Alteryx Inc (NYSE: AYX), a data analytics software provider, surged 23.2% in after-hours trading after the company announced a new CEO and updated revenue guidance.
Data in the digital age is more important than ever. It seems that firms dealing with the troves of it are everywhere. Alteryx is one of them.
The firm runs a self-service data analytics platform for businesses that allows them to prep and analyse data in order to solve everyday business problems.
It’s no secret that Alteryx has suffered over the past few months. With a share price flying close to US$180 at the beginning of August, it fell off a cliff after reporting disappointing second-quarter results and, more importantly, weak guidance.
After losing about 40% in the days after that earnings report, the company’s shares have managed to rebound about 30% (including last night’s monster gain).
But what about its numbers? That August sell-off was sparked by some weak guidance of around 7-11% year-on-year revenue growth for the third quarter after it had posted 65% growth on the top line for full-year 2019 and 43% in the first quarter of this year.
Tech volatility on guidance
The reason? Sales headwinds. Alteryx confirmed an elongated sales cycle where more deal scrutiny and stiffer approval processes were weighing on its growth.
Yesterday’s surprise announcement – where the company updated its third-quarter outlook for year-on-year growth of 22-24% and replaced CEO Dean Stoecker with board member Mark Anderson – helped cement how investors should approach high-flying tech stocks.
If investors hold these tech stocks, you have to be prepared for big moves either up or down on earnings guidance and revisions.
More importantly, guidance is now the needle-mover in terms of the share price rather than the latest earnings themselves (given how often tech firms beat).
It shouldn’t stop you looking further out and understanding whether the fundamentals of the business remain sound – Ateryx in its latest quarter still posted a gross margin of 90%.
Regarding Alteryx’s own situation, the updated guidance is obviously great news. The fact that the co-founder and CEO is being replaced doesn’t fill me with the greatest confidence if I were a shareholder.
However, the man taking over the CEO role, Mark Anderson, has a glittering career in tech having served stints at cybersecurity firm Palo Alto Networks Inc (NYSE: PANW) and cloud-based planning software firm Anaplan Inc (NYSE: PLAN).
I’ll be keeping Alteryx as one to watch but if growth does pick up (along with guidance when it releases results on 5 November) then we could very well see it returning to its highs earlier this year.
Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.
This material is categorised as non-independent for the purposes of CGS-CIMB Securities (Singapore) Pte. Ltd. and its affiliates (collectively “CGS-CIMB”) and therefore does not provide an impartial or objective assessment of the subject matter and does not constitute independent research. Consequently, this material has not been prepared in accordance with legal requirements designed to promote the independence of research. Therefore, this material is considered a marketing communication.
This material is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CGS-CIMB’s clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this material. The information and opinions in this material are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, derivative contracts, related investments or other financial instruments or any derivative instrument, or any rights pertaining thereto. CGS-CIMB have not, and will not accept any obligation to check or ensure the adequacy, accuracy, completeness, reliability or fairness of any information and opinion contained in this material. CGS-CIMB shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.