Exhibit 99.1
Avalara Announces Third Quarter 2019 Financial Results
Third Quarter Total Revenue of $98.5 million
Approximately 11,240 Core Customers as of September 30, 2019
SEATTLE – November 5, 2019 – Avalara, Inc. (NYSE: AVLR), a leading provider of tax compliance automation for businesses of all sizes, today announced financial results for its third quarter ended September 30, 2019.
“Our third quarter was another strong performance for the company, highlighted by revenue growing 41% year over year,” said Scott McFarlane, Avalara co-founder and chief executive officer. “We continue to believe that the automation of transaction tax in our digital economy is inevitable. As technology becomes the backend to every business, government, and financial transaction, Avalara’s compliance cloud platform is designed to scale to support and enable those changes.”
Adoption of the New Revenue Recognition Standard – ASC 606
Avalara adopted the new revenue recognition accounting standard, Accounting Standards Codification (“ASC”) 606, effective January 1, 2019 on a modified retrospective basis. Financial results for reporting periods during 2019 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard ASC 605. This press release includes additional information to reconcile the impacts of the adoption of the new revenue recognition standard on the Company’s financial results for the three and nine months ended September 30, 2019, including the presentation of financial results during 2019 under ASC 605 for comparison to the prior year.
Third Quarter 2019 Financial Results – ASC 606 (standard adopted effective January 1, 2019)
|
|
• |
Revenue: ASC 606 total revenue was $98.5 million. Subscription and returns revenue was $92.0 million. Professional services revenue was $6.5 million. |
|
|
• |
Gross Profit: ASC 606 GAAP gross profit was $68.7 million, representing a 70% gross margin. ASC 606 non-GAAP gross profit was $70.8 million, representing a 72% non-GAAP gross margin. |
|
|
• |
Operating Loss: ASC 606 GAAP operating loss was $13.9 million. ASC 606 non-GAAP operating loss was $2.2 million. |
|
|
• |
Net Loss: ASC 606 GAAP net loss was $12.4 million. ASC 606 non-GAAP net loss was $0.6 million. |
|
|
• |
Net Loss per Share: ASC 606 GAAP net loss per share was $0.16 based on 76.2 million weighted-average shares outstanding. ASC 606 non-GAAP net loss per share was $0.01 based on 76.2 million weighted-average shares outstanding. |
|
|
• |
Deferred Revenue: ASC 606 total deferred revenue was $148.5 million at September 30, 2019. The current portion of ASC 606 deferred revenue was $147.7 million at September 30, 2019. |
|
|
• |
Cash: Net cash provided by operating activities was $5.9 million, compared to $1.2 million provided by operating activities in the third quarter of 2018. Free cash flow was positive $3.6 million, compared to negative $3.6 million in the third quarter of 2018. Our cash and cash equivalents totaled $446.6 million at September 30, 2019. |
|
|
• |
Calculated Billings: Calculated billings were $108.5 million in the third quarter of 2019, compared to calculated billings of $78.8 million in the third quarter of 2018. |
Third Quarter 2019 Financial Results – ASC 605
|
|
• |
Revenue: ASC 605 total revenue was $98.5 million, up 41% from $69.9 million in the third quarter of 2018. Subscription and returns revenue was $92.1 million, up 42% from $64.6 million in the same period last year. Professional services revenue was $6.5 million, up 22% from $5.3 million in the same period last year. |
|
|
• |
Gross Profit: ASC 605 GAAP gross profit was $68.8 million, representing a 70% gross margin, compared to a GAAP gross profit of $49.7 million and a 71% gross margin in the third quarter of 2018. ASC 605 non-GAAP gross profit was $70.8 million, representing a 72% non-GAAP gross margin, compared to a non-GAAP gross profit of $51.3 million and a 73% non-GAAP gross margin in the third quarter of 2018. |
|
|
• |
Operating Loss: ASC 605 GAAP operating loss was $18.7 million, compared to a GAAP operating loss of $24.3 million in the third quarter of 2018. ASC 605 non-GAAP operating loss was $6.9 million, compared to a non-GAAP operating loss of $9.2 million in the third quarter of 2018. |
|
|
• |
Net Loss: ASC 605 GAAP net loss was $17.1 million, compared to a GAAP net loss of $24.1 million in the third quarter of 2018. ASC 605 non-GAAP net loss was $5.4 million, compared to a non-GAAP net loss of $9.0 million in the third quarter of 2018. |
|
|
• |
Net Loss per Share: ASC 605 GAAP net loss per share was $0.22 based on 76.2 million weighted-average shares outstanding, compared to a GAAP net loss per share of $0.36 based on 66.6 million weighted-average shares outstanding in the third quarter of 2018. ASC 605 non-GAAP net loss per share was $0.07 based on 76.2 million non-GAAP shares outstanding in the third quarter of 2019, compared to ASC 605 non-GAAP net loss per share of $0.14 based on 66.6 million non-GAAP shares outstanding in the third quarter of 2018. |
|
|
• |
Deferred Revenue: Total ASC 605 deferred revenue was $162.2 million at September 30, 2019, up from $134.7 million at December 31, 2018. The current portion of ASC 605 deferred revenue was $153.1 million at September 30, 2019, up from $125.3 million at December 31, 2018. |
|
|
• |
Cash: The adoption of ASC 606 did not have an impact on cash and free cash flow. |
Reconciliations of GAAP to non-GAAP financial measures have been provided in the tables included in this release.
Key Metrics
We ended the third quarter of 2019 with approximately 11,240 core customers, up from approximately 10,430 core customers at the end of the second quarter of 2019. Approximately 80 new core customers from our Compli acquisition were added following our integration of their customer base into our primary US billing system in the third quarter of 2019. Our net revenue retention rate was 113% in the third quarter of 2019 and has averaged 110% over the last four quarters.
2
For the fourth quarter of 2019, the Company currently expects:
|
|
• |
ASC 606 total revenue between $99.5 and $100.5 million. |
|
|
• |
ASC 606 non-GAAP operating loss between $7.0 and $8.0 million. |
For the full year 2019, the Company currently expects:
|
|
• |
ASC 606 total revenue between $374.3 and $375.3 million. |
|
|
• |
ASC 606 non-GAAP operating loss between $13.2 and $14.2 million. |
Conference Call Information
Avalara will host a conference call at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) today, November 5, 2019, to discuss its financial results and business highlights. The conference call can be accessed by dialing (844) 882-5970 from the United States and Canada or (647) 253-8697 internationally with conference ID 2882089. A live webcast of the call will also be available on the Avalara investor relations website at investor.avalara.com.
A telephone replay of the conference call will be available until 8:59 p.m. Pacific Time on Tuesday, November 12, 2019 and a webcast replay will also be archived at investor.avalara.com. The telephone replay will be available by dialing (800) 585-8367 from the United States and Canada or (416) 621-4642 internationally with conference ID 2882089.
About Avalara, Inc.
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Canada, the U.K., Belgium, Brazil, and India. More information at www.avalara.com.
Forward-Looking Statements
This press release and the accompanying conference call contain forward-looking statements including, among others, statements about our financial outlook for the fourth quarter and full year 2019. In some cases you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms.
These forward-looking statements involve risks, uncertainties, and assumptions that could cause actual performance or results to differ materially from those expressed or suggested by the forward-looking statements. If any of these risks or uncertainties materialize, or if any of our assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include risks associated with: our ability to sustain our revenue growth rate, to achieve or maintain profitability, and to effectively manage our anticipated growth; our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; the timing of our introduction of new solutions or updates to existing solutions; our ability to successfully diversify our solutions by developing or introducing new solutions or acquiring and integrating additional businesses, products, services, or content; our ability to maintain and expand our strategic
3
relationships with third parties; our ability to deliver our solutions to customers without disruption or delay; our exposure to liability from errors, delays, fraud, or system failures, which may not be covered by insurance; our ability to expand our international reach; and the risks described in the other filings we make with the Securities and Exchange Commission from time to time, including the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 and in any subsequent Quarterly Reports on Form 10-Q, all of which should be read in conjunction with our financial results and forward-looking statements. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Use of Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we have disclosed non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share, non-GAAP shares outstanding, free cash flow, and calculated billings, which are all non-GAAP financial measures. We have provided tabular reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure at the end of this release.
|
|
• |
We calculate non-GAAP cost of revenue, non-GAAP research and development expense, non-GAAP sales and marketing expense, and non-GAAP general and administrative expense as GAAP cost of revenue, GAAP research and development expense, GAAP sales and marketing expense, and GAAP general and administrative expense before stock-based compensation expense and the amortization of acquired intangible assets included in each of the expense categories. |
|
|
• |
We calculate non-GAAP gross profit as GAAP gross profit before stock-based compensation expense and the amortization of acquired intangibles included in cost of revenue. We calculate non-GAAP gross margin as GAAP gross margin before the impact of stock-based compensation expense and the amortization of acquired intangibles included in cost of revenue as a percentage of revenue. |
|
|
• |
We calculate non-GAAP operating loss as GAAP operating loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments. We calculate non-GAAP net loss as GAAP net loss before stock-based compensation expense, amortization of acquired intangibles, and goodwill impairments. |
|
|
• |
We calculate non-GAAP shares outstanding for the nine months ended September 30, 2018 as GAAP weighted-average shares outstanding during the period adjusted as if (1) the conversion of preferred stock into common stock and (2) the issuance of 8,625,000 shares of common stock in our IPO had both occurred as of January 1, 2018. |
|
|
• |
We calculate non-GAAP net loss per share as non-GAAP net loss divided by non-GAAP shares outstanding. |
|
|
• |
We define free cash flow as net cash (used in) provided by operating activities less cash used for the purchases of property and equipment. |
4
|
|
across particular periods, and as an indicator of future subscription revenue, the actual timing of which will be affected by several factors, including subscription start date and duration. |
Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity. We believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as comparing our financial results to those of other companies.
