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Alteryx CFO Kevin Rubin on Q4 outlook, stock sell-off and the possibility of getting acquired

How often do we get to see a new stock register 600% gains in a matter of just two-and-a-half years? Alteryx (NYSE: AYX) has made it look like cakewalk. Importantly, Alteryx’s growth wasn’t driven by speculations or market gimmicks, but rather an innovative product in a tremendously lucrative industry.

The Irvine, California-based company’s data science solutions have been witnessing rapid adoption worldwide, thanks to its user-friendly interface and design features. At the end of the third quarter of 2019, the company had 5,613 customers, 30% more than a year ago. Alteryx also has an enviable reach into Global 2000 firms, with a client list boasting of Microsoft, Coca-Cola, Ford Motor and Barclays PLC.

In an exclusive chat with AlphaStreet, Alteryx CFO Kevin Rubin opens up about the company’s growth strategy and its ambitions.

On weaker-than-expected Q4 guidance…

When Alteryx reported its third-quarter financial results last week, it extended its impressive growth streak. The key figures exceeded Wall Street estimates and a hike in full-year guidance was an icing on the cake. The lone dark spot was the fourth-quarter bottom-line outlook, which was weaker than the street consensus.

CFO Rubin declined from commenting whether the outlook was conservative or not, but stated that EPS has not been the primary focus from an investor perspective.

“Investors realize that there is an incredibly large opportunity for us, and we continue to ensure that we are investing in the right areas to capture this opportunity.” He added that the company’s two main priority areas with regards to investments are global expansion and building engineering capabilities.

Dollar-based net expansion rate for the quarter stood at 132%.

On the September slide…

Since hitting a peak in early September, the stock is currently down around 37%. Rubin said he sees this as a sector rotation, where investors are shifting out of the high-multiple stocks to other industries.  He added that this could be an opportunity for new investors to pitch in and discover the attractive valuations that are expected going ahead.

Check out: Alteryx (AYX) stock research summary

On international expansion…

The data analytics firm currently generates three-fourth of its revenues from the US, most of which are being used up for expansion into Europe and Asia. Rubin asserted that the expansion activities in Europe, operated through its office in London, are gaining a lot of traction over the past few years.

He feels with more focus on Asia in the coming years, it is set to become another huge growth market. Based on the trial download schemes, South Asian markets such as India, China and Japan were identified as potential markets for meaningful expansion.

Alteryx had opened its Asia headquarters in Singapore in April last year, as a first step of expansion into the continent.

READ: Alteryx Q3 2019 earnings conference call transcript

On the M&A strategy…

M&A has been a key growth strategy for Alteryx; it has tucked in five analytics firms since it went public in March 2017. Kevin Rubin said he sees M&A only as a complementary strategy that helps accelerate its time to market.

The CFO said talent acquisition is another key factor driving Alteryx’s M&A strategy as seen from the recent purchases of ClearStory Data and Feature Labs.

alteryx acquisitions since IPO

“We have a very clear view on where the products need to evolve over the coming years, and M&A only accelerates the build-buy scenario. We do look at acquisitions as being accretive to the business over time, but it’s not our primary focus from a growth perspective,” he said.

On ClearStory integration…

Alteryx bought business intelligence firm ClearStory earlier this year in its largest acquisition to date and Rubin stresses that the purchase was primarily for its engineering team, rather than the technology.

Without going into the details, Rubin stated the ClearStory team will supplement to Alteryx’s own development activities, and over time, aspects of the technology will be incorporated in the Alteryx platform.

READ: Understanding Apple (NASDAQ: AAPL) Q4 2019 earnings results through 4 charts

On getting acquired, given the valuations are right

The CFO sidestepped on market speculations that Alteryx could be a great takeover target for the tech giants to gain inroads in the analytics space.

“That is not our strategy in terms of where we are going,” Rubin said. “We see an opportunity to be a key player in the analytics space, which is evidenced by the business we have built and where we see ourselves going.”

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text

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