Analysis of Alteryx’s Trifacta Acquisition

The global big data analytics market is expected to grow at 13% CAGR to reach $549.73 billion by 2028 from $206.95 billion in 2020. Data science and analytics platform provider Alteryx (NYSE: AYX) recently announced its fourth quarter results that continued to outpace market expectations.

Alteryx’s Financials

For the fourth quarter, Alteryx’s revenue grew 8% to $173.8 million ahead of the market’s estimates of $165.36 million. GAAP gross profit was $157.3 million, compared to a GAAP gross profit of $149.8 million a year ago. GAAP net loss was $26.8 million, significantly worse than GAAP net income of $24.4 million a year ago. Non GAAP net income was $11.8 million or $0.17 per diluted share, down from $43.2 million or $0.62 per diluted share a year ago. The market was looking for earnings per share of $0.04.

Alteryx ended the quarter with 7,936 customers, up 12%, with 247 net new customers. It achieved a dollar-based net expansion rate of 119%. ARR for the quarter grew 30% to $638 million.

For the fiscal year, Alteryx reported revenues of $536.1 million, up 8%, and a loss per share of $0.16.

For the first quarter, Alteryx expects revenues of $144-$147 million with an adjusted net loss of $0.61-$0.58 per share. For the full year 2021, it expects revenue of $710-$720 million with a net loss of $0.68-$0.58 per share. The market was looking for revenues of $615.8 million and net loss of $0.12 per share for the year and revenues of $131.77 million and net loss of $0.17 for the quarter.

Alteryx’s Trifacta Acquisition

Recently, Alteryx announced its acquisition of Trifacta for an estimated $400 million. Trifacta is known for its Data Wrangler desktop product that is a freemium low code/no code user interface that makes it easier for analysts to use the product to prepare and transform their data. The acquisition will allow Alteryx to offer an integrated end-to-end, low code/no code analytics automation platform in the cloud, servicing the needs of the entire enterprise, including data analytics teams, IT/data engineering teams, and business users to large enterprises. It will enable Alteryx to integrate its low code/no code analytics solution with Trifacta’s cloud native capabilities, thus allowing for flexible deployment options to meet enterprise customers’ analytics needs.

The Alteryx and Trifacta products overlap in the area of data preparation and transformation.  But while Alteryx has stronger products in the process automation side of data preparation, Trifacta provides an easier to use, low code/no code user experience.  Together the two companies will be able to provide a common offering with a premium pricing model. Prior to the acquisition, Trifacta had raised $224.3 million in eight rounds of funding led by BMW i Ventures, Cathay Innovation, Ignition Partners, ABN AMRO Ventures, Greylock, Energy Impact Partners, Enabling Future, Infosys, Sand Hill Angels, and NTT DOCOMO Ventures. Its most recent round was held in September 2019 when it raised $100 million.

Meanwhile, Alteryx’s stock is currently trading at $54.88 with a market cap of $3.7 billion. It hit a 52-week high of $109.32 in February last year. It hit a 52-week low of $49.67 earlier this month.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.