As a result of adoption of ASC 606 effective January 1, 2019, non-GAAP financial measures for the three and nine months ended September 30, 2019, as computed in accordance with ASC 606, are not as comparable to non-GAAP financial measures for the three and nine months ended September 30, 2018, which are computed in accordance with ASC 605. Except for calculated billings, the reconciliation of non-GAAP measures provided below includes additional information to reconcile the impacts of the adoption of ASC 606 on the non-GAAP financial measures for the three and nine months ended September 30, 2019, including presentation of the non-GAAP measures for 2019 under ASC 605 for comparison to the prior periods.
The company has not reconciled its expectations of non-GAAP financial measures to the corresponding GAAP measures primarily because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
Our definitions of these non-GAAP financial measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP financial measures in conjunction with the related GAAP financial measure.
Definitions of Key Business Metrics
We also use key business metrics, such as core customers and net revenue retention rate.
Core Customers
We believe core customers is a key indicator of our market penetration, growth, and potential future revenue. We use core customers as a metric to focus our customer count reporting on our primary target market segment. We define a core customer as:
|
|
• |
a unique account identifier in our billing system (multiple companies or divisions within a single consolidated enterprise that each have a separate unique account identifier are each treated as separate customers); |
|
|
• |
that is active as of the measurement date; and |
|
|
• |
for which we have recognized, as of the measurement date, greater than $3,000 in total revenue during the last twelve months. |
Currently, our core customer count includes only customers with unique account identifiers in our primary U.S. billing systems and does not include customers who subscribe to our solutions through our international subsidiaries or certain
5
legacy billing systems primarily related to past acquisitions. As we increase our international operations and sales in future periods, we may add customers billed from our international subsidiaries to the core customer metric.
We also have a substantial number of customers of various sizes who do not meet the revenue threshold to be considered a core customer. These customers provide us with market share and awareness, and we anticipate that some may grow into core customers. We believe there is strategic value to addressing the small business and self-serve segment of the marketplace.
Net Revenue Retention Rate
We believe that our net revenue retention rate provides insight into our ability to retain and grow revenue from our customers, as well as their potential long-term value to us. We also believe it reflects the stability of our revenue base, which is one of our core competitive strengths. We calculate our net revenue retention rate by dividing (a) total revenue in the current quarter from any billing accounts that generated revenue during the corresponding quarter of the prior year by (b) total revenue in such corresponding quarter from those same billing accounts. This calculation includes changes during the period for such billing accounts, such as additional solutions purchased, changes in pricing and transaction volume, and terminations, but does not reflect revenue for new billing accounts added during the one-year period.
Currently, our net revenue retention rate includes only customers with unique account identifiers in our primary U.S. billing systems and does not include customers who subscribe to our solutions through our international subsidiaries or certain legacy billing systems primarily related to past acquisitions.
6
AVALARA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|
|
|
For the Three Months Ended September 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Revenue: |
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
$ |
91,986 |
|
|
$ |
64,611 |
|
|
Professional services |
|
|
6,539 |
|
|
|
5,308 |
|
|
Total revenue |
|
|
98,525 |
|
|
|
69,919 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
|
25,621 |
|
|
|
17,330 |
|
|
Professional services |
|
|
4,157 |
|
|
|
2,906 |
|
|
Total cost of revenue (1) |
|
|
29,778 |
|
|
|
20,236 |
|
|
Gross profit |
|
|
68,747 |
|
|
|
49,683 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development (1) |
|
|
21,871 |
|
|
|
13,285 |
|
|
Sales and marketing (1) |
|
|
40,313 |
|
|
|
41,276 |
|
|
General and administrative (1) |
|
|
20,511 |
|
|
|
10,235 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
9,174 |
|
|
Total operating expenses |
|
|
82,695 |
|
|
|
73,970 |
|
|
Operating loss |
|
|
(13,948 |
) |
|
|
(24,287 |
) |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,202 |
) |
|
|
(676 |
) |
|
Interest expense |
|
|
2 |
|
|
|
534 |
|
|
Other (income) expense, net |
|
|
265 |
|
|
|
49 |
|
|
Total other (income) expense, net |
|
|
(1,935 |
) |
|
|
(93 |
) |
|
Loss before income taxes |
|
|
(12,013 |
) |
|
|
(24,194 |
) |
|
Provision for (benefit from) income taxes |
|
|
341 |
|
|
|
(91 |
) |
|
Net loss |
|
$ |
(12,354 |
) |
|
$ |
(24,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and diluted |
|
$ |
(0.16 |
) |
|
$ |
(0.36 |
) |
|
Weighted average shares of common stock outstanding, basic and diluted |
|
|
76,156 |
|
|
|
66,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
|||||
|
(1) The stock-based compensation expense included above was as follows: |
|
2019 |
|
|
2018 |
|
||
|
Cost of revenue |
|
$ |
828 |
|
|
$ |
508 |
|
|
Research and development |
|
|
1,781 |
|
|
|
906 |
|
|
Sales and marketing |
|
|
2,135 |
|
|
|
1,589 |
|
|
General and administrative |
|
|
5,178 |
|
|
|
1,334 |
|
|
Total stock-based compensation |
|
$ |
9,922 |
|
|
$ |
4,337 |
|
|
|
|
|
|
|
|
|
|
|
|
The amortization of acquired intangibles included above was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
1,235 |
|
|
$ |
1,121 |
|
|
Research and development |
|
|
— |
|
|
|
— |
|
|
Sales and marketing |
|
|
605 |
|
|
|
474 |
|
|
General and administrative |
|
|
4 |
|
|
|
— |
|
|
Total amortization of acquired intangibles |
|
$ |
1,844 |
|
|
$ |
1,595 |
|
|
|
|
|
|
|
|
|
|
|
|
