Market Overview

Avalara Announces Second Quarter 2019 Financial Results

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Second Quarter Total Revenue of $91.3 Million

Approximately 10,430 Core Customers as of June 30, 2019

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

"We posted another strong quarter, highlighted by our second quarter revenue growing 43% year over year," said Scott McFarlane, Avalara co-founder and chief executive officer. "Avalara also hosted another highly-successful CRUSH conference, which saw record attendance from customers and partners. We continue to believe that the automation of transaction tax compliance will be adopted over an extended period, as customers upgrade systems, expand their businesses both domestically and internationally, and respond to changing government rules, such as the recent legislative responses to the Supreme Court's Wayfair decision. We believe our broad tax content, robust platform, partner channel, and pre-built integrations position Avalara as a clear choice to lead this automation cycle."

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 six months ended June 30, 2019, including the presentation of financial results during 2019 under ASC 605 for comparison to the prior year.

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

  • Revenue: ASC 606 total revenue was $91.3 million. Subscription and returns revenue was $85.0 million. Professional services revenue was $6.3 million.
  • Gross Profit: ASC 606 GAAP gross profit was $64.0 million, representing a 70% gross margin. ASC 606 non-GAAP gross profit was $65.9 million, representing a 72% non-GAAP gross margin.
  • Operating Loss: ASC 606 GAAP operating loss was $13.7 million. ASC 606 non-GAAP operating loss was $2.5 million.
  • Net Loss: ASC 606 GAAP net loss was $13.2 million. ASC 606 non-GAAP net loss was $2.0 million.
  • Net Loss per Share: ASC 606 GAAP net loss per share was $0.18 based on 71.6 million weighted-average shares outstanding. ASC 606 non-GAAP net loss per share was $0.03 based on 71.6 million weighted-average shares outstanding.
  • Deferred Revenue: ASC 606 total deferred revenue was $138.8 million at June 30, 2019. The current portion of ASC 606 deferred revenue was $138.0 million at June 30, 2019.
  • Cash: Net cash provided by operating activities was $10.0 million, compared to $2.1 million provided by operating activities in the second quarter of 2018. Free cash flow was positive $7.2 million, compared to negative $2.4 million in the second quarter of 2018. Our cash and cash equivalents totaled $441.6 million at June 30, 2019.
  • Calculated Billings: Calculated billings were $97.7 million in the second quarter of 2019, compared to calculated billings of $69.3 million in the second quarter of 2018.

Second Quarter 2019 Financial Results – ASC 605

  • Revenue: ASC 605 total revenue was $91.8 million, up 44% from $63.9 million in the second quarter of 2018. Subscription and returns revenue was $85.5 million, up 43% from $59.8 million in the same period last year. Professional services revenue was $6.2 million, up 55% from $4.0 million in the same period last year.
  • Gross Profit: ASC 605 GAAP gross profit was $64.5 million, representing a 70% gross margin, compared to a GAAP gross profit of $45.2 million and a 71% gross margin in the second quarter of 2018. ASC 605 non-GAAP gross profit was $66.4 million, representing a 72% non-GAAP gross margin, compared to a non-GAAP gross profit of $46.5 million and a 73% non-GAAP gross margin in the second quarter of 2018.
  • Operating Loss: ASC 605 GAAP operating loss was $18.4 million, compared to a GAAP operating loss of $17.1 million in the second quarter of 2018. ASC 605 non-GAAP operating loss was $7.2 million, compared to a non-GAAP operating loss of $12.2 million in the second quarter of 2018.
  • Net Loss: ASC 605 GAAP net loss was $17.9 million, compared to a GAAP net loss of $17.8 million in the second quarter of 2018. ASC 605 non-GAAP net loss was $6.7 million, compared to a non-GAAP net loss of $12.8 million in the second quarter of 2018.
  • Net Loss per Share: ASC 605 GAAP net loss per share was $0.25 based on 71.6 million weighted-average shares outstanding, compared to a GAAP net loss per share of $1.24 based on 14.4 million weighted-average shares outstanding in the second quarter of 2018. ASC 605 non-GAAP net loss per share was $0.09 based on 71.6 million non-GAAP shares outstanding in the second quarter of 2019, compared to ASC 605 non-GAAP net loss per share of $0.19 based on 66.0 million non-GAAP shares outstanding in the second quarter of 2018.
  • Deferred Revenue: Total ASC 605 deferred revenue was $152.1 million at June 30, 2019, up from $134.7 million at December 31, 2018. The current portion of ASC 605 deferred revenue was $142.9 million at June 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.

