Alteryx, Inc. (AYX) Q1 2021 Earnings Call Transcript

Alteryx, Inc. (NYSE: AYX) Q1 2021 earnings call dated May. 04, 2021

Corporate Participants:

Chris Lal — Chief Legal Officer

Mark Anderson — Chief Executive Officer

Kevin Rubin — Chief Financial Officer

Suresh Vittal — Chief Product Officer

Analysts:

Brent Bracelin — Piper Sandler — Analyst

Michael Turits — KeyBanc Capital Markets — Analyst

Tyler Radke — Citi — Analyst

Sanjit Singh — Morgan Stanley — Analyst

Brad Sills — Bank of America Merrill Lynch — Analyst

George Iwanyc — Oppenheimer & Co. — Analyst

Jack Andrews — Needham & Company LLC — Analyst

Pinjalim Bora — J.P. Morgan — Analyst

Derrick Wood — Cowen & Company — Analyst

Steven Koenig — SMBC Nikko Securities — Analyst

Bhavan Suri — William Blair — Analyst

Pat Walravens — JMP Securities — Analyst

Christopher Merwin — Goldman Sachs — Analyst

Presentation:

Operator

Greetings and welcome to Alteryx First Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I’d now like to turn this conference over to your host, Mr. Chris Lal, Chief Legal Officer. Thank you, sir. You may begin.

Chris Lal — Chief Legal Officer

Thank you, operator. Good afternoon and thank you for joining us today to review Alteryx’s first quarter 2021 financial results. With me on the call today are Mark Anderson, Chief Executive Officer; and Kevin Rubin, Chief Financial Officer. Additionally, Suresh Vittal, Chief Product Officer will be joining us for the question-and-answer session after prepared remarks. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainty.

Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC’s website in the Investor Relations section of our website, as well as the risks and other important factors discussed in today’s earnings release. Additionally, non-GAAP financial measures will be discussed on today’s conference call. A reconciliation of these measures to the most directly comparable GAAP financial measures can be found in today’s earnings release.

With that, I’d like to turn the call over to our Chief Executive Officer, Mark Anderson. Mark?

Mark Anderson — Chief Executive Officer

Thanks Chris. And thank you all for joining us on the call today. I’m pleased to report that our FY ’21 is off to a strong start with Q1 results ahead of expectations. The team did a solid job executing against our plan around the globe. We achieved the key milestone with ARR crossing the $500 million mark ending at $513 million, up 27% year-over-year. As we mentioned last year, FY ’21 is a year of transformation for Alteryx as we evolved how we innovate and delivered value to our customers and our Q1 results demonstrate the early progress we’re making. Execution begins with the right leadership and the right operating framework. I’m confident we’re putting a world-class team in place and are making the right investments.

I’m quite happy with the execution against our FY ’21 operating plans thus far and it has been translated down in an actionable way to every one of our associates. Alteryx is delivering unparalleled value to our customers as we scale. Customers and prospects continue to validate our focus on high value use cases for functional and digital transformation. Our Global Tier 1 partnerships with whom we are working have seen great traction as well. I will provide more color shortly. For the call today, I’ll give an update on our overall progress against the key imperative that I outlined last quarter. Kevin will then provide specifics on our Q1 performance as well as our outlook for both Q2 and full year 2021.

Our first imperative is delivering strategic customer outcomes. As a reminder at the end of last year, we began our transformation journey to simplify and streamline our go-to-market organization to focus on the highest value customers and prospects. Narrowing our focus and aligning closely with our partners allows us to go after the largest total addressable market, which will help us deliver high value business outcomes. I believe these are the right changes in order to capitalize on the large market opportunity in front of us that sets us up for long-term sustained growth. Do this effectively, we continue to build and scale our go-to-market engine. As I mentioned earlier, execution starts with leadership. We’re in the final stages of our search for a new Chief Revenue Officer.

And I’m extremely excited to be able to make an announcement very soon. We also continued to expand our sales capacity at all levels. In Q1, we have been incredibly busy hiring associates to bring the right experience and the right skills to Alteryx. We have ambitious hiring plans for 2021 as we look to scale Alteryx across the globe. We’re off to a great start. As an example, we’ve doubled the size of our customer success team in the past four months. I believe that under Matthew Stauble’s leadership, this team will really be able to drive important customer engagement and that over time these investments will lead to faster expansion and larger deal sizes. While we did see elevated sales attrition in Q1, the majority of it was expected.

At the same time, we successfully repositioned and promoted sales resources in Q1. And I’m really proud of how this team adapted to new assignments, new relationships and a much more comprehensive operating framework. We continue to add high quality talent with stage appropriate competencies to complement our strong internal base. With so many moving pieces, our recruiting team and the hiring managers across the globe did an excellent job. My hat goes off to them. Early indications are that our strategy is working evidenced by improved sales productivity in Q1. I continue to expect sales productivity improvement as we move through 2021 as a result of the increased operational rigor and discipline.

Transformations don’t happen overnight and these changes will take time to fully take hold. Our focus on larger companies continues and we currently have 39% of the G2000 where we are seeing new and significant expansion opportunity. They’re turning to Alteryx to help navigate these important transformation journeys. This quarter is the largest real estate online retail marketplace in the U.S. leverage the power of the Alteryx APA platform to deliver automated analytics and drive marketing effectiveness. Also in Q1 we closed a seven figure renewal and expansion deal with a large global consulting firm. This firm like many uses Alteryx both internally and as a lead behind in their digital transformation projects.

