According to a Fortune Business Insights report, the global tax management software market is estimated to grow at 10% CAGR to reach $11.19 billion by 2026 driven by the growing adoption of Machine Learning and Artificial Intelligence technologies within the space. Seattle, Washington-based Avalara (NYSE: AVLR), a leading player in the market, recently announced its first quarter results that surpassed market expectations.

Avalara’s Financials

Avalara’s Q1 revenues grew 31% over the year to $111.4 million, ahead of the market’s forecast of $108.1 million. Non GAAP loss was $0.05 per share compared with the market’s estimated loss of $0.11 per share. A year ago, Avalara had reported a loss of $0.01 per share.

By segment, subscription and returns revenues grew 35% to $105.5 million and professional services revenues fell 12% to $5.9 million.

Among key metrics, total deferred revenue grew from $161.2 million a quarter ago to $165.4 million. Calculated billings grew from $96.4 million last year to $116.7 million. It ended the quarter with approximately 12,710 core customers, up from 11,960 core customers a quarter ago and 9,700 a year ago.

Avalara expects to end the second quarter with revenues of $109-$111 million and forecast revenues of $455-$465 million for the year. The market was looking for revenues of $110.99 million for the quarter with a net loss of $0.08 per share and revenues of $459.4 million for the year with a net loss of $0.22 per share.

Avalara’s Covid Impact

Avalara is seeing mixed results from the Covid crisis, but it believes it is well-positioned to grow within its customer segments. With businesses being forced to move to remote working, they are seeing significant shifts in adoption of SaaS services and digital technologies. It is leveraging these opportunities by announcing several new products, partnerships, and integrations.

Among new product releases, Avalara launched Avalara Returns for Small Business, a product that will help small businesses automate the sales tax return preparation process and eliminate the need of manually filing returns to each state website. Businesses will be able to spend their time focusing on business functions instead of worrying about state tax compliance issues. The product will also help save costs to stay compliant.

It is also leveraging AI capabilities in its solutions. It recently announced the availability of its AI-based tax classification tool that will allow Avalara AvaTax users to classify their products or services to accelerate the taxability determinations for their US domestic product catalogs. Users will be able to answer contextual questions to help determine the correct tax codes for products. The solution will also reduce the turnaround time for product classification.

Recently, it announced an expanded partnership with BigCommerce. The new agreement will make Avalara BigCommerce’s preferred partner. The status will allow BigCommerce customers to have access to Avalara’s existing suite of end-to-end tax compliance solutions and will help them automate sales tax management. BigCommerce small business customers will also have access to special no-charge sales tax calculations offers along with the ability to use the latest product, Avalara Returns for Small Business.

In terms of integrations, it announced the release of 20 newly certified integrations with several business software applications. These integrations will allow customers of Avalara partner solutions to get access to Avalara’s real-time calculation of applicable taxes for billing line items. Integrations were announced with ERP solutions like Aptean Apprise and Nextworld, CRM tools such as Commerce7 to name a few.

The market is pleased with Avalara’s performance. Its stock is trading at $134.14 with a market capitalization of $10.5 billion. It touched a 52-week high of $138.80 last week. The stock had fallen to a 52-week low of $55.50 in March this year when most stocks had fallen. Avalara had listed in June 2018 by raising $157.5 million at a valuation of $1.4 billion. Its stock was priced at $21 at the time of listing. Prior to listing, Avalara had raised $341 million from investors including Battery Ventures, Sageview Capital, TCV, Arthur Ventures, and Warburg Pincus.