Operating Highlights

  • Key Metrics: We ended the second quarter of 2019 with approximately 10,430 core customers, up from approximately 9,700 core customers at the end of the first quarter of 2019. Our net revenue retention rate was 111% in the second quarter of 2019 and has averaged 108% over the last four quarters.
  • Hosted Fourth Annual CRUSH Conference: We hosted our fourth annual CRUSH conference, themed The Path Forward for Tax Compliance. Bringing together the world's experts and practitioners at the forefront of the shifting world of transaction tax, CRUSH offered attendees opportunities to learn, educate, and network with hundreds of peers and experts. This year's CRUSH conference was attended by a record number of customers and partners, with attendance up more than 50% year over year.
  • Completed Follow-On Public Offering of Common Stock: We completed a public offering of 4,133,984 shares of common stock, including the full exercise of the underwriters' option to purchase 539,215 additional shares of common stock, at a price of $69.40 per share. We received net proceeds of $274.7 million, after deducting underwriting discounts and commissions and before deducting offering expenses paid and payable of $1.2 million.

Financial Outlook

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

  • ASC 606 total revenue between $92.5 and $93.5 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 $364.0 and $366.0 million.
  • ASC 606 non-GAAP operating loss between $15.0 and $20.0 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, August 7, 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 7599235. 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 Wednesday, August 14, 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 7599235.

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 third 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, 2019 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 2018 as GAAP weighted-average shares outstanding during the period adjusted as if (1) the conversion of preferred stock into common stock had occurred at the beginning of each respective period presented and (2) the issuance of 8,625,000 shares of common stock in our IPO had 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 six months ended June 30, 2019, as computed in accordance with ASC 606, are not as comparable to non-GAAP financial measures for the three and six months ended June 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 six months ended June 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 June 30,

 

 

2019

 

2018

 

Revenue:

 

 

 

 

 

 

Subscription and returns

$

85,008

 

$

59,845

 

Professional services

 

6,291

 

 

4,034

 

Total revenue

 

91,299

 

 

63,879

 

Cost of revenue:

 

 

 

 

 

 

Subscription and returns

 

22,938

 

 

15,837

 

Professional services

 

4,397

 

 

2,795

 

Total cost of revenue (1)

 

27,335

 

 

18,632

 

Gross profit

 

63,964

 

 

45,247

 

Operating expenses:

 

 

 

 

 

 

Research and development (1)

 

18,996

 

 

12,428

 

Sales and marketing (1)

 

40,678

 

 

40,604

 

General and administrative (1)

 

18,019

 

 

9,341

 

Total operating expenses

 

77,693

 

 

62,373

 

Operating loss

 

(13,729

)

 

(17,126

)

Other (income) expense:

 

 

 

 

 

 

Interest income

 

(1,282

)

 

(99

)

Interest expense

 

173

 

 

1,067

 

Other (income) expense, net

 

381

 

 

(442

)

Total other (income) expense, net

 

(728

)

 

526

 

Loss before income taxes

 

(13,001

)

 

(17,652

)

Provision for (benefit from) income taxes

 

172

 

 

114

 

Net loss

$

(13,173

)

$

(17,766

)

 

 

 

 

 

 

 

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

$

(0.18

)

$

(1.24

)

Weighted average shares of common stock outstanding, basic and diluted

 

71,568

 

 

14,383

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

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

2019

 

2018

 

Cost of revenue

$

708

 

$

377

 

Research and development

 

1,627

 

 

784

 

Sales and marketing

 

2,107

 

 

1,040

 

General and administrative

 

4,982

 

 

1,363

 

Total stock-based compensation

$

9,424

 

$

3,564

 

 

 

 

 

 

 

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

1,230

 

$

887

 

Research and development

 

 

 

 

Sales and marketing

 

543

 

 

507

 

General and administrative

 

4

 

 

7

 

Total amortization of acquired intangibles

$

1,777

 

$

1,401

 

 

 

 

 

 

 

 

The total employer payroll tax expense on employee stock transactions included above was $1.5 million for the three months ended June 30, 2019, of which $0.1 million is included in cost of revenue, $0.3 million is included in research and development, $0.5 million is included in sales and marketing, and $0.6 million is included in general and administrative.

