Alteryx Inc

F:3AI

Earnings Call Transcript 2019-Q1

[Operator]

Greetings. And welcome to Alteryx First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I would now turn the conference over to your host, Chris Lal, Chief Legal Officer. Mr. Lal, you may begin.

[Chris Lal]

Thank you, operator. Good afternoon, and thank you for joining us today to review Alteryx's first quarter 2019 financial results. With me on the call today are Dean Stoecker, Chairman and Chief Executive Officer; and Kevin Rubin, Chief Financial Officer. After prepared remarks, we will open up the call to a question-and-answer session.

During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainty. Our actual results could differ materially from expectations reflected in any forward-looking statements.

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 EDGAR system and our 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 this conference call. Please refer to the tables in our earnings release in the investors section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure.

With that, I'd like to turn the call over to our Chief Executive Officer, Dean Stoecker. Dean?

[Dean Stoecker, Chairman and Chief Executive Officer]

Thanks, Chris, and thank you to everyone joining us today. Alteryx got a solid start to 2019 as the positive trends we saw in 2018 such as digital transformation initiatives increasing global demand for advanced analytics and approved - improved awareness of the Alteryx brand continued.

Q1 revenues were $76 million, up 51% year over year. We generated $16 million in operating cash flow and $1.4 million positive non-GAAP operating income. Net expansion remains strong at 134%. We believe our performance continues to be fueled by our strong global execution, along with an enterprise focus on digital transformation. Underlying this trend of digital transformation is automation which usually begins with automating mundane data tasks.

In our view too many business processes, particularly data oriented one remain highly manual and inefficient, making them ripe for the benefits of automation with Alteryx. According to a recent survey by IDC commissioned by Alteryx, a typical data process involves an average of six disparate data sources, 40 million rows of data and seven different output. Despite increases in innovation data and analytic processes have become more complex not less.

The continued fragmentation at the persistence and consumption layers continues to be a tailwind for us. We’re relevant to Alteryx is the fact that searching for and preparing data consumes over 40% of data workers time and approximately 16 hours per work - per week per worker is wasted on unsuccessful data initiative.

This translates into tens of billions of dollars of analytical waste each year. The Alteryx platform can help organizations transform this waste of time into productive time by easily automating routine processes within the drag and drop. click and run, code free and code friendly environment.

Through a simple but powerful graphical user interface, Alteryx enabled non-technical users to identify and connect to the right data, build repeatable workflows, schedule and scale analytic processes across an enterprise, and operationalize and manage data science model or as we like to say here, just alter [ph]

We continue to see the total addressable market for TAM expand. We now estimate that our core TAM is approximately $23.5 billion. Based on the recent survey, IDC estimates there are 47 million advanced spreadsheet users worldwide. In addition to this, we also believe there will be an increasing shift of the $20 billion dollars in IT related spend on data and data management technologies that flow from IT into the line of business. That will also become available to us over time. In short, we have a large and expanding market opportunity.

In Q1 we added 277 net new customers and now have nearly 5000 customers including 28% of the Global 2000. Some of the notable companies that subscribe to our platform during the quarter, included Autodesk, eBay, Luxottica Group, Netflix, Twitter, and WeWork.

Our land and expand model continue to perform well and consistent with the themes of 2018, we continue to engage with our customers in a more strategic way as we believe the strength of our brand and the power of our platform is resulting in our continued growth around the world.

In Q1 we saw an over 50% increase in new customer lands larger than $50,000 and nearly a doubling of customer expansion transactions greater than $100,000. During Q1, we also witnessed strong activity within the data and analytics rich utilities industry. We added Reliant Energy in the US, old energy and Opus energy in the UK. And we added ALG energy in Australia. We also store more customers with larger land.

For example in Perth Australia, Horizon Power following a trial period purchased the entire Alteryx platform, including Connect and Promote. Horizon Power as a state government owned corporation that provides safe and reliable power to 100,000 residents and 10,000 across regional and remote Western Australia.

The firm's strategy is to inculcate a data maturity and governance program via a data science shared services initiative, to improve operational insight and drive customer benefits, while creating a strong internal data and analytics culture.

Alteryx Connect aids in the governance initiative by exposing its social data catalogue of the data assets available ultimately helping the business better perform its function. With an acute understanding of the importance of operationalizing analytics and a dynamic industry, they deployed Promote to support the predictive models needed to provide superior service for customers.

