Hello, everyone, and welcome to Avalara's 2022 virtual analyst day. We are excited you could join us today. My name is Jennifer Gianola, and I'm the Vice President of Investor Relations. Before I dive into the details of the day, let me just flash our safe harbor statement and remind everyone that some of our statements on today's presentation are forward-looking. We will also mention some GAAP and non-GAAP financial measures. You can find a reconciliation of these figures in the appendix section of the presentation and on our IR website. In addition, please note that we are in our quiet period. Today's presentation will focus on the longer term, not current trends. We are not going to make comments about the current quarter or year. With that, we have a great set of presentations from three members of our management team. First, we'll kick it off with our CEO, Scott McFarlane, who will discuss our compliance opportunity. After that, Amit Mathradas, our President and Chief Operating Officer, will discuss our growth priorities, including our international opportunity. Finally, our CFO, Ross Tennenbaum, will host a financial review discussing our diversified and resilient business model and present our 2025 target framework and long-term model. We will close the day with a Q&A session that I will be moderating with our presenters. Before we get started, just a few housekeeping items to make. We expect the agenda to be about two hours long. For our analysts, please feel free to submit your questions via the private chat directly to me at any time along the way. Last, you can find the slides and a replay of today's presentation on our IR website at investor.avalara.com. I would like to now turn it over to Scott McFarlane, our CEO, to talk about our compliance opportunity. Thank you, Jennifer. Hi, everyone, and thank you for attending today. Heck, a lot has happened in the last two years, and I believe we've all lost sight of our basic story that we believe is so compelling. I'm gonna go back to the basics for a few minutes and then tell you why I believe there's never been a better time to be in compliance. I believe there are few companies and few markets that have a setup as compelling as Avalara does. First, we have a clear and unified vision to be part of every transaction in the world, and I am more confident than ever we can achieve this vision. Transactional taxes are complex, statutory obligations required by all governments globally. Every business is doing it in some manual way. There's no competitive advantage to doing tax better than its peers. The only task is to be in compliance at the least cost and risk. If you talk to CFOs, most will admit that they are not getting it right, and their challenges and exposures are increasing. Automation is the answer, and over the long term, we believe every business will automate. The good news is, after 19 years of doing this, we believe transactional tax automation in the U.S. is still roughly 10% penetrated and even less so globally, leaving many years of runway to compound growth at high rates. Avalara is a leader in this space, and we believe is well-positioned to capture more than a fair share of the market opportunity. Our market has limited competition, and on top of this, we have created three competitive moats, our partner moat, our content moat, and our platform moat. That should insulate us from competition and have more recently become offensive weapons in our pursuit of gaining market share. Over the last couple of years, we have expanded to a multi-product platform company, providing us with new solutions to globally challenging tax problems that gives us visibility into the multi-hundred million dollar cross-sell opportunity. Our business model has proven to be resilient, historically showing low volatility in good and challenging times because our customers must always calculate taxes and file returns. Our pricing model is designed to absorb downside shocks and upside bounces amid changes in economic activity. All this continues to reinforce our belief that we can compound growth organically in the 20%-25% range for years to come and do that while evolving our model to also driving consistent operating and free cash flow leverage that will lead us to a Rule of 40-type model over time. If all of that is not compelling enough, let me double-click on these four important points to help you see why I believe now is the best time to be in compliance. My favorite time at Avalara is to look at the consistent drumbeat of deals that come in each day. I look at every single one of them, and I'm amazed at the diversity of the customer size, the deal size, the industry, the partner, and the triggers for adoption. I want to share several examples that came in in one day, so you can see why I continue to believe, in the long run, everyone will adopt tax automation. Video delivery company has ordered Chargebee and AvaTax for a total book value of $800. Online shopping company has ordered API, AvaTax, Returns, and SST for a total book value of $96,903. Scale company has ordered NetSuite Basic, AvaTax, Returns, Business Licenses, and CertCapture for a total book value of $26,305. Equipment sales company has ordered Next for Windows by Enterprise Business Systems, Salesforce Sales Cloud, AvaTax Returns, CertCapture, and Tax Research for a total book value of $56,762. Education company has ordered WooCommerce, QuickBooks Desktop, and AvaTax, Returns, and CertCapture for a total book value of $1,940. Distribution company has ordered CalcDash, Magento 2, AvaTax and Returns for a total book value of $9,490. While you watch the reel continue to show more deals, I wanna make the point that these deals come in at high velocity every day from businesses across all different industries, sizes, segments, and geographies. These businesses have all been doing tax compliance in some manual way and have experienced the trigger that has tipped the scale in our favor to automate their compliance obligations. Some investors say to me, "Scott, I love the vision, but you don't really think everyone adopts and that you can be part of every transaction in the world, right?" Some say we understand adoption of the more complex businesses with multiple states and multiple channels. But what about the small local businesses or the single state filers? Here is what we're finding. Approximately 15% of our sales and use tax return customers are single state filers. Remember, there are over 13,000 taxing jurisdictions in the U.S. California has more than 400 jurisdictions, and Texas more than 700. Even single state filers may have complex calculation and filing obligations. Some say, "Well, what about a local restaurant or barber shop?" Well, we have those, too. With our point-of-sale solution and partnerships with leading point-of-sale providers, we are able to potentially get a piece of every one of those stores as well. In fact, we are starting to see point-of-sale deal momentum. Our latest deals include winning a landmark pet company deal for $300,000, an outdoor gear company for $185,000, a jewelry company for $28,000, and a luxury brand for another $28,000. If that doesn't get you excited, our returns for accounting solutions should. Tens of thousands of accounting firms do approximately 40% of the sales tax returns in the United States. To date, we go direct to these end customers to try to convert them to automation with us. Imagine if we could power all these accounting firms and get a piece of their 40% share. With this new offering, we are able to sell our returns platform to accounting firms to automate their work and provide them with new revenue streams around licensing and tax research. As we increase penetration with these firms, we get a cut of this action and the ability to sell through to end customers for solutions the accounting firms do not offer today, such as real-time calculation. For larger companies, the status quo is increasingly difficult to manage. As businesses are in more jurisdictions and selling through more channels, the complexity of their tax solution increases exponentially, making our ROI obvious. As we look overseas, we believe the rise of e-invoicing and real-time compliance will mandate tax automation technology, thereby causing our international opportunity to follow the way of the U.S. Second, in my 19 years of doing this, I have never seen so much attention paid to us from new and existing partners, especially inbound interest from partners to us. This is what I refer to as the second wave of partners, as we've seen a shift from when tax compliance and automation was one of the last areas of focus to where the biggest partners in the world, including names like Shopify, Xero, Salesforce, GoDaddy, and Fabric, are coming to us because their customers demand our solution in the magic moment of commerce. Third is that we are approaching a billion-dollar revenue run rate largely on the back of our calculation and return sales tax products in the US SMB segment. Today, we are so much broader and have only just begun to really monetize the breadth of our portfolio, which is why I have confidence in sustaining growth and becoming a multibillion-dollar company. Our expansion includes several areas. In