 

 
 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

$

 

163,239

 

 

$

 

117,715

 

Professional services

 

 

13,030

 

 

 

7,541

 

Total revenue

 

 

176,269

 

 

 

125,256

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription and returns

 

 

43,916

 

 

 

30,654

 

Professional services

 

 

8,726

 

 

 

5,487

 

Total cost of revenue (1)

 

 

52,642

 

 

 

36,141

 

Gross profit

 

 

123,627

 

 

 

89,115

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development (1)

 

 

34,952

 

 

 

25,047

 

Sales and marketing (1)

 

 

78,886

 

 

 

77,911

 

General and administrative (1)

 

 

33,253

 

 

 

18,552

 

Total operating expenses

 

 

147,091

 

 

 

121,510

 

Operating loss

 

 

(23,464

)

 

 

(32,395

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(2,049

)

 

 

(135

)

Interest expense

 

 

284

 

 

 

1,961

 

Other (income) expense, net

 

 

429

 

 

 

(472

)

Total other (income) expense, net

 

 

(1,336

)

 

 

1,354

 

Loss before income taxes

 

 

(22,128

)

 

 

(33,749

)

Provision for (benefit from) income taxes

 

 

288

 

 

 

(734

)

Net loss

 

$

 

(22,416

)

 

$

 

(33,015

)

 

 

 

 

 

 

 

 

 

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

 

$

 

(0.32

)

 

$

 

(3.21

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

69,983

 

 

 

10,299

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

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

 

2019

 

 

2018

 

Cost of revenue

 

$

 

1,449

 

 

$

 

673

 

Research and development

 

 

2,919

 

 

 

1,365

 

Sales and marketing

 

 

4,276

 

 

 

2,085

 

General and administrative

 

 

7,340

 

 

 

2,951

 

Total stock-based compensation

 

$

 

15,984

 

 

$

 

7,074

 

 

 

 

 

 

 

 

 

 

The amortization of acquired intangibles included above was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

 

2,400

 

 

$

 

1,785

 

Research and development

 

 

 

 

 

 

Sales and marketing

 

 

1,048

 

 

 

1,009

 

General and administrative

 

 

7

 

 

 

17

 

Total amortization of acquired intangibles

 

$

 

3,455

 

 

$

 

2,811

 

 

 

 

 

 

 

 

 

 

The total employer payroll tax expense on employee stock transactions included above was $3.9 million for the six months ended June 30, 2019, of which $0.4 million is included in cost of revenue, $0.8 million is included in research and development, $1.3 million is included in sales and marketing, and $1.4 million is included in general and administrative.

 

 

AVALARA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

441,584

 

 

$

142,322

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

43,409

 

 

 

40,287

 

Deferred commissions

 

 

7,365

 

 

 

 

Prepaid expenses and other current assets

 

 

11,179

 

 

 

11,307

 

Total current assets before customer fund assets

 

 

503,537

 

 

 

193,916

 

Funds held from customers

 

 

24,278

 

 

 

13,113

 

Receivable from customers—net of allowance for doubtful accounts

 

 

915

 

 

 

270

 

Total current assets

 

 

528,730

 

 

 

207,299

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Property and equipment—net

 

 

34,148

 

 

 

33,373

 

Goodwill

 

 

78,981

 

 

 

61,300

 

Intangible assets—net

 

 

24,765

 

 

 

19,371

 

Deferred commissions

 

 

23,454

 

 

 

 

Other noncurrent assets

 

 

2,370

 

 

 

1,589

 

Total assets

 

$

692,448

 

 

$

322,932

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade payables

 

 

8,197

 

 

 

4,847

 

Accrued expenses

 

 

49,114

 

 

 

42,217

 

Deferred revenue

 

 

137,997

 

 

 

125,260

 

Total current liabilities before customer fund obligations

 

 

195,308

 

 

 

172,324

 

Customer fund obligations

 

 

25,245

 

 

 

13,349

 

Total current liabilities

 

 

220,553

 

 

 

185,673

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Deferred revenue

 

 

814

 

 

 

9,393

 

Deferred tax liability

 

 

638

 

 

 

560

 

Deferred rent

 

 

16,480

 

 

 

17,317

 

Other noncurrent liabilities

 

 

1,835

 

 

 

436

 

Total liabilities

 

 

240,320

 

 

 

