The stock market has been incredibly resilient in recent months, bouncing back convincingly from its abbreviated bear market earlier in 2020. Earnings season has generally gone well over the past several weeks, but even when some high-profile companies haven't been able to make the grade, the impact on the overall market has been minimal. Just before 11 a.m. EDT Friday morning, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 48 points to 27,339. The S&P 500 (SNPINDEX:^GSPC) actually gained a fraction of a point to 3,349, while the Nasdaq Composite (NASDAQINDEX:^IXIC) was also close to unchanged at 11,108.
Many investors have benefited during the rally from stocks with strong prospects for future growth. However, some have feared that those highfliers have gotten ahead of their fundamental business performance, and that seemed to be the story for software-as-a-service (SaaS) favorite Alteryx (NYSE:AYX) on Friday morning. In addition, Uber Technologies (NYSE:UBER) wasn't able to satisfy its shareholders that it's on track to recover from coronavirus-inspired difficulties. Below, we'll look more closely at the latest reports from these popular stocks.
Alteryx falls off the growth cliff
Shares of data analytics platform provider Alteryx plunged 27% Friday morning. The move followed the company's second-quarter financial report, which failed to live up to the extremely high expectations that investors had for the company.
Alteryx continued to grow during the quarter, although its pace of gains wasn't quite up to the standards that many followers of SaaS stocks expect. Total revenue rose 17% from year-ago levels, buoyed by a 40% year-over-year jump in annual recurring revenue. Existing clients stayed loyal, helping Alteryx post a 126% dollar-based net expansion rate. Client counts were up 27% over the past year to 6,714, including 271 new customers in just the past three months.
However, Alteryx sees that growth slowing further. Third-quarter guidance included revenue growth projections of just 7% to 11% from year-earlier levels. For the full 2020 year, Alteryx expects top-line gains of 10% to 11%. Even using annual recurring revenue as a more accurate gauge, 2020 growth expectations for 30% show a substantial reduction in growth rates.
Alteryx had seen its share price more than double between March and July, and as a result, today's plunge doesn't come close to erasing all of the stock's gains. Nevertheless, it serves as a reminder of what can happen when investors set a high hurdle for a business to overcome.
Uber stalls out
Elsewhere, Uber Technologies saw its shares drop 5%. The ride-hailing service suffered a big loss during the second quarter, and sales declines remained ugly.
Uber's numbers showed how two of its businesses are performing very differently. Revenue for the mobility segment, which includes ridesharing, plunged 67% from year-ago levels. Delivery segment revenue, which includes the Uber Eats service, more than doubled year over year. However, the problem is that Uber Eats isn't profitable, with adjusted pre-tax operating losses for the segment narrowing only slightly for the period. Meanwhile, the mobility segment's bottom line plunged 90%, leaving it still barely profitable but not nearly enough to stop Uber from losing $1.8 billion overall.
Uber hopes to make delivery a better business. Plans to acquire rival Postmates should add to its scale, while efforts to provide grocery delivery should broaden its customer base. Nevertheless, Uber won't really get back to its former status until the COVID-19 pandemic ends and ride-hailing returns to former levels.
Growth stocks have done extremely well this year as a group, but individual players are always vulnerable to unexpected slowdowns. Uber and Alteryx can recover from today's setbacks, but they'll have to prove that they're back on the right path to regain investor confidence.