the U.S. indirect tax, we have recently added new products for use tax, point of sale, and Avalara Tax Research. Over the years, have grown industry-focused tax types, including those in communication, fuel excise, hospitality, and beverage alcohol excise. In global indirect tax, we have expanded to include cross-border customs and duties, enhanced solutions around VAT and GST, as well as solutions for e-invoicing and insurance premium taxes. We have also expanded the platform to include direct tax types, including 1099s, property tax, and licensing. Finally, we have expanded the segments and channels in which we are focused, including upmarket to enterprise through Avalara for Enterprise, downmarket for emerging small businesses through Avalara for Small Business, and new channels such as accountants through Avalara Returns for Accountants. Finally is our international opportunity, which we'll unpack in more detail here today. International countries are rapidly moving forward with more real-time reporting through e-invoicing, which we believe will expand the TAM by making international tax compliance more transactional, like U.S. calculation, and therefore requiring technology solutions. We believe the international landscape looks a lot like the U.S. did a decade ago. It requires a technology-forward, partner-centered company like Avalara, and we believe is ripe for us to replicate the moats and success we have built and continue to realize in the U.S. I'm now going to turn it over to Amit to talk more about growth drivers. Thank you all very much. Thank you, Scott. Hi, everyone, and thank you for attending our 2022 Analyst Day. I would like to talk to you more about our growth drivers, including how we think about new customer acquisition growth, how we will grow by monetizing our large base, how we leverage partners as part of the growth algorithm, and how we see a shifting international landscape accelerating our global market opportunity. We have had strong execution over the last few years, adding new logos to the business and growing ASPs. The chart on the left shows our growth in core customers by segment. As you can see, we have had meaningful growth seen across our core customers, across all size segments, and have grown our total core customer count by 22% in each of 2021 and Q1 of 2022. The middle chart shows how balanced we are by revenue growth across customer size segments. Many investors think that we are an SMB company, and that means that we only cater to small businesses. This pie chart shows we are pretty evenly distributed across small, medium, and large businesses. Finally, the chart on the right shows that our average trailing 12-month revenue per core customer has increased meaningfully by segment. This is a result of larger wins and expanding our customer base through upsell and cross-sell motions. Given how early we are in the penetration of our market, our growth recipe is to strive to continue to add new customers at a similar rate while increasing our average revenue per customer through the cross-sell of new products, natural customer expansion, and strategic pricing. The heritage of Avalara has been weighted towards monetizing new logos. We have recently entered a powerful time in Avalara's growth story, where we can continue to monetize new logos, as I just discussed, but also monetize a very large customer base by providing them with more value. Today, we have nearly 20,000 core customers, almost 34,000 billable accounts, and nearly 100,000 end customers. That is a large and rapidly growing base to which we can monetize through expansion and cross-sell. Now let me discuss cross-sell. I'd like to double-click on our early momentum that we are seeing selling newer products to the large base, and I reiterate that this is early. We have still got low penetration, but are seeing early momentum that gives us confidence that this selling motion is really working. The charts on this slide show that our sales to existing customers for expansion and cross-sell. As you can see, we have had strong growth in our base. More than a half of our upsell value has come from customer expansions, but we are also seeing solid growth from cross-sell. Historically, cross-sell has been comprised of selling our returns and certificate management products and additional connectors as customers become omnichannel. Also includes one-time services such as Nexus studies, voluntary disclosure agreements or VDAs, and back filings. Going forward, our focus is to increase cross-sell by leveraging our newer strategic products. Our customer account management team, or CAMS as we call them, is focused on cross-sell of our new strategic products, including things like Use tax, license management, TTR tax research, cross-border, and point-of-sale products. The chart on the left shows our progress in each month of Q1 2022 versus Q1 of 2021. For the pipeline we developed for our strategic products, which average a year-on-year growth rate of over 150%. The chart on the right shows the growth in sales value of the same products, which shows a year-on-year growth rate of over 200%. Approximately 16% of our Q1 2022 cross-sell already comes from these strategic products. I would note that it is early in the cross-sell opportunity, and we have a lot of execution to get right. If we do so and manage the sources of downsell and churn, we expect that we can maintain our net revenue rate expansion of 115% or in that area. Finally, I get really fired up by the actual deals and would like to share some examples of customers that have meaningfully expanded their spend with Avalara by buying additional products and new enterprise deals with marquee customers. In our last earnings call, we announced that we won one of the largest customer deals with a battery distributor company for a deal value of $509,000, including CertCapture, our exemption certificate management solution, our SST program, TTR tax research, and Avalara License Management, formerly business licenses. This is an expansion of an existing customer and provides exciting evidence of our potential in this cross-sell opportunity. Next, we won a large furniture retailer for a deal value of $452,000, including point of sale returns, exemption certificate management, and Avalara License Management, formerly business licenses. This was a long time customer that migrated to a new financial application system in 2018. In addition, this customer is evaluating us for our TTR tax research, property tax, and 1099 solutions. We are really excited to announce that we have won a large enterprise deal with Snowflake, the data cloud company with 4,000 employees worldwide. We are thrilled that Snowflake selected us for our sales tax calculation, returns, exemption certificate management solutions. Snowflake has been rapidly expanding globally and selected Avalara due to the need to automate to improve efficiency and mitigate risk. Snowflake did a rip and replace due to our accuracy, ease of implementation, and lower cost than the incumbent. We have robust out-of-the-box functionality, which allows for easier design, configuration, implementation, resulting in less needed for customization, which leads to a lower implementation cost. Finally, due to our accuracy, we decrease potential audit liabilities resulting from calculating incorrect sales tax rates. Finally, we won a Fortune 500 American industrial company. I think this may be the first time we are announcing a rip and replace of a competitor in a Fortune 500 company. The company needed AvaTax calculation, returns, our exemption certificate management solution, all through an Oracle Cloud connector to ensure accurate tax determination and compliance. The company's products are used worldwide in aerospace, automotive, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial applications. This is a great win for us. You know, many investors ask us if we can provide a relative value framework by product. It's not as easy to do as it is for per employee or per seat-based model. Our models work based on metrics like transaction volume, number of jurisdictions, which tax nexus, number of certificates under management, and other things like that. Let me provide you with a framework for how to think about it. When we look at our core customers, we see that 88% have calculation, 72% have returns, and 32% have certificate management. Theoretically, all of these could get to a 100% penetration. When we look across all our nearly 20,000 core customers, the average value for calculation is around $19,000. For returns, it's around $12,000, and for cert management it is $6,000. Now, our newest strategic products currently have a very low penetration in our base. This gives us the opportunity to continue selling not only more returns and certs, but also to sell many more strategic products that can help us expand the value of our large and growing customer base over time. Let's look at what this opportunity could look like. We've recently developed a proprietary algorithm that identifies the next best product to cross-sell into each existing customer's portfolio. This is really powerful because it is supported by our customers' transactional data that runs through our system. We can see