213,379

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

937,047

 

 

 

599,493

 

Accumulated other comprehensive loss

 

 

(2,531

)

 

 

(2,345

)

Accumulated deficit

 

 

(482,396

)

 

 

(487,602

)

Total shareholders' equity

 

 

452,128

 

 

 

109,553

 

Total liabilities and shareholders' equity

 

$

692,448

 

 

$

322,932

 

 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

For the Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(13,173

)

 

$

(17,766

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,987

 

 

 

3,002

 

Stock-based compensation

 

 

9,424

 

 

 

3,564

 

Deferred tax expense (benefit)

 

 

39

 

 

 

51

 

Amortization of deferred rent

 

 

(259

)

 

 

(38

)

Non-cash change in earnout liability

 

 

476

 

 

 

(391

)

Non-cash bad debt (recovery) expense

 

 

228

 

 

 

(152

)

Other

 

 

137

 

 

 

61

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

1,807

 

 

 

4,406

 

Prepaid expenses and other current assets

 

 

1,109

 

 

 

1,763

 

Deferred commissions

 

 

(5,175

)

 

 

 

Other noncurrent assets

 

 

(546

)

 

 

(126

)

Trade payables

 

 

(1,122

)

 

 

(512

)

Accrued expenses

 

 

6,972

 

 

 

2,771

 

Deferred revenue

 

 

6,096

 

 

 

5,466

 

Net cash provided by operating activities

 

 

10,000

 

 

 

2,099

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net increase in customer fund assets

 

 

(4,654

)

 

 

13,942

 

Cash paid for acquired intangible assets

 

 

 

 

 

(4,881

)

Purchase of property and equipment

 

 

(2,836

)

 

 

(4,544

)

Net cash (used in) provided by investing activities

 

 

(7,490

)

 

 

4,517

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net of underwriting discounts

 

 

274,705

 

 

 

192,510

 

Payments of deferred financing costs

 

 

(359

)

 

 

(622

)

Payments on credit facility

 

 

 

 

 

(33,000

)

Proceeds from credit facility

 

 

 

 

 

5,000

 

Repayment of note payable

 

 

 

 

 

(234

)

Net increase in customer fund obligations

 

 

4,654

 

 

 

(13,942

)

Proceeds from exercise of stock options and common stock warrants

 

 

13,106

 

 

 

5,254

 

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

 

 

 

 

 

(201

)

Repurchase of shares

 

 

 

 

 

(987

)

Net cash provided by financing activities

 

 

292,106

 

 

 

153,778

 

Foreign currency effect on cash and cash equivalents

 

 

90

 

 

 

92

 

Net change in cash and cash equivalents

 

 

294,706

 

 

 

160,486

 

Cash and cash equivalents—Beginning of period

 

 

146,878

 

 

 

12,622

 

Cash and cash equivalents—End of period

 

$

441,584

 

 

$

173,108

 

 
 

AVALARA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

 

(22,416

)

 

$

 

(33,015

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,668

 

 

 

5,992

 

Stock-based compensation

 

 

15,984

 

 

 

7,074

 

Deferred tax expense (benefit)

 

 

78

 

 

 

(967

)

Amortization of deferred rent

 

 

(392

)

 

 

263

 

Non-cash change in earnout liability

 

 

476

 

 

 

(462

)

Non-cash bad debt (recovery) expense

 

 

450

 

 

 

(85

)

Other

 

 

195

 

 

 

241

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(3,728

)

 

 

(2,022

)

Prepaid expenses and other current assets

 

 

(596

)

 

 

(144

)

Deferred commissions

 

 

(11,552

)

 

 

 

Other noncurrent assets

 

 

(782

)

 

 

(16

)

Trade payables

 

 

2,468

 

 

 

(2,248

)

Accrued expenses

 

 

(3,401

)

 

 

(3,000

)

Deferred revenue

 

 

15,127

 

 

 

17,113

 

Net cash used in operating activities

 

 

(421

)

 

 

(11,276

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net increase in customer fund assets

 

 

(11,878

)

 

 

(4,585

)

Cash paid for acquired intangible assets

 

 

(131

)

 

 

(4,881

)

Cash paid for acquisitions of businesses

 

 

(17,310

)

 

 

 

Purchase of property and equipment

 

 

(4,950

)

 

 

(8,169

)

Net cash used in investing activities

 

 

(34,269

)

 

 

