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Alteryx, Inc. (NYSE:AYX)
Q2 2019 Earnings Call
Jul 31, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Alteryx Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Chris Lal. Please go ahead.

Chris Lal -- Chief Legal Officer

Thank you, operator. Good afternoon, and thank you for joining us today to review Alteryx's second quarter 2019 financial results. With me on the call today are Dean Stoecker, Chairman and Chief Executive Officer and Kevin Rubin, Chief Financial Officer Additionally, Scott Jones, President and Chief Revenue Officer will be joining us for the question-and-answer session after prepared remarks.

During this call, we may make statements related to our business that are forward-looking statements under Federal Securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's EDGAR system and our website as well as the risks and other important factors discussed in today's earnings release.

Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release and the Investors section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.

With that, I'd like to turn the call over to our Chief Executive Officer, Dean Stoecker. Dean?

Dean Stoecker -- Chairman and Chief Executive Officer

Thanks, Chris, and thank you to everyone joining us today. Alteryx delivered excellent Q2 results driven by continued industry tailwinds and strong execution. Here are a few highlights for the quarter. Revenue was $82 million, up 59% year-over-year. We achieved net expansion of a 133%, illustrating our customers continue to invest more in the Alteryx platform over time. We saw a doubling of seven-figure deals and over 50% increase in year-over-year in deals larger than $250,000 both consistent with our expectations as we focus on the Global 2000. And finally, our land and expand business model continues to perform.

Our 2014 customer cohort increased their investment in Alteryx 270% over four years. Our data shows that our 2015 and 2016 cohorts performed better. In Q2, we have 305 net new customers and now have approximately 5,300 customers, including 656 or 33% of the Global 2000. Notable customers that transacted with Alteryx during the quarter included General Dynamics, Ikea Limited, Informatica, KKR Capstone, L'Oreal, Raytheon, Salesforce.com, Sequoia Capital, SolarWinds, Dark Spot[Phonetic], Tiger Capital and Viking Cruises. We set at the crossroads of a number of key market trends that we believe will enable us to deliver strong growth for many years to come.

In our view, the recent business consolidation in this space is simply validation of what we've communicated for a long time. The data and analytics are core to every business worldwide. And while Alteryx has grown significantly in a relatively short period of time or as I like to say, we are a great 20-year-old overnight success, we believe that we are still in the early stages of our maturity to fully capitalize on this massive opportunity. For example, based on our analysis, we believe there are approximately 8 million to 9 million potential Alteryx Designer users within the Global 2000 and we currently have less than 1% penetration within that population.

We have long believed that analytics is a social experience. In fact, a big part of our success is the Alteryx community. And during Q2, we hosted our 10th U.S. Inspire Conference, the largest gathering in our history, bringing together approximately 4,500 customers, partners and Alteryx associates in Nashville to celebrate analytics. These gatherings are an important way to deepen our engagement with our customers and partners. They are also important because customers that are engaged in community have significantly higher expansion rate and are three times more likely to use the advanced analytic capabilities within the Alteryx platform.

For those of you who were able to join us in Nashville, you heard a variety of Alteryx customers share their individual journeys. Some of the notable ones include, CBRE, the worldwide leader in real estate services, automated data pipelines and enable data workers with advanced analytic capabilities in Alteryx to build sentiment analysis and tenant churn models to predict business opportunities. Advent Health, a leader in whole person healthcare reported they leveraged 1 billion data points from various clinical data sources to deliver more than $100 million in ROI. Tax and accounting software maker, Intuit started their Alteryx journey with one analyst who eliminated 20 hours a week of burdensome operational work and have scaled these results across the global analytics team and demonstrated that Alteryx is a critical business necessity. Global investment Bank, J.P. Morgan organically expanded their Alteryx usage from a couple of users to over 1,000 in just over two years. And American Airlines, which operates more than 6,700 daily flights to 350 destinations in 50 countries around the world reduced processing times by 99% in their Line Maintenance Strategic Planning Department and allowed analysis of data that was nearly impossible before Alteryx.

Last quarter we told you about Western Australia-based Horizon Power that started their evaluation of Alteryx with Connect, but ultimately purchased the entire Alteryx platform. At Inspire they described how Alteryx is helping them with their key imperatives of improving customer and employee experience, while improving operational efficiency across the company. They invested in Alteryx to provide a knowledge base with Connect and a DevOps lifecycle with Promote. They invested in Server to provide governance, security and production performance. And of course, with Designer they built a 130 apps supporting six different business units in just four months.

We continue to gain traction in our vertical go-to-market teams as well. This quarter, a North American healthcare provider was seeking a better way to manage nurse staffing ratios to increase profitability. The data science team sought a solution to help with model deployment and began an evaluation of Promote. During their evaluation process, they came to the -- to appreciate the value of the entire Alteryx platform and ended up purchasing Promote, Designer and Server to bring data science capabilities to data analysts, effectively creating citizen data scientists and scaled analytics across the organization.

International performance was also strong in Q2 with international revenue of $24 million, up 58% year-over-year and representing approximately 30% of total revenue. We did business with companies like AiNanoLab in the UAE, American Express India Private Limited, Cisco Systems, Poland, DFS Venture Singapore, Ingersoll-Rand Latin America in Panama, Piraeus Bank in Greece, Scotia Peru Holdings, Shiseido Company in Japan and Vodacom Ltd in South Africa. Our customer footprint spans over 80 countries.

