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Avalara Announces Fourth Quarter and Fiscal Year 2021 Financial Results

Feb 10, 2022

Fourth Quarter Total Revenue of $195.1 Million, up 35% year-over-year

Fiscal 2021 Total Revenue of $699.0 Million, up 40% year-over-year

SEATTLE--(BUSINESS WIRE)-- Avalara, Inc. (NYSE: AVLR), a leading provider of tax compliance automation for businesses of all sizes, today announced financial results for its fourth quarter and fiscal year ended December 31, 2021.

“For the full year we accelerated our topline, achieving revenue growth of 40% year-over-year, and we delivered our third consecutive year of positive operating and free cash flow,” said Scott McFarlane, Avalara co-founder and chief executive officer. “As we enter fiscal 2022, we are excited about the opportunity to leverage our growing scale, competitive moats, and ubiquity in the market to establish Avalara as the standard cloud platform for compliance. We believe we are in the early days of addressing a huge addressable market to automate compliance for businesses of all sizes.”

Fourth Quarter 2021 Financial Results

  • Revenue: Total revenue was $195.1 million in the fourth quarter of 2021, up 35% from $144.8 million in the fourth quarter of 2020. Subscription and returns revenue was $177.1 million, up 34% from $132.6 million in the same period last year. Professional services revenue was $18.0 million, up 48% from $12.2 million in the same period last year.
  • Gross Profit: GAAP gross profit was $136.7 million in the fourth quarter of 2021, representing a 70% gross margin, compared to a GAAP gross profit of $104.2 million and a 72% gross margin in the fourth quarter of 2020. Non-GAAP gross profit was $142.1 million, representing a 73% non-GAAP gross margin, compared to a non-GAAP gross profit of $107.7 million and a 74% non-GAAP gross margin in the fourth quarter of 2020.
  • Operating Loss: GAAP operating loss was $28.1 million in the fourth quarter of 2021, compared to a GAAP operating loss of $19.7 million in the fourth quarter of 2020. Non-GAAP operating income was $1.7 million in the fourth quarter of 2021, compared to non-GAAP operating loss of $0.6 million in the fourth quarter of 2020.
  • Net Loss: GAAP net loss was $35.0 million in the fourth quarter of 2021, compared to a GAAP net loss of $11.0 million in the fourth quarter of 2020. Non-GAAP net loss was $5.3 million in the fourth quarter of 2021, compared to non-GAAP net income of $8.1 million in the fourth quarter of 2020.
  • Net Loss per Share: GAAP basic and diluted net loss per share was $0.40 based on 87.0 million weighted average shares outstanding in the fourth quarter of 2021, compared to a GAAP basic and diluted net loss per share of $0.13 based on 84.8 million weighted average shares outstanding in the fourth quarter of 2020. Non-GAAP diluted net loss per share was $0.06 based on 87.0 million weighted average shares outstanding in the fourth quarter of 2021, compared to a non-GAAP diluted net income per share of $0.09 based on 89.3 million diluted weighted average shares outstanding in the fourth quarter of 2020.
  • Deferred Revenue: Total deferred revenue was $283.0 million at December 31, 2021, up from $209.7 million at December 31, 2020. The current portion of deferred revenue was $280.8 million at December 31, 2021, up from $208.0 million at December 31, 2020.
  • Cash: Net cash provided by operating activities was $25.4 million in the fourth quarter of 2021, compared to $31.6 million provided by operating activities in the fourth quarter of 2020. Free cash flow was $18.0 million in the fourth quarter of 2021, compared to $28.6 million in the fourth quarter of 2020. Cash and cash equivalents totaled $1.5 billion at December 31, 2021, compared to $673.6 million at December 31, 2020.
  • Calculated Billings: Calculated billings were $217.8 million in the fourth quarter of 2021, compared to calculated billings of $167.1 million in the fourth quarter of 2020.

Reconciliations of GAAP to non-GAAP financial measures have been provided in the tables included in this release.

Fiscal Year 2021 Financial Results

  • Revenue: Total revenue was $699.0 million in fiscal year 2021, up 40% from $500.6 million in fiscal year 2020. Subscription and returns revenue was $633.1 million, up 36% from $465.8 million in the prior year. Professional services revenue was $65.9 million, up 90% from $34.7 million in the prior year.
  • Gross Profit: GAAP gross profit was $494.1 million in fiscal year 2021, representing a 71% gross margin, compared to a GAAP gross profit of $357.5 million and a 71% gross margin in fiscal year 2020. Non-GAAP gross profit was $513.7 million in fiscal year 2021, representing a 73% non-GAAP gross margin, compared to a non-GAAP gross profit of $368.5 million and a 74% non-GAAP gross margin in fiscal year 2020.
  • Operating Loss: GAAP operating loss was $106.6 million in fiscal year 2021, compared to a GAAP operating loss of $62.0 million in fiscal year 2020. Non-GAAP operating income was $5.5 million in fiscal year 2021, compared to a non-GAAP operating loss of $3.1 million in fiscal year 2020.
  • Net Loss: GAAP net loss was $125.2 million in fiscal year 2021, compared to a GAAP net loss of $49.2 million in fiscal year 2020. Non-GAAP net loss was $13.2 million in fiscal year 2021, compared to a non-GAAP net income of $9.6 million in fiscal year 2020.
  • Net Loss per Share: GAAP basic and diluted net loss per share was $1.45 based on 86.3 million weighted average shares outstanding in fiscal year 2021, compared to a GAAP basic and diluted net loss per share of $0.61 based on 81.0 million weighted average shares outstanding in fiscal year 2020. Non-GAAP diluted net loss per share was $0.15 based on 86.3 million weighted average shares outstanding in fiscal year 2021, compared to non-GAAP diluted net income per share of $0.11 based on 85.4 million diluted weighted average shares outstanding in fiscal year 2020.
  • Cash: Net cash provided by operating activities was $34.1 million in fiscal year 2021, compared to $42.6 million provided by operating activities in fiscal year 2020. Free cash flow was $12.7 million in fiscal year 2021, compared to $34.0 million in fiscal year 2020.

