Avalara, Inc.

a two-way range of $488 to $490 million. As implied by our Q4 guidance, we are improving our full-year 2020 non-GAAP operating loss guidance from a range of $16 to $20 million to a loss range of $7 to $9 million. We are in the early stages of our 2021 budget process and plan to provide detailed guidance on our fourth quarter conference call. That said, I would like to share some early thoughts on 2021. Our thesis and vision have not changed. We are addressing a large low penetrated market opportunity and believe that Avalara is well positioned to deliver durable long-term top line growth of 20 to 25% as we continue to pursue building a global multi-product, multi-billion dollar business. On top of this, we expect the acquisitions of TTR and business licenses to add approximately 30 million in 2021 revenue. This number reflects our early thinking and includes preliminary expectations for deferred revenue write-down. We may refine this number on our fourth quarter conference call. Efficient growth is important to us. In 2020, we have demonstrated our ability to produce positive free cash flow and non-GAAP operating income. However, we believe the momentum in our business, compelling customer economics, and unique position in a large market all support more aggressive investment in 2021. Our early 2021 investment plans result in a non-GAAP operating loss margin. in the low to mid single-digit range and a modest level of free cash flow burn in 2021. This includes additional investments to support our recent acquisitions and enhance our corporate development and integration teams. Thank you for participating in today's call. At this point, we would like to open up the call for your questions.

Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question. Thank you. Your first question comes from Chris Merwin from Goldman Sachs. Please go ahead. Your line is open.

Okay. Thanks so much for taking my question, and congrats on another great quarter. Obviously, a lot going on this quarter, a lot of good things. I wanted to ask about Shopify, actually. So, you talked about converting a Shopify Plus customer to a direct customer. And when we think about that channel, obviously, there's a lot of businesses there. So, can you talk a bit more about the opportunity to create more direct relationships with some of these e-commerce customers, particularly the larger ones, and how that can give you more direct exposure through upsell and, obviously, to be able to cross-sell as well, but more exposure through upsell to the structural growth in that vertical. Thank you.

Sure, Chris. Thanks. I'll start, and then Ross can jump in. We've talked about Shopify, Wix, and BigCommerce, and a lot of the ones that we put in the category of Avalara included. These are relationships that we have where we've done a global relationship to be their sales tax provider. And with our relationship with them, we are put into the box with them and we're doing the calculations with them. The joint task that we have is, okay, now how do you take them and just take them from a calculation customer and monetize them down the road? So we've gotten in the box with these players and then we're our work is just beginning because you want to get them to step up to, you know, returns and the like. And so what we want to highlight in this call is just that transformation. Okay, you're in the box with them. Now, how do you take them and add a much more robust offering, you know, throughout their organization? And that's, you know, quite frankly, you know, been our playbook. You know, we start out and we did this with the ERPs. You get in the box. You start working with them, and then the minute you're on solid ground and your integration is working, you then go out and monetize that channel. So we're early in the process with Avalara included at these low-end, not low-end, but at these e-commerce platforms. And now we're just seeing how we can, you know, continually push and monetize that channel even more.

Okay, great. Thank you. And maybe just a quick follow-up on TTR. I know it's still really early here, but from a pipeline perspective, has that started to open up some opportunities in verticals maybe where you haven't had as big a footprint in the past? And any commentary on the progress with the integration to date? Thanks.

Oh, yeah, Chris. For TTR, it's, I mean, you know I'm really excited about that because any time that we have, you know, additional content, it opens the door for other, you know, for more business, right? I mean, it's one of the levers that you have. You can add more, as I talked about in my opening remarks, you know, we can add more partners, right? and that's a way to increase the market. You can add content, and every time you add content, you are adding more customers to your sales force's ability to do deals. And TTR has a really robust set of content that's different than ours in many areas. And we're able to add that. Now, it's going to take us a while to do that. And I think I said this before. I mean, we've bought content from TTR. We've brought it into our platform before, so we're familiar with doing that. And we think that we can do that over the next year to 18 months. And so each and every quarter, we'll be adding more content to the sales team's bag of tricks.

