Avalara Announces Third Quarter 2019 Financial Results

Third Quarter Total Revenue of $98.5 million

Approximately 11,240 Core Customers as of September 30, 2019

SEATTLE--()--Avalara, Inc. (NYSE: AVLR), a leading provider of tax compliance automation for businesses of all sizes, today announced financial results for its third quarter ended September 30, 2019.

“Our third quarter was another strong performance for the company, highlighted by revenue growing 41% year over year,” said Scott McFarlane, Avalara co-founder and chief executive officer. “We continue to believe that the automation of transaction tax in our digital economy is inevitable. As technology becomes the backend to every business, government, and financial transaction, Avalara’s compliance cloud platform is designed to scale to support and enable those changes.”

Adoption of the New Revenue Recognition Standard – ASC 606

Avalara adopted the new revenue recognition accounting standard, Accounting Standards Codification (“ASC”) 606, effective January 1, 2019 on a modified retrospective basis. Financial results for reporting periods during 2019 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard ASC 605. This press release includes additional information to reconcile the impacts of the adoption of the new revenue recognition standard on the Company’s financial results for the three and nine months ended September 30, 2019, including the presentation of financial results during 2019 under ASC 605 for comparison to the prior year.

Third Quarter 2019 Financial Results – ASC 606 (standard adopted effective January 1, 2019)

  • Revenue: ASC 606 total revenue was $98.5 million. Subscription and returns revenue was $92.0 million. Professional services revenue was $6.5 million.
  • Gross Profit: ASC 606 GAAP gross profit was $68.7 million, representing a 70% gross margin. ASC 606 non-GAAP gross profit was $70.8 million, representing a 72% non-GAAP gross margin.
  • Operating Loss: ASC 606 GAAP operating loss was $13.9 million. ASC 606 non-GAAP operating loss was $2.2 million.
  • Net Loss: ASC 606 GAAP net loss was $12.4 million. ASC 606 non-GAAP net loss was $0.6 million.
  • Net Loss per Share: ASC 606 GAAP net loss per share was $0.16 based on 76.2 million weighted-average shares outstanding. ASC 606 non-GAAP net loss per share was $0.01 based on 76.2 million weighted-average shares outstanding.
  • Deferred Revenue: ASC 606 total deferred revenue was $148.5 million at September 30, 2019. The current portion of ASC 606 deferred revenue was $147.7 million at September 30, 2019.
  • Cash: Net cash provided by operating activities was $5.9 million, compared to $1.2 million provided by operating activities in the third quarter of 2018. Free cash flow was positive $3.6 million, compared to negative $3.6 million in the third quarter of 2018. Our cash and cash equivalents totaled $446.6 million at September 30, 2019.
  • Calculated Billings: Calculated billings were $108.5 million in the third quarter of 2019, compared to calculated billings of $78.8 million in the third quarter of 2018.

Third Quarter 2019 Financial Results – ASC 605

  • Revenue: ASC 605 total revenue was $98.5 million, up 41% from $69.9 million in the third quarter of 2018. Subscription and returns revenue was $92.1 million, up 42% from $64.6 million in the same period last year. Professional services revenue was $6.5 million, up 22% from $5.3 million in the same period last year.
  • Gross Profit: ASC 605 GAAP gross profit was $68.8 million, representing a 70% gross margin, compared to a GAAP gross profit of $49.7 million and a 71% gross margin in the third quarter of 2018. ASC 605 non-GAAP gross profit was $70.8 million, representing a 72% non-GAAP gross margin, compared to a non-GAAP gross profit of $51.3 million and a 73% non-GAAP gross margin in the third quarter of 2018.
  • Operating Loss: ASC 605 GAAP operating loss was $18.7 million, compared to a GAAP operating loss of $24.3 million in the third quarter of 2018. ASC 605 non-GAAP operating loss was $6.9 million, compared to a non-GAAP operating loss of $9.2 million in the third quarter of 2018.
  • Net Loss: ASC 605 GAAP net loss was $17.1 million, compared to a GAAP net loss of $24.1 million in the third quarter of 2018. ASC 605 non-GAAP net loss was $5.4 million, compared to a non-GAAP net loss of $9.0 million in the third quarter of 2018.
  • Net Loss per Share: ASC 605 GAAP net loss per share was $0.22 based on 76.2 million weighted-average shares outstanding, compared to a GAAP net loss per share of $0.36 based on 66.6 million weighted-average shares outstanding in the third quarter of 2018. ASC 605 non-GAAP net loss per share was $0.07 based on 76.2 million non-GAAP shares outstanding in the third quarter of 2019, compared to ASC 605 non-GAAP net loss per share of $0.14 based on 66.6 million non-GAAP shares outstanding in the third quarter of 2018.
  • Deferred Revenue: Total ASC 605 deferred revenue was $162.2 million at September 30, 2019, up from $134.7 million at December 31, 2018. The current portion of ASC 605 deferred revenue was $153.1 million at September 30, 2019, up from $125.3 million at December 31, 2018.
  • Cash: The adoption of ASC 606 did not have an impact on cash and free cash flow.

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

Key Metrics

We ended the third quarter of 2019 with approximately 11,240 core customers, up from approximately 10,430 core customers at the end of the second quarter of 2019. Approximately 80 new core customers from our Compli acquisition were added following our integration of their customer base into our primary US billing system in the third quarter of 2019. Our net revenue retention rate was 113% in the third quarter of 2019 and has averaged 110% over the last four quarters.

Financial Outlook

For the fourth quarter of 2019, the Company currently expects:

  • ASC 606 total revenue between $99.5 and $100.5 million.
  • ASC 606 non-GAAP operating loss between $7.0 and $8.0 million.

For the full year 2019, the Company currently expects:

  • ASC 606 total revenue between $374.3 and $375.3 million.
  • ASC 606 non-GAAP operating loss between $13.2 and $14.2 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, November 5, 2019, 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 2882089. 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 Tuesday, November 12, 2019 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 2882089.

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 fourth quarter and full year 2019. 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 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, 2018 and in any subsequent Quarterly Reports on Form 10-Q, all of 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, non-GAAP shares outstanding, 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 shares outstanding for the nine months ended September 30, 2018 as GAAP weighted-average shares outstanding during the period adjusted as if (1) the conversion of preferred stock into common stock and (2) the issuance of 8,625,000 shares of common stock in our IPO had both occurred as of January 1, 2018.
  • We calculate non-GAAP net loss per share as non-GAAP net loss divided by non-GAAP 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 an 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.