International performance was also strong in Q1 with international revenue of $23 million, up 54% year over year and now representing 30% of total revenue. We now have a customer footprint in over 80 countries and particularly we saw strong performance in Japan where we recently expanded our presence and saw revenue increased by 146% year over year.

During Q1, we did business with All Nippon Airways, Konica Minolta, Mitsui and Company, MTD data Corporation, Nissan, Recruit Holdings, Olympus Corporation and Panasonic Corporation Japan. Additionally, Honda, a longtime Alteryx customer expanded in Q1, Honda like an increasing number of global 2000 companies worldwide is leveraging Alteryx for advanced analytics use cases.

Honda leverages Alteryx via Internavi, its telematics service that provides real time traffic, safety, security and environment information to onboard vehicle navigation system. Honda has a goal to share insights from this system with the public and enable people worldwide to improve their lives.

For example, data regarding traffic patterns with frequent sudden braking to be used by local governments and police for alerting and city planning. It can also be used to analyze traffic patterns and as a guide to help determine the most efficient means of travel. After struggling with extracting the spatial data from Internavi, Honda adopted Alteryx to meet its goal of improving people's lives.

As the volume and variety of use cases for Alteryx continues to expand, we expect to continue to expand our ecosystem to complement our go to market initiative. For example to support the success we've seen recently with tax and audit use cases, we recently entered into a strategic partnership with Thomson Reuters. Jim Smith, President and chief Executive Officer of Thomson Reuters said and I “we are excited to introduce Alteryx to our one source customers worldwide and look forward to a long successful partnership. Together we can offer complementary tools and services to help customers streamline workflows and turn data into the insight. That is front and center issue for all of our customers in legal, tax and regulatory market”

Looking forward, we expect to continue to expand the types of partners we engage with to adequately address the increasing number of strategic use cases that Alteryx is being leveraged for. And speaking of partnerships as you know we recently welcomed ClearStory Data to the Alteryx family.

As we said we believe that consolidation in the crowded data science and analytics space will intensify and our strong balance sheet enables us to be opportunistic. With ClearStory we not only acquired compelling IP, we acquired a world class team. The team's technical expertise and scalable compute, data profiling and auto inference aligns well with our strategy and we are excited to continue to innovate for the future needs of customers, as we make Alteryx synonymous with analytics worldwide.

With that, let me turn the call over to Kevin to discuss our Q1 financials and outlook for its Q2 and 2019. Kevin?

[Kevin Rubin, Chief Financial Officer]

Thanks, Dean. We had a solid start to the year. Q1 revenue with $76 million, an increase of 51% year over year. As Dean noted, Q1 saw a strong enterprise focus that resulted in a favorable product mix on the higher end of the upfront range that we provided last call. As a reminder, we expect approximately 35% to 40% of our bookings to be recognized upfront based on product mix.

International revenue was $23 million, up 54% year over year, as we continue to benefit from the strong global demand for analytics. Before moving on, I want to remind everyone that unless otherwise stated I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP result.

Our Q1 gross margin was 90.5%, down slightly when compared to 91.2% in Q1 2018, primarily due to increased headcount consistent with our global expansion and support for new products.

As we have discussed previously, as we sell more Connect and Promote we will have some pressure on gross margin. Our Q1 operating expenses were $67.3 million compared to $38.7 million in the same period last year. The year over year increase in operating expenses was due primarily to additional headcount and other investments in scaling our international operations.

Sequentially our operating expenses increased by 19% which was also commiserate with the increase in headcount. Our Q1 operating profit was $1.4 million or an operating margin of 2%. Net income was $3 million or $0.04 per share based on $67.5 million non-GAAP fully diluted weighted average shares outstanding. Our net income assumes a non-GAAP effective tax rate of 20%.

Turning now to the GAAP balance sheet. As of March 31, we had cash, cash equivalents, short term and long term investments at $461.3 million compared to $426.2 million as of December 31 2018.

In Q1 we generated positive cash flow from operations of $16 million, driven by strong collection. Turning to the liability side of the balance sheet. During the first quarter our convertible senior notes became convertible and therefore were classified as short term liability. This was triggered because our Class A common stock closed above 130% of the conversion price for more than 20 trading days during a period of 30 consecutive trading days.

