Q4 2021 Avalara Inc Earnings Call
Speaker 1: Good afternoon, my name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Avalara fourth quarter and fiscal year 2021 earnings conference call. All lines have been placed on mute.
Good afternoon.
Afternoon. My name is Christian I'll be your conference operator today.
I'd like to welcome everyone to the outlet or a fourth quarter and fiscal year 2021 earnings conference call.
All lines have been placed on mute to prevent any background noise.
Speaker 1: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number 1 on your telephone keypad.
After the Speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
To withdraw your question. Please press star one again.
Speaker 1: Thank you, Jennifer Gianola, Vice President of investor relations.
Thank you Jennifer <unk>, Vice President of Investor Relations you may begin.
Speaker 2: Good afternoon and welcome to Avalara's fourth quarter and fiscal year 2021 earnings call.
Good afternoon, and welcome to Apple there is fourth quarter and fiscal year 2021 earnings call.
Speaker 2: We will be discussing the results announced in our press release issued after market closed today.
We will be discussing the results announced in our press release issued after market close today.
Speaker 2: With me are Avalor's CEO Scott McFarland and CFO Ross Tenenbaum.
With me are Abelard, CEO , Scott Mcfarlane, and CFO Ross Tennenbaum.
Speaker 2: Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Today's call will contain forward looking statements, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker 2: Forward-looking statements include statements concerning financial and business trends, the impact of COVID-19 on our business, and global economic conditions.
Forward looking statements include statements concerning financial and business trends.
The impact of COVID-19 on our business and global economic conditions.
Speaker 2: expectations regarding the integration of acquisitions into our business, and growth opportunities and synergies arising from such acquisitions. Our expected future business and financial performance and financial conditions, and our guidance for the first quarter and fiscal year 2022, and can be identified by words such as expect, anticipate, intend, plan, believe, seek, or will.
The patients regarding the integration of acquisitions into our business and growth opportunities and synergies arising from such acquisition.
Our expected future business and financial performance and financial condition, and our guidance for the first quarter and fiscal year 2022 .
And can be identified by words, such as expect anticipate intend plan believe.
Well, we'll see.
Speaker 2: These statements reflect our views as of today only, should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements.
These statements reflect our views as of today only.
Should not be relied upon as representing our views at any subsequent date and we do not undertake any duty to update these statements.
Speaker 2: Forward-looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
Forward looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
Speaker 2: For discussion of the material risks and other important factors that could affect our actual results, please refer to the risks discussed in today's press release, our annual report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2021, and our other periodic filings with the authority.
A discussion of the material risks and other important factors that could affect our actual results. Please refer to the risks.
In today's press release, our annual report on Form 10-K filed with the Securities and Exchange Commission on February 22021, and our other periodic filings with the SEC.
Speaker 2: During the call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
During the call. We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and non-GAAP results is included in our earnings press release, which has been filed with the SEC and is also available on our website at investor Dot Apple or a dog.
Speaker 2: A reconciliation of the GAAP and non-GAAP results is included on our earnings press release, which has been filed with the SEC and is also available on our website at investor.abuelera.com. With that, let me turn the call over to Scott.
Paul.
With that let me turn the call over to Scott.
Thank you Jennifer and welcome to everyone, joining our Q4 2021 earnings call.
Speaker 3: Thanks, Jennifer, and welcome to everyone joining our Q4 2021 earnings call.
Speaker 3: I would like to congratulate the entire Avalara team for an outstanding performance in the fourth quarter and fiscal year 2021.
I would like to congratulate the entire avalere it team for an outstanding performance in the fourth quarter and fiscal year 2021.
Speaker 3: 2021 was another terrific year for Avalara.
2021 was another terrific year for <unk>.
Speaker 3: we accelerated our top line growth, reporting total annual revenue of 699 million, an increase of 40% year over year.
We accelerated our top line growth supporting total annual revenue of $699 million, an increase of 40% year over year.
Speaker 3: with our first ever annual positive non-GAAP operating income of $6 million.
With our first ever annual positive non-GAAP operating income of $6 million.
Speaker 3: Even excluding acquisitions in 2021, organic revenue growth increased 29 percent year over year, consistent with the prior year's organic growth.
Even excluding acquisitions in 2021 organic revenue growth increased 29% year over year <unk>.
Consistent with the prior year's organic growth.
Speaker 3: We also reported free cash flow of $13 million, our third straight year of positive operating and free cash flow.
We also reported free cash flow of $13 million, our third straight year of positive operating and free cash flow.
Speaker 3: Reflecting on the last three years since IPO, I'm proud of our team for delivering a 37% three-year revenue kegger and consistent operating results that exceeded expectations in good and challenging times.
Reflecting on the last three years since the IPO I'm proud of our team for delivering a 37% three year revenue CAGR and consistent operating results that exceeded expectations in good and challenging times.
Speaker 3: In 2021, we added several exciting milestones.
In 2021, we added several exciting milestones.
Speaker 3: We achieved our first ever annual non-GAAP operating process. We crossed over 100,000
We achieved our first ever annual non-GAAP operating profit.
Crossed over 100000 in total and customers.
Speaker 3: We were recognized as the leader in all three IDC MarketScape reporters on global cloud tax automation.
We were recognized as a leader in all three IDC market Scape reports and global cloud automation.
Speaker 3: We delivered more new products and capabilities than ever before in our history.
We delivered more new products and capabilities than ever before in our history.
Speaker 3: We expanded our relationship with Shopify to power cross border duty and import tax features of its global commerce hub Shopify market.
We expanded our relationship with Shopify.
Cross border duty and import tax feature of its global Commerce hub Shopify market.
Speaker 3: We achieved the largest attendance ever at our virtual crush, and we issued nearly $1 billion of convertible notes, providing ample financial flexibility for the large opportunity in front of us.
We achieved the largest attendance ever at our virtual crash and we issued nearly $1 billion of convertible notes, providing ample financial flexibility through the large opportunity in front of us.
Speaker 3: As we approach $1 billion in annual revenue run rate, we are excited about our opportunity to leverage our growing scale, competitive moats, and ubiquity in the market to establish Avalara as the standard cloud platform for compliance.
As we approach $1 billion in annual revenue run rate, we are excited about our opportunity to leverage our growing scale competitive moats and ubiquity in the market to establish <unk> as the standard cloud platform for compliance.
Speaker 3: Our thesis and vision have not changed. We remain a leader and category definer in a massive global market driven by statutory requirements.
Our thesis envision have not changed we remain a leader in category Definer in a massive global market driven by statutory requirements.
Speaker 3: and with enviable tailwinds tied to the adoption of cloud, e-commerce, ROI, and regulatory.
And with enviable tailwind tied to the adoption of cloud ecommerce Rois and regulatory.
We believe that over the long term every business will adopt tax automation.
Speaker 3: We believe that over the long term, every business will adopt tax automation.
We are early in this journey and we believe we are best positioned to capture the leading share.
Speaker 3: As we look forward to 2022, it feels as though we have more opportunity to capture than in prior years. Here are some of the opportunities that we have.
As we look forward to 2022, it feels as though we have more opportunity to capture that in prior years.
Here are some of the opportunities that I get excited about.
After 18 months of aggressively building and buying content and products, we have a significant opportunity to cross sell more products to our large customer base.
It feels like we're entering our second wave of partnership opportunities, where many large players from across the ecosystem are more focused on what we do.
This opens exciting opportunities with new partners and potentially large expansion with existing partners.
Speaker 3: In addition to our core SMB market, we continue to expand our reach up market to large enterprises and down market to smaller business.
In addition to our core SMB market, we continue to expand our reach upmarket to large enterprises and down market to smaller businesses.
Speaker 3: And building on our 2021 success in international, we have opportunities to expand our presence and our product portfolio in existing and new markets.
And building on our 2021 success in international we have opportunities to expand our presence and our product portfolio in existing and new markets.
We believe compliance automation is inevitable we are right.
Speaker 3: We are right where we want to be in our journey. And now, we must continue to execute our strategy and drive towards our vision of becoming the global category-defining cloud-compliance platform.
Where we wanted to be in our journey and now we must continue to execute our strategy and drive towards our vision of becoming the global category defining cloud compliance platform.
Speaker 3: I love talking about our customer wins. I believe they exemplify our leadership position, which has been built on years of investing in our differentiated strategy.
I love talking about our customer wins.
I believe they exemplify our leadership position, which has been built on years of investing in our differentiated strategy.
Speaker 3: They speak volumes to the value of our competitive moats, including how our content
Volumes to the value of our competitive moats, including how our content.
Speaker 3: broad product portfolio, and more than 1,200 signed partners' integrations help us win competitive deals across nearly every size segment, industry, and geography.
Broad product portfolio and more than 200 signed partners integrations helped us win competitive deals across nearly every size segment industry and geography.
Speaker 3: Over the years, it's been exciting to see the evolution of our customer win, including larger deal values, more deals with multiple products and integrations, and more global customers.
Over the years, it's been exciting to see the evolution of our customer wins, including larger deal values more deals with multiple products and integrations and more global customers.
Here are just a few examples.
Speaker 3: During the fourth quarter, we won enterprise deals with a diverse group of companies.
During the fourth quarter, we won enterprise deals with a diverse group of companies.
Speaker 3: First, we want an enterprise deal with a florist company for a deal value of $300,000, including annual recurring revenue, one-time software, and services due to our integrations with disparate systems, including ERP, point of sale, and commerce platform.
First we want an enterprise deal with a Florida company to a deal value of $300000.
<unk> annual recurring revenue onetime software and services due to our integrations with disparate systems, including ERP point of sale and commerce platforms.
Speaker 3: Next, we want to deal with a boating supply company for a deal value of $180,000.
Next we wanted to deal with the boating supply company to a deal value of $180000.
Speaker 3: After discovering serious license exposure, the company selected us to package an end-to-end license management and compliance offering built on the assets we acquired from our 2020 business licenses acquisition.
After discovering serious license exposure the company selected us to package and end to end license management and compliance offering built on the assets, we acquired from our 2020 business licenses acquisition.
Speaker 3: We want to treat wholesaler and a multiproduct deal for $238,000, including avatars, certificates, returns and our SST program.
We want to treat wholesaler and a multi product deal for $238000, including Abbott tax certificates returns and our SSP program.
Speaker 3: We won this deal due to our integrations with a leading ERP application and our relationship with a global software and consulting partner.
We won this deal due to our integrations with leading ERP application and our relationship with a global software and consulting partner.
Finally.
Speaker 3: We want to deal with a financial services company for $99,000. The company is operating in 11 states, and a recent audit led to a negative judgment.
We want to deal with a financial services company for $99000. The company is operating in 11 States and a recent audit led one negative judgment.
We wanted to deal due to our prebuilt integration with the leading ERP application.
Speaker 3: We won this deal due to our pre-built integration with a leading ERP application coupled with a strong recommendation from one of our business transformation partners.
Coupled with a strong recommendation from one of our business transformation partners.
Speaker 3: Additionally, we compiled several competitive wins and takeaways. We won a competitive enterprise deal with one of the leading distributors of air conditioning and heating supplies for a deal value of $215,000, including AVA tax, consumer use tax, and exemption certificate.
Additionally, we compiled several competitive wins and takeaways, we want a competitive enterprise deal with one of the leading distributors of air conditioning and heating supplies for a deal value of $215000.
Including avid tax consumer use tax exemption certificates.
Speaker 3: We won against the competition due to our embedded integration with a leading business software application.
We won against the competition due to our embedded integration with a leading business software application.
Speaker 3: Next, we want to deal with a vehicle services company for a deal value of $170,000, including AVA tax, consumer use tax, TTR research and CERT tax.
Next we want to deal with the vehicle services company for a deal value of $170000, including AD attacks consumer use tax GTR research insured catches.
Speaker 3: We won this competitive deal due to our unified product offering, TTR research and our integration with a leading accounting and finance software application.
We won this competitive deal due to our unified product offering GTR research and our integration with a leading accounting and finance software application.
Speaker 3: We want a competitive takeaway deal with a global industrial company for a deal value of $100,000, including Avitax, CertCapture, and TTR Research.
We want a competitive takeaway deal with a global industrial company for a deal value of $100000, including AD attacks share capture and PTR research. We won due to our partner integrations with leading ERP application for global manufacturers and superior technology and feature set.
Speaker 3: we won due to our partner integration with a leading ERP application for global manufacturers and superior technology and feature set.
Speaker 3: Finally, we want a competitive takeaway exemption certificate management deal with a multinational conglomerate for a deal value of $231,000.
Finally, we want a competitive takeaway exemption certificate management deal with a multinational conglomerate to a deal value of $231000.
Speaker 3: The company wanted a better solution and was impressed with our eCMS platform.