The total employer payroll tax expense on employee stock transactions included above was $1.5 million for the three months ended September 30, 2019, of which $0.1 million is included in cost of revenue, $0.1 million is included in research and development, $0.2 million is included in sales and marketing, and $1.1 million is included in general and administrative. |
|
|||||||
7
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Revenue: |
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
$ |
255,225 |
|
|
$ |
182,326 |
|
|
Professional services |
|
|
19,569 |
|
|
|
12,849 |
|
|
Total revenue |
|
|
274,794 |
|
|
|
195,175 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
|
69,537 |
|
|
|
47,984 |
|
|
Professional services |
|
|
12,883 |
|
|
|
8,393 |
|
|
Total cost of revenue (1) |
|
|
82,420 |
|
|
|
56,377 |
|
|
Gross profit |
|
|
192,374 |
|
|
|
138,798 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development (1) |
|
|
56,823 |
|
|
|
38,332 |
|
|
Sales and marketing (1) |
|
|
119,199 |
|
|
|
119,187 |
|
|
General and administrative (1) |
|
|
53,764 |
|
|
|
28,787 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
9,174 |
|
|
Total operating expenses |
|
|
229,786 |
|
|
|
195,480 |
|
|
Operating loss |
|
|
(37,412 |
) |
|
|
(56,682 |
) |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(4,251 |
) |
|
|
(811 |
) |
|
Interest expense |
|
|
286 |
|
|
|
2,495 |
|
|
Other (income) expense, net |
|
|
694 |
|
|
|
(423 |
) |
|
Total other (income) expense, net |
|
|
(3,271 |
) |
|
|
1,261 |
|
|
Loss before income taxes |
|
|
(34,141 |
) |
|
|
(57,943 |
) |
|
Provision for (benefit from) income taxes |
|
|
629 |
|
|
|
(825 |
) |
|
Net loss |
|
$ |
(34,770 |
) |
|
$ |
(57,118 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and diluted |
|
$ |
(0.48 |
) |
|
$ |
(1.95 |
) |
|
Weighted average shares of common stock outstanding, basic and diluted |
|
|
72,064 |
|
|
|
29,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
|
|||||
|
(1) The stock-based compensation expense included above was as follows: |
|
2019 |
|
|
2018 |
|
||
|
Cost of revenue |
|
$ |
2,277 |
|
|
$ |
1,181 |
|
|
Research and development |
|
|
4,700 |
|
|
|
2,271 |
|
|
Sales and marketing |
|
|
6,411 |
|
|
|
3,674 |
|
|
General and administrative |
|
|
12,518 |
|
|
|
4,285 |
|
|
Total stock-based compensation |
|
$ |
25,906 |
|
|
$ |
11,411 |
|
|
|
|
|
|
|
|
|
|
|
|
The amortization of acquired intangibles included above was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
3,635 |
|
|
$ |
2,906 |
|
|
Research and development |
|
|
— |
|
|
|
— |
|
|
Sales and marketing |
|
|
1,653 |
|
|
|
1,483 |
|
|
General and administrative |
|
|
11 |
|
|
|
17 |
|
|
Total amortization of acquired intangibles |
|
$ |
5,299 |
|
|
$ |
4,406 |
|
|
|
|
|
|
|
|
|
|
|
|
The total employer payroll tax expense on employee stock transactions included above was $5.4 million for the nine months ended September 30, 2019, of which $0.5 million is included in cost of revenue, $0.9 million is included in research and development, $1.5 million is included in sales and marketing, and $2.5 million is included in general and administrative. |
|
|||||||
8
CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
446,563 |
|
|
$ |
142,322 |
|
|
Trade accounts receivable—net of allowance for doubtful accounts |
|
|
49,124 |
|
|
|
40,287 |
|
|
Deferred commissions |
|
|
8,402 |
|
|
|
— |
|
|
Prepaid expenses and other current assets |
|
|
13,856 |
|
|
|
11,307 |
|
|
Total current assets before customer fund assets |
|
|
517,945 |
|
|
|
193,916 |
|
|
Funds held from customers |
|
|
16,665 |
|
|
|
13,113 |
|
|
Receivable from customers—net of allowance for doubtful accounts |
|
|
690 |
|
|
|
270 |
|
|
Total current assets |
|
|
535,300 |
|
|
|
207,299 |
|
|
Noncurrent assets: |
|
|
|
|
|
|
|
|
|
Property and equipment—net |
|
|
34,537 |
|
|
|
33,373 |
|
|
Goodwill |
|
|
100,926 |
|
|
|
61,300 |
|
|
Intangible assets—net |
|
|
24,543 |
|
|
|
19,371 |
|
|
Deferred commissions |
|
|
27,206 |
|
|
|
— |
|
|
Other noncurrent assets |
|
|
2,420 |
|
|
|
1,589 |
|
|
Total assets |
|
$ |
724,932 |
|
|
$ |
322,932 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
10,962 |
|
|
|
4,847 |
|
|
Accrued expenses |
|
|
49,864 |
|
|
|
42,101 |
|
|
Accrued earnout liabilities |
|
|
6,102 |
|
|
|
116 |
|
|
Deferred revenue |
|
|
147,713 |
|
|
|
125,260 |
|
|
Total current liabilities before customer fund obligations |
|
|
214,641 |
|
|
|
172,324 |
|
|
Customer fund obligations |
|
|
17,306 |
|
|
|
13,349 |
|
|
Total current liabilities |
|
|
231,947 |
|
|
|
185,673 |
|
|
Noncurrent liabilities: |
|
|
|
|
|
|
|
|
|
Deferred revenue |
|
|
753 |
|
|
|
9,393 |
|
|
Deferred tax liability |
|
|
698 |
|
|
|
560 |
|
|
Deferred rent |
|
|
15,905 |
|
|
|
17,317 |
|
|
Accrued earnout liabilities |
|
|
9,399 |
|
|
|
— |
|
|
Other noncurrent liabilities |
|
|
2,361 |
|
|
|
436 |
|
|
Total liabilities |
|
|
261,063 |
|
|
|
213,379 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
|
Common stock |
|
|
8 |
|
|
|
7 |
|
|
Additional paid-in capital |
|
|
961,733 |
|
|
|
599,493 |
|
|
Accumulated other comprehensive loss |
|
|
(3,122 |
) |
|
|
(2,345 |
) |
|
Accumulated deficit |
|
|
(494,750 |
) |
|
|
(487,602 |
) |
|
Total shareholders’ equity |
|
|
463,869 |
|
|
|
109,553 |
|
|
Total liabilities and shareholders' equity |
|
$ |
724,932 |
|
|
$ |
322,932 |
|
9
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
For the Three Months Ended September 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,354 |
) |
|
$ |
(24,103 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,016 |
|
|
|
3,398 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
9,174 |
|
|
Stock-based compensation |
|
|
9,922 |
|
|
|
4,337 |
|
|
Deferred tax expense (benefit) |
|
|
60 |
|
|
|
(143 |
) |
|
Amortization of deferred rent |
|
|
(386 |
) |
|
|
(32 |
) |
|
Non-cash change in earnout liability |
|
|
134 |
|
|
|
32 |
|
|
Non-cash bad debt expense (recovery) |
|
|
152 |
|
|
|
(297 |
) |
|
Other |
|
|
32 |
|
|
|
285 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(5,920 |
) |
|
|
(5,830 |
) |
|
Prepaid expenses and other current assets |
|
|
(2,678 |
) |
|
|
(2,544 |
) |
|
Deferred commissions |
|
|
(4,788 |
) |
|
|
— |
|
|
Other noncurrent assets |
|
|
(49 |
) |
|
|
(533 |
) |
|
Trade payables |
|
|
2,350 |
|
|
|
(1,105 |
) |
|
Accrued expenses |
|
|
5,706 |
|
|
|
9,095 |
|
|
Deferred rent (lease incentives) |
|
|
— |
|
|
|
579 |
|
|
Deferred revenue |
|
|
9,655 |
|
|
|
8,865 |
|
|
Net cash provided by operating activities |
|
|
5,852 |
|
|
|