Every quarter we have great examples of how our platform is being used in different ways. This quarter the U.S. census expanded with Alteryx. With our analytics automation solution they’re automating a variety of manual processes related to survey collection and processing and are saving thousands of employee hours a year. What used to take weeks now happens in minutes. Also this quarter a large social media company expanded with Alteryx to improve its human capital experience. Through the power of automation they expect to save approximately 4,000 employee hours per year while delivering new real-time updates on employee engagement to their C-level executives. The Alteryx community is another way we serve our customers and partners.

We’ve long believed that achieving analytics outcomes is a social and collaborative experience. And through the Alteryx community we bring customers and partners together to learn, share and collaborate. This quarter we launched a brand new Alteryx community site that makes it even easier to learn, connect and drive value. The new community platform includes a richer experience with personalized recommendations and a new data science portal to support advanced analytics across the globe. The feedback today has been exceptional. The Alteryx community is extremely impactful to our customers’ experience with the Alteryx platform. Customers that are engaged with our community are three times more likely to expand and have significantly higher usage of advanced analytics capabilities.

In the past year, we saw an over 50% increase in activity on community. Another key imperative for Alteryx is broadening the ecosystem. Continuing to expand key partnerships while adding new ones is a key pillar in our success. We believe having a robust ecosystem of strategic go-to-market and technology partnerships will act as a force multiplier and help accelerate our growth. These partnerships enable more strategic engagement with the C-suite, including digital transformation initiatives and allow us to deliver more seamless integration. For example, Robotic Process Automation or RPA is highly complementary with our APA platform and together we can allow for swift implementation and faster time to value and outcomes.

We continue to see momentum with UiPath. People’s United Bank is leveraging the joint power of UiPath and Alteryx to drive real-time transaction processing and monitoring, which has enabled them to increase compliance and lower operating risk. We’re also pleased to announce a partnership with Blue Prism. Customers have a choice of RPA vendors and we are making it easier for them to integrate with the best. Finally, we are seeing real traction with our Snowflake alliance and our joint go-to-market program. Our first global go-to-market program, Together, launched in March and we had a strong start out of the gate with Snowflake influenced wins this quarter.

One of the reasons we are successful is that we are agnostic to where [Indecipherable] comes from and goes to as well as where your analytics are consumed. We’re making progress around our strategic imperative to drive innovation and make Alteryx consumable anywhere. 2021 will be a year of investment in product innovation with our new Chief Product Officer, Suresh Vittal leading his efforts. He joined the team last quarter and has hit the ground running and is busy driving transformation across R&D. Suresh has been busy shaping the team to support our growth ambitions while augmenting the strong team we currently have in place.

I’m also excited that in two weeks from May 18 to the 20, we’ll be hosting our Inspire Conference virtually where customers, alliance partners, data fans and analytics gurus unite as a global analytics community to share and learn new ways to solve the biggest challenges facing business and society today. We have an amazing lineup of customer and alliance partner presentations, plans and I hope you’ll join us to hear from Nike, Mercedes-Benz, Kraft Heinz, Standard Chartered Bank, UBS, UiPath, Snowflake, AWS and so many more. We will also be hosting a Financial Analyst Day on the afternoon of May 18 where Suresh and I will go into more depth on our current product strategy and Kevin will outline in detail our financial framework.

I hope you can join us. In closing, we’re making good progress against our 2021 operating plan and strategic objectives. I remain confident in our ability to successfully transform Alteryx to deliver long-term value for associates, customers and shareholders. The opportunity ahead of us is massive and growing as we continue to deliver significant business value to our customers and innovate relentlessly, I believe Alteryx will be one of the winners in this highly fragmented vendor landscape. I’m incredibly energized by the opportunity we have in front of us.

With that, let me turn the call over to Kevin. Kevin?

Kevin Rubin — Chief Financial Officer

Thank you, Mark. Overall as Mark highlighted, we delivered a solid performance in the first quarter. ARR was $513 million, an increase of 27% year-over-year and revenue was $190 million, up 9% year-over-year. Both were ahead of expectations as we continue to see improvements in sales execution as a result of the sales strategy and operating framework transformation I walked you through last quarter. Crossing over $500 million in ARR is a significant milestone and we expect to hit another milestone within the year crossing over the $600 million mark. At the end of Q1, we had 7,214 customers including 776 or 39% of the Global 2000.

While net new customer adds for the quarter were lower than historical levels, we realigned our sales team at the beginning of the year to deliver high value business outcomes and drive expansion within our largest potential customers. Net expansion for Q1 was 120% and a stronger 129% within our Global 2000 customers. Additionally in Q1, we saw improved overall churn rates. While we continue to believe that net expansion of 120% is achievable, as we pivot our go-to-market efforts, we may experience periods where net expansion falls below this level due two factors. First, focusing on larger perspective customers and selling high-value use cases may increase the average initial deal sizes.

Second, and as I mentioned during our call last quarter, we are transitioning our small and mid-sized customers to be predominantly channel supportive, which also may impact net expansion rates for this customer segment. Churn rates are typically highest in smaller companies and those with a single suite of designer. Before moving on, I want to remind everyone that unless otherwise stated I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP results. As I mentioned earlier Q1 revenue was $190 million, and increased 9% year-over-year. While contract duration averaged two years for the quarter, it did decrease year-over-year as we sold fewer multi-year fields in the quarter compared to Q1 of last year.