where customers have cross-border and VAT transactions but don't subscribe to these solutions, and where customers have exempt transactions but don't have our exemption product, for example. Our customer account managers recently began using this tool to more effectively target their sales efforts. When we take the average expected value we would yield if it's sold to the topmost recommended product to each existing customer. We estimate that it could increase revenue by $130 million. If we add the next best five products, we estimate it would be worth more than $400 million in annual revenue. The pie chart illustrates the composition of the next best product recommended for our existing customer base. Please note that we believe this is a conservative analysis that excludes cross-sell potential to end customers of our e-commerce platforms and partners and our international customers. A touch of SST and our recent acquisition offerings such as e-invoicing, Track1099, insurance, and property tax is not included, nor does it contemplate customer expansions, pricing uplift, or continued growing base of customers for Avalara. Lastly, I'm gonna touch base briefly on partners. As you know, we have always been a partner-based business, and that means we are focused on being deeply integrated into all business applications on one side. Today, we have over 1,200 signed partner integrations and governments on the other. With that, we can become the standard for tax and broader compliance and really have a shot at being a part of every transaction in the world. I am really excited about the progress we have made with our partners. We view Shopify as a model of how to strive and build all our partner relationships as they evolve. Our relationship with Shopify has been expanding ever since we signed the first partner agreement with them in 2015. We started by being included in Shopify's platform for their Plus merchants, and in 2021, we announced Shopify selected Avalara's cross-border solutions to power both their Plus and non-Plus merchants, calculating duties, tariffs in cart at the time of transaction. This is a great example of how our platform innovation with cross-border won us the expansion opportunity with Shopify. Finally, on our Q1 earnings call, we announced that we executed an agreement with Shopify to expand our services, supporting merchants beyond Shopify Plus. We believe this means over time, we have the opportunity to be the calculation engine for Shopify's entire base. Over the last year, we have added many additional new exciting partnerships. We grew our marketplace customers by 47% year-on-year as of March 2022. We are expanding our Avalara Included program and adding new partnerships with Xero. We also added a new very large yet to be named marketplace to the program that comes with more than $2 million of revenue per year, plus usage growth as they implement and scale our solutions. With DAVO, our acquisition that we made recently, we added connectors to some of the most modern point-of-sale providers, including Toast and Clover, and also earlier in the year, announced a big partnership with one of the largest point-of-sale vendors in the space. In addition, we are advancing our relationship with large accounting firms, and we are talking to more potential partners in the areas of payments and point-of-sale. Compliance has become a mission-critical and an essential area that our broader partner ecosystem is focused on solving as the complexity continues to grow. Our strategic partner activity is very active, and in many cases, we find partners are coming to us to solve the challenges that they and their customers have to be dealing with around tax compliance in today's omni-channel world. I am going to transition to discussing our international growth opportunity. Firstly, let me begin with the state of the union of our international business. In 2021, our total international revenues represented 8% of the total company revenues. After strong year-on-year growth of 34% in 2020 and 79% in 2021, we are experiencing some challenges in 2022. Let me share some key statistics to help you understand the composition of our international business. I am gonna focus on our European business since it really accounts for the vast majority of our international revenues. From a customer perspective, we ended 2021 with nearly 2,300 direct customers, accounting for $16 million in revenue and over 14,000 customers through our large European marketplace partner for around $27 million in revenue. Of our direct customer base, approximately 35% are domiciled in the U.K., and approximately 20% are domiciled in Germany and Belgium. Regarding our large E.U. marketplace partner, we made changes to our contract in the beginning of Q4 2021 with the expectation we would see higher customer volumes. These volumes have not yet materialized, and we are not expecting it. Regarding our direct business, this business has grown rapidly in the last two years due to benefits from regulatory changes and enhanced VAT products. One regulatory change was aimed at making European taxation more simple for merchants by allowing them to register and file in fewer European countries where those countries would then share tax information and monies with the other countries in the Union. This change is aimed at getting more merchants to register and file, though the number of registrations and filings per customer over time will be fewer. We believe our opportunity remains very large to capture a need and launch a VAT compliance offering for customers of all sizes and for more partners beyond our large European marketplace partner. We expect this managed VAT solution to be available in Q4 of 2022. In addition to these challenges, as we enter 2022, we struggle to keep pace with sales and marketing capacity hiring. To address this collective issue, we have appointed Greg Chapman, a long-term Avalarian and a veteran of the company, and an SVP who has overseen our entire partner business development model to lead our European business. We expect Greg to reinvigorate the European direct business, ignite partner relationships, and build out our international moat, expanding our go-to-market to more regions and work with more products to deliver a strong managed returns offering. We expect that these initiatives, coupled with our expanding e-invoicing initiative, will allow us to capitalize on the large international opportunity. Compliance is entering the next adoption cycle with the momentum of e-invoicing and real-time reporting. Government-mandated real-time compliance is driving global adoption across the world, boosting software spending over the next decade. As a result, tax compliance technology is quickly becoming mission-critical. Our international growth strategies include, firstly, to expand our direct business to build out our presence with localized marketing and sales in the Benelux and DACH regions. We will continue to offer multinationals our AvaTax sales tax solution and offer later this year a robust managed returns product for businesses and partners domiciled inside and outside of Europe. Secondly, it's to build out and win the e-invoicing opportunity. We view this as a game changer in our space, as governments are effectively mandating technology-driven compliance to help eliminate the VAT fraud gap. Lastly, the shift to e-invoicing will allow us to build an international moat like what we have built in the United States. This will allow us to have a global moat integrated into any business application on one side and any government on the other. We believe this will be a powerful position that will be very difficult to replicate and on which we can support tax and a broader set of real-time compliance activities. What is e-invoicing, you ask? Well, it's simply a digital transmission of sales and purchase documents between businesses, governments, and consumers. E-invoicing has been a trend for many businesses as they seek efficiencies with trading partners, but the momentum towards e-invoicing is accelerating as governments are legislating its use to close the VAT gap of over EUR 160 billion annually. These mandates require businesses to transmit e-invoices containing accurate data over a certified network to which governments have access and are a party to the transaction. This effectively makes the invoice a tax return and makes compliance transactional while accelerating tax remittances. We believe this is the perfect setup for Avalara, as this evolution requires a technology and partner-first company with experiences of integrating to businesses, applications, and governments. Avalara will leverage its existing and expanding technology partnerships to infuse e-invoicing functionality with ERPs, billing systems, marketplaces, e-commerce platforms, and other applications that create or consume a sale of purchase document. This will be done in service of connecting global trading partners to our networks, so any business can buy or sell from or to anyone. Those transactions will be combined with Avalara's real-time accurate compliance data, including VAT, cross-border, and other tax types, and transmitted across our certified network. If you take anything away from what I