Alteryx has some snazzy data analysis tools, but this company has seen a bit of a rough patch recently, so we ask if Alteryx stock a good investment?
Nov. 2, 2020
Alteryx (NYSE: AYX) does not make quite as many headlines as other software as a service (SaaS) companies, but it is a stock worth thinking about as an investor. As a high growth stock in a high growth sector, is this data company a good addition to your portfolio?
The bull case for Alteryx
Alteryx recently appointed a new CEO, Mark Anderson, who has proven experience guiding enterprising tech companies through the process of scaling up and growing as a company. His appointment was happy news for Alteryx investors who now hope to see the company showcase more strong and stable growth after the last few months of volatility.
This stock has potential growth that will outstrip the market, with an expected earnings growth of 104% per year in comparison to the 22% we should see from the U.S. market, Alteryx could be a good choice for many investors. Also, it is likely to see high growth revenue of 22% growth annually compared to 10% for the market and 12.8% for the software industry as a whole.
Stock is currently up 35% YTD and up 50% year-over-year. Even during a pandemic, this data analytic company managed to increase its net new customers by 271 in the last quarter which is a 30% increase YoY. Moving forward this trend should continue, particularly as new its product with Adobe should attract more attention from businesses with an eye for analyzing marketing figures and increasing customer loyalty.
Additionally, Alteryx can include some heavy hitters among its customer base. Its clients include Hyundai, Chick-fil-a, Barnes & Noble, Cisco, and Coca Cola. Did you know that Coca-Cola's senior business analytics manager downloaded Alteryx as a trial to solve a problem he himself could not solve and from then on he was a fan of its comprehensive set of tools and layout?
The bear case for Alteryx
Alteryx has given investors a few concerns over the last couple of months as can be seen by its highly volatile stock, and in particular, seeing a 38% drop between 7th Aug - 11 Aug. This volatility was caused in part by a lower than expected Q2 growth at only 17% and a low forecast for the second half of the year. For a company that has seen 69% compound annual growth for the past three years, this was quite a shock to its investors.
Alteryx's latest quarter also showed weakness in its business practices as stated in its earnings call. Increased funds were re-allocated to encourage larger businesses to renew their contracts rather than focussing on expanding the medium-sized business sector which has not seen much growth as it presented a 'challenging customer buying environment'. However, Alteryx has been focused on preventing business churn and establishing loyalty during a time where many companies are cutting back on spending costs.
This leads me to the last point in this bear case: the price. Alteryx could be considered a luxury item for businesses that bring in enough revenue to afford its high prices. For the full Alteryx server including its 'Connect' and 'Promote' services, the package can cost anywhere upwards of $117,975 per year. This could prove to be a problem should current economic conditions continue. Perhaps this is why the company decided to focus on the retention of bigger businesses rather than the growth of smaller, more likely-to-be-hit ones in Q2.
So should I invest in Alteryx?
Alteryx is not a bad stock to invest in. It has some risk, namely its current volatility and its price, but as the company is readying itself to scale-up, and a new CEO at the helm to guide it, Alteryx has potential for investors who are willing to wait out the current crisis.
Quickfire round
- What is the difference between Tableau and Alteryx?
Whilst both provide data analysis, Tableau provides its users with great ways to visualize data, whilst Alteryx works well for data cleansing.
- How do I become Alteryx certified?
Alteryx, provide 3 courses between 2-3 hours each. The beginner and the advanced course are free, whilst the expert level costs $150.
- How expensive is Alteryx?
Alteryx costs $5,195 per year for the designer package, however when you buy the Alteryx server it can cost $78'975 per year. Added to the designer package are other options such as its location insights data set, business insights data set, and the Intelligence Suite which cost $11,700 per user per year, $33,800 per user per year, and $2,300 per user per year respectively.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