Data and analytic strategies continue to draw attention at the C-Suite level. And we believe that data driven strategies will continue to evolve from basic descriptive analytics such as visualizations to more advanced analytic used cases powered by Alteryx. Today we are engaging the chief data officers more frequently than a year ago. This is driven by both increasing C level involvement in data and analytics discussions, as well as our sales teams focusing more on chief data and analytics officer engagement. An example of this is a conversation I recently had with the Chief Analytics Officer for one of the largest banks in North America who has spent the last two years democratizing data and creating a data science and analytics culture at his firm.

With the Alteryx platform, analysts across the bank in nearly every function have operationalized more than 500 workflows, saving tens of thousands of hours, freeing the teams up to tackle more challenging opportunities. They now clearly see the opportunity to modernize their stack by eliminating redundant systems deepen IT and have ambitions to reduce the dependency on Excel, retired tools like DataMirror and Cognos, all while leveraging our Python and Alteryx to migrate thousands of predictive models currently found in SaaS.

This conversation is illustrative of what I have said since our IPO. The winner of the $24 billion TAM in the line of business will be the natural beneficiary of the $28 billion share shift of legacy tools locked up in IT organizations around the world. We are starting to see the early days of this shift starting to emerge. As we continue to scale, we also see an opportunity to activate our ecosystem and create even more avenues for future growth.

With that, let me turn the call over to Kevin to discuss our Q2 financials and outlook for Q3 in the second half of 2019. Kevin ?

Kevin Rubin -- Chief Financial Officer

Thank you, Dean. As Dean noted, we had a very strong second quarter, highlighted by revenue of $82 million, an increase of 59% year-over-year. Similar to what we saw in Q1, revenue benefited from a more favorable product mix, which resulted in the upfront percentage of our revenue being once again at the high-end of the 35% to 40% range. We did see some of our larger customers enter into longer commitments with us in Q2, which we believe is continued validation of the strategic importance of the Alteryx platform, although overall contract duration remained at about two years.

International revenue was $24.3 million, up 58% year-over-year as we continue to benefit from the strong global demand for analytics.

Before moving on, I want to remind everyone that unless otherwise stated, I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP results.

Our Q2 gross margin was 91% consistent with last quarter and Q2 of 2018. Our Q2 operating expenses were $73.4 million compared to $45.7 million in the same period last year. The year-over-year increase in operating expenses was due primarily to additional headcount and other investments in scaling our international operations. As a reminder, our Q2 expenses included the cost of hosting Inspire. Our Q2 operating income was $813,000 or an operating margin of 1%. Net income was $896,000 or $0.01 per share based on 68.5 million non-GAAP fully diluted weighted average shares outstanding. Our net income assumes a non-GAAP effective tax rate of 20%.

Turning now to the GAAP balance sheet, as of June 30th, we had cash, cash equivalents, short-term and long-term investments of $426.8 million compared with $461.3 million as of the end of Q1 2019. The decrease in cash is largely related to the purchase of ClearStory, which was completed in early Q2 as well as seasonally higher operating expenses driven by hosting Inspire in June.

Finally, we ended the quarter with 1,076 associates, up from 936 associates at the end of Q1 2019 and 674 associates at the end of Q2 2018. Our increase in headcount is reflective of the pace of investments we are making and we expect to continue to make to capture the meaningful opportunity we see globally.

Now turning to our outlook for Q3 and full year 2019. As a reminder, please note that our guidance assumes the following. Average duration of our subscription terms remains constant at approximately two years. Approximately 35% to 40% of our TCV booked in the quarter will be recognized upfront with the remainder recognized ratably over time. Quarterly revenue seasonality is expected to be consistent with what we experienced in 2018. For Q3 2019, we expect GAAP revenue in the range of $88 million to $91 million, representing year-over-year growth of approximately 41% to 45%. We expect our non-GAAP operating income to be in the range of $5 million to $8 million and non-GAAP net income per share fully diluted of $0.06 to $0.09. This assumes 70 million non-GAAP weighted average shares outstanding fully diluted.

For the full year 2019, we are raising our revenue outlook and now expect GAAP revenue in the range of $370 million to $375 million, representing year-over-year growth of approximately 46% to 48%. We expect our non-GAAP operating income to be in the range of $35 million to $40 million and non-GAAP net income per share -- per diluted share of $0.44 to $0.50. This assumes 69.5 million non-GAAP weighted average shares outstanding on a fully diluted basis and an effective tax rate of 20%.

And with that, we'll open up the call to questions. Operator?

Questions and Answers:

Operator

Thank you. At this time, we will be conducting a question-and-answer session [Operator Instructions] Our first question comes from the line of Tyler Radke with Citi. Please proceed with your question.

Tyler Radke -- Citi -- Analyst

Hey, great. Thanks a lot for taking the question. So obviously, the large deals grew at really strong pace here in Q2. And if I look back at the Analyst Day and kind of where your recent commentary has been heaaded, it seems like you're really doubling down on the Global 2000. And I guess my question is, how are you thinking about investing in sales capacity from a Global 2000 perspective? It looks like margins for the rest of the year, you're not really passing along much margin expansion despite the top-line raise. So I'm just curious if you're -- see the success here with the large deals signed to incrementally invest in the Global 2000 opportunity? Thank you.

