Life in the public eye got intriguing for one of Orange County’s best tech stories in years, Alteryx Inc., the Irvine software maker that made a splashy Wall Street debut in March.
Some inside investors that backed Alteryx in the lead-up to its March initial public offering cashed out as the six-month lockup provision expired.
And New York-based hedge fund Abdiel Capital Advisors LP quickly made the Irvine data-mining specialist one of its top holdings, taking about a 7% stake overall and a 20.9% stake in the Class A stock, according to recent Securities and Exchange Commission filings. Alteryx has both Class A and Class B stock, the latter carrying 10 times the voting rights of the former.
Abdiel describes itself in a job listing as a “long-only value investment hedge fund,” and has a portfolio of mostly new, trendy segment targeters, such as Shopify Inc. and San Luis Obispo-based Mindbody Inc. Now add Alteryx to its growing holdings.
Lockup Expires
Palo Alto-based Sapphire Ventures was the largest insider seller late last month, shedding 5.1 million shares of Class B common stock for $108.3 million, according to a recent filing with the SEC. The move lowered its voting stake in the analytics software provider from about 13.1% to 2.6%. The move leaves Sapphire with less than 2% of the company.
Thomson Reuters in New York sold 2 million shares for $42.5 million, decreasing its voting shares ownership from 12.9% to 10.3%, its total equity stake in Alteryx to 7.2%.
Alteryx co-founder Dean Stoecker cashed out more than $12.7 million, selling 600,000 shares. His voting power in the company actually rose 2% to 22.1% due to insider sales of Class B stock converting shares to Class A. He owns 15.5% of the company.
Alteryx executives and co-founders Olivia Duane Adams and Edward P. Harding Jr. each sold 150,000 shares of Class B common stock for $3.1 million.
Adams, who’s chief customer officer, now has 4.7% voting power in the company. Harding, a vice president and chief technology officer, has 3.9%. They own 1.9 and 1.6 million shares, respectively.
All told, Alteryx insiders sold 8 million shares of Class B common stock and cashed out $170 million.
The insider shares were sold in a secondary offering at $21.25 per share of Class A shares, according to regulatory filings—effectively converting Class B shares to Class A.
The company raised $114 million in net proceeds from its March 24 IPO, which snapped a nearly two-year drought in public offerings in OC. It sold 9 million shares at $14 per share.
The share price is up about 40% since the IPO to a market value just shy of $1.2 billion.
The company’s largest backer, New York-based Insight Ventures, hasn’t sold any of its Class A or B shares. The firm and its affiliates have invested more than $49 million in Alteryx. It led an $85 million Series C round in November 2015 with San Francisco-based Iconiq Capital, which has a 6.6% controlling stake.
The funding round at the time indicated a valuation of nearly $1 billion. And Alteryx quickly rewarded its backers’ faith. Its market value today is roughly $1.2 billion.
OC’s largest venture capital firm, Newport Beach-based Toba Capital, also appears to be a longer-term shareholder, a position it typically takes, evident in the the dozens of software companies in its expanding portfolio.
Toba founder Vinny Smith, who cashed out nearly $1 billion in 2012 from Quest Software’s $2.8 billion sale to Dell Inc., brought in Insight Ventures as an early Alteryx investor. Insight has 31% of the voting stock, according to regulatory filings, and about 22% of the company.
Stoecker, who is second with 22% of voting stock and a little more than 15% of the firm he co-founded, declined to comment on the recent shareholder shifts.
“I cannot comment as we are in the quiet period for the quarter,” he told the Business Journal in an email.
Toba, which has about a 7% voting stake and just shy of 5% of Alteryx—approximately $60 million on paper—has invested $6 million in the company, with another $2 million from his Teach a Man to Fish Foundation.
Toba and the other early backers helped Alteryx raise $163 million before its IPO.
The Business
Alteryx’ customers pay a subscription fee for its software to integrate data, monetize content, forecast sales, map retail expansion plans, and compare sales and product placement, among other features.
As the stock zoomed past the $1 billion market cap in its first months as a public company, it became one of the most talked-about software-as-a-service companies on Wall Street, especially in the white-hot space of business intelligence and analytics. That market is forecast to reach $23 billion by 2020, according to Gartner Inc., a leading IT-research firm.
Alteryx is the 18th largest software employer in OC, with 136 local workers. Its roster of customers through June exceeded 2,800.
The fast-growing cloud company posted sales last year of $85.8 million, up 59% from 2015, while increasing gross margins to a high of 82%. Alteryx continued its sales growth through the first half of the year, recording sales of $58.9 million for the first six months, up 66% from the same period last year.
It’s still losing money, posting annual losses ranging from $20 million to $25 million the last three years.
Alteryx’ results as a public company have done nothing to diminish Wall Street’s enthusiasm for the company or its business. Six of the seven analysts who follow the firm rate it a “buy” or “strong buy.”
In August JMP Securities analysts raised their price target to $26 and cited the firm’s “financial model,” and said it “benefits from multiple secular tailwinds.”
KeyBanc Capital Markets’ analysts wrote in August that “Alteryx has a multiyear runway to sustain high growth.”
