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New Alteryx CEO Anderson: Buys Likely

Silicon Valley veteran Mark Anderson is piloting Irvine-based Alteryx Inc. into a future complete with rising customer expectations, increasing sales expectations from Wall Street, a transformed business world post-pandemic and a nearly $1 billion balance sheet that may be used for more acquisitions.

The new chief executive of the closely watched data analytics company (NYSE: AYX) spoke with the Business Journal on Nov. 12, in a joint telephone interview with co-founder Dean Stoecker, whom he succeeded as CEO a little more than a month earlier.

Alteryx ranks No. 2 on this week’s Business Journal’s list of Fastest-Growing Public Companies with revenues between $100 million and $500 million (see list, page 28).

The company—whose software allows data workers to turn huge amounts of information and data into actionable business decisions—also places sixth among local public companies by market value, and with a $7.5 billion market cap in mid-November, is OC’s second-largest tech company by valuation, trailing only the $24 billion-valued Skyworks Solutions Inc. (Nasdaq: SWKS).

Despite some wild stock swings this year, including a steep hit to its valuation earlier this month, shares in Alteryx remained up about 15% for the year as of mid-month, with an increase of more than 720% since its 2017 initial public offering.

Scaling Plans

Anderson’s résumé includes leadership positions at F5 Networks Inc. (Nasdaq: FFIV) Cisco Systems Inc. (Nasdaq: CSCO) and Lucent Technologies Inc.

More recently, he was president at Palo Alto Networks Inc. (NYSE: PANW), which has a $28 billion market cap. During the six years Anderson worked there as a top-level executive, Palo Alto’s sales exploded elevenfold to $2.9 billion in fiscal 2019, becoming one of the world’s largest internet security companies.

A similar game plan in terms of scaling is expected by the new CEO at Alteryx.

Amid talk of the company’s explosive global growth, Anderson emphasized that Alteryx is committed to staying in Irvine “certainly for the foreseeable future” and has no plans to leave.

Like virtually all companies across the globe, Alteryx has been affected by the COVID-19 crisis. Alteryx on Nov. 5 said third-quarter revenue rose 25% year-over-year but warned of continuing uncertainty due to the pandemic, and projected fourth-quarter revenue slightly below the average analyst estimate.

The company, which at points this year saw its market cap top $10 billion, saw its stock fall 20% over the next day.

$50B Market

Anderson acknowledged that some investors and analysts thought the company’s guidance for the fourth quarter was “too conservative,” and that the company gave “a little less than people were expecting on the guidance line.”

Stoecker, now executive chairman of Alteryx, added his big-picture view in one of the first interviews the pair gave together: “You can’t manage the stock price. You can only manage the business. The rest takes care of itself.”

“This is a $50 billion space. We know we have the right platform for it,” according to Stoecker. “Mark taking this role is evidence that we’re going to go take the market by storm.”

Annual revenue for the company in 2020 is expected to be in the range of $481 million to $485 million, an increase of 15% to 16% year-over-year.

While Alteryx has not provided official guidance for fiscal year 2021, company finance chief Kevin Rubin told financial analysts on Nov. 5: “Based on what we see today, much uncertainty remains in the market for 2021.”


Acquisition Plan

Alteryx, founded in 1997, has purchased five companies over the course of its history.

Its largest buy to date was the October 2019 purchase of Feature Labs in Massachusetts for a reported $37.7 million to fuel expansion, as the company faces what it calls “intense and increasing competition in our market.”

CEO Anderson said the company will be pushing internal innovation to help broaden the business. “We’re also going to have to do that by making acquisitions,” he said.

The nearly $1 billion on the company’s balance sheet will help make the purchases possible, officials said.

“It’s a safe bet that we’re going to continue to do that,” said Anderson of acquisitions. “We’re only going to do it when we find the right combination of technology and people in alignment with our culture.”

Future Focus

Alteryx sees itself playing a central role in helping companies move into the future.

“Every company, every government, especially post-COVID is being forced to transform. We feel like we’re the instrumentation layer of that transformation,” said Anderson.

The new CEO made it clear that the better Alteryx is, the more customers expect.

“We want to be more relevant and more important to customers but when we are, they expect more from us. When they expect more from us, we have to do more, we have to be better,” according to Anderson. “If we succeed there, we can get more business from them. It’s a wonderful virtuous circle that is mutually beneficial.”

Alteryx ended the third quarter of 2020 with 6,955 customers, a 24% increase from the third quarter of 2019. Customers include 7-Eleven, Amway, Coca-Cola, Sega, Vizio, Hyundai, Kaiser, Cisco and Walmart, according to the company’s website, just to name a few examples.

More Innovation

“The next four quarters you’re going to see more innovation from Alteryx than you’ve seen in the last four or five years,” Stoecker said.

Derrick Wood, a managing director at investment bank Cowen and Co., said some of the tweaks Alteryx has been “making to the sales model will start to bear more fruit in the fourth quarter.”

Alteryx still needs to work on issues, according to Wood. That includes sales structure and the roadmap for a Cloud product “to re-accelerate growth, re-instill its leadership in a market that is still just scratching the surface in penetration, and get on a stronger footing to march to $1 billion in revenue in a post COVID environment,” Wood told the Business Journal.

Move Continues

The company announced in October of last year that it was moving to about 183,000 square feet of new office space in two buildings at the new Spectrum Terrace office campus, and Anderson says the relocation out of the current Park Place office is going “really well.”

“We have a lot of people who want to come back to an office and we feel like we have an obligation to them,” Anderson said. “One building is completely done and it looks really good. It just needs people there.”

The whole complex should be ready early next year, though exactly when people will come back to the office from home and other remote work locations remains to be seen.

“I don’t know if we’re ever going to return back to what was normal,” Stoecker said. “We’ve seen our engineering team become more productive working from home.”

And the highly refurbished 1960s-era Volkswagen bus that symbolizes Alteryx’s long journal will be moved from the Park Place offices to the new site, too.

“I think they’re planning on moving it out at the end of year,” said Stoecker, adding the workmen have already picked the huge palate glass window to take out for the complicated operation.

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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