Shares of the big-data software company Alteryx Inc. went into a tailspin in extended trading today after the company issued a grim forecast for the current quarter that came in well below estimates.

Adding to its woeful third-quarter guidance, the company also said it will miss full-year forecasts. Investors reacted badly, and the stock fell more than 22%.

The company had just delivered decent results for the second quarter. It reported a loss before certain costs such as stock compensation of 37 cents per share, well above Wall Street’s estimate of a 67-cent-per-share loss. Revenue climbed 4% from a year earlier, to $188 million, ahead of the analysts’ call for $182.1 million. Nonetheless, Alteryx posted a net loss of $120 million overall, rising from a loss of $107 million one year earlier.

For the third quarter, Alteryx said it expects revenue of between $208 million and $212 million, down 2% to 4% from the year prior and well below Wall Street’s consensus estimate of $233 million. The full-year forecast doesn’t look any better either, with Alteryx targeting a range of $930 million to $940 million, far below Wall Street’s forecast of $984 million in annual sales.

Alteryx is a provider of tools for performing extract, transform and load, otherwise known as ETL. Its software is used by enterprises to prepare massive volumes of data for analysis. The Alteryx Cloud platform provides functionality around data cleansing, data mining and geospatial analytics, and offers baked-in connectivity to business intelligence tools such as Experian and Tableau.

Although Alteryx’s software can be useful, it’s apparent that not every enterprise deems it to be essential. As a result, Alteryx has struggled to increase its sales amid the patchy economic environment that has seen many enterprises reduce their software spending budgets. Three months ago, Alteryx acknowledged this reality, and said it would undergo a workforce reduction plan that would shed about 300 jobs from its employee base of about 2,900.

“Customers are demonstrating a strong commitment to Alteryx as they face an increasingly dynamic macro environment, as evidenced by robust and consistent gross retention and renewal rates in Q2,” said Chief Executive Mark Anderson (pictured).

Analyst Holger Mueller of Constellation Research Inc. said Alteryx’s problem is it cannot find the growth it needs to justify its operating costs. “Growth was lackluster but the costs increased, and the result is not pretty to see,” Mueller explained. “So the question is where does Alteryx go next? Either the management finds a way to ignite growth, or the cost base has to be adjusted. The next quarter will tell us more.”

Although it’s struggling to improve sales, the company has continued to innovate. During the quarter, it unveiled a new artificial intelligence engine for the Alteryx Analytics Cloud Platform, aiming to improve productivity for users.

Alteryx AiDIN was announced at its annual user conference Inspire 2023, bringing a number of generative AI capabilities to Alteryx’s flagship platform, including an automatic insights feature called Magic Document and a Workflow Summary tool for data preparation tasks.

“As we look to the second half of 2023, we are reinforcing our commitment to improving profitability, while also sustaining a high pace of platform innovation with Alteryx AiDIN, our generative AI and machine learning technologies, as well as cloud-connected technologies,” Anderson said.

Photo: Alteryx