Avalara - The SMB Sales Tax Automation Provider - Continues Dramatic Growth in Revenue, Clients, Activity.

Avalara's Automated Sales Tax Management Service (STMS) Proves Market Demand for Web-Based Tax-Calculation Services

BAINBRIDGE ISLAND, Wash. -- Because of strong ongoing demand among small and medium businesses (SMBs) for Avalara's distinctive, on-demand, Web-based and ERP-integrated, automated Sales Tax Management Service (STMS), the market's only established STMS provider has experienced continued rapid growth in terms of revenue, sales, registered users, partners and transactions per second.

"We are experiencing a 234% rate of revenue growth during Q3 of 2006, when compared to the same period in 2005, and 315% rate of sales growth over the same period in 2005," according to Jared Vogt, Avalara's Chairman and Chief Executive Officer. "This significant and sustained growth in both revenue and sales stems from our ability to meet previously unserved demand in the SMB marketplace. This corresponds with a widespread increase in SMB market acceptance of our core AvaTax automated sales tax management service."

In Q1 of 2005, Avalara had roughly 100 registered users and reseller-partners. At the close of Q2 of 2006, that figure stood at nearly 5,000 registered users. Today, that number has grown to more than 6,500, representing a sustained annual-rate user growth of 300%-plus per year. In sustaining this impressive growth, Avalara continues to sign up an average of from 500 to 700 new users and reseller-partners each month.

At the conclusion of Q3 of 2006, Avalara also now has more than 450 registered reseller-partners who take advantage of Avalara's unique proposition to their midmarket and e-commerce clients. This represents an increase in reseller-partners amounting to 171% over Q3 of 2005.

"In the next 24 months, we expect to see some of the venerable software-based, enterprise-oriented sales tax data and software companies attempt to enter the SMB market with their own versions of our automated Sales Tax Management Services," continued Vogt. "That is understandable - when you look at the strong and growing demand among small and mid-sized companies for a sales tax automation solution, and at our success at servicing those customers. But the ASP service model, which is essential to any effective Sales Tax Management Service, is not built in to the DNA of software-based solutions, or to the service mix offered by tax data providers. As a dedicated ASP on-demand web-based service, AvaTax was built from the ground up on Service-Oriented Architecture (SOA) principles. Avalara's unhindered focus on the SMB market, which we have sustained from day-one, means we will continue to offer a superior, focused service to SMBs - and will continue to offer services that are well beyond software-rooted competitors' capabilities."

As an on-demand, Software-as-a-Service (SaaS) alternative to more expensive and less adaptive software solutions, Avalara processes hundreds of transactions a minute - well over 10,000 transactions per hour. "Our system's robust and service-oriented architecture ensures the ability to handle all the volume our clients demand of us," Vogt explained.

"Avalara has achieved an enviable position in the marketplace, providing an automated web-based service - STMS - not available elsewhere to businesses engaged in cross-jurisdictional commerce," Vogt said, "and that exclusive marketplace position is fueling our growth.

"In addition, having just been named one of only three Certified Service Providers by the 43-state Streamlined Sales Tax (SST) coalition," Vogt added, "and because we are the only CSP focused on that 4.6 million business SMB market, we expect our growth to sustain through 2007 and beyond."

About AvaTax[TM]

An SMB market-leading, Web-service-based sales tax solution, AvaTax instantly and accurately calculates sales tax for clients in any of the 12,586 jurisdictions in North America; provides detailed, real-time reporting; and automatically generates pre-populated sales tax returns.

AvaTax comes integrated with SMB financial applications serving more businesses than any other solution on the market today, including Microsoft Dynamics[TM] GP, Microsoft Dynamics[TM] NAV, Intuit's QuickBooks[R], Sage Software's Sage MAS 90 ERP, Sage MAS 200 ERP, Sage MAS 500 ERP, Sage Accpac ERP and Epicor's iScala. Additionally, with AvaTax SDK[TM], developers can integrate Avalara's sales tax Web service with any e-commerce, third party or custom-build solution with use of a comprehensive Software Developer's Kit (SDK).

About Avalara

Headquartered on Bainbridge Island near Seattle, Washington, Avalara is changing the sales tax landscape by delivering innovative and affordable solutions to small and mid-sized businesses. Avalara's mission is to transform the sales tax compliance process by creating cost-effective, state-of-the-art solutions, and does so primarily through integrated, on-demand, Web-based services that provide transparent transactions, accurate tax compliance, painless administration and effortless reporting. Avalara is one of only two sales tax automation providers operating as Certified Service Providers (CSPs) under the multi-state Streamlined Sales Tax program, and is the only one that focuses on small and medium-sized (SMB) businesses.