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Explaining The 140% Increase In Avalara's Stock Price This Year

Avalara (NYSE: AVLR), a company that provides a suite of cloud-based solutions for tracking and managing sales tax collections, has seen its stock price more than double since the beginning of this year, while rallying ~18% over the last month. The recent uptick in the stock price can be attributed to stronger Q3 results, as revenues growth accelerated to 41%, from around 26% in the year-ago quarter, with the company also posting a narrower than expected net loss. The company is benefiting from recent changes and increasing complexity in U.S. tax laws. For instance, since the mid-2018 U.S. Supreme Court decision on the South Dakota v. Wayfair, case, U.S. states require remote sellers to collect and remit sales tax, increasing regulatory challenges for sellers. Separately, Avalara is also increasing its focus on Cross-Border solutions to boost its international business.

We ‘step back’ from these recent swings to review Avalara’s performance over the last few years, as a context for what might come next. Our Interactive dashboard, Why Has Avalara Stock More Than Doubled This Year? reviews the near term reasons and the big picture.

The context for the last few years:

A closer look At Avalara’s Total Revenues over the last few years and the outlook

Total Revenues for Avalara significantly increased from $213 Mil in 2017 to $272 Mil in 2018; an increase of 27.7%. This compares with Total Revenues growth of  27.3% in 2017. We expect Total Revenues growth to accelerate to 38% in 2019, driven by higher Subscription and Returns segment revenues.

A closer look At Avalara’s Total Expenses over the last few years and the outlook

Total Expense for Avalara significantly increased from $279 Mil in 2017 to $349 Mil in 2018; an increase of 25.2%. This compares with Total Expense growth of  24.0% in 2017. We expect Total Expense growth to be 12% in 2019.

How does Avalara’s Revenue Growth compare with rivals?

For more information on how Avalara’s Revenue Growth compares to its rivals, view our interactive dashboard analysis.

How has  Avalara’s EBT trended?

EBT for Avalara decreased from -$65.3 Mil in 2017 to -$76.5 Mil in 2018. We expect EBT to improve to -$14.6 million in 2019.

How has Avalara’s Net Income and EPS trended?

For more details on Avalara’s Net Income and EPS, view our interactive dashboard analysis.

 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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