Finally, we ended the quarter with 936 associates, up from 817 associates at the end of Q4 2018 and 629 associates at the end of Q1 2018. Our increase in headcount is reflective of the pace of investments we are making and we expect to continue to make - capture the meaningful opportunity we see globally.

Now turning to our outlook for Q2 and full year 2019. As a reminder, please note that our guidance assumes the following, average duration of our subscription terms remains constant at approximately two years, approximately 35% to 40% of our TCB booked in the quarter will be recognized upfront with the remainder recognized ratably over time.

Orderly revenue seasonality is expected to be consistent with what we experienced in 2018. As a reminder, as we highlighted last quarter Q1 revenues benefited from a small portion of Q4 transaction with January subscriptions start date, meaning revenue recognition commence in Q1. This impact is also evident in the 2018 quarterly revenue seasonality under ASC 606.

Our outlook also includes the effect of the acquisition of ClearStory which was completed on April 4th. For Q2 2019, we expect GAAP revenue in the range of $74 million to $77 million, representing year over year growth of approximately 44% to 50%. We expect our non-GAAP operating loss to be in the range of $4 million to $7 million and non-GAAP net loss per share basic and diluted of $0.04 to $0.09. This assumes $62.5 million non-GAAP weighted average shares outstanding basic and deluded.

As a reminder, we host inspire our Annual User Conference in June which contributes to seasonally higher sales and marketing expenses in Q2. For the full year 2019, we are raising our outlook and now expect GAAP revenue in the range of $355 million to $360 million, representing year over year growth of approximately 40% to 42%.

We expect our non-GAAP operating income to be in the range of $30 million to $35 million and non-GAAP net income per share of $0.38 to $0.45. This assumes $68 million non-GAAP weighted average shares outstanding on a fully diluted basis and an effective tax rate of 20%.

And with that, we'll open up the call for questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from Tyler Radke, Citi. Please proceed with your question.

[Tyler Radke, Citi]

Hey. Thank you. Good afternoon. I was hoping you could talk about maybe some of the other traction that you're seeing in terms of use cases that you really think are on fire outside of tax and audit. Obviously that's one that you called out in the quarter, but are there other use cases that you would call out, that you feel like you're having a lot of success and selling pretty efficiently into?

[Dean Stoecker, Chairman and Chief Executive Officer]

Thanks for the question. I think that there is a general consensus that Alteryx is very horizontal within an organization, so we start to see verticals pop up more than we do now horizontals. Tax and audit is occurring in pretty much every industry and every corner of the globe. We're starting to see a lot of activity in everything from HR to facilities management to finance and planning applications within the healthcare industry within the public sector.

I think we continue to be amazed at the variety of use cases within functional areas as well, all the way down to things, America's football team, the Dallas Cowboys doing interesting things around analytics within the stadium.

[Tyler Radke, Citi]

Great. And then a follow up. It looks like you're your net expansion rate continue to go higher and look like they're at their highest point since at least 2017. But the customer count growth has been slowing down still, now its growing healthy in the mid 30s. But I'm curious is that is that kind of reflecting a double down in the enterprise? Is that reflecting something intentionally that you're doing or any color that you could add there?

[Dean Stoecker, Chairman and Chief Executive Officer]

You're spot on. It actually illustrates the focus we have on large global enterprises. In fact, if you look at the customer count while it was relatively the same kind of growth as we saw last year, we had 82% growth in global 2000 customers within that 277.

So we are very acutely aware of where the TAM lives. And it doesn't matter whether it's here in North America or the rest of the world. In fact, we saw a 60^% growth of those - of that 82% growth in global 2000, 60% of it was within international global 2000.

So we are very focused on our enterprise playbooks, the end to end platform story, the emergence of the Chief Data Officer and I think that will help us continue to see that net expansion for some period of time.

[Tyler Radke, Citi]

Thank you.

[Operator]

Our next question comes from Michael Turits, Raymond James. Please proceed with your question.

[Michael Turits, Raymond James]

Hey, guys. Good evening. Two questions. First, you saw the gross margin come down a little bit and you said that was related to expansion [indiscernible] we've seen the opposite sometimes where gross margin peak is Connect and Promote was not as big a percentage of your total. So it's something starting to fire a little bit more Connect and Promote, if so what what's doing and what are the remaining hurdles?

