Seeking Alpha • Oct 14

Avalara ticks higher as holders said to approve $8.2B sale to Vista Equity

Avalara (NYSE:AVLR) ticked up 0.7% after shareholders are said to have approved tje $8.2 billion sale to Vista Equity. Avalara (AVLR) holders approved the deal at the shareholder vote on Friday, a person who listened to the vote told Seeking Alpha. The approval comes after a few of Avalara (AVLR) shareholders had come out against the deal and said they had planned to vote it down. Last week proxy adviser Glass Lewis also recommended AVLR shareholders vote against the sale. In August Vista Equity agreed to pay $93.50/share in all cash-transaction for Avalara.

Seeking Alpha • Oct 05

Glass Lewis recommends AVLR shareholders vote against $8.4B sale to Vista Equity

Altair US, one of Avalara's (NYSE:AVLR) largest shareholders, said Wednesday proxy advisory firm Glass Lewis recommended that AVLR shareholders vote against its $8.4B sale to Vista Equity. Glass Lewis called the purchase price "inadequate" when factoring in AVLR's historical valuation and the prices paid for other software firms in earlier deals. "... we have concerns about the questionable deal timing, the sometimes inexplicable course of discussions, and the board's pessimistic reasoning for the merger and conflicts of interest in the decision-making process," it added. On the other hand, proxy adviser ISS issued "cautionary" support for the deal, but raised concerns over shift in narrative from AVLR's management. "It is understandable that shareholders who are optimistic about AVLR's long-term potential may question the urgency to sell now," it added. Another AVLR investor Merrion Investment Management said it would vote against the sale. Altair, a pre-IPO angel investor in AVLR, is of the view that AVLR would be better off as a standalone.

Seeking Alpha • Sep 26

Avalara announces 18 newly certified integrations into business applications

Avalara (ALVR) shares are up 5.6% on Monday after the firm notifies the release of 18 newly certified integrations with accounting, ERP, ecommerce, point-of-sale, mobile commerce, and CRM software applications. Certified integrations are built to ensure customers enjoy a fast, reliable, and easy process for embedding Avalara’s automated tax management into existing systems. The move enable customers of Avalara partner solutions to benefit from Avalara’s real-time calculation of applicable taxes for billing line items.

Seeking Alpha • Sep 15

Avalara holder plans to vote against $8.2B sale to Vista Equity

An Avalara Inc. (NYSE:AVLR) holder said it plans to vote against a planned $8.2 billion sale of the tax-software company to private equity firm Vista Equity. Merrion Investment Management, which has been an investor in Avalara (AVLR) since October 2019, said that the price for Avalara "appears completely devoid of any control premium appropriate in this situation," according to a statement. The Merrion opposition comes after a Bloomberg report a week ago that another Avalara holder, Altair US, which has a 1% stake in Avalara (AVLR), is also against the sale and believes company would be better off as an standalone. Vista Equity agreed to pay $93.50/share in all cash-transaction for Avalara (AVLR) last month, which represented a 27% premium to Avalara's closing price on July 6, the last trading prior to media reports about a potential transaction.

Seeking Alpha • Sep 08

Avalara holder said to plan to vote against $8.2B sale to Vista Equity - report

An Avalara Inc. (NYSE:AVLR) holder plans to vote against a planned $8.2 billion sale of the tax-software company to private equity firm Vista Equity. Altair US, which has a 1% stake in Avalara (AVLR), argued that the company would be better off as an standalone company and that sales process was flawed and the price undervalues the company, according to traders, who cited a Bloomberg report, which referenced a letter Altair sent to shareholders on Thursday. Vista Equity agreed to pay $93.50/share in all cash-transaction for Avalara (AVLR) last month, which represented a 27% premium to Avalara's closing price on July 6, the last trading prior to media reports about a potential transaction. A BMO analyst in July said that Avalara (AVLR) was likely on many "short lists" as a possible acquisition target.