Reconciliations of GAAP to non-GAAP financial measures have been provided in the tables included in this release.

Fourth Quarter and Fiscal Year 2021 Highlights

  • Key Metrics: During the second quarter of 2021, we revised our core customer calculation methodology to include revenue from our Streamlined Sales Tax solution (SST), which results in additional customers being included in reported core customers. During the second quarter of 2021, we also revised our net revenue retention rate calculation methodology to include revenue from SST that previously was not included, and to exclude professional services revenue, as these services tend to be more one-time in nature. We have included both the revised and legacy Key Metrics methodologies for core customers and net revenue retention in a table at the end of this release.
    Under the revised calculation methodology, we ended the fourth quarter of 2021 with approximately 18,270 core customers, up from approximately 17,400 core customers at the end of the previous quarter and approximately 15,020 in the fourth quarter of 2020, representing a 22% increase year-over-year.
    Under the revised calculation methodology, our net revenue retention rate was 116% in the fourth quarter of 2021 and has averaged 115% over the last four quarters.
  • In 2021, Avalara was named a Leader in three IDC MarketScape reports covering tax automation solutions for small and mid-size businesses (SMB), enterprise, and value-added tax (VAT).
  • In 2021, we launched our corporate sustainability site, highlighting our existing initiatives, and outlining the ongoing commitment to being a responsible employer and corporate leader in social, environmental, and governance programs.
  • In 2021, we announced that the company’s cross-border compliance capabilities will power the new duty and import tax features of Shopify’s global commerce hub, Shopify Markets. We also announced Avalara Managed Tax Classification, Avalara Content Generation for POS, Avalara Shipping Verification, Avalara Vendor Exemption Management, Avalara Trade Treaty Support, and Avalara Trade Restrictions Management. Finally, we announced an array of new tax compliance automation products and services designed specifically for accountants.
  • In 2021, we announced the appointment of Srinivas Tallapragada, Marcela Martin, and retired Lieutenant General Bruce Crawford to our board of directors. Tallapragada is president and chief engineering officer of Salesforce, the leader in customer relationship management, where he leads a global team responsible for building and managing the company’s products and platform. Martin is chief financial officer of Squarespace, the all-in-one website building platform, where she oversees the company’s finance and corporate development functions. Crawford is senior vice president for strategic development, growth, and sales at Jacobs, a leading technology-enabled solutions provider.
  • In August 2021, we issued $977.5 million aggregate principal amount of 0.25% convertible senior notes due 2026, which includes the exercise in full of the $127.5 million option granted to the initial purchasers of the notes in a private offering. We received net proceeds of $959.9 million, after deducting fees and expenses payable by the company. We used approximately $75.3 million of the net proceeds from the notes to pay the cost of the capped call transactions entered into in connection with the offering.
  • In 2021, we closed the acquisitions of CrowdReason Limited Liability Company, Track1099 LLC, 3CE Technologies, Inc., DAVO Technologies LLC, and INPOSIA Solutions GmbH.

Financial Outlook

For the first quarter of 2022, the Company currently expects:

  • Total revenue between $197 and $199 million.
  • Non-GAAP operating loss between $9 and $11 million.

For the full year 2022, the Company currently expects:

  • Total revenue between $854 and $859 million.
  • Non-GAAP operating loss between $17 and $21 million.

Conference Call Information

Avalara will host a conference call at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) today, February 10, 2022, to discuss its financial results and business highlights. The conference call can be accessed by dialing (888) 660-6196 from the United States or (929) 203-1824 internationally with Conference ID 5816067. A live webcast of the call will also be available on the Avalara investor relations website at investor.avalara.com.

A telephone replay of the conference call will be available until 8:59 p.m. Pacific Time on Thursday, February 17, 2022, and a webcast replay will also be archived at investor.avalara.com. The telephone replay will be available by dialing (800) 770-2030 from the United States or (647) 362-9199 internationally with Conference ID 5816067.

About Avalara, Inc.

Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Brazil, Europe, and India. More information at www.avalara.com.

Forward-Looking Statements

This press release and the accompanying conference call contain forward-looking statements including, among others, statements about our financial outlook for the first quarter and full year 2022, our expectations for the integration of our acquisitions into our business, and expected growth opportunities and synergies arising from the acquisitions. In some cases you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms.