(17,635

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net of underwriting discounts

 

 

274,705

 

 

 

192,510

 

Payments of deferred financing costs

 

 

(398

)

 

 

(622

)

Payments on credit facility

 

 

 

 

 

(33,000

)

Proceeds from credit facility

 

 

 

 

 

23,000

 

Repayment of note payable

 

 

 

 

 

(234

)

Net increase in customer fund obligations

 

 

11,797

 

 

 

4,585

 

Proceeds from exercise of stock options and common stock warrants

 

 

40,417

 

 

 

5,580

 

Proceeds from purchases of stock under employee stock purchase plan

 

 

7,664

 

 

 

 

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

 

 

(93

)

 

 

(2,217

)

Repurchase of shares

 

 

 

 

 

(1,806

)

Net cash provided by financing activities

 

 

334,092

 

 

 

187,796

 

Foreign currency effect on cash and cash equivalents

 

 

(140

)

 

 

148

 

Net change in cash and cash equivalents

 

 

299,262

 

 

 

159,033

 

Cash and cash equivalents—Beginning of period

 

 

142,322

 

 

 

14,075

 

Cash and cash equivalents—End of period

 

$

 

441,584

 

 

$

 

173,108

 

 

 

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 June 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

$

 

85,008

 

 

$

 

534

 

 

$

 

85,542

 

 

$

 

59,845

 

Professional services

 

 

6,291

 

 

 

(47

)

 

 

6,244

 

 

 

4,034

 

Total revenue

 

 

91,299

 

 

 

487

 

 

 

91,786

 

 

 

63,879

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

 

22,938

 

 

 

 

 

 

22,938

 

 

 

15,837

 

Professional services

 

 

4,397

 

 

 

 

 

 

4,397

 

 

 

2,795

 

Total cost of revenue

 

 

27,335

 

 

 

 

 

 

27,335

 

 

 

18,632

 

Gross profit

 

 

63,964

 

 

 

487

 

 

 

64,451

 

 

 

45,247

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,996

 

 

 

 

 

 

18,996

 

 

 

12,428

 

Sales and marketing

 

 

40,678

 

 

 

5,175

 

 

 

45,853

 

 

 

40,604

 

General and administrative

 

 

18,019

 

 

 

 

 

 

18,019

 

 

 

9,341

 

Total operating expenses

 

 

77,693

 

 

 

5,175

 

 

 

82,868

 

 

 

62,373

 

Operating loss

 

 

(13,729

)

 

 

(4,688

)

 

 

(18,417

)

 

 

(17,126

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,282

)

 

 

 

 

 

(1,282

)

 

 

(99

)

Interest expense

 

 

173

 

 

 

 

 

 

173

 

 

 

1,067

 

Other (income) expense, net

 

 

381

 

 

 

 

 

 

381

 

 

 

(442

)

Total other (income) expense, net

 

 

(728

)

 

 

 

 

 

(728

)

 

 

526

 

Loss before income taxes

 

 

(13,001

)

 

 

(4,688

)

 

 

(17,689

)

 

 

(17,652

)

Provision for (benefit from) income taxes

 

 

172

 

 

 

 

 

 

172

 

 

 

114

 

Net loss

 

$

 

(13,173

)

 

$

 

(4,688

)

 

$

 

(17,861

)

 

$

 

(17,766

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

 

(0.18

)

 

$

 

(0.07

)

 

$

 

(0.25

)

 

$

 

(1.24

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

71,568

 

 

 

 

 

 

 

71,568

 

 

 

14,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

As Reported

(ASC 606)

 

 

Impacts from

Adoption

 

 

Without

Adoption

(ASC 605)

 

 

As Reported

(ASC 605)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

$

 

163,239

 

 

$

 

618

 

 

$

 

163,857

 

 

$

 

117,715

 

Professional services

 

 

13,030

 

 

 

(100

)

 

 

12,930

 

 

 

7,541

 

Total revenue

 

 

176,269

 

 

 

518

 

 

 

176,787

 

 

 

125,256

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and returns

 

 

43,916

 

 

 

 

 

 

43,916

 

 

 

30,654

 

Professional services

 

 

8,726

 

 

 

 

 

 

8,726

 

 

 

5,487

 

Total cost of revenue

 

 

52,642

 

 

 

 

 

 

52,642

 

 

 

36,141

 

Gross profit

 

 

123,627

 

 

 