just said, it should be that we believe e-invoicing greatly expands our international addressable market as the governments are effectively mandating a technology automation solution for compliance. The result is that international compliance will become more transactional and look more like the United States, allowing Avalara to extend our U.S. moat and success globally. Like with everything we do, complexity is our friend and a key driver of our business. Rolls out e-invoicing differently. One dimension is how the governments choose to be a part of that transaction, post-issue, pre-issue, clearance, or periodic. Eventually, we believe the governments will be a party to the transaction and receive their money in real time. Another dimension is the timing of the rollout of e-invoicing by country and for different types of transactions, for B2B, B2C, and B2G. Another is the standard for which e-invoicing systems are required to talk to the governments. Some are standardizing on Peppol, a common framework for secure cross-border exchange of electronic business documents, while others have different and more customized ways to integrate. We often talk about how omni-channel complexity is a great growth driver for Avalara in the U.S. How businesses that used to be a store down the street, but today they are selling through stores, e-commerce, multiple marketplaces. This means businesses can be selling anywhere and have omni-channel complexity. This exponentially increases compliance complexity and drives the need for automation. We expect the international complexity created by e-invoicing to be a major growth driver for Avalara. Imagine being a multinational business that has to deal with VAT and all these different e-invoicing requirements by country, and then also deal with cross-border duties and tariffs and sales taxes in the U.S. This type of complexity is Avalara's best friend and the ultimate driver of tossing out status quo in favor of automation. The result of e-invoicing will be our ability to extend our U.S. moat globally. You see, because unlike in the United States, international tax calculation has never been a problem, so it has been difficult to create a moat like we did in the U.S. Now, because of the push forward with e-invoicing, international tax is going to become more transactional, like that of the United States and sales tax calculation. This will allow us to expand, partnering with business applications, providers, and governments to build a global network on which we can do any type of compliance. This is our vision to be a part of every transaction in the world coming to life. By building a network to address the e-invoicing opportunity, we will be moving our global SaaS compliance platform forward to address a broader e-compliance opportunity. That's because on our rails, where we integrate businesses, governments, and consumers, we will be able to support a broad complement of compliance documents from classic VAT compliance documents to customs declarations and business licenses, in addition to other documents that may be supported by third parties. By coupling this with various document management services such as authentication and verification, we and third-party developers can build additional applications for tax, compliance, risk management, fraud protection, and much more. In closing, we are very excited about e-invoicing, which represents a paradigm shift in our international market that will effectively mandate a technology-driven solution over the status quo. This change will allow us to extend our U.S. integration mode globally to build a global cloud compliance platform that can handle periodic and real-time tax compliance in addition to a host of broader compliance requirements. We believe this accelerates our vision to be a part of every transaction in the world. I'd now like to turn it over to Ross to walk us through the financial highlights and present our 2025 target framework model. Thanks, Amit. Hi, everyone. Thank you for taking the time to join our 2022 Analyst Day. I wanna hit a few topics that come up in nearly every investor meeting, including risk of exposure to e-commerce, risk to our customer base of a potential recession, and risk of partners having price leverage over us. Then I will transition to talking about our 2025 intermediate term and long-term targets. First, let's talk about our overall business diversity. We have approximately 20,000 core customers and nearly 100,000 total end customers with no significant concentration from any individual customer. The pie chart shows that we are very diversified from a partner perspective. Additionally, many ask about which partners have price leverage over Avalara. For the vast majority of our partner relationships, our partners are referring business to Avalara, where our sales team works the deal and closes business on our paper. We then own the customer, and our customer account management team will then work to retain and upsell our customers. Our partners don't have input or leverage on our pricing to our customers. Now, there are a few partners that have more influence over our pricing, including our large E.U. Marketplace partner, our SST program, where the U.S. state governments are our partners, and the fees we get directly from our Avalara Included model. Combined, this accounted for approximately 12% of 2021 revenues. We are also very diverse by industry and customer segment. The left chart shows our diversification by industry, and we note that retail, where e-commerce is most prevalent, comprised 18% of trailing 12-month revenue. The right chart shows our trailing 12-month revenue by customer size segment. Many investors worry that we are overexposed to very small customers that may be more challenged in an economic recession. You may find this chart surprising in that it shows we are highly diversified across all size segments with more than 50% of our revenue from medium and large businesses. We expect our small business category, which accounts for 33% of revenue and includes businesses with $5 million-$50 million of revenue, would also hold up well in a recession. E-commerce has been an important trigger for the business, and we believe will remain important for many years to come. Fundamentally, Avalara benefits from trigger events that increases complexity, thereby tipping the scale from manual status quo to automation. E-commerce is one of many triggers, but it is an important trigger because these businesses are often selling in multiple channels and many more jurisdictions. Imagine trying to manually manage tax compliance when you're selling in some combination of stores, e-commerce, and multiple marketplaces, and doing so across many of the United States' 13,000 taxing jurisdictions. Potentially, even globally, where you have to deal with duties, tariffs, VAT, and GST. While the world saw an acceleration of e-commerce in the pandemic, and this helped our business, this dynamic and increase in complexity will be ongoing for a generation and supports our belief that in the long run, everyone will automate while we are still only around 10% penetrated in our core U.S. market. When you put it all together, again, you can see our diversity as 18% of our revenue comes from retail and approximately 1/3 of our revenue comes from all our customers that are classified as marketplaces or have a connector to one of our Avalara Included partners such as Shopify and BigCommerce, or have a connector to one of our e-commerce direct partners such as Salesforce and Adobe. I believe the diversification point should help investors get more comfortable with Avalara being a low beta and more insulated from a recession. I would like to provide two more data points regarding this. If we look at 2021 U.S. subscription returns revenue, approximately 60% of it was comprised of calculation products, most of which are tied to transaction volumes, while 40% of it was comprised of compliance products. Most of the compliance products, chiefly U.S. sales tax returns, do not fluctuate with economic activity. In other words, if a business has Nexus in a jurisdiction, it has to file in that jurisdiction no matter how well or poorly their revenues are performing. This makes the returns business very well-insulated from challenging economic activity. On the calculation side, investors often worry about customers downgrading their calculation subscriptions in the event of challenging economic conditions. This slide shows an illustration of how our business and pricing model are designed to insulate us from difficult economic times. The top chart shows an example of three tiers in our calculation subscription model, which would likely be purchased by smaller customers. Let's assume a small customer is in the 10,001-15,000 transaction band and paying a $6,852 annual calculation subscription. We assume customers are operating at the midpoint of the band, or 12,500 transactions. This means the customer would have to do 2,500 fewer transactions, or 20% less, to be able to move down a tier. In this event, the customer wouldn't actually move down as they would be at the upper bound of the lower tier and risk having to pay upgrade fees to move back up. Customers typically