Alteryx (AYX) Shares Skyrocket, What You Need To Know
What Happened:
Shares of data analytics and automation platform Alteryx jumped 18.6% in the morning session after the company reported a "beat and raise" quarter, exceeding expectations on key metrics including annual recurring revenue (ARR), revenue, and adjusted operating profit. The strong performance was attributed to better-than-expected conversion rates on expansion opportunities and robust gross retention. Alteryx also emphasized its successful sales strategy geared towards targeting larger organizations, which is driving larger deal sizes. Looking ahead, the company raised its outlook for the full year across the board. Notably, revenue and ARR guidance for the full year came in ahead of Consensus estimates. Overall, we think this was a strong quarter that should please most shareholders, especially considering the low expectations heading into the earnings season due to macro and execution challenges highlighted in the previous quarter.
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What is the market telling us:
Alteryx's shares are somewhat volatile and over the last year have had 30 moves greater than 5%. But moves this big are very rare even for Alteryx and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 25.3% on the news that the company reported second-quarter annual recurring revenue (ARR), which missed Wall Street's estimates, though revenue and EPS beat. In addition, it provided weak guidance across the board. ARR, revenue, and non-GAAP operating income guidance for next quarter all missed expectations. Notably, full year guidance was lowered across the board, which is never a good sign. Management pointed to a change in buying behavior the last two weeks of the reported quarter, particularly with large customer expansions outside the renewal cycle. The macro and sales execution were culprits, and this commentary will surely call into question how bad things could get for Alteryx in the near term since the slower buying patterns seems to have only begun. . Overall, it was a weaker quarter for the company, with the market struggling to digest the implications of the missed guidance.
Following the results, the company received two downgrades from Wall Street analysts. Loop Capital downgraded the stock's rating from Buy to Hold and lowered the price target from $65 to $30. Similarly, Piper Sandler analyst Brent Bracelin downgraded the stock's rating from Overweight (Buy) to Neutral (Hold) and also lowered the price target from $68 to $30. Bracelin, lowered estimates and rating after the Q2 ARR shortfall ($14M miss steered by a shift in customer behavior which has made standalone expansions challenging) made it difficult to forecast the future growth trajectory of the business.
Alteryx is down 24.8% since the beginning of the year, and at $37.20 per share it is trading 46.5% below its 52-week high of $69.52 from February 2023. Investors who bought $1,000 worth of Alteryx's shares 5 years ago would now be looking at an investment worth $639.15.
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