ALTERYX, INC. You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , or Annual Report, filed with theSecurities and Exchange Commission , or theSEC , onFebruary 15, 2022 . This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors," set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. See "Special Note Regarding Forward-Looking Statements" above. OverviewAlteryx powers analytics for all by providing our leading Analytics Automation Platform.Alteryx delivers easy end-to-end automation of data engineering, analytics, reporting, machine learning, and data science processes, enabling enterprises everywhere to democratize data analytics across their organizations for a broad range of use cases. Data workers, regardless of technical acumen, are empowered to be curious and solve problems. WithAlteryx , users can automate the full range of analytics, data science and processes, embed intelligent decision-making and actions, and empower their organization to enable top and bottom-line impact, efficiency gains, and rapid upskilling. Our platform includes Alteryx Designer, our data profiling, preparation, blending, analytics, data science, and process automation product deployable to the cloud and on premise; Alteryx Server, our secure and scalable server-based product for managing, automating, and governing processes and applications in a web-based environment; Alteryx Intelligence Suite, our augmented machine learning, auto-modeling, and text mining product; Alteryx Connect, our collaborative data exploration platform for discovering information assets and sharing recommendations across the enterprise; and Alteryx Promote, our advanced analytics model management product for data scientists and analytics teams to build, manage, monitor, and deploy predictive models into real-time production applications. Our platform also offers cloud-native products, includingAlteryx Designer Cloud powered byTrifacta , our open and interactive cloud platform for data engineers and analysts to collaboratively profile, prepare, and pipeline data for analytics and machine learning; Alteryx Machine Learning, our automated machine learning product for building, validating, iterating, and exploring machine learning models with a fully-guided user experience; and Alteryx Auto Insights, our analytics solution that automates insights for business users. In addition,Alteryx Community , our online user community, allows users to gain valuable insights from one another, collaborate and share their experiences and ideas, and innovate around our platform. Our platform has been adopted by organizations across a wide variety of industries and sizes. As ofSeptember 30, 2022 , we had over 8,300 customers in more than 90 countries, including over 910 of the Global 2000 companies. We derive a large portion of our revenue from subscriptions for use of our platform. Our software can be licensed for use on a desktop or server, or it can be deployed in the cloud or through a browser. Subscription periods for our platform generally range from one to three years and the subscription fees are typically billed annually in advance. We also generate revenue from professional services, including training and consulting services. Revenue from subscriptions, including related PCS, represented over 95% of revenue for each of the three and nine months endedSeptember 30, 2022 and 2021. Our business model involves both a "land and expand" sales motion as well as an enterprise sales motion. Our go-to-market approach often begins with a free trial of Alteryx Designer and is followed by an initial purchase of our offerings. As organizations quickly realize the benefits derived from our platform, use frequently spreads across departments, divisions, and geographies through word-of-mouth, collaboration, and standardization and automation of business processes. Both for an initial purchase and as part of expanding a current customer's use of our products, we also employ an enterprise-focused sales motion that identifies and involves members of a customer's senior management team to accelerate acceptance and adoption of our platform within their organization. Over time, many of our customers find that the use of our platform is strategic and collaborative in nature and it becomes a fundamental element of their operational, analytical, and business processes. We sell our platform primarily through direct sales and marketing channels utilizing a wide range of online and offline sales and marketing activities. In addition, we have cultivated strong relationships with channel partners to help us extend the reach of our sales and marketing efforts, especially internationally. Our channel partners include technology alliances, solution providers, global strategic integrators, and value-added resellers, or VARs. These channel partners also provide solution-based selling, services, and training internationally. 