[Dean Stoecker, Chairman and Chief Executive Officer]

Well, I think we're still early on in the process. I think we had indicated before that we could see six to eight maybe longer orders before we started to see meaningful attachment rates. The horizon use case in the script was is kind of telling we're beginning to see more people who step up earlier on the end to end platform including that first mile with Connect and that last mile with Promote.

I think we've indicated that in the long haul if you believe the data science and machine learning are going to eat the world, you're going to need to have Promote in the mix and we're beginning to see more use cases around that.

Our sales teams are within there - both land and expand motions are talking about the end to end platform more. Over time as we prosecute to the Global 2000, I would expect us to have a significant attach rate or both land and expand.

[Michael Turits, Raymond James]

Great. Thanks. And then, Kevin since we don't really – is there anything you can do to help us out in terms of understanding some of balance sheet kinds of growth metrics. I mean, we don't really have a year over year comparable on deferred on a 606 basis. If you could help us out with that which could be great or alternatively talk about how we can think about deferred growth going forward or alternatively talk to us a little bit about RPO in the quarter?

[Kevin Rubin, Chief Financial Officer]

Yes. Thanks, Michael. So your last comment, I mean we would focus you on RPO, if you're trying to understand how momentum changes quarter to quarter and so that would be the appropriate benchmark.

We did elect to include the net effect of the contract asset in deferred revenue in our RPO disclosure. So that is a totality of - all of the remaining performance obligation. The other thing I guess I would just point to we saw very typical seasonality in Q1 relative to what was illustrated in 2018 ASC 606 quarterly information. And so I think as a proxy you can look to the quarterly seasonality we saw in 2018 relative to how we're thinking about 2019.

[Michael Turits, Raymond James]

Okay. Thanks.

[Operator]

Our next question comes from Derrick Wood, Cowen. Please proceed with your question.

[Derrick Wood, Cowen]

Thanks. So Dean you're talking a lot about end to end platform, larger deal activity. I'm just curious from a go to market standpoint, if you guys have historically taken more of a bottoms up land and expand approach, as you kind of get more scale and awareness and broader adoption are you starting to see deployment decisions kind of bubble up higher or in the organization and become more of a top down agenda?

[Dean Stoecker, Chairman and Chief Executive Officer]

Well, I think that's only evident when there is a Chief Data Officer in the mix or a proxy thereof. We are beginning to see more of that because we're hanging out more on the Global 2000. Our playbooks haven't really changed, whether we're talking about any aspect of our global team, they're still very focused on the $10 to $12,000 two seat land in 45 days. Even when we closed 40 of the Global 2000 this quarter, that invariably the majority of those ended up in that same land cycle. And so we get excited just to land them on a couple of seats, so that we can begin the top down selling motion.

So the playbook hasn't changed .The DNA of the sales rep hasn't changed. We're cognizant of the fact that the land and expand model works and because we're at relatively low penetration rates in any of our most penetrated accounts we see the opportunity for a big expansion over a very long period of time in most of these customers.

[Derrick Wood, Cowen]

Okay. And maybe touching on the ClearStory acquisition. Can you just give us a sense for what kind of core tech key components that you're getting that you didn't have and I know ClearStory had been leveraging Spark and harnessing some large scale unstructured data sets. How are you planning to kind of attack this side of the market in terms of analytics workloads?

[Dean Stoecker, Chairman and Chief Executive Officer]

Sure. Great question. Let me first add some context to the question that is, since our convertible last year we had indicated that we had anticipated a consolidation, maybe an accelerated consolidation in the data science and analytics world. We see many of the folks at around the modern BI and the data science machine learning MQs from Gartner make themselves available.

ClearStory ended up being a great opportunity for us. They - we've long had a desire to have a presence in Silicon Valley. It gives us a beachhead there. The talented team of approximately 20 folks and they do have core expertise that that we haven't had a ton of experience with. They have a number of people who are very active in the Apache open source community, leveraging scalable compute on Spark.

We have Spark Direct Connect capabilities. However I think they're going to give us a one upmanship on the ability to do a much better job than we've done historically. They've done a yeoman's [ph] work around what they call data harmonization. We referred to that as smart tooling, that's data profiling and auto insurance thing to actually use machine learning to automatically understand what's happening in a data set, fixing that data set before you advance your cause down the analytic journey.

