The Alteryx (NYSE: AYX) IPO is well-banked with co-leads Goldman and JP Morgan joined by a team of five research-oriented co-manager (PacCrest, Blair, JMP, RayJay and Cowen.) Price talk is $12 to $14 which puts the market capitalization at $750M at the mid-point of the range on about 58M shares outstanding. Check out the Alteryx IPO Slides. We also have a complete the AYX IPO roadshow transcript.
Last year AYX reported a loss of $30M on $86M in revenues which were up 60% YoY. Growth and positioning are both good but perhaps not good enough to support an 8.7x trailing revenue multiple.
Alteryx has been around for quite some time. We noticed them a few years ago because they had some key advantages over other analytics solutions - 1) they incorporated and integrated external data very well "out of the box" and 2) it didn't require huge amounts of IT resources which meant that even business users could get results more easily. Most other analytics companies view external data sources and integration as secondary questions. However, it is the ability to access and integrate this external data that makes it possible to get any business insight at all!
One of our favorite executives in this space, Jit Saxena, said "if it takes three months to get an answer to your questions, you stop asking questions."
Here is the short list of key company positioning considerations for us:
- Alteryx has a great departmental solution with a strong geo-analytic capabilities built in. They have also improved their data preparation and support one of the broadest arrays of usage for any product in the market.
- Alteryx is often deployed in companies that have many other BI and analytics solutions already. Small deployments typically come with a higher cost of sales and can be harder to expand to larger recurring contracts.
- As they try and "move up" to larger contracts they are getting some resistance from customers who then become more inclined to use "good enough" parts of some of their larger existing BI toolsets.
- Alteryx doesn't have strong visual presentation capabilities and so it's often paired with other solutions like Tableau (NYSE: DATA) and they are working on improving their own self-service analytics and data preparation capabilities.
Based on their current market positioning and income statement it's not clear that they can really win the battle to become a broader, more enterprise-ready company in the BI/Analytics marketplace.
At over 8x trailing revenues the valuation is at a premium to comparable players including Informatica (INFA 4.8x), Tableau (DATA, 4.5x), Hortonworks (HDP, 3,4x) and MicroStrategy (MSTR, 4.2x). Now it's true that these are more mature and not growing as rapidly as AYX. But still. The only close comparable is Talend (TLND) which is also at 8x.
W like the product and the company but losses are still large relative to revenue and they are competing in a strongly contested market. Over the years they have executed reasonably well but have not improved their positioning relative to competition during the past few years. Breaking out of a niche is not easy and it feels like much success is already priced in at $12-14/share.
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