have to be down 20%-25% to move down a tier. In that case, the customer does move down a tier, their new annual calculation subscription would be $5,457 or 20% lower. Now, if you consider that most customers have calculation returns, and the returns volume typically does not experience volatility or downgrades, then the decline in revenue for this illustrative customer would be more like 10% of total revenue for both products. Furthermore, these downgrades would typically happen around the renewal. The Avalara manifesto states our prime directive as efficient growth. We are proud that since our IPO in 2018 through 2021, we have sustained a 37% compound annual revenue growth rate, along with three consecutive years of positive free cash flow and our first year of non-GAAP operating profit in 2021. Now nearing a $1 billion annual revenue run rate, and with our sights locked on becoming a multi-billion-dollar revenue company, we are entering a new operating model paradigm that will couple high revenue growth rates with sustained and improving operating and free cash flow margins. For the first time, we would like to introduce an intermediate term model. Before doing that, I would like to call out a few assumptions. We are looking at a multi-year horizon, and our intermediate-term growth target contemplates our current visibility, but does not assume a further deteriorating macroeconomic environment or prolonged recession. We believe our intermediate-term target around OpEx and margin expectations are within our control. We expect to continue to leverage M&A to build the business and accelerate certain important growth initiatives. We will try to do M&A in support of our model, but we will also be opportunistic regarding potential highly strategic acquisitions that could change the near-term composition of the model around either growth or profitability. If that should happen, and there can be no assurance that we will be presented with any such opportunities, we would expect to share how we think about it and our plan for how the model would evolve post any such acquisition. We remain in the early days of penetration in a big market and still believe we are a growth story, where we can sustain strong growth for a number of years as we build a multi-billion-dollar revenue company. We also believe we can do that with significant margin improvement. Should we see opportunities to accelerate growth, we may elect to slow our margin evolution, and if growth should sustainably slow below our guidance, we will look for opportunities to evolve margin more quickly. Between now and 2025, we expect Avalara to compound organic revenue growth in the 20%-25% area, and we expect 2025 operating margins in the 10%-15% area and free cash flow margins higher in the 13%-18% area. If we find opportunities to increase growth, we may deliver lower margin, and if growth sustainably dips below, we would deliver higher margin with a focus on targeting a Rule of 40 combination of revenue growth and free cash flow margins. Now let me give you some more details for why we believe we will get there. I'll go through the gross margin opportunities in the next slide in more detail, and on this slide, discuss our other OpEx opportunities. We believe we can improve R&D as a percent of revenue to 16%-18% from the low 20% area today. Over the last few years, we are thankful that investors allowed us to increase R&D expense as a percent of revenue so that we could more quickly expand the team to build and enhance our products and platform. These investments have paid off as we have built and assimilated numerous additional products to drive our cross-sell opportunity, modernize various areas of our platform for growth and efficiency, and increase our initiatives around integration, automation, and security. Now, with more than 1,250 product and engineering personnel, we believe we can still be highly innovative and fast-moving without having to add net new personnel. To achieve this, we are building more robust prioritization frameworks that will help ensure we are allocating our investments to the most valuable products, harvesting mature products, and killing initiatives that don't meet our expectations. We believe we can improve G&A as a percent of revenue from 14% in 2021 to 10%-12% in 2025 as we scale and increase our discipline and focus in this area. We've always said that as a growth company, delivering above 30% growth over the last few years, that we don't want to err on the light side with sales and marketing expenses. When we benchmark sales and marketing as a percent of revenue, we appear better than our peers. That said, we believe we can also drive leverage in sales and marketing expense as a percent of revenue from 38% in 2021 to 34%-36% in 2025. This may fluctuate if we see valuable opportunities to invest in growth. We won't hesitate to do so while keeping in mind our commitments to the intermediate-term model. In addition, efficiency will be impacted by the mix of newer products and geographies that we enter. Here are some areas we believe we can gain leverage. By focusing on the golden ratios to reduce the ratio of non-quota-carrying headcount to quota carriers and marketing program spend. By increasing our sales productivity metrics through a more efficient sales motion, multi-product sales with higher ASPs, and an increasing mix of growth from our customer base. By automating and driving a low-touch model for small customers to drive efficiency and engaging with a more customized model for enterprise customers to drive up ASP. By obtaining more leverage and value from our partner per unit of commission and evaluating areas where we can calibrate commissions commensurate with partners' contribution. By scaling and maturing newer products and geographies. Altogether, this supports an intermediate-term model where we believe we can compound organic revenue growth in the 20%-25% area while meaningfully increasing free cash flow margins to 13%-18% of our revenue by 2025. I'd like to expand on our gross margin evolution by unpacking the components of cost of revenue. We expect professional services mix to remain around 9%-10% of total revenue. Unlike our peers, Avalara today has around 1,900 employees in cost of revenue. Much of this is a function of the 500 members of our compliance team, the 165 in support, and the 165 members of our content team. The compliance team is responsible for filing compliance documents such as sales tax returns in the U.S. and VAT compliance documents in the E.U. in the U.S., filing sales tax returns is a highly automated process. In 2021, we filed nearly 3 million sales tax returns with about 110 people. Other areas are less automated at about one-third the productivity, which means that much of the remaining compliance headcount processes a fraction of these returns for our other U.S. tax types and our international business. We have multiple returns platforms, and the key is to integrate them into one and drive the level of automation we have with our U.S. sales tax returns. We acknowledge that we have been discussing this for the last couple of years, and we have been making progress towards this goal, though at a slower pace than we previously desired, as we have prioritized other initiatives above it. Going forward, we are focused on achieving these automation efficiencies. Our content research team is tasked with researching tax law so that we can codify it in the software. We are now orienting the team to focus on research in net new areas, especially in international, and leveraging machine learning technologies originally purchased from our Indix acquisition to harvest and maintain our existing content. This will allow us to maintain the size of this team over the next few years. Support and go live are benefiting from investments we have made over the last few years in right-sizing the teams and investments in people, process, and technology. For example, by launching Avalara for Small Business, a product designed to be no-touch for smaller customers, we can help alleviate many smaller customers that have been consuming go-live capacity. We expect this will allow these teams to realize scale benefits and to be able to grow headcount and OpEx lower than our revenue growth rate. We also have approximately 220 heads in cost of revenue from recent acquisitions. These businesses tend to have lower automation and scale. As we more tightly integrate these businesses and increase their automation, we expect we can also gain leverage in this area over the coming years. Finally, we have been working on platform monetization changes that should help us modestly lower our hosting costs as a% of revenue over the coming years. Many investors ask if, in the long run, we are structurally different than our other SaaS peers. I highlight that our compliance and content functions, which are in cost of revenue, and our partner commissions, which are in sales and marketing expense, are areas of expense that our peers typically do not have. In the long run, we do not believe we'll be meaningfully different from our peers, and therefore believe that at mid-teens growth rates, we should be at 80%+ gross margins and 20%-25%+ operating margins. In the long run, when