U.S. markets open in 38 minutes

Avalara Announces First Quarter 2020 Financial Results

First Quarter Total Revenue of $111.4 Million

Subscriptions and Returns Revenue Growth of 35% From First Quarter 2019

Avalara, Inc. (NYSE: AVLR), a leading provider of tax compliance automation for businesses of all sizes, today announced financial results for its first quarter ended March 31, 2020.

"Avalara continued to see strong growth at the start of 2020, driven by the delivery and adoption of our compliance automation suite by a variety of industries, segments, and regions," said Scott McFarlane, co-founder and chief executive officer of Avalara. "We believe that our proven ability to drive efficiencies for our customers, our partners, and ourselves will be even more critical to deliver strong results during this unprecedented challenge."

First Quarter 2020 Financial Results

  • Revenue: Total revenue was $111.4 million in the first quarter of 2020, up 31% from $85.0 million in the first quarter of 2019. Subscription and returns revenue was $105.5 million, up 35% from $78.2 million in the same period last year. Professional services revenue was $5.9 million, down 12% from $6.7 million in the same period last year.
  • Gross Profit: GAAP gross profit was $77.2 million in the first quarter of 2020, representing a 69% gross margin, compared to a GAAP gross profit of $59.7 million and a 70% gross margin in the first quarter of 2019. Non-GAAP gross profit was $79.6 million, representing a 71% non-GAAP gross margin, compared to a non-GAAP gross profit of $61.6 million and a 72% non-GAAP gross margin in the first quarter of 2019.
  • Operating Loss: GAAP operating loss was $19.7 million in the first quarter of 2020, compared to a GAAP operating loss of $10.8 million in the first quarter of 2019. Non-GAAP operating loss was $8.1 million, compared to a non-GAAP operating loss of $2.6 million in the first quarter of 2019.
  • Net Loss: GAAP net loss was $15.3 million in the first quarter of 2020, compared to a GAAP net loss of $10.4 million in the first quarter of 2019. Non-GAAP net loss was $3.7 million, compared to a non-GAAP net loss of $2.1 million in the first quarter of 2019.
  • Net Loss per Share: GAAP net loss per share was $0.20 based on 77.9 million weighted-average shares outstanding in the first quarter of 2020, compared to a GAAP net loss per share of $0.15 based on 68.4 million weighted-average shares outstanding in the first quarter of 2019. Non-GAAP net loss per share was $0.05 in the first quarter of 2020, compared to a non-GAAP net loss per share of $0.03 in the first quarter of 2019.
  • Deferred Revenue: Total deferred revenue was $165.4 million at March 31, 2020, up from $161.2 million at December 31, 2019. The current portion of deferred revenue was $164.7 million at March 31, 2020, up from $160.3 million at December 31, 2019.
  • Cash: Net cash used in operating activities was $24.3 million in the first quarter of 2020, compared to $10.4 million used in operating activities in the first quarter of 2019. Free cash flow was negative $25.9 million in the first quarter of 2020, compared to negative $12.5 million in the first quarter of 2019. Cash and cash equivalents totaled $450.5 million at March 31, 2020 compared to $467.0 million at December 31, 2019.
  • Calculated Billings: Calculated billings were $116.7 million in the first quarter of 2020, compared to calculated billings of $96.4 million in the first quarter of 2019.

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

First Quarter 2020 Operating Highlights

  • Key Metrics: We ended the first quarter of 2020 with approximately 12,710 core customers, up from approximately 11,960 core customers at the end of the previous quarter and approximately 9,700 in the first quarter of 2019, a 31% increase year-over-year. Our net revenue retention rate was 109% in the first quarter of 2020 and has averaged 111% over the last four quarters.
  • Appointed Brian Sharples to Board of Directors: We announced the appointment of global business leader and strategist Brian Sharples to our board of directors. Sharples is co-founder and former CEO of HomeAway, a leading online marketplace of vacation rentals, and currently serves on the board of directors for Yelp, GoDaddy, RVShare, Fexy Media, and Ally Financial Group. Prior to founding HomeAway, Mr. Sharples was President and CEO of IntelliQuest Information Group, a supplier of marketing data and research to Fortune 500 technology companies. He has been an active angel investor since 2001 and has made early stage investments in more than 30 companies since that time. He has more than 30 years of experience working with leaders, boards, and global teams to help technology companies establish their brand strategy and scale. Mr. Sharples joins the Avalara board after the recent addition of Bill Ingram, Avalara’s CFO from 2015 until March 2020. Avalara also announced that Justin Sadrian, a managing director at Warburg Pincus LLC, will be leaving its board of directors when his current term ends in June 2020.