The company wanted a better solution and was impressed with our CMS flat port.
Speaker 3: We have great examples of customers experiencing rapid growth that triggered the need to move away from status quo. Manual processes.
We have great examples of customers experiencing rapid growth that triggered the need to move away from status quo.
Manual processes.
<unk> automation.
Speaker 3: First, we want to deal with the restaurant chain for a deal value of $147,000 for our licensing managed services. Thanks again to our business.
First do you want to deal with the restaurant chain for a deal value of $147000 for a licensing managed services. Thanks again to our business licenses team but.
Speaker 3: The company was tracking licenses manually, and the rapid growth exceeded their ability to keep up with demand, triggering the need for a cloud-based solution that replaced Excel spreadsheets.
The company was tracking licenses manually and the rapid growth exceeded their ability to keep up with demand triggering the need for a cloud based solution that replaced excel spreadsheets.
Speaker 3: We also won a diversified power solutions provider for a deal value of $53,000, including Avitax and CertCapture. We won this deal due to our integration with the leading ERP application and our CertCapture offer.
We also wanted to diversified power solutions provider for a deal value of $53000, including Abbott tax and third capture.
Won this deal due to our integration with the leading ERP applications and our share capture offering.
Speaker 3: The company has been using manual processes for exemption certificates and rapid growth triggered the need to automate compliance.
The company had been using manual processes for exemption certificates and rapid growth triggered the need to automate compliance.
Speaker 3: On the international side, we want to deal with a fast-growing tech company based in Spain for a deal value of $350,000, including Avitax, VAT Reporting, and India GST, beating out the competition.
On the international side, we want to deal with a fast growing Tech company based in Spain for a deal value of $350000, including Abbott tax that reporting and India GST, beating out the competition.
Speaker 3: This one is a great example of why our portfolio of products matters in the world of global
This win is a great example of why our portfolio of products matters in the world of Global Commerce.
Speaker 3: We want a multinational Indian conglomerate for a deal value of $40,000, including avatars, cross-border and returns, opening the door for more opportunities in the future.
We want a multinational Indian conglomerate for a deal value of $40000, including Abbott tax cross border and returns.
Turning the door for more opportunities in the future.
Speaker 3: We won this deal due to our integrations with a multinational ERP application and a leading
We won this deal due to our integrations with a multinational ERP application.
And a leading enterprise commerce platform <unk>.
Speaker 3: Finally, we want a UK-based fashion retailer for a deal value of $309,000, including Avitax cross-border and returns with future opportunities, including PTR research and business licenses due to our integrations with an e-commerce platform and a leading cloud ERP system.
Finally, we won a U K based fashion retailer for a deal value of $309000, including Abbott tax cross border and returns with future opportunities, including <unk> research and business licenses due to our integrations with an e-commerce platform and a leading cloud ERP system.
As demonstrated through our customer wins Avalere as partner boat continues to be a key differentiator, especially as businesses shift to omnichannel and seek a single tax compliance platform that can integrate into multiple disparate systems.
Speaker 3: As demonstrated through our customer wins, Avalara's partner mode continues to be a key differentiator, especially as businesses shift to omni-channel and seek a single tax compliance platform that can integrate into multiple disparate systems.
Speaker 3: That's why we continue to enhance our partner mode by actively forging new relationships that enable us to offer integrations with more business applications and exposure to potential customers.
That's why we continue to enhance our partner mode by actively forging new relationships that enable us to offer integrations with more business applications and exposure to potential customers.
Speaker 3: We offer far more pre-built integrations with these applications than any other tax software providers, and we plan to continue adding more. Our total number of partner integrations, including all of those that have been signed but are not yet live, has increased to 1,200.
We offer far more pre built integrations with these applications than any other tax software providers and we plan to continue adding more our total number of partner integrations, including all of those that have been signed but are not yet live has increased to 1200.
Speaker 3: With that, today we are excited to announce several new partner deals.
With that today, we are excited to announce several new partner deals.
Speaker 3: These new relationships are great examples of what I call the second wave of partnership deals for Avalara, building on the first wave of ERP deals during the early days of the company.
These new relationships are great examples of what I call. The second wave of partnership deals travel era building on the first wave of ERP deals during the early days of the company.
Speaker 3: First, we signed a multi-year partnership with an industry-leading online payroll and HR solutions company, expanding our reach to over 50,000 small and mid-sized accounting practitioners.
First we signed a multiyear partnership with an industry, leading online payroll and HR solutions company, expanding our reach to over 50000 small and mid sized accounting practitioners.
Speaker 3: This deal positions Avalara for Accountants, our recently launched suite of tax compliance tools, as the sales tax technology solution of choice for accounting practices.
This deal positions Avalere for account, our recently launched suite of tax compliance tool as the sales tax technology solution of choice for accounting practices.
Speaker 3: We signed a multi-year deal with one of the largest point-of-sale providers in the market, servicing many verticals, including restaurants, banking, retail, and hospitality, supporting thousands of locations.
We signed a multiyear deal with one of the largest point of sale providers in the market servicing many verticals, including restaurants banking retail and hospitality supporting thousands of locations.
Speaker 3: Next, we signed a tax services partnership deal with an international cloud-based accounting provider to build and offer a joint sales tax solution to small businesses in the United States.
Next we signed the tax services partnership deal with an international cloud based accounting provider to build and offer a joint sales tax solution to small businesses in the United States.
Speaker 3: Today, this partner has over 200,000 customers in the United States and growing.
Today. This partner has over 200000 customers in the United States and growing.
Speaker 3: We are excited to announce that the Davo team we acquired last year signed a partnership deal with a leading restaurant and accounting bookkeeping company for small businesses with 1,900 locations.
We are excited to announce that the <unk> team, we acquired last year signed a partnership deal with a leading restaurant and accounting bookkeeping company for small businesses with 1900 locations.
Speaker 3: After evaluating our solution, this partner saw the return on investment immediately and chose Avalare to be the tax automation engine powering their sales tax function.
After evaluating our solution. This partners saw the return on investment immediately and chose <unk> to be the tax automation engine powering their sales tax function.
Speaker 3: Finally, we signed a deal with a large American multinational shipping company covering 5,000 stores.
Finally, we signed the deal with a large American multinational shipping company covering 5000 stores.
Speaker 3: We were selected to help the company achieve their goals of increasing accuracy of sales tax automation at their point of sale location and reducing the risk of liabilities in and on.
We were selected to help the company achieve their goals of increasing accuracy of sales tax automation at their point of sale locations and reducing the risk of liabilities in an audit.
Speaker 3: We believe these deals are just the beginning of more partnerships to come.
We believe these deals are just the beginning of more partnerships to come.
Speaker 3: We are engaged with providers like e-commerce platforms, marketplaces, point-of-sale providers, and payment processors. And they are being accelerated by the generational shift to e-commerce.
We are engaged with providers like e-commerce platforms marketplaces point of sale providers and payment processors and they are being accelerated by the generational shift to e-commerce .
Speaker 3: We have been building towards this watershed moment for years.
We have been building towards this watershed moment for years.
Speaker 3: It reminds me of when we were going after ERP vendors during the early days of the company. We knew we had to win those deals to solidify our position and lock out competitors.
It reminds me of when we're going after ERP vendors during the early days of the company.
We knew we had to win those deals to solidify our position and lock out competitors.
Speaker 3: We are witnessing the same thing now in a second wave, where e-commerce payment processing and compliance converge, and we are succeeding and winning head-to-head deals.
We are witnessing the same thing now in our second wave, where ecommerce payment processing and compliance converge and we are succeeding and winning head to head deal.
Speaker 3: To further expand our mode, software developer engagement is a key focus area for Avalara.
To further expand our moat software developer engagement is a key focus area for Avalere.
Speaker 3: Software developers who build integrations that connect solutions and services into various business applications represent another essential partner segment for Avalara. That's why we're holding our second annual virtual developer conference called Avalara Next in March, where we bring together developers from all over the world at the forefront of global commerce and tax technology.
Software developers, who build integrations that connect solutions and services and the various business applications represent another essential partner segment travel era.
That's why we are holding our second annual virtual developer conference called Avalon <unk> in March where we bring together developers from all over the world at the forefront of global Commerce and tax technology.
Speaker 3: Also, I want to remind you that we'll be hosting our virtual global crush in May 2022. We will provide more details in the coming weeks. We hope you'll be able to join us at this event. We believe we are building.
Also I want to remind you that we'll be hosting our virtual global crush in May 2022, we will provide more details in the coming weeks, we hope youll be able to join us at this event.
We believe we are building the most robust compliance platform.
Speaker 3: And 2021 was another milestone year for advancing our vision, both organically.
In 2021, and it was another milestone year for advancing our vision.
Both organically and through M&A.
Speaker 3: I am pleased by the early contributions from recent acquisitions.
I am pleased by the early contributions from recent acquisitions.
Speaker 3: Our two largest acquisitions, TTR and business licenses, exceeded our expectations in 2021.
Our two largest acquisitions TCR and business licenses exceeded our expectations in 2021.
Speaker 3: We are entering 2022 with the strongest portfolio of products that we've ever had, including more great technology, content, and talented teams that we acquired over the last year.
We are entering 2022 with the strongest portfolio of products that we've ever had including more great technology content and talented teams that we acquired over the last year.
Speaker 3: Going forward, we will continue to aggressively pursue and grow our core business in indirect tax through organic investment and M&A.
Going forward, we will continue to aggressively pursue and grow our core business and indirect tax through organic investments and M&A.
Speaker 3: We expect M&A will be an important contributor to our international growth.
We expect M&A will be an important contributor to our international growth plans.
Speaker 3: As we've always said, we believe we are a long and strong business, single digits penetrated in a large addressable market, and a long term play based on automating a statutorily required function.
As we've always said, we believe we are a long and strong business single digit penetrated in a large addressable market and a long term play based on automating our statutorily required function.
Speaker 3: We're excited that we're approaching a billion dollars in annual revenue run rate and believe we can grow and scale Avalara into a multi-product, multi-billion dollar revenue company over time. Thank you.
We're excited that we're approaching a $1 billion in.
An annual revenue run rate and believe we can grow and scale avalere into a multi product multi billion dollar revenue company over time.
I will now turn it over to Ross.
Speaker 4: Thanks, Scott. We were very pleased with our full year 2021 results that exceeded our guidance throughout the year.
Thanks, Scott we were very pleased with our full year 2021 results that exceeded our guidance throughout the year.
Speaker 4: I was particularly pleased to see our durable compounding growth story continue.
I was particularly pleased to see our durable compounding growth story continue.
Speaker 4: We are building a great long-term business and are still very early in our journey.
We are building a great long term business and are still very early in our journey.
Speaker 4: Despite the pandemic, we were able to consistently deliver 29% organic revenue growth in 2020 and 2021, showing no deceleration.
Despite the pandemic, we were able to consistently deliver 29% organic revenue growth in 2020, and 2021 showing no deceleration.
Speaker 4: This resulted in $699 million in total revenue or 40% total year-over-year growth, including M&A.
This resulted in $699 million in total revenue or 40% total year over year growth, including M&A.
Speaker 4: We couple that with our third straight year of positive free cash flow and a new milestone of achieving positive annual non-gap operating.
We coupled that with our third straight year of positive free cash flow and a new milestone of achieving positive annual non-GAAP operating weeks.
Speaker 4: Q4 exceeded our guided metrics and was again driven by balanced execution across the business.
Q4 exceeded our guided metrics and was again driven by balanced execution across the business.
Speaker 4: Q4 total revenue was $195.1 million, up 35% year-over-year, or up 27% after excluding revenue from acquisitions since Q4 2020.
Q4, total revenue was $195 1 million up 35% year over year or up 27% after excluding revenue from acquisitions since Q4 2020.
Speaker 4: Subscription and returns revenue grew 34% year-over-year to $177.1 million, or up 28% excluding acquisitions, and represented 91% of our total revenue.
Subscription and returns revenue grew 34% year over year to $177 1 million or up 28%, excluding acquisitions and represented 91% of our total revenue.
Speaker 4: Professional services revenue was $18 million, up 48% year over year.
Professional services revenue was $18 million up 48% year over year.
Speaker 4: Our core customer count increased by 870 from the previous quarter to approximately 18,270 at the end of Q4 2021, a year-over-year increase of 22%.
Our core customer count increased by 870 from the previous quarter to approximately 18270 at the end of Q4 2021.
Year over year increase of 22%.
Speaker 4: Our core customer count under our previous definition increased by 830.
Our core customer count under our previous definition increased by 830.
Speaker 4: Our net revenue retention rate was 116% unchanged compared to 116% last quarter, resulting in a 115% four-quarter average.