518

 

 

 

124,145

 

 

 

89,115

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

34,952

 

 

 

 

 

 

34,952

 

 

 

25,047

 

Sales and marketing

 

 

78,886

 

 

 

11,552

 

 

 

90,438

 

 

 

77,911

 

General and administrative

 

 

33,253

 

 

 

 

 

 

33,253

 

 

 

18,552

 

Total operating expenses

 

 

147,091

 

 

 

11,552

 

 

 

158,643

 

 

 

121,510

 

Operating loss

 

 

(23,464

)

 

 

(11,034

)

 

 

(34,498

)

 

 

(32,395

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(2,049

)

 

 

 

 

 

(2,049

)

 

 

(135

)

Interest expense

 

 

284

 

 

 

 

 

 

284

 

 

 

1,961

 

Other (income) expense, net

 

 

429

 

 

 

 

 

 

429

 

 

 

(472

)

Total other (income) expense, net

 

 

(1,336

)

 

 

 

 

 

(1,336

)

 

 

1,354

 

Loss before income taxes

 

 

(22,128

)

 

 

(11,034

)

 

 

(33,162

)

 

 

(33,749

)

Provision for (benefit from) income taxes

 

 

288

 

 

 

 

 

 

288

 

 

 

(734

)

Net loss

 

$

 

(22,416

)

 

$

 

(11,034

)

 

$

 

(33,450

)

 

$

 

(33,015

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

 

(0.32

)

 

$

 

(0.16

)

 

$

 

(0.48

)

 

$

 

(3.21

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

69,983

 

 

 

 

 

 

 

69,983

 

 

 

10,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVALARA, INC.

CONSOLIDATED BALANCE SHEETS

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

(in thousands)

 

 

June 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

 

$

 

441,584

 

 

 

 

 

 

$

 

441,584

 

 

$

 

142,322

 

Trade accounts receivable—net of allowance for doubtful accounts

 

 

43,409

 

 

 

963

 

 

 

44,372

 

 

 

40,287

 

Deferred commissions

 

 

7,365

 

 

 

(7,365

)

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

11,179

 

 

 

 

 

 

11,179

 

 

 

11,307

 

Total current assets before customer fund assets

 

 

503,537

 

 

 

(6,402

)

 

 

497,135

 

 

 

193,916

 

Funds held from customers

 

 

24,278

 

 

 

 

 

 

24,278

 

 

 

13,113

 

Receivable from customers—net of allowance for doubtful accounts

 

 

915

 

 

 

 

 

 

915

 

 

 

270

 

Total current assets

 

 

528,730

 

 

 

(6,402

)

 

 

522,328

 

 

 

207,299

 

Noncurrent assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment—net

 

 

34,148

 

 

 

 

 

 

34,148

 

 

 

33,373

 

Goodwill

 

 

78,981

 

 

 

 

 

 

78,981

 

 

 

61,300

 

Intangible assets—net

 

 

24,765

 

 

 

 

 

 

24,765

 

 

 

19,371

 

Deferred commissions

 

 

23,454

 

 

 

(23,454

)

 

 

 

 

 

 

Other noncurrent assets

 

 

2,370

 

 

 

 

 

 

2,370

 

 

 

1,589

 

Total assets

 

$

 

692,448

 

 

$

 

(29,856

)

 

$

 

662,592

 

 

$

 

322,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

8,197

 

 

 

 

 

 

 

8,197

 

 

 

4,847

 

Accrued expenses

 

 

49,114

 

 

 

(4,508

)

 

 

44,606

 

 

 

42,217

 

Deferred revenue

 

 

137,997

 

 

 

4,903

 

 

 

142,900

 

 

 

125,260

 

Total current liabilities before customer fund obligations

 

 

195,308

 

 

 

395

 

 

 

195,703

 

 

 

172,324

 

Customer fund obligations

 

 

25,245

 

 

 

 

 

 

25,245

 

 

 

13,349

 

Total current liabilities

 

 

220,553

 

 

 

395

 

 

 

220,948

 

 

 

185,673

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

814

 

 

 

8,405

 

 

 

9,219

 

 

 

9,393

 

Deferred tax liability

 

 

638

 

 

 

 

 

 

638

 

 

 

560

 

Deferred rent

 

 

16,480

 

 

 

 

 

 

16,480

 

 

 

17,317

 

Other noncurrent liabilities

 