Financial Outlook

Based on the unprecedented conditions associated with the novel coronavirus (COVID-19) pandemic, the Company is updating its financial outlook for the full year 2020 and providing the following financial outlook for the second quarter.

For the second quarter of 2020, the Company currently expects:

  • Total revenue between $109 and $111 million.
  • Non-GAAP operating loss between $8 and $9 million.

For the full year 2020, the Company currently expects:

  • Total revenue between $455 and $465 million.
  • Non-GAAP operating loss between $18 and $22 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, May 7, 2020, to discuss its financial results and business highlights. The conference call can be accessed by dialing (844) 882-5970 from the United States and Canada or (647) 253-8697 internationally with conference ID 4577413. 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, May 14, 2020 and a webcast replay will also be archived at investor.avalara.com. The telephone replay will be available by dialing (800) 585-8367 from the United States and Canada or (416) 621-4642 internationally with conference ID 4577413.

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 Canada, the U.K., Belgium, Brazil, 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 second quarter and full year 2020. 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, 2019, 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 loss, non-GAAP net loss, non-GAAP net 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 loss as GAAP operating loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments. We calculate non-GAAP net loss as GAAP net loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments.
  • We calculate non-GAAP net loss per share as non-GAAP net loss divided by weighted average shares outstanding.
  • We define free cash flow as net cash (used in) provided by operating activities less cash used for the purchases of property and equipment.
  • We define calculated billings as total revenue plus the changes in deferred revenue and contract liabilities in the period. Because we 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 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 last twelve 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 who subscribe to our solutions through our international subsidiaries and certain legacy billing systems that have not been integrated into our primary U.S. billing systems (e.g., 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 also have a substantial number of customers of various sizes who do not meet the revenue threshold to be considered a core customer. These customers provide us with market share and awareness, and we anticipate that some may grow into core customers. We believe there is strategic value to addressing the small business and self-serve segment of the marketplace.

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 revenue in the current quarter from any billing accounts that generated revenue during the corresponding quarter of the prior year by (b) total 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.

Currently, 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 billing systems primarily related to past acquisitions.

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

 
 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

105,546

 

 

$

78,231

 

Professional services

 

 

5,897

 

 

 

6,739

 

Total revenue

 

 

111,443

 

 

 

84,970

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

29,517

 

 

 

20,978

 

Professional services

 

 

4,737

 

 

 

4,329

 

Total cost of revenue (2)

 

 

34,254

 

 

 

25,307

 

Gross profit

 

 

77,189

 

 

 

59,663

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (2)

 

 

25,847

 

 

 

15,956

 

Sales and marketing (1)(2)

 

 

49,634

 

 

 

39,319

 

General and administrative (2)

 

 

21,388

 

 

 

15,234

 

Total operating expenses

 

 

96,869

 

 

 

70,509

 

Operating loss

 

 

(19,680

)

 

 

(10,846

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(1,442

)

 

 

(767

)

Interest expense

 

 

 

 

 

111

 

Other (income) expense, net

 

 

(3,372

)

 

 

48

 

Total other (income) expense, net

 

 

(4,814

)

 

 

(608

)

Loss before income taxes

 

 

(14,866

)

 

 

(10,238

)

Provision for (benefit from) income taxes

 

 

417

 

 

 

116

 

Net loss

 

$

(15,283

)

 

$

(10,354

)

 

 

 

 

 

 

 

 

 

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

 

$

(0.20

)

 

$

(0.15

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

77,904

 

 

 

68,381

 

 

 

 

 

 

 

 

 

 

(1) In preparing our 2019 annual financial statements, we discovered an immaterial error in recording deferred sales commissions for the first three quarters of 2019 impacting our previously reported quarterly financial results. We have presented the corrected consolidated statements of operations data for the first quarter of 2019. The correction to sales commission expense resulted in additional sales and marketing expenses of $1.1 million for the three months ended March 31, 2019.