Dean Stoecker -- Chairman and Chief Executive Officer

Thanks, Tyler for the question. I don't actually think it changes our investment thesis on quota capacity. We clearly are going after where the analyst hangout. With 8 million or 9 million potential analysts in the Global 2000, I think we're just focused on making sure that we land there with our traditional land motion that we make sure that our teams are executing the expansion playbook very quickly. We see a $4 billion to $5 billion TAM in that space by itself. But I don't think it actually changes any of our thesis we're investing. We'reinvesting across the board. I think it hasn't probably more to do with our enablement for those that are tackling the strategic accounts in the Global 2000. And as a reminder, for those of you who have not met Scott Jones, he is on the call today, President and CRO and he can opine on some of these questions as well.

Tyler Radke -- Citi -- Analyst

Great. Maybe a question then for Scott or you Dean. I think Kevin actually mentioned some of the additional OpEx in the quarter reflected the international headcount and it looks like international revenue grew 58%, which was in line with the total company revenues or not a huge under performance by any means, but that's down pretty significantly compared to a year ago. I guess is there anything that you're focused on internationally to maybe get those growth rates up to their smaller numbers or are you pretty happy with that performance?

Kevin Rubin -- Chief Financial Officer

Hey Tyler. I just want to remind you that the growth rates under 605 for international were a little bit different under 606. So some of that is the nature of the changing revenue model. But I'll let these guys go ahead and answer the rest of the question.

Dean Stoecker -- Chairman and Chief Executive Officer

Well, I'll also point at that over 50% of our growth in G2K happened internationally this last quarter. So the investments that we're making internationally are paying off when it comes to the larger opportunities in G2K around the world.

Scott Jones -- President & CRO Tableau/SAP

Yeah. Tyler, this is Scott. Just to follow up on Kevin and Dean's comments, we're still very early in our entry into the Asia and Latin America markets. In EMEA we're a little bit -- a little bit more mature and starting to focus our sales efforts a little bit more on the enterprise side. And as Dean just mentioned, over half of our new lands in the Fortune 2000 this past quarter were in international markets. So we feel really, really good about the investments we're making, we're constantly evaluating them, but we're bullish on the opportunities moving forward.

Tyler Radke -- Citi -- Analyst

Thank you.

Operator

Our next question comes from the line of Brent Bracelin with KeyBanc Capital Markets. Please proceed with your question.

Unidentified Participant

Hi, this is Clarke on for Brent. Dean, I wanted to maybe focusing on that commentary that you gave around half of the G2K adds were from international. And I guess just stepping back, I'm a little bit surprised by the rate of G2K adds, looking at a year ago at 500 G2K customers and then 560 last quarter and then now it's 656. You know that comment that you made about half was that the historical trend and this is kind of all G2K focus rises kind of all boats and you had domestic adds just very strong for the quarter. Just trying to parse on where these investments are happening. So it's such a stark increase in G2K customers this quarter?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, there's two parts to this. One is the net new adds that we had in the quarter and then the second part of it was the change in definitions from prior years. So we did incorporate that. There were a total of I think reported 99 new G2Ks. There were 46 I believe net new from sales and the other remainder was from a redefinition on G2K.

Unidentified Participant

Okay. And then, another thing that I noticed and I was just wondering if this held true for you is, you had some customer activity with some other analytic vendors or some software vendors in the ecosystem. Do you feel that you're reaching a scale where sort of new alliances and new bonds are being created and they're seeing kind of existing Alteryx user base as something they want to tap into with their solutions?

Dean Stoecker -- Chairman and Chief Executive Officer

We absolutely do. I think that people are beginning to understand the power of our platform the fact that they can add new components to the platform, they can create new tools, new macros, new apps, new APIs, provide embedded analytics as part of their own systems. Last quarter we talked about the new opportunities that emerge with Thomson Reuters to allow their ONESOURCE customers to live in ONESOURCE longer and that requires Alteryx to be in the mix. And so, we've seen pretty healthy pipeline build from TR and there's a number of other partnerships that we'll be talking about in future quarters as we begin to establish those relationships in a very similar way as we've done with TR.

Unidentified Participant

Perfect. Thank you.

Operator

Our next question comes from the line of Derrick Wood with Cowen. Please proceed with your question.

Derrick Wood -- Cowen & Company -- Analyst

Great. Thanks for taking my questions. You, so you recently had some feature upgrades to your Server product, is there anything incremental to call out in the upgrade and would you expect that to potentially drive greater Server adoption or be an incremental revenue driver as you look out over the next year or so?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, we're always listening to customers, Derrick. We have a long list of incremental improvements on Server. We have a whole bunch of new things we want to add that will move the needle we believe in Server in future releases. I think the real key to Server adoption is making sure that we are hanging out with where the analysts are. I think we've said in the past that when you get to 15 or 20 designers that you typically move to Server, that's just easier to achieve when you're selling into the G2K. That said, I wouldn't limit it just to innovation on Server. I think it's -- we're clearly listening to what customers need us to do to appease the scalability, the governance, the security kinds of issues that IT has. But across the entire platform from new features and capabilities in Designer for both Q3 and Q4 in our plant releases, the improvements to UI and Promote, a bunch of new assets that are going to be harvested for Connect, unification of Connect more with Server so that we simplify the user experience in the platform.