growth slows to single digits, we see operating margins getting above 30%. We believe that over the longer term, as we achieve higher levels of compliance and content automation, that we should be able to meaningfully increase productivity per employee on these teams, resulting in lower cost margins around a couple points of revenue. We still believe gross margins will be above 80% long term. Similarly, we believe our partner commissions will be greatly diluted down over the long term for two reasons. The first is we typically pay partner commissions as a percent or a calculation subscription. As we sell more products beyond calculation, and this becomes a larger piece of our revenue, we will see a reduction in the partner commission fees as a percent of revenue. Second, our partners are a competitive moat, and we believe paying this commission is the cost of the benefits this moat has afforded and will continue to afford us, which is long-term sustainable growth and protection against competition. For these reasons, we have not sought to reduce existing commissions. However, in the longer term, as growth slows, we expect to more actively manage the cost benefits of these relationships. For these reasons, we believe long-term that partner commissions should reduce to a small percentage of revenue. Finally, Avalara is committed to sustainability. In April, we published our first environmental, social, and governance report, along with our findings from our 2021 materiality assessment, which will serve as the foundation of our ESG journey. Our focus is on ensuring our product is secure, safe, and continues to create value and sustainable impact, that we do right by our people, and that we make strides to improve our impact on the planet. We continue to make investments in internal programs that drive value-enhancing sustainability in these three areas. Thank you all for your time today and your interest in Avalara's compliance opportunity and our path to Rule of 40. I will now hand it over to Jennifer, who will moderate the Q&A. Thank you, Ross. Hello, everybody. My name is Jennifer Gianola, the Vice President of Investor Relations, and I'm going to help moderate the Q&A portion today. We have three leaders from the Avalara executive team who are going to take your questions. Those three leaders are Scott, Ross, and Amit. The way that this is going to work is we are going to take questions from the analysts live via Zoom. Just as a reminder to the analysts, please have your video turned on, and please unmute your line when you ask a question. For those of you watching the webcast, if you have a question, we ask that you submit your questions via the Q&A chat function in the upper right-hand corner of your screen. Toward the end of the Q&A portion, I will be reading out some of those questions. With that, let's get started. We have our first question from Andrew DeGasperi from Berenberg. Andrew, please go ahead. Thanks, Jennifer, for taking my question. I guess first on the e-invoicing market, can you elaborate a little bit in terms of the timeline to try and crystallize on that $20 billion opportunity, and where are we in terms of different regions, of that opportunity? Well, I'll start, and then you guys can jump in and talk a little bit about it. We're in early stages of e-invoicing. I mean, it is being adopted, but the way it typically adopts is a country will go to the government first, then it'll go to enterprise customers, and then it'll go to the broader consumer base. That takes years and years and years to develop. I mean, I would say that the two regions that are furthest along in growing would be that of the E.U., EMEA in particular, and then Latin America. I'll point out to everybody that really the first country that came up with e-invoicing was Nota Fiscal. It takes place in Brazil. They've had that for quite some time. It's very developed, and it's sort of grown. The standards will start to come together over time, I think. We're in early innings of this area. I want to point out because I just want to lay the groundwork for everything that we're doing here today. When we talk about e-invoicing, we're talking about the rails that information gets to the government, about the invoices, about what's taking place. That does not necessarily include the calculation. I mean, the calculation is separate. Now, Avalara believes fundamentally that those two should be put together. There are people that do e-invoicing that don't do anything you know, around, you know, the reporting of that and the like. We believe that the right model, just like we did with, you know, cross-border, where we think it should be done at the checkout as opposed to a third party, we believe combining all these together makes the most sense for the customer, makes the most sense for the business, makes the most sense for the government. I just wanted to lay that out to set the thing. Ross, you may want to jump in or Amit jump in on. Well, you know, one question we get a lot from investors is what is the timeline, 10 years for this to kick in or are we talking now in a year? I do wanna give you some boundary there. As you could see on the slide that we showed, there are a lot of e-invoicing mandates that have already been selected by countries and are actively being selected now and over time. We try to dimensionalize that. It's sorta the way in which the country is gonna do it before the transaction, after the transaction. How the standard for which you're gonna integrate to them, whether that be the Peppol standard or something else more customized, and then when they're gonna enact standards for B2G versus B2B, B2C. Every country playing out different. What you can see is many have already adopted certain things, especially B2G, and as we look forward over the next two to three years, we see a lot more adopting more standards. Right now, companies in country are using tools to solve this because where they have to do it, but the challenge is creating as every country rolls this out differently on different timelines and standards. I always say imagine being a multinational, right? Let's just say you're in the E.U., and you're selling into five European countries and the U.S. now you have to deal with VAT, you have to deal with e-invoicing, different standards and rules and obligations in different countries. Then, if you're selling in the U.S., you have to deal with sales tax as well, which is totally different, and you have to deal with cross-border customs duties and tariffs. If that's not the ultimate, you know, change to status quo, I don't know what is. Our point is this is early innings, like Scott said, but it is happening now, unfolding now, and is an opportunity that we need to be on top of now. I'll just finish up with what really quickly that right now the pressure is on the multinationals, and that's where we're gonna see, you know, the bulk of the business grow and evolve, and that's what we're focused on, you know, moving forward. Thank you. Thank you, Andrew. Our next question comes from Daniel Jester of BMO Capital. Dan, please go ahead. Great. Can we just stick on the international framework? If 50 different countries are potentially gonna have 50 different standards, I know it might not be the case, but it seems like there's gonna be a lot of different standards. How do you efficiently scale that over many countries and geographies if you're going to have to potentially help your customers in you know, potentially different ways? What I would say is that the model is, I mean, similar to what we've already experienced in the United States, right? I mean, 50 different states, you know, sets of rules and, you know, along the way. I've always said that, you know, what's so great about compliance, it really falls into this world where the most important thing that you're dealing with is content. That's, you know, at the content. You gotta get the content right, the rules, rates, forms, all of those things. Then it goes through three engines, right? You know, it goes through a transactional engine. It goes through a document management engine and a reporting engine. Then on top of it, you build, you know, applications or solutions for the customers. You know, compliance is compliance, and it really moves through that program. If you know the rules, you can. It's just a statutory requirement, and you have the engines already built, it's scalable. As we do that in the United States, it's worked out, you know, really well. We understand exactly how that works. That is not too dissimilar. I mean, although that means it spans, you know, hundreds of countries, it's generally the same. What you're really talking about are what are the specific rules. Now, there's different places like Brazil and, you know, some bespoke areas and I don't even know this, to be honest with you, how difficult it is to go into China or into Japan, let's say, and those will be more bespoke. For the most part, the vast VAT regimes, you know, can be sort of standardized around those three engines, so you're only dealing with the changes in the rules. It's actually scalable, just like our engine in the United States is. Yeah. Great. Then if I could just ask a follow-up. On the cross-sell, appreciate