Avalara (AVLR) Tops Q3 EPS by 11c, Revenues Beat; Offers 4Q EPS/Revenue Guidance Above Consensus

Avalara (NYSE: AVLR) reported Q3 EPS of $0.02, $0.11 better than the analyst estimate of ($0.09). Revenue for the quarter came in at $127.9 million versus the consensus estimate of $116.2 million.

“Avalara’s stellar third quarter performance exceeded our expectations, with revenue growth accelerating to 30 percent year-over-year, reaching a key milestone of a half a billion topline annual revenue run rate,” said Scott McFarlane, Avalara co-founder and chief executive officer. “Our results demonstrate the adaptability and resiliency of our business model during a changing business and economic environment presented by COVID-19. We continue to see a confluence of macro trends that are tailwinds for our business, from the accelerating growth of ecommerce to broader adoption of cloud-based solutions and a growing emphasis on efficiency to the increasing need for regulatory compliance enforcement. We believe that global demand for compliance automation is inevitable, and we are well positioned to capture the large opportunity in front of us.”

Third Quarter 2020 Financial Results

• Revenue: Total revenue was $127.9 million in the third quarter of 2020, up 30% from $98.5 million in the third quarter of 2019. Subscription and returns revenue was $119.2 million, up 30% from $92.0 million in the same period last year. Professional services revenue was $8.7 million, up 33% from $6.5 million in the same period last year.
• Gross Profit: GAAP gross profit was $92.9 million in the third quarter of 2020, representing a 73% gross margin, compared to a GAAP gross profit of $68.7 million and a 70% gross margin in the third quarter of 2019. Non-GAAP gross profit was $95.5 million, representing a 75% non-GAAP gross margin, compared to a non-GAAP gross profit of $70.8 million and a 72% non-GAAP gross margin in the third quarter of 2019.
• Operating Loss: GAAP operating loss was $12.6 million in the third quarter of 2020, compared to a GAAP operating loss of $14.9 million in the third quarter of 2019. Non-GAAP operating income was $1.7 million in the third quarter of 2020, compared to a non-GAAP operating loss of $3.1 million in the third quarter of 2019.
• Net Loss: GAAP net loss was $12.7 million in the third quarter of 2020, compared to a GAAP net loss of $13.3 million in the third quarter of 2019. Non-GAAP net income was $1.6 million in the third quarter of 2020, compared to a non-GAAP net loss of $1.5 million in the third quarter of 2019.
• Net Loss per Share: GAAP basic and diluted net loss per share was $0.15 based on 82.3 million weighted-average shares outstanding in the third quarter of 2020, compared to a GAAP basic and diluted net loss per share of $0.17 based on 76.2 million weighted-average shares outstanding in the third quarter of 2019. Non-GAAP diluted net income per share was $0.02 based on 86.7 million weighted-average shares outstanding in the third quarter of 2020, compared to a non-GAAP diluted net loss per share of $0.02 based on 76.2 million weighted-average shares outstanding in the third quarter of 2019.
• Deferred Revenue: Total deferred revenue was $180.6 million at September 30, 2020, up from $161.2 million at December 31, 2019. The current portion of deferred revenue was $178.9 million at September 30, 2020, up from $160.3 million at December 31, 2019.
• Cash: Net cash provided by operating activities was $27.9 million in the third quarter of 2020, compared to $5.9 million provided by operating activities in the third quarter of 2019. Free cash flow was positive $25.8 million in the third quarter of 2020, compared to positive $3.6 million in the third quarter of 2019. Cash and cash equivalents totaled $1,064.1 million at September 30, 2020 compared to $467.0 million at December 31, 2019.
• Calculated Billings: Calculated billings were $142.3 million in the third quarter of 2020, compared to calculated billings of $108.5 million in the third quarter of 2019.

GUIDANCE:

Avalara sees Q4 2020 revenue of $132-134 million, versus the consensus of $125.18 million.

Avalara sees FY2020 revenue of $488-490 million, versus the consensus of $469.39 million.

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

• Total revenue between $132.0 and $134.0 million.
• Non-GAAP operating loss between $4.0 and $6.0 million.

For the full year 2020, the Company currently expects:

• Total revenue between $488.0 and $490.0 million.
• Non-GAAP operating loss between $7.0 and $9.0 million.

For earnings history and earnings-related data on Avalara (AVLR) click here.

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