analysts predicted it would remain the fastest-growing part of enterprise software expenditures.
It’s a $48.2 billion market that is dominated by fast-growing companies like Salesforce.com (CRM) and Adobe.
Investors should pay attention to both businesses.
But despite how well these digital channels are doing, they’re not the big opportunity. Rather …
Alteryx Inc. (AYX) is.
This Irvine, Calif.-based company operates a software platform for data scientists. It allows them to plug in data, often without coding, build models and get actionable insights fast. The secret is the platform sets in the middle of the data analytics stack. Digital information in a variety of formats and from multiple sources can be plugged in and made useful.
In the beginning, the company made a name for itself helping large companies like Amazon.com (AMZN), Ford (F) and Coca-Cola (KO) find market inefficiencies. However, the software quickly became a useful as a tool for investment companies analyzing derivatives.
Professional sports teams, like the Dallas Cowboys and Green Bay Packers, use Alteryx to perform player analytics. And that platform has become a must-have instrument for retailers trying to make sense of data coming from storefront point-of-sale systems, e-commerce and from digital influencer campaigns.
In March 2017 Alteryx came public when managers offered 9 million shares at $14 on the New York Stock Exchange.
At the time, co-founder Dean Stoecker told CNBC that Alteryx was relevant because legacy data analytics was completely broken. As more parts of the economy become digital, legacy tools were sippy straws sucking at a lake.
Related post: Next-gen Approach to Data Analytics is a Game-changer
Alteryx is more like a pipeline. Its codebase lets users suck up data from companies like Tableau, a firm that makes low-level digital information intelligible.
That data is deployed to predictive analytics and machine learning algorithms without writing any code, then pushed out to higher level consumption applications like Adobe and Salesforce.
Stoecker explained what the company does, and why it’s so important in an interview.
Today, the company has technology partnerships with Amazon Web Services, Microsoft (MSFT), salesforce, Oracle (ORCL) and Tableau. Its customers range from Adidas (ADDYY), Dairy Queen and Johnson & Johnson (JNJ) to Unilever (UN) and Home Depot (HD).
In the digital era, maintaining market share is more difficult than ever. Digital channels make it easy for smaller firms to compete head-to-head with multinational companies. The businesses that are winning are using data to understand their customers better.
Just look at all those holiday-shopping predictions you see all over TV and the internet, and the spending data from Black Friday and Cyber Monday that you see in nearly real time.
- Adobe Analytics will analyze 1 trillion transactions during the holiday shopping season.
- Salesforce Commerce Cloud tracks 500 million shoppers across 30 countries, according a TechCrunch report.
They can do that thanks to no-code software solutions like Alteryx where they can furiously plug in even more data.
The company posted third-quarter sales of $103.4 million Oct. 31, a gain of 65%, compared to the same period a year ago. Sales surged to $253 million in 2018, a gain of almost 93% year-over-year.
For the fourth quarter, Alteryx is expecting revenues in the range of $128 million to $131 million, a gain of between 44% and 47%.
Alteryx shares are up 90.9% this year, for a market cap of $7.3 billion. The stock is up 710% since its March 2017 IPO.
Despite these numbers, the stock is cheap. This is because the digital transformation of the enterprise world is in its infancy. Corporate managers will need bigger pipelines to push an expanding universe of data in the future.
Growth-oriented investors should consider buying Alteryx into weakness.
This is why Alteryx has been in our Tech Trend Trader portfolio for several months now. It’s currently tracking with double-digit gains. And it isn’t the only one. We’re even tracking triple-digit gains for certain positions. My DISRUPT system is already on the hunt for our next big opportunity.
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Jon D. Markman