These forward-looking statements involve risks, uncertainties, and assumptions that could cause actual performance or results to differ materially from those expressed or suggested by the forward-looking statements. If any of these risks or uncertainties materialize, or if any of our assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include risks associated with: our ability to sustain our revenue growth rate, to achieve or maintain profitability, and to effectively manage our anticipated growth; our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; the impact of the novel coronavirus (COVID-19) pandemic and any associated economic downturn on our business operations, results, and financial position; the timing of our introduction of new solutions or updates to existing solutions; our ability to successfully diversify our solutions by developing or introducing new solutions or acquiring and integrating additional businesses, products, services, or content; our ability to maintain and expand our strategic relationships with third parties; our ability to deliver our solutions to customers without disruption or delay; our exposure to liability from errors, delays, fraud, or system failures, which may not be covered by insurance; our ability to expand our international reach; and the risks described in the other filings we make with the Securities and Exchange Commission from time to time, including the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, and which should be read in conjunction with our financial results and forward-looking statements. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Use of Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we have disclosed non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP basic net income (loss) per share, non-GAAP diluted net income (loss) per share, free cash flow, and calculated billings, which are all non-GAAP financial measures. We have provided tabular reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure at the end of this release.

  • We calculate non-GAAP cost of revenue, non-GAAP research and development expense, non-GAAP sales and marketing expense, and non-GAAP general and administrative expense as GAAP cost of revenue, GAAP research and development expense, GAAP sales and marketing expense, and GAAP general and administrative expense before stock-based compensation expense and the amortization of acquired intangible assets included in each of the expense categories.
  • We calculate non-GAAP gross profit as GAAP gross profit before stock-based compensation expense and the amortization of acquired intangibles included in cost of revenue. We calculate non-GAAP gross margin as GAAP gross margin before the impact of stock-based compensation expense and the amortization of acquired intangibles included in cost of revenue as a percentage of revenue.
  • We calculate non-GAAP operating income (loss) as GAAP operating loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments. We calculate non-GAAP net income (loss) as GAAP net loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments.
  • We calculate non-GAAP basic net income (loss) per share as non-GAAP net income (loss) divided by weighted average shares outstanding.
  • We calculate non-GAAP diluted net income (loss) per share as non-GAAP net income (loss) divided by diluted weighted average shares outstanding. Diluted weighted average shares outstanding includes weighted average shares outstanding plus the dilutive effect, if any, of outstanding common stock equivalents.
  • We define free cash flow as net cash provided by operating activities less cash used for the purchases of property and equipment and capitalized software development costs.
  • We define calculated billings as total revenue plus the changes in deferred revenue and contract liabilities in the period, excluding the acquisition date impact of deferred revenue and contract liabilities assumed in a business combination. Because we generally recognize subscription revenue ratably over the subscription term, calculated billings can be used to measure our subscription sales activity for a particular period, to compare subscription sales activity across particular periods, and as a potential indicator of future subscription revenue, the actual timing of which will be affected by several factors, including subscription start date and duration.

Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity. We believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as when comparing our financial results to those of other companies.

The company has not reconciled its expectations of non-GAAP financial measures to the corresponding GAAP measures primarily because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Our definitions of these non-GAAP financial measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP financial measures in conjunction with the related GAAP financial measure.

Definitions of Key Business Metrics

We also use the key business metrics of core customers and net revenue retention rate.

Core Customers

We believe core customers is a key indicator of our market penetration, growth, and potential future revenue. We use core customers as a metric to focus our customer count reporting on our primary target market segment. We define a core customer as:

  • a unique account identifier in our primary U.S. billing systems (multiple companies or divisions within a single consolidated enterprise that each have a separate unique account identifier are each treated as separate customers);
  • that is active as of the measurement date; and
  • for which we have recognized, as of the measurement date, greater than $3,000 in total revenue during the previous 12 months.

Currently, our core customer count includes only customers with unique account identifiers in our primary U.S. billing systems and does not include customers that subscribe to our solutions through our international subsidiaries and certain legacy and acquired billing systems that have not yet been integrated into our primary U.S. billing systems (e.g., recent acquisitions and our lodging tax compliance solution). As we increase our international operations and sales in future periods, we may add customers billed from our international subsidiaries to the core customer metric.

We revised our core customer calculation methodology during the second quarter of 2021. Under the prior methodology, revenue from SST was not included in our calculation of total revenue during the previous 12 months. This meant customers that would have otherwise met the definition of a core customer, with inclusion of attributable SST revenue, were excluded from our core customer count as well as our disclosures on the percentage of total revenue attributable to core customers. The revised methodology for core customers includes revenue from SST.

We believe this change improves the usefulness of this key business metric, which is to measure both the growth of existing customers into core customers and the acquisition of new customers of a certain size.

We also have a substantial number of customers of various sizes that do not meet the revenue threshold to be considered a core customer. Many of these customers are in the emerging and small business segment of the marketplace, which represents strategic value and a growth opportunity for us. Customers who do not meet the revenue threshold to be considered a core customer provide us with market share and awareness, and we anticipate that some may grow into core customers. In addition, we have numerous enterprise-level customers that only utilize our services for small segments of their business, providing opportunities over time for us to extend our relationship and make them core customers.

In addition to customers with whom we have a direct relationship, some of our customers are business application publishers (including ecommerce platforms) that include automated tax determination powered by Avalara. While those platform providers may be core customers to Avalara, their end-user customers generally are not.

Net Revenue Retention Rate

We believe that our net revenue retention rate provides insight into our ability to retain and grow revenue from our customers, as well as their potential long-term value to us. We also believe it reflects the stability of our revenue base, which is one of our core competitive strengths. We calculate our net revenue retention rate by dividing (a) total subscription and returns revenue in the current quarter from any billing accounts that generated revenue during the corresponding quarter of the prior year by (b) total subscription and returns revenue in such corresponding quarter from those same billing accounts. This calculation includes changes during the period for such billing accounts, such as additional solutions purchased, changes in pricing and transaction volume, and terminations, but does not reflect revenue for new billing accounts added during the one-year period.

