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Alteryx Going Private; $4.4B Sale to PE Firms

Alteryx Inc. got its start in a small office above a restaurant in Orange in the late 1990s, and then soared to more than $10 billion in value as a publicly traded company just as the pandemic hit.

Now with stiff competition and a share price that’s lagged the past few years, the Irvine-based company (NYSE: AYX), still Orange County’s most valuable public software firm with a roughly $3.4 billion valuation, says it’s going back to being a private company, about seven years after the fanfare-filled start of its public trading.

Private equity firms Clearlake Capital Group and Insight Partners on Dec. 18 announced a deal to buy Alteryx for $4.4 billion, factoring in about $1 billion in debt.

The PE firms are paying $48.25 per share for the company, a price that’s 59% above what Alteryx’s stock was valued at in September, when reports broke that the company was exploring a potential sale.

The company went public in 2017 at $14 a share.

Upbeat Co-Founder

The sale to the two PE firms gets the enthusiastic support of the company’s main backers, including co-founder and Executive Chairman of the Board, Dean Stoecker.

“I too am upbeat about this next chapter,” Stoecker told the Business Journal on Dec. 20.

“The next chapter for Alteryx will be epic!”

The data analytics company took 26 years to get to nearly $1 billion in annualized recurring revenue—its preferred gauge for reporting sales—and Stoecker says “the next billion will come much, much quicker.”

Stoecker remains the company’s largest shareholder by far.

According to Business Journal calculations, Stoecker has shares worth nearly $400 million.
The sale is expected to close within the next six months.

50% Growth

For a time, it seemed Alteryx could do no wrong, racking up 50% growth in its first few years of being a public company.

Its boisterous Inspire conferences draw tens of thousands of enthusiastic data analytics fans, and Stoecker has often repeated the mantra that “data is the new oil.” He stepped down as CEO in October 2020.

A restored 1960s-era Volkswagen microbus at the company’s headquarters acts as a symbol of its journey over the years.

The headquarters move to the Spectrum Terrace office campus from its prior spot
at Irvine’s Park Place was completed last year.

Alteryx is one of several full-building tenants at the 73-acre office campus along the San Diego (405) Freeway and Laguna Canyon Road that counts nine buildings and a variety of enticing amenities, including an Olympic-length swimming pool and a fitness center.

Alteryx has since sublet some of the space it initially leased at the campus to Boot Barn Holdings Inc. (NYSE: BOOT).

Alteryx said in April it was cutting about 11% of the workforce—or some 320 people.

‘Great Respect’

Alteryx CEO Mark Anderson said, “We are excited to partner with Clearlake and Insight for the next stage of Alteryx’s journey.

“Both Clearlake and Insight have great respect for our mission, people and technology, and they look forward to helping our company—and in turn our customers and partners—be even more successful,” Anderson said in the purchase announcement on Dec. 18.

No leadership changes in connection with the transaction are planned or contemplated “at this time.”

The situation regarding the front-line workers may be less clear.

“We will continue to adapt the organization as needed to align with industry and business trends,” the company said in a fact sheet sent to employees when the sale was announced.

Pandemic Shifts, Competition

In the past two years, Alteryx ran into penny-pinching clients and prospects, as well as stiff competition from much larger industry giants like Microsoft Corp. (Nasdaq: MSFT) and Oracle Corp. (NYSE: ORCL).

Derrick Wood, managing director at Cowen and Co., sees advantages as a private company but also challenges.

“I think Dean (Stoecker) and investors in the go-private transaction should be able to accrue greater shareholder value as a private company,” Wood told the Business Journal on Dec. 18.

“I don’t think the magic of data analytics has been upended by AI, and there’s a lot of value enhancement AYX can bring to its platform around AI.”

Still, he cautioned that Alteryx “is not an easy sale” as shown by the COVID-19 disruptions and more recently from economic conditions that led to tighter budgets and greater scrutiny by clients and prospective clients.

A Return to OC’s Software Market

Clearlake Capital and Insight Partners had plenty of experience with Orange County software companies even before their recently announced commitment to purchase Alteryx Inc.

Santa Monica-based Clearlake was part of the team that bought Irvine-based business software firm Kofax in 2022 for what was said to be a $3 billion sticker price, including debt.

Clearlake also announced its purchase of cybersecurity and IT firm Quest Software Inc. of Aliso Viejo in 2021, for a $5.4 billion, including debt.

Insight, based in New York, has already supported Alteryx as an investor over the past decade.

Insight was also part of a venture that bought Irvine-based real estate data firm CoreLogic in 2021 for a reported $6 billion.

“With Clearlake and Insight, we will gain access to increased working capital, industry expertise, and flexibility as a private company,” Alteryx managers told employees.

“Together, we will build on our achievements and accelerate our mission of harnessing the power of analytics to enable customers all over the world to transform data into a breakthrough,” they said.

Clearlake and Insight “have outstanding records helping companies grow and thrive,” according to the fact sheet sent to employees.

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