And I think they also provide something that we're not exactly sure where it's going to fit, but they've done a good job with these three visualizations performance based visualizations on big data and we see in our in line visualytics play a need to have the ability for very quick response times, rendering times for visualizations on larger data sets as you reduce that data through your analytic pipeline ultimately to be able to get to machine learning algorithms that you can operationalized on Promote.

We obviously are not going to go up stack to the dashboarding world, it’s still bloody ocean and we'll still see what happens there, but we see some of these technologies making their way into our platform and we think we've got a great team and a presence in the Valley that will allow us to attract more talent.

[Derrick Wood, Cowen]

Thanks for the color.

[Operator]

Our next question comes from Brent Bracelin, KeyBanc Capital Markets. Please proceed with your question.

[Brent Bracelin, KeyBanc Capital Markets]

Afternoon and thanks for taking the questions here. I'll start with Dean. Let's talk a little bit about kind of partner influence deals, obviously started out the year here with an auditor changed because of some opportunity you saw there.

So could you just bring us up to speed on what you're doing with those kind of global SI partners. And then as you think about the 40 new GS Global 2000 customers as you landed this quarter, was that comparable to the same number during Q1 of last year was a little bit higher. Walk us through kind of what you're seeing around the Global 2000 and then partner influence kind of deals this quarter? Thanks.

[Dean Stoecker, Chairman and Chief Executive Officer]

Sure. Good question. So we had 82% growth in our Global 2000 customers this year versus last year in Q1. It's significant step up in the kinds of TAM that we want to address. And again, I'll restate that 60% of that was international. So this is not a North American phenomenon, we're beginning to see large global customers in Germany and Singapore and Australia take the same path down this digital transformation journey.

Regarding tax and audit and some of the partners in that space you reference, the audit change, I think is a lot less to do with the audit change. It has to do with the fact that the top six tax not at firms in the world have embraced Alteryx in some form or fashion and that's because one of the single most important parts of automation and digital transformation space happens to begin in finance.

And you think about the myriad of use cases where you can automate mundane routine tasks that were isolated in the in the IDC study. We can get 16 hours of every analyst time back in and organizations get duly rewarded for that - that operational improvement and this is across almost everything from transfer pricing to ethics risk modeling to R&D tax credit to you name there's one hundred use cases that we've seen.

And so we'll continue to build out partnerships with the accounting firms where they see a need to help their customers out and ultimately have joint customers at that point. And our partnership announced with Thomson Reuters is an important one in that regard. They - all the firms seem to kind of pick their place and there's very little overlap with TR and our customer base. We're really excited that they see the opportunity for digital transformation to allow people to live in their one source platform for longer periods of time with Alteryx.

[Brent Bracelin, KeyBanc Capital Markets]

Got it. And then just clarification. 82% growth in the Global 2000 this year versus last year, was that a customer count growth figure or is that actually kind of an aggregate dollar growth?

[Dean Stoecker, Chairman and Chief Executive Officer]

No that's customer count. And again that that's exciting to us because that's what fuels net expansion over long periods of time. Those customers in the Global 2000 represent a very significant portion of the $47 billion [ph] analyst TAM that have been living in complexity look up.

[Brent Bracelin, KeyBanc Capital Markets]

Make sense. And then shifting gears, Kevin here, just as we think about the move to ASC 606, we obviously get a little bit more noisy here around some of these metrics that we all kind of look at, but was there any sort of nuances or changes in the move to ASC 606 that would impact net retention rate, that the net expansion rate you gave. Any other kind of weird calculations we should think about, just given the move to ASC 606?

[Kevin Rubin, Chief Financial Officer]

Thanks, Brent. So you may recall we actually changed the method of calculating. We had net retention which was a revenue based metric previously and we updated that in Q4 on the last call to net expansion. So the unit expansion rate is an annual contract value calculation that is unaffected by 606. So that is a pure calculation of how our customers a year over year are expanding their relationship with us.

Other than that I would just point to the mechanics as I walk through with respect to guidance, how revenue gets ultimately determined.

[Brent Bracelin, KeyBanc Capital Markets]

Got it. Very helpful there. And helpful color. Then last question is just on the operating expenses, it looks obviously as you think about the pace of investment in OpEx this quarter or last quarter north to 70% kind of growth in OpEx. How are you thinking about kind of those investments, where are those investments kind of going? And as you think about the elevated investments here, how long do you think you're going to be stepping on the gas around investing in the business to scale it?