So it's not just a Server issue, it's across the platform. We continue to innovate and we have pretty good visibility into what customers want our community as a great playground for people to provide us with the checklist of what they want in the platform. We have the opportunity to debate those issues within our product management team and engineering teams. And we're never going to stop listening to what customers need as we build out this platform further.

Derrick Wood -- Cowen & Company -- Analyst

Great, thanks. And then you guys brought in a new Chief Marketing Officer a number of months ago, I'd just be curious to hear what initiatives he has on his plate and anything to date in terms of new marketing, positioning or what the market reception has been?

Scott Jones -- President & CRO Tableau/SAP

hey, Derrick, this is Scott. How are you?

Derrick Wood -- Cowen & Company -- Analyst

Hi Scott.

Scott Jones -- President & CRO Tableau/SAP

First of all, he is a she, it's Amy Heidersbach and she joined us about a month ago and we're really, really thrilled to welcome her to the company. A lot of really great experience in her background and specifically she can be very focused on bringing specific used case solutions to market, opening up new buying centers within our customers and we're really excited about what she's going to bring to the entire team and to our customers.

Derrick Wood -- Cowen & Company -- Analyst

Great. Congrats guys, everyone on the quarter.

Dean Stoecker -- Chairman and Chief Executive Officer

Right. Thank you.

Operator

Our next question comes from the line of David Griffin with William Blair. Please proceed with your question.

David Griffin -- William Blair -- Analyst

Hey. Good afternoon. Thanks for taking the questions. Two if I could, the first one for Dean. I just quickly wanted to touch on the Tableau and Looker acquisitions. I know this is something we talked pretty extensively about at the customer conference in terms of getting your take on the competitive implications there, but it is something that is still kind of front and center for investors. So I wanted to circle back and just get an update on whether you saw any of those transactions may be influenced customer conversations or sales cycles, really in any way during the quarter?

Dean Stoecker -- Chairman and Chief Executive Officer

Not at all. In fact, I think in both cases, it's clear affirmation that the space that we've built and seem to be winning in today is headed down the right path. It hasn't changed any of the sales cycles that hasn't slowed anything down. It hasn't spread anything up. We're particularly excited about the Salesforce, Tableau deal both are valuable customers of ours. Not really sure what Google intends to do with Looker. That probably fires up some other competitive conversations outside of our world. But again, I think it's affirmation that the market is beginning to consolidate even faster than we imagined a year, year and a half ago and it's affirmation that we're doing the right thing.

David Griffin -- William Blair -- Analyst

Got it. That's helpful. And then just one more if I could. Circling back and expanding on your thoughts on hiring activity given that we're halfway through the year now and do you tend to kind of front-load hiring. Can you just give us a progress update on where overall hiring activity came in relative to plan and whether or not you feel like you're attracting the level of talent that you would hope? And then specifically on the sales organization. As we think about potential growth in headcount this year, would it be fair to assume that the growth rate could be something approximately in line with revenue growth or would you expect it to be materially different?

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah, thanks. Thanks, David. I mean I would say we're pretty pleased with hiring. I think we've commented previously that as we've gotten larger and more recognized, it has facilitated hiring and quality of attracting better talent. In terms of sales, obviously that's been an area, sales and marketing combined has been an area that we've heavily focused our investment efforts on. If we just look year-over-year, those teams have grown a little over 60%. So it's pretty consistent with what we've seen on a revenue growth base -- revenue growth basis.

David Griffin -- William Blair -- Analyst

Great. Thank you.

Operator

Our next question comes from the line of Jack Andrews with Needham & Company. Please proceed with your question.

Jack Andrews -- Needham & Company LLC -- Analyst

Good afternoon. Thanks for taking my question. I feel like one of the common themes from your Inspire Conference was that many customers seem to be on this journey of large and increasingly rapid seat expansions over a sustained period of time. So I was just wondering, can you shed some light on whether this is still mainly happening organically just through the success of your product or is there something else that you've refined in your sales or customer service process that's really encouraging these types of expansions?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, I think it's a little bit of both. Just anecdotally, at Inspire I personally had probably 12 or 13 one-on-one meetings with customers and every single one of my meetings was either a customer trying to go from 50 seats to 500 and wanted to know how to influence that or from 500 seats to 5,000. So some of this is just the awareness of executives on the importance of data science and analytics and the importance of driving a data science and analytics culture and their path to digital transformation success.

I do believe that quarter after quarter we continue to improve our playbooks, we take out as much friction in the processes as possible. We have a time tested land and expand model that just simply works. So we just need to make sure that we continue to iterate wherever possible. But a lot of it are the tailwinds just coming from CDOs and proxies for CDOs that are recognizing the importance of data science and analytics cultures for their success.

Jack Andrews -- Needham & Company LLC -- Analyst

Great. I appreciate that. And just as a follow up, I want to ask about your assisted modeling product. Our understanding is that this is on track to be I believe it's the most downloaded beta in your company history. So I was wondering if you could just talk about the significance of this. When do you think it might be released and how do we think about the ramifications around this?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, I'm not sure where you heard it was the most successfully downloaded beta. We are in beta one. There are several betas before we GA this. There is no date on the -- specific date on the GA. There are quite a few downloads. We -- what we believe is important is as the train statisticians have easier-to-use tools like Alteryx with Python and Jupyter Notebook support to build models and deploy models on Promote, the citizen data scientists needs to have a clear path to success and understanding what models might influence a question they're tending to ask ask and how to decision off of whatever the result of whatever model is optimized for that question.