Chris, I would add it to Ross. It's encouraging. You know, the integrations, they take time, as you know, and they're long-term integrations. But I would say it's encouraging even in the early days as we – one of the first things we did was compared pipelines, looked at deals they're in, looked at deals we're in, where there's complementarity. And I've been involved and are aware of, you know, a few situations already where, you know, you know, we're helping each other out, where there's opportunity that we can help each other out. So I've been impressed with the early developments around, you know, the sales pipeline and the go-to-market synergies we can get from the deal.

Your next question comes from Sterling Audie from J.P. Morgan. Please go ahead. Your line is open.

Hi, this is Sathya Tagarwal on Sterling Audie. So can you give us more colors on the demand and uptake of your solutions in the international markets?

Ross, why don't you jump in on just from a numbers perspective and a thought process, and then I'll give you my follow-on color.

Yeah, so international... You know, we're running the playbook. We talked about earlier in the year in the first half with COVID, international was hit pretty hard. And, you know, it's really come back in a nice way in Q3. So, you know, early on the EU, you know, we saw some softness there. I think we've done well around it in Q3. We've got a strong team, a great leadership bench there. And I think the good news in the EU is we've got good tailwinds on our back. We've got regulatory tailwinds that we've highlighted. We've got the product mix that we need. We've got the sales team and marketing team in place. So that's an area where in the EU we have what we need and we have high expectations, and I think we're beyond some of the the challenges we had with COVID. So we're optimistic there. And then Scott can talk more about it, but we just launched a new product in India. And so we're really moving in India from what's been an engineering center and a cost center to trying to promote a revenue center there. So we've got some early customers, new product launch in India. Scott can probably talk a little more about that one.

So I'm really impressed with the team and their resiliency, as Ross was talking about. And we've said this before, I think we said it on the last earnings call, where the EU is our most mature market from an international perspective. It's one we've had the longest. We feel really comfortable with it. Our product offering gets better all the time. The sales team is really doing well. We talked about our leadership position with our – with our show there that we got 3,000 people to come and listen about all that's going on international. But what I'm really impressed with that is that the majority, I mean the vast majority of those were not Avalara customers. They were prospects. So, I mean, I think we're doing, you know, we're doing really well from that perspective. And, you know, then, you know, Latin America, you know, and Brazil in particular is a good market for us. A lot of, you know, businesses have huge, I mean, you know, it's the most difficult tax regime. And a lot of businesses have, you know, a lot of difficulty. So we're really helping our international customers out in that area. India is the least developed. And as Ross said, it's just a brand new area. But it really simplifies what's happening internationally. I mean, India changed its tax regime. I mean, it changed the GST and created this immense opportunity that our teams in Avalara, you know, built the product, got it out, and we're in the market and we're starting to sell. So, you know, what I like about international, it goes across the whole gamut from, you know, more mature companies to really emerging. And then, obviously, international will expand beyond just those three markets as we move into future quarters.

OK, so just a follow up on the business acquisition. So how does that impact our employee count and what would be the revenue ? Yeah.

We have right around, I think, 3,000 employees, and this is an additional 100, as I said in my remarks. So it's a smaller number of people here all in the United States. So it's just sort of business as usual from our perspective.

Yeah, and on the revenue side. Just to add on the revenue side, we said in the prepared remarks to think about TTR and business licenses combined adding about $30 million of revenue in 2021.

Your next question comes from Brad Chills from Bank of America. Please go ahead. Your line is open.

Oh, great. Hey, thanks, guys. I wanted to ask about the SST program. Congratulations on the renewal there. I know that's an important program. Can you describe a little bit for us what that does beyond just the business itself, the revenue you generate from the licensing? When you bring in a customer through SST, what have you seen historically with these customers as they've grown with you? They start out small with a smaller footprint of state that they're filing in. And just any commentary on kind of that customer set and so we can think about that kind of going forward in the model.