26 -------------------------------------------------------------------------------- COVID-19 Impact InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a pandemic, which has resulted in authorities implementing and re-implementing numerous measures from time to time to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that the COVID-19 pandemic has had or will have on our operating results, financial condition, liquidity, and cash flows due to numerous uncertainties, including the duration and severity of the pandemic, any resurgences of the pandemic locally or globally, and the evolution and impact of COVID-19 variants, our compliance with these measures has impacted our day-to-day operations and could continue to disrupt our business and operations, as well as that of certain of our customers whose industries are more severely impacted by these factors, for an indefinite period of time. To support the health and well-being of our employees, customers, partners and communities, the majority of our offices worldwide were closed fromMarch 2020 throughMay 2021 . Beginning inJune 2021 and throughApril 2022 , as conditions improved, vaccination rates increased, and local authorities permitted, we reopened all of our offices worldwide. Starting inApril 2022 , we began encouraging ourU.S. -based employeeswho are local to an office to begin returning at least one day per week. We have also reduced restrictions on travel and have seen increases in travel throughout 2022. We anticipate that costs related to travel will continue to increase. InFebruary 2022 , we transitioned our corporate headquarters to our new facilities inIrvine, California . Although we were able to secure a subtenant for our previous corporate headquarters, the impact of the pandemic on the commercial real estate market and the increase in work-from-home arrangements has caused a decline in demand for office space and market rates, which contributed to the long-lived asset impairment incurred upon our ceasing use of that space. As a result of the shift to work-from-home arrangements and our pursuit of high-quality employees globally, we are continuing to assess the use of our facilities. Based on these workforce dynamics, we intend to initiate steps toward a facility rationalization in the fourth quarter of 2022. Key Business Metrics
We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions:
Annual Recurring Revenue. We derive a large portion of our revenue from subscriptions for use of our platform. Subscription periods for our platform generally range from one to three years and the subscription fees are typically billed annually in advance. A portion of revenue from our subscriptions is recognized at the point in time when the platform is first made available to the customer, or the beginning of the subscription term, if later. The remaining portion is recognized ratably over the life of the contract. This revenue recognition creates variability in the revenue we recognize period to period based on the timing of subscription start dates and the subscription term. In order to measure the underlying performance of our subscription-based contracts, we calculate annual recurring revenue, or ARR, which represents the annualized recurring value of all active subscription contracts at the end of a reporting period and excludes the value of non-recurring revenue streams, such as certain professional services. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. Both multi-year contracts and contracts with terms less than one year are annualized by dividing the total committed contract value by the number of months in the subscription term and then multiplying by twelve.
The following table summarizes our annual recurring revenue (in millions) for each quarter end for the periods indicated:
As of
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2021 2021 2021 2021 2022 2022 2022
Annual recurring revenue $ 512.7 $ 547.6 $ 578.6 $ 638.0 $ 683.6 $ 726.8 $ 757.7
27-------------------------------------------------------------------------------- Dollar-Based Net Expansion Rate. Our dollar-based net expansion rate is a trailing four-quarter average of the annual contract value, or ACV, which is defined as the subscription revenue that we would contractually expect to recognize over the term of the contract divided by the term of the contract, in years, from a cohort of customers in a quarter as compared to the same quarter in the prior year. A dollar-based net expansion rate equal to 100% would generally imply that we received the same amount of ACV from our cohort of customers in the current quarter as we did in the same quarter of the prior year. A dollar-based net expansion rate less than 100% would generally imply that we received less ACV from our cohort of customers in the current quarter than we did in the same quarter of the prior year. A dollar-based net expansion rate greater than 100% would generally imply that we received more ACV from our cohort of customers in the current quarter than we did in the same quarter of the prior year. To calculate our dollar-based net expansion rate, we first identify a cohort of customers, or the Base Customers, in a particular quarter, or theBase Quarter . A customer will not be considered a Base Customer unless such customer has an active subscription on the last day of theBase Quarter . We then divide the ACV in the same quarter of the subsequent year attributable to the Base Customers, or theComparison Quarter , including Base Customers from which we no longer derive ACV in theComparison Quarter , by the ACV attributable to those Base Customers in theBase Quarter . Our dollar-based net expansion rate in a particular quarter is then obtained by averaging the result from that particular quarter with the corresponding result from each of the prior three quarters. The dollar-based net expansion rate excludes contract value relating to professional services from that cohort.