Our net revenue retention rate includes only customers with unique account identifiers in our primary U.S. billing systems and does not include customers who subscribe to our solutions through our international subsidiaries or certain legacy and acquired billing systems that have not been integrated into our primary U.S. billing systems.

During the second quarter of 2021, we revised our net revenue retention rate calculation methodology. Under the prior methodology, revenue from SST was not included in our reported net revenue retention rate. This meant that revenue expansion from existing customers adopting our SST solution was not included, while revenue contraction from customers replacing one or more of Avalara’s other solutions with SST was included. The revised calculation methodology for net revenue retention rate includes revenue from SST. In addition, professional services revenue is no longer included in the revised calculation methodology, as these services tend to be more one-time in nature.

We believe these changes improve the usefulness of this key business metric, which is to measure our ability to retain and grow revenue from existing customers over time.


Reported Consolidated Results

AVALARA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 

 

For the Three Months Ended December 31,

 

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

177,094

 

 

$

132,567

 

Professional services

 

 

18,048

 

 

 

12,193

 

Total revenue

 

 

195,142

 

 

 

144,760

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

49,444

 

 

 

34,882

 

Professional services

 

 

9,002

 

 

 

5,697

 

Total cost of revenue (1)

 

 

58,446

 

 

 

40,579

 

Gross profit

 

 

136,696

 

 

 

104,181

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (1)

 

 

45,550

 

 

 

34,457

 

Sales and marketing (1)

 

 

83,938

 

 

 

59,759

 

General and administrative (1)

 

 

35,319

 

 

 

29,647

 

Total operating expenses

 

 

164,807

 

 

 

123,863

 

Operating loss

 

 

(28,111

)

 

 

(19,682

)

Other income (expense):

 

 

 

 

 

 

 

 

Fair value changes in earnout liabilities

 

 

(3,520

)

 

 

 

Interest income

 

 

33

 

 

 

32

 

Interest expense

 

 

(1,496

)

 

 

 

Other income (expense), net

 

 

(246

)

 

 

(637

)

Total other income (expense), net

 

 

(5,229

)

 

 

(605

)

Loss before income taxes

 

 

(33,340

)

 

 

(20,287

)

(Provision for) benefit from income taxes

 

 

(1,709

)

 

 

9,256

 

Net loss

 

$

(35,049

)

 

$

(11,031

)

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common shareholders, basic and diluted

 

$

(0.40

)

 

$

(0.13

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

86,976

 

 

 

84,767

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

(1) The stock-based compensation expense included above was as follows:

 

2021

 

 

2020

 

Cost of revenue

 

$

2,819

 

 

$

1,645

 

Research and development

 

 

6,754

 

 

 

3,971

 

Sales and marketing

 

 

5,386

 

 

 

3,219

 

General and administrative

 

 

7,808

 

 

 

4,536

 

Total stock-based compensation

 

$

22,767

 

 

$

13,371

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

Cost of revenue

 

$

2,591

 

 

$

1,864

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

3,541

 

 

 

3,061

 

General and administrative

 

 

889

 

 

 

807

 

Total amortization of acquired intangibles

 

$

7,021

 

 

$

5,732

 

 

AVALARA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

633,091

 

 

$

465,825

 

Professional services

 

 

65,886

 

 

 

34,744

 

Total revenue

 

 

698,977

 

 

 

500,569

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

173,414

 

 

 

124,333

 

Professional services

 

 

31,418

 

 

 

18,762

 

Total cost of revenue (1)

 

 

204,832

 

 

 

143,095

 

Gross profit

 

 

494,145

 

 

 

357,474

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (1)

 

 

167,391

 

 

 

119,710

 

Sales and marketing (1)

 

 

296,006

 

 

 

204,490

 

General and administrative (1)

 

 

137,301

 

 

 

95,242

 

Total operating expenses

 

 

600,698

 

 

 

419,442

 

Operating loss

 

 

(106,553

)

 

 

(61,968

)

Other income (expense):

 

 

 

 

 

 

 

 

Fair value changes in earnout liabilities

 

 

(12,231

)

 

 

2,325

 

Interest income

 

 

108

 

 

 

1,678

 

Interest expense

 

 

(2,311

)

 

 

 

Other income (expense), net

 

 

(938

)

 

 

473

 

Total other income (expense), net

 

 

(15,372

)

 

 

4,476

 

Loss before income taxes

 

 

(121,925

)

 

 

(57,492

)

(Provision for) benefit from income taxes

 

 

(3,308

)

 

 

8,309

 

Net loss

 

$

(125,233

)

 

$

(49,183

)

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common shareholders, basic and diluted

 

$

(1.45

)

 

$

(0.61

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

86,263

 

 

 

80,985

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

(1) The stock-based compensation expense included above was as follows:

 

2021

 

 

2020

 

Cost of revenue

 

$

10,203

 

 

$

5,909

 

Research and development

 

 

24,343

 

 

 

13,226

 

Sales and marketing

 

 

20,301

 

 

 

12,147

 

General and administrative

 

 

33,250

 

 

 

16,888

 

Total stock-based compensation

 

$

88,097

 

 

$

48,170

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

Cost of revenue

 

$

9,319

 

 

$

5,166

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

11,082

 