 

 

 

For the Three Months Ended March 31,

 

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

 

2020

 

 

2019

 

Cost of revenue

 

$

1,196

 

 

$

741

 

Research and development

 

 

2,394

 

 

 

1,292

 

Sales and marketing

 

 

2,815

 

 

 

2,169

 

General and administrative

 

 

3,326

 

 

 

2,358

 

Total stock-based compensation

 

$

9,731

 

 

$

6,560

 

 

 

 

 

 

 

 

 

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

1,230

 

 

$

1,170

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

607

 

 

 

505

 

General and administrative

 

 

4

 

 

 

3

 

Total amortization of acquired intangibles

 

$

1,841

 

 

$

1,678

 

 

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

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

450,535

 

 

$

466,950

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

53,797

 

 

 

51,644

 

Deferred commissions

 

 

9,676

 

 

 

9,279

 

Prepaid expenses and other current assets

 

 

18,872

 

 

 

14,127

 

Total current assets before customer fund assets

 

 

532,880

 

 

 

542,000

 

Funds held from customers

 

 

28,096

 

 

 

24,383

 

Receivable from customers—net of allowance for doubtful accounts

 

 

588

 

 

 

420

 

Total current assets

 

 

561,564

 

 

 

566,803

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Deferred commissions

 

 

30,990

 

 

 

29,137

 

Operating lease right-of-use assets—net

 

 

53,929

 

 

 

49,321

 

Property and equipment—net

 

 

34,185

 

 

 

34,997

 

Intangible assets—net

 

 

20,949

 

 

 

22,932

 

Goodwill

 

 

101,035

 

 

 

101,224

 

Other noncurrent assets

 

 

3,237

 

 

 

2,853

 

Total assets

 

$

805,889

 

 

$

807,267

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade payables

 

 

15,289

 

 

 

11,693

 

Accrued expenses

 

 

45,187

 

 

 

62,104

 

Deferred revenue

 

 

164,699

 

 

 

160,271

 

Accrued earnout liabilities

 

 

3,671

 

 

 

4,120

 

Operating lease liabilities

 

 

10,140

 

 

 

8,756

 

Total current liabilities before customer fund obligations

 

 

238,986

 

 

 

246,944

 

Customer fund obligations

 

 

28,817

 

 

 

24,783

 

Total current liabilities

 

 

267,803

 

 

 

271,727

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Deferred revenue

 

 

670

 

 

 

970

 

Accrued earnout liabilities

 

 

 

 

 

9,835

 

Operating lease liabilities

 

 

59,887

 

 

 

58,301

 

Deferred tax liability

 

 

399

 

 

 

337

 

Other noncurrent liabilities

 

 

836

 

 

 

2,375

 

Total liabilities

 

 

329,595

 

 

 

343,545

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

1,003,857

 

 

 

976,627

 

Accumulated other comprehensive loss

 

 

(2,094

)

 

 

(2,719

)

Accumulated deficit

 

 

(525,477

)

 

 

(510,194

)

Total shareholders’ equity

 

 

476,294

 

 

 

463,722

 

Total liabilities and shareholders' equity

 

$

805,889

 

 

$

807,267

 

 

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

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

 $

(15,283

)

 

$

(10,354

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

9,731

 

 

 

6,560

 

Depreciation and amortization

 

 

4,091

 

 

 

3,681

 

Deferred tax expense

 

 

62

 

 

 

39

 

Non-cash operating lease costs (1)

 

 

1,956

 

 

 

1,054

 

Non-cash change in earnout liability

 

 

(2,509

)

 

 

 

Non-cash bad debt expense

 

 

631

 

 

 

222

 

Other

 

 

192

 

 

 

58

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(2,750

)

 

 

(5,535

)

Prepaid expenses and other current assets

 

 

(4,745

)

 

 

(1,705

)

Deferred commissions

 

 

(2,250

)

 

 

(5,266

)

Other noncurrent assets

 

 

(384

)

 

 

(236

)

Trade payables

 

 

3,659

 

 

 

3,590

 

Accrued expenses

 

 

(18,568

)

 

 

(10,373

)

Deferred revenue

 

 

4,128

 

 

 

9,031

 

Operating lease liabilities (1)

 

 

(2,230

)

 

 

(1,187

)

Net cash used in operating activities

 

 

(24,269

)

 

 

(10,421

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,600

)

 

 

(2,114

)

Cash paid for acquisitions of businesses

 

 

 

 

 

(17,310

)

Cash paid for acquired intangible assets

 

 

 

 

 

(131

)

Net increase in customer fund assets

 

 

(3,915

)

 

 

(7,224

)

Net cash used in investing activities

 

 

(5,515

)

 

 