And as we mentioned last quarter we expect contract duration to shorten somewhat as we align the business around ARR which impacts revenue, but not ARR. Our Q1 gross margin was 93%, up 140 basis points from Q1 2020. Our Q1 operating expenses were $130 million compared to $103 million in the same period last year. The increase in our operating expenses is primarily attributable to increases associated with head count and other employee related expenses. Our Q1 operating loss was $3 million. Net loss was $5 million or a loss of $0.08 per share based on 66.9 million fully diluted weighted average shares outstanding.

Turning now to the GAAP balance sheet and statement of cash flows; in the first quarter we generated $26 million in cash flow from operations. Our liquidity position remains very strong with just over a $1 billion in cash, cash equivalents, short-term and long-term investments. Now turning to the outlook for Q2 in full year; we are focused on executing against our strategic imperatives and are investing significantly in product development to accelerate innovation and in our sales and marketing efforts to better focus on larger customers and prospects with the greatest propensity to benefit from the Alteryx platform. We are encouraged by the improved sales productivity we experienced in Q1 as evidenced that our strategy is working.

These investments are expected to drive our next phase of growth and are being made through the first-half of the year. We expect to see their benefits in the second-half of 2021. Our guidance assumes the following; first, we continue to expect a modest and gradual improvement in the macro environment in 2021 specifically in the second-half of the year; second, the average duration of our subscription agreements will shorten and start trending below two years; and third, approximately 40% of TCV booked in the quarter will be recognized upfront with the remainder recognized ratably over the time of the contract. Finally, I’d like to remind you that our guidance is subject to various important risks and cautionary factors referenced in our call today and in today’s earnings release.

For Q2 2021, we expect our GAAP revenue in the range of $111 million to $114 million which represents year-over-year growth of 15% to 18%. We expect our non-GAAP operating loss to be in the range of $22 million to $19 million and non-GAAP net loss per share of $0.27 to $0.24. This assumes 68 million weighted average shares outstanding. For the full-year 2021, we are raising GAAP revenue guidance to be in the range of $565 million to $575 million, which translates into year-over-year growth of 14% to 16%. We are also raising our full-year 2021 ARR guidance and now expect to exit 2021 with approximately $635 million of ARR.

This represents an increase of $10 million from our prior guidance and translates to approximately 29% year-over-year growth. We expect our non-GAAP operating income loss to be in the range of a $5 million operating loss to a $5 million operating income. Our non-GAAP net income loss per share is expected to range from a net loss per diluted share of $0.07 to a net income per diluted share of $0.07. Our non-GAAP net loss per share assume 68.5 million basic shares outstanding, while our non-GAAP net income per diluted share assume 72 million fully diluted weighted average shares outstanding. Finally, we expect an effective tax rate of 20%.

In summary, I’m excited about our strong start to the year. We are starting to see the benefits from the operating framework we are putting in place. We believe the transformations we are making today sets us on the right course for the future in this next phase of growth. We have a strong product market that — significant market opportunity, a powerful business model and a strong financial position with over $1 billion of cash on the balance sheet.

And with that, we’ll open the call for questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Brent Bracelin with Piper Sandler. You may proceed with your question.

Brent Bracelin — Piper Sandler — Analyst

Thank you and good afternoon. I had one for Mark and I’ll follow-up for Kevin if I could. Mark, it’s been I think a little over six months now since you have taken over the helms here. I was hoping to get a report card as you think about the office transformation here. What areas are you most pleased with so far and where do you plan to double-down your efforts going forward?

Mark Anderson — Chief Executive Officer

Hey, Brent, thanks very much for the question. Yeah, so, it has been over six months in the saddle here; really been incredibly blessed to work with such a talented team — group of people around the world that are dealing with all the things that have been swirling around for the last six months with the pandemic and whatnot. I’d say I’m really encouraged about the innovation. We’re going to talk about a couple of weeks at Inspire. Suresh are I are going to roll out our kind of roadmap for the future from a pretty granular technical standpoint.

And I’d also say I’m pretty pleased with the transformation that’s going on in the go-to-market. As you know, we streamlined and repositioned a lot of people in the first quarter and in doing so, it freed up the spending to be able to double the investments that we’ve made as I mentioned in the script in our customer success. And what we’re finding is customers have a much higher sense of urgency these days around the departmental or digital transformation projects that we’re working on and having subject matter experts after the sale to help us stick the landing, I think it’s going to be really helpful especially in the second half of the year.

Brent Bracelin — Piper Sandler — Analyst

Got it. Certainly sounds interesting and we’ll stay tuned for more at the Inspire next — well, actually in a few weeks. I guess Kevin for you, trying to understand the ARR guide. The guide here you’ve taken out by $10 million. It implies your closure is actually going to accelerate kind of exiting the year. If I just look at the net new ARR, it’s about — implies about you have to add about $122 million for the next three quarters. If I look at the three quarters of last year, you only added about $88 million of net new. That’s a 40% increase. Given Q1 net new ARR was about $10 million lower than what you saw in Q1 last year, what gives you confidence you can add $122 million of net ARR over the next three quarters? Just trying to understand the logic there of a pretty meaningful build in ARR.

Kevin Rubin — Chief Financial Officer

Thanks, Brent. Appreciate the question. Look, I think its a few things. We obviously made very intentional and deliberate changes to the go-to-market this year that we think as the year progresses will result in meaningful improvement in productivity. And Q1 is kind of an early indication or early evidence that that is transpiring. And I think as we look forward and just consider what that means ultimately to the go-to-market going forward, I think that’s powerful. The other just two components just to keep in mind is we also have very strong partnerships that as part of the transformation are getting activated in a meaningful way. And I think those are going to contribute meaningfully in the back half of the year. And then lastly, just think about product innovation. And we’re obviously going to go into more detail at Inspire here in a couple of weeks. But we think that’s going to be a nice stimulus to the back end of the year into the business. So I mean looking across all those three dimensions, it certainly gives us confidence in the guide.