Sure, Brad. We talked about this in the past, but SST is an area that's been around for a long time. I mean, it was one of the first things that we did when we started our business. We got certified, I think, in 2005 or 2006, back in the day, and we thought it was really significant because It was a state program that people had to get approved for, and we were one of the three original companies to get approved for that. And I think it was actually one of those things that made Avalare what it is today. Because we distinguished ourselves from everybody else. And when we were doing OEM deals, you couldn't bet that it was not going to be this really powerful force. Now, it turned out not to be that big of a deal in the very beginning. it just blossomed again because now all of these businesses, I mean, all these states had a program where they were paying for the customers to do transactions. They're paying us a percentage for the transactions they are doing. So it's a win-win for everybody. The state collects the revenue, we get paid by the state, and the transactions are free to the businesses. I mean, that's a tremendous tailwind, you know, for us. And so, you know, we've, you know, just really developed that, you know, SSP program into something I think that's a meaningful competitive advantage for us. And it really helps the customer. But for the most part, it's not something that they grow into in your specific question. I mean, they grow as their transactions grow, but the minute that they do it, all of their transactions are free to them. So they're incented to do whatever they need to do there, and we get a percentage of the tax collected from the state. So right off the bat, the minute they start doing it, it's meaningful to Avalara and the customer.

That's great. Thanks, Scott. And then one more, if I may. Ross, you mentioned some pent-up demand that kind of you caught up in Q3. Some of the trends you mentioned earlier in the call that are driving this acceleration, e-commerce, cloud, omni-channel, these are very compelling tailwinds that you would think are ongoing. Just trying to parse out how much of your success you saw in Q3 came from some of that pent-up demand when the underlying trends in the business, some of these drivers of growth seem to be very compelling and not accelerating.

Good question. The underlying drivers that we talk about, you know, e-commerce, cloud, ROI, you know, we've always said and we still believe these are long-term sustainable drivers and tailwinds for our business. And, you know, to me they sustain in a world with COVID or without COVID. So I think, you know, we've shown that this business is strong in good and challenging times. I wouldn't over-index on the pent-up demand point, Brad. I think when you think about, you know, billings as a proxy for the end market demand, you know, we said we were happy that we accelerated from 22% growth last quarter to 31% this quarter and commented that, you know, the first half of the quarter was higher than that on the growth rate and the second half was lower than that. And so the point is, there's a little bit of lumpiness than usual because I think there's some lingering deals in the pipeline that, you know, would have closed earlier in the year, but because the COVID people had delayed. So that's really the point. And as we think about modeling forward, you know, we think about what we saw in the back half of the quarter as the building's growth rate that we're thinking about modeling forward.

Your next question comes from Pat Walraven from GMP. Please go ahead. Your line is open.

Hey, guys, this is Joe Marincic on for Pat. Thank you for the question. Scott, I was hoping you could talk about ATR and why is that so important for enterprise businesses? Thank you.

Sure. So in our standard business, in the standard mid-market business, they are concerned about getting sales tax rights. They're concerned about, you know, but it's not something they want to spend a lot of time on. and they just want it done for them uh as you move upstream all of these uh the larger businesses all have big tax departments and and they and they all have their own research teams and they all have their own ways of thinking about how they want to classify their products how they want to tax They make, you know, they do custom rules, and that's what the advanced rules does. It allows them the flexibility to create the taxing environment in our software that best fits them and their needs as they see it. So we've been focused on making it simple and easy for businesses that don't have that kind of technical and tax expertise in their business. This allows the most advanced people in tax to do what and when they want to do. And so it's just one of those things that if you're going to be in the enterprise space, and I've said this all the way along the line, you need that functionality for many of those customers. It just wasn't something that we had on our radar screen for a number of years. We were opportunistic. We got deals that it didn't require that, but there are a lot out there that do, and it was just time for us to step up, get that done, add that to things like cross-border, add that to exemption certificate management, and then consumer use. Those things together may create a really strong enterprise offering.

Super helpful. Thanks, guys. Thanks.

Your next question comes from Brad Reback from Steeple. Please go ahead. Your line is open.

Great. Thanks very much. Ross, back on your commentary around the second half of the quarter, slowing from the first half of the quarter, Without getting too granular here, but can you give us a sense of if November – in October, I should say, we saw a firming of the demand pipeline?

