AYX - Embedded Expectations Analysis - 2021 02 04
Alteryx, Inc. (AYX:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 218.4x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about the efficiency of the Alteryx Platform, ARR guidance, and contract durationSpecifically, management may lack confidence in their ability to sustain the efficiency gains the Alteryx platform provides, attract more companies to use their advanced analytics, and meet ARR growth guidance. Moreover, they may be concerned about the performance compensation of their employees and the potential dilution of their weighted average shares outstanding. Furthermore, they may lack confidence in their ability to sustain long-term revenue growth and continue leveraging adoption licenses. In addition, management may be concerned about contract duration headwinds, and they may be exaggerating the consistency of their small- and medium-sized focused commercial businesses
Although management may have concerns about the efficiency of the Alteryx Platform, ARR guidance, and contract duration, market expectations are overly bearish given the firm's fast-growing, highly profitable SaaS-like business model. As such, equity outperformance is warranted
Alteryx provides data science and analytics. The company's analytics platform comprises: Alteryx Designer, its data profiling, preparation, blending, and analytics product used to create visual workflows or analytic processes; Alteryx Server, its server-based product for scheduling, sharing, and running analytic processes and applications in a web-based environment; Alteryx Connect, its collaborative data exploration platform for discovering information assets and sharing recommendations across the enterprise; and Alteryx Promote, its analytics model management product for data scientists and analytics teams to build, manage, monitor, and deploy predictive models into production applications.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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