[Kevin Rubin, Chief Financial Officer]

I mean, I think as we've talked with you guys in the past, seasonally we tend to front load a lot of our hires to the beginning of the year, certainly first half of the year with the desire of making sure that we have as much productivity in the back half as we can. So you are seeing some seasonal effects.

And then I think as we think more broadly about level investment, as I think as we've talked about, there's a significant opportunity for us globally. And as we continue to hire and launch new markets and new offices, we continue to get rewarded from that. And so as long as that is the case and the dynamics, we're going to kind of continue to do that.

That being said, I think if you if you look at our model over a longer term, I mean there is leverage in this model and we do expect that we'll be able to generate significant cash flow over the longer term.

[Brent Bracelin, KeyBanc Capital Markets]

Got it. Thank you.

[Kevin Rubin, Chief Financial Officer]

Thanks, Brent.

[Operator]

Our next question comes from Ittai Kidron, Oppenheimer and Company. Please proceed with your question.

[Ittai Kidron, Oppenheimer and Company]

Thanks and congrats guys, great quarter. Just a couple short ones for me. Dean on the salesforce side, given the traction that you're seeing in some of the verticals, I think you highlighted utilities and tax audit. How do you think about the progression of the verticalization of your salesforce. If I'm not mistaken you only had government and healthcare kind of specifically carved out. Is there more coming on a near-term basis?

[Dean Stoecker, Chairman and Chief Executive Officer]

Well, we use Alteryx ourselves internally to understand how people use our platform looking at everything from job titles to industries to geographies to help inform us what we should be doing next. There are many choices and we're going to be very careful about investing too quickly in any one of them till we understand the magnitude impact of each of them.

But even last year we stood up two of the verticals and we're in the process of doing a better job at tax and audit as that is one of the largest most recent use cases. But we see opportunities in everything from manufacturing, pharmaceuticals as an adjunct to health care, academics, the student market, university market seems to be doing pretty well. I would be cautious about the expansion capabilities in that because that's not necessarily where the largest TAM is. We're going to be cautious. I don't - none of the team has identified the one that that's going to move the needle. And so we're going to be paying very close attention to it in the next couple of quarters to make determinations.

[Ittai Kidron, Oppenheimer and Company]

Got it. And then just a quick follow up. When you think about the competitive environment, I know you've talked about how - you don't see much out there right here right now. Just making sure, checking the temperature there, any changes there in the field that you're seeing?

[Dean Stoecker, Chairman and Chief Executive Officer]

Well, we do we pay attention to the competition because it's so vary. There are point solutions along the way depending on what vertical we're in or what use case or functional area we're in. So I'd say there's it would be disingenuous for us to say there's no competition. And you almost have to say that everyone is a competitor to a certain extent.

We do see south more consistently as a the incumbent in a an opportunity, not necessarily a head to head competition. They - invariably people are trying to wean themselves of SaaS is being recognized more as the last generation of predictive capabilities.

And so, that said, we pay attention, we pay attention to corporate cultures which tends to be the second biggest competitor of people not willing to engage in or embark on a digital transformation journey. But we don't - we don't necessarily worry about the competition. We have a competitive intel team, and we keep track of what everyone's doing, not just from a product perspective, but an M&A perspective and where we see them in the strategic chessboard. So we're -- we're aware, we're certainly aware.

[Ittai Kidron, Oppenheimer and Company]

Very good. Good luck, guys.

[Dean Stoecker, Chairman and Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from Bhavan Suri, William Blair. Please proceed with your question.

[Bhavan Suri, William Blair]

Thanks for taking my question. I guess I just want to follow up on the competitive environment a little bit and it's good because as I was going to ask a question about you can say Microsoft but to me SaaS or SPSS or enterprise mining or something that would be more of the incumbent.

But if I turn to like the Trifactas, the Paxatas, the Tamrs out there, I guess are you seeing any pricing pressure from those guys or are they being priced competitively leveraging that to get into deals or at least make some noise. I'm just wondering what you're seeing out there from that perspective?

[Dean Stoecker, Chairman and Chief Executive Officer]

No certainly not from those folks. I think that the out of the box experience with Alteryx is it's $4000 a year on a three year contract, that seems expensive. We get through that pretty quickly as people start to realize that out of that 16 hours of wasted activity every week in the hands of each analyst that operational efficiency improvement more than pays for itself in a single seat.

