Market Overview

Alteryx Announces Second Quarter 2018 Financial Results

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Revenue increased 54% year-over-year to $46.8 million

Dollar-based net revenue retention of 131%

Appoints President and New Chief Technology Officer

Alteryx, Inc. (NYSE:AYX), revolutionizing business through data science
and analytics, today announced financial results for its second quarter
ended June 30, 2018.

"We had another outstanding quarter highlighted by over 50% revenue
growth and continued leading net revenue retention," said Dean Stoecker,
CEO of Alteryx, Inc. "Alteryx achieved a key milestone during the second
quarter, having crossed $200 million in annual recurring revenue, as we
continue to benefit from market tailwinds as companies of all sizes in
diverse industries across the globe seek to turn data into insights for
better business results. We believe that Alteryx can become synonymous
with analytics by delivering high value data science and analytics
outcomes for our customers each and every day."

Second Quarter 2018 Financial Highlights

  • Revenue: Revenue for the second quarter of 2018 was
    $46.8 million, an increase of 54% on a year-over-year basis.
  • Gross Profit: GAAP gross profit for the second quarter of 2018
    was $41.5 million, or a GAAP gross margin of 89%, an increase compared
    to GAAP gross profit of $25.0 million, or a GAAP gross margin of 83%,
    in the second quarter of 2017. Non-GAAP gross profit for the second
    quarter of 2018 was $42.2 million, or a non-GAAP gross margin of 90%,
    an increase compared to non-GAAP gross profit of $25.4 million, or a
    non-GAAP gross margin of 84%, in the second quarter of 2017.
  • Loss from Operations: GAAP loss from operations for the second
    quarter of 2018 was $(8.9) million, compared to a loss from operations
    of $(8.1) million for the second quarter of 2017. Non-GAAP loss from
    operations for the second quarter of 2018 was $(4.3) million, an
    improvement compared to non-GAAP loss from operations of
    $(5.5) million for the second quarter of 2017.
  • Net Loss: GAAP net loss attributable to common stockholders for
    the second quarter of 2018 was $(5.3) million, compared to a GAAP net
    loss attributable to common stockholders of $(7.0) million for the
    second quarter of 2017. GAAP net loss per share attributable to common
    stockholders for the second quarter of 2018 was $(0.09), based on
    60.7 million weighted-average basic and diluted shares outstanding,
    compared to a GAAP net loss per share attributable to common
    stockholders of $(0.12), based on 58.3 million weighted-average basic
    and diluted shares outstanding, for the second quarter of 2017.

    Non-GAAP
    net loss for the second quarter of 2018 was $(5.6) million, compared
    to a non-GAAP net loss of $(5.3) million for the second quarter of
    2017. Non-GAAP net loss per share for the second quarter of 2018 was
    $(0.09), based on 60.7 million non-GAAP weighted-average basic and
    diluted shares outstanding, compared to a non-GAAP net loss per share
    of $(0.09), based on 58.3 million non-GAAP weighted-average basic and
    diluted shares outstanding, for the second quarter of 2017.
  • Balance Sheet and Cash Flow: As of June 30, 2018, Alteryx had
    cash, cash equivalents, short-term and long-term investments of
    $405.2 million, compared with $194.1 million as of December 31, 2017.
    The increase in cash is primarily related to the issuance of our 0.50%
    Convertible Senior Notes due 2023. Cash used in operating activities
    for the second quarter was $(5.7) million compared to cash provided by
    operating activities of $0.7 million in the same period last year. For
    the first six months of 2018, cash provided by operating activities
    was $6.4 million compared to $5.7 million for the same period last
    year.

A reconciliation of GAAP to non-GAAP financial measures has been
provided in the tables included in this press release. An explanation of
these measures is also included below under the heading "Non-GAAP
Financial Measures and Operating Measures."

Second Quarter and Recent Business Highlights

  • Ended the second quarter of 2018 with 3,940 customers, a 40% increase
    from the second quarter of 2017. Added 267 net new customers in the
    second quarter of 2018 compared to 258 net new customers in the second
    quarter of 2017.
  • Achieved a dollar-based net revenue retention rate of 131% for the
    second quarter of 2018.
  • Sold $230.0 million aggregate principal amount of our 0.50%
    Convertible Senior Notes due 2023, including the initial purchasers'
    exercise in full of their option to purchase an additional $30.0
    million of the notes.
  • Announced the general availability of the newest version of the
    Alteryx platform (2018.2) at its annual user conference, Inspire 2018.
    The release delivers new features across the platform to improve the
    analytic experience for IT, business analysts and data scientists,
    altering how they collaborate and scale analytics across the
    organization, find and connect to data, and ultimately drive
    business-changing insights.