That said, we're confident in the results that will probably play out next year on assisted modeling. I think it's -- amping up the skills of the citizen scientists are equally important to providing a code-friendly approach for the scientists. I couldn't tell you off the top of my head how many downloads there have been, but I do know that I see beta reports and see the kind of feedback that we're getting both internally as well as externally with customers and we're pretty excited about the assisted modeling effort.

Jack Andrews -- Needham & Company LLC -- Analyst

Great. Thanks for taking my questions.

Operator

Our next question comes from the line of George Iwanyc with Oppenheimer. Please proceed with your question.

George Iwanyc -- Oppenheimer & Co. -- Analyst

Thank you for taking my question. So Dean, following up on those comments on assisted modeling, can you maybe give us a sense of longer term whether they're monetization opportunities with AI, ML and automation?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, clearly there is opportunities for monetization. I think that while today we have a fairly limited number of SKUs that our teams sell, there might be opportunities in the future to add additional SKUs that target specific used cases or specific horizontal functional areas or specific vertical markets. There is clearly going to be an opportunity to leverage our platform to build vertical solutions that leverage data science and machine learning in the full breadth predictive capabilities within our Python and Alteryx in general.

How that emerges, we're still seeing the market unfold around this. There is a lot of point solutions that do one industry very well, they might do price optimization, but you can't leave that into a vertical solution very easily. So with our platform, we see lots of avenues both in Designer, outside of Designer as pure cloud services in news app services that could disrupt thousands of point solutions that exist today in various verticals and even down to building new companies where data science and machine learning will move the needle on the value of these businesses.

George Iwanyc -- Oppenheimer & Co. -- Analyst

And one other question. With the strong, larger enterprise traction you're seeing, can you give us a sense of the tax rates for Connect and Promote with the deals overall and especially with the larger customers?

Dean Stoecker -- Chairman and Chief Executive Officer

Well, we haven't divulged any attach rates yet. We're actually very excited about the progress we're making with both Connect and Promote. We included two of those stories in the prepared remarks. And we heard many of these stories at Inspire. And I think what's happening is as the line of business gets more alignment with the Chief Data Officer and in many cases the self-service data science and analytics got ahead of CDOs or proxy CDOs and now that the CDOs are in the mix, they're beginning to recognize the real challenges in the future and that is harvesting all the assets that are now being curated by all of these analysts. So therefore, Connect becomes critical to the first mile of their analytic journey.

And we're hearing those organizations that have been struggling deploying algorithms for years, even though it's pretty easy for them to build a model and it's getting perhaps easier to build models with auto modeling capabilities. The real challenge isn't building the model that's deploying the model. So Promote becomes infinitely more important to our customers in the longhaul. And so we're excited that we don't have just one entry point for our platform. We've typically entered with designers that skate to servers that then lead to Connect and then Promote. But as you saw in our healthcare example, customers start with Promote, they realize that all of the other parts of the platform accelerate this journey to success. And so at some point down the road, we will perhaps share some attach rates, but we won't do that today.

George Iwanyc -- Oppenheimer & Co. -- Analyst

Thank you.

Operator

Our next question comes from the line of Taz Koujalgi with Guggenheim Partners. Please proceed with your question.

Taz Koujalgi -- Guggenheim Partners -- Analyst

Hey guys. Thanks for taking my question. A question on the net expansion rate, that's been consistent for the last few quarters. Can you guys comment on how much of that was driven this quarter by seats versus sort of new products into the installed base?

Dean Stoecker -- Chairman and Chief Executive Officer

We don't break it down, but the reality is most of the expansions occur with additional designers in the same department, additional designers in adjacent departments. And again, 15 or 20 designers lead to a server that sparks the interest in Connect and Promote. So it's a combination of both seat expansion in Designer and then the necessity to get to scaling and security and governance and automation.

Kevin Rubin -- Chief Financial Officer

Yeah, that's no different than historical. We haven't seen any fundamental shift in how expansion has been generated.

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah.

Taz Koujalgi -- Guggenheim Partners -- Analyst

Thanks. And then one for Kevin. If I'm doing my math right, I guess your, based on the ARPU that you've disclosed tonight, I get your bookings growing sequentially about 60% from Q1 to Q2. Is that -- I hope I'm doing my math right, but was it a difference in seasonality of your bookings growth this year versus last year. We don't have last year's numbers so I'm trying to get a sense of the seasonal growth from Q1 to Q2 this year was in line with the typical seasonality or was -- or something different given that strong number that I'm getting?

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah. I mean I think directionally you're seeing the appropriate trend. I think if you look at our 605 reported quarters last year, you'll see a similar acceleration from Q1 to Q2. We have talked about our seasonality quarter-to-quarter, Q2 tends to be a strong quarter for us like many software companies. Given that duration of contracts have not really moved from two years. I think that's a reasonable proxy for comparison. So -- but to your point, we did see a notable increase this quarter.

Taz Koujalgi -- Guggenheim Partners -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Chris Merwin with Goldman Sachs. Please proceed with your question.

Chris Merwin -- Goldman Sachs -- Analyst

Okay. Thanks for taking my questions. I just had a couple actually. I think Dean, you talked about increased traction with vertical go-to-market team, just curious if you plan to invest further in that vertical go-to-market opportunity either from a sales or product perspective? And then I had a quick follow up. Thanks.