As a result of adoption of ASC 606 effective January 1, 2019, non-GAAP financial measures for the three and nine months ended September 30, 2019, as computed in accordance with ASC 606, are not as comparable to non-GAAP financial measures for the three and nine months ended September 30, 2018, which are computed in accordance with ASC 605. Except for calculated billings, the reconciliation of non-GAAP measures provided below includes additional information to reconcile the impacts of the adoption of ASC 606 on the non-GAAP financial measures for the three and nine months ended September 30, 2019, including presentation of the non-GAAP measures for 2019 under ASC 605 for comparison to the prior periods.

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 key business metrics, such as 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 billing system (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 or certain legacy billing systems primarily related to past acquisitions. 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 September 30,

 

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

91,986

 

 

$

64,611

 

Professional services

 

 

6,539

 

 

 

5,308

 

Total revenue

 

 

98,525

 

 

 

69,919

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

25,621

 

 

 

17,330

 

Professional services

 

 

4,157

 

 

 

2,906

 

Total cost of revenue (1)

 

 

29,778

 

 

 

20,236

 

Gross profit

 

 

68,747

 

 

 

49,683

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (1)

 

 

21,871

 

 

 

13,285

 

Sales and marketing (1)

 

 

40,313

 

 

 

41,276

 

General and administrative (1)

 

 

20,511

 

 

 

10,235

 

Goodwill impairment

 

 

 

 

 

9,174

 

Total operating expenses

 

 

82,695

 

 

 

73,970

 

Operating loss

 

 

(13,948

)

 

 

(24,287

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(2,202

)

 

 

(676

)

Interest expense

 

 

2

 

 

 

534

 

Other (income) expense, net

 

 

265

 

 

 

49

 

Total other (income) expense, net

 

 

(1,935

)

 

 

(93

)

Loss before income taxes

 

 

(12,013

)

 

 

(24,194

)

Provision for (benefit from) income taxes

 

 

341

 

 

 

(91

)

Net loss

 

$

(12,354

)

 

$

(24,103

)

 

 

 

 

 

 

 

 

 

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

 

$

(0.16

)

 

$

(0.36

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

76,156

 

 

 

66,590

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

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

 

2019

 

 

2018

 

Cost of revenue

 

$

828

 

 

$

508

 

Research and development

 

 

1,781

 

 

 

906

 

Sales and marketing

 

 

2,135

 

 

 

1,589

 

General and administrative

 

 

5,178

 

 

 

1,334

 

Total stock-based compensation

 

$

9,922

 

 

$

4,337

 

 

 

 

 

 

 

 

 

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

1,235

 

 

$

1,121

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

605

 

 

 

474

 

General and administrative

 

 

4

 

 

 

 

Total amortization of acquired intangibles

 

$

1,844

 

 

$

1,595

 

The total employer payroll tax expense on employee stock transactions included above was $1.5 million for the three months ended September 30, 2019, of which $0.1 million is included in cost of revenue, $0.1 million is included in research and development, $0.2 million is included in sales and marketing, and $1.1 million is included in general and administrative.

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

255,225

 

 

$

182,326

 

Professional services

 

 

19,569

 

 

 

12,849

 

Total revenue

 

 

274,794

 

 

 

195,175

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

69,537

 

 

 

47,984

 

Professional services

 

 

12,883

 

 

 

8,393

 

Total cost of revenue (1)

 

 

82,420

 

 

 

56,377

 

Gross profit

 

 

192,374

 

 

 

138,798

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (1)

 

 

56,823

 

 

 

38,332

 

Sales and marketing (1)

 

 

119,199

 

 

 

119,187

 

General and administrative (1)

 

 

53,764

 

 

 

28,787

 

Goodwill impairment

 

 

 

 

 

9,174

 

Total operating expenses

 

 

229,786

 

 

 

195,480

 

Operating loss

 

 

(37,412

)

 

 

(56,682

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(4,251

)

 

 

(811

)

Interest expense

 

 

286

 

 

 

2,495

 

Other (income) expense, net

 

 

694

 

 

 

(423

)

Total other (income) expense, net

 

 

(3,271

)

 

 

1,261

 

Loss before income taxes

 

 

(34,141

)

 

 

(57,943

)

Provision for (benefit from) income taxes

 

 

629

 

 

 

(825

)

Net loss

 

$

(34,770

)

 

$

(57,118

)

 

 

 

 

 

 

 

 

 

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

 

$

(0.48

)

 

$

(1.95

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

72,064

 

 

 

29,269

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30,

 

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

 

2019

 

 

2018

 

Cost of revenue

 

$

2,277

 

 

$

1,181

 

Research and development

 

 

4,700

 

 

 

2,271

 

Sales and marketing

 

 

6,411

 

 

 

3,674

 

General and administrative

 

 

12,518

 

 

 

4,285

 

Total stock-based compensation

 

$

25,906

 

 

$

11,411

 

 

 

 

 

 

 

 

 

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

3,635

 

 

$

2,906

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

1,653

 

 

 

1,483

 

General and administrative

 

 

11

 

 

 

17

 

Total amortization of acquired intangibles

 

$

5,299

 

 

$

4,406

 

The total employer payroll tax expense on employee stock transactions included above was $5.4 million for the nine months ended September 30, 2019, of which $0.5 million is included in cost of revenue, $0.9 million is included in research and development, $1.5 million is included in sales and marketing, and $2.5 million is included in general and administrative.

 

AVALARA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

446,563

 

 

$

142,322

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

49,124

 

 

 

40,287

 

Deferred commissions

 

 

8,402

 

 

 

 

Prepaid expenses and other current assets

 

 

13,856

 

 

 

11,307

 

Total current assets before customer fund assets

 

 

517,945

 

 

 

193,916

 

Funds held from customers

 

 

16,665

 

 

 

13,113

 

Receivable from customers—net of allowance for doubtful accounts

 

 

690

 

 

 

270

 

Total current assets

 

 

535,300

 

 

 

207,299

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Property and equipment—net

 

 

34,537

 

 

 

33,373

 

Goodwill

 

 

100,926

 

 

 

61,300

 

Intangible assets—net

 

 

24,543

 

 

 

19,371

 

Deferred commissions

 

 

27,206

 

 

 

 

Other noncurrent assets

 

 

2,420

 

 

 

1,589

 

Total assets

 

$

724,932

 

 

$

322,932

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade payables

 

 

10,962

 

 

 

4,847

 

