Alteryx (AYX) is a developer of self-service data analytics software that enables organizations to improve the productivity of their analysts. More specifically, its subscription-based platform allows its customers to easily prepare, blend, and analyze data from a variety of sources, enabling quicker data-driven decisions.
Its platform includes Alteryx Designer, its data preparation, blending, and analytics product deployable in the cloud and on premise. It also offers the Alteryx Server, a secure and scalable product for sharing and running applications in a web-based environment. And, lastly, its Alteryx Analytics Gallery is a cloud-based collaboration offering that is key to its platform. It allows users to share workflows in a centralized repository. In short, AYX's goal is to make its platform as common in the workplace as spreadsheets are today.
The company employs a "land and expand" strategy in which it often offers new customers a fee trial. This is then followed by an initial purchase of its platform. The company says that over time, usage of the platform spreads across departments, divisions, and geographies through collaboration and standardization of business processes.
Overall, AYS'x financials look pretty good, with the exception of the steady stream of operating losses. But, even there, the losses aren't massive and have been very steady -- as opposed to worsening. What stands out, though, is its revenue growth, and its margins, have been on the rise. Oftentimes when a tech company goes public, its revenue growth rates have already topped out. So, this is a notable positive. Another positive is its balance sheet, which is clean with no debt and a healthy amount of cash.
Taking a look at its FY16 results, revenue jumped by 59%to $85.8 million. The increase in revenue was primarily from additional sales to existing customers and, to a lesser extent, the increase in total number of customers. For the years ended December 31, 2015 and 2016, revenue attributed to existing customers was 89% and 92%, respectively, of revenue.
Gross margin increased by 100 basis points year/year as a result of an increase in the proportion of revenue from subscriptions relative to revenue from professional services, partially offset by channel mix. As for expenses, Sales & Marketing is its largest expense and was up 33% to $57.6 million. That is actually a fairly reasonable increase relative to other tech IPOs. Also, as a percentage of revenue, Sales and Marketing declined to 67% from 80%.
Still, the 44% increase in total operating expenses was enough to offset the strong revenue growth and bump in gross margin. Specifically, AYX reported an operating loss of ($23.0) million vs. ($21.1) million in the year ago period.