the additional context you gave there. I just, you know, you talked about in the business, people come to you with trigger event, and then you solve it. Now you're gonna be pushing more of the products their way. Can you just kinda expand about like, you know, how much that trigger event still matters for some of these strategic products? Or are you actually going to be able to push directly to customers even without a trigger? Thank you. Well, I'm gonna answer something at a very high level, and I'm gonna turn it over to Amit, because I think he can talk about the specific things that are happening in the cross-sell regime. The trigger events matter in all of the different products, right? I mean, the businesses are faced with complexities, and whether it be exemptions, whether it be, you know, use tax, returns, sales tax, VAT, cross-border, I mean, we've tried to create a platform where people are. Everybody is welcome to share their problems with us, so we can enter the market the way they want to enter. I mean, you know, 'cause we cast a wide net, and yes, it's sort of our history is based on calculation. The best days are, I think, here to come when our salespeople, our marketing, everything is just looking for the people that have complexity around compliance, and they come to us because they know that that's where it is. Now that's the how I see this unfolding. It's really worked well for us in you know calculations. It's expanded the returns, but I see it expanding even more. Amit, you can jump into you know what's happening on the ground. Thank you for that question. One of the big things that you called out and Scott just mentioned, look, there are different triggers for different entry point products. You know, we stay on top of that and make sure that our marketing and other things, you know, tie to that. The one thing I will call out with a number of our compliance solutions is all businesses need licenses. Right? Cross-border, if you are going to be selling internationally, you're going to need cross-border. Things that we are doing around that, you know, and I think I covered it in my earlier remarks, was we've now because we see the transactional data, we know exactly when a customer has started to open up a new state. We know exactly when a customer starts seeing transactions from a global perspective. That just allows and those for us become internal triggers, right? Of going to a customer and saying, "Hey, we now know you're selling internationally. You're getting ready to sell internationally. How can we help you with that on cross-border? We know you're expanding. Do you need other licenses and other pieces?" This next best product toolkit that sits on top of, you know, the first product and how it kinda gets managed, offers us these other ways of finding triggers just based on how the business is growing, expanding or, you know, moving into other avenues, products or categories. That's a great discussion. Great. Thank you. Thank you, Daniel. Our next question is from Brad Sills of BofA. Brad, please go ahead. Oh, great. Hey, guys. Thanks for taking my questions. I wanted to circle back on the cross-sell opportunity as well here. I mean, now that you've taken a look at the trends and the data, are there any of these products in that list or services that you feel, you know, perhaps there's more volume, more opportunity than you did prior to that cut in looking at the underlying data? Brad, hey. Thanks. Obviously, I mean, Amit and I answered the last one around this one. Obviously, it needs a little bit more detail, so we're gonna turn to Ross to help us unpack this thing a little bit more. Just passing it around. I think you're looking for more things that have impressed us more. I think TTR is one where we had high expectations in acquiring, it was our largest acquisition. We moved fast to integrate it and it did well versus our plan in the first year, and we continue to be optimistic about it. It's one where I was actually. This is a cool story. I was talking to one of our sales leaders, and I said, I'm always going around asking sales how they are feeling about the different products and the cross-sell motion. This was a new sales leader, and she said, "Yeah, TTR is my favorite. That, that's the best one." I said, "Why?" She said, "Because it's not, like, optional." She's like, "We're talking to customers now, and we're saying, you have a compliance problem, okay? You need to calc how many states you're in. You need returns. You need to map your product catalog to tax codes to get this right." What she was saying is, like, we've created a holistic sales cycle where we're talking about mapping your product catalog to your codes, calculating, doing returns and doing certs. They basically created their own bundle without us formalizing the bundle and the pricing around it, and went to the customer and said, you know, "This is what you need to get tax right." You know, has high levels of attach on the TTR tax research product to do that, and so are able to generate more ASPs around it. We see the same thing on the CAM side when we just look at, you know, some of the products that are bubbling up that are more complementary. We think that's a product when we bought it was very much higher level of enterprise. It was very connected to competitors and larger customers, where competitor was doing calc and we were, TTR was in there alongside it for tax research. When we brought it, we realized, like, this can go down to businesses much smaller. You know, I always say $50-$100 million revenue. I don't know what the exact number is, but we find it's got wider appeal and a broader segment of the market up and down. We find that the salespeople are more naturally putting it on. Then you see in that S-chart we did with next best product, we still have a great opportunity for returns, so that comes up as a product where, you know, we can still continue to increase attached returns. CertCapture is only 32% of core customers. We think that could be much higher. You know, we really built that for manufacturing and wholesalers that have a lot of certificate requirement, so that's what we've gotten a lot of. Every customer in every industry, large and small, you know, theoretically has a cert requirement. We've taken the product. Again, we took the TTR product and the Avalara product, we merged them recently and launched a new best-of-breed product that they're segmenting for large, medium, and small. Again, going at how do we increase that penetration of certs up to somewhere around where the returns are. Yeah, I've noticed with certs. Yeah. I've noticed with certs that the attachment rate today is greater on deals than it has been in the past. Sure, yeah. It's benefiting from all the work that Amit's been doing around the cross-sell motion. That's exactly right. It's funny 'cause we didn't even think about it. When we were thinking, we were thinking about the new things we acquired, new products we brought in, and we're like, "Oh, wait. Cert's 32%." It can be very high, and it's benefiting from the work that we're doing. Those are some of the things that come to mind, Brad. Understood. No, that's great to hear. Thanks, guys. One more, if I may please, on the gross margin. Thanks for all the detail on what is included in cost of sales. The top two, compliance and customs and classification, the notion that technology automation will drive efficiencies there, what have you done so far? What have you learned in your efforts there to generate some scale? Where do you expect the source of leverage going forward in those two categories? Thanks again. Yeah. Yeah. Go ahead. Great question. Yeah, I can start there. You know, first thing I'll say, this isn't new to us, and I even called out in my prepared remarks that we've been talking about this for a couple years. We've prioritized other things, and I think those were good choices. But the point is, more than a year ago, we announced that we had rebuilt our returns console, like the core sales tax returns engine that is highly efficient. We said we did 3 million-ish sales tax returns with 110 people. That can continue to get better, but again, that's high automation people assist. Other areas are more high people and technology assist, and we need to right size that. We announced that we had rebuilt this returns console, and in doing that with the mindset of pulling in these other businesses, so other tax types in the U.S. to be able to pull in and consolidate into one, we call it Avalara Returns, pull it into one and be able to get that level of efficiency that we have in US Sales tax in these other areas. It's something that we've started, something underway. It's not a, you know, this is not like sending someone to the moon, can we do this? This is, yes, we know how to do it. We have it mapped out. We have timelines for deliverables, you know, this year and next year. It just was delayed by our choice, you know, in the last couple of years. We gotta go get that done. Then international- Hey, Ross, before you jump in. Yeah. Brad, I just wanna take this opportunity to remind everybody, I mean, when I started the company and we started doing returns in 2006, you know, we had one customer, and