Alteryx Stock: A Quality Company for Your Growth Portfolio

Author: Aditya Raghunath

Estimated read time: 3 minutes

Publication date: 21st Jul 2020 15:22 GMT+1


We can see why investors remain optimistic about growth stocks. The investment returns that growth stocks have generated over the last decade remains unparalleled. Technology giants such as Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN) and Netflix (NASDAQ: NFLX) have returned 993%, 2,560% and 2,820% respectively in the last 10 years. Comparatively the S&P 500 and Nasdaq are up 199% and 623% respectively since July 2010.

Here we take a look at another tech stock that has the potential to generate multi-fold investors over the next decade.

 

A data analytics player

Data analytics company Alteryx (NYSE: AYX) went public back in March 2017 at a price of $14 per share. The stock is currently trading at $171, indicating returns of over 1,100% in just over three years.

Alteryx is part of the high growth data analytics segment. Its data analytics platform enabled enterprises to improve business outcomes and productivity of business analysts, data scientists and data engineers. Alteryx has a subscription-based platform where enterprises can analyze data from a host of sources and benefit from data driven decisions.

The Alteryx platform is efficient and allows employees to perform analysis independently instead of depending on multiple parties and work streams. Users can create a visual workflow to securely interact with the underlying source data and workflows can be configured to address a multitude of use cases.

The platform also offers a secure collaboration environment for large organizations where employees can create, publish and share analytic applications across the company. Alteryx is banking on its code-free and code-friendly platform to simplify and automate the entire analytics process.

 

Focus on customer acquisition and growth

Alteryx continues to focus on growing its top-line by expanding its enterprise base. It ended 2019 with 6,100 enterprise customers and this figure rose to 6,400 in the first quarter of 2020. The data analytics giant aims to growing its client base via marketing efforts coupled with increasing its sales teams and indirect sales channels.

Alteryx is also eyeing lucrative international markets. The company claimed, “We believe that the global opportunity for self-service data analytics solutions is significant and should continue to expand as organizations outside the United States seek to adopt self-service platforms as we have experienced with our existing customers.”

Alteryx has valued the total addressable market at $49 billion providing the company with enough opportunities to drive top-line growth, given its revenue of $418 million in 2019. Alteryx has been also been named as a market leader in Gartner’s Magic Quadrant for Data Science and Machine Learning Platforms.

The company reported sales of $109 million in Q1, a growth of 43% year-over-year. Due to its asset light model, AYX reported a non-GAAP gross margin of 91%. Another important metric for the company is its dollar-based het retention rate that stood at 128%, indicating a robust increase in subscriptions from existing products.

 

Valuation might be a deterrent

Alteryx stock is trading at a forward price to earnings multiple of 330x and it has a price to sales multiple of 21x which might make investors nervous given the uncertainty surrounding global equities.

However, growth stocks tend to trade at a premium and Alteryx’s subscription-based business model will help to offset business cyclicality. The company’s increasing customer base, expanding addressable market and a high gross margin makes it an ideal stock for growth investors.


Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.com. The observations he makes are his own and are not intended as investment or trading advice.