Seeking Alpha • Aug 15

Avalara: Disappointed By The Takeout Offer, Though Valuation Is Reasonable

Avalara recently reported Q2 results with revenue coming in a little soft, though profitability was better than expected. The bigger news was their decision to be acquired by Visa Equity for $93.50/share, representing a 27% premium compared to the pre-rumor levels. While the takeout valuation implies ~9x forward revenue, investors may be disappointed in the decision to sell given the recent investor day providing bullish long-term financial targets. Avalara (AVLR) recently reported their Q2 financial results with revenue coming in a little below expectations, but profitability better than expected. However, the biggest news was that they recently agreed to be acquired by Vista Equity for $93.50/share in cash, which at face value seems pretty disappointing for investors. The stock has been under a lot of selling pressure since reaching an all-time high in late-2021, with the stock down 65% at the low-point. And while this takeout price did provide some upside relative to the trading price at the time of the announcement, I believe investors should be somewhat disappointed at the valuation and takeout price. AVLR data by YCharts With the takeout acquisition expected to close in the second half of the year, it appears this may be the end of Avalara's public stock. With the takeout price representing only a 27% premium compared to pre-rumors, it does also represent a big discount to the levels the stock had been trading over the past year. I believe investors should be somewhat disappointed with this takeout price, given the stock had traded above the $93.50 takeout price for much of the first half of 2022. While not surprising to see private equity interest in Avalara given the significant pullback, one might have thought management's long-term financial outlook would be supportive of a higher takeout price. For now, I don't believe there is much to do with the stock as the current trading price is marginally below the takeout price. However, I do believe investors should start to feel more confident about software stocks in general. If private equity is dipping their toes into the public markets at current valuation levels, the may be close to reaching a trough in general valuations. Financial Review During Q2, the company reported revenue growth of 23% yoy to $208.6 million, which slightly missed expectations for $208 million. In addition, billings during the quarter came in at $212.4 million, representing 17% yoy growth, which at face value seems a little disappointing. Not surprisingly, the company's non-GAAP gross margin remained healthy at 75%, compared to 74% in the year-ago period. Given the strong and stable gross margins, we should see longer-term operating leverage, as I talk about below. Avalara However, non-GAAP operating loss of $1.9 million demonstrates a long pathway ahead for the company. Nevertheless, non-GAAP EPS loss of $0.02 was better than expectations for a loss of $0.08. From a customer metric standpoint, Avalara continued to demonstrate strength, growing their customer base to 20,110 core customers, up 21% yoy. I believe the company continues to operate in an under-penetrated market, as tax compliance software is still an investment that has not been made by many companies. In addition, net revenue retention rate was 113% during Q2 and has averaged 115% over the trailing 12-months. Avalara Back in late-June, the company hosted their investor day, in which management talked about their 2025 financial targets. Given the significant market opportunity, the company expected organic revenue growth of 20-25% through 2025. Combined with stable gross margins of 76-78%, the company is expecting some nice operating leverage, with non-GAAP operating margin expected to reach 10-15%, up from the 1% margin they saw in 2021. In addition, FCF margin is expected to improve, reaching 13-18% by 2025. Vista Equity Takeout Given the above financial framework, it was quite shocking to see the company agree to be acquired by Vista Equity for $93.50 shortly after hosting a positive investor event. Back in early July, just a few weeks after the company hosted their financial day and providing bullish long-term targets, there were rumors that Avalara was approached by Vista Equity in a potential takeover, causing the stop to pop 16% from the ~$73.50 trading price at the time. Given the eventual takeout price of $93.50, this only represented a ~27% premium to the pre-rumor stock price, which does not appear overly attractive given Avalara had traded above the takeout price for much of the first four months of 2022. While it's not surprising to see Avalara receive private equity interest given their long-term financial framework, investors would have like to see a higher takeout price. Yes, the valuation for many software stocks have pulled back significantly over the past year, but if management was very bullish about their long-term outlook, then a takeout price equivalent to the average trading level for most of this year should have been unattractive. Valuation With the stock down around 45% year to date prior to the takeout rumors, it's no surprise to see valuation pullback to 6x forward revenue at the trough. Investors had become fearful of high-valuation companies that were not profitable, especially given the heightened concerns with a potential recession around the corner. Nevertheless, Avalara's long-term financial targets of 20-25% organic revenue growth and 10-15% non-GAAP operating margin would have given them a solid framework around the Rule of 40. Typically, software stocks with similar financial metrics would be trading right around 10x forward revenue. AVLR EV to Revenues (Forward) data by YCharts However, the takeout price by Vista Equity represents just under 9x forward revenue, which at face value does not seem unattractive. More recently, Anaplan was acquired by private equity firm Thoma Bravo for around 10.5x forward revenue. And with the market pulling back since the Anaplan takeout announcement, it's no surprise that the unprofitable Avalara was taken out for a slightly less valuation multiple.