The following table summarizes our dollar-based net expansion rate at the end of each quarter for the periods indicated:
Three Months Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2021 2021 2021 2021 2022 2022 2022
Dollar-based net expansion rate 120 % 120 % 119 % 119 % 119 % 120 % 121 %
Number of Customers. We believe that our ability to expand our customer base is
a key indicator of our market penetration, the growth of our business, and our
future potential business opportunities. We define a customer at the end of any
particular period as an entity with a subscription agreement that runs through
the current or future period as of the measurement date. Organizations with free
trials have not entered into a subscription agreement and are not considered
customers. A single organization with separate subsidiaries, segments, or
divisions that use our platform may represent multiple customers, as we treat
each entity that is invoiced separately as a single customer. In cases where
customers subscribe to our platform through our channel partners, each end
customer is counted separately.
The following table summarizes the number of our customers at each quarter end
for the periods indicated:
As of
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2021 2021 2021 2021 2022 2022 2022
Customers 7,214 7,405 7,689 7,936 8,195 8,296 8,340
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Results of Operations
The following table sets forth our results of operations for the periods
indicated. The period-to-period comparison of financial results is not
necessarily indicative of financial results to be achieved in future periods.
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands)
Revenue:
Subscription-based software license$ 111,590 $ 37,477 $ 255,416 $ 120,851 PCS and services 104,122 86,024 298,860 241,479 Total revenue 215,712 123,501 554,276 362,330 Cost of revenue: Subscription-based software license 2,940 1,264 7,984 3,739 PCS and services 29,054 14,202 78,023 35,498 Total cost of revenue(1) 31,994 15,466 86,007 39,237 Gross profit 183,718 108,035 468,269 323,093 Operating expenses: Research and development(1) 54,803 33,457 162,030 95,645 Sales and marketing(1) 135,976 83,034 384,781 232,597 General and administrative(1) 56,887 37,125 172,777 104,291 Impairment of long-lived assets - - 8,239 - Total operating expenses 247,666 153,616 727,827 432,533 Loss from operations (63,948) (45,581) (259,558) (109,440) Interest expense (2,454) (9,973) (7,291) (29,206) Other expense, net (6,905) (2,363) (15,698) (1,561) Loss before provision for income taxes (73,307) (57,917) (282,547) (140,207) Provision for income taxes 1,206 122 4,299 1,928 Net loss$ (74,513) $ (58,039) $ (286,846) $ (142,135)
(1) Amounts include stock-based compensation expense as follows:
Three Months Ended September
30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands)
Cost of revenue $ 4,786
14,386 8,258 40,258 21,913
Sales and marketing 21,641 11,018 56,035 26,105
General and administrative 20,494 12,236 55,424 33,319
Total $ 61,307 $ 33,330 $ 164,428 $ 85,556
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The following table sets forth selected historical financial data for the periods indicated, expressed as a percentage of revenue:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue:
Subscription-based software license 51.7 % 30.3 % 46.1 % 33.4 %
PCS and services 48.3 69.7 53.9 66.6
Total revenue 100.0 100.0 100.0 100.0
Cost of revenue:
Subscription-based software license 1.4 1.0 1.4 1.0
PCS and services 13.4 11.5 14.1 9.8
Total cost of revenue 14.8 12.5 15.5 10.8
Gross profit 85.2 87.5 84.5 89.2
Operating expenses:
Research and development 25.4 27.1 29.2 26.4
Sales and marketing 63.0 67.2 69.4 64.2
General and administrative 26.4 30.1 31.2 28.8
Impairment of long-lived assets - - 1.5 -
Total operating expenses 114.8 124.4 131.3 119.4
Loss from operations (29.6) (36.9) (46.8) (30.2)
Interest expense (1.1) (8.1) (1.3) (8.1)
Other expense, net (3.2) (1.9) (2.8) (0.4)
Loss before provision for income taxes (33.9) (46.9) (50.9) (38.7)
Provision for income taxes 0.6 0.1 0.8 0.5
Net loss (34.5) % (47.0) % (51.7) % (39.2) %
Comparison of the Three and Nine Months Ended September 30, 2022 and 2021
Revenue
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Subscription-based software
license $ 111,590 $ 37,477 $ 74,113 197.8 % $ 255,416 $ 120,851 $ 134,565 111.3 %
PCS and services 104,122 86,024 18,098 21.0 298,860 241,479 57,381 23.8
Total revenue $ 215,712 $ 123,501 $ 92,211 74.7 % $ 554,276 $ 362,330 $ 191,946 53.0 %
Subscription-based software license revenue increased for the three and nine
months ended September 30, 2022 as compared to the three and nine months ended
September 30, 2021 primarily due to an increase in sales to new and existing
customers during the three and nine months ended September 30, 2022 as compared
to the three and nine months ended September 30, 2021 . In addition, as a result
of a determination to cease the inclusion of a certain performance obligation
previously included in subscriptions to our platform, we recognized a larger
portion of the total transaction price at the point in time when the platform
was first made available to the customer, or the beginning of the subscription
term, if later, during the nine months ended September 30, 2022 as compared to
the nine months ended September 30, 2021 .