 

1,835

 

 

 

 

 

 

1,835

 

 

 

436

 

Total liabilities

 

 

240,320

 

 

 

8,800

 

 

 

249,120

 

 

 

213,379

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

8

 

 

 

 

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

937,047

 

 

 

 

 

 

937,047

 

 

 

599,493

 

Accumulated other comprehensive income loss

 

 

(2,531

)

 

 

 

 

 

(2,531

)

 

 

(2,345

)

Accumulated deficit

 

 

(482,396

)

 

 

(38,656

)

 

 

(521,052

)

 

 

(487,602

)

Total shareholders' equity

 

 

452,128

 

 

 

(38,656

)

 

 

413,472

 

 

 

109,553

 

Total liabilities and shareholders' equity

 

$

 

692,448

 

 

$

 

(29,856

)

 

$

 

662,592

 

 

$

 

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 June 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

 

$

(13,173

)

 

$

(4,688

)

 

$

(17,861

)

 

$

(17,766

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,987

 

 

 

 

 

 

3,987

 

 

 

3,002

 

Stock-based compensation

 

 

9,424

 

 

 

 

 

 

9,424

 

 

 

3,564

 

Deferred tax expense (benefit)

 

 

39

 

 

 

 

 

 

39

 

 

 

51

 

Amortization of deferred rent

 

 

(259

)

 

 

 

 

 

(259

)

 

 

(38

)

Non-cash change in earnout liability

 

 

476

 

 

 

 

 

 

476

 

 

 

(391

)

Non-cash bad debt (recovery) expense

 

 

228

 

 

 

 

 

 

228

 

 

 

(152

)

Other

 

 

137

 

 

 

 

 

 

137

 

 

 

61

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

1,807

 

 

 

(43

)

 

 

1,764

 

 

 

4,406

 

Prepaid expenses and other current assets

 

 

1,109

 

 

 

 

 

 

1,109

 

 

 

1,763

 

Deferred commissions

 

 

(5,175

)

 

 

5,175

 

 

 

 

 

 

 

Other noncurrent assets

 

 

(546

)

 

 

 

 

 

(546

)

 

 

(126

)

Trade payables

 

 

(1,122

)

 

 

 

 

 

(1,122

)

 

 

(512

)

Accrued expenses

 

 

6,972

 

 

 

(301

)

 

 

6,671

 

 

 

2,771

 

Deferred revenue

 

 

6,096

 

 

 

(143

)

 

 

5,953

 

 

 

5,466

 

Net cash provided by operating activities

 

 

10,000

 

 

 

 

 

 

10,000

 

 

 

2,099

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in customer fund assets

 

 

(4,654

)

 

 

 

 

 

(4,654

)

 

 

13,942

 

Cash paid for acquired intangible assets

 

 

 

 

 

 

 

 

-

 

 

 

(4,881

)

Purchase of property and equipment

 

 

(2,836

)

 

 

 

 

 

(2,836

)

 

 

(4,544

)

Net cash (used in) provided by investing activities

 

 

(7,490

)

 

 

 

 

 

(7,490

)

 

 

4,517

 

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

 

 

(359

)

 

 

 

 

 

(359

)

 

 

(622

)

Payments on credit facility

 

 

 

 

 

 

 

 

 

 

 

(33,000

)

Proceeds from credit facility

 

 

 

 

 

 

 

 

 

 

 

5,000

 

Repayment of note payable

 

 

 

 

 

 

 

 

 

 

 

(234

)

Net increase in customer fund obligations

 

 

4,654

 

 

 

 

 

 

4,654

 

 

 

(13,942

)

Proceeds from exercise of stock options and common stock warrants

 

 

13,106

 

 

 

 

 

 

13,106

 

 

 

5,254

 

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

 

 

 

 

 

 

 

 

 

 

 

(201

)

Repurchase of shares

 

 

 

 

 

 

 

 

 

 

 

(987

)

Net cash provided by financing activities

 

 

292,106

 

 

 

 

 

 

292,106

 

 

 

153,778

 

Foreign currency effect on cash and cash equivalents

 

 

90

 

 

 

 

 

 

90

 

 

 

92

 

Net change in cash and cash equivalents

 

 

294,706

 

 

 

 

 

 

294,706

 

 

 

160,486

 

Cash and cash equivalents—Beginning of period

 

 

146,878

 

 

 

 

 

 