1,178 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Net (increase) decrease in customer fund assets |
|
|
7,892 |
|
|
|
6,638 |
|
|
Cash paid for acquired intangible assets |
|
|
(8 |
) |
|
|
(121 |
) |
|
Cash paid for acquisitions of businesses |
|
|
(13,000 |
) |
|
|
— |
|
|
Purchase of property and equipment |
|
|
(2,246 |
) |
|
|
(4,745 |
) |
|
Net cash (used in) provided by investing activities |
|
|
(7,362 |
) |
|
|
1,772 |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Payments of deferred financing costs |
|
|
(157 |
) |
|
|
(1,462 |
) |
|
Payments on credit facility |
|
|
— |
|
|
|
(30,000 |
) |
|
Net increase (decrease) in customer fund obligations |
|
|
(7,811 |
) |
|
|
(6,638 |
) |
|
Proceeds from exercise of stock options and common stock warrants |
|
|
11,166 |
|
|
|
207 |
|
|
Proceeds from purchases of stock under employee stock purchase plan |
|
|
4,629 |
|
|
|
— |
|
|
Taxes paid related to net share settlement of stock-based awards |
|
|
(1,090 |
) |
|
|
(109 |
) |
|
Payment related to business combination earnouts |
|
|
(375 |
) |
|
|
— |
|
|
Net cash (used in) provided by financing activities |
|
|
6,362 |
|
|
|
(38,002 |
) |
|
Foreign currency effect on cash and cash equivalents |
|
|
127 |
|
|
|
37 |
|
|
Net change in cash and cash equivalents |
|
|
4,979 |
|
|
|
(35,015 |
) |
|
Cash and cash equivalents—Beginning of period |
|
|
441,584 |
|
|
|
173,108 |
|
|
Cash and cash equivalents—End of period |
|
$ |
446,563 |
|
|
$ |
138,093 |
|
10
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(34,770 |
) |
|
$ |
(57,118 |
) |
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,684 |
|
|
|
9,390 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
9,174 |
|
|
Stock-based compensation |
|
|
25,906 |
|
|
|
11,411 |
|
|
Deferred tax expense (benefit) |
|
|
138 |
|
|
|
(1,110 |
) |
|
Amortization of deferred rent |
|
|
(778 |
) |
|
|
231 |
|
|
Non-cash change in earnout liability |
|
|
610 |
|
|
|
(430 |
) |
|
Non-cash bad debt expense (recovery) |
|
|
602 |
|
|
|
(382 |
) |
|
Other |
|
|
227 |
|
|
|
526 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(9,648 |
) |
|
|
(7,852 |
) |
|
Prepaid expenses and other current assets |
|
|
(3,274 |
) |
|
|
(2,688 |
) |
|
Deferred commissions |
|
|
(16,340 |
) |
|
|
— |
|
|
Other noncurrent assets |
|
|
(831 |
) |
|
|
(549 |
) |
|
Trade payables |
|
|
4,818 |
|
|
|
(3,353 |
) |
|
Accrued expenses |
|
|
2,305 |
|
|
|
6,095 |
|
|
Deferred rent (lease incentives) |
|
|
— |
|
|
|
579 |
|
|
Deferred revenue |
|
|
24,782 |
|
|
|
25,978 |
|
|
Net cash provided by (used in) operating activities |
|
|
5,431 |
|
|
|
(10,098 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Net (increase) decrease in customer fund assets |
|
|
(3,986 |
) |
|
|
2,053 |
|
|
Cash paid for acquired intangible assets |
|
|
(139 |
) |
|
|
(5,002 |
) |
|
Cash paid for acquisitions of businesses |
|
|
(30,310 |
) |
|
|
— |
|
|
Purchase of property and equipment |
|
|
(7,196 |
) |
|
|
(12,914 |
) |
|
Net cash used in investing activities |
|
|
(41,631 |
) |
|
|
(15,863 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from common stock offering, net of underwriting discounts |
|
|
274,705 |
|
|
|
192,510 |
|
|
Payments of deferred financing costs |
|
|
(555 |
) |
|
|
(2,084 |
) |
|
Payments on credit facility |
|
|
— |
|
|
|
(63,000 |
) |
|
Proceeds from credit facility |
|
|
— |
|
|
|
23,000 |
|
|
Repayment of note payable |
|
|
— |
|
|
|
(234 |
) |
|
Net increase (decrease) in customer fund obligations |
|
|
3,986 |
|
|
|
(2,053 |
) |
|
Proceeds from exercise of stock options and common stock warrants |
|
|
51,583 |
|
|
|
5,787 |
|
|
Proceeds from purchases of stock under employee stock purchase plan |
|
|
12,293 |
|
|
|
— |
|
|
Taxes paid related to net share settlement of stock-based awards |
|
|
(1,183 |
) |
|
|
(2,326 |
) |
|
Repurchase of shares |
|
|
— |
|
|
|
(1,806 |
) |
|
Payment related to business combination earnouts |
|
|
(375 |
) |
|
|
— |
|
|
Net cash provided by financing activities |
|
|
340,454 |
|
|
|
149,794 |
|
|
Foreign currency effect on cash and cash equivalents |
|
|
(13 |
) |
|
|
185 |
|
|
Net change in cash and cash equivalents |
|
|
304,241 |
|
|
|
124,018 |
|
|
Cash and cash equivalents—Beginning of period |
|
|
142,322 |
|
|
|
14,075 |
|
|
Cash and cash equivalents—End of period |
|
$ |
446,563 |
|
|
$ |
138,093 |
|
11
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands, except per share amounts)
|
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
$ |
91,986 |
|
|
$ |
71 |
|
|
$ |
92,057 |
|
|
$ |
64,611 |
|
|
Professional services |
|
|
6,539 |
|
|
|
(49 |
) |
|
|
6,490 |
|
|
|
5,308 |
|
|
Total revenue |
|
|
98,525 |
|
|
|
22 |
|
|
|
98,547 |
|
|
|
69,919 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
|
25,621 |
|
|
|
— |
|
|
|
25,621 |
|
|
|
17,330 |
|
|
Professional services |
|
|
4,157 |
|
|
|
— |
|
|
|
4,157 |
|
|
|
2,906 |
|
|
Total cost of revenue |
|
|
29,778 |
|
|
|
— |
|
|
|
29,778 |
|
|
|
20,236 |
|
|
Gross profit |
|
|
68,747 |
|
|
|
22 |
|
|
|
68,769 |
|
|
|
49,683 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
21,871 |
|
|
|
— |
|
|
|
21,871 |
|
|
|
13,285 |
|
|
Sales and marketing |
|
|
40,313 |
|
|
|
4,789 |
|
|
|
45,102 |
|
|
|
41,276 |
|
|
General and administrative |
|
|
20,511 |
|
|
|
— |
|
|
|
20,511 |
|
|
|
10,235 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Total operating expenses |
|
|
82,695 |
|
|
|
4,789 |
|
|
|
87,484 |
|
|
|
73,970 |
|
|
Operating loss |
|
|
(13,948 |
) |
|
|
(4,767 |
) |
|
|
(18,715 |
) |
|
|
(24,287 |
) |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,202 |
) |
|
|
— |
|
|
|
(2,202 |
) |
|
|
(676 |
) |
|
Interest expense |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
534 |
|
|
Other (income) expense, net |
|
|
265 |
|
|
|
— |
|
|
|
265 |
|
|
|
49 |
|
|
Total other (income) expense, net |
|
|
(1,935 |
) |
|
|
— |
|
|
|
(1,935 |
) |
|
|
(93 |
) |
|
Loss before income taxes |
|
|
(12,013 |
) |
|
|
(4,767 |
) |
|
|
(16,780 |
) |
|
|
(24,194 |
) |
|
Provision for (benefit from) income taxes |
|
|
341 |
|
|
|
— |
|
|
|
341 |
|
|
|
(91 |
) |
|
Net loss |
|
$ |
(12,354 |
) |
|
$ |
(4,767 |
) |
|
$ |
(17,121 |
) |
|
$ |
(24,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and diluted |
|
$ |
(0.16 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.36 |
) |
|
Weighted average shares of common stock outstanding, basic and diluted |
|
|
76,156 |
|
|
|
|
|
|
|
76,156 |
|
|
|
66,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands, except per share amounts)