 

 

4,664

 

General and administrative

 

 

3,574

 

 

 

819

 

Total amortization of acquired intangibles

 

$

23,975

 

 

$

10,649

 

 

AVALARA, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands)

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,514,064

 

 

$

673,593

 

Restricted cash

 

 

37,700

 

 

 

19,953

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

114,248

 

 

 

75,857

 

Deferred commissions

 

 

16,364

 

 

 

12,245

 

Prepaid expenses and other current assets

 

 

29,267

 

 

 

20,098

 

Total current assets before customer fund assets

 

 

1,711,643

 

 

 

801,746

 

Funds held from customers

 

 

62,509

 

 

 

30,598

 

Receivable from customers—net of allowance for doubtful accounts

 

 

1,472

 

 

 

563

 

Total current assets

 

 

1,775,624

 

 

 

832,907

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Restricted cash

 

 

 

 

 

37,700

 

Deferred commissions

 

 

52,155

 

 

 

38,625

 

Operating lease right-of-use assets—net

 

 

44,385

 

 

 

52,320

 

Property and equipment—net

 

 

46,464

 

 

 

34,713

 

Intangible assets—net

 

 

96,818

 

 

 

86,513

 

Goodwill

 

 

672,381

 

 

 

513,234

 

Other noncurrent assets

 

 

10,704

 

 

 

6,321

 

Total assets

 

$

2,698,531

 

 

$

1,602,333

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade payables

 

 

16,683

 

 

 

20,280

 

Accrued expenses

 

 

109,792

 

 

 

84,532

 

Deferred revenue

 

 

280,816

 

 

 

208,026

 

Accrued purchase price related to acquisitions

 

 

51,476

 

 

 

22,473

 

Accrued earnout liabilities

 

 

33,151

 

 

 

749

 

Operating lease liabilities

 

 

11,453

 

 

 

11,339

 

Total current liabilities before customer fund obligations

 

 

503,371

 

 

 

347,399

 

Customer fund obligations

 

 

64,302

 

 

 

31,549

 

Total current liabilities

 

 

567,673

 

 

 

378,948

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Convertible senior notes—net

 

 

961,259

 

 

 

 

Deferred revenue

 

 

2,139

 

 

 

1,664

 

Accrued purchase price related to acquisitions

 

 

7,988

 

 

 

49,057

 

Accrued earnout liabilities

 

 

81,485

 

 

 

34,468

 

Operating lease liabilities

 

 

45,614

 

 

 

56,625

 

Deferred tax liability

 

 

5,158

 

 

 

1,031

 

Other noncurrent liabilities

 

 

761

 

 

 

380

 

Total liabilities

 

 

1,672,077

 

 

 

522,173

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

9

 

 

 

9

 

Additional paid-in capital

 

 

1,714,483

 

 

 

1,640,867

 

Accumulated other comprehensive loss

 

 

(3,428

)

 

 

(1,339

)

Accumulated deficit

 

 

(684,610

)

 

 

(559,377

)

Total shareholders’ equity

 

 

1,026,454

 

 

 

1,080,160

 

Total liabilities and shareholders' equity

 

$

2,698,531

 

 

$

1,602,333

 

 

 

AVALARA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

 

For the Three Months Ended December 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(35,049

)

 

$

(11,031

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

22,767

 

 

 

13,371

 

Depreciation and amortization

 

 

10,794

 

 

 

8,310

 

Amortization of debt issuance costs

 

 

885

 

 

 

 

Impairment of capitalized cloud computing costs

 

 

322

 

 

 

 

Deferred income tax expense (benefit)

 

 

3,164

 

 

 

(9,612

)

Non-cash operating lease costs

 

 

2,447

 

 

 

2,084

 

Fair value changes in earnout liabilities

 

 

3,520

 

 

 

 

Non-cash bad debt expense

 

 

475

 

 

 

618

 

Other

 

 

16

 

 

 

(9

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(17,340

)

 

 

(5,716

)

Prepaid expenses and other current assets

 

 

2,735

 

 

 

846

 

Deferred commissions

 

 

(4,887

)

 

 

(5,029

)

Other noncurrent assets

 

 

(643

)

 

 

(145

)

Trade payables

 

 

(1,913

)

 

 

3,343

 

Accrued expenses

 

 

16,665

 

 

 

17,732

 

Deferred revenue

 

 

24,530

 

 

 

19,857

 

Operating lease liabilities

 

 

(3,095

)

 

 

(3,061

)

Net cash provided by operating activities

 

 

25,393

 

 

 

31,558

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(3,196

)

 

 

(1,533

)

Capitalized software development costs

 

 

(4,156

)

 

 

(1,453

)

Cash paid for acquisitions of businesses, net of cash and restricted cash equivalents acquired

 

 

(43,091

)

 

 

(368,198

)

Cash paid for acquired intangible assets

 

 

(400

)

 

 

(1,200

)

Net cash used in investing activities

 

 

(50,843

)

 

 

(372,384

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of deferred financing costs

 

 

 

 

 

(386

)

Payments of debt issuance costs

 

 

(266

)

 

 

 

Proceeds from exercise of stock options

 

 

3,633

 

 

 

9,229

 

Payments on financed asset purchases

 

 

(104

)

 

 

 

Net (decrease) increase in customer fund obligations

 

 

(17,654

)

 

 

4,057

 

Net cash (used in) provided by financing activities

 

 

(14,391

)

 

 

