Avalara Reports Q1 2022 Earnings With Quarterly Revenues Up 33% Year Over Year

Avalara announced financial results for its first quarter ended March 31, 2022, reporting total revenue of $204.5 million, up 33% over the same period last year.

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Avalara First Quarter 2022 Financial Results

• Revenue: Total revenue was $204.5 million in the first quarter of 2022, up 33% from $153.6 million in the first quarter of 2021. Subscription and returns revenue was $186.9 million, up 34% from $139.3 million in the same period last year. Professional services revenue was $17.7 million, up 24% from $14.3 million in the same period last year.
• Gross Profit: GAAP gross profit was $144.4 million in the first quarter of 2022, representing a 71% gross margin, compared to a GAAP gross profit of $109.1 million and a 71% gross margin in the first quarter of 2021. Non-GAAP gross profit was $150.8 million, representing a 74% non-GAAP gross margin, compared to a non-GAAP gross profit of $113.2 million and a 74% non-GAAP gross margin in the first quarter of 2021.
• Operating Loss: GAAP operating loss was $35.1 million in the first quarter of 2022, compared to a GAAP operating loss of $25.5 million in the first quarter of 2021. Non-GAAP operating income was $4.7 million in the first quarter of 2022, compared to non-GAAP operating loss of $2.2 million in the first quarter of 2021.
• Net Loss: GAAP net loss was $32.6 million in the first quarter of 2022, compared to a GAAP net loss of $30.1 million in the first quarter of 2021. Non-GAAP net income was $7.2 million in the first quarter of 2022, compared to non-GAAP net loss of $6.8 million in the first quarter of 2021.
• Net Loss per Share: GAAP basic and diluted net loss per share was $0.37 based on 87.5 million weighted-average shares outstanding in the first quarter of 2022, compared to a GAAP basic and diluted net loss per share of $0.35 based on 85.4 million weighted-average shares outstanding in the first quarter of 2021. Non-GAAP diluted net income per share was $0.08 based on 88.9 million diluted weighted-average shares outstanding in the first quarter of 2022, compared to a non-GAAP diluted net loss per share of $0.08 based on 85.4 million weighted-average shares outstanding in the first quarter of 2021.
• Deferred Revenue: Total deferred revenue was $303.6 million at March 31, 2022, up from $283.0 million at December 31, 2021. The current portion of deferred revenue was $302.5 million at March 31, 2022, up from $280.8 million at December 31, 2021.
• Cash: Net cash used in operating activities was $23.1 million in the first quarter of 2022, compared to $28.2 million in the first quarter of 2021. Free cash flow was negative $31.1 million in the first quarter of 2022, compared to negative $31.9 million in the first quarter of 2021. Cash and cash equivalents totaled $1.5 billion at March 31, 2022, compared to $1.5 billion at December 31, 2021.
• Calculated Billings: Calculated billings were $219.2 million in the first quarter of 2022, compared to calculated billings of $171.8 million in the first quarter of 2021.

“We started 2022 with another strong quarter, exceeding our guidance and achieving topline revenue growth of 33% year-over-year. Mounting complexity in today’s digital-first world is pushing global demand for compliance automation. We continue to execute our strategy to build the global cloud compliance platform to achieve our vision of being part of every transaction in the world.”

Scott McFarlane, Avalara co-founder and chief executive officer.

First Quarter 2022 and Recent Operating Highlights

Avalara ended the first quarter of 2022 with approximately 19,160 core customers, up from approximately 18,270 core customers at the end of the previous quarter and approximately 15,730 in the first quarter of 2021, representing a 22% increase year-over-year.

Its net revenue retention rate was 115% in the first quarter of 2022 and the company averaged 116% over the last four quarters.

First Quarter 2022 and Recent Product Highlights

Avalara announced the release of 20 newly certified integrations with accounting, ERP, ecommerce, point-of-sale, mobile commerce, and CRM software applications.

The company has been a partner-centric company since its founding in 2004, with a concerted focus on integrating with technology solutions already in use by existing and future customers.

Avalara-certified integration partners have met criteria developed by Avalara for performance and reliability. Certified integrations are built to ensure customers enjoy a fast, reliable, and easy process for embedding Avalara’s automated tax management into existing systems.

Additionally, these integrations enable customers of Avalara partner solutions to benefit from Avalara’s real-time calculation of applicable taxes for billing line items.

Avalara software reduces the tedium and complexity of determining taxes for millions of products and services across the US, Canada, Europe, and other international jurisdictions, giving customers more time to focus on driving their own business success.

The company also announced a new low-code studio to help developers easily build integrations between Avalara’s compliance platform and business applications and two new APIs for sales tax returns and e-invoicing.

Embedding compliance functions using APIs allows Avalara partners to serve their customers more holistically within the software they already use.

Avalara is expanding opportunities for partners to build compliance integrations and experiences. To offer flexibility and control to developers, Avalara is pursuing a headless compliance approach that decouples the front-end presentation layer of a compliance experience from the back-end compliance functionality.

With new and future APIs for compliance, software developers can more quickly and easily build complete compliance workflows into business applications.

Financial Outlook

For the second quarter of 2022, Avalara currently expects:

• Total revenue between $208.0 and $210.0 million.
• Non-GAAP operating loss between $6.0 and $8.0 million.

For the full year 2022, Avalara currently expects:

• Total revenue between $867.0 and $871.0 million.
• Non-GAAP operating loss between $6.0 and $8.0 million.

For full details on Avalara’s first-quarter earnings report, please visit the Avalara investor relations site here.