Our net revenue retention rate was 116% unchanged compared to a 116% last quarter, resulting in a 115% four quarter average.
Speaker 4: Our NRR under our previous definition increased to 113%, the second highest result since our IPO, resulting in a 110% four-quarter average.
Our NR under our previous definition increased to 113% with second highest results since our IPO, resulting in a 110% four quarter average.
Speaker 4: Core customer revenue grew 26% year over year to $155.4 million in Q4, and grew 28% for the year.
Core customer revenue grew 26% year over year to $155 4 million in Q4 and grew 28% for the year.
Speaker 4: Q4 revenue from non-core customers grew 32% year over year to 20.2 million, primarily driven by strong growth in EMEA and grew 39% for all of 2021.
Q4 revenue from noncore customers grew 32% year over year to $20 2 million, primarily driven by strong growth in EMEA and grew 39% for all of 2021.
Speaker 4: Q4 revenue from acquisitions made since Q4 20 was 19.5 million and 62.2 million for all of 2021.
Q4 revenue from acquisitions made since Q4, 'twenty was $19 5 million and $62 2 million for all of 2021.
Speaker 4: In discussing the remainder of the income statement, please note that unless otherwise stated, all references to our expenses, operating results, and share counts are on a non-GAAP basis and are reconciled to our GAAP results in the earnings press release that was issued just before this call.
In discussing the remainder of the income statement. Please note that unless otherwise stated all references to our expenses operating results and share count on a non-GAAP basis and are reconciled to our GAAP results in the earnings press release that was issued just before this call.
Speaker 4: Gross profit was $142.1 million in Q4, representing a 73% gross margin. This compares with gross profit of $107.7 million and a 74% gross margin in the same period last year.
Gross profit was $142 1 million in Q4, representing a 73% gross margin.
This compares with gross profit of $107 7 million and a 74% gross margin in the same period last year.
Speaker 4: Subscription gross margins were 75%, down from 76% in the same period last year.
Prescription gross margins were 75% down from 76% in the same period last year.
Speaker 4: The year-over-year impact on gross margin was driven by new acquisitions as well as higher hosting infrastructure costs.
The year over year impact on gross margin was driven by new acquisitions as well as higher hosting infrastructure costs.
Speaker 4: Sales and marketing expense was $75 million in Q4, or 38% of total revenue, compared to 37% last year. The increase in sales and marketing is a reflection of our desire to continue investing in our go-to-market motions to take advantage of the large market opportunities.
Sales and marketing expense was $75 million in Q4, or 38% of total revenue compared to 37% last year.
The increase in sales and marketing as a reflection of our desire to continue investing in our go to market motions to take advantage of the large market opportunity.
Speaker 4: Q4 research and development expense was $38.8 million, or 20% of revenue, down from 21% of revenue in Q4'20, but included a higher benefit from capitalized software in the current quarter versus the prior year. Absent the increased capitalization, Q4 R&D expense would be roughly in line with the year ago comparable period.
Q4 research and development expense was $38 8 million or 20% of revenue down from 21% of revenue in Q4, 'twenty, but included a higher benefit from capitalized software in the current quarter versus the prior year.
Absent the increased capitalization Q4, R&D expense would be roughly in line with the year ago comparable period.
Speaker 4: Q4 general and administrative expense was $26.6 million, or 14% of revenue, down from 17% of revenue in Q4'20.
Q4 general and administrative expense was $26 6 million or 14% of revenue down from 17% of revenue in Q4 2000.
Speaker 4: Q4 operating income was $1.7 million, which was better than our guidance, largely as a result of strong revenue and some expense favorability.
Q4, operating income was $1 7 million, which was better than our guidance largely as a result of strong revenue and some expense favorability.
Q4, net loss per share was <unk> <unk> in the quarter based on 87 million shares outstanding.
Speaker 4: Q4 net loss per share was $0.06 in the quarter based on 87 million shares outstanding.
Speaker 4: Total deferred revenue at the end of Q4'21 was $283 million, up 35% from $209.7 million at the end of Q4'20, and up 34% year-over-year, excluding acquisitions since Q4'20.
Total deferred revenue at the end of Q4, 'twenty, one was $283 million up 35% from $209 7 million at the end of Q4, 'twenty and up 34% year over year, excluding acquisitions since Q4 two one.
Speaker 4: Calculated buildings is a non gap metric that takes into consideration revenue and the change in deferred revenue as well as the change in contract liability.
Calculated billings is a non-GAAP metric that takes into consideration revenue and the change in deferred revenue as well as the change in contract liabilities.
Speaker 4: Calculated billings was $217.8 million in Q4'21, up 30% year-over-year, and up 25% year-over-year, excluding acquisitions in Q4'20.
Related billings was $217 8 million in Q4, 'twenty, one up 30% year over year and up 25% year over year, excluding acquisitions in Q1.
Speaker 4: On an adjusted basis, when we flew the impact of our large EU marketplace partner, our organic calculated billings was a consistently strong 29%.
On an adjusted basis, when we exclude the impact of our large EU marketplace partner.
Our organic calculated billings was a consistently strong 29%.
Speaker 4: As a reminder, in Q4, we evolved our contract with this partner, resulting in lower volume-based pricing and a switch from annual to monthly billings over the course of 2022. These changes are intended to improve the customer experience and increase adoption volume. As you know, we don't guide the billing, but as you think about your 2022 billings, please keep in mind that the changes to the agreement may impact our billings growth rate by a few percentage points, while the impact of the new pricing and billings frequency normalizes.
As a reminder, in Q4, we evolved our contract with its partner, resulting in lower volume based pricing and a switch from annual to monthly billings over the course of 2022.
These changes are intended to improve the customer experience and increase adoption and volume as you know we don't guide to billings, but as you think about your 2022 billings. Please keep in mind that the changes to the agreement.
Impact our billings growth rate by a few percentage points, while the impact of the new pricing and billings frequency normalized.
Speaker 4: We remain excited and believe we are still early in our journey with this important partner and believe there are additional opportunities to expand our relationship by supporting them with a broader range of compliance offerings and across more jurisdictions.
We remain excited and believe we are still early in our journey with this important partner and believe there are additional opportunities to expand our relationship by supporting them with a broader range of compliance offerings and across more jurisdictions.
Speaker 4: Free cash flow was $18 million in the fourth quarter, compared to $28.6 million in the same quarter last year. For 2021, we achieved free cash flow of $12.7 million, compared to $34 million for 2020.
Free cash flow was 18 million in the fourth quarter compared to $28 6 million in the same quarter last year for 2021, which you're free cash flow of $12 7 million compared to $34 million for 2020.
Speaker 4: As we have stated on past calls, our free cash flow will fluctuate from quarter to quarter caused by many factors, including the timing of working capital, the seasonality and levels of our billing and expenses, as well as our overall level of investment in the business.
As we have stated on past calls our free cash flow will fluctuate from quarter to quarter caused by many factors, including the timing of working capital the seasonality and levels of our billings and expenses as well as our overall level of investment in the business.
Speaker 4: Our cash and cash equivalents were $1.5 billion at the end of Q4 21, an increase of $840 million from $674 million at the end of Q4 20.
Our cash and cash equivalents were $1 5 billion at the end of Q4, 'twenty, one an increase of $840 million from $674 million at the end of Q4 <unk>.
Speaker 4: Looking now at our fiscal year 2021 results, total revenue of $699 million was up 40% year-over-year, or 29% after excluding $62.2 million in revenue from acquisitions since Q4'20.
Looking now at our fiscal year 2021 results total revenue of $699 million was up 40% year over year or 29% after excluding $62 $2 million in revenue from acquisitions since Q4 'twenty.
Speaker 4: Subscription and returns revenue contributed $633.1 million. This represented 91% of our total revenue, and it grew 36% year-over-year, or 29% excluding acquisitions. Professional services and other revenue contributed $65.9 million.
Subscription and returns revenue contributed $633 1 million. This represented 91% of our total revenue and it grew 36% year over year or 29%, excluding acquisitions professional services and other revenue contributed $65 9 million.
Speaker 4: Gross profit was 513.7 million for 2021, representing a 73% gross margin. This compares with gross profit of 368.5 million and a 74% gross margin in 2020.
Gross profit was $513 7 million for 2021, representing a 73% gross margin. This compares with gross profit of $368 5 million and a 74% gross margin in 2020.
Speaker 4: We were very pleased to have achieved, for the first time, positive operating income of 5.5 million in 2021, which compares with a 3.1 million dollar operating loss in the prior year.
We were very pleased to have achieved for the first time positive operating income of $5 $5 million in 2021, which compares with a $3 $1 million operating loss in the prior year.
Speaker 4: I will now conclude the call by providing guidance on revenue and non gap operating loss for Q1 and for the full year 2022.
I will now conclude the call by providing guidance on revenue and non-GAAP operating loss for Q1 and for the full year 2022.
Speaker 4: We're excited to be entering 2022 coming off a 31% organic billings and 29% organic revenue growth.
We're excited to be entering 2022 coming off a 31% organic billings and 29% organic revenue growth.
Speaker 4: Our thesis and vision have not changed. Avalara is a simple story. In the long run, like other required back office functions such as payroll, we believe every company will automate their tax compliance. We are addressing a large, low-penetrated market where we are a leader in the space with competitive moats and a differentiated business strategy. We are positioned to capture a leader's
Thesis envision have not changed.
<unk> is a simple story in the long run like other required back office functions such as payroll. We believe every company will automate their tax compliance we are addressing a large low penetrated market, where we are a leader in this space with competitive moats and a differentiated business strategy.
We are positioned to capture a leader share of our market opportunity. We believe this position translates into durable long term organic revenue growth of 20% to 25% as we continued to pursue a multibillion dollar revenue business.
Speaker 4: We believe this position translates into durable, long-term organic revenue growth of 20 to 25 percent as we continue to pursue a multi-billion dollar revenue business.
Speaker 4: In recent years, we have outperformed our long-term growth objective. We will continue to strive for outperformance as we scale the business. For 2022, there are several growth initiatives where solid execution can help us achieve outperformance.
In recent years, we've outperformed our long term growth objectives we.
We will continue to strive for outperformance as we scale the business for 2022, there are several growth initiatives, where solid execution and help us achieve outperformance.
Speaker 4: including new customer acquisition velocity, cross-selling new products to our vast customer base, sustaining international growth and expanding into new regions, and closing key second wave partner operations.
<unk>, new customer acquisition velocity cross selling new products to our vast customer base sustaining international growth and expanding into new regions and closing key second wave partner opportunities.
Speaker 4: Taken all together, our growth algorithm gives us confidence that we can deliver another strong year.
Altogether, our growth algorithm gives us confidence that we can deliver another strong year.
Speaker 4: For the full year 2022, we expect total revenue between 854 and 859 million, which represents a 23% year over year growth rate at the midpoint of the range.
For the full year 2022, we expect total revenue between 854, and 859 million, which represents a 23% year over year growth rate at the midpoint of the range.
We expect our full year 2022, non-GAAP operating loss to be in the range of $17 million to $21 million.
Speaker 4: We expect our full year 2022 non-GAAP operating loss to be in the range of $17 to $21 million.
Speaker 4: We are proud to have delivered positive free cash flow in each of the last three years and positive operating income in 2021. Our 2022 guidance reflects our view into numerous attractive investment opportunities that support our long-term growth.
We are proud to have delivered positive free cash flow in each of the last three years and positive operating income in 2021, our 2022 guidance reflects our view into numerous attractive investment opportunities.
Toward our long term growth thesis.
Speaker 4: We expect 2022 professional services revenue to be around 9% of total 2022 revenue.
We expect 2022 professional services revenue to be around 9% of total 2022 revenue.
Speaker 4: We expect 2022 revenue seasonality to be generally consistent with prior year.
We expect 2022 revenue seasonality to be generally consistent with prior years.
Speaker 4: We expect 2022 total non-GAAP gross margin to be similar to our 2021 results of 73.5%.
We expect 2022 total non-GAAP gross margin to be similar to our 2021 results of 73, 5%.
Speaker 4: This reflects an increase from our ongoing automation efforts. Counted by a decrease from recent and new product efforts.
This reflects an increase from our ongoing automation efforts.
<unk> by a decrease from recent M&A and new product efforts.
Speaker 4: and work required by some of our exciting new partner relationships that require our solutions to run on another cloud.
And work required by some of our exciting new partner relationships that require our solutions to run on another cloud infrastructure.
Speaker 4: For Q1 2022, we expect total revenue between $197 and $199 million, which represents a 29% year-over-year growth rate at the midpoint of the range.
For Q1 2022, we expect total revenue between 197, and 199 million, which represents a 29% year over year growth rate at the midpoint of the range.
Speaker 4: We expect our Q1 non-GAAP operating loss to be in the range of $9 to $11 million.
