Happy Tuesday, trading virtuosos! I hope you are having a most wonderful day so far! I myself am having a great one! We can all agree that tech/SaaS/companies primarily used online have ruled over the IPO's lately, and this current one is no different. Let's take a look at the AVLR, just a infant in the markets!
AVLR, the ticker symbol for Avalara, is your one stop shop for tax compliance and software. It is headquartered in Seattle, Washington and was found in 2004. It's funny, several of the IPO's we have gone over in the last couple of months were founded in 2004. That must be the magic number for recent IPO's! According to AVLR's website, their services (at it's most rudimentary) include everything from tax calculations, filing returns, tax document management, and more! We all know that taxes can be confusing. And for businesses that confusion is even more prevalent so having a company that can take care of all of the compliance, storage and filings is a great service! Avalara uses it's in house applications to automatically gather data to generate reports, estimate taxes as information comes in, and send payments if applicable. Furthermore, Avalara can also assist businesses in achieving compliance with their international VAT and transactional tax obligations. These global sites include Brazil, Europe, and India! What a great help for those doing business overseas!
Avalara's price structure is not as cut and dry as some of the other IPO's we have looked at. They are able to help everyone from small businesses to enterprise companies. After a little bit of scavenging around on their site it looks as if the base price starts around a meager $50 for a small businesses but goes up from there. Anything larger than that would require a chit chat with someone on their team to give you a customized plan. Plans are based on a number of factors including: number of business and back-office systems, number of sales transactions processed per month, and number of states or jurisdictions where sales tax is being collected. At the end of their fiscal year in 2017, Avalara reported sales revenue of $213,159,000.00 which has been steadily growing a rate of between 27 and 35% each year. I see this trend continuing as there will be more and more need for services such as this, and also the fact their growth seems healthy and not too fast! Still a young business, they are losing money. Last year that number was -$54,162,000.00 which seems like a lot, but doesn't alarm me too much since this number is dropping each year. The road to complete profitability is long for most, but I see it happening for this one.
Avalara is certainly not one of a kind in this space. Besides the traditional CPA and other tax professionals in the everyday world, AVLR's online competitors also include names like TaxJar, Vertex, and Taxware just to name a few. TaxJar is the most similar in my opinion, with a sleek interface and comparable products. Both AVLR and TaxJar boast a long list of high level, Fortune 500 clients as well. TaxJar also advertises that is seamlessly incorporates with companies such as Amazon, Shopify, Etsy, and a load more, which is a huge selling point. I have an inkling that AVLR does these services as well, but the advertisement alone can be enough to give a company an edge. Vertex has certainly been around for longer (since 1978) however doesn't have the "it" factor that AVLR and TaxJar has. Taxware also seems a little more "old school" than the above three and doesn't offer as many services as the above. As far as I see, TaxJar looks to be their biggest comparable competitors however it is not traded on the stock market.
When I first started writing up this article this was the setup I had on AVLR and the past two days it did exactly what I wanted. Woo! But quicker than I anticipated. Haha. So since I wasn't finished with the article I wasn't able to send it out in time. No worries though! We could wait for it's pull back and do something like this, which is what I will most likely end up doing. Keep in mind earnings for AVLR are on 8/9/18!
That's all for now folks! It's been a fun filled episode of "Let's Look at IPO's with Ashley". Until next time, be kind to one another!