Mark Anderson — Chief Executive Officer

Yeah. Brent, I’ll [Indecipherable] at the end of that. Mechanically, we will see productivity continue to go up through the fiscal year and that’s really going to be driven by these technology and distribution alliances that we’ve been forging as well as the fact we’re going to be adding more arrows into the quiver of our teams.

Brent Bracelin — Piper Sandler — Analyst

Totally makes sense. Look forward to hearing more on the details in a couple of weeks. Thanks.

Mark Anderson — Chief Executive Officer

Great. Thanks, Brent.

Kevin Rubin — Chief Financial Officer

Thanks Brent.

Operator

[Operator Instructions] Our next question comes from the line of Michael Turits with KeyBanc. You may proceed with your question.

Michael Turits — KeyBanc Capital Markets — Analyst

Hey guys. Hey Mark and Kevin, everybody, good evening. I wondered if you could talk a little bit about what’s happened, what’s been going — since Suresh has come onto the team? And specifically how he’s helping to carve your — into your thinking about cloud and I know we’ve got an Analyst Day coming up, but love it if we can talk about this direction?

Mark Anderson — Chief Executive Officer

Yeah Michael, great to hear from you. Thanks. Hope all is well with you. Yeah, well, listen I think we were super excited to get Suresh given his background coming from Adobe where they walked a mile in the shoes that we’re walking, moving from a premise-based product to that plus cloud journeys that we’ve kind of alluded to in the past. What I’ve seen certainly from my space is Suresh is really driving specificity around kind of where we’re going, how we’re going to get there and what we’re going to need both organically and inorganically and he is sitting right here beside me. So I might just hand the mic over to him and let him give you some more color.

Suresh Vittal — Chief Product Officer

Yeah. Thanks for the question, Michael. Thanks Mark. Super excited to be here obviously, and I think it’s exciting to be part of a company whose products are so mission-critical for our customers. We’ve got an amazing passionate group of customers. We’ve got a lot planned for Inspire and for the Analyst Day here in a couple of weeks where we would elaborate on our product strategy. So stay tuned for that, but lots of great progress in the near term here.

Michael Turits — KeyBanc Capital Markets — Analyst

Mark and Suresh, thank you very much. Mark, good to talk to you of course again also.

Mark Anderson — Chief Executive Officer

Thanks Michael.

Operator

Our next question comes from the line of Tyler Radke with Citi. You may proceed with your question.

Tyler Radke — Citi — Analyst

Hey, thank you. Mark, I was hoping you could talk a little bit about the sales changes you made. Obviously, as you mentioned there was a lot of turnover in the quarter largely to be expected. But just kind of where are we in terms of the sales transformation? Do you kind of feel like the worst is behind you? It did seem like the net new customer number picked up a little bit versus Q4. But do you feel like every — all the changes from the sales side are behind you and you kind of expect things from a customer add perspective to improve from here? Thank you.

Mark Anderson — Chief Executive Officer

Hey Tyler. Thanks a lot for the question. Yeah, listen, I think we rolled the changes out at the very beginning of the fiscal quarter and I really got to hand it to the team. There was a lot of change that we imposed new assignments, new territories, new quotas. We had a — our annual sales kick off and the team has done a really nice job sort of I think getting going for the first fiscal quarter. Listen, the first few quarters of transformation as you know from covering other companies it’s always the bumpiest and I find that the way I look at things maybe six to nine months into it you start to see the impact of these changes start to really normalize and become a lot more predictable.

That said, I think we still have changes that we’re making. We’re again going to be looking at some exciting innovations that we think will really help us drive meetings and drive pipeline. Got really exciting both distribution and technology partnerships that will continue to drive meetings and pipeline. And as I mentioned on the script, hopefully in a few days, we’ll be able to announce a good CRO that’s got stage-appropriate experience and also large scale experience managing thousands of people and billions of dollars. So please stay tuned on that.

Tyler Radke — Citi — Analyst

Thank you.

Operator

Our next question comes from the line of Sanjit Singh with Morgan Stanley. You may proceed with your question.

Sanjit Singh — Morgan Stanley — Analyst

Thank you for taking the questions and congrats on the nice start to 2021. Mark, I guess my question is looking through the eyes of customers that sort of read your script, it sounds like there’s a lot of exciting things happening both on the sales front, but also on the product front which Suresh is leading the charge with. What is being put in place in terms of giving them that sort of bridge? I imagine as we go to the Analyst Day we’re going to be talking about a pretty significant product roadmap that might go multi-years. How do you sort of prevent the classic case where a customer sort of pause ahead of big product announcements just to see like where the product portfolio is going to minimize that sales disruption risk as you sort of launch the next stage of the product portfolio?

Mark Anderson — Chief Executive Officer

Yeah. Sanjit, thanks for the question. Really I think it’s a smart and important question. Listen, we think a lot about that. Of course we never take for granted the fact we’ve got hundreds of thousands of really happy, deliriously happy users that use our innovation every day. We’ve got well over 7,000 customers around the world. And we also think it’s a massive and continuing to expand TAM. I think I’ve said in the past we measure it in terms of tens of billions of dollars. Today in the next few years I believe it will be measured in hundreds of billions of dollars because as this entire space explodes.