No, I'm not going to – we never comment on the current quarter, Brad. I mean, look, overall, Q3, strong quarter. You saw our results. Billings accelerated from 22 to 31. Revenue accelerated 30. Gross margin 75%, positive operating, pre-cash flow, positive non-gap operating income. So, you know, business is working. It's working in the enterprise. It's working in the market. It's working in ESB. It's working internationally. We're benefiting from e-commerce. We're benefiting from cloud. We're benefiting from ROI. so we feel really good about the business and things are working. I'm just, you know, I've been giving you guys color. You know, we stood in there and guided from the beginning. We gave monthly color so we could be transparent, so I just wanted to give you a little color. You know, June had strong bookings, and I think July first half of Q3 benefited on the billings number, and You know, the back half was also strong on Billings, but it was just lower. So nothing to worry about, Brad. I'm just trying to give you a little extra color. Perfect.

Thanks very much.

Your next question comes from from Mizuho. Please go ahead. Your line is open.

Hey, thanks for taking my question. I just wanted to ask about your success going down market. You guys introduced a couple of products, returns for small business and then sales and use tax. And then we saw marketplace facilitator laws that was enacted. Now some of these marketplaces, they are doing sales calculation and sending referral to you. So I'm wondering what sort of success you have seen you know, early success in Q3, and how big is that opportunity going down market?

Sure. Look, I mean, we really believe, and we've said this all the way along the line as we talk about it, the biggest market in this space is the mid-market. It's where the biggest TAM is, and that's where we started. But having said that, We want to move downstream to capture the businesses as they start to grow, because nobody starts out as a business that's an enterprise company or even a mid-market. They start out at the lower end. And that is a play that has to be done through partnerships. And as I've always said, or at least our playbook and our strategy is that you must win that mid-market. And once you win that mid-market, you then get the street cred, if you will, to be able to move downstream and to be able to do those large partnership deals. You cannot go after the low end of the market without winning the large partnerships. and and so and and then as we said in the i think on the first question once you win those large partnerships then for the rest of you know eternity you are working there to uh to monetize that business and if you can do that and when you do that i mean that there is a you know a substantial you know a substantial pan and a substantial market to to to have there but it just takes A LITTLE BIT LONGER TO DEVELOP THAN IT DOES AT THE MID-MARKET AND EVEN AT THE ENTERPRISE SPACE BECAUSE YOU HAVE TO WORK THROUGH THOSE PARTNERS OVER A PERIOD OF TIME TO MONETIZE IT WITH PRODUCTS OTHER THAN TAX CALCULATIONS. So I think it can be a fantastic market for us. It just is going to take time to evolve and monetize as we push through that market. The key to it, though, is you must win those deals. I mean, every one of those deals are competitive, and you must be the one that people – So you have to have a good tax calculation. You have to be able to do registration. You know, you have to be able to do returns. You have to be able to onboard those customers. So it's one of the things that plays really strongly to Avalara's sort of competitive mode, if you will.

That's a great color start. So another high-level question about state enforcement. We saw almost last year almost all states started enacting this economic nexus law. Then this year we are seeing most of the states now struggling in terms of revenue. What could they do or have you started seeing states enforcing this kind of law?

So, I mean, that's a great question because, I mean, the states are really in a tough spot if you stop and think about it because, you know, one, they obviously they need revenues. But the minute COVID came out, everybody started to say, how can we help small businesses? How can we help businesses? And the first thing that everybody did was say, okay, we're not going to give you a hall pass on when and how you pay sales tax. And it just further really pushes them down. Now, without stimulus packages and things like that, businesses are still struggling. So I think states are reluctant. to really jump in and be, you know, the enforcement arm right now. But having said that, the states are developing digital ways to see what businesses are doing. So what are, you know, who's selling in their states, who's not registered with their state, because that's a key thing, registrations. That's how they know they are matching registrations with marketplaces. I mean, information is starting to be developed for them, and businesses are starting to be able to provide that kind of matching to the state, and they will start taking that and enforcing it in the future. And there's all sorts of different things that they're looking to do. But in the end, that's what the bottom line is. How do we get visibility into who's doing business in our state and matching it to registration?

Your next question comes from David Hines from Canaccord. Please go ahead. Your line is open.

