California-based Alteryx (NYSE:AYX) is a leader in the field of data analytics. The company’s Alteryx Analytic Process Automation (APA) platform offers end-to-end automation of data analytics. This means faster results and the ability for employees who aren’t trained data scientists to leverage the technology. It’s used by over 6,000 customers globally. After reaching record highs (almost breaking the $182 mark) in July, AYX stock suffered a dramatic collapse in August.
Now trading under $110, is this stock now a buying opportunity? It earns a ‘B’ rating in my Portfolio Grader, offering pretty solid long-term investment potential.
The big challenge at the moment is determining how long headwinds from the novel coronavirus pandemic will last. When businesses resume spending on tools like data analytics, expect AYX to recover from its August setback.
Data Analytics Tools Have Become Invaluable
In an interview, Richard Waterman — a Wharton EMBA professor — points out the value of data analytics:
… data analytics is helpful for everyone. Instead of making decisions based on gut instinct, these are tools to make decision making more efficient through experiments and testing. There is usually an ‘aha’ moment when they understand what regression methodology can do for them with problems at work.
It’s not just work-based scenarios where data analytics come into play. During the pandemic, the technology has been key to predicting virus outcomes, helping health agencies to plan for effective use of resources.
As a market leader, Alteryx is in a good position to benefit from the increased visibility and use of data analytics tools.
Q2 Earnings: Positive Trends, But AYX Hammered
On Aug. 6, Alteryx reported second-quarter earnings. The aftermath was a disaster for shareholders, but let’s have a look at the numbers before getting into that.
There were some bright spots in the company’s Q2. Revenue of $96.2 million was up 17% year-over-year, and beat Wall Street’s estimates of $94.11 million. Adjusted earnings per share of 2 cents also handily beat expectations. It was up from 1 cent per share a year ago, and far better than the 14 cents per share loss that Wall Street had predicted.
The company’s customer count was up 27% YoY, with 271 new customers added in the second quarter. Annual recurring revenue (ARR) grew 40% to $430 million.
The company also expanded its product offerings:
During the second quarter, we not only described a new category of software, Analytic Process Automation, but we also delivered significant innovation to the market with our Alteryx Analytics Hub, Intelligence Suite and 2020.2 releases. We believe these innovations will help bring our customers’ digital transformation efforts to life.
However, there were some concerning numbers in there as well. The operating loss of $17.79 million for the quarter widened by 114.6% compared to Q2 2019. The net loss of $35.29 million was up a whopping 996% YoY. Guidance was also weaker than expected, due to customers cutting costs and changing their spending patterns during the pandemic. The company released Q3 guidance for revenue of between $111 million and $115 million — up 7% to 10%.
The market was not happy with the Q2 earnings report, and especially the guidance that shows slowing revenue growth. AYX stock was punished, dropping nearly 30% in a single session.
Bottom Line on AYX Stock
Alteryx offers a compelling data analytics platform, a service that many companies and organizations are realizing is critical to success. It’s signing up new customers, many in the form of contracts that deliver recurring revenue. As InvestorPlace contributor Luke Lango points out, only 37% of Global 2,000 companies currently use Alteryx’s platform. That provides plenty of room for future growth.
Yes, the coronavirus pandemic has thrown a wrench in the works for Alteryx. With companies cutting costs where they can, spending on data analytics is vulnerable to being pushed to the side. However, this is going to be a temporary setback. That makes the cratering of AYX stock in August — a level it has yet to recover from – a buying opportunity.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.