12,900

 

Foreign currency effect

 

 

111

 

 

 

396

 

Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents

 

 

(39,730

)

 

 

(327,530

)

Cash, cash equivalents, restricted cash, and restricted cash equivalents—Beginning of period

 

 

1,653,633

 

 

 

1,089,374

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents—End of period

 

$

1,613,903

 

 

$

761,844

 

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets, end of period:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,514,064

 

 

$

673,593

 

Restricted cash

 

 

37,700

 

 

 

57,653

 

Restricted cash equivalents—funds held from customers

 

 

62,139

 

 

 

30,598

 

Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

 

$

1,613,903

 

 

$

761,844

 

 

AVALARA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(125,233

)

 

$

(49,183

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

88,097

 

 

 

48,170

 

Depreciation and amortization

 

 

36,526

 

 

 

20,233

 

Amortization of debt issuance costs

 

 

1,367

 

 

 

 

Asset impairments

 

 

 

 

 

794

 

Impairment of capitalized cloud computing costs

 

 

667

 

 

 

 

Deferred income tax expense (benefit)

 

 

1,128

 

 

 

(9,419

)

Non-cash operating lease costs

 

 

9,549

 

 

 

8,111

 

Fair value changes in earnout liabilities

 

 

12,231

 

 

 

(2,325

)

Non-cash bad debt expense

 

 

1,801

 

 

 

2,063

 

Other

 

 

(783

)

 

 

(230

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(36,053

)

 

 

(17,921

)

Prepaid expenses and other current assets

 

 

(10,986

)

 

 

(3,333

)

Deferred commissions

 

 

(17,648

)

 

 

(12,454

)

Other noncurrent assets

 

 

(4,362

)

 

 

(2,843

)

Trade payables

 

 

(4,240

)

 

 

8,026

 

Accrued expenses

 

 

22,646

 

 

 

23,979

 

Deferred revenue

 

 

71,406

 

 

 

39,254

 

Operating lease liabilities

 

 

(11,995

)

 

 

(10,304

)

Net cash provided by operating activities

 

 

34,118

 

 

 

42,618

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(7,659

)

 

 

(4,501

)

Capitalized software development costs

 

 

(13,764

)

 

 

(4,159

)

Cash paid for acquisitions of businesses, net of cash and restricted cash equivalents acquired

 

 

(76,646

)

 

 

(368,198

)

Cash paid for acquired intangible assets

 

 

(1,900

)

 

 

(1,200

)

Cash paid for purchases of customer fund available-for-sale securities

 

 

(381

)

 

 

 

Net cash used in investing activities

 

 

(100,350

)

 

 

(378,058

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net of underwriting discounts

 

 

 

 

 

556,312

 

Payments of deferred financing costs

 

 

 

 

 

(686

)

Proceeds from convertible senior notes

 

 

977,500

 

 

 

 

Payments of debt issuance costs

 

 

(17,609

)

 

 

 

Purchase of capped calls

 

 

(75,268

)

 

 

 

Proceeds from exercise of stock options

 

 

21,779

 

 

 

39,946

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

14,446

 

 

 

11,337

 

Acquisition-related post-closing payments

 

 

(20,821

)

 

 

(2,763

)

Payments related to business combination earnouts

 

 

(33

)

 

 

(3,760

)

Payments related to asset acquisition earnouts

 

 

(1,266

)

 

 

(65

)

Payments on financed asset purchases

 

 

(104

)

 

 

 

Net increase in customer fund obligations

 

 

20,288

 

 

 

5,738

 

Net cash provided by investing activities

 

 

918,912

 

 

 

606,059

 

Foreign currency effect

 

 

(621

)

 

 

(108

)

Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents

 

 

852,059

 

 

 

270,511

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents—Beginning of period

 

 

761,844

 

 

 

491,333

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents—End of period

 

$

1,613,903

 

 

$

761,844

 

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets, end of period:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,514,064

 

 

$

673,593

 

Restricted cash

 

 

37,700

 

 

 

57,653

 

Restricted cash equivalents—funds held from customers

 

 

62,139

 

 

 

30,598

 

Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

 

$

1,613,903

 

 

$

761,844

 

 

AVALARA, INC.
UNAUDITED PRESENTATION AND RECONCILIATION TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)

The following schedules reflect our non-GAAP financial measures and reconcile our non-GAAP financial measures to the related GAAP financial measures:

Summary of Non-GAAP Financial Measures:

 

 

For the Three Months Ended
December 31,

 

 

For the Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Non-GAAP cost of revenue

 

$

53,036

 

 

$

37,070

 

 

$

185,310

 

 

$

132,020

 

Non-GAAP gross profit

 

$

142,106

 

 

$

107,690

 

 

$

513,667

 

 

$

368,549

 

Non-GAAP gross margin

 

 

73

%

 

 

74

%

 

 

73

%

 

 

74

%

Non-GAAP research and development expense

 

$

38,796

 

 

$

30,486

 

 

$

143,048

 

 

$

106,484

 

Non-GAAP sales and marketing expense

 

$

75,011

 

 

$

53,479

 

 

$

264,623

 

 

$

187,679

 

Non-GAAP general and administrative expense

 

$

26,622

 

 

$

24,304

 

 

$

100,477

 

 

$

77,535

 

Non-GAAP operating income (loss)

 

$

1,677

 

 

$

(579

)

 

$

5,519

 

 

$

(3,149

)

Non-GAAP net income (loss)