Management Update

Ned Harding, chief technology officer (CTO) and co-founder, has decided
to step down from the CTO position. Mr. Harding will serve in an
advisory capacity to the board of directors and executive management
through 2019. The board of directors has appointed Derek Knudsen as CTO,
effective August 13, 2018. Mr. Knudsen will be responsible for software
engineering, engineering operations, and information technology. In
addition, the board of directors has appointed Scott Jones, the
company's chief revenue officer (CRO), as president and CRO. Mr. Jones
joined the company in January 2017 as CRO, and as president he will be
responsible for all go-to-market activities, including marketing.

"I want to acknowledge Ned's tremendous contributions to the formation
and development of Alteryx. The entire Alteryx team thanks him for
everything he has done over the past two decades," said Stoecker. "In
order to support our continued growth, we are making a few
organizational changes. With Ned's transition to an advisor, we have the
opportunity to reimagine the CTO role for a rapidly growing organization
and I'm pleased to welcome Derek Knudsen to the Alteryx community as our
new CTO. In addition, we have appointed Scott Jones, our CRO, as
President and CRO of Alteryx, consolidating all of our go-to-market
activities under Scott to best position Alteryx for sustained growth for
years to come."

Financial Outlook

As of August 8, 2018, guidance for the third quarter 2018 and full year
2018 is as follows:

  • Third Quarter 2018 Guidance:
    • Revenue is expected to be in the range of $49.0 million to
      $50.0 million.
    • Non-GAAP loss from operations is expected to be in the range of
      $(2.5) million to $(3.5) million.
    • Non-GAAP net loss per share is expected to be in the range of
      $(0.04) to $(0.06) based on approximately 61.5 million non-GAAP
      weighted-average basic and diluted shares outstanding.
  • Full Year 2018 Guidance:
    • Revenue is now expected to be in the range of $191.0 million to
      $193.0 million.
    • Non-GAAP loss from operations is now expected to be in the range
      of $(13.0) million to $(15.0) million.
    • Non-GAAP net loss per share is now expected to be in the range of
      $(0.24) to $(0.27) based on approximately 61.0 million non-GAAP
      weighted-average basic and diluted shares outstanding.

The financial outlook above for non-GAAP loss from operations and
non-GAAP net loss per share exclude estimates for stock-based
compensation expense, acquisition related adjustments, amortization of
debt discount, and other non-recurring items. A reconciliation of the
non-GAAP financial guidance measures to corresponding GAAP measures is
not available on a forward-looking basis primarily as a result of the
uncertainty regarding, and the potential variability of, stock-based
compensation expense, acquisition related adjustments, amortization of
debt discount, and other non-recurring items. In particular, stock-based
compensation expense is impacted by our future hiring and retention
needs, as well as the future fair market value of our Class A common
stock, all of which is not within our control, is difficult to predict,
and is subject to constant change. The actual amount of these expenses
during 2018 will have a significant impact on our future GAAP financial
results. Accordingly, a reconciliation of the non-GAAP financial
guidance measures to the corresponding GAAP measures is not available
without unreasonable effort.

Quarterly Conference Call

Alteryx will host a conference call today at 5:00 p.m. Eastern Time to
discuss the company's financial results. To access this call, dial
877-407-9716 (domestic) or 201-493-6779 (international). A live webcast
of this conference call will be available on the "Investors" page of the
company's website at www.alteryx.com.

Following the conference call, a telephone replay will be available
through August 14, 2018, at 844-512-2921 (domestic) or 412-317-6671
(international). The replay passcode is 13681464. An archived webcast of
this conference call will also be available in the "Investors" section
of the company's website.

Non-GAAP Financial Measures and Operating Measures

To supplement our consolidated financial statements, which are prepared
and presented in accordance with GAAP, we use the following non-GAAP
financial measures: non-GAAP gross profit, non-GAAP gross margin,
non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss per
share, and non-GAAP weighted-average diluted shares outstanding. The
presentation of these financial measures is not intended to be
considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with GAAP.