|
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
$ |
255,225 |
|
|
$ |
689 |
|
|
$ |
255,914 |
|
|
$ |
182,326 |
|
|
Professional services |
|
|
19,569 |
|
|
|
(149 |
) |
|
|
19,420 |
|
|
|
12,849 |
|
|
Total revenue |
|
|
274,794 |
|
|
|
540 |
|
|
|
275,334 |
|
|
|
195,175 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription and returns |
|
|
69,537 |
|
|
|
— |
|
|
|
69,537 |
|
|
|
47,984 |
|
|
Professional services |
|
|
12,883 |
|
|
|
— |
|
|
|
12,883 |
|
|
|
8,393 |
|
|
Total cost of revenue |
|
|
82,420 |
|
|
|
— |
|
|
|
82,420 |
|
|
|
56,377 |
|
|
Gross profit |
|
|
192,374 |
|
|
|
540 |
|
|
|
192,914 |
|
|
|
138,798 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
56,823 |
|
|
|
— |
|
|
|
56,823 |
|
|
|
38,332 |
|
|
Sales and marketing |
|
|
119,199 |
|
|
|
16,340 |
|
|
|
135,539 |
|
|
|
119,187 |
|
|
General and administrative |
|
|
53,764 |
|
|
|
— |
|
|
|
53,764 |
|
|
|
28,787 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Total operating expenses |
|
|
229,786 |
|
|
|
16,340 |
|
|
|
246,126 |
|
|
|
195,480 |
|
|
Operating loss |
|
|
(37,412 |
) |
|
|
(15,800 |
) |
|
|
(53,212 |
) |
|
|
(56,682 |
) |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(4,251 |
) |
|
|
— |
|
|
|
(4,251 |
) |
|
|
(811 |
) |
|
Interest expense |
|
|
286 |
|
|
|
— |
|
|
|
286 |
|
|
|
2,495 |
|
|
Other (income) expense, net |
|
|
694 |
|
|
|
— |
|
|
|
694 |
|
|
|
(423 |
) |
|
Total other (income) expense, net |
|
|
(3,271 |
) |
|
|
— |
|
|
|
(3,271 |
) |
|
|
1,261 |
|
|
Loss before income taxes |
|
|
(34,141 |
) |
|
|
(15,800 |
) |
|
|
(49,941 |
) |
|
|
(57,943 |
) |
|
Provision for (benefit from) income taxes |
|
|
629 |
|
|
|
— |
|
|
|
629 |
|
|
|
(825 |
) |
|
Net loss |
|
$ |
(34,770 |
) |
|
$ |
(15,800 |
) |
|
$ |
(50,570 |
) |
|
$ |
(57,118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and diluted |
|
$ |
(0.48 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.70 |
) |
|
$ |
(1.95 |
) |
|
Weighted average shares of common stock outstanding, basic and diluted |
|
|
72,064 |
|
|
|
|
|
|
|
72,064 |
|
|
|
29,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
CONSOLIDATED BALANCE SHEETS
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands)
|
|
|
September 30, |
|
|
December 31, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
|
|||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
446,563 |
|
|
$ |
— |
|
|
$ |
446,563 |
|
|
$ |
142,322 |
|
|
Trade accounts receivable—net of allowance for doubtful accounts |
|
|
49,124 |
|
|
|
1,044 |
|
|
|
50,168 |
|
|
|
40,287 |
|
|
Deferred commissions |
|
|
8,402 |
|
|
|
(8,402 |
) |
|
|
— |
|
|
|
— |
|
|
Prepaid expenses and other current assets |
|
|
13,856 |
|
|
|
— |
|
|
|
13,856 |
|
|
|
11,307 |
|
|
Total current assets before customer fund assets |
|
|
517,945 |
|
|
|
(7,358 |
) |
|
|
510,587 |
|
|
|
193,916 |
|
|
Funds held from customers |
|
|
16,665 |
|
|
|
— |
|
|
|
16,665 |
|
|
|
13,113 |
|
|
Receivable from customers—net of allowance for doubtful accounts |
|
|
690 |
|
|
|
— |
|
|
|
690 |
|
|
|
270 |
|
|
Total current assets |
|
|
535,300 |
|
|
|
(7,358 |
) |
|
|
527,942 |
|
|
|
207,299 |
|
|
Noncurrent assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment—net |
|
|
34,537 |
|
|
|
— |
|
|
|
34,537 |
|
|
|
33,373 |
|
|
Goodwill |
|
|
100,926 |
|
|
|
— |
|
|
|
100,926 |
|
|
|
61,300 |
|
|
Intangible assets—net |
|
|
24,543 |
|
|
|
— |
|
|
|
24,543 |
|
|
|
19,371 |
|
|
Deferred commissions |
|
|
27,206 |
|
|
|
(27,206 |
) |
|
|
— |
|
|
|
— |
|
|
Other noncurrent assets |
|
|
2,420 |
|
|
|
— |
|
|
|
2,420 |
|
|
|
1,589 |
|
|
Total assets |
|
$ |
724,932 |
|
|
$ |
(34,564 |
) |
|
$ |
690,368 |
|
|
$ |
322,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
10,962 |
|
|
|
— |
|
|
|
10,962 |
|
|
|
4,847 |
|
|
Accrued expenses |
|
|
49,864 |
|
|
|
(4,843 |
) |
|
|
45,021 |
|
|
|
42,101 |
|
|
Accrued earnout liabilities |
|
|
6,102 |
|
|
|
— |
|
|
|
6,102 |
|
|
|
116 |
|
|
Deferred revenue |
|
|
147,713 |
|
|
|
5,349 |
|
|
|
153,062 |
|
|
|
125,260 |
|
|
Total current liabilities before customer fund obligations |
|
|
214,641 |
|
|
|
506 |
|
|
|
215,147 |
|
|
|
172,324 |
|
|
Customer fund obligations |
|
|
17,306 |
|
|
|
— |
|
|
|
17,306 |
|
|
|
13,349 |
|
|
Total current liabilities |
|
|
231,947 |
|
|
|
506 |
|
|
|
232,453 |
|
|
|
185,673 |
|
|
Noncurrent liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue |
|
|
753 |
|
|
|
8,353 |
|
|
|
9,106 |
|
|
|
9,393 |
|
|
Deferred tax liability |
|
|
698 |
|
|
|
— |
|
|
|
698 |
|
|
|
560 |
|
|
Deferred rent |
|
|
15,905 |
|
|
|
— |
|
|
|
15,905 |
|
|
|
17,317 |
|
|
Accrued earnout liabilities |
|
|
9,399 |
|
|
|
— |
|
|
|
9,399 |
|
|
|
— |
|
|
Other noncurrent liabilities |
|
|
2,361 |
|
|
|
— |
|
|
|
2,361 |
|
|
|
436 |
|
|
Total liabilities |
|
|
261,063 |
|
|
|
8,859 |
|
|
|
269,922 |
|
|
|
213,379 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common stock |
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
|
7 |
|
|
Additional paid-in capital |
|
|
961,733 |
|
|
|
— |
|
|
|
961,733 |
|
|
|
599,493 |
|
|
Accumulated other comprehensive loss |
|
|
(3,122 |
) |
|
|
— |
|
|
|
(3,122 |
) |
|
|
(2,345 |
) |
|
Accumulated deficit |
|
|
(494,750 |
) |
|
|
(43,423 |
) |
|
|
(538,173 |
) |
|
|
(487,602 |
) |
|
Total shareholders’ equity |
|
|
463,869 |
|
|
|
(43,423 |
) |
|
|
420,446 |
|
|
|
109,553 |
|
|
Total liabilities and shareholders' equity |
|
$ |
724,932 |
|
|
$ |
(34,564 |
) |
|
$ |
690,368 |
|
|
$ |
322,932 |
|
14
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands)
|
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,354 |
) |
|
$ |
(4,767 |
) |
|
$ |
(17,121 |
) |
|
$ |
(24,103 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,016 |
|
|
|
— |
|
|
|
4,016 |
|
|
|
3,398 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Stock-based compensation |
|
|
9,922 |
|
|
|
— |
|
|
|
9,922 |
|
|
|
4,337 |
|
|
Deferred tax expense (benefit) |
|
|
60 |
|
|
|
— |
|
|
|
60 |
|
|
|
(143 |
) |
|
Amortization of deferred rent |
|
|
(386 |
) |
|
|
— |
|
|
|
(386 |
) |
|
|
(32 |
) |
|
Non-cash change in earnout liability |
|
|
134 |
|
|
|
— |
|
|
|
134 |
|
|
|
32 |
|
|
Non-cash bad debt expense (recovery) |
|
|
152 |
|
|
|
— |
|
|
|
152 |
|
|
|
(297 |
) |
|
Other |
|
|
32 |
|
|
|
— |
|
|
|
32 |
|
|
|
285 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(5,920 |
) |
|
|
(79 |
) |
|
|
(5,999 |
) |
|
|
(5,830 |
) |
|
Prepaid expenses and other current assets |
|
|
(2,678 |
) |
|
|
— |
|
|
|
(2,678 |
) |