Hey, guys. This is Luke on for DJ. So you've said in the past that I think e-commerce drives around half of customer transaction volume. ARR related to e-commerce customers has grown at around a 50% CAGR over the last three years historically. So, you know, just thinking about it, you've provided some color here already, but I was just wondering if you could just expand on how you're thinking about

the recent acceleration in e-commerce adoption impacting demand for your product stack going forward thanks rosh you want to you want to jump in on that on that one and we can yeah talk about sure oh beta status and things like that so yeah dj look it's um or luke thanks for taking the call um we're definitely benefiting from e-commerce um you know we've got a lot of customers that are either, you know, full e-commerce businesses or hybrid. You know, it's hard to think about a customer anymore that's just a point-of-sale retail store business. You know, everybody is getting into e-commerce, and we stand to benefit from that. And when you think about the pipeline that we've called out in the past, you know, there's over 1 million customers e-commerce users on the Shopify and the Big Commerces and all those. And we're getting them, because of our relationship with those platforms that were built in, when Shopify adds a user to Shopify Plus, they come on our platform. And then we do the calculation for them. And so the name of the game, as Scott was talking about before, is to continue to deepen the partnership with these customers and to get more and more of their customers tackling our platform. And then we know who they are, and then our job is to target them and sell them on other solutions that we have. And now we have many solutions for tax compliance that we can sell. And so every quarter we're focused on upselling these customers, converting them to Avalara direct customers and monetizing more fully. And so that's really how it's working quarter in quarter out for us.

Let me see if I can't, I mean, that's a great question and I'm glad you asked it because I think this will help understand, help everybody understand, you know, why Avalara is a special company in this case. First off, when we – and a little color around monetization. What does that mean? Okay, we are in the lower end of the markets, you know, the Wix's big, you know, big commerces and Shopify, a lot of customers down there. The key is that you're doing calculations for their e-commerce business. But people don't file out of their e-commerce solution. They file out of their ERP's. And what's interesting about that, so the minute we get the big commerce customer, you then want to go get their ERP. Avalara, with 1,000 partnerships, is in the best position to be able to aggregate all of their transactions. Because that's what this is about, aggregating transactions. Because not everybody is doing everything just on Shopify. They may be doing it on many different types of platforms. You pull all of your transactions together, and then you file. And the ability to actually do that is it is how you monetize you know the e-commerce relationship and yes the uh e-commerce market is doing you know really really well but as i was saying we're uh you know we're a low beta right i mean customers buy huge transactions for us and so for being with us in bands and it doesn't go up oftentimes as much as you might think, but it does not, as we've proven through this COVID, does not go down as well. So, yes, it's a tremendous market for us. It's very, very steady. And the minute we get it, we have this ability to upsell, monetize, and to get the rest of their business. I hope that helps.

Yeah, that helps a lot. Thanks a lot, guys. I appreciate it.

Your next question comes from Alex Sklar from Raymond James. Please go ahead. Your line is open.

Great. Thank you. Scott, you've got a lot of new products and upgraded features and functionality that have hit this year and that are coming up in the medium-term roadmap. But TTR and BL acquisitions both seem like they're solutions that your sales force can actually lead with. I'm curious how much that was factored into the acquisitions. And with your existing product portfolio, any other products that you've had success in terms of landing new logos outside of calculations?

Thanks. So it's a really good question and a good observation. I mean, what we're always looking for I mean, I talk about the four horsemen of sales tax. There are five if you include that, right? You've got sales tax. You've got consumer use. You've got exemption certificates and returns. Every business in the United States has one or all of those as a problem. So what we're trying to do is provide entry places for our sales teams to talk to customers. If you don't do sales tax, highly likely that you're doing consumer use or you're doing exemption. you know, and everybody's doing, you know, returns. So you have an avenue to talk to them. Now, I've always, I've loved, as I said in, you know, before, I've loved TTR because some businesses start with you because they just want to buy a subscription for their, you know, uh for their for their tax experts but once you have you know once you're engaged with them they understand your you know all of your tax rules and you're helping them with audits and all the other things that they're doing then then it's a nice upsell to calculation and returns and the and the like and the same thing with business licenses look at it's this is the it's a great um uh position to be in when small businesses have to come to you to register because the minute they register, you then have a chance to talk to them about returns or about calculations or about other licenses. And in the end, you're always trying to add more products to them because it makes it a stickier, you know, sale and you just get advantages that way. So, yeah, it's a strategy that we've, you know, that we've employed and we're going to continue to do that.

