Avalara Q2 2022 Financial Analysis

Avalara's Claim That That a Majority of Analysts Support the Deal is Misleading Following review of the proxy statement, majority of analysts endorsed the timing of the sale and the attractiveness of the deal price Timing is Right Avalara "The filing also enumerated a number of compounding operational and market-related challenges that have been building in recent quarters, introducing substantial amount of uncertainty regarding the company's ability to execute on its strategic vision over the next couple of years... Given the incremental information provided in the proxy filing, we see another offer as unlikely." William Blair, 24-Aug-2022 "We continue to believe that the agreed-upon acquisition by Vista will remain the best near term offer for AVLR... we believe shares would likely face significant near-term pressures should the sale not proceed until investors can gain greater confidence on its recent investor day outlook." -Raymond James, 23-Aug-2022 2 This selective quote merely states that another offer is unlikely 1 Price is Attractive vs. Standalone "We believe the company is fairly priced as it was sold to Vista Equity Partners because: 1) several additional PE firms contacted Avalara financial advisor... none submitted any oral or written indication of interest following the initial contact, while no strategic party expressed interest; and 2) Avalara's 2022 revenue came in below expectations and there is uncertainty surrounding the company's expected performance..." -IMP Securities, 29-Aug2022 "In Vista (Avalara] found a partner with a proven track record of driving efficient growth, so it would not surprise us to see Avalara reemerge in the years ahead with a different look... when you assume forward estimates were very likely moving lower, the multiple becomes even more appealing." -Canaccord Genuity, 8-Aug-2022 2 3 Piper Sandler, 8-Aug-2022 "This acquisition was announced in conjunction with Q2 results that were mixed with the lowest q/q subscription growth rate of 1.9% in five years and a sharp moderation in calculated billings growth that slipped to 17% vs. 28% last quarter. Justification of a higher premium appear challenging from a timing perspective given the uncertain macro backdrop and mixed operating results." SOUDE WON Notes sided for aidil emph William Blair's full remarks on the deal, which Avalara omits, were: "Given Avalara's leading position in the large and underpenetrated market for tax compliance automation software, our initial view is that the proposed transaction price is somewhat underwhelming."1 Only states that Avalara's price may face near-term pressure if the sale does not proceed On the deal, Raymond James also stated: "[W]e are a little surprised at AVLR'S willingness to sell at $93.50 given its recently laid out medium-term targets ($250 million of FCF by CY 25) and an aspirational goal of reaching $3 billion in revenue. "2 3 Like other analysts, Piper Sandler notes that a higher premium was unlikely to be obtained given the macroeconomic environment and the Company's mixed Q2 operating results; we believe this reinforces our view that now was not the right time to sell the Company 4 Even if we assume that every analyst on this page is supportive (which we do not believe is the case), Avalara has 13 coverage analysts covering the stock;³ to claim that a "majority" of analysts "endorse" the deal is misleading Avalara appears to be misinterpreting analyst sentiment to manufacture support for the transaction 1 Source: William Blair Analyst Note, August 8, 2022. 14 2 Source: Raymond James Analyst Note, August 8, 2022. 3 Source: Bloomberg. Altair US, LLC

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