146,878

 

 

 

12,622

 

Cash and cash equivalents—End of period

 

$

441,584

 

 

$

 

 

$

441,584

 

 

$

173,108

 

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 Six Months Ended June 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

 

$

(22,416

)

 

$

(11,034

)

 

$

(33,450

)

 

$

(33,015

)

Adjustments to reconcile net loss to net cash used in operating

activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,668

 

 

 

 

 

 

7,668

 

 

 

5,992

 

Stock-based compensation

 

 

15,984

 

 

 

 

 

 

15,984

 

 

 

7,074

 

Deferred tax expense (benefit)

 

 

78

 

 

 

 

 

 

78

 

 

 

(967

)

Amortization of deferred rent

 

 

(392

)

 

 

 

 

 

(392

)

 

 

263

 

Non-cash change in earnout liability

 

 

476

 

 

 

 

 

 

476

 

 

 

(462

)

Non-cash bad debt (recovery) expense

 

 

450

 

 

 

 

 

 

450

 

 

 

(85

)

Other

 

 

195

 

 

 

 

 

 

195

 

 

 

241

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(3,728

)

 

 

(158

)

 

 

(3,886

)

 

 

(2,022

)

Prepaid expenses and other current assets

 

 

(596

)

 

 

 

 

 

(596

)

 

 

(144

)

Deferred commissions

 

 

(11,552

)

 

 

11,552

 

 

 

 

 

 

 

Other noncurrent assets

 

 

(782

)

 

 

 

 

 

(782

)

 

 

(16

)

Trade payables

 

 

2,468

 

 

 

 

 

 

2,468

 

 

 

(2,248

)

Accrued expenses

 

 

(3,401

)

 

 

(2,418

)

 

 

(5,819

)

 

 

(3,000

)

Deferred revenue

 

 

15,127

 

 

 

2,058

 

 

 

17,185

 

 

 

17,113

 

Net cash used in operating activities

 

 

(421

)

 

 

 

 

 

(421

)

 

 

(11,276

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in customer fund assets

 

 

(11,878

)

 

 

 

 

 

(11,878

)

 

 

(4,585

)

Cash paid for acquired intangible assets

 

 

(131

)

 

 

 

 

 

(131

)

 

 

(4,881

)

Cash paid for acquisitions of businesses

 

 

(17,310

)

 

 

 

 

 

(17,310

)

 

 

 

Purchase of property and equipment

 

 

(4,950

)

 

 

 

 

 

(4,950

)

 

 

(8,169

)

Net cash used in investing activities

 

 

(34,269

)

 

 

 

 

 

(34,269

)

 

 

(17,635

)

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

 

 

(398

)

 

 

 

 

 

(398

)

 

 

(622

)

Payments on credit facility

 

 

 

 

 

 

 

 

 

 

 

(33,000

)

Proceeds from credit facility

 

 

 

 

 

 

 

 

 

 

 

23,000

 

Repayment of note payable

 

 

 

 

 

 

 

 

 

 

 

(234

)

Net increase in customer fund obligations

 

 

11,797

 

 

 

 

 

 

11,797

 

 

 

4,585

 

Proceeds from exercise of stock options and common stock warrants

 

 

40,417

 

 

 

 

 

 

40,417

 

 

 

5,580

 

Proceeds from purchases of stock under employee stock purchase

plan

 

 

7,664

 

 

 

 

 

 

7,664

 

 

 

 

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

 

 

(93

)

 

 

 

 

 

(93

)

 

 

(2,217

)

Repurchase of shares

 

 

 

 

 

 

 

 

 

 

 

(1,806

)

Net cash provided by financing activities

 

 

334,092

 

 

 

 

 

 

334,092

 

 

 

187,796

 

Foreign currency effect on cash and cash equivalents

 

 

(140

)

 

 

 

 

 

(140

)

 

 

148

 

Net change in cash and cash equivalents

 

 

299,262

 

 

 

 

 

 

299,262

 

 

 

159,033

 

Cash and cash equivalents—Beginning of period

 

 

142,322

 

 

 

 

 

 

142,322

 

 

 

14,075

 

Cash and cash equivalents—End of period

 

$

441,584

 

 

$

 

 

$

441,584

 

 

$

173,108

 

AVALARA, INC.

UNAUDITED PRESENTATION AND RECONCILIATION TO NON-GAAP FINANCIAL MEASURES