Alteryx Financial Impact - Alteryx

Financial Impact 

As California based Alteryx Company ventures into the agricultural market, extensive market survey and financial projections relating to the project have to be made. In the calculations of the projected financial statements of the company, the number of employees working on the project at the company is expected to be 30. There will be 24 permanent employees and six part-time employees. There is an assumption that the number of employees will be the same throughout the project period. It is expected that the project will have an increase in the profits from the first financial year onwards. For instance, by January 2020, the agtech project at Alteryx is expected to hit more than $ 8.8 million in net profits for the financial year 2019(Alteryx, 2018). In the financial year 2020, the gains are expected to rise to $ 23.8 million, and the benefits are expected to increase again in the fiscal year 2021 to $ 58.6 million (Alteryx, 2018). It is assumed that the increase in the profits will be due to the markets increasing awareness of the sustainable agtech solutions that Alteryx will be introducing to the market. In 2022, the net profit is expected to stand at $ 139.9 million (Alteryx, 2018). That will increase in 2023 to $ 329.5 million. In 2024, the gain is expected to hit $ 450.5 million and $ 500.2 in 2025(Alteryx, 2018). The exponential increase in the profits of the project will increase due to the payment and clearance of loans and grants that have been used in the startup. The following is a graphical representation of the net profits for the seven years. 

(Alteryx, 2018) 

As the market will already be served by 2023, the exponential increase in the net profits of the company is assumed to reduce. That will lead to the necessity of Alteryx Company coming up with another innovation for the agtech market in and out of California to increase the growth phase of the company. 

It is forecasted that the demand for the agtech products such as drones, robots and the other machinery that the company wishes to invest in as the agtech project will have an exponential increase in the first four years of sales. After that, the market is expected to have been served already, and therefore their sales will reduce or stagnate unless the company will introduce innovations. The capital purchase costs will be assumed constant since the facilities that the company needs to venture into the agtech industry will have been taken care of at the initialization of the company in the agriculture and technology market. The price of the innovative products that the emerging agtech leader, Alteryx, will be selling to the Californian and the general American farmers is expected to remain constant in every month. Assumedly, there will be an increase in the volume of the products and the requisition of services and empowerment to the agriculturalists. For the agricultural drones, it is expected that 100 of them will be sold at $ 7500 each to the farmers and other organizations in January 2019 (Alteryx, 2018). The volume of their sales is expected to have a seven percent increase every month as the project grows and the company expands and reaches more potential customers. The following is the graphical representation of the sales in the drones and robots by Alteryx Company in the first year of business. 

(Alteryx, 2018) 

From the outlook, Alteryx Company expects that the rate of increase in the monthly sales of the drones will be higher than that of the robots. One of the reasons for the trend is that on average, the drones are cheaper than the robots. Nonetheless, the robots may serve the customers for a longer time than the drones. 

The revenue of the company is expected to have an incremental trend for the seven years that the project will be running at Alteryx. In the financial year 2019, the revenue at the company is expected to be $ 33.8 million (Alteryx, 2018). In the following fiscal year 2020, the revenue is expected to increase to $ 68.3 million (Alteryx, 2018). It is assumed that the company will have elaborate marketing strategies by then and the product will appeal to the customers. Alteryx Company will also have targeted a fresh market for the agtech products and services that the company has planned to offer the Californian farmers as well as those who are in the other states in the United States of America. After the financial year 2025, new entrants to the agtech market will make the competition stiff for Alteryx leading to reduced expected revenue in the sector. The net income before taxation is expected to increase in the company from 2019 to 2025 as follows. 

Net income before taxes

$10,076,937

$27,202,691

$67,026,233

$159,886,948

$376,661,393

$400,778,360

$430.439,495

(Alteryx, 2018) 

(Alteryx, 2018) 

Financing 

When it comes to financing a project, a company may choose to use the internal resources or the external resources. The internal resources could involve the money that has been saved by the company for a period or the profits made from another investment plowed into the new investment (Fraser, Bhaumik, & Wright, 2015). Externally, a company may fund its project using some methods that range from requesting for a loan at a bank, encouraging people to buy shares, and the mergers and acquisitions. Depending on a company's potential to realize the money back, the company management may make informed decisions on the source of funding that will be the best for the company's projects (Fraser, Bhaumik, & Wright, 2015). 

The following are the advantages and disadvantages that Alteryx Company may have when using the internal funding methods. One of the merits of internal funding in the case of Alteryx and the agricultural project is that the management of the company will have more ownership of the project. Some of the external funders of a project such as investors may come up with rule and regulations such as gaining profits from their investments. That would lead to reduced control over the project in the case of Alteryx (Penrose, 2017). A disadvantage of internal funding, according to Zúñiga ‐ Vicente et al. (2014), is that in case Alteryx may not have enough funds to sustain the project, it may stall due to the lack of proper allocation of resources. That starves the project of monetary resources at its startup. 

