Data analytics software maker Alteryx Inc. is the latest tech company to announce large-scale employee layoffs—a reduction bound to affect headcount at the company’s new headquarters in Irvine.
Alteryx (NYSE: AYX) said the cuts will affect about 11% of the workforce for Orange County’s most valuable publicly traded software company—or some 320 people—and presumably will include a mix of firings and attrition. It’s the biggest reported reduction in the firm’s 26-year history, and follows much larger reductions at tech giants including Twitter and Meta.
“This reduction will impact every team and region in our organization, with the highest impacts in areas of sales and marketing, general and administrative,” Alteryx CEO Mark Anderson told analysts on April 27.
He emphasized he remains optimistic about the future of the company, which had 8,358 customers as of Dec. 31, a 5% increase in 12 months.
Alteryx software allows users to quickly access, manipulate and analyze data. The software lets workers turn huge amounts of information and data into actionable business decisions.
A company spokesperson declined to comment on the potential number of reductions at the company’s headquarters at the Spectrum Terrace office campus.
Alteryx had a reported 350 workers in Irvine as of last July. The company had already announced a companywide headcount cut of about 5% in February, affecting approximately 150 jobs including some in Irvine.
The company reduced the amount of space it leases at its headquarters to 120,000 square feet, down from about 180,000 square feet in early 2022.
CEO Anderson summed up the situation in a companywide letter on April 27 in these terms:
“In response to the changing macroeconomic environment, we’ve made strategic decisions to reduce our real estate footprint, slow hiring in parts of our business, and rationalize other expenses.”
He added: “While this is not the news I want to share with you, I remain confident in our future and the enormous opportunity ahead for us on our path to becoming a durable, profitable company in ’23 and beyond.”
Alteryx released first-quarter earnings that same day.
First-quarter revenue rose 26% to $199 million in the first quarter, close to analyst estimates. Yet, the projected revenue for the current quarter was 11% or more below outside analysts’ estimates.
“We believe we will deliver strong growth in 2023 and beyond and we plan to do so with increased profitability. We have an incredible opportunity ahead of us. 2023 provides us with our largest renewal base ever,” Chief Financial Officer Kevin Rubin told analysts.
Shares in Alteryx dropped almost 12% to $45 apiece for a market cap of $3.5 billion after the earnings release.
The market cap was approaching $5 billion earlier this year. Alteryx’s valuation topped $10 billion for a time in 2020.
Brent Bracelin, managing director and senior research analyst at Piper Sandler, said the Alteryx preferred sales measure—annual recurring revenue—was “negatively impacted by a handful of large deals that slipped out of March.”
“The main culprit was the unexpected turbulence in banking that extended timelines to close new contracts,” Bracelin said in a note to clients shortly after the earnings were released.
Alteryx is clearly sailing in rough waters, as a predicted recession makes businesses take an extra look at expenses.
Anderson also saw extra hurdles to contract deals.
“We just saw a little more aggressive tactics on the part of negotiators a new level of scrutiny was being applied and a few tactics that frankly I’ve not seen before, customers not wanting to waste a good crisis to try to extract a better deal,” Anderson told analysts on April 27.
Alteryx told regulators that day that “the emergence of new industry standards related to analytics products and services may adversely affect the demand for our platform.”
“This could happen if new internet standards and technologies or new standards in the field of operating system support emerge that are incompatible with customer deployments of our platform,” Alteryx said in regulatory filings.
“While we saw things slow down a little bit especially after the Silicon Valley Bank shutdown, we still feel pretty good about the quarter,” Anderson told analysts on April 27.
In the first quarter, Alteryx net loss narrowed to $89 million from $105.6 million in the same period a year ago. Alteryx is moving ahead with innovations. It recently announced Fanalytics, a new initiative showcasing analytic insights and applications across several of the most watched sports in the world.
Alteryx has established new partnerships with professional sports organizations worldwide, including teams and players within Formula 1, NBA, NFL, Premier League, and the PGA Tour.
Alteryx is as an authorized partner for the Department of Defense’s SkillBridge program, in which the software company will help active-duty service members transition to civilian careers by providing real-world industry training and certifications in data analytics, as part of the Alteryx SparkED no-cost education program.