Alteryx (NYSE: AYX) Stock Collapse Presents Data Analytics Buying Opportunity

Data analytics firm Alteryx NYSE: AYX stock took a shocking collapse on its Q2 2020 earnings release shaving more than (-35%) off its share price in the following two-days. Their analytics processing automation (APA) platform experienced churn in organizations with under $100 million in annual sales resulting in lowered top-line guidance. Alteryx shares took the opposite trajectory as larger big data CRM players were able to knock the ball out of the park. Shares fell under its February pre-COVID highs even while the benchmark S&P 500 index NYSEARCA: SPY recovered to new all-time highs. However, this setback in shares may provide opportunities for prudent investors that understand the future tailwinds that the pandemic triggered “new normal” is manifesting for the Company.

Q2 FY 2020 Earnings Release

On Aug 06, 2020, Alteryx released its second-quarter fiscal 2020 results for the quarter ending June 2020. TheCompany reported a non-GAAP earnings-per-share (EPS) of $0.02 versus consensus analyst estimates for a loss of (-$0.14), a $0.16 per share beat. Revenues grew 17.3% year-over-year (YoY) to $96.2 million beating consensus estimates of $94.11 million. Alteryx issued downside guidance for Q3 revenues of $111 million to $115 million versus $119.30 consensus analyst estimates. The Company also forecasts EPS range of $0.09 to $0.14 versus $0.13 analyst estimates. Customer churn was experienced in smaller commercial organizations under $100 million in annual sales. The stock price reaction was shocking, and investors were likely wishing the Company didn’t provide forward estimates as so many other companies took that route. However, credit must be given to the forthcoming nature of management which also provided more insights into the headwinds and tailwinds ahead.

COVID-19 Impacts

During the conference calls, the Company summed up the direct impacts of COVID-19 resulting in pullbacks to spending, smaller deals and longer sales cycles. While April 2020 new business activity was consistent YoY initially, activity slowed near the end of the quarter resulting in extended sales cycles from highs levels of scrutiny from budget cuts mostly in the commercial under $100 million annual sales segment. Customer buying behavior was “most evident” in its expansion business for transactions not attached to a renewal. Alteryx CEO Dean Stoecker stated that due to business conditions it “…does not anticipate a material improvement in business in 2020.” However, he feels COVID is creating a longer-term tailwind as companies realize the need for agile data analytics, especially in uncertain times. While deal sizes were small, they were able to land high profile clients like Levi Strauss & Co. (NYSE: LEVI) , Mondelez International (NASDAQ: MDLZ) , ServiceNow (NYSE: NOW), Suncor Energy NYSE: SU, Match Group NASDAQ: MTCH, Snap NASDAQ: SNAP , Banco Santander Brasil NYSE: BSBR and Petrobras NYSE: PBR to name a few. For the quarter, the Company landed 271 net new clients for a total of 6,714 customers including 37% of the Global 2000.

Two Significant ROI Use Cases

CEO Stoecker highlighted two client success stories in Q2. Satellite radio broadcaster Sirius XM NASDAQ: SIRI was able to utilize Alteryx APA platform to achieve savings of 2,500 hours on 40 used cases in just 90 days (Q2) with the goal of 157 used cases and over 9,200 hours saved annually through automation on the Alteryx platform. The Company also closed a deal with the Saudi Arabia Ministry of Health for COVID-19 used case. They were able to automate COVID-19 collection data from national labs and hospitals to understand its reproduction rate and track spread. This helped they slow the spread of COVID-19 and save lives as the key outcome. The Alteryx platform provided, “…insights into how, when and where to respond to COVID-19 cases and who to quarantine, what facilities to close and how to allocate hospital bed space.”, according to Stoecker. The Company launched Intelligence Suite, Alteryx Analytics Hub and its next gen AMP (Alteryx Multithreaded Processing) engine in Q2 with positive early feedback. A virtual support center was also launched to improve customer engagement. While the business is 2H loaded, the extended sales cycle has caused the Company to lower forecasts. This creates buying opportunities at the right price levels for nimble traders and prudent investors.

AYX Opportunistic Pullback Price Levels Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for AYX stock. The monthly rifle chart uptrend has been stifled with the share price collapse. While the stochastic is still rising, shares need to recover back up through the monthly 15-period and 5-period moving average (MA) bumpers at $124.92 and $143.58 respective range to maintain the trend. The original weekly market structure low (MSL) buy trigger at $107.37 Fibonacci (fib) level managed to stabilize support on the initial earnings reaction collapse. Resistance sits at the $127.69 weekly 5-period MA and overlapping fib. A rejection there triggers further selling on the bearish mini inverse pup which can provide opportunistic pullback price levels are at $114.37 fib, $107.35 weekly MSL/fib, $102.50 sticky 2.50s zone and $95.64 fib. Since this is a volatile thinner traded stock, it’s important to be nimble and use wider wiggle room but also implement trail stops as needed