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Why Alteryx Stock Is Soaring After Earnings

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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.

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