 

$

(5,261

)

 

$

8,072

 

 

$

(13,161

)

 

$

9,636

 

Non-GAAP basic net income (loss) per share

 

$

(0.06

)

 

$

0.10

 

 

$

(0.15

)

 

$

0.12

 

Non-GAAP diluted net income (loss) per share

 

$

(0.06

)

 

$

0.09

 

 

$

(0.15

)

 

$

0.11

 

Free cash flow

 

$

18,041

 

 

$

28,572

 

 

$

12,695

 

 

$

33,958

 

 

Reconciliation of Non-GAAP Financial Measures:

 

 

For the Three Months Ended
December 31,

 

 

For the Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Reconciliation of Non-GAAP Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

58,446

 

 

$

40,579

 

 

$

204,832

 

 

$

143,095

 

Stock-based compensation expense

 

 

(2,819

)

 

 

(1,645

)

 

 

(10,203

)

 

 

(5,909

)

Amortization of acquired intangibles

 

 

(2,591

)

 

 

(1,864

)

 

 

(9,319

)

 

 

(5,166

)

Non-GAAP Cost of Revenue

 

$

53,036

 

 

$

37,070

 

 

$

185,310

 

 

$

132,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

136,696

 

 

$

104,181

 

 

$

494,145

 

 

$

357,474

 

Stock-based compensation expense

 

 

2,819

 

 

 

1,645

 

 

 

10,203

 

 

 

5,909

 

Amortization of acquired intangibles

 

 

2,591

 

 

 

1,864

 

 

 

9,319

 

 

 

5,166

 

Non-GAAP Gross Profit

 

$

142,106

 

 

$

107,690

 

 

$

513,667

 

 

$

368,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

70

%

 

 

72

%

 

 

71

%

 

 

71

%

Stock-based compensation expense as a percentage of revenue

 

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Amortization of acquired intangibles as a percentage of revenue

 

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Non-GAAP Gross Margin

 

 

73

%

 

 

74

%

 

 

73

%

 

 

74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Research and Development Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

45,550

 

 

$

34,457

 

 

$

167,391

 

 

$

119,710

 

Stock-based compensation expense

 

 

(6,754

)

 

 

(3,971

)

 

 

(24,343

)

 

 

(13,226

)

Amortization of acquired intangibles

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Research and Development Expense

 

$

38,796

 

 

$

30,486

 

 

$

143,048

 

 

$

106,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Sales and Marketing Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

83,938

 

 

$

59,759

 

 

$

296,006

 

 

$

204,490

 

Stock-based compensation expense

 

 

(5,386

)

 

 

(3,219

)

 

 

(20,301

)

 

 

(12,147

)

Amortization of acquired intangibles

 

 

(3,541

)

 

 

(3,061

)

 

 

(11,082

)

 

 

(4,664

)

Non-GAAP Sales and Marketing Expense

 

$

75,011

 

 

$

53,479

 

 

$

264,623

 

 

$

187,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP General and Administrative Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

35,319

 

 

$

29,647

 

 

$

137,301

 

 

$

95,242

 

Stock-based compensation expense

 

 

(7,808

)

 

 

(4,536

)

 

 

(33,250

)

 

 

(16,888

)

Amortization of acquired intangibles

 

 

(889

)

 

 

(807

)

 

 

(3,574

)

 

 

(819

)

Non-GAAP General and Administrative Expense

 

$

26,622

 

 

$

24,304

 

 

$

100,477

 

 

$

77,535

 

 

 

For the Three Months Ended
December 31,

 

 

For the Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Reconciliation of Non-GAAP Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(28,111

)

 

$

(19,682

)

 

$

(106,553

)

 

$

(61,968

)

Stock-based compensation expense

 

 

22,767

 

 

 

13,371

 

 

 

88,097

 

 

 

48,170

 

Amortization of acquired intangibles

 

 

7,021

 

 

 

5,732

 

 

 

23,975

 

 

 

10,649

 

Non-GAAP Operating Income (Loss)

 

$

1,677

 

 

$

(579

)

 

$

5,519

 

 

$

(3,149

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(35,049

)

 

$

(11,031

)

 

$

(125,233

)

 

$

(49,183

)

Stock-based compensation expense

 

 

22,767

 

 

 

13,371

 

 

 

88,097

 

 

 

48,170

 

Amortization of acquired intangibles

 

 

7,021

 

 

 

5,732

 

 

 

23,975

 

 

 

10,649

 

Non-GAAP Net Income (Loss)

 

$

(5,261

)

 

$

8,072

 

 

$

(13,161

)

 

$

9,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Basic Net Income (Loss) Per

Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

$

(0.40

)

 

$

(0.13

)

 

$

(1.45

)

 

$

(0.61

)

Stock-based compensation expense per share

 

 

0.26

 

 

 

0.16

 

 

 

1.02

 

 

 

0.59

 

Amortization of acquired intangibles per share

 

 

0.08

 

 

 

0.07

 

 

 

0.28

 

 

 

0.13

 

Non-GAAP Basic Net Income (Loss) Per Share

 

$

(0.06

)

 

$

0.10

 

 

$

(0.15

)

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted Net Income (Loss) Per

Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per diluted share

 

$

(0.40

)

 

$

(0.12

)

 

$

(1.45

)

 

$

(0.58

)

Stock-based compensation expense per share

 

 

0.26

 

 

 

0.15

 

 

 

1.02

 

 

 

0.56

 

