So Avalara is a Quiet Giant in SaaS -- that you don't know enough about
At $600m ARR, growing 38%+, it does something both boring AND hard
It sells tax compliance software to SMEs
5 Interesting Learnings: ⬇️⬇️⬇️⬇️⬇️
#1. 15,580 customers, up 20% year-over-year — or $40,000 per customer per year on average.
NRR is 107%, fairly consistently over the past 4 quarters. Good but not great for a $40k deal.
What they do is mission critical, so ACVs from SMEs are pretty high
#2. 1000 partners are key to their GTM strategy. And “in 950 of the partners, Avalara has no competition”.
Like HubSpot, Shopify and other leaders that sell sophisticated, $10k+ solutions to SMEs, partners are key to implementation.
They invest >heavily< here
#3. $180,000 revenue per employee. With 3,351 employees, Avalara is not that leveraged.
We’ve seen this with sales-driven SMB and SME leaders like Xero as well. If you are selling to SMBs, you have to be efficient. Especially if they need a lot of human interaction.
#4. 7% of revenues from prof services — which have 48% margins
Avalara leans on partners to do most of the heavy lifting here (see #2), but they still provide them for larger customers. They mark the services up about 2x. They don’t lose money on services.
#5. Driving upmarket to cross $1B in ARR, but $100k is still a big customer for them
Avalara is fueling growth to $1B ARR by pushing into $100k+ deals, but it didn't rush there.
Their core is still SME and it got to hundreds of millions of ARR while remaining SME focused:
And a few bonus notes
#6. It wasn't a rocketship to start.
Avalara was founded in 2004, took 16 years to hit the first $500m in ARR, in 2020.
But the compounding now is epic.
#7. Gross annual churn of 4%, NRR of 107%.
It’s great to see an SME leader disclose the combo of gross churn and NRR.
#8. Long-tail drive revenue.
Most of us underinvest in our partner ecosystem, see #2 above
A great visual here about how their 1000+ partners bring in revenue and deals for them:
#9. Finally, deal sizes are up across all segments — Small, Medium, & Large
Enterprise is $71k ACV, Mid-market is $36k, SMB is $23k, and small customers are $14k ACV
Deal sizes are all up over the past 24 mos outside of smallest customers
This is how most of us scale
A deeper dive here:
saastr.com/5-interesting-…
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