We expect our Q1 non-GAAP operating loss to be in the range of $9 million to $11 million.
Speaker 4: Please note that similar to prior years, we expect that significant Q1 cash outflows for bonus payments, software and insurance renewals, and other large.
Please note that similar to prior years, we expect a significant Q1 cash outflows for bonus payments software and insurance renewals and other large expenses.
Speaker 4: In closing, we have an exciting opportunity to continue building a durable growth compounding
In closing, we have an exciting opportunity to continue building a durable growth compounding company. We believe we are a leader in a large market that is still early to adopt tax compliance automation technology.
Speaker 4: We believe we are a leader in a large market that is still early to adopt tax-compliant automation technology.
Speaker 4: We're seeing a demand transformation as businesses become omnichannel, operate in many jurisdictions, and shift their business to e-commerce and the cloud. These changes, coupled with an ever-shifting regulatory environment, make it even more difficult to maintain tax compliance without automation.
Seeing a demand transformation as businesses become omnichannel operating many jurisdictions and shift their business to e-commerce in the cloud.
These changes coupled with an ever shifting regulatory environment make it even more difficult to maintain tax compliance without automation.
Speaker 4: At the same time, we are continuing to evolve to a platform.
At the same time, we are continuing to evolve to a platform company driving an increased supply of products and capabilities, which will deliver even more value to our customers.
Speaker 4: driving an increased supply of products and capabilities, which will deliver even more value to our.
Speaker 4: We also continue to invest to win additional segments and geographies so that we can continue to compound growth for the long.
We also continued to invest to win additional segments and geographies. So that we can continue to compound growth for the long term.
Speaker 4: Please note we will participate in upcoming conferences including JMP and Morgan Stanley in the first quarter.
Please note, we will participate in upcoming conferences, including JMP and Morgan Stanley in the first quarter.
Speaker 4: Thank you for participating in today's call. At this point, we would like to open up the call for your questions.
Thank you for participating in today's call at this point, we would like to open up the call for your questions.
Speaker 1: As a reminder, if you'd like to ask a question, please press star then 1 on your telephone keypad.
As a reminder, if you'd like to ask a question. Please press Star then one on your telephone keypad.
Speaker 1: Our first question is from Brad Sills of Bank of America Securities. Your line is open.
Our first question is from Brad Sills with Bank of America Securities. Your line is open.
Oh, great. Thanks, guys for taking my question in.
Speaker 3: Oh, great. Thanks, guys, for taking my question and wanted to focus a little bit on.
Wanted to focus a little bit on.
Speaker 5: reopening, there's been a lot of discussion around what impact that may or may not have on software.
Reopening.
There's been a lot of discussion around what impact that may or may not have on software and.
Speaker 5: in the industry and just curious, what are your expectations as we get into that? I think e-commerce is a focus here.
In the industry and just curious what are your expectations as we get into that I think E. Commerce is a focus here.
Speaker 5: There's a decent amount of underlying transaction volumes that drive your business. So maybe even just if you could drill in on e-commerce versus ERP upgrades, how do you expect those two drivers to kind of, you know, trend as we get...
There's a decent amount of underlying transaction volumes that drive your business. So maybe even just if you could drill in on ecommerce versus ERP upgrades. How do you expect those two drivers to kind of.
Trend as we get into reopening.
Speaker 3: Hey, Brad, let me jump in that. Ross can give some color if he wants after I'm done here, but.
Hey, Brad.
Let me jump in that Ross can give some color if he wants after I'm done here, but.
Look I mean, we've always said this about Avalere I mean, we're up.
Speaker 3: Look, I mean, we've always said this about Avalara. I mean, we're a good company in good and in bad times, right? I mean, a low beta business.
We're a good company in good and in bad.
Bad times, right I mean, a low beta low beta.
Low beta business and as you know.
Speaker 3: as you know with the emergence of e-commerce and
With the emergence of e-commerce .
Speaker 3: all that has gone along with that. I mean, we've seen a lot of opportunity come out of that, but we're secondary to it, right? It has to develop.
All that has gone along with that.
You've seen a law.
Lot of opportunity come out of that but were up were secondary to it right. It has to develop.
Speaker 3: you know, around the world, it has to develop with our partners, and then we come along behind that. And so it's a long-term growth program for us as we continue to work with those partners to grow.
Around the world It has to develop with our partners and then we can come along behind that and so it's a long term growth program for us as we continue to work with those partners to grow so we see e-commerce as a important part of our business moving forward in 2022 and beyond it's just.
Speaker 3: So we see e-commerce as a important part of our business moving forward in 2022 and beyond. It's just, it's not going to, we do not see it as a decreasing.
It's not going to.
We do not see it as a decreasing.
Speaker 3: program. As a matter of fact, we see it as one of the big drivers of our business as we move forward.
Program as a matter of fact, we see it as one of the big.
The drivers of our business as we move forward.
Speaker 5: That's great. Thank you. And then, yeah, yeah, go ahead. No, I was just going to say, like.
That's great. Thanks.
Yes, Yes go ahead.
Right.
So I was just going to say like.
Speaker 4: like 2020 pandemic hits and everyone's worried about software and it's slowing down and software degrade and we did really well and did almost 30% growth that year. And then e-commerce did well for us. Other things did well. And then 2021, people worried that things were going to slow down. We were tied to e-com and it was going to slow down with others. And we posted the same growth rate. We did 29% organic both years.
Twenty-twenty pandemic heads and I run worried about software and it's slowing down and software degrade and we did really well and.
It did almost 30% growth that year and then you know.
E Commerce did well for us other things did well and then 2021 people worry that things are going to slow down like we were tied to ecommerce is going to slow down with others and we posted the same growth rate with a 29% organic both years. So yes, it's just like a strong position to be and I think it goes to Scott's point that you know we are a consistent business.
Speaker 4: So, you know, it's just like a strong position to be in. I think it goes to Scott's point that, you know, we're a consistent business that can compound growth, good times and bad, and, you know, we're at the center of that, those four forces we always talk about, e-com, cloud, ROI, and, you know, regulatory change, and I think those continue to be there in 2022, and e-com will be good, and, you know, ERP is important, and there's a lot of opportunity out there for us.
That can compound growth good times and bad and we're at the center of that those four horses, we always talk about E com cloud ROI and regulatory change and I think those continue to.
To be there in 2022 and E comm will be good and you know ERP is important and there's a lot of opportunity out there for us.
That's great to hear thanks, Ross and then one more if I may. Please you mentioned focusing on investment in added geographic geographies and segments could you drill into a little bit there just a little bit more detail as to which geos and what are some of the segments that you're focusing on this year as far as investment. Thanks, So much.
Speaker 5: That's great to hear. Thanks, Ross. And one more, if I may, please. You mentioned focusing on investment in added geographies and segments. Could you drill into a little bit there, just a little bit more detail as to, you know, which geos and what are some of the segments that you're focusing on this year as far as investment? Thanks so much.
Yes, Brad.
Speaker 3: Look, I mean, I mean, we've talked about this pretty consistently mean, you know, we see, you know, we're single digit penetrated in this huge SMB market.
Look I mean, we've talked about this pretty consistently.
We see more single digit penetrated in his huge SMB market.
Speaker 3: So, I mean, one of the things that I'm excited about this year is to continue to focus in on that. But having, but having said that, I mean, there is opportunity for us as we intentionally move upstream into the enterprise world. I mean, that's, you know, that's something that we're going to continue to do. And I, I think you saw that a little bit or heard that a little bit in the, my comments about the, the deals we're winning.
One of the things that I'm excited about this year is to continue to focus in on that but having but having said that there is opportunity for us as we intentionally move upstream into the enterprise World mean, that's that's something that we're going to continue to do and I think you saw that a little bit or heard that a little bit in the.
My comments about the deals we're winning likewise I mean, you know our DNA is in part I mean, we're that's something that we just we thrive on and the F&B World is is ripe for that right and we talked a little bit about that in my in my earnings script, but.
Speaker 3: Likewise, our DNA has been partners. That's something that we thrive on, and the F&B world is ripe for that. We talked a little bit about that in my earnings script.
Speaker 3: So, I see those two as just sort of, that's what we always do. Now, moving beyond that internationally, we see huge opportunity in growing what we do in EMEA. We've really had a good go of it in UK and some of the other countries, but we can expand that even more to more of the countries in EMEA. And then, you know, we have a big presence in India and we're going to continue to
So I see those two is just sort of that's what we always do now moving beyond that internationally, we see huge opportunity in and not in growing what we do in EMEA. We've really had a good go of it in UK and some of the other companies countries, but we can expand that even.
More to more of the.
The countries in EMEA and then.
We have a big presence in India, and we're going to continue to continue to use that presence to grow our sales business there.
Speaker 3: continue to use that presence to grow our sales business there.
Speaker 3: And Brazil has been a great.
And Brazil has been a great.
Speaker 3: a place for us to, you know, be a beachhead for us in Latham.
Place for us to be a beachhead for us in Latam, So what I think youll see us internationally as we continue to focus on the things I just talked about but we will start to do.
Speaker 3: So what I think you'll see us internationally is to continue to focus on the things I just talked about, but we'll start to do exploratory work in putting...
Exploratory work in putting.
Speaker 3: you know, our BD and product management people in-country in some of the other countries in Asia and LATAM, so we can start to build that out. Because
Our BD and product management people in country in some of the other countries in Asia and Latam. So we can start to build that out because I mean, developing these markets. It's not a single year journey, it's a multi multiyear journey and we want to start that albeit small.
Speaker 3: I mean, developing these markets, it's not a single-year journey, it's a multi-multi-year journey, and we want to start that, albeit small, but growing outside of the areas that we're in today.
But growing outside of the areas that we're in today.
That's exciting thanks Scott.
Yeah.
Speaker 1: Our next question is from Gabriela Borges with Goldman Sachs, your line is open.
Our next question is from Gabriela Borges with Goldman Sachs. Your line is open.
Speaker 5: Hi, this is Kevin Kumar on for Gabriela. Thanks for taking my question. Curious on the enterprise go-to-market. As you invest more sales resources there, how's the surround strategy?
Hi, This is Kevin Kumar on for our Gabriella. Thanks for taking my question.
Just curious on the enterprise go to market as you invest more sales resources there.
How does the surround strategy.
Speaker 5: Sorry, how's the surround strategy impacting the types of conversations you're having with customers? And, are you starting to see a broadening of the use cases within enterprise? Thanks.
Sorry.
<unk> strategy impacting the types of conversations you are having with customers and are you starting to see a broadening of the use cases within enterprise.
Speaker 3: Good, good, good, good questions.
Good good good good questions.
Speaker 3: So, like I said, we've been more intentional than we've ever been in our enterprise space. And that comes with growing out our products, growing out our feature sets, as well as building out the sales force. But I have to say our sales force is probably the most mature aspect of what we're doing in enterprise today.
So like I said, we've been more intentional than we've ever been in and in our enterprise space and that comes with growing out our products growing out our feet are feature sets as well as building out the sales force, but I have to say our sales force is probably there.
Most mature aspect of what we're doing in enterprise today.
<unk>.
Speaker 3: When we talk about enterprise, you have to be careful because there's the Fortune 1000, and then there are all the companies that need compliance that can spend a lot of money. Some of those you heard today, 300,000, 350,000, and those are not household names.
When we talk about enterprise you have to be careful because there is the fortune 1000, and then theyre all the companies that just need compliance that can spend a lot of money a lot of money. Some of those you heard today three 300 350000 and those are not household names.
Speaker 3: So our team is pretty adept at selling those. We're growing out our product. But what I think one of the biggest areas that we continue to grow is build out our team of specialists and getting a better understanding around how you
So our team is pretty adept at selling those we're growing out our product, but what I think.
One of the biggest areas that we continue to grow as build out our team of specialists and getting a better understanding.
Round how you.
Yes.
Speaker 3: sell with the sales engineer in motion, and how you work with the big customers and the big partners that are out there. And that's a long-term journey for us, and we continue to grow on it. And I think as evidence about, you know, as the script said, and some
Sell lift with the fit with the sales engineer and motion and how you work with the big customers and the Big partners that are out there and Thats a long term journey for us and we continue to grow on it and I think as evidence about.
As the.
Script said in some of our use cases case wins that we had I think we're expanding in all areas. I mean, you can just see it all industries all geographies from an omnichannel perspective, with where we really shine and I think it is highlighted by the customers that we talked about today.
Speaker 3: use case wins that we had, I think we're expanding in all areas. I mean, you could just see it, all industries, all geographies, you know, from an omni-channel perspective is where we really shine. And I think it's highlighted by, you know, the customers that we talked about today. So I expect to see more of that. I expect us to get better at doing that over the years to come. So I'm really excited about where we are and how we can grow enterprise.
