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Avalara's (AVLR) New Product Simplifies Exemption Certificate Collection

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Avalara (AVLR - Free Report) recently announced the launch of its new product, Exemption Certificate Management Pro to help small- and medium-sized companies to simplify exemption certificate collection and compliance management.

Businesses are sometimes exempt from paying sales tax on certain specific taxable purchases. However, they are required to provide an exemption certificate to the vendor at the time of the transaction. But with online sales finding global precedence, vendors are required to collect and validate exemption certificates in bulk and quickly. Several companies still file for exemption certificates manually, which costs more time and is prone to errors that can lead to costly audits.

Avalara Exemption Certificate solves this problem as the first AI-powered automation tool globally for exemption certificate management. The exemption certificate is an automated document validation tool that leverages AI and OCR to automatically scan compliance documents for data entry and certificate validation, which will save time and audit costs for the company.

Avalara has created this product specifically for small- and medium-sized businesses. However, with the Transaction Tax Resources acquisition in 2020, Avalara has not only been creating compliance management solutions for SMBs but also investing heavily to develop products for large enterprises and Fortune 500 companies to address businesses of all sizes.

Avalara Benefits From Strong Investment Strategy

Avalara has been investing heavily to broaden its product portfolio and win market share via mergers and acquisitions. As the company finally surpassed the $1-billion mark in revenues since IPO, the company has been focused on increasing profitability and improving business operations to meet the break-even point in investments.

This strategy has resulted in an impressive 37% revenue CAGR since IPO and positive cash flow for three consecutive years.

Avalara strongly believes that with the ongoing adoption of cloud-based business applications and omnichannel selling platforms, every business will adopt tax automation. With its unique offerings like the Exemption Certificate Management Pro, Avalara is well-positioned to capture a leading share in an expanding market and enjoy a competitive moat.

As it enjoys a diversified and loyal customer base, Avalara is focused specifically on five areas of the business. Firstly, to increase revenues by cross-selling more products to the existing customer base and secondly, to win more partnerships. Thirdly, the company is focused on reaching out to large and small enterprises in addition to the core SMB market. Fourthly, to expand its customers’ international presence in new and emerging markets. Fifthly, to enhance operational efficiency to increase profitability.

As Avalara continues to invest in a broadening product portfolio, it is attracting new customers. In the first quarter of 2022, the company had more than 1,200 signed partner integrations who were ready to use Avalara’s products. In the first quarter of 2022, Avalara had inked an agreement with Shopify (SHOP - Free Report) to expand its services supporting beyond Shopify Plus.

Avalara has already been supporting Shopify with cross-border duty and import tax features and automation of the taxation process.

Avalara is looking to expand internationally with its acquisition of INPOSIA to address the next significant compliance tailwind. The company believes that in the future, companies will move to e-invoicing completely as governments across 60 countries are coming out with legislations that require e-invoicing or tax reporting. As such, Avalara can leverage Inposia’s e-invoicing services and win significant market share in the growing market.

Zacks Rank and Stocks to Consider

Avalara, currently carries Zacks Rank# 3 (Hold), is a stock worth retaining in the portfolio; here are some better-ranked stocks to consider in the broader sector to gain more returns.

AVLR shares have fallen 41.1% in the year-to-date period compared with the Zacks Internet – Softwareindustry’s and the Zacks Computer TechnologySector’s decline of 47.2% and 26.7%, respectively.

Analog Devices (ADI - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ADI shares have fallen 11.7% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixedindustry’s decline of 19.2%.

Cisco Systems (CSCO - Free Report) presently carries a Zacks Rank of 2.

Cisco shares have decreased 21.8% in the year-to-date period compared with the Zacks Computer-Networking industry’s decline of 22.2%.

In-Depth Zacks Research for the Tickers Above

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Analog Devices, Inc. (ADI) - free report >>

Cisco Systems, Inc. (CSCO) - free report >>

Shopify Inc. (SHOP) - free report >>

Avalara, Inc. (AVLR) - free report >>