(26,779

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of deferred financing costs

 

 

 

 

 

(39

)

Proceeds from exercise of stock options

 

 

7,928

 

 

 

27,311

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

5,716

 

 

 

7,664

 

Taxes paid related to net share settlement of stock-based awards

 

 

 

 

 

(93

)

Payment related to business combination earnouts

 

 

(3,760

)

 

 

 

Net increase in customer fund obligations

 

 

3,915

 

 

 

7,143

 

Net cash provided by financing activities

 

 

13,799

 

 

 

41,986

 

Foreign currency effect on cash and cash equivalents

 

 

(365

)

 

 

(230

)

Net change in cash and cash equivalents

 

 

(16,350

)

 

 

4,556

 

Cash and cash equivalents—Beginning of period

 

 

466,950

 

 

 

142,322

 

Cash and cash equivalents—End of period

 

$

450,600

 

 

$

146,878

 

 

(1) Avalara adopted the new lease accounting standard as of January 1, 2019 in our Annual Report on Form 10-K for the year ended December 31, 2019. We have presented cash flows from operating activities for the quarter ended March 31, 2019 to include adjustments for the adoption of the new lease accounting standard. The adjustments do not impact previously disclosed net cash used in operating activities.

 

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 March 31,

 

 

 

2020

 

 

2019

 

Non-GAAP cost of revenue

 

$

31,828

 

 

$

23,396

 

Non-GAAP gross profit

 

 

79,615

 

 

 

61,574

 

Non-GAAP gross margin

 

 

71

%

 

 

72

%

Non-GAAP research and development expense

 

$

23,453

 

 

$

14,664

 

Non-GAAP sales and marketing expense

 

 

46,212

 

 

 

36,645

 

Non-GAAP general and administrative expense

 

 

18,058

 

 

 

12,873

 

Non-GAAP operating loss

 

 

(8,108

)

 

 

(2,608

)

Non-GAAP net loss

 

 

(3,711

)

 

 

(2,116

)

Non-GAAP net loss per share

 

 

(0.05

)

 

 

(0.03

)

Free cash flow

 

$

(25,869

)

 

$

(12,535

)

 

Reconciliation of Non-GAAP Financial Measures:

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Reconciliation of Non-GAAP Cost of Revenue:

 

 

 

 

 

 

 

 

Cost of revenue

 

$

34,254

 

 

$

25,307

 

Stock-based compensation expense

 

 

(1,196

)

 

 

(741

)

Amortization of acquired intangibles

 

 

(1,230

)

 

 

(1,170

)

Non-GAAP Cost of Revenue

 

$

31,828

 

 

$

23,396

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Profit:

 

 

 

 

 

 

 

 

Gross Profit

 

$

77,189

 

 

$

59,663

 

Stock-based compensation expense

 

 

1,196

 

 

 

741

 

Amortization of acquired intangibles

 

 

1,230

 

 

 

1,170

 

Non-GAAP Gross Profit

 

$

79,615

 

 

$

61,574

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Margin:

 

 

 

 

 

 

 

 

Gross margin

 

 

69

%

 

 

70

%

Stock-based compensation expense as a percentage of revenue

 

 

1

%

 

 

1

%

Amortization of acquired intangibles as a percentage of revenue

 

 

1

%

 

 

1

%

Non-GAAP Gross Margin

 

 

71

%

 

 

72

%

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Research and Development Expense:

 

 

 

 

 

 

 

 

Research and development

 

$

25,847

 

 

$

15,956

 

Stock-based compensation expense

 

 

(2,394

)

 

 

(1,292

)

Amortization of acquired intangibles

 

 

 

 

 

 

Non-GAAP Research and Development Expense

 

$

23,453

 

 

$

14,664

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Sales and Marketing Expense:

 

 

 

 

 

 

 

 

Sales and marketing

 

$

49,634

 

 

$

39,319

 

Stock-based compensation expense

 

 

(2,815

)

 

 

(2,169

)

Amortization of acquired intangibles

 

 

(607

)

 

 

(505

)

Non-GAAP Sales and Marketing Expense

 

$

46,212

 

 

$

36,645

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP General and Administrative Expense:

 

 

 

 

 

 

 

 

General and administrative

 

$

21,388

 

 

$

15,234

 

Stock-based compensation expense

 

 

(3,326

)

 

 

(2,358

)

Amortization of acquired intangibles

 

 

(4

)

 

 

(3

)

