What happened

Shares of cloud-based tax compliance solutions provider Avalara (NYSE:AVLR) jumped on Wednesday after the company reported its fourth-quarter results. A revenue beat and in-line earnings were enough to propel the stock about 16.3% higher by noon EST.

So what

Avalara reported fourth-quarter revenue of $76.9 million, up 33% year over year and about $5.7 million higher than the average analyst estimate. Subscription and returns revenue grew 33% to $71.7 million, while professional services revenue also increased 33% to $5.2 million.

A rising stock chart.

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Avalara ended the fourth quarter with 9,070 core customers, up from 8,490 core customers at the end of the third quarter. The net revenue retention rate, which measures revenue generated from existing customers compared to the prior-year period, was 108% in the fourth quarter.

Non-GAAP earnings per share came in at a loss of $0.19, down from a loss of $0.17 in the prior-year period and in line with analyst expectations. Avalara lost $0.28 on a GAAP basis, although it did produce positive free cash flow of $4.5 million. Free cash flow was negative $5.6 million in the prior-year period.

CEO Scott McFarlane laid out the company's opportunity: "Transaction tax compliance remains a highly manual process and is in the early stages of automating, representing an estimated $8 billion addressable market for us. This year we expanded our tax content, software platform, partner channel, and pre-built integrations, which we believe position Avalara as a clear choice to lead this automation cycle."

Check out the latest Avalara earnings call transcript.

Now what

Avalara expects to produce revenue between $78 million and $79 million in the first quarter, along with a non-GAAP operating loss between $10 million and $11 million. For the full year, the company expects revenue between $328 million and $332 million, and a non-GAAP operating loss between $30 million and $35 million. Revenue and non-GAAP operating loss were $272.1 million and $45.0 million, respectively, in 2018.

With a revenue beat in the fourth quarter and guidance calling for 21% revenue growth in 2019, investors had no shortage of reasons to bid up the stock.