Accrued expenses

 

 

49,864

 

 

 

42,101

 

Accrued earnout liabilities

 

 

6,102

 

 

 

116

 

Deferred revenue

 

 

147,713

 

 

 

125,260

 

Total current liabilities before customer fund obligations

 

 

214,641

 

 

 

172,324

 

Customer fund obligations

 

 

17,306

 

 

 

13,349

 

Total current liabilities

 

 

231,947

 

 

 

185,673

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Deferred revenue

 

 

753

 

 

 

9,393

 

Deferred tax liability

 

 

698

 

 

 

560

 

Deferred rent

 

 

15,905

 

 

 

17,317

 

Accrued earnout liabilities

 

 

9,399

 

 

 

 

Other noncurrent liabilities

 

 

2,361

 

 

 

436

 

Total liabilities

 

 

261,063

 

 

 

213,379

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

961,733

 

 

 

599,493

 

Accumulated other comprehensive loss

 

 

(3,122

)

 

 

(2,345

)

Accumulated deficit

 

 

(494,750

)

 

 

(487,602

)

Total shareholders’ equity

 

 

463,869

 

 

 

109,553

 

Total liabilities and shareholders' equity

 

$

724,932

 

 

$

322,932

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(12,354

)

 

$

(24,103

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,016

 

 

 

3,398

 

Goodwill impairment

 

 

 

 

 

9,174

 

Stock-based compensation

 

 

9,922

 

 

 

4,337

 

Deferred tax expense (benefit)

 

 

60

 

 

 

(143

)

Amortization of deferred rent

 

 

(386

)

 

 

(32

)

Non-cash change in earnout liability

 

 

134

 

 

 

32

 

Non-cash bad debt expense (recovery)

 

 

152

 

 

 

(297

)

Other

 

 

32

 

 

 

285

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(5,920

)

 

 

(5,830

)

Prepaid expenses and other current assets

 

 

(2,678

)

 

 

(2,544

)

Deferred commissions

 

 

(4,788

)

 

 

 

Other noncurrent assets

 

 

(49

)

 

 

(533

)

Trade payables

 

 

2,350

 

 

 

(1,105

)

Accrued expenses

 

 

5,706

 

 

 

9,095

 

Deferred rent (lease incentives)

 

 

 

 

 

579

 

Deferred revenue

 

 

9,655

 

 

 

8,865

 

Net cash provided by operating activities

 

 

5,852

 

 

 

1,178

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net (increase) decrease in customer fund assets

 

 

7,892

 

 

 

6,638

 

Cash paid for acquired intangible assets

 

 

(8

)

 

 

(121

)

Cash paid for acquisitions of businesses

 

 

(13,000

)

 

 

 

Purchase of property and equipment

 

 

(2,246

)

 

 

(4,745

)

Net cash (used in) provided by investing activities

 

 

(7,362

)

 

 

1,772

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of deferred financing costs

 

 

(157

)

 

 

(1,462

)

Payments on credit facility

 

 

 

 

 

(30,000

)

Net increase (decrease) in customer fund obligations

 

 

(7,811

)

 

 

(6,638

)

Proceeds from exercise of stock options and common stock warrants

 

 

11,166

 

 

 

207

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

4,629

 

 

 

 

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

 

 

(1,090

)

 

 

(109

)

Payment related to business combination earnouts

 

 

(375

)

 

 

 

Net cash (used in) provided by financing activities

 

 

6,362

 

 

 

(38,002

)

Foreign currency effect on cash and cash equivalents

 

 

127

 

 

 

37

 

Net change in cash and cash equivalents

 

 

4,979

 

 

 

(35,015

)

Cash and cash equivalents—Beginning of period

 

 

441,584

 

 

 

173,108

 

Cash and cash equivalents—End of period

 

$

446,563

 

 

$

138,093

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(34,770

)

 

$

(57,118

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,684

 

 

 

9,390

 

Goodwill impairment

 

 

 

 

 

9,174

 

Stock-based compensation

 

 

25,906

 

 

 

11,411

 

Deferred tax expense (benefit)

 

 

138

 

 

 

(1,110

)

Amortization of deferred rent

 

 

(778

)

 

 

231

 

Non-cash change in earnout liability

 

 

610

 

 

 

(430

)

Non-cash bad debt expense (recovery)

 

 

602

 

 

 

(382

)

Other

 

 

227

 

 

 

526

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(9,648

)

 

 

(7,852

)

Prepaid expenses and other current assets

 

 

(3,274

)

 

 

(2,688

)

Deferred commissions

 

 

(16,340

)

 

 

 

Other noncurrent assets

 

 

(831

)

 

 

(549

)

Trade payables

 

 

4,818

 

 

 

(3,353

)

Accrued expenses

 

 

2,305

 

 

 

6,095

 

Deferred rent (lease incentives)

 

 

 

 

 

579

 

Deferred revenue

 

 

24,782

 

 

 

25,978

 

Net cash provided by (used in) operating activities

 

 

5,431

 

 

 

(10,098

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net (increase) decrease in customer fund assets

 

 

(3,986

)

 

 

2,053

 

Cash paid for acquired intangible assets

 

 

(139

)

 

 

(5,002

)

Cash paid for acquisitions of businesses

 

 

(30,310

)

 

 

 

Purchase of property and equipment

 

 

(7,196

)

 

 

(12,914

)

Net cash used in investing activities

 

 

(41,631

)

 

 

(15,863

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net of underwriting discounts

 

 

274,705

 

 

 

192,510

 

Payments of deferred financing costs

 

 

(555

)

 

 

(2,084

)

Payments on credit facility

 

 

 

 

 

(63,000

)

Proceeds from credit facility

 

 

 

 

 

23,000

 

Repayment of note payable

 

 

 

 

 

(234

)

Net increase (decrease) in customer fund obligations

 

 

3,986

 

 

 

(2,053

)

Proceeds from exercise of stock options and common stock warrants

 

 

51,583

 

 

 

5,787

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

12,293

 

 

 

 

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

 

 

(1,183

)

 

 

(2,326

)

Repurchase of shares

 

 

 

 

 

(1,806

)

Payment related to business combination earnouts

 

 

(375

)

 

 

 

Net cash provided by financing activities

 

 

340,454

 

 

 

149,794

 

Foreign currency effect on cash and cash equivalents

 

 

(13

)

 

 

185

 

Net change in cash and cash equivalents

 

 

304,241

 

 

 

124,018

 

Cash and cash equivalents—Beginning of period

 