Dean Stoecker -- Chairman and Chief Executive Officer

Great question. We are seeing success in our healthcare public sector team as well, even in education and we're beginning to see additional avenues. In some cases, they're not necessarily vertical build out, but they are horizontal build outs that could have an enormous impact on opportunities in the future. For example, with all the work that we're doing with the accounting firms, we're seeing a huge opportunity and a big void in the Office of Finance. And so we've been doing a lot of work around how we might be able to move the needle there. So it's not necessarily a vertical, but a horizontal play. And we're beginning to see everything from tax and accounting and audit and FP&A and the whole swath of opportunities.

For example, just in the tax world, there is I don't know 16, 17, 18 different high value used cases that we've begun to learn about across the finance teams that we sell to, everything from sales and use tax compliance, tax apportionment, transfer pricing, debt tax, declarations, property taxes and it's something that every business has to go through kind of that thankless task that's required by the regulatory bodies. And so we don't look at it just as a vertical, we are looking at some verticals, but we see the horizontal plays potentially leading us to something in the Office of Finance possibly even supply chain. We're starting to see some really great used cases around supply chain optimization.

Chris Merwin -- Goldman Sachs -- Analyst

Okay, great. And then just a follow-up on that expansion. It's been north of a 130% now four quarters in the row. I think the long-term guidance there is a 120% and obviously heard the anecdote from the customer conference and we heard that really strong feedback as well from customers about near-term plans to have significantly increased deployment. So just curious, I mean how we might think about the trajectory of net expansion going forward either in the context of this year's guidance or even beyond that?

Dean Stoecker -- Chairman and Chief Executive Officer

We don't forecast on this, but if we're successful at tackling greater penetration of the G2K. We're now 33% of the total with less than 1% penetration of the potential users of just Designer. There is an enormous opportunity there. I think at the Investor Conference at Inspire, we identified the net expansion of the Global 2000 customers at a 143% I believe in. So the net expansion of the G2K is demonstrably higher than net expansion of all customers in general. So we think this could continue for quite some time.

Chris Merwin -- Goldman Sachs -- Analyst

Thanks very much.

Operator

Our next question comes from the line of Pat Walravens with JMP Securities. Please proceed with your question.

Unidentified Participant

Hi. This is Joey on for Pat. Congrats on the quarter. Internationally, did you notice any areas of weakness? Thank you.

Dean Stoecker -- Chairman and Chief Executive Officer

In general, no. Obviously we look at every quarter, perhaps a bit differently than others. We have a 60 second policy here about how good our quarter is. And then we turn our focus to the half -- the glass half full, try to figure out what we could have done better, what marbles we left on the table, what processes to improve. Scott probably can add some additional color to it. We are early on in some of the markets that we've built out internationally, but I think generally we're happy with what we're doing internationally.

Scott Jones -- President & CRO Tableau/SAP

Yeah, I agree, Dean. We're pleased with the quarter, pleased with the results. We have been able to add some really great new customers in all of our international markets, but continue to have room for improvement and room for continued investment to take advantage of this significant opportunity that lies in front of us.

Unidentified Participant

Thank you.

Operator

Our next question comes from the line of Michael Turits with Raymond James. Please proceed with your question.

Michael Turits -- Raymond James -- Analyst

Hey guys, good evening. First on the 3Q guide, obviously you've raised the EBIT guide for the year, but you came in below the Street granted, you don't guide to 3Q, but capable of the Street on EBIT for the third quarter. Anything around timing of expenses that would help us explain them?

Kevin Rubin -- Chief Financial Officer

Well, Michael, I think as we think about Q3 and the full year, we are continuing to invest as we've kind of described previously around building out the global operations and taking advantage of opportunities we see outside North America. And I think that's going to continue as reflected in the guidance.

Michael Turits -- Raymond James -- Analyst

And then there was another question earlier about attach and success traction etc. with Connect. One of the things you had mentioned a couple of quarters ago was that you are starting to see lands with Connect. Are you still seeing that or is it primarily attach or expands?

Dean Stoecker -- Chairman and Chief Executive Officer

It's predominantly expands, although as we deal more with the Global 2000, the conversation with Connect and Promote happens a lot earlier and it's not a forced conversation, it's the CDOs or proxies need different things and what the analyst cares about and the analyst just wants to love their job again and munch a bunch of data to get some outcomes. And I think that the CDOs care about things that protect the enterprise. They want governance and security and collaboration. They -- and you heard this at the conference from the customers who spoke about their Connect efforts. And we're seeing -- with machine learning is going to the eat world, most of these CDOs who recognize that clearly see the risk of not having something like Promote to allow them to deploy and manage models.

So these end gaps as we talked about many quarters ago after the acquisitions. We said in the longhaul, these could be the most valuable parts of our platform. And I think that might come through in the not too distant future.

Michael Turits -- Raymond James -- Analyst

Great, Thanks, Dean. Thanks Kevin.

Operator

Our next question comes from the line of Mark Murphy with JP Morgan. Please proceed with your question.

Matthew Coss -- JP Morgan -- Analyst

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Thank you for taking my question. Scott, you mentioned you're still in the very early stages of your entry into the Asian and Latin American markets. I'm curious, what do you replace in those markets versus in the U.S. and EMEA and the possible there is less adoption of legacy tools in those markets that would make for sales cycle with a little bit less friction?