So I expect to see more of that I expect us to get better at doing that over the years to come.
So I'm really excited about where we are and how we can grow enterprise.
Great and then regarding the 2022 operating guide.
Speaker 6: Great. And then regarding the 2022 operating guide coming in, I think it's slightly negative. How should we think about investment priorities between product and go-to-market this year and just the general cadence of hiring throughout the year? Thank you.
Coming in I think a slightly negative how should we think about investment priorities between product and go to market. This year and just the general cadence of hiring throughout the year. Thank you.
That's why don't you jump in on that one.
Speaker 4: Yeah, I mean, I think where we're focused our investments is a lot in sales and marketing. So I think as we talked about last quarter, you know, you'll see a little bit of a deleveraging in sales and marketing as a percent of revenue as we focus on some of these opportunities that we've highlighted. We've got, you know, a huge opportunity with some of these partners who we're calling the second wave of partners, new partners and expansion of existing partners. And so we are expanding our investments around those teams and functions.
Yes.
I think where we're focused our investments.
It is a lot in sales and marketing so I think as we talked about last quarter.
You'll see a little bit of a deleveraging in sales and marketing as a percent of revenue.
As we focus on some of these opportunities and really highlight we've got.
Huge opportunity with some of these partners in what we're calling the second wave of partners, New partners and expansion of existing partners and so we are expanding our investments around those teams and functions.
Speaker 4: We've got a lot of opportunity to expand in international new countries and geos.
We've got a lot of opportunity to expand in international new countries and Geos.
Speaker 4: So we'll be expanding investments there and then.
We're expanding investments there and then.
Speaker 4: cross-sell, up-sell, and just getting the organization aligned, the teams aligned, and the investments required to hit that opportunity. We've got a tremendous amount of new products.
Cross sell up sell and just getting the organization aligned the teams aligned and the investments required to hit that opportunity. We've got a tremendous amount of new products and a great opportunity. We have over 100000 end customers. We hit that milestone last year total end customers. It's a lot of opportunity to sell more products to these customers and so on.
Speaker 4: great opportunity. We have over 100,000 end customers. We hit that milestone last year, total end customers. It's a lot of opportunities to sell more products to these customers. And so we're investing in that. So you'll see that in the sales and marketing line. R&D, the percent of revenue should stay somewhere similar as last year, we're going to continue to
Vesting and that so you'll see that in the sales and marketing line R&D as a percent of revenue should stay somewhere similar as last year, we're going to continue to.
Speaker 4: You know, invest at the same level, but that's a high level investment as we continue to build out the platform.
Invest at the same level, but that's a high level of investment as we continue to build out the platform gives.
Speaker 4: Gives us opportunities for future growth. We always think that it allows us to really build something special in the global compliance platform and start to pull away from the competition. So we like that a lot and those are the two main areas with sales and marketing being the key one.
It gives us opportunities for future growth.
You know, we always thinks it allows us to really build something special and the global compliance platform and start to pull away from the competition. So we like that a lot and those are those are the two main areas with sales and marketing being the key one that will increase year over year.
Speaker 3: You know, I'll, I'll, I'll just.
Yeah.
I'll I'll just.
Yes.
Speaker 3: follow on with what Ross said, because I think it's really worth mentioning. This is a huge market with just enormous opportunities, and the things that we focus on is being as focused as we possibly can in this world where there is so much opportunity.
Follow on with Ross said, because I think it really worth it is really worth mentioning.
This is a huge market with just enormous opportunities in the things that we focus on.
As you know.
Is being as focused as we possibly can in this world where there is so much opportunity.
Speaker 3: And so when Ross talks about, you know, multiproducts and cross-sell, big opportunity for us. Get, you know, immensely excited about that. But I can't, I mean, I just can't emphasize enough how exciting it is when you see the second wave of partners, right? I mean, like I said, partnerships are in our DNA. It's who we are, it's how we shine.
And so when raws talks about multi products and cross sell big opportunity for us get immensely excited about that but I can't.
I just can't emphasize enough how exciting it is when you see the second wave of partners right I mean, like I said partnerships here in our DNA, It's who we are it's how we shine.
And.
Speaker 3: the world economy and all that's happening is really driving a lot of business opportunity around that. I just feel like it was back in the day. And it's an exciting opportunity. And then you have international to focus on. And this doesn't get said enough, but I think a lot of our investment is around how we wow our customers and our partners.
The world economy, and all Thats happening is really driving a lot of business opportunity around that I just feel like it was back in the day.
It's an exciting opportunity and then you'll have international to focus on.
And this doesn't get set enough, but I think a lot of our investment is around how we wow, our customers and our partners and how we.
Speaker 3: and how we, you know, build out our people and culture.
Build out our people and culture. So you've got all those exciting opportunities, but there is just reality around you got to take care of your customers. Your partners your people and all of those constituents and so it's an exciting year for us and I think theres lots of opportunity to do some great things.
Speaker 3: So you've got all those exciting opportunities, but there's just reality around, you know, you gotta take care of your customers, your partners, your people, and all of those constituents. And so it's an exciting year for us, and I think there's lots of, you know, opportunity to do some great things.
I appreciate the color. Thanks.
Our next question is from Brent bracelet with Piper Sandler Your line is open.
Speaker 1: Our next question is from Brent Braceland with Piper Sandler. Your line is open.
Okay.
Brent <unk> with Piper Sandler Your line is open.
Speaker 1: We'll move on to the next question, which is from Matt Stadler with William Blair. Your line is open.
We'll move on to the next question, which is from Matt Stotler with William Blair. Your line is open.
Speaker 7: Yeah. Hey, thanks for taking the questions. I guess first, you know, we'd love to maybe get an update on, you know, when thinking through some of the, you know, TAM expansion opportunities here. Obviously, you've made some recent acquisitions. They get you more, you know, expand out of the initial indirect tax landscape into more direct taxes and other types of taxes. Any updates on how you're thinking about how those opportunities expand your functional TAM and any early traction or thoughts on how that progresses going forward?
Yeah, Hi, thanks for taking the questions.
I guess first.
To maybe get an update on when thinking through some of the Tam expansion opportunities here, obviously, you've made some recent acquisitions.
Yeah.
To expand out of the initial indirect tax landscape into more direct taxes and other types of taxes any any updates on how youre thinking about how those opportunity to expand your functional Tam and any early traction or thoughts on how that progression going forward.
Speaker 3: Yeah, I mean, at the highest level, at the highest level, you know, I always talk about this, right? You know, the four horsemen of tax, you know, those are the things that, you know, that everybody has to do, you know, it's sales tax, use tax, you've got exemptions, and you've, and you've got returns. I mean, that is what the, what Avalare has been based on, you know, that's where the majority of our, our, our revenue is today. But as we've talked, as you, as you talk, I mean, we've, we've really started.
Yeah.
At the highest level at the highest level.
I always talk about this right the four horsemen attacks.
Those are the things that you know that.
Everybody has to do with sales tax use tax you've got exemptions and you've got returns I mean that is what the what avalere has been based on that's where the majority of our revenue is today, but as we've talked as you as you talk.
Leave.
Really starting to expand.
Speaker 3: outside of those four things into transactional tax, indirect taxes as well. VAT, doing cross-border, doing a whole host of things like business licenses, and then just research, TTR research. Like I said,
Outside of those four things into transactional tax in indirect taxes.
As well.
That doing cross border doing.
A whole host of things like business licenses and then just research <unk> research and so like I said I mean, we really wanted to focus and bring focus to making sure that we are expanding those areas as much as we possibly can.
Speaker 3: I mean, we really want to focus and bring focus to making sure that we are expanding those areas as much as we possibly can.
Speaker 3: We've explored beyond those areas and early innings in going outside of indirect tax.
We've explored beyond those areas and early innings in going outside of indirect tax and those have huge tam.
Speaker 3: And those have huge, you know, TAM implications.
Tam implications.
Speaker 3: I mean, we know that those are big. We know that those are areas that we're going to continue to grow. But as I said, with one of the other earlier calls, I want everybody to, you know, to, to know that we are really focused on that indirect area because I mean, there's just so much opportunity there when I look at, you know, beyond indirect tax, I look at that as future proofing the business.
We know that those are big we know that those are areas that we're going to continue to grow but as I said that was one of the other earlier calls I want everybody to.
You know that we are really focused on that indirect areas because.
There's just so much opportunity there when I look at beyond indirect tax I look at that as future proofing. The business. You know, we can take care of the business and grow the business with indirect and future proofing the business with.
Speaker 3: You know, we can take care of the business and grow the business with indirect and future proofing the business with with other, you know, compliance opportunities and we're going to be proving out that thesis, you know, in in this year and the, and the, and the years going forward, but I expect them to be big contributors, but not just immediately. So we're going to we're going to grow them like we do all of the other ones. Well, we'll continue to push that. But I want to make sure that we're really focused on what we do really well. And with the opportunity in front of us.
With other compliance opportunities and we're going to be proving out that thesis.
And this year in the <unk>.
Here's going forward, but I expect them to be big contributors, but not just.
Immediately so we're going to we're going to grow them like we do all of the other ones will we will continue to push that but I want to make sure that we're really focused on what we do really well and what the opportunity in front of us.
Speaker 3: in indirect tax.
Indirect cash.
Right got it that's helpful and then maybe just one more.
Speaker 7: more looking at the enterprise investments and specific to go-to-market. Obviously, you have this great partner-driven motion that works very well in the SMB segment, the mid-market segment's been getting you guys into the enterprise as well. We've also talked about building out more white-gloved services for those customers. They tend to like that higher touch in some cases. Any update on how you're thinking about building out those white-gloved resources in that, I guess, more intense services?
Looking at the enterprise investments in specifics go to market. Obviously, you have this great kind of.
Partner, driven motion that works very well in the SMB segment of the mid market segment has been giving you guys enter the enterprise as well. We've also talked about kind of building out more white glove services for those customers. They tend to like that higher touch in some cases, but any update on how youre thinking about drilling out those kind of like low resources in that.
More intense.
Speaker 7: You know services model up market
Services model upmarket.
Speaker 3: Sure, like I said, like I said, I mean, I think from a sales perspective, I think we're, you know, pretty well, you know, set. We're going to continue to grow that and that will evolve over time when it comes to the white glove services, you know, I mean.
Sure.
Like I said like I said, I mean, I think from a sales perspective, I think we're pretty well set we will going to continue to grow that net will evolve over time.
When it comes to the White glove services.
Does that mean.
Speaker 3: That's where I think that that build out of the team that I was talking about, you know, your tax technologists, the people that are there, both involved in the selling process, but also in the support implementation process.
That's where I think that that.
That build out of the team that I was talking about your tax technologists that people that are they're both involved in the selling process, but also in the support implementation process, but I wanted to point out that that we are a partner driven based.
Speaker 3: But I want to point out that we are a partner-driven company. And moving into the enterprise space, we want to do that in conjunction with partners. It's not something that we want to do on our own.
Our partner driven company.
And moving into the enterprise space, we wanted to do that in conjunction with partners. It's not something that we wanted to do on our own.
Speaker 3: You know, we believe in the partner model and we want to utilize, you know, partners in doing that, in joining us in that white glove service.
We believe in the partner model and we wanted to utilize partners and in doing that in joining us in that white glove service, so it'll be us.
Speaker 3: So it'll be, you know, us, we may take the lead, but our partners will be right there next to us in providing that. And that's a motion that, you know, we wanna continue to, you know, learn and grow and develop. And that'll happen over the coming years.
We may take the lead but.
But our partners will be right. There next to us in providing that and Thats a motion that we wanted to continue to learn and grow and develop and that'll happen over the coming years.
Got it understood that's helpful. Thanks again.
Speaker 1: Our next question is from Siti Panigrahi with Mizuho. Your line is open.
Our next question is from city Pentagon <unk> with Mizuho. Your line is open.
Speaker 8: Thanks for taking my question so you you talked about the second wave of partnership deals so Scott help us understand how long it takes usually when you do this kind of investment with partners when do they start contributing to revenue?
Thanks for taking my question. So you talked about the second wave of partnership deals.
Scott to help us understand how long it takes usually when you do this kind of investment with partners when do they start contributing to revenue.
Speaker 3: You know, um, they so, uh, they take a while to develop and and you started to see it, you know, I mean
You know.
So.
They take a while to develop and you started to see it.
Speaker 3: you start to see it with Shopify. And I'll just talk about that in general. I mean, that was a company that we, you know, that came out of our emerging group, if you can imagine, right? It was, I mean, hardly anybody had heard about it. We had, you know, we started developing it with them. We started, you know, going to market with them, you know, and that's been a, you know, six plus year journey. But then they start to hit their stride.