We have not seen compression of prices at all yet even in general terms let alone in a direct competitive environment. If even somebody who might be the closest to us. Certainly not from the folks that were cloud - first or cloud only or Hadoop first or Hadoop only or option – our prolonged optionality gave us lots of opportunity to maintain our prices because we're going to Switzerland in this space. We don't care about what happens if the persistence layer the consumption layer and that uniqueness - that competitive mode that we've built that is now getting deeper and wider protects our prices.

[Bhavan Suri, William Blair]

Got a. And then sort of one higher level question I guess, when you think about it essentially especially with the statistical events just big part of the package of the solution, you're giving people who - let's take SAS, and SAS used to have a set of PhD in stats or massive statistics to really use it, and you've got an environment where I don't need to code, I could but I don't need to. And I can drop random walks. You can drop a -- or area of regression, whatever, onto data and see the result. But the challenge you have is this, now you're putting in the hands of users who may not totally understand that.

So you have pitching staff. Of course, you understand it, but the average business user maybe at McKinsey and BCG do. But they mean to someone in the average company that doesn't. Are you guys thinking about a way to help these people sort of figure out what's the optimal solution or - are they, is there AI and now it’s going to back up the date and make sure the coalition they get is not spurious. I guess for the less sophisticated user, is there something you guys thinking about or building towards that allows them to think of as a powerful statistical features without actually knowing what that means. Yes know what I'm saying?

[Dean Stoecker, Chairman and Chief Executive Officer]

I totally get what you're saying. In fact, it's very true that that as you liberate analytics across a broader swap of users who - now it's easy to build algorithmic processes. Our concern has been making sure that we amplify human intelligence in that process.

So we've embarked over some period of time on a program around assisted modeling to allow the citizen data scientist to actually understand why they would select the model, what that model score might mean, how to decision off that model.

We're seeing the convergence of trained statistician and the citizen scientists happen. We're going to make sure that we provide the guardrails for the citizen scientists, while we provide the acceleration that the Phd wants to get through models quickly. So we see a world in the not too distant future where assisted modeling for the citizen scientist is going to be a requirement and a – on auto modeling function for trained statisticians so they can get back to the edge cases and the hard problems within enterprises. We see both of those as real possibilities. The jury's still out on both of them. But if you guys come to our Inspire Conference in June, you'll probably see a little bit of both.

[Bhavan Suri, William Blair]

That’s helpful, super helpful. Thanks, guys.

[Dean Stoecker, Chairman and Chief Executive Officer]

Thanks, Bhavan.

[Operator]

Our next question comes from Jack Andrews, Needham. Please proceed with your question.

[Jack Andrews, Needham]

Good afternoon and thanks for taking my question. I just wonder if we could drill down a bit more on the large deals in particular I think Dean you mentioned a 50% increase in deals greater than $50,000 on initial lands.

Could you talk about more specifically what's driving that, is that strictly attach rates of Promote and Connect, is that the ability to engage directly off the bat with CDOs or something else?

[Dean Stoecker, Chairman and Chief Executive Officer]

With regard to the lands being larger, I think there's two dimensions, one is there's a focus of enterprises on digital transformation spend more than 50 grand to see success on getting access to the $10 trillion to $15 trillion of value that's locked up and data around the world, it seems like an insurance policy that's pretty low cost to be honest with you.

We also see that that lands are occurring at a larger size when it's an Alteryx user from a previous customer of Alteryx. I can name a couple of customers where that has occurred, Chumash Casino and Resort, for example, they recently landed with nine designers and a server with a former user who used to – who use Alteryx at a Las Vegas casino.

And so they understand the value where Alteryx plays for both code free and code friendly environments and for them it may still be a 45 day sales cycle, but it's going to be north of $50,000 because they understand the impact that the platform has.

When it comes to the nearly doubling of expands that are more than one $100,000, I think the playbooks that we have for a top down motion when there is a CDO in the mix, they just work. We've instituted for example this last few months something we refer to as value engineering to help our sales people and to help customers understand the true value of larger adoption of the platform.

And I think this is all beginning to play out the way we've anticipated for many years where particularly in the Global 2000 they just can't wait to get their hands on our platform to start to eke out value and drive efficiency gains across their organization.

[Jack Andrews, Needham]

Appreciate your perspective. Here's a quick follow up. I want to ask given the advancements you've made just around visualization in general. Are you seeing any changes in terms of customer behavior about they're - about in terms of how they export data to perhaps traditional BI, dashboard and reporting tools?

