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Why Alteryx Stock Plunged 31% Last Month

By Jeremy Bowman - Sep 1, 2020 at 11:55PM

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The data analytics specialist tumbled on a weak earnings report.

What happened

Shares of Alteryx (AYX 3.11%) took a dive last month, after the data analytics software provider posted disappointing results in its second-quarter earnings report, including guidance calling for sharply lower revenue growth in the second half of the year. As a result, the stock finished August down 31%, according to data from S&P Global Market Intelligence.

As the chart below shows, nearly all of those losses came on Aug. 7, after the earnings report came out.

AYX Chart

AYX data by YCharts

So what

Alteryx actually beat estimates in its second-quarter report though its growth rate slowed considerably from previous quarters. Revenue rose 17% to $96.2 million, ahead of the company's own guidance of 10%-15% revenue growth and analyst estimates at $93.8 million. Annual recurring revenue was up 40% to $430 million as the discrepancy between quarterly revenue and recurring revenue came down in part to accounting rules.

A woman looking at a chart on a computer

Image source: Getty Images.

It added 271 net new customers in the quarter to finish with 6,714, up 27% from the year before. On the bottom line, the company posted an adjusted per-share profit of $0.02, double from the year-ago quarter and easily beat expectations of a loss of $0.14.

CEO Dean Stoecker said, "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." On the earnings call, he explained that sales cycles had lengthened, deal sizes were smaller and there was more scrutiny over spending. Stoecker added that the company doesn't expect a material improvement to performance for the rest of the year based on what it sees.

Now what

What really seemed to rattle investors was the company's guidance. Management forecast revenue growth slowing to 7%-11% in the quarter and called for 10%-11% top-line growth for the full year, implying negative revenue growth in the fourth quarter. For the full year, it sees a 30% increase in annual recurring revenue. Management again pointed to uncertainty around the pandemic, relating to contract renewals, uncertainty in new business, variability in contract duration, and slightly higher churn.

Still, that guidance may prove to be conservative as it's clear management is being cautious. For a stock that still has promising long-term growth prospects, the sell-off seems to present a buying opportunity.

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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