You start to see it with with Shopify and Al and I will just talk about that in general I mean, I mean that was it.
Company that way.
Came out of our emerging group if you can imagine right. It was hardly anybody had heard about it.
We started developing with them, we started going to market with them and that's been a six plus year journey.
But then they start to hit their stride, we start to hit our stride with them and we continue.
Speaker 3: We start to hit our stride with them, and we continue to grow. But then once you get that, then you get second opportunities, and third opportunities, and fourth opportunities. And what I mean by that is that you get a cross-border opportunity that we announced last quarter, and that starts to bring more and more revenue. Then you start to expand it even further to get a larger portion of their business. And then that continues to expand it even more. They feel comfortable with it. You get a little bit more integrated in with their solution. And then finally, you've really got something that's developing. And we see that with almost every one of our partners.
Gross but then once you once you get that then you get second opportunities and third opportunities and fourth opportunities and what I mean by that is is that you.
You get a cross border opportunity that that we announced last late last quarter and that starts to bring more and more more and more revenue. Then you start to expand that even further to get a larger portion of their business and then that continues to expand it even more they feel comfortable with it you get a little bit more in.
Integrated in with their solution and then finally, you've really got something thats.
Developing and we see that with almost every one of our partners whether it be in the beginning with the stages in the <unk> and the Microsofts or now with e-commerce payment processors, Pos and and the like so yes.
Speaker 3: I mean, whether it be in the beginning with the Sages and the Epicores and the Microsofts or, you know, now with, you know, e-commerce, payment processors, POS, and the like. So, yeah, you will always get a bump from them early on, but what you hope is that that bump continues to grow and expand beyond that, and then it's a really significant part.
You will always get a bump from them early on but what you hope is that that bump continues to grow and expand beyond that and then it's really and then its a really significant part.
Speaker 3: That's, that's how we see these develop.
<unk>.
That's that's how we see these developing.
Yeah.
Speaker 1: Our next question is from Brad Reback with Stiefel. Your line is open.
Our next question is from Brad Reback with Stifel. Your line is open.
Speaker 3: Great. Thanks very much. Ross, I think last quarter, as you talked about the sort of evolving relationship with your European e-marketplace customer, that they had stopped sending volume of sellers to you for a period of time. Now that you've renegotiated that deal, have those volumes picked back up and are they running at where they were pre-renegotiation?
Great. Thanks, very much Ross I think last quarter.
You talked about the sort of evolving relationship with your European.
In marketplace customer that they had stopped sending volume of sellers to you for a period of time now that you've renegotiated that deal had those volumes pick back up and are are they running at where they were pre renegotiations.
Yeah, Hey, Brad Thanks for the question.
Speaker 4: Yeah, hey, Brad. Thanks for the question. So I mean, I'm probably not going to get in the habit of talking about the volumes every quarter for one partner that's less than 4% of revenue. But we did work through the contract change. And just a reminder to people, it's meant to drive adoption. And at the end of the day, we're aligned on the same cause, which is that there's statutory requirements to be compliant with VAT for all these marketplace sellers, the merchants.
So I mean, I'm, probably not going to get in the habit of talking about the volumes every quarter.
For one partner Thats less than 4% of revenue but.
Some weird.
We did work through the contract change as a reminder to people it's meant to drive adoption and at the end of the day. We're aligned on the same cause which is that there are statutory requirements to be complying with that for all of these marketplace sellers the merchants and we and the partner want to get everybody complying and we want to get as many as we can.
Speaker 4: And we and the partner want to get everybody compliant, and we want to get as many as we can on our platform. And so to do that.
On our platform and so to do that.
Speaker 4: You know, there's the customer experience element.
The customer experience element.
Speaker 4: There's the pricing element, and then there's the, you know, the billing business model element. And so we've made some adjustments to go, you know, from annual to monthly billing. We think that that'll help.
There's the pricing element and then there is the billing business model element and so we've made some adjustments to go from annual to monthly billing, we think that that will help that the experience is what the customers want.
Speaker 4: It's the experience. It's what the customers want. You know, they hit a new volume tier, so that brings the pricing down. And so all of that is playing out, as we discussed last quarter.
They hit a new volume tier so so that brings the pricing down.
And so all of that is playing out as we discussed last quarter.
Speaker 4: And I think as we talked about, it'll have some impact on revenue that's reflected in our guidance, and we said it'll have a few points.
And I think as we talked about.
It will have some impact on revenue that is reflected in our guidance and we said it will have a few points.
Speaker 4: impact on billings growth, because billings gets impacted by pricing and by the duration change. And obviously, the duration change doesn't impact MRR or the economics. It's just...
Impact on billings growth, because billings gets impacted by pricing and by the duration change and obviously the duration change doesn't impact MRI or the economics suggest the duration change. So overall, Brian like what I would say is this is a really important partner.
Speaker 4: So overall, Brad, like what I would say is, you know, this is a really important partner.
Speaker 4: We have a lot of opportunity with this partner within the business that we're doing already, and then there are other opportunities outside of that business. And, you know, we think there's a long runway to do a lot more with this partner over the years and continue to grow that business.
We have a lot of opportunity with this partner within the business that we're doing already and then there are other opportunities outside of that business.
And we think there's a long runway to do a lot more of this partner over the years and continue to grow that business.
Speaker 4: And the last thing I would say is we're not depending on them, you know.
And the last thing I would say is we're not depending on that you know.
It was $27 million of revenue last year.
Speaker 4: It was $27 million of revenue last year. It's less than 4% of our total revenue. We're not dependent on them. And we've got over 1,200 signed partners. We're diversifying in the EU.
Less than 4% of our total revenue, we're not dependent on them.
And we've got over 1200 signed partners, we're diversifying in the EU. So its good business and will work through this.
Speaker 4: So it's good business, and we'll work through this. It's not that huge an issue, and we're excited about all the opportunities we have with this partner and with other partners in the international realm.
It's not that huge.
Issue and we're excited about all the opportunities we have with this partner with other partners in the international realm overtime.
Speaker 1: Our next question is from Stan Zlotsky with Morgan Stanley , Airline is.
Okay.
Our next question is from Stanislawski with Morgan Stanley . Your line is open.
Speaker 9: Hi, guys, you have been on for a span. Congratulations on a strong quarter and pipeline for the upcoming year. Just could you talk about what the revenue and billions growth is excluding their European marketplace business? Thank you.
Hey, guys you have done a study on for Stan congratulations on a strong quarter.
Pipeline for the upcoming year.
Just could you talk about what the revenue and billings growth is excluding their European marketplace business.
So so on the billings.
Billings growth excluding <unk>.
Speaker 4: Including at the partnering q3 and q4 with both 29%
The partner in Q3, and Q4 were both 29%.
We didn't disclose.
Speaker 4: For revenue, it's pretty close to the same. So I wouldn't worry about revenue. But for billings, 29% in each of Q3, Q4, or again.
For revenue, it's pretty close to the same so I wouldn't I wouldn't worry about revenue for billings.
29% in each of Q3 Q4 organic excluding the impact of the partner.
Got it.
Speaker 9: Got it. Um, and then 1 more follow up question. Um, you just provide us with an update on your relationship with the big 4 and any possible pipeline that build up that partnership is introducing and near term.
And then one more follow up question.
Can you just provide us with an update on your relationship with the big four and any possible pipeline.
<unk> buildup that partnership is introducing in the near term.
Speaker 3: That so you know I alluded that in some of the other conversations here. I mean, that's one of the journeys that we have to, you know, go forth with.
So I alluded that in some of the other conversations here I mean, that's one of the journeys that we have to.
Go forth with.
Speaker 3: The the enterprise space mean, you know, we've we have a nice relationship with them. You know, it hasn't been our, you know.
The enterprise space mean.
We have a nice relationship with them.
It hasnt been our.
Speaker 3: number one area, enterprise. So we've got some ground and some work to do with them to get up to their full potential. But we see them in many deals, right? We see that, I mean, we're with them with many deals. And I think one of the other questions was, is our surround strategy, it does work, right? Because we see the big four and,
Number one area enterprise. So we've got some ground in some some work too.
Could do with them too.
Get up to their full potential, but we see them in many deals right, we see that I mean with that with them with many deals.
And I think one of the other question was does our surround strategy.
It does work right because we see the big four and eight.
Speaker 3: exemption certificate customers, you know, the big customers in excise fuel, you know, most of our strategic products.
Exemption certificate customers.
The the big customers in an excise fuel.
Most of our strategic products.
Speaker 3: many of the deals. So, I mean, I would say we're doing well with them. The pipeline is building. We see a good relationship with them. But, you know, frankly, I mean, that's an area that we want to continue to grow and get better at as we develop that enterprise space.
Many of the deal so I mean, I would say, we're doing well with them.
The pipeline is building.
We see a good relationship with them, but frankly, I mean, that's an area that we want to continue to grow and get better at as we develop that enterprise space.
Speaker 3: I, you know, I'm pleased with where we are, but there's always room for improvement. Our next question is from.
I am pleased with where we are but there is always room for improvement.
Our next question is from Brent bracelet with Piper Sandler Your line is open.
Great can you hear me.
Sure Joe.
Speaker 10: Sorry, just making sure you can hear me there. Good afternoon. Thanks for the question here. I'm going to ask one question, and I'll direct it towards Ross. I think it's interesting.
Hi, Brad Oh, good Hey, Brent sorry, just making sure you can hear me there.
Good afternoon. Thanks for the question here I'm going to ask one question and ill directed towards Ross I think it's interesting.
Speaker 10: year-and-a-half, two years ago, the Wall Street Narratives was...
Year, and a half two years ago, the wall Street narrowed as was well how much can commerce and E comm be a big driver for forever Lora. Conversely, now people are worried about exposure to E. Com. So Ross could you just maybe put a finer point around what is <unk> exposure to E. Commerce today, as we think about some.
Speaker 10: Well, how much can commerce and e-com be a big driver for Avalara? Conversely, now people are a little worried about exposure to e-com. So, Ross, could you just maybe put a finer point around what is Avalara's exposure to e-commerce today as we think about some
Speaker 10: some tougher compares in the first half of the year there and how we should think about the Avalara kind of exposure to higher or lower volumes given part of the business is volume dependent, part of it is more subscription dependent. Thanks.
Some tougher compares in the first half of the year, there and how we should think about.
The the Avalon kind of exposure to higher or lower volumes given part of the business is volume dependent part of it is more subscription dependent.
Speaker 4: Yeah, I mean, it's a great, it's a great question, Brent, and I just think.
Yes.
That's a great question, Brent and I, just think we're a lot more insulated from the ups and downs of the.
Speaker 4: were a lot more insulated from the ups and downs of the GMB pure e-commerce models that a lot of people watch. And it's funny, and we've talked about this. You go back in 2020, everybody was like, oh.
GMB pure ecommerce model that a lot of people watch and it is.
And we've talked about this you go back in 2020.
Everybody was like Oh, you know.
Speaker 4: you're not gonna do well because of the pandemic. And then we did well, software did well, and it was like, oh, you benefited from e-commerce.
Youre not going to do well because of the pandemic and then we did well software did well and there was like Oh, you benefited from ecommerce and then in 2021, everyone was was really concerned that we and others were going to slow down as a result of e-commerce starting to slowdown in 2021, and you know again I just highlight something we're really really proud of you know we did 30.
Speaker 4: And then in 2021, everyone was really concerned that we and others were going to slow down as a result of e-commerce starting to slow down in 2021. And again, I just highlight something we're really, really proud of. We did 31% organic billings for the year last year, and we did 29% organic revenue growth last year, which was the same as the prior year. So 2020, 2021, we did 29% organic revenue growth.
1% organic billings for the year last year, and we did 29% organic revenue growth last year, which was the same as the prior year. So 2020, 2021 we did 29% organic revenue growth.
Speaker 4: You know, very, very consistent, no deceleration in a year where everyone was worried that, you know, did you pull forward demand? Is it going to slow down? What's your exposure to e-commerce?
Very consistent no deceleration in a year, where everyone was worried that did you pull forward of demand is it going to slow down what's your exposure to e-commerce .
Speaker 4: And as I look forward into 2022 and beyond, you know, e-commerce is one of these great drivers of our, it's one of these four forces along with cloud and along with ROI and along with regulatory that propels our business.
As I look forward into 2022 and beyond E. Commerce is one of these great drivers of it's one of these four forces along with cloud and along with ROI, along with regulatory that propels our business.
Speaker 4: And it's a you know, it's a generational shift. It's for us. It's
And it's a it's a generational shift.
For us it's not about.
Speaker 4: you know, you became an e-commerce company and how much GMV you're coming in. It's about you became an e-commerce company. You may have some stores, you're on some marketplaces.