 

142,322

 

 

 

14,075

 

Cash and cash equivalents—End of period

 

$

446,563

 

 

$

138,093

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)

(in thousands, except per share amounts)

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

$

91,986

 

 

$

71

 

 

$

92,057

 

 

$

64,611

 

Professional services

 

 

6,539

 

 

 

(49

)

 

 

6,490

 

 

 

5,308

 

Total revenue

 

 

98,525

 

 

 

22

 

 

 

98,547

 

 

 

69,919

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

 

25,621

 

 

 

 

 

 

25,621

 

 

 

17,330

 

Professional services

 

 

4,157

 

 

 

 

 

 

4,157

 

 

 

2,906

 

Total cost of revenue

 

 

29,778

 

 

 

 

 

 

29,778

 

 

 

20,236

 

Gross profit

 

 

68,747

 

 

 

22

 

 

 

68,769

 

 

 

49,683

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

21,871

 

 

 

 

 

 

21,871

 

 

 

13,285

 

Sales and marketing

 

 

40,313

 

 

 

4,789

 

 

 

45,102

 

 

 

41,276

 

General and administrative

 

 

20,511

 

 

 

 

 

 

20,511

 

 

 

10,235

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Total operating expenses

 

 

82,695

 

 

 

4,789

 

 

 

87,484

 

 

 

73,970

 

Operating loss

 

 

(13,948

)

 

 

(4,767

)

 

 

(18,715

)

 

 

(24,287

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(2,202

)

 

 

 

 

 

(2,202

)

 

 

(676

)

Interest expense

 

 

2

 

 

 

 

 

 

2

 

 

 

534

 

Other (income) expense, net

 

 

265

 

 

 

 

 

 

265

 

 

 

49

 

Total other (income) expense, net

 

 

(1,935

)

 

 

 

 

 

(1,935

)

 

 

(93

)

Loss before income taxes

 

 

(12,013

)

 

 

(4,767

)

 

 

(16,780

)

 

 

(24,194

)

Provision for (benefit from) income taxes

 

 

341

 

 

 

 

 

 

341

 

 

 

(91

)

Net loss

 

$

(12,354

)

 

$

(4,767

)

 

$

(17,121

)

 

$

(24,103

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(0.16

)

 

$

(0.06

)

 

$

(0.22

)

 

$

(0.36

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

76,156

 

 

 

 

 

 

 

76,156

 

 

 

66,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)

(in thousands, except per share amounts)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

$

255,225

 

 

$

689

 

 

$

255,914

 

 

$

182,326

 

Professional services

 

 

19,569

 

 

 

(149

)

 

 

19,420

 

 

 

12,849

 

Total revenue

 

 

274,794

 

 

 

540

 

 

 

275,334

 

 

 

195,175

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

 

69,537

 

 

 

 

 

 

69,537

 

 

 

47,984

 

Professional services

 

 

12,883

 

 

 

 

 

 

12,883

 

 

 

8,393

 

Total cost of revenue

 

 

82,420

 

 

 

 

 

 

82,420

 

 

 

56,377

 

Gross profit

 

 

192,374

 

 

 

540

 

 

 

192,914

 

 

 

138,798

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

56,823

 

 

 

 

 

 

56,823

 

 

 

38,332

 

Sales and marketing

 

 

119,199

 

 

 

16,340

 

 

 

135,539

 

 

 

119,187

 

General and administrative

 

 

53,764

 

 

 

 

 

 

53,764

 

 

 

28,787

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Total operating expenses

 

 

229,786

 

 

 

16,340

 

 

 

246,126

 

 

 

195,480

 

Operating loss

 

 

(37,412

)

 

 

(15,800

)

 

 

(53,212

)

 

 

(56,682

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(4,251

)

 

 

 

 

 

(4,251

)

 

 

(811

)

Interest expense

 

 

286

 

 

 

 

 

 

286

 

 

 

2,495

 

Other (income) expense, net

 

 

694

 

 

 

 

 

 

694

 

 

 

(423

)

Total other (income) expense, net

 

 

(3,271

)

 

 

 

 

 

(3,271

)

 

 

1,261

 

Loss before income taxes

 

 

(34,141

)

 

 

(15,800

)

 

 

(49,941

)

 

 

(57,943

)

Provision for (benefit from) income taxes

 

 

629

 

 

 

 

 

 

629

 

 

 

(825

)

Net loss

 

$

(34,770

)

 

$

(15,800

)

 

$

(50,570

)

 

$

(57,118

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(0.48

)

 

$

(0.22

)

 

$

(0.70

)

 

$

(1.95

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

72,064

 

 

 

 

 

 

 

72,064

 

 

 

29,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVALARA, INC.

CONSOLIDATED BALANCE SHEETS

RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)

(in thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

446,563

 

 

$

 

 

$

446,563

 

 

$

142,322

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

49,124

 

 

 

1,044

 

 

 

50,168

 

 

 

40,287

 

Deferred commissions

 

 

8,402

 

 

 

(8,402

)

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

13,856

 

 

 

 

 

 

13,856

 

 

 

11,307

 

Total current assets before customer fund assets

 

 

517,945

 

 

 

(7,358

)

 

 

510,587

 

 

 

193,916

 

Funds held from customers

 

 

16,665

 

 

 

 

 

 

16,665

 

 

 

13,113

 

Receivable from customers—net of allowance for doubtful accounts

 

 

690

 

 

 

 

 

 

690

 

 

 

270

 

Total current assets

 

 

535,300

 

 

 

(7,358

)

 

 

527,942

 

 

 

207,299

 

Noncurrent assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment—net

 

 

34,537

 

 

 

 

 

 

34,537

 

 

 

33,373

 

Goodwill

 

 

100,926

 

 

 

 

 

 

100,926

 

 

 

61,300

 

Intangible assets—net

 

 

24,543

 

 

 

 

 

 

24,543

 

 

 

19,371

 

Deferred commissions

 

 

27,206

 

 

 

(27,206

)

 

 

 

 

 

 

Other noncurrent assets

 

 

2,420

 

 

 

 

 

 

2,420

 

 

 

1,589

 

Total assets

 

$

724,932

 

 

$

(34,564

)

 

$

690,368

 

 

$

322,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

10,962

 

 

 

 

 

 

10,962

 

 

 

4,847

 

Accrued expenses

 

 

49,864

 

 

 

(4,843

)

 

 

45,021

 

 

 

42,101

 

Accrued earnout liabilities

 

 