Seeking Alpha • Aug 08

Vista Equity agrees to buy Avalara for $8.4B

Private equity firm Vista Equity agreed to buy tax software provider Avalara (NYSE:AVLR) for $8.4 billion including debt. Vista Equity agreed to pay $93.50/share in all cash-transaction, according to a statement. The deal represents a 27% premium to Avalara's closing price on July 6, the last trading prior to media reports about a potential transaction. The deal is expected to close in the second half of the year and closing of the transaction is not subject to a financing condition. Avalara (AVLR) jumped 16% on July 7 after a StreetInsider report that the tax software provider is said to had been approached about a takeover from Vista Equity. Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Avalara, and Simpson Thacher & Bartlett LLP and Perkins Coie LLP are acting as legal counsel. Kirkland & Ellis LLP is acting as legal counsel for Vista. A BMO analyst last month said that Avalara (AVLR) was likely on many "short lists" as a possible acquisition target.

Seeking Alpha • Jul 25

Avalara: Tax Compliance Cross-Selling Opportunities Turn Us Bullish

Shares of Avalara have been under pressure amid the broader market selloff and volatility among high-growth technology software names. The company is generating strong growth with an outlook for accelerating earnings starting next year. We are bullish on the stock and view the selloff as a new buying opportunity. Avalara Inc (AVLR) offers cloud-based software for large and small businesses to deal with tax compliance. The tools cover everything from transaction sales and use-tax paperwork, VAT, GST, excise, communications, lodging, and other indirect tax requirements from various authorities. The attraction here is that companies are increasingly looking for digital and automated solutions to deal with the growing complexity of these types of regulatory issues. While growth has been very impressive over the last several years, shares of AVLR have been caught up in the broader market volatility with a deep selloff in 2022 against what was likely a stretched valuation at the top. Ahead of the upcoming Q2 earnings report set to be released on August 8th, we see several reasons to get bullish on the stock which is well positioned to recover. AVLR Investment Thesis We'll get straight to the point highlighting five reasons we're buying AVLR with an expectation that shares can outperform going forward. The company is a high-quality business offering an in-demand, differentiated business software service with a positive long-term outlook. Firming margins and climbing profitability highlight an impressive growth story and solid fundamentals. Operational trends including strong cross-selling momentum can support an earnings beat in the upcoming quarterly report Favorable technical setup with shares forming a tradeable bottom. Rumors of the company being a potential acquisition target add a potential near-term catalyst. AVLR Key Metrics AVLR last reported its Q1 results back in May with non-GAAP EPS of $0.08 which beat expectations by $0.25. Revenue of $205 million climbed 33% year over year and was also ahead of the consensus. While the company is unprofitable on a GAAP basis with negative free cash flow, the story here is the trend of improving financials. Excluding stock-based compensation and the amortization of acquired intangibles, Avalara reached a positive adjusted operating income in Q1 of $4.7 million with a 2% margin, reversing a loss of -$2.2 million in the period last year. The result has been driven by the top-line strength while benefiting from overall scale as SG&A and R&D decline as a percentage of revenue. These trends are expected to accelerate through next year. Operationally, customer growth has been the main engine of the company including a trend of climbing revenue per core customer. For context, Avalara breaks out its customer groups by size where the enterprise-level segment generating $76,000 per customer in Q1 2022 is up from a level closer to $50K in Q1 2019. The trend is similar with small and mid-size businesses. Total core customers reached 19,160 core customers, up from 18,270 in the period last year. source: company IR A lot of the success has been Avalara's ability to both cross-sell and upsell new features to existing customers along with a continued international expansion as part of its strategy. Management explains that a cohort of customers that have been on the platform typically add more services to their contracts over time evidenced by a net revenue retention rate of 115%. We can also bring up that the level of deferred revenue at $304 million to the end of the quarter is up 7% just from Q4 which provides some visibility for a further growth