Scott Jones -- President & CRO Tableau/SAP

Yeah. Well, I'd say the buying patterns are very similar across all of those markets to what we see in North America. I would say in certain sub-regions like Japan, for instance, IT maybe a little bit more heavily involved. You work with and partner with channel partners more often in a market like that. But I think generally, we have the same sort of traction in the international markets that we do in North America and be competitive products that we may either replace or more often complement or often times it's just greenfield opportunity and greenfield type of projects that we're working on are very similar.

Matthew Coss -- JP Morgan -- Analyst

Okay. And have you seen any increase in Japan ahead of the implementation of the consumption tax there?

Scott Jones -- President & CRO Tableau/SAP

No. No impact at all.

Matthew Coss -- JP Morgan -- Analyst

All right. And then finally with ClearStory you acquired that a couple of months ago, has that improved or noticed -- has there been a noticable improvement in your ability to hire in Silicon Valley with the present you are now?

Dean Stoecker -- Chairman and Chief Executive Officer

It's still too early for that. We are in the process of consolidating our offices there. We have made all of our engineering racks available to both Broomfield[Phonetic], as well as Silicon Valley. When we're at full employment, as an economy, it does become tougher. And so we're moving into higher cost territory. But at the same time, we continue to add engineering talent in our European development center both in Heaven [Phonetic] Prague. I think that with the ClearStory team, it is a talented bunch of folks. I think that we will be able to attract a lot of talent in the Bay Area and time will tell.

Matthew Coss -- JP Morgan -- Analyst

Thank you.

Operator

Our next question comes from the line of Brad Sills with BAM. Please proceed with your question.

Brad Sills -- Bank of America Merrill Lynch -- Analyst

Hey guys. Thanks for taking my question. Wanted to ask a similar question just around some of these larger expansion deals. As you get into these deals, are you noticing any change in kind of the environment from which of these organizations are coming from? Is it more replacement as you get into these bigger expand deals in the Global 2000 versus say greenfield? And if so, where are they coming from, what kind of environment are you seeing?

Dean Stoecker -- Chairman and Chief Executive Officer

Well I, -- we don't necessarily go in with any pre-determined replacement. We almost -- always go in net new. Remember even with G2K, our land motion is the same. We typically land with two or three seats at Designer, it's $10,000 or $12,000 bucks, it's the same 45 day sales cycle. And then in G2K that's often a POC play. It's a single used case that has high value return to prove the value of having a platform like ours.

We do see once we get to scale with larger organizations, as I said in the prepared remarks, we do start to replace legacy technology that's deep in IT. And we hear this quite a bit where customers begin to wind down their legacy BI platforms, their reporting platforms, their data quality platforms. And so we attempt not to insert friction in the process, we don't elephant hunt. I think Scott's team has done a phenomenal job at making sure the land model works regardless of where the headcount is of these analysts that live in enterprises around the world.

Scott Jones -- President & CRO Tableau/SAP

I think if I could just make one follow up comment. I think organizations and CDOs are just now starting to understand and appreciate the opportunity to have a full end-to-end analytic platform to manage the entire analytic workflow. And so those conversations are really in the very early stages, but there is certainly interest and appreciation for what that would mean to complex organizations solving problems.

Brad Sills -- Bank of America Merrill Lynch -- Analyst

That's great. Thank you. And then one more if I may please. Just any changes you're noticing on kind of business drivers here with the whole move to cloud-based data warehouses. I think in the past you said it hasn't had a big impact, but is it just intermediation of data with alternative databases and cloud-based data warehouses. Is that having any impact on the business?

Dean Stoecker -- Chairman and Chief Executive Officer

A positive impact. We see that again as a tailwind

where you have more and more data sets and more and more locations. It plays right into our strength. And because we can deploy anywhere, it doesn't really matter where the run time compute occurs, whether it's on-prem or in the cloud. It's pretty important to recognize that process complexity and data complexity continues in large enterprises and both of those are tailwinds for us.

Brad Sills -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Our next question comes from the line of Steve Koenig with Wedbush Securities. Please proceed with your question.

Steve Koenig -- Wedbush Securities -- Analyst

Hi, there. Thanks for taking my questions. I appreciate it. Wanted to get into that leads [Phonetic] a little bit here on the financials. So first question is simply, can you give us a little color on the products, product mix shift that favored upfront Rev-Rec in the quarter?

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah, sure. So I think as we signaled last quarter and maybe is evident of the conversations throughout a lot of this Q&A around an enterprise slant to the business, it does typically result in more servers, Connect and Promote being sold into these organizations and those are favorable mixes to the upfront portion of the revenue.

Steve Koenig -- Wedbush Securities -- Analyst

Got it, got it. Okay. And then my follow up here is a little bit longer winded, but you bear with me for a second here. So under 605, it was easy and transparent to understand how recurring revenue was growing. With 606 it's hard to get to underlying growth trends. It's partly a function of the accounting standard, but also the detail, at least to date in your RPO disclosure don't really help bridge that gap. So I guess if you factor in all the puts and takes duration upfront, rev mix shift, anything else. Like how does your underlying ARR growth? How is that comparing to your revenue growth both kind of this quarter and maybe longer term if you could give any color, that would be great?

