Cloud Stocks: Is SAP Acquiring Alteryx?

According to a recent Market Research Future report, the Global Data Analytics Market is estimated to grow at 29% CAGR to reach $132.9 billion by the year 2026 from $23 billion in 2019. Data science and analytics platform provider Alteryx’s (NYSE: AYX) recently announced its fourth quarter results that surpassed market expectations. There is a lot of speculation in the industry that SAP is in the process of acquiring Alteryx.

Alteryx’s Financials

For the fourth quarter, Alteryx’s revenue grew 3% to $160.5 million ahead of the market’s estimates by $6.9 million. GAAP gross profit was $149.8 million and GAAP gross margin was 93%, better than GAAP gross profit of $144.2 million and GAAP gross margin of 92% a year ago. GAAP net income was $22 million, was also significantly worse than GAAP net loss of $30.7 million a year ago. Adjusted net income was $43.2.1 million or $0.62 per share, down from $44.2 million or $0.64 per share a year ago. The market was looking for an EPS of $0.31.

Alteryx ended the quarter with 7,083 customers, up 16% with 128 net new customers. It achieved a dollar-based net expansion rate of 122%. ARR for the quarter grew 32% to over $492.6 million.

For the year, Alteryx announced a 19% increase in revenue to $495.3 million and a loss of $0.37 per share.

For the first quarter, Alteryx expects revenues of $104-$107 million and an adjusted net income of $0.25-$0.22 per share. For the full year 2021, it expects revenue of $555-$565 million and net income of ($0.07)-$0.07 per share. The market was looking for revenues of 567.2 million for the year with a net income of $0.73 per share.

Alteryx’s Growing Partnerships

During the quarter, Alteryx continued its series of partnerships. It announced a tie-up with Snowflake to integrate its analytics automation and data science capabilities with Snowflake’s platform. The partnership will allow customers with automated data pipelining, faster data processing, and quicker analytics outcomes at scale. It will also allow its data prep, analytics, and no-code low data sharing capabilities, allowing it to leverage Snowflake’s compute, elastic scaling and secure data sharing capabilities. The partnership makes scalable analytics and data science more accessible on Snowflake. The integration provides Alteryx with automated data preparation and processing inside Snowflake’s compute services, a new data loader to help large-scale analytics and data science initiatives and seamless connections between already transformed data and Alteryx’s own analytic and data science capabilities.

Besides partnerships, it is expanding its product offerings. Recently, it announced the launch of Alteryx Strategic Analytics 8.0, with Analytics Gallery, a cloud component which is aimed at consumerizing Big Data analytics in the cloud. Analytics Gallery is a cloud based offering that offers more than 30 free analytics applications to help organizations accelerate their business intelligence efforts. The browser-based platform provides customers with several tools to share, access, and create a collection of apps.

The analytic apps, workflows, and macros in the Alteryx Public Gallery are built using Alteryx Designer, a platform that offers an intuitive workflow for data blending and advanced analytics. The solution allows organizations to uncover business insights at a faster speed than traditional approaches. Alteryx realizes that social media applications that are geared toward the general consumer provide a simpler, intuitive user interface. It has been focused on bringing that simplicity to enterprise offerings to make them more interesting for organizations.

Alteryx believes that the consumerization trend is bringing three key changes to the analytics market —personalization, sophistication, and socialization. Together, these three changes are revolutionizing how managers use analytics in their day-to-day jobs. The managers are no longer going to do generic top-down analytics, but will be able to analyze data bottom-up, using a highly personalized analytic application. Individualized access to sophisticated capabilities will come with the ability to share analytics across their organization and beyond. The recent acquisition of Slack by Salesforce highlights how big tech is looking at consumerization within the tech industry.

I think Alteryx’s consumerized approach will make it a good match for a player like SAP. Alteryx already provides native integration for SAP Sybase databases and SAP HANA and enables analysts to confidently apply analytics tools to current and future SAP database investments and even accelerate migration initiatives. Its bi-directional integration enables SAP database, SAP’s Sybase Adaptive Server Enterprise, and SAP Sybase SQL Anywhere 10 to access at both sides of the workflow, source, or target. Alteryx is also well integrated with SAP HANA and provides support for powerful in-database processing. But, SAP’s HANA is used by very few users in an enterprise. Alteryx’s consumerized approach to HANA will accelerate its usage tremendously within the organization and boost SAP’s BI strategy significantly.

Alteryx’s stock is currently trading at $116.36 with a market cap of $7.75 billion. It hit a 52-week high of $185.75 in July last year. It hit a 52-week low of $75.17 following the COVID-19 crash in March.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

This segment is a part in the series : Cloud Stocks