<unk> became an ecommerce company you know how much GM V are accommodated a value became an E. Commerce company you may have some stores you are.
On some marketplaces, you're selling in multiple channels omnichannel and so therefore, where you used to be able to manage your tax complexity because youre a lot more simple all days are simple yet a story of a single site fewer products whatever selling into few jurisdictions, you could probably handle that but now you are.
Speaker 4: selling in multiple channels, omni-channel. And so therefore, where you used to be able to manage your tax complexity, because you were a lot more simple. Old days, you were simple. You had a store, you had a single site, fewer products, whatever, selling to a few jurisdictions.
Speaker 4: you could probably handle that. But now you're an e-commerce provider, you got some stores, you got multiple marketplaces, you're selling in many jurisdictions in the U.S., maybe beyond the U.S. globally.
E Commerce provider, you've got some stores you got multiple marketplaces are selling in many jurisdictions in the U S. Maybe beyond the U S globally, and you got to be complying with that I mean, saying Zhang accepting status quo and doing that manually is very very difficult to do that's what's driving our business and everyone. That's become an E Commerce company about acceleration.
Speaker 4: And you've got to be compliant with that. I mean, accepting status quo and doing that manually is very, very difficult to do.
Speaker 4: That's what's driving our business and everyone that's become an e-commerce company, that acceleration over the last couple of years, most of those are still out there. They're getting calc on their e-commerce engine, probably from us.
Last couple of years most of those are still out there theyre getting calc in there on their e-commerce engine, probably from us, but they havent solve the rest of compliance they haven't solved returns out and solve exemption, but may not be doing cross border customs and duties and may not be doing use tax and that's our <unk>.
Speaker 4: But they haven't solved the rest of compliance. They haven't solved returns. They haven't solved exemptions. They may not be doing cross-border customs and duty. They may not be doing use.
Speaker 4: And that licensing, all these products we have, we got to go after them and sell them more products. So think about us as you always have, Brent. Consistent, long, strong.
<unk> like all of these products, but we got to go after them and sell them more products. So think about us as you always have Brian consistent long strong business.
Our next question is from Pat <unk> with JMP Securities. Your line is open.
Speaker 1: Our next question is from Pat Walravens with JMP Securities.
Speaker 11: Thank you so much. This is Joey Marincic on for POP. I just want to touch on the hiring environment and sort of back to those sales and marketing investments. You know, how are you thinking about your ability to recruit and retain talent? And then how do you think about the type of talent you, you know, you're looking for as you continue to scale? Thank you guys.
Thank you so much Joe I'm ready to take on for Pat I, just wanted to touch on the hiring environment and sort of back to those sales and marketing investments.
How are you thinking about your ability to recruit and retain talent and then how do you thing about the type of talent you you know youre looking for as you continue to scale. Thank you guys.
Hey, Pat.
Speaker 3: Well, I mean, just as a general note, right? You know, sort of, I mean, I see a sort of.
Well I mean, just as a general note right.
Sort of I mean, I see a sort of struggling with the same things that everybody else in the pack was struggling with right I mean, it's not I mean, this isn't rocket science I mean, it's.
Speaker 3: struggling with the same things that everybody else in the pack is struggling with, right? I mean, it's not, I mean, this isn't rocket science. I mean, it's harder to hire people. It's, you know, you have to, we're having to pay them more, you know, return to the office is an issue, all of those things. But, you know, what I'm really proud of, but from an Avalara perspective is, I mean, we have not seen a change in, you know, our retention rate.
It's harder to hire people.
You have to work at.
We're going to pay them more.
Return to the office as a as an issue all of those things but.
What I'm really proud of it but from an <unk> perspective is I mean, we have not seen a change in.
Our retention rates.
Speaker 3: You know, I think our engagement with our employees is the same as it has been, you know, prior to the pandemic, and maybe even better a little bit. And so, you know, finding people, I mean, is, I mean, something that we've been really, really competitive at. I mean, we've added 1,500, you know, people last year.
I think our engagement with our employees as is the same as it has been prior to the pandemic and may be even better.
A little bit and so finding people I mean is it is something that we've been really really competitive app I mean, we've added 1500 people last year.
Speaker 3: I mean, we've been pretty good at doing that in a lot of different areas.
I mean, we're pretty we've been pretty good at doing that.
And a lot of different areas.
Speaker 3: And we have not seen the same kind of challenge in some of the areas and sales and marketing is one of those as we have in hiring developers, which I'm sure everybody talks about because it's a difficult thing. And a lot of our hiring is happening in the US and outside of that because we're a global company on four different continents.
And I don't and we have not seen the same kind of challenge in some of the areas in sales and marketing is one of those as we have in hiring developers, which I'm sure everybody talks about because it is a it's a different it's a difficult thing and a lot of our hiring is happening in the U S and outside of that because we're a <unk>.
Global company on four different continents.
Speaker 3: So, I mean, I don't think I have anything, you know, I mean, you know, out of the usual to report, you know. I mean, we're doing really, really well. We continue to grow our team, you know, sort of.
So I mean, I don't think I have anything.
I mean.
Out of the usual to report.
We're doing really really well, we continue to grow our team.
Sort of.
Speaker 3: in a large and aggressive way. Developers are always difficult, but we've been able to find our way to keep people and to add the people that we need to grow the business.
In a large and aggressive way.
Developers are always difficult but.
We've been able to find a way to keep people into.
Add the people that we need to grow the business.
Speaker 1: Our next question is from Sterling Otti with JPMorgan.
Our next question is from Sterling Auty with Jpmorgan. Your line is open.
Hi, guys. This is Dan first Sterling.
Speaker 12: Hi guys, this is Achetan for Sterling. Can you please provide details around FX Impact on the portal?
Please provide details around our fixed and back on the portal.
That was the hotels unless I missed it.
FX impact.
Speaker 4: Oh, FX. Yeah, you know, we haven't we've never called out an FX impact. It hasn't been meaningful enough for us. I know you're seeing it with a lot of other companies, international is about, you know, 8% of revenue now. So we're starting to look at it more. But I wouldn't say it's a meaningful thing to disclose at this point in time.
Oh FX, yeah, we haven't we've ever called out FX impact.
It hasn't been meaningful enough for us I know you are seeing a lot of other companies international is about 8% of revenue now so we're starting to look at it more but I wouldn't say, it's a meaningful thing to disclose at this point in time.
Okay.
Our next question is from Peter Levine with Evercore. Your line is open.
Speaker 1: Our next question is from Peter Levine with Evercore.
Speaker 3: Great. Thanks, Dr. Scruze and Ian. Maybe just one for Scott, more high-level, but in your prepared remarks, you kind of sounded excited about your partner channels, but maybe looking at the compliance side of the business, like, what gets you excited about the compliance roadmap? Is it about integrated workflows with tax, AI automation, new product development, kind of that differentiates MLR, but just curious to know kind of what you're excited about on the compliance side?
Great. Thanks, guys for squeezing me in maybe just one for Scott more high level, but in your prepared remarks, you kind of sounded excited about your partner channels, but maybe looking at the compliance side of the business like what gets you excited about the compliance roadmap is it about integrated workflows with tax AI automation, new product development kind of differentiate that valero, but just curious to know kind of.
What you're excited about on the compliance side. Thanks.
Yeah I mean.
Speaker 3: Yeah, I mean, they sort of go hand in hand in this sense. I mean, what I'm really excited about is we have been on an aggressive program to build out what I think to be today, even in direct tax. And as I talked earlier, I mean, moving out of indirect tax and dipping our toe into direct tax.
What I'm really they sort of go hand in hand in this sense I mean, what I'm really excited about is we have been on an aggressive program to build out what I think could be.
Today, even indirect tax and as I talked earlier mean, moving out of indirect tax and dipping our toe into direct tax.
Speaker 3: this broad end-to-end solution that helps customers with their compliance product. This has been one of my dreams, is to build out this whole suite of services so you're helping customers where they need the help throughout that process. You are their partner in going forward with their business.
This broad end to end solution that helps customers with their compliance product mean.
<unk>.
This has been one of my dreams is to build out this whole suite of services. So you are helping customers where they need the help throughout that process. You are their partner in going forward with their with their with their business.
Speaker 3: And I just think the team has done a magnificent job.
And I just think the team has done a magnificent job.
Speaker 3: of pulling our platform vision, pulling our platform together. You're going to start to see some really nice developments around our user experience, around how this is all tied together. I think you'll see efficiencies at the back end of how we're tying all of this together that are really going to be good. Why I say that they're tied together with partners is because this is what partners are seeing.
Ill start with pulling our platform vision pulling our platform together youre going to start to see some some really nice.
Developments around our user experience around how this is all tied together I think youll see efficiencies at the backend of how we're tying all of this together that are really going to going to be good and why I say that they are tied together with partners. Because this is what partners are seeing I mean, this is what gives us our competitive.
Speaker 3: I mean, this is what gives us our competitive advantage. I mean, we've always been really good at finding the next thing in compliance.
Advantage I mean, we've always been really good at finding the next thing in compliance and whether it be right in the early days. It was adding sort of end to end calculation and returns or doing address validation to make the calculations in compliance.
Speaker 3: And whether it be right in the early days, it was adding sort of end-to-end calculation and return.
Speaker 3: or doing address validation to make the calculations and compliance even better. Then you add cross-border, which is just something that should be done right at the time of checkout. So it's the combining of all of these things.
Even better and then you add cross border, which is just.
Something that.
Should be done right at the time of right at the time of checkouts. So it's the combining of all of these things.
Speaker 3: that makes our moat so strong and helps our customers so well. So, it's that combination of how it all fits together, I mean, that's what really gets me fired up. That's what gets me, you know, into the office every day, and that is the journey that you have to do to be part of every transaction in the world. And when you do it both domestically and internationally, I mean, it's really compelling, and, you know, it gets me in.
It makes our moat so strong.
And and helps our customers so well so it's that combination of how it all fits together I mean, that's what really gets me fired up that's what gets me into the office every day and that is the journey that you have to do to be part of every transaction in the world and when you do it both domestically and internationally.
It's really compelling and.
You get me in about.
Speaker 3: You know, about 5,000 other people fired up every single day.
About 5000 other people fired.
Fired up every single day.
Okay.
Our next question is from David Hynes with Canaccord. Your line is open.
Speaker 1: Our next question is from David Hines with Canaccord. Your line is open.
Hey, this is Luke on for D. J. Thanks for taking the question. So SSD I think was 8300 or so basis point headwind to growth. This year, if im remembering correctly due to that compensation formula changed first should we expect any headwind in calendar 'twenty two as you lap that change.
Speaker 5: Hey, this is Luke on for DJ. Thanks for taking the question. So SST, I think was a 300 or so basis point headwind to growth this year. If I'm remembering correctly, due to that compensation formula change first,
Speaker 5: Should we expect any headwind in calendar 22 as you lap that change that I believe took effect at the beginning of February ? And then second, how should we think about its impact on your net dollar retention as you lap that headwind? Is there upward bias there?
But I believe took effect the <unk>.
Beginning of February and then second how should we think about its impact on your net dollar retention as you lap that headwind.
As their upward bias there.
Speaker 4: Thanks, Luke. I think you nailed it. It ends in January , so January will be the last month.
Thanks, Luke I think you know that.
Okay.
And in January so January over the last months.
Speaker 4: where we, starting February , we lapped the compensation formula.
Where we starting February we lap.
The compensation Formula change.
Speaker 4: So, that pricing change headwind that we saw last year, we're over with, ending in January . You should think about, people ask, how do you think about SST growing in 2022? And our view is, think about our returns platform, it's our second largest product, customers in the U.S. have...
So that pricing change headwind that we saw last year were over with ending in January you should think about.
People ask how do think about SSD growing like in 2022.
And our view is think about our returns platform is our second largest product customers in the U S have.
Speaker 4: They have nexus in certain states, some of them are SST states, some of them are not, but they're buying our returns products, some of them need more SST, some of them need less. It should grow somewhere in line with our returns product sales. So that normalizes now.
They are in excess in certain states. Some of them are SST states some of them or not but they are buying our returns products some of them need more ssds on the loss at <unk>.
Should grow somewhere in line with our returns product sales so that that normalizes, now which is which is.
Speaker 4: great. And then on NRR, you know, we've been we've been showing the the revised metric and that revised metric includes SST and excludes professional services.
Which is great and then on <unk>, we've been we've been showing the revised metric and a revised metric.
Includes SST and exclude professional services and the legacy metric. We also still reporting which was the second highest since since IPO that one excludes SST and so what you see is a legacy metric that excludes us D has been rising pretty consistently and the new metric has been.
Speaker 4: And the legacy metric we're also still reporting, which was the second highest since IPO, that one excludes SST. And so what you see is the legacy metric that excludes SST has been rising pretty consistently.