Okay, great. And then just one follow-up for you, Scott. Just in terms of the BL acquisition, you already had a licensing and registration product. This obviously expands on that. um was this something that your customers were already asking you to go to i know i know you have a broader kind of vision to be part of all of global compliance i'm just curious if this is an area that you've been asked to go and if there's any other ancillary kind of compliance areas that have been pain points that you've been asked to go by your customers thanks you know um uh

Well, I really like this one. I mean, I've known David and Alex Abe for a long time. I've known them for a long time. They were in this business, and they actually came up with the first business. the sales tax file that would be sold to businesses. And they ended up selling their business and then starting this because it was a niche in the market that they saw that there was a lot of demand. And so I've watched them and talked to them about what they've done for many, many years. I've seen how their business has grown, how they can take that content, sell it just like we do. And I've known all the way along the line that we could take their services and sell that to our customers because there's a need for businesses to do that. So we don't lead with it. I don't get at a trade show, nobody comes up to me and says, hey, do you do licenses? But we've watched what they've done and watched what they've developed and had that partnership with them selling business licenses, registrations, and we knew that we could add that to the bag and sell it down through our channel. So it is a little bit of a divergence for us. It's a lot like cross-border. You asked, do we have other examples? Cross-border would be just that same way. I mean, cross-border doing duties and customs is something that should happen at work. the time of checkout. It just should. That's where it makes the most sense. Now, every once in a while a customer will say that, but when you develop and put it in there, it's like, oh, my gosh, that's exactly what I need. That's exactly where it should be. So, yes, you're talking to customers. Yes, you're getting an idea. But in the end, I mean, sometimes we can see that even in advance of where the customers are and really help them out.

Your next question comes from Brent Braceland from Piper Sandler. Please go ahead. Your line is open.

Thank you. One for Scott. Quick follow-up for Ross. Scott, you've now had, looks like, what, 30 days since announcing TTR. Any large enterprise or partner feedback that surprised you so far?

You know, I think I said this when we did our conference call and the like. What just shocked me to no end was how much the TPR customers loved them. I mean, with a 76, I think that's what it was, a 76 NTF. score, and then all of our due diligence and follow-up with their customers, it was amazing how much they're trusted and liked by their customers. But what I've also seen, because Sean has shared much of the feedback to me with our customers is that they appreciated the sale to Avalara. So that's, I mean, that's what was also interesting, that they would reach out, say, hey, you know, glad you sold. You know, if you trust Avalara, we trust Avalara. I mean, just the feedback that we're getting was amazing, and it really validated why I think it was a great acquisition for us.

Great. And I guess, Ross, you know, I appreciate the tempered enthusiasm here. I think Bill Ingram's smiling out there somewhere. But I'm going to push back a little bit. Subscription revenue, I think, was up, what, 10% sequentially. That's the highest sequential rebound in any quarter of 2019 and 2020 so far, the highest Q3 sequential increase, I think, in four years. I appreciate kind of the pent-up demand. you know, having some contribution, but it does feel like there is something kind of different happening here. You've got a lot of new products moving up market, moving down market, the econ tailwinds. It just feels like there's a lot of momentum and the strength feels like it's broad based. And so just trying to understand, as you think about the components of what drove again, this highest sequential increase in subscription revenue in quite some time, how much of that is sustainable, is durable, and is tied to a lot of the trends you guys have been working on for the last couple of years?

Yeah. No, Brent, it's a good question. I mean, look, I think, as I said earlier, it was a good quarter across the board. Everything's working, you know, across the different customer segments, geographies. You know, the new products and acquisitions, that's pretty new. So, you know, I'm not going to say that we have some early successes on some of those cross-borders working. We're seeing some nice results out of consumer use. So we are seeing some results from these products, but these are long-term things and these are long-term trends. You know, we had, you know, a few million more than we expected this quarter, you know, and that's why I called out. I think that there was some you know, some extra demand that's been in the pipeline that didn't come in in Q2 because of COVID that came through. And so I think there's a little extra than that that delivered a higher result this year or this quarter than it has in past years. So, look, overall, Brent's business is working well. We're proceeding with cautious optimism. We're pleased with the results. And, you know, we want to be cautious going forward. We're still sitting here in a pandemic. My kids are still doing school from home. We don't know when this is going to end. And, you know, we're happy with the business, but we want to be cautious moving forward.

