I made my first post about this company back on March 9th and have been following it ever since. It has been in a consolidation phase since that post until the ER on May 7th when it’s stock price jumped 23%.
Here is a quick summary on what they do.
Avalara, Inc went public in June 2018 and the initial price to the public was set to $24.00 per share and they raised $192.5 million.
Avalara provides cloud-based solutions in order to automate the processes of determining taxability, identifying applicable tax rates, determining and collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. The company serves various industries such as Retail and e-commerce, Manufacturing, Fuel and Energy, Communications, and Lodging and hospitality among others. It generates revenue in the form of subscriptions and professional services.
They have made 2 acquisitions already this year to help widen their mote.
On January 22, 2019, the Company completed the acquisition of Compli. As a result of the acquisition, the Company expanded its ability to provide transaction tax solutions and content for the alcoholic beverage industry.
On February 6, 2019, the Company completed the acquisition of Indix. Indix is an artificial intelligence company providing comprehensive product descriptions for more than one billion products sold and shipped worldwide. The Company accounted for the Indix Purchase as a business combination. As a result of the acquisition, the Company intends to use the Indix artificial intelligence to maintain and expand its tax content database. (somehow I missed this bit of news)
Remarks from CFO William D. Ingram I found interesting.
“We use core customers as a metric to focus our customer count reporting on our primary target market segment. As of March 31, 2019 and December 31, 2018, we had approximately 9,700 and 9,070 core customers, respectively, representing less than half of our total number of customers. In the first three months of 2019, our core customers represented more than 80% of our total revenue.”
“We have been growing rapidly in recent periods. Our total revenue for the three months ended March 31, 2019 were $85.0 million compared to $61.4 million for the three months ended March 31, 2018. As a result of significant investments in growth, we have incurred net losses in all of our prior reporting periods. Our net loss for the three months ended March 31, 2019 was $9.2 million compared to a net loss of $15.2 million for the three months ended March 31, 2018.”
(Please forgive me for not posting their last 4 quarters but the whole 605/606 ASC and converting the numbers is so confusing to me so I just grabbed this from their 10q.)
Total revenue for the three months ended March 31, 2019 increased by $23.6 million, or 38%, compared to the three months ended March 31, 2018.
Subscription and returns revenue for the three months ended March 31, 2019 increased by $20.4 million, or 35%, compared to the three months ended March 31, 2018.
Professional services revenue for the three months ended March 31, 2019 increased by $3.2 million, or 92%, compared to the three months ended March 31, 2018.
Growth in total revenue was due primarily to increased demand for our services from new and existing customers. The increase in total revenue for the three months ended March 31, 2019 compared to the same period of 2018, was due primarily to:
$12.9 million from new U.S. customers
$4.4 million from existing U.S. customers
$3.1 million attributable to revenue growth in our international operations
$0.8 million from the acquisitions made during the first quarter of 2019
$0.7 million was from interest income earned on client funds.
Total gross profit for the three months ended March 31, 2019 increased $15.8 million, or 36%, compared to the three months ended March 31, 2018.
Total gross margin was 70% for the three months ended March 31, 2019 compared to 71% for the same period of 2018. This decrease in gross margin was due primarily to higher software hosting costs.
I find this to be a compelling cloud company with recurring revenue that sits in the Financial space. I am hoping that some others on this board will find this company just as interesting and help me dig a little more into their financials to see if they are worth investing in.
intro post on AVLR: https://discussion.fool.com/intro-avlr-34153360.aspx
Stephen
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