|
|
(2,544 |
) |
|
Deferred commissions |
|
|
(4,788 |
) |
|
|
4,788 |
|
|
|
— |
|
|
|
— |
|
|
Other noncurrent assets |
|
|
(49 |
) |
|
|
— |
|
|
|
(49 |
) |
|
|
(533 |
) |
|
Trade payables |
|
|
2,350 |
|
|
|
— |
|
|
|
2,350 |
|
|
|
(1,105 |
) |
|
Accrued expenses |
|
|
5,706 |
|
|
|
(335 |
) |
|
|
5,371 |
|
|
|
9,095 |
|
|
Deferred rent (lease incentives) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
579 |
|
|
Deferred revenue |
|
|
9,655 |
|
|
|
393 |
|
|
|
10,048 |
|
|
|
8,865 |
|
|
Net cash provided by operating activities |
|
|
5,852 |
|
|
|
— |
|
|
|
5,852 |
|
|
|
1,178 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (increase) decrease in customer fund assets |
|
|
7,892 |
|
|
|
— |
|
|
|
7,892 |
|
|
|
6,638 |
|
|
Cash paid for acquired intangible assets |
|
|
(8 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
(121 |
) |
|
Cash paid for acquisitions of businesses |
|
|
(13,000 |
) |
|
|
— |
|
|
|
(13,000 |
) |
|
|
— |
|
|
Purchase of property and equipment |
|
|
(2,246 |
) |
|
|
— |
|
|
|
(2,246 |
) |
|
|
(4,745 |
) |
|
Net cash (used in) provided by investing activities |
|
|
(7,362 |
) |
|
|
— |
|
|
|
(7,362 |
) |
|
|
1,772 |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of deferred financing costs |
|
|
(157 |
) |
|
|
— |
|
|
|
(157 |
) |
|
|
(1,462 |
) |
|
Payments on credit facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,000 |
) |
|
Net increase (decrease) in customer fund obligations |
|
|
(7,811 |
) |
|
|
— |
|
|
|
(7,811 |
) |
|
|
(6,638 |
) |
|
Proceeds from exercise of stock options and common stock warrants |
|
|
11,166 |
|
|
|
— |
|
|
|
11,166 |
|
|
|
207 |
|
|
Proceeds from purchases of stock under employee stock purchase plan |
|
|
4,629 |
|
|
|
— |
|
|
|
4,629 |
|
|
|
— |
|
|
Taxes paid related to net share settlement of stock-based awards |
|
|
(1,090 |
) |
|
|
— |
|
|
|
(1,090 |
) |
|
|
(109 |
) |
|
Payment related to business combination earnouts |
|
|
(375 |
) |
|
|
— |
|
|
|
(375 |
) |
|
|
— |
|
|
Net cash (used in) provided by financing activities |
|
|
6,362 |
|
|
|
— |
|
|
|
6,362 |
|
|
|
(38,002 |
) |
|
Foreign currency effect on cash and cash equivalents |
|
|
127 |
|
|
|
— |
|
|
|
127 |
|
|
|
37 |
|
|
Net change in cash and cash equivalents |
|
|
4,979 |
|
|
|
— |
|
|
|
4,979 |
|
|
|
(35,015 |
) |
|
Cash and cash equivalents—Beginning of period |
|
|
441,584 |
|
|
|
— |
|
|
|
441,584 |
|
|
|
173,108 |
|
|
Cash and cash equivalents—End of period |
|
$ |
446,563 |
|
|
$ |
— |
|
|
$ |
446,563 |
|
|
$ |
138,093 |
|
15
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands)
|
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(34,770 |
) |
|
|
(15,800 |
) |
|
$ |
(50,570 |
) |
|
$ |
(57,118 |
) |
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,684 |
|
|
|
— |
|
|
|
11,684 |
|
|
|
9,390 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Stock-based compensation |
|
|
25,906 |
|
|
|
— |
|
|
|
25,906 |
|
|
|
11,411 |
|
|
Deferred tax expense (benefit) |
|
|
138 |
|
|
|
— |
|
|
|
138 |
|
|
|
(1,110 |
) |
|
Amortization of deferred rent |
|
|
(778 |
) |
|
|
— |
|
|
|
(778 |
) |
|
|
231 |
|
|
Non-cash change in earnout liability |
|
|
610 |
|
|
|
— |
|
|
|
610 |
|
|
|
(430 |
) |
|
Non-cash bad debt expense (recovery) |
|
|
602 |
|
|
|
— |
|
|
|
602 |
|
|
|
(382 |
) |
|
Other |
|
|
227 |
|
|
|
— |
|
|
|
227 |
|
|
|
526 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(9,648 |
) |
|
|
(238 |
) |
|
|
(9,886 |
) |
|
|
(7,852 |
) |
|
Prepaid expenses and other current assets |
|
|
(3,274 |
) |
|
|
— |
|
|
|
(3,274 |
) |
|
|
(2,688 |
) |
|
Deferred commissions |
|
|
(16,340 |
) |
|
|
16,340 |
|
|
|
— |
|
|
|
— |
|
|
Other noncurrent assets |
|
|
(831 |
) |
|
|
— |
|
|
|
(831 |
) |
|
|
(549 |
) |
|
Trade payables |
|
|
4,818 |
|
|
|
— |
|
|
|
4,818 |
|
|
|
(3,353 |
) |
|
Accrued expenses |
|
|
2,305 |
|
|
|
(2,753 |
) |
|
|
(448 |
) |
|
|
6,095 |
|
|
Deferred rent (lease incentives) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
579 |
|
|
Deferred revenue |
|
|
24,782 |
|
|
|
2,451 |
|
|
|
27,233 |
|
|
|
25,978 |
|
|
Net cash provided by (used in) operating activities |
|
|
5,431 |
|
|
|
— |
|
|
|
5,431 |
|
|
|
(10,098 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (increase) decrease in customer fund assets |
|
|
(3,986 |
) |
|
|
— |
|
|
|
(3,986 |
) |
|
|
2,053 |
|
|
Cash paid for acquired intangible assets |
|
|
(139 |
) |
|
|
— |
|
|
|
(139 |
) |
|
|
(5,002 |
) |
|
Cash paid for acquisitions of businesses |
|
|
(30,310 |
) |
|
|
— |
|
|
|
(30,310 |
) |
|
|
— |
|
|
Purchase of property and equipment |
|
|
(7,196 |
) |
|
|
— |
|
|
|
(7,196 |
) |
|
|
(12,914 |
) |
|
Net cash used in investing activities |
|
|
(41,631 |
) |
|
|
— |
|
|
|
(41,631 |
) |
|
|
(15,863 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from common stock offering, net of underwriting discounts |
|
|
274,705 |
|
|
|
— |
|
|
|
274,705 |
|
|
|
192,510 |
|
|
Payments of deferred financing costs |
|
|
(555 |
) |
|
|
— |
|
|
|
(555 |
) |
|
|
(2,084 |
) |
|
Payments on credit facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(63,000 |
) |
|
Proceeds from credit facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,000 |
|
|
Repayment of note payable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(234 |
) |
|
Net increase (decrease) in customer fund obligations |
|
|
3,986 |
|
|
|
— |
|
|
|
3,986 |
|
|
|
(2,053 |
) |
|
Proceeds from exercise of stock options and common stock warrants |
|
|
51,583 |
|
|
|
— |
|
|
|
51,583 |
|
|
|
5,787 |
|
|
Proceeds from purchases of stock under employee stock purchase plan |
|
|
12,293 |
|
|
|
— |
|
|
|
12,293 |
|
|
|
— |
|
|
Taxes paid related to net share settlement of stock-based awards |
|
|
(1,183 |
) |
|
|
— |
|
|
|
(1,183 |
) |
|
|
(2,326 |
) |
|
Repurchase of shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,806 |
) |
|
Payment related to business combination earnouts |
|
|
(375 |
) |
|
|
— |
|
|
|
(375 |
) |
|
|
— |
|
|
Net cash provided by financing activities |
|
|
340,454 |
|
|
|
— |
|
|
|
340,454 |
|
|
|
149,794 |
|
|
Foreign currency effect on cash and cash equivalents |
|
|
(13 |
) |
|
|
— |
|
|
|
(13 |
) |
|
|
185 |
|
|
Net change in cash and cash equivalents |
|
|
304,241 |
|
|
|
— |
|
|
|
304,241 |
|
|
|
124,018 |
|
|
Cash and cash equivalents—Beginning of period |
|
|
142,322 |
|
|
|
— |
|
|
|
142,322 |
|
|
|
14,075 |
|
|
Cash and cash equivalents—End of period |
|
$ |
446,563 |
|
|
$ |
— |
|
|
$ |
446,563 |
|
|
$ |
138,093 |
|
16
AVALARA, INC.