Speaker 4: And the new metric has been flat, not in a bad way. It's been 160%. It's really strong. But it's been flat. And that's because the new one includes SST. So it's getting the hit from the SST pricing impact. The old one does not. So you're seeing it go up because it's reflecting the rest of the business and not the SST impact.
Flat not in a bad way, it's been 160% is really strong, but it's been flat and that's because the new one includes ssds, though it's getting the hit from the SSD pricing impact the old one does not so youre seeing it go up because it's reflecting the rest of the business and not the <unk> impact.
Speaker 4: I expect in 2022, those will move in the same direction, okay? So you should just think NRR long-term. Our ambition internally here is we got a lot of products, we got a lot of customers, we have a huge opportunity to keep selling, you know, more products to our customer base. I think that supports our high NRR rates and, you know, we've said over time we would love to we would love to push those even
I expect in 2022, those will move in the same direction. Okay. So you should just think IRR long term our ambition internally here is we've got a lot of products. We've got a lot of customers, we have a huge opportunity to keep selling more.
More products to our customer base I think that supports our high IRR rates and we've said over time, we would love to we would love to push those even higher.
Speaker 1: Our next question is from Alex Sklar with Raymond James.
Our next question is from Alex Sklar with Raymond James Your line is open.
Hi, Thanks for taking the question. This is John on for Alex just one from us and we've spoken about it quite a bit today, but as you look at the international opportunity. How do you think about all of our direct versus marketplace and other partnerships contributing to your international growth over the next few years.
Speaker 5: Hi, thanks for taking the question. This is John on for Alex. Just one from us, and we've spoken about it quite a bit today, but as you look at the international opportunity, how do you think about Avalara Direct versus Marketplace and other partnerships contributing to your international growth over the next two years?
Yeah.
Speaker 3: I mean, we, as you said, we have talked about it a little bit, but I just, you know, I love saying it, so I'll just say it again. I mean, our DNA, our focus is in partnerships. I mean, you know, we have a rinse and repeat model that we really, you know, believe in in the United States, and we've carried it, you know, into our international market.
Yeah.
As you said, we have talked about a little bit but I just.
I love, saying it so I'll just say it again I mean, our DNA. Our focus is in is in partnerships.
We have a rinse and repeat model that we really believe in the United States and we've carried it.
Into our international markets.
Speaker 3: Partnerships is key to how we believe, you know, the growth is going to happen. I mean, let's just call it the way it is, right? I mean, you can't, we have, to be in this space, you have to have partnerships with the people who create the invoices. I mean, that's.
Partnerships is key to how we believe the growth is going to happen I mean, let's just call. It the way. It is right I mean, you can't we have to be in this space you have to have partnerships with the people who create invoices I mean, that's just a given.
Speaker 3: And so when we talk about international, you know, it's the same motion. You know, we want to go to market with all sorts of different partners.
And so when we when we talk about international.
It's the same motion we wanted to go to market with with all sorts of different partners.
Speaker 3: You know, whether they be marketplaces, e-commerce, ERP, POS, and we're just going to continue to, you know, execute that, you know, model that we have.
Whether they'd be marketplaces E Commerce ERP.
POS and we're just going to continue to execute that that model that we have.
Our next question is from Andrew de Gasperi with Sternberg. Your line is open.
Speaker 1: Our next question is from Andrew Degasperi with Berenberg.
Thanks for taking my question I, just had one for Ross.
Speaker 3: Thanks for taking my question. I just have one for Ross. Particularly when it comes, I know you talked a lot about the marketplace partner and the change on the rate card and duration of the contracts. I was just wondering is this fully reflected in the Q1 guide and then is that impact
Particularly when it comes to I know you talked a lot about the marketplace partnering to change on the rate card and duration of the contracts I was just wondering is this fully reflected in the Q1 guide and then.
Is that impact.
Speaker 3: linear as far as the year is concerned. And then lastly, how do I compare the Q1 growth guidance of 29% or high 20% relative to the full year growth? Is that just a function of conservatism on your part or is there something else at play?
Linear as far as the year is concerned and then lastly, how do I compare to Q1 growth guidance of 29% of our high 20% relative to the full year growth is that just.
A function of conservatism on your part or is there something else at play.
Yes, I mean, the marketplace is.
As reflected in the guide yes.
We don't guide to billings as you know, but we gave some color around we think it's a few percentage points billings remember gets hit a little bit worse than revenue because you got the billings frequency duration change. So just as you guys think about your models and how.
Speaker 4: So, you know, just as you guys think about your models and how you're going to do billings, just keep in mind that, you know, there's, there's a, there's a few points impact from.
Are you going to do billings is keep in mind that you know there is there.
There's a there's a few points impact from.
Speaker 4: Uh, that that partner situation on revenue, it's it's reflected. And then, you know, I think you're, I think your 2nd, part of your question, you know, is around Q. 1.
That partner situation on revenue, it's really it's reflected and then I.
I think I think your second part of your question was around Q1 versus the rest of the year and if that's correct.
Speaker 4: And if that's correct, you know, I think our guidance philosophy has been consistent for years now, and it always starts with the point that, you know, think about as a growth compounder.
I think our guidance philosophy has been consistent for years now and it always starts with the point that you know think about it.
Growth compound or.
Speaker 4: where we can grow revenue organically 20-25% for a long time, build a multi-billion dollar business. We're in a large market, it's early days, low penetration, leader in the space.
Where we can grow revenue organically, 2025% for a long time build a multibillion dollar business. We were in a large market. Its early days low penetration leader in this space all that good stuff that gives us confidence that we can consistently compound growth for a long time and that's the starting point for the guidance for the year and.
Speaker 4: all that good stuff that gives us confidence that we can consistently compound growth for a long time.
Speaker 4: And that's the starting point for the guidance for the year. And a lot of people will say, well, yeah, in the last few years, you've outperformed that pretty meaningfully in the 30s plus.
A lot of people will say well yeah in the last few years, you've outperformed that pretty meaningfully in the 30, plus how do you kind of think about that and it's like any given year, we're going to obviously work hard to exceed.
Speaker 4: You know, how do you kind of think about that? And it's like any given year, we're going to obviously work hard to exceed. It's not a guarantee. It's not a given. I think as we head into this year, we have some really exciting opportunities that Scott talked about. And, you know, the ones that really are there is just like that cross-sell opportunity of all these products to the base, you know, 100,000 end customers, 18,000 core customers.
It's not a guarantee if not a given I think as we head into this year, we have some really exciting opportunities as Scott talked about and the ones that really they really are there. It's just like that cross sell opportunity of all these products to their base of 100000 end customers 18000 core customers.
Speaker 4: All these partnerships, the second wave concept Scott talked about, new partners and expansion of existing ones. You know, international, you know, the direct piece has been largely UK, so expanding throughout Europe and other areas of the globe, you know, just really, really early opportunity there. You know, those are the three biggest highlights. And so, you know, I just think we need to execute on those and we feel good about the opportunities ahead and our ability to deliver, you know, a strong year.
All of these partnerships the second wave concept, Scott talked about new new partners and expansion of existing ones.
National the direct piece has been marginally UK, so expanding throughout Europe and other areas of the globe.
Really really early opportunity there.
Those are those are the three biggest highlights and so I just think we need to execute on those and we feel good about the opportunities ahead and our ability to deliver.
Yeah.
Okay.
Speaker 1: Our final question is from Daniel Jester with BMO.
Our final question is from Daniel Jester with BMO. Your line is open.
Speaker 13: Great. Thank you for squeezing me in. Just two quick ones for me.
Great. Thank you for squeezing me in just two quick ones for me.
Speaker 13: We were talking about the business wins earlier in the call. A cross-border came up a couple of times.
When youre talking about the business wins earlier in the call Cross border came up a couple of times, we've heard that some of the supply chain challenges globally have really disproportionately hit small business and midsized business I'm wondering if you can if that's being reflected in the growth in demand of that product are you able to kind of grow.
Speaker 13: You know, we've heard that, you know, some of the supply chain challenges globally have really disproportionately hit small business and mid-sized business, so I'm wondering
Speaker 13: If you can, if that's being reflected in the growth and demand of that product, are you able to kind of grow through that? And then secondly, Ross, can you just comment, is there any inorganic revenue contribution in the guide?
Through that and then secondly, Ross can you just comment is there any inorganic revenue contribution in the guide thanks.
Speaker 3: Well, I mean, I'll start on the cross-border, and then I'm going to turn it over to Ross for, he can give color to it, because Ross actually runs the cross-border business for us, and then he can finish up with your second question. But, you know, look, cross-border, I think, is a very meaningful part of, you know, of the Avalara growth story in years to come.
Well I mean.
I'll turn on the cross border and then I'm going to turn it over to Ross for he can give color to it because Ross actually runs the cross border business for us.
And then he can finish up.
With your second question, but look at cross border I think is a is a.
A very meaningful part of.
The Avalere on gross store story in years to come so.
Speaker 3: So I would say that we do not see that impact that you were referring.
I would say that that we do not see that impact that you were referring to in our business, but it's early days and we're growing that business.
Speaker 3: I mean, in our business, but it's early days and we're growing that business, you know, you know, quite, you know, quite substantially. And I think it will continue to do that. So, you know, from, from just from a growth perspective, we're not seeing that, that, that supply chain, you know, hitch hit our business.
Quite quite substantially and I think it will continue to do that so from from just from a growth perspective.
Not seeing that supply chain.
Hitch hit.
<unk> hit our business.
Speaker 4: Yeah, and that business is doing really well. And the thing is, it goes back to the earlier question around e-commerce models and GMV.
Yes.
Business is doing really well and I like the thing is it goes back to the earlier question around my E Commerce model and <unk> like if you're shipping cross borders like you have to be compliant with duties and tariffs and import taxes and all of that period right.
Speaker 4: If you're shipping cross-borders, you have to be compliant with duties and tariffs and import taxes and all that period, whether you're doing one thing or a billion things that you're shipping. So while your GMV may go up and down from supply chain, you're either compliant or you're not compliant. You're not supposed to be semi-compliant. So that's the good thing about our business, is you got to do it. And so that business keeps going even if there's issues. And sometimes when there's issues, it's good for us, because it's good for us to do it.
Are you doing one thing or are 1 billion things that you're shipping so while your GM V may go up and down from supply chain urea, they're compliant or Noncompliant theres like youre not supposed to be semi compliance. So that's the good thing about our business is like you Gotta do it and so that business keeps going even if there's issues and sometimes when there is issues is good for us because.
There's heightened awareness.
Speaker 4: So, I think that's, that's going fine. And then on the 2nd question, is there inorganic in the guide? The guide does incorporate all acquisitions, including acquisitions we did in 2021.
I think that that's going fine and then on the second question is they're inorganic in the guide the guide does incorporate all acquisitions, including acquisitions, we did in 2021.
Speaker 4: You know, we said last year that we wouldn't break out or we've been breaking out organic inorganic We always want to be transparent to the extent that these are material. They'll be in our filings
We said last year that we wouldn't break out we've been breaking out organic inorganic we always wanted to be transparent to the extent that these are material Dolby and our filings.
Speaker 4: But the gap between organic and inorganic isn't like 10 points like it was last year. It's, you know, small and, you know, not material in our view.
But the gap between organic and inorganic isn't like 10 points like it was last year.
Small in.
Not material in our view so that's why we're not showing it if it if it grows to be more material to be in our filings and we may talk about it but we don't think there's a need to know and so the way I would.
Speaker 4: So that's why we're not showing it. If it grows to be more material, it'll be in our filings, then we may talk about it. But we don't think there's a need to now. And so the way I think about it is you've got a little tiny bit of inorganic there on the positive side. You've got this EU marketplace situation on the negative side that's probably about balanced out. And therefore, what we're reporting is, we think, pretty reflective of the actual performance of the business.
Think about it is you got a little tiny bit of inorganic there on the positive side, you've got this EU marketplace situation on the negative side, there's probably about balanced out and therefore, what we're reporting is we think pretty reflective of the actual performance of the business.
That will conclude our question and answer session I will turn the call back over to co founder and Chief Executive Officer, Scott Mcfarlane for any closing remarks.
Speaker 1: call back over to co-founder and chief executive officer Scott McFarland for any closing
Speaker 3: Everybody, I'd like to take this opportunity to thank all of our employees. Are great customers and partners for their hard work and support.
Everybody I'd like to take this opportunity to thank all of our employees are great customers and partners for their hard work and support.
Speaker 3: And we look forward to talking to you and seeing everybody as soon as we possibly can. And thank you all so very much for being on the call.
And we look forward to talking to you and being.
Seeing everybody as soon as we possibly can and thank you all so very much for for being on the call.
Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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