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PCS and services revenue is primarily recognized ratably over the subscription
term. Due to the ratable revenue recognition, the increase in PCS and services
revenue is primarily attributed to sales to customers in prior periods and the
growth in our customer base between September 30, 2021 and September 30, 2022 .
Our product pricing was not a significant driver of the changes in
subscription-based software license or PCS and services revenue for the periods
presented. In addition, our new cloud-based product offerings, including Alteryx
Designer Cloud powered by Trifacta , Alteryx Machine Learning, and Alteryx Auto
Insights, did not represent a material amount of revenue for the nine months
ended September 30, 2022 .
The disaggregation of revenue by region was as follows:
Three Months Ended
September 30, Change Nine Months Ended September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
United States $ 141,949 $ 81,813 $ 60,136 73.5 % $ 381,483 $ 240,110 $ 141,373 58.9 %
International 73,763 41,688 32,075 76.9 172,793 122,220 50,573 41.4
Total revenue $ 215,712 $ 123,501 $ 92,211 74.7 % $ 554,276 $ 362,330 $ 191,946 53.0 %
Cost of Revenue and Gross Margin
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Subscription-based software
license $ 2,940 $ 1,264 $ 1,676 132.6 % $ 7,984 $ 3,739 $ 4,245 113.5 %
PCS and services 29,054 14,202 14,852 104.6 78,023 35,498 42,525 119.8
Total cost of revenue $ 31,994 $ 15,466 $ 16,528 106.9 % $ 86,007 $ 39,237 $ 46,770 119.2 %
% of revenue 14.8 % 12.5 % 15.5 % 10.8 %
Gross margin 85.2 % 87.5 % 84.5 % 89.2 %
Cost of revenue increased for the three months ended September 30, 2022 as
compared to the three months ended September 30, 2021 primarily due to $11.9
million in increased employee-related costs, including stock-based compensation,
driven by incremental headcount, a broad-based wage increase to improve
retention and productivity, and merit increases, as well as additional stock
awards granted to new hires and as part of our equity refresh programs.
Additionally, there was an increase of $2.2 million in amortization of
intangibles associated with our recent acquisitions and an increase of $2.2
million of depreciation of capitalized software development costs. Furthermore,
we have made significant investments in our cloud infrastructure and customer
success organizations, including through the acquisition of Trifacta , which has
contributed to the increase to cost of revenue and the resulting decrease to
gross margin.
Cost of revenue increased for the nine months ended September 30, 2022 as
compared to the nine months ended September 30, 2021 primarily due to $32.3
million in increased employee-related costs, including stock-based compensation,
driven by an increase in headcount, a broad-based wage increase, as well as
additional stock awards granted to new hires and as part of our equity refresh
programs. Additionally, there were increases in amortization of intangibles
associated with our recent acquisitions of $5.7 million , depreciation of
capitalized software development costs of $4.9 million , and higher information
technology and overhead costs of $1.3 million to support the increased
headcount.