UNAUDITED PRESENTATION AND RECONCILIATION TO NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF THE IMPACTS FROM THE ADOPTION OF THE NEW REVENUE RECOGNITION STANDARD (ASC 606)
(in thousands, except per share amounts)
The following schedules reflect our non-GAAP financial measures and reconcile our non-GAAP financial measures to the related GAAP financial measures:
Summary of Non-GAAP Financial Measures:
|
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Non-GAAP cost of revenue |
|
$ |
27,715 |
|
|
$ |
— |
|
|
$ |
27,715 |
|
|
$ |
18,607 |
|
|
Non-GAAP gross profit |
|
|
70,810 |
|
|
|
22 |
|
|
|
70,832 |
|
|
|
51,312 |
|
|
Non-GAAP gross margin |
|
|
72 |
% |
|
|
0 |
% |
|
|
72 |
% |
|
|
73 |
% |
|
Non-GAAP research and development expense |
|
$ |
20,090 |
|
|
$ |
— |
|
|
$ |
20,090 |
|
|
$ |
12,379 |
|
|
Non-GAAP sales and marketing expense |
|
|
37,573 |
|
|
|
4,789 |
|
|
|
42,362 |
|
|
|
39,213 |
|
|
Non-GAAP general and administrative expense |
|
|
15,329 |
|
|
|
— |
|
|
|
15,329 |
|
|
|
8,901 |
|
|
Non-GAAP operating loss |
|
|
(2,182 |
) |
|
|
(4,767 |
) |
|
|
(6,949 |
) |
|
|
(9,181 |
) |
|
Non-GAAP net loss |
|
|
(588 |
) |
|
|
(4,767 |
) |
|
|
(5,355 |
) |
|
|
(8,997 |
) |
|
Non-GAAP net loss per share |
|
|
(0.01 |
) |
|
|
(0.06 |
) |
|
|
(0.07 |
) |
|
|
(0.14 |
) |
|
Free cash flow |
|
|
3,606 |
|
|
|
— |
|
|
|
3,606 |
|
|
|
(3,567 |
) |
|
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Non-GAAP cost of revenue |
|
$ |
76,508 |
|
|
$ |
— |
|
|
$ |
76,508 |
|
|
$ |
52,290 |
|
|
Non-GAAP gross profit |
|
|
198,286 |
|
|
|
540 |
|
|
|
198,826 |
|
|
|
142,885 |
|
|
Non-GAAP gross margin |
|
|
72 |
% |
|
|
0 |
% |
|
|
72 |
% |
|
|
73 |
% |
|
Non-GAAP research and development expense |
|
$ |
52,123 |
|
|
$ |
— |
|
|
$ |
52,123 |
|
|
$ |
36,061 |
|
|
Non-GAAP sales and marketing expense |
|
|
111,135 |
|
|
|
16,340 |
|
|
|
127,475 |
|
|
|
114,030 |
|
|
Non-GAAP general and administrative expense |
|
|
41,235 |
|
|
|
— |
|
|
|
41,235 |
|
|
|
24,485 |
|
|
Non-GAAP operating loss |
|
|
(6,207 |
) |
|
|
(15,800 |
) |
|
|
(22,007 |
) |
|
|
(31,691 |
) |
|
Non-GAAP net loss |
|
|
(3,565 |
) |
|
|
(15,800 |
) |
|
|
(19,365 |
) |
|
|
(32,127 |
) |
|
Non-GAAP net loss per share |
|
|
(0.05 |
) |
|
|
(0.22 |
) |
|
|
(0.27 |
) |
|
|
(0.49 |
) |
|
Free cash flow |
|
$ |
(1,765 |
) |
|
$ |
— |
|
|
$ |
(1,765 |
) |
|
$ |
(23,012 |
) |
17
Reconciliation of Non-GAAP Financial Measures:
|
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Reconciliation of Non-GAAP Cost of Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
29,778 |
|
|
$ |
— |
|
|
$ |
29,778 |
|
|
$ |
20,236 |
|
|
Stock-based compensation expense |
|
|
(828 |
) |
|
|
— |
|
|
|
(828 |
) |
|
|
(508 |
) |
|
Amortization of acquired intangibles |
|
|
(1,235 |
) |
|
|
— |
|
|
|
(1,235 |
) |
|
|
(1,121 |
) |
|
Non-GAAP Cost of Revenue |
|
$ |
27,715 |
|
|
$ |
— |
|
|
$ |
27,715 |
|
|
$ |
18,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
68,747 |
|
|
$ |
22 |
|
|
$ |
68,769 |
|
|
$ |
49,683 |
|
|
Stock-based compensation expense |
|
|
828 |
|
|
|
— |
|
|
|
828 |
|
|
|
508 |
|
|
Amortization of acquired intangibles |
|
|
1,235 |
|
|
|
— |
|
|
|
1,235 |
|
|
|
1,121 |
|
|
Non-GAAP Gross Profit |
|
$ |
70,810 |
|
|
$ |
22 |
|
|
$ |
70,832 |
|
|
$ |
51,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Gross Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
70 |
% |
|
|
0 |
% |
|
|
70 |
% |
|
|
71 |
% |
|
Stock-based compensation expense as a percentage of revenue |
|
|
1 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
Amortization of acquired intangibles as a percentage of revenue |
|
|
1 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
2 |
% |
|
Non-GAAP Gross Margin |
|
|
72 |
% |
|
|
0 |
% |
|
|
72 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Research and Development Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
21,871 |
|
|
$ |
— |
|
|
$ |
21,871 |
|
|
$ |
13,285 |
|
|
Stock-based compensation expense |
|
|
(1,781 |
) |
|
|
— |
|
|
|
(1,781 |
) |
|
|
(906 |
) |
|
Amortization of acquired intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP Research and Development Expense |
|
$ |
20,090 |
|
|
$ |
— |
|
|
$ |
20,090 |
|
|
$ |
12,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Sales and Marketing Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
$ |
40,313 |
|
|
$ |
4,789 |
|
|
$ |
45,102 |
|
|
$ |
41,276 |
|
|
Stock-based compensation expense |
|
|
(2,135 |
) |
|
|
— |
|
|
|
(2,135 |
) |
|
|
(1,589 |
) |
|
Amortization of acquired intangibles |
|
|
(605 |
) |
|
|
— |
|
|
|
(605 |
) |
|
|
(474 |
) |
|
Non-GAAP Sales and Marketing Expense |
|
$ |
37,573 |
|
|
$ |
4,789 |
|
|
$ |
42,362 |
|
|
$ |
39,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP General and Administrative Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
20,511 |
|
|
$ |
— |
|
|
$ |
20,511 |
|
|
$ |
10,235 |
|
|
Stock-based compensation expense |
|
|
(5,178 |
) |
|
|
— |
|
|
|
(5,178 |
) |
|
|
(1,334 |
) |
|
Amortization of acquired intangibles |
|
|
(4 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
Non-GAAP General and Administrative Expense |
|
$ |
15,329 |
|
|
$ |
— |
|
|
$ |
15,329 |
|
|
$ |
8,901 |
|
18
|
Reconciliation of Non-GAAP Operating Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(13,948 |
) |
|
$ |
(4,767 |
) |
|
$ |
(18,715 |
) |
|
$ |
(24,287 |
) |
|
Stock-based compensation expense |
|
|
9,922 |
|
|
|
— |
|
|
|
9,922 |
|
|
|
4,337 |
|
|
Amortization of acquired intangibles |
|
|
1,844 |
|
|
|
— |
|
|
|
1,844 |
|
|
|
1,595 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Non-GAAP Operating Loss |
|
$ |
(2,182 |
) |
|
$ |
(4,767 |
) |
|
$ |
(6,949 |
) |
|
$ |
(9,181 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,354 |
) |
|
$ |
(4,767 |
) |
|
$ |
(17,121 |
) |
|
$ |
(24,103 |
) |
|
Stock-based compensation expense |
|
|
9,922 |
|
|
|
— |
|
|
|
9,922 |
|
|
|
4,337 |
|
|
Amortization of acquired intangibles |
|
|
1,844 |
|
|
|
— |
|
|
|
1,844 |
|
|
|
1,595 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Non-GAAP Net Loss |
|
$ |
(588 |
) |
|
$ |
(4,767 |
) |
|
$ |
(5,355 |
) |
|
$ |
(8,997 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net Loss Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
$ |
(0.16 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.36 |
) |
|
Stock-based compensation expense per share |
|
|
0.13 |
|
|
|
— |
|
|
|
0.13 |
|
|
|
0.07 |
|
|
Amortization of acquired intangibles per share |
|
|
0.02 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
Goodwill impairment per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.14 |
|
|
Non-GAAP unweighted adjustment to common and preferred shares issued per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP Net Loss Per Share |
|
$ |
(0.01 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Non-GAAP Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding used in computing net loss per share |
|
|
76,156 |
|
|
|
— |
|
|
|
76,156 |
|
|
|
66,590 |
|
|
Non-GAAP adjustment to common and preferred shares issued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP Shares Outstanding Used in Computing Non-GAAP Net Loss Per Share |
|
|
76,156 |
|
|
|
— |
|
|
|
76,156 |
|
|
|
66,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
5,852 |
|
|
$ |
— |
|
|
$ |
5,852 |
|
|
$ |
1,178 |
|
|
Purchases of property and equipment |
|
|
(2,246 |
) |
|
|
— |
|
|
|
(2,246 |
) |
|
|
(4,745 |
) |
|
Free Cash Flow |
|
$ |
3,606 |
|
|
$ |
— |
|
|
$ |
3,606 |
|
|
$ |
(3,567 |
) |
19
|
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
As Reported (ASC 606) |
|
|
Impacts from Adoption |
|
|
Without Adoption (ASC 605) |
|
|
As Reported (ASC 605) |
|
||||
|
Reconciliation of Non-GAAP Cost of Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