Amortization of acquired intangibles per share

 

 

0.08

 

 

 

0.06

 

 

 

0.28

 

 

 

0.12

 

Non-GAAP Diluted Net Income (Loss) Per Share (1)

 

$

(0.06

)

 

$

0.09

 

 

$

(0.15

)

 

$

0.11

 

Shares used in computing non-GAAP diluted net income (loss) per share

 

 

86,976

 

 

 

89,257

 

 

 

86,263

 

 

 

85,381

 

 

(1) For the three months and year ended December 31, 2021, all common stock equivalents have been excluded from the diluted share count as their effect is antidilutive. For the three months and year ended December 31, 2020, the diluted share count included approximately 4.5 million and 4.4 million dilutive shares, respectively, related to employee stock options and stock-based awards.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

25,393

 

 

$

31,558

 

 

$

34,118

 

 

$

42,618

 

Less: Purchases of property and equipment

 

 

(3,196

)

 

 

(1,533

)

 

 

(7,659

)

 

 

(4,501

)

Less: Capitalized software development costs

 

 

(4,156

)

 

 

(1,453

)

 

 

(13,764

)

 

 

(4,159

)

Free Cash Flow

 

$

18,041

 

 

$

28,572

 

 

$

12,695

 

 

$

33,958

 

 

AVALARA, INC.
UNAUDITED PRESENTATION OF CALCULATED BILLINGS AND RECONCILIATION TO REVENUE

 

Three Months Ended

 

 

Dec 31,

2021 (1)

Sep 30,

2021 (1)

 

Jun 30,

2021 (1)

 

 

Mar 31,

2021

 

 

Dec 31,

2020 (1)

 

 

Sep 30,

2020

 

 

Jun 30,

2020

 

 

Mar 31,

2020

 

Total revenue

$

195,142

$

181,167

 

$

169,067

 

 

$

153,601

 

 

$

144,760

 

 

$

127,879

 

 

$

116,487

 

 

$

111,443

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (end of

period)

 

282,955

 

 

257,883

 

 

 

239,395

 

 

 

225,531

 

 

 

209,690

 

 

 

180,640

 

 

 

167,719

 

 

 

165,369

 

Contract liabilities (end of

period)

 

6,918

 

 

8,597

 

 

 

11,406

 

 

 

12,466

 

 

 

10,134

 

 

 

7,673

 

 

 

6,195

 

 

 

6,330

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

(beginning of

period)

 

(257,883

)

 

(239,395

)

 

 

(225,531

)

 

 

(209,690

)

 

 

(180,640

)

 

 

(167,719

)

 

 

(165,369

)

 

 

(161,241

)

Contract liabilities

(beginning of

period)

 

(8,597

)

 

(11,406

)

 

 

(12,466

)

 

 

(10,134

)

 

 

(7,673

)

 

 

(6,195

)

 

 

(6,330

)

 

 

(5,197

)

Deferred revenue and contract liabilities assumed in

business combinations

 

(747

)

 

(430

)

 

 

(886

)

 

 

 

 

 

(9,194

)

 

 

 

 

 

 

 

 

 

Calculated billings

$

217,788

$

196,416

 

$

180,985

 

 

$

171,774

 

 

$

167,077

 

 

$

142,278

 

 

$

118,702

 

 

$

116,704

 

 

(1) These quarters include reconciling adjustments to exclude the acquisition-date fair value of deferred revenue and contract liabilities assumed in business combinations.

 

AVALARA, INC.
UNAUDITED PRESENTATION OF KEY BUSINESS METRICS

 

Dec 31,
2021

Sep 30,
2021

 

Jun 30,
2021

 

 

Mar 31,
2021

 

 

Dec 31,
2020

 

 

Sep 30,
2020

 

 

Jun 30,
2020

 

 

Mar 31,
2020

 

Number of core

customers

(as of end

of period) - legacy

 

18,060

 

 

17,230

 

 

 

16,410

 

 

 

15,580

 

 

 

14,890

 

 

 

14,180

 

 

 

13,560

 

 

 

12,940

 

Number of core

customers

(as of end

of period) - revised(1)

 

18,270

 

 

17,400

 

 

 

16,570

 

 

 

15,730

 

 

 

15,020

 

 

 

14,300

 

 

 

13,640

 

 

 

13,000

 

Net revenue

retention rate - legacy

 

113

%

 

112

%

 

 

110

%

 

 

107

%

 

 

104

%

 

 

108

%

 

 

107

%

 

 

109

%

Net revenue

retention rate - revised(2)

 

116

%

 

 

116

%

 

 

116

%

 

 

113

%

 

 

115

%

 

 

116

%

 

 

114

%

 

 

117

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) During the second quarter of 2021, we revised the methodology for calculating core customers to include revenue from SST (see Definitions of Key Business Metrics above for details). The table above includes the number of core customers using both the legacy and the revised methodologies.
(2) During the second quarter of 2021, we revised the methodology for calculating net revenue retention rate to include revenue from SST. In addition, professional services revenue is no longer included in the revised calculation methodology, as these services tend to be more one-time in nature (see Definitions of Key Business Metrics above for details). The table above includes the net revenue retention rate using both the legacy and the revised methodologies.

 

Investor Contact
Jennifer Gianola
Avalara
jennifer.gianola@avalara.com
650-499-9837

Media Contact
Tommy Morgan
Avalara
media@avalara.com
540-448-7551

Source: Avalara, Inc.

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