runway. source: company IR In terms of guidance, management is targeting full-year 2022 revenue between $867 and $871 million which represents an approximate 25% increase over 2021 at the midpoint. While Avalara expects a negative non-GAAP operating loss for the full year between $6 million and $8 million, it's worth noting that this estimate was revised from prior operating loss guidance between $17 million to $21 million. Furthermore, management sees the company approaching breakeven or better in Q4 2022 which sets up an earnings tailwind into next year. Avalara has also released targets for fiscal 2025. Over the next three years, the plan is for the operating margin to trend towards 10-15% as it benefits from its larger scale and efficiency. Compared to a gross margin of 73% in 2021 and Q1, the expectation is that the metric can trend towards 76-78% based on the top-line momentum and a push towards automation. The expectation is that organic revenue growth continues above 20% per year over the period. Finally, we note that Avalara ended the quarter with $1.5 billion in cash and equivalents against approximately $1 billion in total debt. The cushion here should provide ample liquidity to support continued growth which will be further strengthened as cash flows improve going forward. source: company IR Is AVLR A Good Long-Term Investment We won't claim tax compliance is the most exciting area of software tech, but the point here is that Avalara has established itself as the leader in dealing with these specific functions. The upside is that clients are often captured based on basic functionality, opening the door for Avalara to expand the relationship through its full product suite. source: company IR One of the most encouraging developments is Avalara's more recent push to integrate with related SaaS marketplaces and e-commerce platforms. In essence, businesses dealing with large volumes of payments and transactions are targeted customer types that can benefit from Avalara solutions. Management notes that the new relationships are driving a new wave of growth. From the earnings conference call: Customers of all sizes and in all industries are more quickly becoming omni-channel, having to deal with tax compliance across multiple systems and in more jurisdictions even globally. This greatly increases their tax compliance complexity and renders manual status quo solutions ineffective. The millions of new e-commerce customers created over the last two years will need to deal with this reality and we capture tens of thousands of them and still growing using our calculation on our e-commerce partners platforms. This offers us a large number of prospects to upsell additional compliance products beyond just calculation. According to the current revenue and earnings consensus, 2023 is set to be the breakout year for EPS to turn positive with a current estimate of $0.16 compared to the forecast for -$0.07 in 2022. From there, the market expects earnings to accelerate, in line with management targets supported by the recent operating trends. Seeking Alpha AVLR trading at 9x 2022 sales suggests the growth story here is hardly a secret. At the same time, recognized that the stock traded with a sales multiple as high as 30x in late 2020. We make the argument that the growth story and long-term outlook for the company are as strong as ever. As it relates to valuation, shares are looking interesting considering the earnings momentum expected through 2025 and beyond. Compared to the consensus EPS of $0.16 in 2023, the potential that EPS climbs more than 400% towards $0.83 by 2024 with revenue climbing above 20% is the type of trend that can justify a higher premium.

Seeking Alpha • Jul 07

Avalara surges 16% on report on takeover approach

Avalara (NYSE:AVLR) jumped 16% after a report that the tax software provider is said to have been approached about a takeover from private equity frim Vista Equity Partners. Both companies are said to be working with advisers, though its not clear how advanced the talks are, according to a StreetInsider report. Avalara has a market cap of $6.7 billion and short interest of 4.2%. Developing story ...

Seeking Alpha • May 07

Avalara: Best Time To Buy This SaaS Leader

Shares of Avalara skyrocketed nearly 10% after posting a fantastic beat-and-raise in Q1, hopefully igniting a rebound trend. The company still enjoys a greenfield market environment for tax automation. With positive pro forma operating margins, Avalara is also a rare SaaS stock that balances strong growth with bottom-line progress. Trading at ~7x forward revenue, Avalara is very favorably valued for a long-term investor.

Seeking Alpha • Feb 09

Avalara Q4 Earnings Preview: Will The Report Change The Story?