So I think one of the things you’ll — certainly not going to spoil any surprises for next week but I think you can count on us really doubling down on improving the experience, the security, the innovation that’s being applied to our bread and butter, server and designer as well as making our innovation consumable everywhere as fast as we can. And so you can imagine as we work through the beta programs, we work through production ready. We’re going to be super thoughtful about ensuring that we’ve got more and more innovation to add to our customers to drive up lifetime value of our customers, not take away from it.

Sanjit Singh — Morgan Stanley — Analyst

Understood. Thanks a lot. Looking forward the Analyst Day.

Mark Anderson — Chief Executive Officer

Yeah. Thanks, Sanjit.

Operator

Our next question comes from the line of Brad Sills with BofA Securities. You may proceed with your question.

Brad Sills — Bank of America Merrill Lynch — Analyst

Oh, great. Hey, guys. Thanks for taking my question. I wanted to ask about the Snowflake wins. I know it’s early, but if there’s any color you could provide on how those deals look versus your traditional deals? Are they more pervasive throughout the organization? Is Snowflake I mean you guys in for just data integration into that use case? Do you see these types of deals as providing a bigger expansion opportunity longer-term? Just any color on just how you guys are participating there and what’s different about a cloud deal with like a Snowflake for example? Thank you.

Mark Anderson — Chief Executive Officer

Yeah. Thanks a lot for the question, Brad. Maybe I’ll start that off and hand it over to Suresh or perhaps Kevin. Yes, what we’ve seen with Snowflake as we’ve discussed in the past has been just sort of an ongoing continuing to grow and build — relevance between Snowflake and the market and our customers and — back a few years ago when we built the first Snowflake connector we just watched the telemetry and saw that more and more customer data was being put into their terrific data warehouse solution.

So much so that we approached them last year and started working on much more — much deeper integration so that we could actually allow our customers to be able to push workflows right into the Snowflake compute. I think we found pretty quickly that the Snowflake folks like that because it burns consumption and that’s what they care about. I think the engagement that we started back in March was really kind of a peer to peer field based engagement that really started getting salespeople together on Zoom in some places maybe in Starbucks and sitting and strategizing on how to sell our respective innovations to customers to drive more consumption in Snowflake and to drive a greater need for the ability to manipulate that bandwidth with Alteryx’s APA platform.

Brad Sills — Bank of America Merrill Lynch — Analyst

Thank you.

Suresh Vittal — Chief Product Officer

Yeah. If I may add a couple of thoughts; we see a great opportunity for our customers as they move workloads to the cloud, clouds like Snowflake, Azure, AWS and so on. And Alteryx plays a big part in driving automation and analytics for our customers in the cloud, both in getting the data into the cloud and then driving analytics once the data’s there and then distributing those insights to various enterprise systems whether it’s RPA environment whether it’s salesforce automation or other enterprises. So we think there’s tremendous opportunity as our customers embark on this data-driven cloud transformation.

Brad Sills — Bank of America Merrill Lynch — Analyst

That’s great. Thanks so much, guys.

Kevin Rubin — Chief Financial Officer

Thanks, Brad.

Mark Anderson — Chief Executive Officer

Yeah. Thanks Brad.

Operator

Our next question comes from the line of George Iwanyc with Oppenheimer. You may proceed with your question.

George Iwanyc — Oppenheimer & Co. — Analyst

Thank you for taking my questions. So, Kevin maybe if you look at the expansion activity you had during the quarter, can you give us maybe some color on how much was product-related and maybe new server Connect-Promote and how much was coming from new seat growth? And would you also may be put that in context of the traction you’re seeing with the G2K customers?

Kevin Rubin — Chief Financial Officer

Yeah. Thanks George. Appreciate the question. Look, I mean at the basic level our expansion success is seat-driven and use case-driven. We certainly have opportunity to up sell the products server connect promoted as you mentioned. And we saw some encouraging trends in that respect. But underlying all that is fundamentally getting more users and more people within departments engaged on the Alteryx platform and running more workflows. So I still think about expansion is largely being driven by seats versus product up-sell and cross-sell.

George Iwanyc — Oppenheimer & Co. — Analyst

And just on the G2K trends?

Kevin Rubin — Chief Financial Officer

Oh, sorry. Look I think we are continuing — we’re continued to be encouraged by how we’ve been successful within that customer segment. And certainly the strategic alliances that we’ve talked a lot about are helpful in driving relevance and activity within the Global 2000. And so that’s a key focus. I think we’ve been consistent at — consistently quarter-after-quarter growing that segment and we’ve also consistently seen much higher expansion rates within the Global 2000.

Mark Anderson — Chief Executive Officer

Yeah, George, if I could just add to the end of that there — we also saw just looking back over the last few quarters, pretty sizable uptick in the growth of the kind of engagement on our community. Not only do we sort of re-skin the community and make it more modern and add a bunch of features, but we’re really seeing especially when people are locked into their homes, working on a keyboard all day, that connecting with other people and socializing what they’re doing with the analytics and automation is becoming more and more important thing.

George Iwanyc — Oppenheimer & Co. — Analyst

Thank you.

Operator

Our next question comes from the line of Jack Andrews with Needham. You may proceed with your question.

Jack Andrews — Needham & Company LLC — Analyst

Good afternoon. Thanks for taking my question. Mark, I was wondering maybe if you could rank order your ecosystem progress so far. You mentioned three types of partners, strategic, go-to-market and technology. Maybe just talk about where have you made the most progress? Where do you have a lot more work to do and maybe who could really move the needle for you from a longer term perspective?

