Is Alteryx Stock Presenting a Buying Opportunity?

Key Points

• Alteryx is a data preparation and analytics automation platform experiencing double-digit growth rates but warned of a slowdown in Q2 2023.
• Alteryx has pursued a growth acquisition strategy racking up debt and operating expenses.
• Due to uncertain macroeconomic conditions, the company will cut 11% of its workforce, mainly in the sales and marketing departments.
• Alteryx lowered its Q2 2023 guidance but raised full-year 2023 top and bottom line forecasts.
• Q2 2023 sales are expected to be flat to 2% YoY growth, falling from 26.1% in Q1 2023.
• Alteryx shares have a 5.8% short interest.

Alteryx Inc. NYSE: AYX is a big data analytics automation platform enabling companies to collect, process, prepare and analyze data in different formats from different sources. Its flexible and intuitive platform enables companies to adopt and utilize big data analytics to implement data-driven decisions and solutions. The platform enables code-free machine learning models and simple drag and drop of different blocks to create automated processes. Its clients include some of the best-known brands, including Netflix Inc. NASDAQ: NFLX, Chevron Co. NYSE: CVX, Meta Platforms Inc. NASDAQ: META and Walgreens Boots Alliance Inc. NYSE: WBA.

Hypergrowth to Stabilization

Alteryx has been in hypergrowth mode through acquisitions in addition to organic growth. The perceived growth slowdown led to a (20%) haircut in its shares on its Q1 2023 earnings release and lowered guidance. While the company cutting 11% of its workforce may be a good cost-cutting measure, the fact that most of the layoffs will be in the sales department suggests that a protracted revenue slowdown may be in the cards. The company cut its Q2 2023 guidance for larger losses and lower revenues but still expected full-year 2023 to be non-GAAP profitable with a 15% to 16% growth rate.

AI and ML Integration

Alteryx is developing more ways to incorporate artificial intelligence (AI) and machine learning throughout its platform. Alteryx embeds large language models to enhance optical character recognition, topic modeling and text summarization. Integrating AI with its Auto Insights will cut down on the time for customers to go from insights to action.

Losses

On April 27, 2023, Alteryx released its fiscal first quarter 2023 earnings report for the quarter ending in March 2023. The company saw an earnings-per-share (EPS) loss of ($0.19), excluding non-recurring items, versus consensus analyst estimates of ($0.26), beating by $0.07. Revenues rose 26.1% year-over-year (YoY) to $199.1 million, missing analyst estimates of $200.76 million. Its annual run rate (ARR) grew 25% to $857 million. Dollar-based net expansion rate was 121% in the quarter. The company is cutting 11% of its workforce due to the uncertain macroeconomic climate. Most layoffs are in the sales and marketing department of approximately 320 jobs out of 2,900 full-time employees. The company will take between $11 million to $13 million in related charges.

Changes in Buying Behavior

Alteryx CEO Mark Anderson noted on the conference call that they saw changes in its client buying behavior towards the quarter's end. Clients started being more scrutinized over deals leading to a longer sales cycle. They also saw sales that would typically close sooner in a stable economy get pushed into the next quarter or further out during the current economic climate.

He did point out that even in uncertain macroeconomic conditions, the company has yet to see any shift in competitive dynamics. He commented, “Customers need our innovation today more than ever. We're seeing robust trends with net expansion and renewal rates. Given our standout 2022 performance and resilience thus far in 2023, I believe we have the right initiatives in place and can continue to stay agile and successful in this dynamic environment.”

Mixed Guidance

Alteryx lowered its guidance for Q2 fiscal 2023 EPS to ($0.69) to ($0.65) range versus ($0.41) consensus analyst estimates. Revenues are expected between $180 million to $184 million versus $205.08 million consensus analyst estimates. It raised its full-year 2023 EPS between $0.65 to $0.75 beating $0.40 consensus estimates. Full-year 2023 revenues are expected between $980 million to $990 million versus $986.86 million. Alteryx analyst ratings and price targets can be found on MarketBeat.

Weekly Cup and Handle Breakdown

The weekly candlestick chart on AYX illustrates the cup and handle formation that was materializing. The cup formed at the $69.46 peak in September 2022 as shares fell to a low of $39.55 in December 2022. A rounded bottom formed as shares continued to rally back to retest the cup lip line in February 2023. After shares peaked, the handle formation attempted on the weekly market structure low (MSL) trigger at $59.65.

However, AYX shares broke down through the weekly 20-period exponential moving average (EMA) support at $52.75 and the weekly 50-period MA at $53.91. The weekly stochastic continued its oscillation down as the earnings release and guidance cut accelerated selling through the previous rounded bottom low at $39.55. Shares collapsed towards $34.80 as the weekly stochastic tests the 20-band. Pullback support levels are $34.80, $30.71, $27.79 and $24.46.