6,102

 

 

 

 

 

 

6,102

 

 

 

116

 

Deferred revenue

 

 

147,713

 

 

 

5,349

 

 

 

153,062

 

 

 

125,260

 

Total current liabilities before customer fund obligations

 

 

214,641

 

 

 

506

 

 

 

215,147

 

 

 

172,324

 

Customer fund obligations

 

 

17,306

 

 

 

 

 

 

17,306

 

 

 

13,349

 

Total current liabilities

 

 

231,947

 

 

 

506

 

 

 

232,453

 

 

 

185,673

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

753

 

 

 

8,353

 

 

 

9,106

 

 

 

9,393

 

Deferred tax liability

 

 

698

 

 

 

 

 

 

698

 

 

 

560

 

Deferred rent

 

 

15,905

 

 

 

 

 

 

15,905

 

 

 

17,317

 

Accrued earnout liabilities

 

 

9,399

 

 

 

 

 

 

9,399

 

 

 

 

Other noncurrent liabilities

 

 

2,361

 

 

 

 

 

 

2,361

 

 

 

436

 

Total liabilities

 

 

261,063

 

 

 

8,859

 

 

 

269,922

 

 

 

213,379

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

8

 

 

 

 

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

961,733

 

 

 

 

 

 

961,733

 

 

 

599,493

 

Accumulated other comprehensive loss

 

 

(3,122

)

 

 

 

 

 

(3,122

)

 

 

(2,345

)

Accumulated deficit

 

 

(494,750

)

 

 

(43,423

)

 

 

(538,173

)

 

 

(487,602

)

Total shareholders’ equity

 

 

463,869

 

 

 

(43,423

)

 

 

420,446

 

 

 

109,553

 

Total liabilities and shareholders' equity

 

$

724,932

 

 

$

(34,564

)

 

$

690,368

 

 

$

322,932

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)

(in thousands)

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported
(ASC 606)

 

 

Impacts from
Adoption

 

 

Without
Adoption
(ASC 605)

 

 

As Reported
(ASC 605)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,354

)

 

$

(4,767

)

 

$

(17,121

)

 

$

(24,103

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,016

 

 

 

 

 

 

4,016

 

 

 

3,398

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Stock-based compensation

 

 

9,922

 

 

 

 

 

 

9,922

 

 

 

4,337

 

Deferred tax expense (benefit)

 

 

60

 

 

 

 

 

 

60

 

 

 

(143

)

Amortization of deferred rent

 

 

(386

)

 

 

 

 

 

(386

)

 

 

(32

)

Non-cash change in earnout liability

 

 

134

 

 

 

 

 

 

134

 

 

 

32

 

Non-cash bad debt expense (recovery)

 

 

152

 

 

 

 

 

 

152

 

 

 

(297

)

Other

 

 

32

 

 

 

 

 

 

32

 

 

 

285

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(5,920

)

 

 

(79

)

 

 

(5,999

)

 

 

(5,830

)

Prepaid expenses and other current assets

 

 

(2,678

)

 

 

 

 

 

(2,678

)

 

 

(2,544

)

Deferred commissions

 

 

(4,788

)

 

 

4,788

 

 

 

 

 

 

 

Other noncurrent assets

 

 

(49

)

 

 

 

 

 

(49

)

 

 

(533

)

Trade payables

 

 

2,350

 

 

 

 

 

 

2,350

 

 

 

(1,105

)

Accrued expenses

 

 

5,706

 

 

 

(335

)

 

 

5,371

 

 

 

9,095

 

Deferred rent (lease incentives)

 

 

 

 

 

 

 

 

 

 

 

579

 

Deferred revenue

 

 

9,655

 

 

 

393

 

 

 

10,048

 

 

 

8,865

 

Net cash provided by operating activities

 

 

5,852

 

 

 

 

 

 

5,852

 

 

 

1,178

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (increase) decrease in customer fund assets

 

 

7,892

 

 

 

 

 

 

7,892

 

 

 

6,638

 

Cash paid for acquired intangible assets

 

 

(8

)

 

 

 

 

 

(8

)

 

 

(121

)

Cash paid for acquisitions of businesses

 

 

(13,000

)

 

 

 

 

 

(13,000

)

 

 

 

Purchase of property and equipment

 

 

(2,246

)

 

 

 

 

 

(2,246

)

 

 

(4,745

)

Net cash (used in) provided by investing activities

 

 

(7,362

)

 

 

 

 

 

(7,362

)

 

 

1,772

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments of deferred financing costs

 

 

(157

)

 

 

 

 

 

(157

)

 

 

(1,462

)

Payments on credit facility

 

 

 

 

 

 

 

 

 

 

 

(30,000

)

Net increase (decrease) in customer fund obligations

 

 

(7,811

)

 

 

 

 

 

(7,811

)

 

 

(6,638

)

Proceeds from exercise of stock options and common stock warrants

 

 

11,166

 

 

 

 

 

 

11,166

 

 

 

207

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

4,629

 

 

 

 

 

 

4,629

 

 

 

 

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

 

 

(1,090

)

 

 

 

 

 

(1,090

)

 

 

(109

)

Payment related to business combination earnouts

 

 

(375

)

 

 

 

 

 

(375

)

 

 

 

Net cash (used in) provided by financing activities

 

 

6,362

 

 

 

 

 

 

6,362

 

 

 

(38,002

)

Foreign currency effect on cash and cash equivalents

 

 

127

 

 

 

 

 

 

127

 

 

 

37

 

Net change in cash and cash equivalents

 

 

4,979

 

 

 

 

 

 

4,979

 

 

 

(35,015

)

Cash and cash equivalents—Beginning of period

 

 

441,584

 

 

 

 

 

 

441,584

 

 

 

173,108

 

Cash and cash equivalents—End of period

 

$

446,563

 

 

$

 

 

$

446,563

 

 

$

138,093

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)

(in thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,770

)

 

 

(15,800

)

 

$

(50,570

)

 

$

(57,118

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,684

 

 

 

 

 

 

11,684

 

 

 

9,390

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Stock-based compensation

 

 

25,906

 

 

 

 

 

 

25,906

 

 

 

11,411

 

Deferred tax expense (benefit)

 

 

138

 

 

 

 

 

 

138

 

 

 

(1,110

)

Amortization of deferred rent

 

 

(778

)

 

 

 

 

 

(778

)

 

 

231

 

Non-cash change in earnout liability

 

 

610

 

 

 

 

 

 

610

 

 

 