As of
31
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Research and Development
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Research and development $ 54,803 $ 33,457 $ 21,346 63.8 % $ 162,030 $ 95,645 $ 66,385 69.4 %
% of revenue 25.4 % 27.1 % 29.2 % 26.4 %
Research and development expense increased for the three months ended September
30, 2022 as compared to the three months ended September 30, 2021 primarily due
to $20.0 million in increased employee-related costs, including stock-based
compensation, driven by incremental headcount, a broad-based wage increase to
improve retention and productivity, merit increases, and additional stock awards
granted to new hires and as part of our equity refresh programs. In addition,
there was an increase in information technology and overhead costs of $1.8
million due to the procurement of additional software licenses and office
expansion and fit-outs.
Research and development expense increased for the nine months ended September
30, 2022 as compared to the nine months ended September 30, 2021 primarily due
to $58.0 million in increased employee-related costs, including stock-based
compensation, driven by incremental headcount, a broad-based wage increase,
merit increases, and additional stock awards granted to new hires and as part of
our equity refresh programs. Additionally, there was a $5.3 million increase in
information technology and overhead costs due to the procurement of additional
software licenses and office expansion and fit-outs, and a $2.3 million increase
in consulting and outsourced labor costs to assist in certain development
projects.
As of
Sales and Marketing
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Sales and marketing $ 135,976 $ 83,034 $ 52,942 63.8 % $ 384,781 $ 232,597 $ 152,184 65.4 %
% of revenue 63.0 % 67.2 % 69.4 % 64.2 %
Sales and marketing expense increased for the three months ended September 30,
2022 as compared to the three months ended September 30, 2021 primarily due to
an increase in employee-related costs of $40.7 million . The overall increase in
employee-related costs was a result of increased headcount, a broad-based wage
increase to improve retention and productivity, merit increases, and additional
stock awards granted to new hires and as part of our equity refresh programs.
There was an additional increase related to the effect of higher travel and
entertainment expenses of $6.3 million due primarily to increased international
travel. Furthermore, there was an increase of $3.7 million in marketing programs
due in part to our brand awareness campaigns. and an increase of $1.0 million in
information technology and overhead costs as a result of office expansion and
fit-outs.
Sales and marketing expense increased for the nine months ended September 30,
2022 as compared to the nine months ended September 30, 2021 primarily due to an
increase in employee-related costs, including stock-based compensation, of
$107.5 million . The overall increase in employee-related costs was a result of
increased headcount, a broad-based wage increase to improve retention and
productivity, merit increases, and additional stock awards granted to new hires
and as part of our equity refresh programs. There was an additional increase
related to the effect of higher travel and entertainment expenses of $20.2
million , primarily due to increased international travel and the return to our
in-person events. Furthermore, there was an increase of $12.0 million in
marketing programs due in part to our brand awareness campaigns, such as our
in-person user conference in May 2022 , which had been fully virtual in the prior
year, and other digital marketing programs, an increase of $5.3 million in
information technology and overhead costs as a result of office expansion and
fit-outs, and an increase in consulting and outsourced labor costs of $2.6
million related to projects for go-to-market strategies and global campaign
integration.
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As of
General and Administrative
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
General and administrative $ 56,887 $ 37,125 $ 19,762 53.2 % $ 172,777 $ 104,291 $ 68,486 65.7 %
% of revenue 26.4 % 30.1 % 31.2 % 28.8 %
General and administrative expense increased for the three months ended
September 30, 2022 as compared to the three months ended September 30, 2021
primarily due to $19.7 million in increased employee-related costs, including
stock-based compensation, from incremental headcount, a broad-based wage
increase to improve retention and productivity, merit increases, and additional
stock awards granted to new hires and as part of our equity refresh programs,
including the market-based PRSUs granted to certain executives.
