Insights

Why Alteryx Was Rising on a Tough Day for Other Software Names

What happened
Shares of data analytics and automation software provider Alteryx (NYSE: AYX) were rising today, up 5% as of 2:13 p.m. ET, on a day when many high-growth software companies found themselves deeply in the red.
That’s because Alteryx had already been fairly beaten down last year to quite low valuations, at least relative to other enterprise software companies. In addition, the company reported first-quarter earnings last night that handily beat expectations.
So what
In the first quarter, Alteryx accelerated revenue and annualized recurring revenue (ARR) by the same 33% growth figure. Non-GAAP (adjusted) losses per share were $0.40, which, although negative, still beat expectations.
Alteryx’s results were helped by a slew of recent acquisitions, including Hyper Anna, Lore IO, and Trifacta, each of which benefited year-over-year numbers, and also helped Alteryx’s roadmap to the cloud. Traditionally deployed on-premise at large enterprises, Alteryx recently rolled out a full cloud-based offering of its data analytics platform. The comprehensive platform aims to democratize data science, allowing non-technical business analysts to seamlessly work with data and analytics.
While the cloud transition is hurting gross margin a bit, which fell from 93% last year to 88% last quarter, the transition appears to be reaccelerating revenue. The all-important ARR growth accelerated to 33% from 30% in the fourth quarter of 2021.
That appears to have investors excited. During the quarter, Alteryx’s net expansion rate grew 119%, meaning existing customers spent on average 19% more with Alteryx last quarter versus a year ago. That’s consistent with the past few quarters. The company also added 259 new customers, increasing its customer count by 14% over the year-ago quarter.
Image source: Getty Images.

Now what
Alteryx had a good day today, and may be one of the few software companies that could weather higher interest rates. The stock only trades around 5.7 times this year’s annualized recurring revenue estimates.
That’s inexpensive for the software world; however, the entire software industry is de-rating as investors are selling high-priced stocks for cheaper value stocks that trade at a lower multiple of earnings, amid rising interest rates.
Alteryx looks like a solid value pick relative to its peers, but it is an open question as to how much software stocks can go up this year amid steeply rising rising interest rates. If inflation abates through the year and the Federal Reserve pivots to a less hawkish position, the stock could soar. However, that likely won’t happen until more inflation data is available throughout 2022. That being said, for long-term investors, Alteryx still looks like a cheap way to play the big data revolution going on at enterprises of all sizes.
Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Alteryx. The Motley Fool has a disclosure policy. –

What happened

Shares of data analytics and automation software provider Alteryx (NYSE: AYX) were rising today, up 5% as of 2:13 p.m. ET, on a day when many high-growth software companies found themselves deeply in the red.

That’s because Alteryx had already been fairly beaten down last year to quite low valuations, at least relative to other enterprise software companies. In addition, the company reported first-quarter earnings last night that handily beat expectations.

So what

In the first quarter, Alteryx accelerated revenue and annualized recurring revenue (ARR) by the same 33% growth figure. Non-GAAP (adjusted) losses per share were $0.40, which, although negative, still beat expectations.

Alteryx’s results were helped by a slew of recent acquisitions, including Hyper Anna, Lore IO, and Trifacta, each of which benefited year-over-year numbers, and also helped Alteryx’s roadmap to the cloud. Traditionally deployed on-premise at large enterprises, Alteryx recently rolled out a full cloud-based offering of its data analytics platform. The comprehensive platform aims to democratize data science, allowing non-technical business analysts to seamlessly work with data and analytics.

While the cloud transition is hurting gross margin a bit, which fell from 93% last year to 88% last quarter, the transition appears to be reaccelerating revenue. The all-important ARR growth accelerated to 33% from 30% in the fourth quarter of 2021.

That appears to have investors excited. During the quarter, Alteryx’s net expansion rate grew 119%, meaning existing customers spent on average 19% more with Alteryx last quarter versus a year ago. That’s consistent with the past few quarters. The company also added 259 new customers, increasing its customer count by 14% over the year-ago quarter.

Image source: Getty Images.

Now what

Alteryx had a good day today, and may be one of the few software companies that could weather higher interest rates. The stock only trades around 5.7 times this year’s annualized recurring revenue estimates.

That’s inexpensive for the software world; however, the entire software industry is de-rating as investors are selling high-priced stocks for cheaper value stocks that trade at a lower multiple of earnings, amid rising interest rates.

Alteryx looks like a solid value pick relative to its peers, but it is an open question as to how much software stocks can go up this year amid steeply rising rising interest rates. If inflation abates through the year and the Federal Reserve pivots to a less hawkish position, the stock could soar. However, that likely won’t happen until more inflation data is available throughout 2022. That being said, for long-term investors, Alteryx still looks like a cheap way to play the big data revolution going on at enterprises of all sizes.

Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Alteryx. The Motley Fool has a disclosure policy.

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