(430

)

Non-cash bad debt expense (recovery)

 

 

602

 

 

 

 

 

 

602

 

 

 

(382

)

Other

 

 

227

 

 

 

 

 

 

227

 

 

 

526

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(9,648

)

 

 

(238

)

 

 

(9,886

)

 

 

(7,852

)

Prepaid expenses and other current assets

 

 

(3,274

)

 

 

 

 

 

(3,274

)

 

 

(2,688

)

Deferred commissions

 

 

(16,340

)

 

 

16,340

 

 

 

 

 

 

 

Other noncurrent assets

 

 

(831

)

 

 

 

 

 

(831

)

 

 

(549

)

Trade payables

 

 

4,818

 

 

 

 

 

 

4,818

 

 

 

(3,353

)

Accrued expenses

 

 

2,305

 

 

 

(2,753

)

 

 

(448

)

 

 

6,095

 

Deferred rent (lease incentives)

 

 

 

 

 

 

 

 

 

 

 

579

 

Deferred revenue

 

 

24,782

 

 

 

2,451

 

 

 

27,233

 

 

 

25,978

 

Net cash provided by (used in) operating activities

 

 

5,431

 

 

 

 

 

 

5,431

 

 

 

(10,098

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (increase) decrease in customer fund assets

 

 

(3,986

)

 

 

 

 

 

(3,986

)

 

 

2,053

 

Cash paid for acquired intangible assets

 

 

(139

)

 

 

 

 

 

(139

)

 

 

(5,002

)

Cash paid for acquisitions of businesses

 

 

(30,310

)

 

 

 

 

 

(30,310

)

 

 

 

Purchase of property and equipment

 

 

(7,196

)

 

 

 

 

 

(7,196

)

 

 

(12,914

)

Net cash used in investing activities

 

 

(41,631

)

 

 

 

 

 

(41,631

)

 

 

(15,863

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net of underwriting discounts

 

 

274,705

 

 

 

 

 

 

274,705

 

 

 

192,510

 

Payments of deferred financing costs

 

 

(555

)

 

 

 

 

 

(555

)

 

 

(2,084

)

Payments on credit facility

 

 

 

 

 

 

 

 

 

 

 

(63,000

)

Proceeds from credit facility

 

 

 

 

 

 

 

 

 

 

 

23,000

 

Repayment of note payable

 

 

 

 

 

 

 

 

 

 

 

(234

)

Net increase (decrease) in customer fund obligations

 

 

3,986

 

 

 

 

 

 

3,986

 

 

 

(2,053

)

Proceeds from exercise of stock options and common stock warrants

 

 

51,583

 

 

 

 

 

 

51,583

 

 

 

5,787

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

12,293

 

 

 

 

 

 

12,293

 

 

 

 

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

 

 

(1,183

)

 

 

 

 

 

(1,183

)

 

 

(2,326

)

Repurchase of shares

 

 

 

 

 

 

 

 

 

 

 

(1,806

)

Payment related to business combination earnouts

 

 

(375

)

 

 

 

 

 

(375

)

 

 

 

Net cash provided by financing activities

 

 

340,454

 

 

 

 

 

 

340,454

 

 

 

149,794

 

Foreign currency effect on cash and cash equivalents

 

 

(13

)

 

 

 

 

 

(13

)

 

 

185

 

Net change in cash and cash equivalents

 

 

304,241

 

 

 

 

 

 

304,241

 

 

 

124,018

 

Cash and cash equivalents—Beginning of period

 

 

142,322

 

 

 

 

 

 

142,322

 

 

 

14,075

 

Cash and cash equivalents—End of period

 

$

446,563

 

 

$

 

 

$

446,563

 

 

$

138,093

 

AVALARA, INC.
UNAUDITED PRESENTATION AND RECONCILIATION TO NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(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 September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Non-GAAP cost of revenue

 

$

27,715

 

 

$

 

 

$

27,715

 

 

$

18,607

 

Non-GAAP gross profit

 

 

70,810

 

 

 

22

 

 

 

70,832

 

 

 

51,312

 

Non-GAAP gross margin

 

 

72

%

 

 

0

%

 

 

72

%

 

 

73

%

Non-GAAP research and development expense

 

$

20,090

 

 

$

 

 

$

20,090

 

 

$

12,379

 

Non-GAAP sales and marketing expense

 

 

37,573

 

 

 

4,789

 

 

 

42,362

 

 

 

39,213

 

Non-GAAP general and administrative expense

 

 

15,329

 

 

 

 

 

 

15,329

 

 

 

8,901

 

Non-GAAP operating loss

 

 

(2,182

)

 

 

(4,767

)

 

 

(6,949

)

 

 

(9,181

)

Non-GAAP net loss

 

 

(588

)

 

 

(4,767

)

 

 

(5,355

)

 

 

(8,997

)

Non-GAAP net loss per share

 

 

(0.01

)

 

 

(0.06

)

 

 

(0.07

)

 

 

(0.14

)

Free cash flow

 

 

3,606

 

 

 

 

 

 

3,606

 

 

 

(3,567

)

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Non-GAAP cost of revenue

 

$

76,508

 

 

$

 

 

$

76,508

 

 

$

52,290

 

Non-GAAP gross profit

 

 

198,286

 

 

 

540

 

 

 

198,826

 

 

 

142,885

 

Non-GAAP gross margin

 

 

72

%

 

 

0

%

 

 

72

%

 

 

73

%

Non-GAAP research and development expense

 

$

52,123

 

 

$

 

 

$

52,123

 

 

$

36,061

 

Non-GAAP sales and marketing expense

 

 

111,135

 

 

 

16,340

 

 

 

127,475

 

 

 

114,030

 

Non-GAAP general and administrative expense

 

 

41,235

 

 

 

 

 

 

41,235

 

 

 

24,485

 

Non-GAAP operating loss

 

 

(6,207

)

 

 

(15,800

)

 

 

(22,007

)

 

 

(31,691

)

Non-GAAP net loss

 

 

(3,565

)

 

 

(15,800

)

 

 

(19,365

)

 

 

(32,127

)

Non-GAAP net loss per share

 

 

(0.05

)

 

 

(0.22

)

 

 

(0.27

)

 

 

(0.49

)

Free cash flow

 

$

(1,765

)

 

$

 

 

$

(1,765

)

 

$

(23,012

)

Reconciliation of Non-GAAP Financial Measures:

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Reconciliation of Non-GAAP Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

29,778

 

 

$

 

 

