With the business potentially at an important milestone, we thought we'd take a closer look at Avalara, Inc.'s (NYSE:AVLR) future prospects. Avalara, Inc., together with its subsidiaries, provides cloud-based solutions for transaction tax compliance worldwide. The company’s loss has recently broadened since it announced a US$49m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$81m, moving it further away from breakeven. As path to profitability is the topic on Avalara's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 11 of the American Software analysts is that Avalara is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$55m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 19% is expected, which seems realistic. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.
We're not going to go through company-specific developments for Avalara given that this is a high-level summary, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Avalara currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are too many aspects of Avalara to cover in one brief article, but the key fundamentals for the company can all be found in one place – Avalara's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Valuation: What is Avalara worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Avalara is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Avalara’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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