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Why Alteryx Stock Plunged Today

By Jeremy Bowman – Aug 7, 2020 at 4:36PM

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Shares of the data analytics specialist tanked on weak guidance in its earnings report.

What happened

Shares of Alteryx (AYX -0.71%) were taking a dive today after the maker of cloud-based data analytics software posted a disappointing second-quarter earnings report, showing clear headwinds from the coronavirus pandemic. Its guidance also badly missed the mark, indicating that those challenges would persist for the rest of the year.

As of 9:46 a.m. EDT, the stock was down 27.1%.

A businessman looking at several charts on monitors and paper.

Image source: Getty Images.

So what

Alteryx said revenue in the quarter increased 17% to $96.2 million, which beat estimates at $93.8 million as well as the company's own guidance of 10% to 15% top-line growth. Customer count was up 27% from a year ago to 6,714, and the company added 271 new customers in the second quarter.

Other bright spots included annual recurring revenue growth of 40% to $430 million, and a dollar-based net expansion rate of 126%, meaning existing customers increased their spending with the company by 26% from a year ago.

Gross margin also remained strong at 90%, showing the company keeps nearly all of the revenue from running its software, and it finished with an adjusted earnings-per-share (EPS) of $0.02, up from $0.01 in the year-ago quarter, and well ahead of the estimated $0.14 per-share loss.

According to CEO Dean Stoecker:

While we experienced a slowdown in the second quarter driven by the global impact of COVID-19, we believe that the global opportunity for analytics and automation solutions remains significant, and we believe Alteryx remains well positioned as a leader in the space.

Now what

The real reason for the sell-off seemed to be guidance as management expects growth to slow from here, calling for revenue to increase just 7% to 11% in the third quarter and 10% to 11% for the full year. It also called for annual recurring revenue growth of 30%, down from the second-quarter pace. By comparison, analysts were expecting 15% top-line growth for the current quarter and 21% for the full year.

Unlike some cloud stocks , Alteryx recognizes a substantial portion of its revenue up front through services and upgrades, making it more vulnerable to the macroeconomic climate than a pure subscription-based business.

While investors are clearly disappointed with the report and the guidance, Alteryx is considered the leader in its field, and the stock should recover as the crisis eases.

Jeremy Bowman owns shares of Alteryx. The Motley Fool owns shares of and recommends Alteryx. The Motley Fool has a disclosure policy.

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