$

29,778

 

 

$

20,236

 

Stock-based compensation expense

 

 

(828

)

 

 

 

 

 

(828

)

 

 

(508

)

Amortization of acquired intangibles

 

 

(1,235

)

 

 

 

 

 

(1,235

)

 

 

(1,121

)

Non-GAAP Cost of Revenue

 

$

27,715

 

 

$

 

 

$

27,715

 

 

$

18,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

68,747

 

 

$

22

 

 

$

68,769

 

 

$

49,683

 

Stock-based compensation expense

 

 

828

 

 

 

 

 

 

828

 

 

 

508

 

Amortization of acquired intangibles

 

 

1,235

 

 

 

 

 

 

1,235

 

 

 

1,121

 

Non-GAAP Gross Profit

 

$

70,810

 

 

$

22

 

 

$

70,832

 

 

$

51,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

70

%

 

 

0

%

 

 

70

%

 

 

71

%

Stock-based compensation expense as a percentage of revenue

 

 

1

%

 

 

0

%

 

 

1

%

 

 

1

%

Amortization of acquired intangibles as a percentage of revenue

 

 

1

%

 

 

0

%

 

 

1

%

 

 

2

%

Non-GAAP Gross Margin

 

 

72

%

 

 

0

%

 

 

72

%

 

 

73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Research and Development Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

21,871

 

 

$

 

 

$

21,871

 

 

$

13,285

 

Stock-based compensation expense

 

 

(1,781

)

 

 

 

 

 

(1,781

)

 

 

(906

)

Amortization of acquired intangibles

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Research and Development Expense

 

$

20,090

 

 

$

 

 

$

20,090

 

 

$

12,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Sales and Marketing Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

40,313

 

 

$

4,789

 

 

$

45,102

 

 

$

41,276

 

Stock-based compensation expense

 

 

(2,135

)

 

 

 

 

 

(2,135

)

 

 

(1,589

)

Amortization of acquired intangibles

 

 

(605

)

 

 

 

 

 

(605

)

 

 

(474

)

Non-GAAP Sales and Marketing Expense

 

$

37,573

 

 

$

4,789

 

 

$

42,362

 

 

$

39,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP General and Administrative Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

20,511

 

 

$

 

 

$

20,511

 

 

$

10,235

 

Stock-based compensation expense

 

 

(5,178

)

 

 

 

 

 

(5,178

)

 

 

(1,334

)

Amortization of acquired intangibles

 

 

(4

)

 

 

 

 

 

(4

)

 

 

 

Non-GAAP General and Administrative Expense

 

$

15,329

 

 

$

 

 

$

15,329

 

 

$

8,901

 

Reconciliation of Non-GAAP Operating Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(13,948

)

 

$

(4,767

)

 

$

(18,715

)

 

$

(24,287

)

Stock-based compensation expense

 

 

9,922

 

 

 

 

 

 

9,922

 

 

 

4,337

 

Amortization of acquired intangibles

 

 

1,844

 

 

 

 

 

 

1,844

 

 

 

1,595

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Non-GAAP Operating Loss

 

$

(2,182

)

 

$

(4,767

)

 

$

(6,949

)

 

$

(9,181

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,354

)

 

$

(4,767

)

 

$

(17,121

)

 

$

(24,103

)

Stock-based compensation expense

 

 

9,922

 

 

 

 

 

 

9,922

 

 

 

4,337

 

Amortization of acquired intangibles

 

 

1,844

 

 

 

 

 

 

1,844

 

 

 

1,595

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Non-GAAP Net Loss

 

$

(588

)

 

$

(4,767

)

 

$

(5,355

)

 

$

(8,997

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

$

(0.16

)

 

$

(0.06

)

 

$

(0.22

)

 

$

(0.36

)

Stock-based compensation expense per share

 

 

0.13

 

 

 

 

 

 

0.13

 

 

 

0.07

 

Amortization of acquired intangibles per share

 

 

0.02

 

 

 

 

 

 

0.02

 

 

 

0.02

 

Goodwill impairment per share

 

 

 

 

 

 

 

 

 

 

 

0.14

 

Non-GAAP unweighted adjustment to common and preferred shares

issued per share

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Loss Per Share

 

$

(0.01

)

 

$

(0.06

)

 

$

(0.07

)

 

$

(0.14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of Non-GAAP Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding used in computing net loss per share

 

 

76,156

 

 

 

 

 

 

76,156

 

 

 

66,590

 

Non-GAAP adjustment to common and preferred shares issued

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Shares Outstanding Used in Computing Non-GAAP Net Loss Per Share

 

 

76,156

 

 

 

 

 

 

76,156

 

 

 

66,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

5,852

 

 

$

 

 

$

5,852

 

 

$

1,178

 

Purchases of property and equipment

 

 

(2,246

)

 

 

 

 

 

(2,246

)

 

 

(4,745

)

Free Cash Flow

 

$

3,606

 

 

$

 

 

$

3,606

 

 

$

(3,567

)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported
(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Reconciliation of Non-GAAP Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

82,420

 

 

$

 

 

$

82,420

 

 

$

56,377

 

Stock-based compensation expense

 

 

(2,277

)

 

 

 

 

 

(2,277

)

 

 

(1,181

)

Amortization of acquired intangibles

 

 

(3,635

)

 

 

 

 

 

(3,635

)

 

 

(2,906

)

Non-GAAP Cost of Revenue

 

$

76,508

 

 

$

 

 

$

76,508

 

 

$

52,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

192,374

 

 

$

540

 

 

$

192,914

 

 

$

138,798

 

Stock-based compensation expense

 

 

2,277

 

 

 

 

 

 

2,277

 

 

 

1,181

 

Amortization of acquired intangibles

 

 

3,635

 

 

 

 

 

 

3,635

 

 

 

2,906

 

Non-GAAP Gross Profit

 

$

198,286

 

 

$

540

 

 

$

198,826

 

 

$

142,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

70

%

 

 

0

%

 

 

70

%

 

 

71

%

Stock-based compensation expense as a percentage of revenue

 

 

1

%

 

 

0

%

 

 

1

%

 

 

1

%

Amortization of acquired intangibles as a percentage of revenue

 

 

1

%

 

 

0

%

 

 

1

%

 

 

1

%

Non-GAAP Gross Margin

 

 

72

%

 

 

0

%

 

 

72

%

 

 

73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Research and Development Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

56,823

 

 

$

 

 

$

56,823

 

 

$

38,332

 

Stock-based compensation expense

 