Totally makes sense. Appreciate that. Thanks, guys.

Your last question comes from Matt Stotler from William Blair. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my questions. Keep it pretty brief. I know we're... been a long, long call. So just in terms of enterprise functionality, obviously you guys have been adding a lot of key pieces this year, consumer use tax, integrated cross-border custom rules, TTR acquisition, et cetera. And then your commentary that this, you know, you've kind of reached a stage where you see yourselves as, you know, kind of on par from a functionality perspective with some of the enterprise competitors out there. I would love to just, you know, get some color uh in terms of you know i guess what the enterprise or sorry uh engineering focus is from here in terms of kind of you know outside of just you know continuing to add the content database what are you focused on in terms of your remaining crucial pieces of functionality going forward uh or should we now expect to see you know more of this shift towards adjacent market opportunities which we obviously just got a flavor for with uh with bl it's a it's a great math great question thanks um what i think we're going to continue to see us you know us do is

is really focused on usability, making everything that we do completely simple, integrating all of these products into one UX experience. And we'll just continue to build out all of our areas, right? I mean, there's a lot more that we can do in cross-border. There's considerably more that we can do in driving some of the verticals that we're talking about, telco, fuel, hospitality, working on partnerships. You know, as one of the things I said in my prepared remarks is, you know, we'll continue to push, you know, returns for small businesses and fiscal representation. So I would say that what we would do is that we're in the, you know, the V1, V2 development of all of these things, and it's going to get better and better all the way down the line. And then, as you said, I think we've, you know, signaled, that we want to be a global cloud compliance platform. And so you'll see lots of things happening as we pull all of these things that we've got together and we explore how we can grow our international presence.

And Matt, the only thing I would add is As you know, following the story, we've been opportunistically enterprise. And so it's moving from being there when customers want to displace or want to adopt and being in that fight and winning a good fair share of deals to to taking all the pieces, you mentioned them all, you know, consumer use, cross-border, ATR, TTR, business licenses, everything that we have, and really making it an enterprise suite, like an integrated enterprise suite, as Scott called out, and shifting to go to market to really, you know, like really focused on marketing that actively to the enterprise customers out there. so that we're increasing our game up there from being what we've called opportunistic to something more forward-leaning than that. So that's all coming together now between the go-to-market and all these great products that we have.

Got it. Yeah, super helpful. And then just one more follow-up on the enterprise. So one thing that enterprise customers place a lot of value on is obviously this white glove support. You're looking for technology providers to be more partners and vendors. So as you move up market, any thoughts on how you expect to build out those capabilities? Is that something that you expect to do internally? Or is your strategy more leveraging partners? Or what are you going to do to try and provide this kind of deep level of service in that segment of the market?

Great, great, great observation. You know, one of the things that we've done in building Avalara, part of our playbook, which has been entering markets like some of the strategic initiative markets like we've done with fuel, telco, hospitality, all of those have come with, you know, large enterprise focus. You know, I mean, we do nine out of ten super fuel companies in Exide. But And so we've been learning the white glove process. I mean, we were a mid-market company when we started. We've been buying these businesses, learning it. TTR was a significant step forward in building the muscle around white glove service. So it's something that we're going to have to build and invest in in the coming year. We're going to continue to drive to do that because you have to do that, as you say. The one interesting thing that you talked about, which is are you going to do that internally or are you going to do that through partners? Avalara is a partner-centric company. So the very first thing that we think about is how can we, you know, utilize the big four, how can we use system integrators, how can we, you know, develop that relationship, which is something that's new and different for Avalara at that high end of the you know, of the market. And we're going to continue to push and develop that muscle. And, you know, at some of the lower ends of the market there, we'll be doing a lot of that, you know, professional services ourselves. But whenever we can use a partner, that's our first choice.

We have no further questions. I would now like to turn the call over to Scott McFarland, co-founder and CEO, for closing remarks.

I'd like to thank everyone for joining us today. You know, we continue to focus on bolstering Adler's leadership vision, driving growth and achieving our vision to become the global cloud compliance platform for every transaction in the world. I just ask everybody that, you know, please stay safe and healthy. And we look forward to next quarter's call. Thanks, everybody. Really appreciate it.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

THE END Thank you.