Mark Anderson — Chief Executive Officer

Yeah. Thanks a lot for the question, Jack. Listen, I think they’re all really important, right. For sure, we started last year in a journey with PwC and that journey has taken on a substantial scale not only with PwC as a customer, but also with PwC as an influencer and using our innovation as the lead behind for a lot of their big projects that they’re doing on functional and digital transformation. But to do them, the right service, I think we had to make sure that we had the people and the team and the processes to operationalize that partnership, so that it can grow for both of us. And then, we need to rinse and repeat that as we announced with HCL last quarter, a really strong partnership going after their biggest customers.

And going into these big multi-dec — or even $100 million projects that they’re doing and using Alteryx as the lead behind technology. So I think we started to build some institutional muscle around not only the people that are operationalizing those partnerships, but the field teams that are now working with partners from PwC or executives from HCL to really drive our relevance up in accounts that either we’re working at or the ones that we’re not working at. So, I think that will continue to be a really important avenue of focus for us and our new CRO brings a lot of chops in terms of working with large scale partners like that.

But, the technology side you can’t underestimate how important that is either because customers these days they want easy buttons, they want very clean and slick integrations so that the work is done by the vendors not by their engineering staffs any longer and so, certainly key partnerships that we have with Adobe, with UiPath on the RPA side now, also Blue Prism as well as Snowflake and stay tuned for more on the data warehousing side because customers want to be able to use us in all of these different environments. We’re sort of a — we’re neutral when it comes to where we’re going to facilitate the use of our innovation in what environments.

Same thing with the public cloud players, so I think to do these right and to do them all at the right service, I think we have to make sure we don’t try to go too fast so that we don’t deliver the quality, experience that our customers and our partners need. And then just finally, we do have a really good long tail of regional partners around the world that we’ve worked with in the past. I see having been part of tech firms in the past that have grown 10 times, 20 times, 30 times over a sustained period of time, I’ve seen these regional partners grow into become large multi-billion dollar partners and I’m still applying the right resources to be able to facilitate those partnerships to be successful.

Jack Andrews — Needham & Company LLC — Analyst

Got it. Thanks Mark.

Mark Anderson — Chief Executive Officer

You bet, Jack.

Operator

Our next question comes from the line of Mark Murphy with J.P. Morgan. You may proceed with your question.

Pinjalim Bora — J.P. Morgan — Analyst

Oh, great. Hey, this is Pinjalim on behalf of Mark Murphy. Thank you for taking our question. Kevin, a quick question for you. I think you had said last year that you had seen a big jump in adoption agreements, I think maybe in Q2, Q3 as COVID hit, what have you seen with respect to those adoption agreements ramp so far in terms of the pace of ramp? And are you seeing any conversion of those adoption agreements into ELAs as we enter 2021, and if that is a factor playing into your overall guidance for the year?

Kevin Rubin — Chief Financial Officer

Yeah. Thanks, Pinjalim. Look, as we’ve said in the past, adoption licenses are one tool in a tool belt out of many tools for sellers in how they engage with customers and how customers can consume our technology. We did see an uptick last year and those contracts all largely were completed in last year and converted. And as we’ve talked in the past adoption licenses tend to have a very high value, high impact conversion, if you will — being able to engage deeply with a customer around specific use cases and populations of users with the purpose of building out successful outcomes tends to have a successful outcome. We continue to use adoptions as part of our playbook and we’ve continued to see those convert quite well.

Pinjalim Bora — J.P. Morgan — Analyst

Thank you.

Mark Anderson — Chief Executive Officer

Thanks, Pinjalim.

Operator

Our next question comes from the line of Derrick Wood with Cowen & Company. You may proceed with your question.

Derrick Wood — Cowen & Company — Analyst

Great, thanks. Thanks for taking my question. Question for you Kevin. Can you give us a sense for how to think about the kind of Q2 ARR and linearity for the year? And are you baking in most of the new AAR acceleration from improvements in sales productivity and adding sales capacity or are you expecting newer channel efforts to also be a meaningful contributor?

Kevin Rubin — Chief Financial Officer

Yeah. Thanks Derrick. Hope you’re well. Look, I would say you know similar to I think my commentary last quarter — we are going to continue to see seasonal performance in the year relative to historical levels. So H2 is going to be seasonally stronger as we’ve historically experienced than H1. And so I would think about our ARR building from a growth perspective throughout the year. And then Q4 is typically our seasonally strongest. Look, in terms of improvement in productivity, I kind of go back to my earlier remarks. I think it’s going to come from a lot of the changes that we’ve instituted in the go-to-market itself. It’s also going to come from contributions from the alliances and partnership that we’ve talked about and operational, I think those to a much better degree and ultimately I think there’s going to be lift from the product side as we get into the back half of the year. So I think all of these are important muscles that are being exercised that will show benefit as we get into Q3 and Q4.

Derrick Wood — Cowen & Company — Analyst

Great. Thank you.

Kevin Rubin — Chief Financial Officer

Perfect. Thank you.

Mark Anderson — Chief Executive Officer

Thanks, Derrick.

Operator

Our next question comes from the line of Steve Koenig with SMBC Capital. You may proceed with your question.