Avalara is a lesson in why "it should be" is often an exercise in futility in public stock investing. This tax software business has all the tailwinds in the world, muted levels of competition, grows quickly, generates positive cashflow - but the stock is in the basement. It "should be" higher than it is now. So we rate the stock at Buy. Will Q4 earnings change the story? Read on!

Seeking Alpha • Nov 07

Avalara: Risk/Reward Equation Is Well Balanced

Shares of Avalara have traded choppily at all-time highs, after dramatically underperforming the S&P 500 year-to-date. The company is still managing to grow substantially at a ~40% y/y pace, but a fervent pace of acquisitions is helping to keep the optics up. Avalara is taking on an increasing debt load in order to finance its purchases. The stock looks richly valued at 17x forward revenue.

Seeking Alpha • Oct 19

Avalara: Let This Bloated Stock Come Down To Earth

Shares of Avalara have bucked the broader trend in the tech sector, rallying since September while most of its peers have corrected. The main driver is spillover enthusiasm from Avalara's second-quarter earnings release, when the company posted 45% y/y revenue growth - its highest growth quarter on record. Even more impressively, billings kept a 52% y/y pace, indicating that near-term deceleration is unlikely. At the same time, Avalara's huge valuation at nearly 20x next year's revenue makes further upside quite unlikely.

Seeking Alpha • Aug 07

We Remain At Buy On Avalara After Q2 Earnings

Avalara reported its Q2 numbers this week. This is one of a handful of companies set to benefit from the rollout of online sales taxes across the US and beyond. Growth accelerated significantly, cash flow margins improved, and the balance sheet remains clean. We were at Buy before earnings and believe this remains a compelling after earnings.

Seeking Alpha • Jul 20

Avalara: Great Performance At A Terrible Price

Shares of Avalara have traded choppily this year as investors have balanced strong fundamental performance alongside an upward creep in valuations. Avalara delivered excellent results in Q1, with both revenue and billings growth accelerating. Margins are also improving, due to slight gross margin expansion alongside sales and marketing leverage. Still, the stock's mid-teens revenue valuation profile looks like a risky buy.

Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	0/6
Financial Health	5/6
Dividends	0/6

Historical stock prices
Current Share Price	US$93.48
52 Week High	US$188.43
52 Week Low	US$66.39
Beta	0.98
1 Month Change	0.96%
3 Month Change	1.76%
1 Year Change	-47.12%
3 Year Change	42.61%
5 Year Change	n/a
Change since IPO	108.01%

	AVLR	US Software	US Market
7D	0.9%	0.2%	1.5%
1Y	-47.1%	-11.5%	25.5%

AVLR volatility
AVLR Average Weekly Movement	3.0%
Software Industry Average Movement	9.6%
Market Average Movement	7.2%
10% most volatile stocks in US Market	16.0%
10% least volatile stocks in US Market	3.2%

AVLR fundamental statistics
Market cap	US$8.28b
Earnings (TTM)	-US$162.92m
Revenue (TTM)	US$789.43m

AVLR income statement (TTM)
Revenue	US$789.43m
Cost of Revenue	US$234.73m
Gross Profit	US$554.70m
Other Expenses	US$717.62m
Earnings	-US$162.92m

Earnings per share (EPS)	-1.84
Gross Margin	70.27%
Net Profit Margin	-20.64%
Debt/Equity Ratio	93.8%

Data	Last Updated (UTC time)
Company Analysis	2022/10/19 14:30
End of Day Share Price	2022/10/18 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31

Package	Data	Timeframe	Example US Source ^*
Company Financials	10 years	Income statement Cash flow statement Balance sheet	SEC Form 10-K SEC Form 10-Q
Analyst Consensus Estimates	+3 years	Forecast financials Analyst price targets	Analyst Research Reports Blue Matrix
Market Prices	30 years	Stock prices Dividends, Splits and Actions	ICE Market Data SEC Form S-1
Ownership	10 years	Top shareholders Insider trading	SEC Form 4 SEC Form 13D
Management	10 years	Leadership team Board of directors	SEC Form 10-K SEC Form DEF 14A
Key Developments	10 years	Company announcements	SEC Form 8-K

