Shares of the analytics automation company Alteryx (NYSE:AYX) are down over 23% in after-hours trading despite better-than-expected Q2 financial results. While the company exceeded analysts’ Q2 estimates, its Q3 and full-year revenue outlook fell short of expectations, disappointing investors.
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Before we delve into the company’s guidance, let’s look at its Q2 performance.
AYX Surpasses Analysts’ Q2 Expectations
AYX delivered revenue of $188 million in Q2, reflecting an increase of about 4% year-over-year. Moreover, it surpassed analysts’ estimates of $181.98 million.
Thanks to the improvement in sales and its focus on reducing costs, Alteryx managed to reduce its losses. Nonetheless, higher sales and marketing expenses and increased interest costs remained a drag. It reported an adjusted loss of $0.37 a share in Q2 compared to a loss of $0.46 a share in the prior-year quarter. Also, it came in better than the Street’s estimate of a loss of $0.67 per share.
Outlook Fell Short of Estimates
The company highlighted that a tougher macro environment resulted in the postponement of significant upsell opportunities with large customers. In addition, the deals that closed in the second quarter were of reduced size, impacting the company’s revenues. Further, the company expects no improvement in customers’ buying behavior for the remainder of the year, which may hurt its top-line growth.
Alteryx revealed that in the last two weeks of the second quarter, it witnessed significant divergence from historical conversion rates as customers opted to delay or substantially reduce new initiatives until renewal. This trend was more pronounced in the U.S. and led to a year-over-year decline in bookings.
Given the headwinds, Alteryx expects its Q3 revenues to decline by 2-4% year-over-year and come in the range of $208 million to $212 million. In contrast, analysts projected the company to post revenues of $233.03 million. Furthermore, Alteryx’s Fiscal 2023 guidance also came below Street’s forecast.
In terms of top-line numbers, the company expects to deliver revenues in the range of $930 million to $940 million, reflecting a year-over-year growth of 9% to 10%. This compares unfavorably to the analysts’ consensus estimate of $984 million.
What is the Prediction for AYX stock?
Alteryx’s revenue outlook disappoints. However, its new generative AI (Artificial Intelligence) offerings, higher retention and renewal rates, and focus on improving sales productivity bode well for growth.
AYX stock sports a Strong Buy consensus rating and has received buy recommendations from all nine analysts who have recently rated it. These analysts’ average price target of $70.11 implies 86.36% upside potential from current levels.
