Avalara cruised past Wall Street expectations in its second quarterly update since going public in June.
The Seattle sales tax automation company posted a net loss of $9 million — or $0.14 per share — on revenue of $69.5 million. Analysts surveyed in advance expected Avalara to post losses of $0.17 per share on $66.24 million in revenue. Both losses and revenue climbed over a year ago, with revenue up 26 percent.
“With our third consecutive quarter of 25 percent revenue growth, we delivered another strong performance,” said Scott McFarlane, Avalara co-founder and CEO. “Transaction tax compliance remains a highly manual process. It is in the early stages of automating, representing an estimated $8 billion addressable market for us. We believe that automation 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 new sales tax nexus rules driven by the Supreme Court’s Wayfair decision. Based on our broad tax content, robust platform, partner channel and pre-built integrations, we believe Avalara is a clear choice to lead this automation cycle.”
The U.S. Supreme Court’s Wayfair decision allowed states to require retailers to collect sales taxes on goods sold to people inside their borders. In response, Avalara released a new service that helps retailers make sure they have the right licenses and registrations in states where they are now required to collect taxes.
Also on Wednesday, Avalara made its first comments on a lawsuit filed against it back in October. A tax accounting accused Avalara of misappropriating technology he developed and using it to strengthen its core offerings, after he said he gave an in-depth demonstration of its capabilities at Avalara’s offices seven years ago.
In a filing with the U.S. Securities and Exchange Commission, Avalara said it has moved to dismiss the lawsuit and have the patent the company is accused of violating declared invalid.
Avalara ended the quarter with 8,490 “core customers,” up from approximately 8,080 customers at the end of the second quarter.
For the fourth quarter, Avalara expects to post between $71 million and $71.5 million, well ahead of analyst projections of $69.13 million.
Avalara’s stock has come back to earth after soaring upon the company’s public debut. Its stock hit an all-time high of $53 at the end of June, soon after the Wayfair ruling. Shares have dropped 40 percent since then, though the price still remains well ahead of its original IPO price.