Analyst	Institution
Andrew DeGasperi	Berenberg
Daniel Jester	BMO Capital Markets Equity Research
Bradley Sills	BofA Global Research

This company has been acquired

Avalara (AVLR) Stock Overview

Rewards

Risk Analysis

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Price History & Performance

Recent News & Updates

Co-Founder notifies of intention to sell stock

Avalara ticks higher as holders said to approve $8.2B sale to Vista Equity

Glass Lewis recommends AVLR shareholders vote against $8.4B sale to Vista Equity

Avalara announces 18 newly certified integrations into business applications

Co-Founder exercised options and sold US$1.5m worth of stock

Avalara holder plans to vote against $8.2B sale to Vista Equity

Recent updates

Co-Founder notifies of intention to sell stock

Avalara ticks higher as holders said to approve $8.2B sale to Vista Equity

Glass Lewis recommends AVLR shareholders vote against $8.4B sale to Vista Equity

Avalara announces 18 newly certified integrations into business applications

Co-Founder exercised options and sold US$1.5m worth of stock

Avalara holder plans to vote against $8.2B sale to Vista Equity

Avalara holder said to plan to vote against $8.2B sale to Vista Equity - report

Avalara: Disappointed By The Takeout Offer, Though Valuation Is Reasonable

Co-Founder exercised options and sold US$1.5m worth of stock

President & COO recently sold US$70k worth of stock

Price target decreased to US$99.55

Second quarter 2022 earnings: EPS misses analyst expectations

Vista Equity agrees to buy Avalara for $8.4B

Avalara: Tax Compliance Cross-Selling Opportunities Turn Us Bullish

Co-Founder exercised options and sold US$1.4m worth of stock

Avalara surges 16% on report on takeover approach

Forecast to breakeven in 2024

Co-Founder exercised options and sold US$1.3m worth of stock

Co-Founder exercised options and sold US$1.3m worth of stock

Now 21% undervalued after recent price drop

Avalara: Best Time To Buy This SaaS Leader

First quarter 2022 earnings: EPS and revenues exceed analyst expectations

Co-Founder exercised options and sold US$1.5m worth of stock

President & COO recently sold US$620k worth of stock

Co-Founder notifies of intention to sell stock

Executive VP recently sold US$138k worth of stock

Co-Founder notifies of intention to sell stock

Executive VP exercised options and sold US$64k worth of stock

Price target decreased to US$172

Full year 2021 earnings: EPS and revenues exceed analyst expectations

Executive VP recently sold US$59k worth of stock

Avalara Q4 Earnings Preview: Will The Report Change The Story?

Executive VP recently sold US$136k worth of stock

Co-Founder notifies of intention to sell stock

Co-Founder notifies of intention to sell stock

President & COO exercised options and sold US$120k worth of stock

Forecast to breakeven in 2023

Avalara: Risk/Reward Equation Is Well Balanced

Third quarter 2021 earnings released: US$0.38 loss per share (vs US$0.15 loss in 3Q 2020)

Executive VP exercised options and sold US$1.1m worth of stock

Avalara: Let This Bloated Stock Come Down To Earth

President & COO exercised options and sold US$115k worth of stock

High number of new directors

Executive VP exercised options and sold US$205k worth of stock

High number of new directors

President & COO exercised options and sold US$117k worth of stock

We Remain At Buy On Avalara After Q2 Earnings

Price target increased to US$199

Second quarter 2021 earnings released: US$0.32 loss per share (vs US$0.13 loss in 2Q 2020)

Lead Independent Director notifies of intention to sell stock

Avalara: Great Performance At A Terrible Price

Executive VP & CTO notifies of intention to sell stock

Co-Founder recently sold US$2.0m worth of stock

Executive VP exercised options and sold US$100k worth of stock

Price target decreased to US$181

President & COO exercised options and sold US$82k worth of stock

Price target decreased to US$188

First quarter 2021 earnings released: US$0.35 loss per share (vs US$0.20 loss in 1Q 2020)

Shareholder Returns

Price Volatility

About the Company

Avalara, Inc. Fundamentals Summary