We use non-GAAP measures to internally evaluate and analyze financial
results. We believe these non-GAAP financial measures provide investors
with useful supplemental information about the financial performance of
our business, enable comparison of financial results between periods
where certain items may vary independent of business performance, and
enable comparison of our financial results with other public companies,
many of which present similar non-GAAP financial measures. We exclude
the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based
compensation expense, which is a non-cash expense, from certain of our
non-GAAP financial measures because we believe that excluding this item
provides meaningful supplemental information regarding operational
performance. In particular, companies calculate stock-based compensation
expense using a variety of valuation methodologies and subjective
assumptions.

Acquisition related adjustments. We exclude amortization of
intangible assets and changes in fair value of contingent consideration,
and related income tax adjustments, which are non-cash, related to
business combinations from certain of our non-GAAP financial
measures. We exclude such expenses as they are related to a business
combination and have no direct correlation to the operation of our
business.

Accretion of Series A redeemable convertible preferred stock. We
exclude accretion relating to our Series A redeemable convertible
preferred stock from non-GAAP net loss per share because this is a
non-cash item that will not recur in the periods following the three
months ended March 31, 2017.

Convertible senior notes adjustments: We exclude the portion of
amortization of debt discount and income tax adjustments that relate to
the equity component of our convertible notes, which are non-cash, from
certain of our non-GAAP financial measures. We exclude such expenses as
they are non-cash and have no direct correlation to the operation of our
business.

In addition, we adjust non-GAAP weighted-average diluted shares
outstanding to include the conversion of the redeemable convertible
preferred stock into shares of common stock as though the conversion had
occurred at the beginning of each of the respective periods.

Investors are cautioned that there are material limitations associated
with the use of non-GAAP financial measures as an analytical tool. In
particular, we exclude stock-based compensation expense, amortization of
intangible assets, and amortization of debt discount which are recurring
and will be reflected in our financial results for the foreseeable
future. The non-GAAP measures we use may be different from non-GAAP
financial measures used by other companies, limiting their usefulness
for comparison purposes. We compensate for these limitations by
providing specific information regarding the GAAP items excluded from
these non-GAAP financial measures.

The company also uses annual recurring revenue (ARR) as one of our
operating measures to assess the health and trajectory of our business.
ARR should be viewed independently of revenue and deferred revenue as
ARR is a performance metric and is not intended to be combined with any
of these items. ARR represents the total annual contract value for
active customer subscription contracts as of the measurement date.

Safe Harbor Statement

This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding our outlook for
the third quarter 2018 and full year 2018, our market opportunity, our
ability to execute our long-term growth strategy, and other future
events. These forward-looking statements are only predictions and may
differ materially from actual results due to a variety of factors
including, but not limited to: our limited operating history under our
current business model; our ability to manage our growth effectively;
the rate of growth in the market for analytics products and services;
our ability to attract new customers and expand sales to existing
customers; our ability to develop and release product and service
enhancements and new products and services to respond to rapid
technological change in a timely and cost-effective manner; intense and
increasing competition in our market; our ability to develop, maintain,
and enhance our brand and reputation cost-effectively; our ability to
expand our sales force and the effectiveness of our sales force; our
ability to establish and maintain successful relationships with our
channel partners; risks associated with our international operations;
litigation, and related costs; security breaches; and other general
market, political, economic, and business conditions.

Additional risks and uncertainties that could affect our financial
results are included under the caption "Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2017, which is
available on the Investor Relations page of our website at www.alteryx.com
and on the SEC website at www.sec.gov.
Additional information will also be set forth in our Quarterly Report on
Form 10-Q for the three months ended June 30, 2018. All forward-looking
statements contained herein are based on information available to us as
of the date hereof and we do not assume any obligation to update these
statements as a result of new information or future events.

About Alteryx, Inc.

Revolutionizing business through data science and analytics, Alteryx
offers an end-to-end analytics platform that empowers data analysts and
scientists alike to break data barriers, deliver insights, and
experience the thrill of getting to the answer faster. Organizations all
over the world rely on Alteryx daily to deliver actionable insights. For
more information visit www.alteryx.com.

Alteryx is a registered trademark of Alteryx, Inc. All other product and
brand names may be trademarks or registered trademarks of their
respective owners.

