Alright, continuing the thread (I suggested spawning a new one anyway)… Tinker said, in part:
I have not bought any yet. So much easier just to do nothing (except as I start to fret - bad habit). The company is solid, clear leader, and the recent Supreme Court decision makes it a certainty that almost every state will charge sales tax (already more than 30) do for any sales in the state. It all turned on “nexus” with a state. Use to be the state had to have some connection other than just making sales to people in the state. The Supreme Court stated otherwise, thus the new found imperative to figure out how to live with all the sales taxes everywhere.
But I also find it difficult to put a huge multiple on a company like this. It is just sales taxes for crying out loud! But if this company can expand its verticals, expand its jurisdictions, and create upsellable products it could have a very long runway with long-term hyper-growth between 25-35%.
I came to roughly the same conclusion, almost. It’s “just taxes” after all. But then I multiplied that by every vendor, online and B&M storefront, shop, etc. that’s going to be selling stuff (read: a ton of people/places), with stuff crossing state and national borders all the time, and considering that the seller has to figure out how to calculate taxes in some foreign place (state or country) is both treacherous and error-prone; or at least expensive if you’re a large organization and have to hire your own staff to figure it out.
Where I started to kind of like Avalara more was that it takes away the need for people and at least softens the deep pain of having to collect taxes. You effectively buy their plug-in (for QuickBooks or Shopify or Magento or whatever) and it figures out, based on the destination OR what is being sold, or both, what taxes need to be collected.
Revenues are growing a little over 40% QoQ (I think 43% last Q if I recall), which makes it a possible candidate here. I need to dig further into other stuff like P/S, P/E since those numbers are different than when I ran them back in early October, but it’s not “cheap.” But then, that’s a hallmark of a Saul stock to some degree, we’ve established…
More to come (hopefully from others too) – work gets in the way.