General and administrative expense increased for the nine months ended September
30, 2022 as compared to the nine months ended September 30, 2021 primarily due
to an increase in employee-related costs, including stock-based compensation, of
$51.7 million due to an increase in headcount, a broad-based wage increase to
improve retention and productivity, merit increases, additional stock awards
granted to new hires and as part of our equity refresh programs, including the
market-based PRSUs granted to certain executives. In addition, there was an
increase in consulting and outsourced labor costs of $12.7 million primarily
driven by higher legal and accounting professional services fees related to our
acquisition of Trifacta in February 2022 , as well as an increase in overhead
costs of $2.8 million due to office expansion and fit-outs, including our new
corporate headquarters.
As of
Impairment of Long-lived Assets
Nine Months Ended September
Three Months Ended September 30, Change 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Impairment of long-lived
assets $ - $ - $ - * $ 8,239 $ - $ 8,239 *
* Not meaningful
The long-lived asset impairment is attributable to the cease-use and sublease of
our previous corporate headquarters during the three months ended
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Interest Expense
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Interest expense $ (2,454) $ (9,973) $ 7,519 (75.4) % $ (7,291) $ (29,206) $ 21,915 (75.0) %
Interest expense is primarily attributable to our 2023 Notes and 2024 & 2026
Notes issued during the three months ended June 30, 2018 and September 30, 2019 ,
respectively. Interest expense decreased in the three and nine months ended
September 30, 2022 as compared to the three and nine months ended September 30,
2021 due to the removal of the equity component and related amortization of the
debt discount as part of the adoption of ASU 2020-06.
Other Expense, Net
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(in thousands, except percentages)
Other expense, net
* Not meaningful
Other expense, net consists primarily of gains and losses on foreign currency remeasurement and transactions and interest income from our available-for-sale securities. The increase in other expense, net for the three months endedSeptember 30, 2022 as compared to the three months endedSeptember 30, 2021 was related to greater losses in foreign currency remeasurement of$5.2 million due to fluctuations inthe United States dollar as compared to other major currencies in which we transact, offset by an increase in investment income of$0.7 million due to higher interest rates. The increase in other expense, net for the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 was related to greater losses in foreign currency remeasurement of$12.1 million due to fluctuations inthe United States dollar as compared to other major transactions in which we transact and greater realized losses in securities of$2.2 million resulting from sales of our short-term available-for-sale investments. Provision for Income Taxes Three Months Ended Nine Months Ended September 30, Change September 30, Change 2022 2021 Amount % 2022 2021 Amount % (in thousands, except percentages) Provision for income taxes$ 1,206 $ 122 $ 1,084 *$ 4,299 $ 1,928 $ 2,371 * * Not meaningful The change in the provision for income taxes for the three and nine months endedSeptember 30, 2022 as compared to the three and nine months endedSeptember 30, 2021 was primarily due to an increase in pre-tax loss at the annualized effective tax rate for the three and nine months endedSeptember 30, 2022 . 34 -------------------------------------------------------------------------------- Liquidity and Capital Resources
We had
Our principal uses of cash are funding our operations and other working capital requirements.
In the short term, we believe that our existing cash and cash equivalents, marketable securities, and cash flow from operations (in periods in which we generate cash flow from operations) will be sufficient for at least the next 12 months to meet our requirements and plans for cash, including meeting our working capital and capital expenditure requirements. In the long term, our ability to support our requirements and plans for cash, including meeting our working capital and capital expenditure requirements, will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the cost to develop and support our offering, the introduction of new products and services, the continuing adoption of our products by customers, any acquisitions or investments that we make in complementary businesses, products, and technologies, and our ability to obtain equity or debt financing. To the extent existing cash and cash equivalents and short-term investments and cash from operations are not sufficient to fund future activities, we may need to raise additional funds. We may seek to raise additional funds through equity, equity-linked, or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict operations. Any additional equity or convertible debt financing may be dilutive to stockholders. If we are unable to raise additional capital or refinance our existing indebtedness when desired, our business, operating results, and financial condition could be adversely affected. There were no material changes in our contractual obligations and commitments during the three and nine months endedSeptember 30, 2022 from the contractual obligations and commitments disclosed in the Annual Report. See Note 8, Convertible Senior Notes, Note 10, Leases, and Note 11, Contingencies, of the notes to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding contractual obligations and commitments. We do not have any relationships with unconsolidated entities or financial relationships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. Cash Flows
The following table sets forth cash flows for the periods indicated:
Nine Months Ended September 30,
2022 2021
(in thousands)
Net cash provided by (used in) operating activities $ (112,724) $ 24,343
Net cash provided by (used in) investing activities 78,898 (556)
Net cash used in financing activities (27,408) (9,628)
Operating Activities
Net cash used in operating activities was $112.7 million for the nine months
ended September 30, 2022 . Net cash used in operating activities primarily
reflected a net loss of $286.8 million and a change in operating assets and
liabilities of $67.1 million , offset in part by net non-cash activity of $241.2
million .