An advantage of the external sources of funding in the case of the proposed agricultural project at Alteryx Company is that by obtaining the external financing, the company can preserve its money for use in another project within the company. The growth of the project is also prioritized since the flow of resources required is seamless compared to when the company is using its internal financial resources to fund the project (Plummer, Allison, & Connelly, 2016). On the other hand, external sources of funding may sometimes have high-interest rates, which will encroach on the return on investments that Alteryx will have at the end of the project. Much of the control of the project will go the funder thus depriving management at Alteryx a say in their plan (Jensen, Nielsen, & Waade, 2016). 

In case the loan application request at Alteryx to fund the proposed project does not go through, the company may opt to make use of the internal financial resources to support the project. The best resource, in this case, will be the sale of assets. The company can sell some of the assets it owns and is not required in its business operations. The company can also lease some of the assets to provide the money to run the assets. That will be an essential way to gather the funds required in the agtech project since the management will not have to go through the troubles of looking for potential investors for their project. 

To ensure that Alteryx Company makes the agtech project sustainable, the company leadership may consider business combinations as a means of expanding into the agriculture market (Ferreira et al., 2014). The presence of other agtech companies in California means that the level of competition is increasing each day as new entrants into the agtech market come with latest developments and projects that have by far appealed to the Californian populace. That would make it difficult for Alteryx to establish its project and ensure quick expansion. 

To reduce the implications that the increasing competition in California and the rest of the USA has on the agtech sector, Alteryx may consider collaborating with an already established company in the market and form a merger (Ferreira et al., 2014). The merger will exponentially increase the size of the two companies in the agtech market. That will give them combined strength to appeal to the customers in the market who are seeking technological integration to their agricultural practice (Ferreira et al., 2014). Additionally, sufficient resources will be invested in the project by both companies, which mean that the project will smoothly go through the startup phase with ease. 

The combination in form of a merger will be viable in the case of the merger between Alteryx Company and another California based Agtech Company, or one that is outside the state of California. The two companies will work on one another's weaknesses to ensure other organizations are behind them in the sector (Ferreira et al., 2014). For instance, Alteryx has an innovative idea that involves transforming the agriculture industry by providing creative technological solutions that are meant to make farming more convenient for the farmers. The other company in the merger may not have an innovative product for the agricultural industry in the state but they may have elaborate and enough marketing strategies that could generate sales for the products developed by Alteryx. In that case, the two companies come together to have a leverage strength that occurs from both working towards maximizing their strengths and reducing their weaknesses (Ferreira et al., 2014). 

As Alteryx Company considers combining with the other company to increase the sales of the agtech project that the former has, both companies will save costs on the production by combining to work on the agtech plan (Ferreira et al., 2014). That will reduce the financial distress that Alteryx would have experienced had the company decided to handle the project alone. In the merger, some of the employees may leave due to the duplication of the roles and responsibilities. Both companies may save significant amounts of money, which they would otherwise have used to pay the employees as wages and other benefits had they existed as separate entities (Ferreira et al., 2014). 

Track Record 

Alteryx Company is on a solid financial ground and can pay the loaned amount to the company as agreed. Primarily, the select financial statements indicate that the company is financially capable of growth. The profits of the company re expected to increase exponentially from a financial year to another as follows. 

(Alteryx, 2018) 

The increase in the net profits is a clear indicator that the company has forecasted that it will be doing well in its financial future. Additionally, Alteryx is investing in an industry that has many avenues and opportunities for growth and expansion. The company will invest in marketing to ensure that many customers in the market prefer the equipment and services that Alteryx provides the agtech market with than the other companies. That will lead to a growth in the sales. That is a positive indicator of the company's ability to pay off its debts such as that which will be used to fund the agtech project. The following is the expected increase in the profits of the company over the seven years.

(Alteryx, 2018) 

The increase in the revenue and the money used in the expenses remaining constant or having very slight increases will increase the net profit of the company which will mean that the return on investments will be increasing. 

The debt-to-equity ratio for the proposed project will record an increase in the financial year’s progress for the project as follows. 

(Alteryx, 2018) 

There is a constant increase in the debt-to-equity ratio for the agtech project at Alteryx Company. The increase in the ratio indicates that Alteryx Company will be able to sustain its growth and expansion in the proposed project that targets the agtech industry in the United States of America. The low values in the debt-to-equity ratio for the company indicate that the company has a higher ability to finance its operations and therefore relies less on the suppliers and lenders. That means that the company will have the ability to pay off its debts and loams since it does not have many financial obligations. There is also a constant increase in the return on investments for the company in the seven years as seen below. 

