Alteryx, Inc.

Greetings, and welcome to AlterX second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference call, you can start and zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host. Ryan Goodman, Head of Investor Relations.

Thank you, Operator. Good afternoon, and thank you for joining us today for Alteryx's second quarter 2022 earnings conference call. I'm Ryan Goodman, Alteryx's Head of Investor Relations. With me on the call today are Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer. Additionally, Paula Hansen, our President and Chief Revenue Officer, and Suresh Patel, our Chief Product Officer, will be joining us for the question and answer session after prepared remarks. This afternoon, we issued a press release announcing our results for the second quarter ended June 30, 2022. If you would like a copy of the release, you can access it online on our Investor Relations website. During this call, we will make forward-looking statements related to our business. including statements about our financial guidance for the third quarter and full year 2022. These statements are not guarantees of future performance. They are subject to a variety of risk and uncertainty, some of which are beyond our control. Our actual results could differ materially from expectations reflected in any forward-looking statement. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and our investor relations website, as well as the risks and other important factors discussed in today's earnings release. Additionally, non-GAAP financial measures will be discussed on today's call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release. With that, I'd like to turn the call over to Chief Executive Officer Mark Anderson.

Thank you, Ryan, and thank you all for joining us on the call today. We delivered a great Q2 with annual recurring revenue, or ARR, of $727 million, up 33% year-over-year, and revenue of $181 million, up 50% year-over-year, both exceeding the high end of our guidance range. We are seeing healthy demand trends as evidenced by a multi-year high for our renewal rates and solid year-over-year growth in pipeline generation. Our value-driven sales motion is resonating in the current market environment, and sales execution continues to be strong. In fact, in Q2, we closed our two largest ACV deals ever. I spent much of the last quarter traveling to visit customers, partners, prospects, and our people. Across all three geographic theaters, customers are asking for our help to democratize access to data and use analytics across all areas of their business. At every meeting, a high priority of this critical need was apparent. Companies and governments are realizing that manual processes must be automated and data analytics needs to be fully leveraged. Having a third party come in and do this can only be a short-term solution. Enabling one's knowledge workforce is the only viable long-term answer. As businesses look to optimize profitability and streamline supply chains in the face of uncertainty, they are increasingly looking to leading platform solutions like Alteryx to drive forward their automation and analytic initiatives. I'll begin with some highlights from the quarter and then provide updates on the market opportunity, our go-to-market strategic initiatives, and our platform innovation momentum. Kevin will then provide more details on the Q2 financial results. First, some highlights. We hosted our Inspire user conference in May with well over 4,000 attendees. It was so energizing to engage with our growing community of users and partners where we saw strong validation that data analytics are now table stakes to effectively compete, enhance performance, and navigate the current macro environment. On the go-to-market front, we expanded on the early success we've seen with our ELA strategy by introducing a new cloud ELA in June. We believe this will provide companies with a frictionless path to more broadly leverage cloud opportunities within the Alteryx analytics platform. We also rolled out our updated partner program, which is already having a positive impact on both ecosystem expansion and field-based engagement. We had a productive quarter of innovation as well, with particular focus on enabling scale with governance. We announced a new version of Alteryx Designer aligned with Federal Information Processing Standards, or FIPS, which opens up a large addressable opportunity for us in the public sector. And for cloud, we introduced Designer Cloud powered by Trifacta at our INSPIRE user conference. This all ties back to our core mission of empowering every person to transform data into a breakthrough. We're committed to driving this democratization on a global scale with low-code, no-code automation of advanced analytic workflows and operational processes. Our rapid innovation is creating new use cases for new personas, and our go-to-market strategy enables us to effectively scale our ability to support our customers and capture the large market opportunity ahead of us. We think of this addressable market across three components, potential users, tangible budget, and underlying business demand. On the first item, potential users, our commissioned study with IDC indicates that there are roughly 80 million advanced spreadsheet users wasting more than 60 billion hours annually on manual and repetitive data analytic tasks. This creates a growing pool of potential citizen data scientists who would benefit from Alteryx's low-code advanced analytic and automation capabilities. As for tangible budget, according to IDC, roughly $65 billion is spent on data analytic tools today, and that number is expected to grow to over $110 billion by 2025. I'm increasingly hearing from customers that analytic enablement for the masses is one of the top two budget priorities today. And third, business demand, which brings it all together. Digital transformation is unlocking a vast amount of data and opportunities, and business leaders increasingly require solutions that empower all employees to leverage this data. As for how we address this market opportunity, we've defined our go-to-market strategy across three pillars. enterprise, partners, and customer success. We continue to see success with our amplified sales focus on larger enterprises. We've effectively upscaled our enterprise-focused sales force by adding many well-tenured reps that bring over a decade of enterprise sales experience coming from multibillion-dollar software companies. The quality of our wins speaks for itself. We had a record Q2 for number of $1 million-plus ACV deals. which more than doubled compared to Q2 last year. We added many new Marquee Global 2000 customers, including Aramco, Orange, Suncor, Lithia Motors, and MongoDB, to name a few. Our penetration into the Global 2000 is now at 46%, up seven points year over year. With a global 2000 net