Net cash provided by operating activities was $24.3 million for the nine months
ended September 30, 2021 . Net cash provided by operating activities primarily
reflected net non-cash activity of $137.5 million and a change in operating
assets and liabilities of $28.9 million , offset in part by a net loss of $142.1
million .
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Changes in operating assets and liabilities is primarily driven by the
seasonality of our sales cycle. The fourth quarter of each fiscal year has
historically been our strongest quarter for new business and renewals and,
correspondingly, the first quarter of the subsequent fiscal year has
historically been the strongest for cash collections on accounts receivable and
highest for payments of sales commissions. As a result of this seasonality, our
accounts receivable decreased during each of the nine months ended September 30,
2021 and 2022 compared to the year ended December 31, 2020 and 2021,
respectively. These decreases were offset in part by a decrease to accrued
payroll and payroll-related liabilities and a net increase in contract asset
balances during each respective period. In addition to the sales cycle, our cash
flow from operations is also impacted by the payment of our annual cash
incentive bonuses to our non-commissioned employees in the first quarter of the
fiscal year and the timing of obligations on accounts payable. During the nine
months ended September 30, 2022 , non-commissioned employees were paid 50% of
their annual cash incentive bonuses through a mid-year bonus payout that was not
done during the nine months ended September 30, 2021 . Subject to the achievement
of the specified performance objectives described in our bonus plan, the
remainder of the annual incentive bonuses will be paid in the first quarter of
2023.
Investing Activities
Net cash provided by investing activities for the nine months ended September
30, 2022 was $78.9 million , consisting of $492.9 million of sales and maturities
of investments, net of purchases, offset in part by $387.0 million of cash paid
in connection with our acquisition of Trifacta Inc. , $19.3 million of purchases
of property and equipment, and $7.7 million of capitalized software development
costs.
Net cash used in investing activities for the nine months ended September 30,
2021 was $0.6 million , consisting of $20.0 million of sales and maturities of
investments, net of purchases, offset in part by $17.2 million of purchases of
property and equipment and $3.4 million of capitalized software development
costs.
Financing Activities
Net cash used in financing activities for the nine months endedSeptember 30, 2022 was$27.4 million , consisting primarily of the minimum tax withholding paid on behalf of employees for RSU settlements of$37.2 million , offset in part by proceeds from stock option exercises of$9.8 million . Net cash used in financing activities for the nine months endedSeptember 30, 2021 was$9.6 million , consisting primarily of the minimum tax withholding paid on behalf of employees for RSU settlements of$19.9 million , offset in part by proceeds from stock option exercises of$10.3 million . The timing and number of stock option exercises and employee stock purchases and the amount of proceeds we receive from these equity awards is not within our control. As it is now our general practice to issue principally RSUs to our employees, cash paid on behalf of employees for minimum statutory withholding taxes on RSU settlements will likely increase. Critical Accounting Policies and Estimates Our condensed consolidated financial statements and the related notes have been prepared in accordance withU.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and operating expenses, provision for income taxes, and related disclosures. Generally, we base our estimates on historical experience and on various other assumptions in accordance withU.S. GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
There have been no changes to our critical accounting policies disclosed in our Annual Report.
Recent Accounting Pronouncements
See Note 2, Significant Accounting Policies, of the notes to our condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.
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