Year	ROI
2019	6%
2020	31%
2021	41%
2022	47%
2023	50%
2024	53%
2025	56%

(Alteryx, 2018) . 

The increase in the return on investments indicates that the agtech project at Alteryx Company is a viable project that will increase the company's financial standing. Therefore, the money lent to the company will not take a long time before it is realized (Alteryx, 2018). The first year in operation will have a low ROI due to the payment of the money that was invested by other parties in the startup of the project. After the first fiscal year, the company will have paid off most of its financial liabilities and will, hence, be in a good position to pay off the loan provided by the bank (Alteryx, 2018). 

The organization has able leaders who have been the pillars of decision making to the company. Therefore, the leadership of the company is morally responsible for paying and clearing the loans that the company requests and receives from the financial institutions (Alteryx, 2018). In the year 2013, Alteryx Company was awarded for being the ethical champion in the software and technology industry during the year in the United States of America. The company has also been complying with the auditing processes since it commenced operations. Notably, the company has severally been named as one of the most compliant companies in the USA. Such virtues are a company's strength and have been used as an essential factor to the success of the borrowing that has been made by the company in the past. The company has also had a clean record in the credit industry where it has been promptly paying off its debts to its financial lenders. 

The company has been involved in minor lawsuits. That adds on to the observance of the ethical principles of the company. The most significant trial that the company was involved in was the suit pressed by another competitor in the technology industry for alleged copyright breach (Alteryx, 2018). Nevertheless, the court found the Alteryx Company innocent after investigations were made on the matter. The company has an ethics committee that keeps the employees and the company leadership in ethical check. Training in ethics is also given continuously to the employees to ensure that they serve the customers diligently. 

References  

Ferreira, M. P., Santos, J. C., de Almeida, M. I. R., & Reis, N. R. (2014). Mergers & acquisitions 

Research: A bibliometric study of top strategy and international business journals, 1980–2010. Journal of Business Research , 67 (12), 2550-2558. 

Fraser, S., Bhaumik, S. K., & Wright, M. (2015). What do we know about entrepreneurial 

Finance and its relationship with growth?. International Small Business Journal , 33 (1), 70-88. 

Jensen, P. M., Nielsen, J. I., & Waade, A. M. (2016). When public service drama travels: The 

Internationalization of Danish television drama and the associated production funding models. The Journal of Popular Television , 4 (1), 91-108. 

Penrose, E. T. (2017). Foreign Investment and the Growth of the Firm 1. In International 

Business (pp. 33-48). Routledge. 

Plummer, L. A., Allison, T. H., & Connelly, B. L. (2016). Better together? Signaling interactions 

In new venture pursuit of initial external capital. Academy of Management Journal , 59 (5), 1585-1604. 

Zúñiga ‐ Vicente, J. Á., Alonso ‐ Borrego, C., Forcadell, F. J., & Galán, J. I. (2014). Assessing the 

Effect of public subsidies on firm R&D investment: a survey. Journal of Economic Surveys , 28 (1), 36-67. 

Appendix 

Net profit for the project (2019-2025) 

	2019	2020	2021	2022	2023	2024	2025
GROSS PROFIT	$13,843,716	$31,178,408	$71,238,529	$164,360,167	$381,718,133	$445,133,811	$494,778,870
TOTAL EXPENSES	$3,766,779	$3,975,717	$4,212,296	$4,473,218	$5,056,740	$5,367,089	$5,456,130
Net income before taxes	$10,076,937	$27,202,691	$67,026,233	$159,886,948	$376,661,393	$400,778,360	$430.439,495
Provision for taxes on income	$1,259,617	$3,400,336	$8,378,279	$19,985,869	$47,082,674	$49,722,540	$69795505
NET PROFIT	$8,817,320	$23,802,354	$58,647,954	$139,901,080	$329,578,719	$450,500,900	$500,235,000

Revenues for the project (2019-2025) 

(Values are in US $) 

	2019	2020	2021	2022	2023	2024	2025
Revenue	33,807,891	68,368,044	142,964,705	307,599,317	677,359,443	756,823,100	845,123,670

Debt-equity ratio (2019-2025) 

Year	Debt-equity ratio
2019	0.02
2020	0.05
2021	0.08
2022	0.10
2023	0.11
2024	0.13
2025	0.15

Return on investments 

Year	ROI
2019	6%
2020	31%
2021	41%
2022	47%
2023	50%
2024	53%
2025	56%