 

(4,700

)

 

 

 

 

 

(4,700

)

 

 

(2,271

)

Amortization of acquired intangibles

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Research and Development Expense

 

$

52,123

 

 

$

 

 

$

52,123

 

 

$

36,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Sales and Marketing Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

119,199

 

 

$

16,340

 

 

$

135,539

 

 

$

119,187

 

Stock-based compensation expense

 

 

(6,411

)

 

 

 

 

 

(6,411

)

 

 

(3,674

)

Amortization of acquired intangibles

 

 

(1,653

)

 

 

 

 

 

(1,653

)

 

 

(1,483

)

Non-GAAP Sales and Marketing Expense

 

$

111,135

 

 

$

16,340

 

 

$

127,475

 

 

$

114,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP General and Administrative Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

53,764

 

 

$

 

 

$

53,764

 

 

$

28,787

 

Stock-based compensation expense

 

 

(12,518

)

 

 

 

 

 

(12,518

)

 

 

(4,285

)

Amortization of acquired intangibles

 

 

(11

)

 

 

 

 

 

(11

)

 

 

(17

)

Non-GAAP General and Administrative Expense

 

$

41,235

 

 

$

 

 

$

41,235

 

 

$

24,485

 

Reconciliation of Non-GAAP Operating Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(37,412

)

 

$

(15,800

)

 

$

(53,212

)

 

$

(56,682

)

Stock-based compensation expense

 

 

25,906

 

 

 

 

 

 

25,906

 

 

 

11,411

 

Amortization of acquired intangibles

 

 

5,299

 

 

 

 

 

 

5,299

 

 

 

4,406

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Non-GAAP Operating Loss

 

$

(6,207

)

 

$

(15,800

)

 

$

(22,007

)

 

$

(31,691

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,770

)

 

$

(15,800

)

 

$

(50,570

)

 

$

(57,118

)

Stock-based compensation expense

 

 

25,906

 

 

 

 

 

 

25,906

 

 

 

11,411

 

Amortization of acquired intangibles

 

 

5,299

 

 

 

 

 

 

5,299

 

 

 

4,406

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

9,174

 

Non-GAAP Net Loss

 

$

(3,565

)

 

$

(15,800

)

 

$

(19,365

)

 

$

(32,127

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Loss Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

$

(0.48

)

 

$

(0.22

)

 

$

(0.70

)

 

$

(1.95

)

Stock-based compensation expense per share

 

 

0.36

 

 

 

 

 

 

0.36

 

 

 

0.39

 

Amortization of acquired intangibles per share

 

 

0.07

 

 

 

 

 

 

0.07

 

 

 

0.15

 

Goodwill impairment per share

 

 

 

 

 

 

 

 

 

 

 

0.31

 

Non-GAAP unweighted adjustment to common and preferred

shares issued (1) per share

 

 

 

 

 

 

 

 

 

 

 

0.61

 

Non-GAAP Net Loss Per Share

 

$

(0.05

)

 

$

(0.22

)

 

$

(0.27

)

 

$

(0.49

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of Non-GAAP Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding used in computing net loss per share

 

 

72,064

 

 

 

 

 

 

72,064

 

 

 

29,269

 

Non-GAAP adjustment to common and preferred shares issued (1)

 

 

 

 

 

 

 

 

 

 

 

36,842

 

Non-GAAP Shares Outstanding Used in Computing Non-GAAP Net Loss Per Share

 

 

72,064

 

 

 

 

 

 

72,064

 

 

 

66,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

$

5,431

 

 

$

 

 

$

5,431

 

 

$

(10,098

)

Purchases of property and equipment

 

 

(7,196

)

 

 

 

 

 

(7,196

)

 

 

(12,914

)

Free Cash Flow

 

$

(1,765

)

 

$

 

 

$

(1,765

)

 

$

(23,012

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The Company’s IPO closed on June 19, 2018 and 8,625,000 shares of common stock were issued. In connection with the IPO, the Company’s outstanding convertible preferred stock converted into 50,888,014 shares of common stock. See description of adjustment in “Use of Non-GAAP Financial Measures” section.
 

AVALARA, INC.

UNAUDITED PRESENTATION OF CALCULATED BILLINGS

 

 

Three Months Ended

 

 

Sep 30,

2019

 

 

Jun 30,

2019

 

 

Mar 31,

2019 (1)

 

 

Dec 31,

2018

 

 

Sep 30,

2018

 

 

Jun 30,

2018

 

 

Mar 31,

2018

 

 

Dec 31,

2017

 

Total revenue

$

98,525

 

 

$

91,299

 

 

$

84,970

 

 

$

76,923

 

 

$

69,919

 

 

$

63,879

 

 

$

61,377

 

 

$

58,035

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (end of

period)

 

148,466

 

 

 

138,811

 

 

 

132,714

 

 

 

134,653

 

 

 

118,209

 

 

 

109,344

 

 

 

103,878

 

 

 

92,231

 

Contract liabilities (end of

period)

 

4,843

 

 

 

4,508

 

 

 

4,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of adoption of ASC 606

on deferred revenue

 

 

 

 

 

 

 

11,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (beginning of

period)

 

(138,811

)

 

 

(132,714

)

 

 

(134,653

)

 

 

(118,209

)

 

 

(109,344

)

 

 

(103,878

)

 

 

(92,231

)

 

 

(84,637

)

Contract liabilities (beginning

of period)

 

(4,508

)

 

 

(4,208

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of adoption of ASC 606

on contract liabilities

 

 

 

 

 

 

 

(2,090

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculated billings

$

108,515

 

 

$

97,696

 

 

$

96,399

 

 

$

93,367

 

 

$

78,784

 

 

$

69,345

 

 

$

73,024

 

 

$

65,629

 

(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

 

 

Sep 30,

2019

 

 

Jun 30,

2019

 

 

Mar 31,

2019

 

 

Dec 31,

2018

 

 

Sep 30,

2018

 

 

Jun 30,

2018

 

 

Mar 31,

2018

 

 

Dec 31,

2017

 

Number of core customers (as of end of period)

 

11,240

 

 

 

10,430

 

 

 

9,700

 

 

 

9,070

 

 

 

8,490

 

 

 

8,080

 

 

 

7,760

 

 

 

7,490

 

Net revenue retention rate

 

113

%

 

 

111

%

 

 

107

%

 

 

108

%

 

 

105

%

 

 

108

%

 

 

109

%

 

 

105

%

 

Contacts

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

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

Contacts

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

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