Shares of data analytics company Alteryx (NYSE:AYX) were up 10.6% in June, according to data provided by S&P Global Market Intelligence. There was no material news released by Alteryx this month, so it is likely the stock was rising in conjunction with the resurgence of growth stocks in June.
Alteryx did not release an earnings report last month, so it is tough to identify any fundamental reason why the stock went up over 10% during the period. However, over the past month growth stocks (with which Alteryx typically gets grouped) have beaten the S&P 500 index by over 4%. This broad market move is the best candidate for Alteryx’s June price performance. The company did announce a partnership with accounting and consulting firm KPMG and signed a contract with McLaren racing, but outside of those two developments, nothing much happened with Alteryx in June.
In the first quarter that ended in March, Alteryx had $119 million in revenue, up 9% from the same period a year ago. Revenue growth has slowed down rapidly for Alteryx in the last year, at least compared to the high double-digit numbers it was putting up in 2019 and early 2020. This slowdown is the main reason why the stock is down over 30% in the last six months, even when considering the 10% recovery in June. Things aren’t all bad for Alteryx. In the first quarter it generated a healthy $26 million in cash from operations and annual recurring revenue (ARR) grew 27% year over year to $513 million. Strong ARR growth is an indicator that Alteryx’s overall revenue growth could accelerate in the coming quarters. It also had a dollar-based net expansion rate of 120% in the first quarter, which shows that its current customers spent more on Alteryx products this quarter compared to a year ago.
Management is guiding for $565 million to $575 million in 2021 revenue for Alteryx, which would be 15% growth if it can hit the midpoint of that range. With a market cap of $5.63 billion, the stock trades at a price-to-sales ratio (P/S) of 11.1 and price-to-operating-cash-flow (P/OCF) of 70 based on its trailing 12-month financials. Ignoring the 10% jump in the stock price this month, which was likely just noise, any investor in Alteryx needs to evaluate whether the company can hit its 2021 guidance and continue growing revenue and cash flow in the years after. If it can’t, and revenue growth stagnates, then that would be bad news for Alteryx’s stock price.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.