Non-GAAP General and Administrative Expense

 

$

18,058

 

 

$

12,873

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Reconciliation of Non-GAAP Operating Loss:

 

 

 

 

 

 

 

 

Operating loss

 

$

(19,680

)

 

$

(10,846

)

Stock-based compensation expense

 

 

9,731

 

 

 

6,560

 

Amortization of acquired intangibles

 

 

1,841

 

 

 

1,678

 

Non-GAAP Operating Loss

 

$

(8,108

)

 

$

(2,608

)

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss:

 

 

 

 

 

 

 

 

Net loss

 

$

(15,283

)

 

$

(10,354

)

Stock-based compensation expense

 

 

9,731

 

 

 

6,560

 

Amortization of acquired intangibles

 

 

1,841

 

 

 

1,678

 

Non-GAAP Net Loss

 

$

(3,711

)

 

$

(2,116

)

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss Per Share:

 

 

 

 

 

 

 

 

Net loss per share

 

$

(0.20

)

 

$

(0.15

)

Stock-based compensation expense per share

 

 

0.12

 

 

 

0.10

 

Amortization of acquired intangibles per share

 

 

0.02

 

 

 

0.02

 

Non-GAAP Net Loss Per Share

 

$

(0.05

)

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(24,269

)

 

$

(10,421

)

Purchases of property and equipment

 

 

(1,600

)

 

 

(2,114

)

Free Cash Flow

 

$

(25,869

)

 

$

(12,535

)

 

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

 

 

Three Months Ended

 

 

Mar 31,
2020

 

 

Dec 31,
2019

 

 

Sep 30,
2019

 

 

Jun 30,
2019

 

 

Mar 31,
2019 (1)

 

 

Dec 31,
2018

 

 

Sep 30,
2018

 

 

Jun 30,
2018

 

Total revenue

$

111,443

 

 

$

107,627

 

 

$

98,525

 

 

$

91,299

 

 

$

84,970

 

 

$

76,923

 

 

$

69,919

 

 

$

63,879

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (end of
period)

 

165,369

 

 

 

161,241

 

 

 

148,466

 

 

 

138,811

 

 

 

132,714

 

 

 

134,653

 

 

 

118,209

 

 

 

109,344

 

Contract liabilities (end of
period)

 

6,330

 

 

 

5,197

 

 

 

4,843

 

 

 

4,508

 

 

 

4,208

 

 

 

 

 

 

 

 

 

 

Impact of adoption of ASC 606
on deferred revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

11,250

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (beginning of
period)

 

(161,241

)

 

 

(148,466

)

 

 

(138,811

)

 

 

(132,714

)

 

 

(134,653

)

 

 

(118,209

)

 

 

(109,344

)

 

 

(103,878

)

Contract liabilities (beginning
of period)

 

(5,197

)

 

 

(4,843

)

 

 

(4,508

)

 

 

(4,208

)

 

 

 

 

 

 

 

 

 

 

 

 

Impact of adoption of ASC 606
on contract liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,090

)

 

 

 

 

 

 

 

 

 

Calculated billings

$

116,704

 

 

$

120,756

 

 

$

108,515

 

 

$

97,696

 

 

$

96,399

 

 

$

93,367

 

 

$

78,784

 

 

$

69,345

 

 

(1) The first quarter of 2019 includes reconciling adjustments to exclude the one-time impact of adoption of ASC 606 as of January 1, 2019.

 

AVALARA, INC.

UNAUDITED PRESENTATION OF KEY BUSINESS METRICS

 

Mar 31,
2020

 

 

Dec 31,
2019

 

 

Sep 30,
2019

 

 

Jun 30,
2019

 

 

Mar 31,
2019

 

 

Dec 31,
2018

 

 

Sep 30,
2018

 

 

Jun 30,
2018

 

Number of core
customers (as of
end of period)

 

12,710

 

 

 

11,960

 

 

 

11,240

 

 

 

10,430

 

 

 

9,700

 

 

 

9,070

 

 

 

8,490

 

 

 

8,080

 

Net revenue
retention rate

 

109

%

 

 

111

%

 

 

113

%

 

 

111

%

 

 

107

%

 

 

108

%

 

 

105

%

 

 

108

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200507006066/en/

Contacts

Investor Contact
Greg McDowell
ICR, LLC
investor@avalara.com
206-641-2425

Media Contact
Jesse Hamlin
Avalara
media@avalara.com
518-281-0631