Why Alteryx Stock Is Soaring After Earnings
Data analytics software maker Alteryx is flying high Tuesday morning after reporting quarterly results that beat consensus estimates.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
After data analytics firm Alteryx Inc. (NYSE: AYX) reported first-quarter results in April, the share price dropped almost 20% in one day. A week later, the stock was down 30%. The results were not all that bad; the net loss was lower than analysts had forecast while revenue missed by just $1 million.
Management pointed to growth in recurring revenue and a coming layoff as indicators of Alteryx’s determination to return to profitability. The efforts paid off in the September quarter.
Software is a goldmine
Alteryx reported sales of $232 million for its third quarter of 2023, 9.5% above the consensus estimate from 16 analysts and 7.9% higher than sales in the year-ago quarter. Gross profit on those sales amounted to $206 million for a gross profit margin of 85% on a GAAP basis and 89% on an adjusted basis. The median gross profit margin for 390 software firms is about 71%.
On an annualized basis, recurring revenue (ARR) is up 21% for the trailing 12 months. Adjusted EBITDA margin rose to 19% in the quarter. At those levels, Alteryx is on its way to being able to sustain its profit. Who knows, the company may even be able to pay a dividend someday. Since coming public in 1997, Alteryx has never paid a dividend. (These are the states where AI is creating the most jobs.)
Reining in costs
Alteryx has cut its staff by about 10% since April, mostly in sales and marketing roles. The company said it has “substantially” completed its planned layoffs and has incurred $17 million in related charges in the first three quarters of this year.
Sales and marketing expenses had ballooned in the first nine months of 2023, from $385 million a year ago to $446 million. For the third quarter, sales & marketing expenses dipped from $136 million last year to $133 million. R&D expenses are essentially flat, and G&A expenses are lower.
Adjusted net income for the third quarter came in at $20 million, compared to a loss of $26 million in the second quarter and a loss of $4 million in the third quarter of last year. Analysts had forecast an adjusted loss of $0.06 for the quarter. Alteryx reported adjusted EPS for the quarter of $0.29.
Looking ahead
Alteryx issued fourth-quarter and full-year guidance that was in line with analysts’ expectations for the quarter and above estimates for the year. The company estimated fourth-quarter EPS in a range of $1.10 to $1.17, slightly below the consensus estimate of $1.19. For the full year, EPS was guided at $0.94 to $1.01, far above the consensus estimate of $0.67.
The company expects fourth-quarter revenue of $334 to $340 million, above the consensus of $337.5 million. For the full year, Alteryx forecasts revenue of $953 to $959 million, compared to a consensus estimate of $934.7 million.
Alteryx stock traded up about 19.3% early in Tuesday’s session at around $36.20 in a 52-week range of $27.92 to $70.63.
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