     

 

Alteryx, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Revenue $ 46,796 $ 30,319 $ 89,617 $ 58,864
Cost of revenue 5,269   5,294   10,273   10,120  
Gross profit 41,527 25,025 79,344 48,744
Operating expenses:
Research and development 10,181 7,147 20,949 13,169
Sales and marketing 28,335 17,589 51,437 33,217
General and administrative 11,938   8,427   21,733   16,110  
Total operating expenses 50,454   33,163   94,119   62,496  
Loss from operations (8,927 ) (8,138 ) (14,775 ) (13,752 )
Interest expense (1,398 ) (1,400 )
Other income (expense), net (834 ) 337   (64 ) 434  
Loss before benefit from income taxes (11,159 ) (7,801 ) (16,239 ) (13,318 )
Benefit from income taxes (5,864 ) (807 ) (5,758 ) (657 )
Net loss $ (5,295 ) $ (6,994 ) $ (10,481 ) $ (12,661 )
Less: Accretion of Series A redeemable convertible

preferred stock

      (1,983 )
Net loss attributable to common stockholders $ (5,295 ) $ (6,994 ) $ (10,481 ) $ (14,644 )
Net loss per share attributable to common stockholders,

basic and diluted

$ (0.09 ) $ (0.12 ) $ (0.17 ) $ (0.31 )
Weighted-average shares used to compute net loss per

share attributable to common stockholders, basic and

diluted

60,685   58,262   60,372   46,757  
     

Alteryx, Inc.

Stock-Based Compensation Expense

(in thousands)

(unaudited)

 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Cost of revenue $ 206 $ 124 $ 345 $ 245
Research and development 721 463 1,954 699
Sales and marketing 1,613 524 2,770 1,183
General and administrative 1,354   1,177   2,614   2,103
Total $ 3,894   $ 2,288   $ 7,683   $ 4,230
     

Alteryx, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 
June 30, 2018 December 31, 2017
Assets
Current assets:
Cash and cash equivalents $ 98,571 $ 119,716
Short-term investments 232,044 54,386
Accounts receivable, net 44,592 49,797
Deferred commissions 12,859 11,213
Prepaid expenses and other current assets 10,735   7,227  
Total current assets 398,801 242,339
Property and equipment, net 10,482 7,492
Long-term investments 74,608 19,964
Goodwill 9,679 8,750
Intangible assets, net 10,267 7,995
Other assets 3,454   4,876  
Total assets $ 507,291   $ 291,416  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 8,392 $ 522
Accrued payroll and payroll related liabilities 11,675 11,835
Accrued expenses and other current liabilities 11,610 8,270
Deferred revenue 115,713   110,213  
Total current liabilities 147,390 130,840
Convertible senior notes, net 168,255
Deferred revenue 3,023 3,545
Other liabilities 3,512   3,527  
Total liabilities 322,180   137,912  
Stockholders' equity:
Preferred stock
Common stock 6 5
Additional paid-in capital 301,329 257,399
Accumulated deficit (115,606 ) (103,546 )
Accumulated other comprehensive loss (618 ) (354 )
Total stockholders' equity 185,111   153,504  
Total liabilities and stockholders' equity $ 507,291   $ 291,416  
     

Alteryx, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,
2018   2017 2018   2017
Cash flows from operating activities:
Net loss $ (5,295 ) $ (6,994 ) $ (10,481 ) $ (12,661 )
Adjustments to reconcile net loss to net cash provided by (used in)

operating activities:

Depreciation and amortization 1,227 873 2,528 1,439
Amortization of debt discount and issuance costs 1,261 1,261
Stock-based compensation 3,894 2,233 7,683 4,175
Provision for doubtful accounts and sales reserve, net of recoveries 27 434 (81 ) 784
Deferred income taxes (6,033 ) (1,048 ) (6,033 ) (1,048 )
Change in fair value of contingent consideration 162 158 455 158
Loss on disposal of assets 9 2 9 32
Changes in operating assets and liabilities, net of effect of
business

acquisitions:

Accounts receivable (15,083 ) (3,517 ) 5,470 7,658
Deferred commissions (1,528 ) 237 (1,746 ) 1,097
Prepaid expenses and other current assets and other assets (1,020 ) 291 (3,604 ) (929 )
Accounts payable 6,585 2,486 7,028 1,961
Accrued payroll and payroll related liabilities 2,483 2,772 (153 ) (734 )
Accrued expenses and other current liabilities 143 12 (1,515 ) 989
Deferred revenue 7,251 2,681 5,364 2,563
Other liabilities 189   49   188   208  
Net cash provided by (used in) operating activities (5,728 ) 669   6,373   5,692  
Cash flows from investing activities:
Purchases of property and equipment (2,089 ) (701 ) (3,505 ) (1,209 )
Cash paid in business acquisitions, net of cash acquired 5 (5,213 ) (3,537 ) (9,097 )
Purchases of investments (188,226 ) (60,018 ) (271,817 ) (76,053 )
Maturities of investments 28,374   4,453   39,374   12,977  
Net cash used in investing activities (161,936 ) (61,479 ) (239,485 ) (73,382 )
Cash flows from financing activities:
Proceeds from issuance of senior convertible notes, net of issuance