Steven Koenig — SMBC Nikko Securities — Analyst

Great. Thank you, gentlemen, for taking my question. I wanted to ask — Mark, I wanted to ask you about the enterprise selling motion that are more important part of your toolkit this year that you’ve been focusing on. Are we talking about simply more capacity and a rotation back to enterprise selling after 2020 or are there qualitative differences in the sales motions? Are you placing greater emphasis on certain types of buyers or sea level buyers, any sort of color you could give me around that, I would appreciate it and congrats on the Q1.

Mark Anderson — Chief Executive Officer

Well, thanks a lot, Steve. Listen, I think — well, if you go back and look over the last several years, every quarter or every year there were some amazingly thoughtful campaigns where we engage pre-sales resources to design incredible solutions, post-sales resources to make sure we stuck the landing, even partner engagement. The problem is, I don’t think we did a great job institutionalizing that and making it consistent across Asia-Pac, Japan, EMEA, let alone across the United States. So I think the big — part of the big lift was really to drive price and consistency there because in my mind driving consistency allows for a more predictable scale over time especially when you’ve got a large TAM. And I think just teaching to people that we have here.

We’ve got some amazing colleagues here and then overlaying resources that have stage and competency experience at these next few legs of the journey. And I think that involves definitely dealing with personas up and down the organization, functional business unit leaders, CFOs, heads of sales operations. The knowledge workers and the leaders within organizations that are really driving their transformations using data to deliver insights into the business. So really trying to do that comprehensively across the geos so that everyone has a predictable set of competencies and I think — and then continuing to just attract amazing talent. We hired a lot of people in Q1. We’ve already hired a lot of people in Q2 and really continue to do that because we think the opportunity to build out these teams to support these customers that have a high sense of urgency is great.

Steven Koenig — SMBC Nikko Securities — Analyst

Terrific. Thanks Mark.

Mark Anderson — Chief Executive Officer

Yeah. Thanks a lot.

Operator

Our next question comes from the line of Bhavan Suri with William Blair. You may proceed with your question.

Bhavan Suri — William Blair — Analyst

Thank you. Hey Mark, hey team, appreciate for taking the call. Mark I want to touch on something a little higher level. You and I have talked and I think you talked about this [Indecipherable] about the simplicity of message, simplicity of buying, a simplicity of understanding the value add of complex statistics in a almost no COVID environment to folks. I’m not just understanding like you’re on the board, you’ve been there for a while. How is that playing out? Like how are we seeing that translate? Are we still early? Are you getting the marketing message right. Are we getting the sales people getting there right? This is not a download, this is not a viral sale but there used to be a day where you made [Indecipherable]. Just walk us through that process just backing off a second.

Mark Anderson — Chief Executive Officer

You bet. Great question. Thanks, Bhavan. Listen, I think I still talk to CEOs and functional business leaders, CFOs almost every day, certainly every week. And at the highest level, I think what I’m hearing from them is that they can no longer tolerate knowledge workers delivering low strategic output for the enterprise. People that are stuck on spreadsheets are going to have to upskill and up level themselves.

Bhavan Suri — William Blair — Analyst

Right.

Mark Anderson — Chief Executive Officer

And so certainly an area that we’ve had tremendous traction and with just a few days of training helping get these people to become more citizen data scientists and deliver more professionally for them for their businesses but also deliver much more strategic output. So I think making sure the team understands not only the business responsibility but I think the socioeconomic responsibility of what we have the opportunity to do here at Alteryx. You’re going to hear about a really exciting program that we’re launching in a couple of weeks at Inspire that make it very easy for students around the world to be able to upskill themselves with the help of Alteryx. I think in terms of the specific functional work that we’re doing, we’re seeing a lot more focus from partners especially the distribution partners that are being asked to help the largest governments, the largest enterprises do this functional and digital transformation for them.

Because they don’t they don’t have the people internally to manage projects this complex. And so I think it’s still fairly early days even among our biggest customers I think are still in the first few innings of really getting control of the totality of the data that swirls around their enterprise. And I think we have a terrific opportunity at Alteryx just to leverage — again the hundreds of thousands of users that have upskilled themselves using our innovation, but also the thousands of customers and increasingly the larger customers that are seeing these successful projects get put in the rearview mirror. And we’re there with pre-sales and post-sales resources now even greater numbers to be able to ask for permission to do more.

Bhavan Suri — William Blair — Analyst

That’s super helpful. I’m going to follow-up. So one the most interesting thing and you and I have actually talked about this which is in downturn people should invest in analytics, but they don’t because it requires an expensive resource, requires software, requires you making a decision, implement a decision, makes you to run through the business, capturing the data and then seeing what was the ROI on the decision. Coming out of this downturn, coming out of people’s concerns about COVID And I’m not saying the entire world has a life [Indecipherable] but we certainly do, Western Europe does.

This idea of analytics coming as a tailwind now where it was a headwind, because of analytics resources are expensive, analytic software is expensive. The outcome is not immediate. I don’t get to a marketing campaign and see everybody buy today. I get to do an analysis. I get to recommend an action, if the action happens you have to analyze the data to make sure it happen. So take that on account. Are you seeing people start to understand that process? Are you starting to see this idea that analytics should be a tailwind actually in downtimes even more than uptimes but that’s what I think we’re coming out of COVID. Are you starting to see that play out at all.

Mark Anderson — Chief Executive Officer

Yeah. I remember the conversation Bhavan, and I really do and I think some of the proof points for me are — certainly we saw some pent up demand in infrastructure to support the different construct of how workers were going to be connecting into the enterprise and that persisted throughout the last I’d say three, four quarters of the pandemic. And it seems like that slowed down a little bit. And we’re seeing the focus being turned on how do we upskill and transform this business much like we’re doing at Alteryx. But so many of our customers are doing the same thing. And that’s why we’ve really made investments on the marketing side.

