What Happened:
Shares of data analytics and automation platform Alteryx fell 25.3% in the afternoon session after the company reported second-quarter annual recurring revenue (ARR), which missed Wall Street's estimates, though revenue and EPS beat. In addition, it provided weak guidance across the board. ARR, revenue, and non-GAAP operating income guidance for next quarter all missed expectations. Notably, full year guidance was lowered across the board, which is never a good sign. Management pointed to a change in buying behavior the last two weeks of the reported quarter, particularly with large customer expansions outside the renewal cycle. The macro and sales execution were culprits, and this commentary will surely call into question how bad things could get for Alteryx in the near term since the slower buying patterns seems to have only begun. .
Overall, it was a weaker quarter for the company, with the market struggling to digest the implications of the missed guidance. Following the results, the company received two downgrades from Wall Street analysts. Loop Capital downgraded the stock's rating from Buy to Hold and lowered the price target from $65 to $30. Similarly, Piper Sandler analyst Brent Bracelin downgraded the stock's rating from Overweight (Buy) to Neutral (Hold) and also lowered the price target from $68 to $30. Bracelin, lowered estimates and rating after the Q2 ARR shortfall ($14M miss steered by a shift in customer behavior which has made standalone expansions challenging) made it difficult to forecast the future growth trajectory of the business.
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What is the market telling us:
Alteryx's shares are quite volatile and over the last year have had 30 moves greater than 5%. But moves this big are very rare even for Alteryx and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move was three months ago, when the stock dropped 15.7% on the news that the company reported first-quarter revenue that narrowly missed analysts' forecasts, but its earnings per share and free cash flow came in above expectations. However, sales guidance for the next quarter and full year fell short of the consensus estimates. Overall, it was a weaker quarter for the company, which has consistently exceeded growth expectations in the past year.
Alteryx is down 39.8% since the beginning of the year, and at $30.01 per share it is trading 56.8% below its 52-week high of $69.52 from February 2023. Investors who bought $1,000 worth of Alteryx's shares five years ago would now be looking at an investment worth $627.80.
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