expansion rate of 128%, we believe these large enterprise wins provide us with a long runway of opportunities for years ahead. We had a fantastic expansion win with a major pharmaceutical company in Q2. This multi-year customer increased their designer implementation by over 60% to 2,500 users. Plus, they added several hundred intelligent suite licenses and Alteryx machine learning. The company is leveraging Designer to orchestrate data management, optimize supply chain management models, and more effectively calibrate pricing and merchandising decisions. And now, with the addition of cloud-delivered Alteryx machine learning, business users can explore new use cases, such as predictive modeling analysis that can be leveraged across the organization. We're also seeing impressive momentum with our ELA strategy. We believe ELAs provide a more flexible path for new customers to embrace the Alteryx platform and for existing customers to explore more broad-based implementations. Now that digitization and automation are being prioritized, we are meeting the needs of our customers' accelerated transformation agendas. We introduced our cloud ELA near the end of the quarter, and it's already garnering strong interest. We believe this sets us up for positive expansion momentum for renewals for the coming year. Our ELA structure enabled a great win with BDO, a leading professional services firm. The ELA construct allowed BDO to approach analytics with a more comprehensive enterprise-wide strategy. This led to a better realization of potential ROI capture across multiple lines of business and ultimately drove a quadrupling of their Alteryx implementation. As for the second pillar of our go-to-market, our partner ecosystem, it's enhancing our ability to rapidly scale our market reach. We rolled out the updated partner program early in Q2 to better empower this community to effectively bring Alteryx solutions to global markets, deliver value-added services, and elevate user engagement. We subsequently saw an increase in new partners joining the program, including marquee organizations like Presidio, and partner engagement which contributed to strong growth in partner sourced new bookings. We continue to see many of our partners embracing the solutions as customers. One of our larger partners renewed this quarter across a multi-thousand user implementation, now with additional Alteryx offerings. We view this deepening engagement by our leading partners as a strong endorsement of the value Alteryx provides and as a validation that breakthroughs can come from anyone. I dropped by a new hire orientation for this partner in June, up in Canada, where Alterix training was embedded into the curriculum. We trained over 200 new hires to use Designer in their day-to-day roles for this important customer and partner. Our partner community is also one of the key contributors to our third go-to-market pillar, customer success. We are committed to ensuring our customers fully leverage our solutions and unlock a positive return on their investment. Active customer engagement often feeds future upsell with new use cases and new personas. The magnitude of this opportunity is even more prominent in large enterprise companies with ELA's. A great example of this is with Chemours, a global specialty chemicals company, which began with a smaller implementation of designer. In collaboration with one of our partners, we hosted nearly 100 enablement sessions and weekly user groups examining business processes and exploring opportunities to automate and optimize with Alteryx. The teams ultimately came up with some innovative workflows enhancing inventory management and forecasting, resulting in a more pervasive ELA with over 250 designer users plus intelligence suite. While scaling our go-to-market reach, in parallel, we are rapidly innovating our platform offerings and capabilities. Cloud is a key focus on our innovation roadmap, and we are making solid progress integrating our portfolio of offerings onto Trifacta's well-established cloud architecture. At Inspire, we announced Designer Cloud powered by Trifacta, which accelerates the integration of Trifacta with designers' industry-leading user interface and capabilities. We are proud to have an early version of this offering available to customers so quickly after the close of the acquisition. Over the coming quarters, we plan to layer in incremental designer functionality and adjacent platform integrations with Alteryx Machine Learning and Alteryx AutoInsights. It's early days and we're pleased with the significant customer traction in our Alteryx Analytics Cloud. It's been such a thrill to see our customers embracing cloud offerings as they empower new users with new use cases. We're also finding that the addition of our cloud solutions in many cases expands our abilities to secure designer wins with larger enterprises. A new customer embracing both our flagship solutions and cloud is Medallia, a global leader in customer and employee experience. In addition to leveraging designer to optimize analytics across marketing, sales ops, and finance, Alteryx Auto Insights will provide business users with AI-driven, real-time insights across the organization. We're also seeing early adoption of cloud with several existing customers upon renewal. For example... A leading recreational sport retailer both expanded its designer implementation and added Alteryx Auto Insight capabilities across its stores. By leveraging the two solutions together, the customer will empower business leaders, district managers, and store managers with fast, AI-driven insights on key workflows such as sales trends and inventory management. As for our flagship solutions, we announced several UI and governance enhancements at Inspire, along with expanded partnerships with Snowflakes, Databricks, and Google. Also, we are very excited to have introduced a new designer that is FIPS compliant. This creates new opportunities within the public sector and is a strong validation of our commitment to trust and security in our core solutions. In closing, it was a great quarter, and I'm increasingly confident in the opportunity ahead of us. Business leaders are prioritizing analytics and embracing democratization of data to scale their analytics and upskill their workforces. And with the macro environment serving as a forcing function for businesses to optimize and automate analytics, the market is coming to us with greater urgency and demanding solutions that Alteryx is uniquely positioned to provide. To take advantage of this reality, we've been working hard to train our people, onboard people with the right competencies and experiences, and build partnerships that will last decades. I'm so proud of what the team has accomplished and can't wait to keep up the momentum in the coming quarters. With that, I'll turn the call over to Kevin. Kevin?