I’ve talked in the past about the rescaling of our website and the improvement of our trial to win experience for customers to get fewer minutes to wow when they download our software. But also today we launched a new branding campaign around Alteryx to — not changing the logo, not changing the name of the company but certainly changing how we articulate what we do for customers. And you’re going to see a lot more of us out there in the marketplace because — we think — perhaps we’ve under-rotated a little bit in the past on that. We want to over-rotate that on now because like you said, the sense of urgency for these customers is very high and we want to help them and take advantage of that.

Bhavan Suri — William Blair — Analyst

Got you, got you. I appreciate the color and I appreciate the [Indecipherable] reference. Thank you.

Mark Anderson — Chief Executive Officer

Yeah. Thanks Bhavan.

Kevin Rubin — Chief Financial Officer

Thanks.

Operator

Our next question comes from the line of Pat Walravens with JMP Securities. You may proceed with your question.

Pat Walravens — JMP Securities — Analyst

Oh, great. Thank you. So, Mark you had this six to seven-year amazing run at Palo Alto and you’re now eight months into what’s hopefully going to be the same process at Alteryx. So, I’m just wondering from a high level what are your some of the takeaways that might be interesting for investors about things that are similar and things that are different about sealing these businesses?

Mark Anderson — Chief Executive Officer

Well, thanks for the kind words Pat. Yeah. Look, being around the right people at the right time is always important. But what I found previously in a couple of my longer-term stints in the past, when you have a highly differentiated technology or innovation that is becoming increasingly more and more important to customers to do a better job of, whether it’s security or load balancing or getting handle on the data that swirls around your enterprise — assembling high-performing teams, driving consistency in terms of how we engage with customers around the world and pay for performance across the board to drive innovation more faster and faster around where customers want to take what we do and how we do it.

I think the opportunity is there and the final thing is it’s a massive TAM. At the security side of things we felt that the TAM was big there. But I think the TAM here is again, in the early innings and it grows to be absolutely massive. And the team we have on board now I think got some really special people again, really excited to bring on what I think you’ll find to be a real special CRO here in a matter of days. But landing resources like Matthew Stauble, lending resources like Suresh Vittal, but also the people that are coming from world-class companies to come and join the mission here at Alteryx is humbling and frankly the team we’re going to do an all-hands call through the — for all of our associates here tomorrow — talking to the team — excited about the people that are here that want to be part of the go-forward plan at Alteryx. It’s an exciting time. But as I said — the first few quarters of transformation or often the bumpiest. We see some question marks and people debating strategy. I think the time for that on the debating side is over and now I’d say we put our heads down, banging up the work and just the light customers so that they want to do more business with us.

Pat Walravens — JMP Securities — Analyst

That is super. Thank you.

Mark Anderson — Chief Executive Officer

Thanks. We’ll take one more question.

Operator

Our last question comes from the line of Chris Merwin with Goldman Sachs. You may proceed with your question.

Christopher Merwin — Goldman Sachs — Analyst

Okay. Thanks very much for taking my question. I just wanted to ask about the Connect and Promote products. I’ve heard as much about them lately and it sounds like you know I think it’s one of the prior questions. You mentioned that more of the expansion is coming from users. But just anything to share about how much more focused those are for the sales force at the moment and how we should be thinking about the cross-sell motion just in general improving from here? Thanks.

Kevin Rubin — Chief Financial Officer

Thanks, Chris. I appreciate the question. Look, I think we suffer from the advantage that the designer is the overwhelming product leader of revenue and ARR for us today. We’ve had success rolling out Connect and Promote. But the truth is the lion’s share of the business continues to come from designer followed by server. So we think that they’re important technologies and pieces of the Alteryx platform in the right application. They’re incredibly valuable to customers. But today we’re seeing the vast majority of the revenue coming from the other two products that I mentioned.

Mark Anderson — Chief Executive Officer

But make no mistake, Chris, going forward. Listen, we’re going to hang our hat on being a company that’s customer-focused, customer-centric, our culture will be revolving around what customers want and need. And I hear this every single customer I talk to talks about the fragmentation of this market there’s a vendor fatigue already in this market because large enterprises, large governments have to deal with a dozen or more companies in the supply chain, if you will, of advanced analytics and data science all the way from the beginning to the end. And so we think there’s permission out there. Certainly from customers we’ve heard from investors there’s permission for us to do more. You can count on us with the informed opinion that Suresh and his team are giving us about what we can do organically. And again we’ve got a $1 billion of cash on the balance sheet. We want to put that to work with the right inorganic opportunities that exist out there in the marketplace. And customers are really going to drive us on that and hold us accountable to that in the near- and long-term.

Christopher Merwin — Goldman Sachs — Analyst

Thanks so much.

Mark Anderson — Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, we have reached the end of today’s question-and-answer session. I would like to turn this call back over to Mr. Mark Anderson for closing remarks.

Mark Anderson — Chief Executive Officer

Thank you, operator, and thanks everybody for joining us today. To summarize we’re off to a strong start for FY ’21. We’re doing the work to transform our business in this next stage of growth. We’re doing this because our customers need us now more than ever. Alteryx is an exciting place to be. We have tremendous market opportunity in front of us, and I really hope that you’re able to join us at the upcoming Inspire Event on May 18th to the 20th as well as our Financial Analyst Day on May 18. Take care.

Operator

[Operator Closing Remarks]