Comparing the Futures of Two Data Giants
Palantir (NYSE: PLTR) and Alteryx (NYSE: AYX) specialize in harnessing vast data to facilitate informed decisions. Palantir’s Gotham caters to U.S. defence sectors, while Foundry targets commercial markets. On the other hand, Alteryx streamlines data from diverse sources, optimizing it for integration with third-party visualization tools.
While Palantir debuted through a direct listing in September 2020 and reached a zenith at $39 per share by January 2021, Alteryx followed the conventional IPO route in March 2017, with its stock peaking at $181.98 in July 2020. Both companies’ stocks are trading at considerable discounts from their highs—Palantir at 60% and Alteryx at 84%.
Challenging times lie ahead as both witnessed slowed revenue growth and dealt with inflated valuations impacted by rising interest rates. So, is any of them worth a long-term investment?
Palantir: Emphasizing Profitable Growth
While Palantir ambitiously set its sights on a 30% annual revenue growth till 2025, backed by its government and commercial ventures, there’s been a deceleration. From 47% in 2020 and 41% in 2021, the growth rate dwindled to 24% in 2022 and is projected at 16% in 2023. Factors include challenges in the commercial sector and fluctuations in government contract acquisitions. However, 2024 looks promising, with an anticipated 19% surge.
But it’s not all gloomy; Palantir has been efficiently streamlining its costs, boasting profitability as per GAAP in recent quarters, with a solid aim of remaining in the green. Two potential growth drivers include the likely bounce-back of its commercial ventures and the promising Palantir AI Platform catering to the burgeoning AI sector.
Alteryx: Grappling with Profitability Amidst Slowed Growth
Alteryx experienced an impressive 45% compound annual growth rate from 2017 to 2022. But projections are more conservative now: around 9%-10% for 2023 and an increment to about 13% in 2024.
A concern is the slowdown in its customer acquisition rate, which it ceased disclosing as of the second quarter in 2023. On the upside, its revenue growth per existing customer remains steady.
Alteryx is implementing cost-cutting tactics to counteract slowed revenue growth, such as job reductions and overhead decreases. Yet, profitability remains elusive on both GAAP and non-GAAP fronts. Investors should note Alteryx’s high debt-to-equity ratio, which is starkly higher than Palantir’s.
Verdict: Palantir Takes the Lead
While Palantir might have bumps ahead regarding its stock stability, it emerges as a more compelling buy when juxtaposed with Alteryx. The reasons are clear: better growth trajectory, higher profitability, more affordable stock, and a robust financial position.
Palantir and Alteryx offer distinct value propositions in the dynamic world of data analytics. While each company faces challenges and growth opportunities, a comparative analysis tilts the scales in favour of Palantir, primarily due to its robust financial standing, growth momentum, and strategic positioning in the market. Investors should always prioritize diligent research, but as of this analysis, Palantir holds a discernible edge.