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah. Thanks, Steve. So, I mean obviously the change in the revenue and the mechanics of the revenue do make it a little bit harder to compare 605 to 606. And candidly ARR and/or those similar metrics are no longer actual drivers to our revenues. So I mean it's hard for me to comment other than to say, I think the results in Q2 kind of speak for themselves. I mean, we've continued to see very, very strong momentum in the business, revenue did grow 59% with a relatively constant average duration and we saw the upfront portion similar to last quarter. So I know that doesn't exactly answer your question, but I think we want to focus on those drivers that actually impact revenue in the current model.

Steve Koenig -- Wedbush Securities -- Analyst

Okay, great. Well, I appreciate your help. Thank you.

Dean Stoecker -- Chairman and Chief Executive Officer

Yeah.

Operator

Our last question comes from the line of Rishi Jaluria with D.A. Davidson. Please proceed with your question.

Rishi Jaluria -- D.A. Davidson -- Analyst

Hey, guys. Thanks for squeezing me in. First, I wanted to start off more with a market type question. So I believe there is recently a Deloitte survey saying that something like two-thirds of companies are still relying on spreadsheets for their analytics and that tells me there's clearly a big market opportunity for you to go after. Help me understand what are you seeing out there and what needs to happen? Is it a cultural thing, is it a skills gap thing to be able to replace a lot of those manual processes and a lot of that kind of lack of analytical maturity so to speak at these businesses and really increase your penetration there? And then I've got a follow up.

Kevin Rubin -- Chief Financial Officer

Sure. Rishi, thanks for the question question. I think it's important to recognize that almost all the research is pointing to the same thing. We commissioned our IDC study earlier this year to try and understand this ourselves. The truth is the data workers spend 90% of their time each week in data. 44% of their time is completely wasted, 18 hours a week for analysts is wasted, doing all the things that should be pretty easy to do, search in for data, getting it ready for analysis, analyzing it, performing model building and app development and trying to deploy these analytic processes. And the system is just completely broken and it's waste across the board.

And so I think it's a combination of the people skills, the technology that they're leveraging, most of which is just spreadsheets, Excel largely and internal awareness around where data lives, how it can be leveraged, it is willingness to open it up to more people, again, which is why they're interested in parts of our platform like Connect. So I think that we're overcoming it by providing a self-service environment that is an end-to-end the process, code free for the citizen scientist who doesn't know how to code or may do some light sequel coding or light our pipeline coating. And it's the same platform that we deliver to the scientist in a code-friendly approach so that they can write code all day long. And the comfort that the C-Suite has now is that everyone's leveraging a single platform to amp up the skills so that they can get rid of this tens of billions of dollars of wasted effort that's sitting in spreadsheets today. We are in the perfect storm and Alteryx is there to pick up the pieces in most organizations.

Rishi Jaluria -- D.A. Davidson -- Analyst

Got it, great. That's really helpful. And then just as a follow up, at Inspire, I mean talked to a number of customers who were new to Alteryx and already looking to expand not just in terms of seats, but more products. Maybe can you give us a sense, and I know this is kind of going on top of some of the earlier questions about this topic, but are you seeing new customers to Alteryx landing with more products than you used to see in the past or at the very least ramping more quickly in terms of how they go from one to two to three products? Thanks.

Dean Stoecker -- Chairman and Chief Executive Officer

I think in both cases, yes. Adding additional SKUs happens typically with the larger organizations because they have a focused effort around digital transformation, but we actually see the expansion occurring with more seats of Designer for example in almost every customer. And I heard the same thing at Inspire where brand new customers came up right after the keynote and said they've been using Alteryx for three weeks and already have four more used cases and six were potential seats of Designer.

So again, I think it's perfect timing for us to activate this audience of 47 million disenfranchised analysts who heat their jobs because they're living in complex if you look up in Excel and we're helping the digital transformation efforts of the C-Suite who truly understand the benefit of driving a data science and analytics culture to see success in that transformation.

Rishi Jaluria -- D.A. Davidson -- Analyst

Got it, great. Thank you so much.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Dean Stoecker for closing remarks.

Dean Stoecker -- Chairman and Chief Executive Officer

Thank you, operator. In closing, let me just remind everyone that's on the call today that we at Alteryx truly believe that customer trust defines the integrity of our company. And I want to thank our 5,300 customers now around the world for trusting us with what we believe is there most valuable asset analytics. I also want to thank our dedicated engaged associates and partners for working tirelessly to help us earn that trust. Thank you for attending today. And I look forward to updating you on our progress next quarter. Bye-bye.

Operator

[Operator Closing Remarks]

Duration: 59 minutes

Call participants:

Chris Lal -- Chief Legal Officer

Dean Stoecker -- Chairman and Chief Executive Officer

Kevin Rubin -- Chief Financial Officer

Scott Jones -- President & CRO Tableau/SAP

Tyler Radke -- Citi -- Analyst

Unidentified Participant

Derrick Wood -- Cowen & Company -- Analyst

David Griffin -- William Blair -- Analyst

Jack Andrews -- Needham & Company LLC -- Analyst

George Iwanyc -- Oppenheimer & Co. -- Analyst

Taz Koujalgi -- Guggenheim Partners -- Analyst

Chris Merwin -- Goldman Sachs -- Analyst

Michael Turits -- Raymond James -- Analyst

Matthew Coss -- JP Morgan -- Analyst

Brad Sills -- Bank of America Merrill Lynch -- Analyst

Steve Koenig -- Wedbush Securities -- Analyst

Rishi Jaluria -- D.A. Davidson -- Analyst

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