[Dean Stoecker, Chairman and Chief Executive Officer]

I don't have any data in front of me on any recent changes, but what we do know is that when we implemented visuallytics about 20 months ago, I think was inspire of 17 where we rolled it out. We have seen a big uptick in the use of visualization or what we call in line visuallytics.

I don't think we've seen a huge shift in the outbound activity. But what we do know is that within the IDC study that the average analyst will output to seven different disparate outputs and that's something we've known to be the case just based on our own product telemetry and what people write out to visualization is one of those, but it is clearly not, there's certainly six other common outputs that people use and I would argue that for any enterprise they may be six completely different outputs.

[Jack Andrews, Needham]

Great Thanks for taking my questions.

[Dean Stoecker, Chairman and Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from Rishi Jaluria, D.A. Davidson. Please proceed with your question.

[Rishi Jaluria, D.A. Davidson]

Hey, guys. Thanks for taking my questions. Let me start with the one that's a little bit more higher level for Dean. So I've seen as maybe over the past year or maybe a little longer than that you're your sales efficiency has definitely increased and impressively, so can you maybe drill down into why that is it's just a function of the G2k and enterprise momentum, is it getting larger lands with maybe a higher tier or higher SKU is anything you could do on that – probably give on that would be helpful? And then I’ve got a follow up for Kevin.

[Dean Stoecker, Chairman and Chief Executive Officer]

Yes. I think there's a number of dimensions. I think that we - we have finally gotten the attention we deserve. Post IPO maybe it's our performance that continues to enlighten people about the fact that we must have something of value as they investigate these tools.

I also know that we have - we spend a tremendous amount of time on iterating up almost all of our processes. In fact three of my five strategic imperatives for the company this year are as follows, follow the signals that we actually leverage Alteryx understand where we're at in any cycle, whether it's in enablement days or close cycles or funnel metrics for sales and marketing programs.

The second is refining the process. So if we see - if we follow the signals and have an opportunity to refine all of our processes that get people enabled quickly all the way down to their efficiencies in the field, two legged sales calls four legged sales calls we track tons of metrics.

And then the third is remove the friction. So we follow the signals refine the processes and we take the pebbles out of the flywheel to make sure that we can continue to improve.

And then lastly it really is just a global phenomenon and I am a sales guy at heart. I just spent a bunch of time in Dubai lunching our Dubai office for Middle East and Africa and then last month in Sydney, Australia with our Inspire on tour and wherever we go we begin to hear people talk about digital transformation and getting to a data science world where they can automate all kinds of tasks not just the easy simple ones that might be an astronaut use cases, but the complex ones that drive higher order value. So there's a bunch of things at play, but you're right its beginning to emerge as a real opportunity for all Alteryx.

[Rishi Jaluria, D.A. Davidson]

Okay. Great. That's helpful. And then Kevin I want to circle back to one comment you've made around that the higher upfront recognition. Can you maybe just remind us what leads to a higher amount of upfront recognition versus I think the 35% that you've talked about being more typical. Is that a function of newer deals is it a product function? And then I don't know if you can quantify what that sort of impact in the quarter was. But again color it would be helpful? Thanks.

[Kevin Rubin, Chief Financial Officer]

Thanks, Rishi. So as we said the upfront does range and vary anywhere from 35% to 40% and that is based on product mix so it does depend on what a customer ends up ordering for us what the combination of skews are that end up in their order.

And if you look over – from Q1 of ‘18 up to this point we've seen a very tight range within that 35% to 40% but we can get some slight fluctuations within there based on product mix.

[Rishi Jaluria, D.A. Davidson]

Okay, great. Thanks.

[Operator]

We have reached the end of the question-and-answer session. And I would now turn the call back over to Dean Stoecker for closing remarks.

[Dean Stoecker, Chairman and Chief Executive Officer]

Thanks, operator. The first in the call I want to publicly acknowledge the hard work of our associates around the world. The engagement of our partners with both us and our joint customers and most importantly I want thank customers for their business and their efficacy of Alteryx. [indiscernible] what you share we thank you for that. Thanks everyone joining us today. We look forward to updating you on our progress. Thank you.

[Operator]

This concludes today’s conference. You many disconnect your lines at this time. Thank you for your participation.