82,420 |
|
|
$ |
— |
|
|
$ |
82,420 |
|
|
$ |
56,377 |
|
|
Stock-based compensation expense |
|
|
(2,277 |
) |
|
|
— |
|
|
|
(2,277 |
) |
|
|
(1,181 |
) |
|
Amortization of acquired intangibles |
|
|
(3,635 |
) |
|
|
— |
|
|
|
(3,635 |
) |
|
|
(2,906 |
) |
|
Non-GAAP Cost of Revenue |
|
$ |
76,508 |
|
|
$ |
— |
|
|
$ |
76,508 |
|
|
$ |
52,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
192,374 |
|
|
$ |
540 |
|
|
$ |
192,914 |
|
|
$ |
138,798 |
|
|
Stock-based compensation expense |
|
|
2,277 |
|
|
|
— |
|
|
|
2,277 |
|
|
|
1,181 |
|
|
Amortization of acquired intangibles |
|
|
3,635 |
|
|
|
— |
|
|
|
3,635 |
|
|
|
2,906 |
|
|
Non-GAAP Gross Profit |
|
$ |
198,286 |
|
|
$ |
540 |
|
|
$ |
198,826 |
|
|
$ |
142,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Gross Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
70 |
% |
|
|
0 |
% |
|
|
70 |
% |
|
|
71 |
% |
|
Stock-based compensation expense as a percentage of revenue |
|
|
1 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
Amortization of acquired intangibles as a percentage of revenue |
|
|
1 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
Non-GAAP Gross Margin |
|
|
72 |
% |
|
|
0 |
% |
|
|
72 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Research and Development Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
56,823 |
|
|
$ |
— |
|
|
$ |
56,823 |
|
|
$ |
38,332 |
|
|
Stock-based compensation expense |
|
|
(4,700 |
) |
|
|
— |
|
|
|
(4,700 |
) |
|
|
(2,271 |
) |
|
Amortization of acquired intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP Research and Development Expense |
|
$ |
52,123 |
|
|
$ |
— |
|
|
$ |
52,123 |
|
|
$ |
36,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Sales and Marketing Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
$ |
119,199 |
|
|
$ |
16,340 |
|
|
$ |
135,539 |
|
|
$ |
119,187 |
|
|
Stock-based compensation expense |
|
|
(6,411 |
) |
|
|
— |
|
|
|
(6,411 |
) |
|
|
(3,674 |
) |
|
Amortization of acquired intangibles |
|
|
(1,653 |
) |
|
|
— |
|
|
|
(1,653 |
) |
|
|
(1,483 |
) |
|
Non-GAAP Sales and Marketing Expense |
|
$ |
111,135 |
|
|
$ |
16,340 |
|
|
$ |
127,475 |
|
|
$ |
114,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP General and Administrative Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
53,764 |
|
|
$ |
— |
|
|
$ |
53,764 |
|
|
$ |
28,787 |
|
|
Stock-based compensation expense |
|
|
(12,518 |
) |
|
|
— |
|
|
|
(12,518 |
) |
|
|
(4,285 |
) |
|
Amortization of acquired intangibles |
|
|
(11 |
) |
|
|
— |
|
|
|
(11 |
) |
|
|
(17 |
) |
|
Non-GAAP General and Administrative Expense |
|
$ |
41,235 |
|
|
$ |
— |
|
|
$ |
41,235 |
|
|
$ |
24,485 |
|
20
|
Reconciliation of Non-GAAP Operating Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(37,412 |
) |
|
$ |
(15,800 |
) |
|
$ |
(53,212 |
) |
|
$ |
(56,682 |
) |
|
Stock-based compensation expense |
|
|
25,906 |
|
|
|
— |
|
|
|
25,906 |
|
|
|
11,411 |
|
|
Amortization of acquired intangibles |
|
|
5,299 |
|
|
|
— |
|
|
|
5,299 |
|
|
|
4,406 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Non-GAAP Operating Loss |
|
$ |
(6,207 |
) |
|
$ |
(15,800 |
) |
|
$ |
(22,007 |
) |
|
$ |
(31,691 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(34,770 |
) |
|
$ |
(15,800 |
) |
|
$ |
(50,570 |
) |
|
$ |
(57,118 |
) |
|
Stock-based compensation expense |
|
|
25,906 |
|
|
|
— |
|
|
|
25,906 |
|
|
|
11,411 |
|
|
Amortization of acquired intangibles |
|
|
5,299 |
|
|
|
— |
|
|
|
5,299 |
|
|
|
4,406 |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,174 |
|
|
Non-GAAP Net Loss |
|
$ |
(3,565 |
) |
|
$ |
(15,800 |
) |
|
$ |
(19,365 |
) |
|
$ |
(32,127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net Loss Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
$ |
(0.48 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.70 |
) |
|
$ |
(1.95 |
) |
|
Stock-based compensation expense per share |
|
|
0.36 |
|
|
|
— |
|
|
|
0.36 |
|
|
|
0.39 |
|
|
Amortization of acquired intangibles per share |
|
|
0.07 |
|
|
|
— |
|
|
|
0.07 |
|
|
|
0.15 |
|
|
Goodwill impairment per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.31 |
|
|
Non-GAAP unweighted adjustment to common and preferred shares issued (1) per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.61 |
|
|
Non-GAAP Net Loss Per Share |
|
$ |
(0.05 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Non-GAAP Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding used in computing net loss per share |
|
|
72,064 |
|
|
|
— |
|
|
|
72,064 |
|
|
|
29,269 |
|
|
Non-GAAP adjustment to common and preferred shares issued (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
36,842 |
|
|
Non-GAAP Shares Outstanding Used in Computing Non-GAAP Net Loss Per Share |
|
|
72,064 |
|
|
|
— |
|
|
|
72,064 |
|
|
|
66,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
5,431 |
|
|
$ |
— |
|
|
$ |
5,431 |
|
|
$ |
(10,098 |
) |
|
Purchases of property and equipment |
|
|
(7,196 |
) |
|
|
— |
|
|
|
(7,196 |
) |
|
|
(12,914 |
) |
|
Free Cash Flow |
|
$ |
(1,765 |
) |
|
$ |
— |
|
|
$ |
(1,765 |
) |
|
$ |
(23,012 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company’s IPO closed on June 19, 2018 and 8,625,000 shares of common stock were issued. In connection with the IPO, the Company’s outstanding convertible preferred stock converted into 50,888,014 shares of common stock. See description of adjustment in “Use of Non-GAAP Financial Measures” section. |
|
|||||||||||||||
21
AVALARA, INC.
UNAUDITED PRESENTATION OF CALCULATED BILLINGS
|
|
Three Months Ended |
|
|||||||||||||||||||||||||||||
|
|
Sep 30, 2019 |
|
|
Jun 30, 2019 |
|
|
Mar 31, 2019 (1) |
|
|
Dec 31, 2018 |
|
|
Sep 30, 2018 |
|
|
Jun 30, 2018 |
|
|
Mar 31, 2018 |
|
|
Dec 31, 2017 |
|
||||||||
|
Total revenue |
$ |
98,525 |
|
|
$ |
91,299 |
|
|
$ |
84,970 |
|
|
$ |
76,923 |
|
|
$ |
69,919 |
|
|
$ |
63,879 |
|
|
$ |
61,377 |
|
|
$ |
58,035 |
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue (end of period) |
|
148,466 |
|
|
|
138,811 |
|
|
|
132,714 |
|
|
|
134,653 |
|
|
|
118,209 |
|
|
|
109,344 |
|
|
|
103,878 |
|
|
|
92,231 |
|
|
Contract liabilities (end of period) |
|
4,843 |
|
|
|
4,508 |
|
|
|
4,208 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Impact of adoption of ASC 606 on deferred revenue |
|
— |
|
|
|
— |
|
|
|
11,250 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue (beginning of period) |
|
(138,811 |
) |
|
|
(132,714 |
) |
|
|
(134,653 |
) |
|
|
(118,209 |
) |
|
|
(109,344 |
) |
|
|
(103,878 |
) |
|
|
(92,231 |
) |
|
|
(84,637 |
) |
|
Contract liabilities (beginning of period) |
|
(4,508 |
) |
|
|
(4,208 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Impact of adoption of ASC 606 on contract liabilities |
|
— |
|
|
|
— |
|
|
|
(2,090 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Calculated billings |
$ |
108,515 |
|
|
$ |
97,696 |
|
|
$ |
96,399 |
|
|
$ |
93,367 |
|
|
$ |
78,784 |
|
|
$ |
69,345 |
|
|
$ |
73,024 |
|
|
$ |
65,629 |
|
|
|
(1) |
The first quarter of 2019 includes reconciling adjustments to exclude the one-time impact of adoption of ASC 606 as of January 1, 2019. |
AVALARA, INC.
UNAUDITED PRESENTATION OF KEY BUSINESS METRICS
|
|
Sep 30, 2019 |
|
|
Jun 30, 2019 |
|
|
Mar 31, 2019 |
|
|
Dec 31, 2018 |
|
|
Sep 30, 2018 |
|
|
Jun 30, 2018 |
|
|
Mar 31, 2018 |
|
|
Dec 31, 2017 |
|
||||||||
|
Number of core customers (as of end of period) |
|
11,240 |
|
|
|
10,430 |
|
|
|
9,700 |
|
|
|
9,070 |
|
|
|
8,490 |
|
|
|
8,080 |
|
|
|
7,760 |
|
|
|
7,490 |
|
|
Net revenue retention rate |
|
113 |
% |
|
|
111 |
% |
|
|
107 |
% |
|
|
108 |
% |
|
|
105 |
% |
|
|
108 |
% |
|
|
109 |
% |
|
|
105 |
% |
Investor Contact
Greg McDowell
ICR, LLC
investor@avalara.com
206-641-2425
Media Contact
Jesse Hamlin
Avalara
media@avalara.com
518-281-0631
22