costs

224,775 224,775
Purchase of capped call (19,113 ) (19,113 )
Proceeds from initial public offering, net of underwriting
commissions

and discounts

17,577 134,757
Payment of initial public offering costs (797 )
Payment of holdback funds from acquisition (250 )
Principal payments on capital lease obligations (83 ) (82 ) (165 ) (164 )
Proceeds from exercise of stock options 1,852 122 6,824 1,006
Minimum tax withholding paid on behalf of employees for restricted

stock units

(48 )   (48 )  
Net cash provided by financing activities 207,383   17,617   212,023   134,802  
Effect of exchange rate changes on cash and cash equivalents (225 ) 22 (56 ) (3 )
Net increase (decrease) in cash and cash equivalents 39,494 (43,171 ) (21,145 ) 67,109
Cash and cash equivalents—beginning of period 59,077   141,586   119,716   31,306  
Cash and cash equivalents—end of period $ 98,571   $ 98,415   $ 98,571   $ 98,415  
     

Alteryx, Inc.

Reconciliation of GAAP Measures to Non-GAAP Measures

(in thousands, except percentages and per share amounts)

(unaudited)

 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Reconciliation of non-GAAP gross profit:
GAAP gross profit $ 41,527 $ 25,025 $ 79,344 $ 48,744
GAAP gross margin 89 % 83 % 89 % 83 %
Add back:
Stock-based compensation expense 206 124 345 245
Amortization of intangible assets 451   236   897   301  
Non-GAAP gross profit $ 42,184   $ 25,385   $ 80,586   $ 49,290  
Non-GAAP gross margin 90 % 84 % 90 % 84 %
Reconciliation of non-GAAP loss from operations:
GAAP loss from operations $ (8,927 ) $ (8,138 ) $ (14,775 ) $ (13,752 )
GAAP operating margin (19 )% (27 )% (16 )% (23 )%
Add back:
Stock-based compensation expense 3,894 2,288 7,683 4,230
Amortization of intangible assets 579 238 1,088 303
Contingent consideration expense 162   158   455   158  
Non-GAAP loss from operations $ (4,292 ) $ (5,454 ) $ (5,549 ) $ (9,061 )
Non-GAAP operating margin (9 )% (18 )% (6 )% (15 )%
Reconciliation of non-GAAP net loss:
GAAP net loss attributable to common stockholders $ (5,295 ) $ (6,994 ) $ (10,481 ) $ (14,644 )
Add back:
Stock-based compensation expense 3,894 2,288 7,683 4,230
Amortization of intangible assets 579 238 1,088 303
Accretion of Series A redeemable convertible

preferred stock

1,983
Contingent consideration expense 162 158 455 158
Amortization of debt discount 1,146 1,146
Income tax adjustments (6,046 ) (998 ) (6,046 ) (998 )
Non-GAAP net loss $ (5,560 ) $ (5,308 ) $ (6,155 ) $ (8,968 )
Non-GAAP diluted loss per share:
Non-GAAP net loss $ (5,560 ) $ (5,308 ) $ (6,155 ) $ (8,968 )
Non-GAAP weighted-average shares used to

compute net loss per share attributable to

common stockholders, diluted

60,685 58,262 60,372 53,393
Non-GAAP net loss per share, diluted $ (0.09 ) $ (0.09 ) $ (0.10 ) $ (0.17 )
Reconciliation of non-GAAP diluted net loss per share
GAAP net loss per share attributable to common

stockholders, diluted

$ (0.09 ) $ (0.12 ) $ (0.17 ) $ (0.31 )
Add back:
Non-GAAP adjustments to net loss per share   0.03   0.07   0.14  
Non-GAAP net loss per share, diluted $ (0.09 ) $ (0.09 ) $ (0.10 ) $ (0.17 )
Reconciliation of non-GAAP diluted weighted-average

shares outstanding

GAAP weighted-average shares used to compute net

loss per share attributable to common stockholders,

diluted

60,685 58,262 60,372 46,757
Add back:
Conversion of redeemable convertible preferred

stock into common stock

      6,636  
Non-GAAP weighted-average shares used to compute

non-GAAP net loss per share, diluted

60,685   58,262   60,372   53,393  

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