it was fully manual, 100% manual. You know, a couple years out later, we were doing, you know, 100,000 returns with 100 people. Today, over that time period, we have built out, you know, with the same 100 people, we're now doing 3 million returns. We know this journey. Now it's some of combining it into, you know, our one world, you know, sort of mindset, right? When I say one world, I mean one content engine, one calculation engine, one returns engine, one world. That's what we are, you know, really, you know, really working towards. I interrupted you. Go ahead. No, it was good. That was a good interruption. That was worth it. Yeah, it's then international, we gotta do the same thing. We gotta take international, which is VAT, so it's not about consolidating the sales tax, it's about similar point that Scott just made, you know, in the VAT region for VAT compliance. We're. That's underway as well. That's what takes care of the compliance bucket, you know, on the first row that you called out on the slide. The second one, which I didn't comment on, is almost 500 people, is our customs organization. We bought a company in 2019 called Portway, which is based in Noida, India, that we're doing classifications for us and other companies for our cross-border business. Again, you have to classify your product catalog with what's called HTS, Harmonized Tariff System codes, so they're international tax codes. It's really hard to do. It's like, okay, you know, you've got a sweater. What's the thread count of the sweater? I mean, it's crazier stuff than even U.S. calculation, and it's hard to do. Our vision was to automate that and to make it highly automated based on machine learning. We bought the company, which was people that basically what happens is, the product comes in, it runs through our machine learning engine, which makes a call on what we think the classification is, and then it sends it to the people, and the people call the ball a strike. You know, they say, "Okay, definitively, this is the answer." And then that feeds back into our machine learning and learns. The vision there is to move this to something that's highly automated. Right now, we're around, you know, 20% automation, and to continue to bring that up to, you know, majority automated. Similar point for compliance, but this is taking, you know, machine learning to do automated classification, and therefore, you know, that allows us to not have to grow, you know, that population. Great. Super helpful. Thanks, guys. Yep. Thank you, Brad. Our next question comes from DJ Hynes of Canaccord Genuity. DJ, please go. Hey, guys. Nice to see everyone. Thanks for doing this. You talked about some of the headwinds impacting the international business this year. I have two questions there. The first is just the pricing renegotiation with your large marketplace partner there. What hasn't gone right on the volume side? I'd love to just get some more color, like where is that volume going? Second, just Ross, for you, like what do you think international growth will be this year? Yeah. First of all, just given where we are in the quarter, I'm not gonna be able to comment on Q2 or 2022. What I can say is on that part, let me just give you the high level on the partner. You know it, but others in the audience may not have all the details. I just want everyone on the same playing field. We have a large partner, we call our large marketplace partner, in the E.U., and they have, you know, basically a marketplace, for transactions that happen in the E.U., and there are sellers on that that are domiciled in the E.U. or outside the E.U. that are selling into the E.U., okay? They're the front end in the marketplace, and they chose us several years ago to be the back end that does the registrations and filings, okay, for VAT for the merchants. That business has done well for us over the last few years. They came to us last year, mid last year, and they said, "Hey, you know, we wanna work on the contract. We wanna make some modifications. Volumes are getting higher." It was always a volume discount type pricing model. Volumes are getting higher, and so they had already sort of achieved a higher band, but they wanted to talk about bringing down pricing, moving from annual billings to monthly billings, and a few other related things that would ultimately lower the barriers to adoption of these merchants. We had negotiations around pricing, and we had a forecast from them on what we could expect. The short of it is, you know, "Hey, give us lower pricing and you can expect higher volumes," and that's what we anticipated. We did that contract in October 2021. That new contract came into place. Since then, the volumes have not materialized. Now, a lot of things have happened, you know, since October 2021, macro wars, all that stuff. Volumes have not materialized, and we do not expect them to materialize. That's the latest on that situation. You know, that's fluid, and we're actively talking to that partner. It's not like you feel like the volumes are going somewhere else. It's just that they're not materializing due to macro factors. Is that the right way to think about it? Well, I mean, to be honest, they control the front end of the situation and the flow. You know, we don't have crystal clear view on what's going on there. Okay. Okay. Yeah. The follow-up question, I'd love to get some more color on the Fortune 500 competitive displacement. Like, what was the wedge that got you in the door there to displace the incumbent? How do you think about leveraging that, you know, referenceability in terms of other enterprise opportunities? I mean, let me just start at the really high level here, then get it out to Amit to talk a little bit more about the specifics. When we talk about enterprise, you know, we talk about, you know, the Fortune 20,000, right? I mean, that's really the heart of that area. You hear it all the time in my, you know, my earnings discussion, which is how we're, you know, displacing lots of customers in that range. I mean, we just have that momentum in that space. What I think is unique about this particular customer, it really is one that's ripping out com... Calculation and, you know, and it's a Fortune 500 company, right? We, you know, to be honest, we don't see a lot of those. You know, we're focused more on that number below the, you know, the 500, where we get a lot of business in that enterprise space. But this one was really a big, you know, a big customer. And so, you know, we called that out separately, and we're really proud of that fact, and I think it's a harbinger of things to come. You can talk a little bit more about that. Yeah. One of the things I would just add is, you know, this customer aside, what's happening in this space, you know, Scott always talks about in the enterprise, in the high, you know, in the top end of the market, our strategy had been to surround, you know, with all the different products, and then eventually, you know, the bell would ring around calculation. If you saw, you know, the slide that said, "Look at the products," that went along with it, that's really, you know, the conversation, you know, very rarely is about just calculation. It's about, yep, we've got a calculation problem, but we've also got all these things that are immediate needs and future needs, and where can I go to actually get all of compliance, you know, the entire conversation around compliance going. That, you know, is really what is driving a number of these conversations in the bigger customers. You know, as they adopt and look at cloud, you know, it becomes a trigger event, and then they start assessing, you know, who can do the full solution today and in the future, and what comes along with it. You know, I mean, that's a really good point, and I just, I mean, wanna clarify what I was really trying to say is Avalara is in enterprise customers all over the place. When we talk, we always go back to our roots, which is calculation. You know, we do nine of the 10 super fuel companies. I mean, we do, you know, some of the biggest retailers, you know, in the world, you know, their fuel tax. You know, we do exemptions from some of the biggest companies. I mean, these are top 100 companies. Right. I mean, we've always had a strategy of let's surround enterprise with the tax type that they want to talk about at that particular time, and when the opportunity comes, we'll end up getting their calculation and other things as well. I did wanna dispel the myth that Avalara isn't an enterprise company because we have lots and lots and lots of Fortune 1000 companies that are doing different things with us. This one was unique because they came to us specifically around, you know, calc and certs and the like, because they were having a problem. Yeah. Makes sense. Thanks for the color, guys. Yep. Thank you. Great discussion. Thank you, DJ. Our next question is from Peter Levine of Evercore. Peter, please go ahead. Great. Thanks for taking my questions. Maybe circling back to the strategic products, I know you kinda talked about it earlier with the trigger events, but maybe what are you replacing, you know, these, what products are customers using today? Meaning as you go into these customers, like, what's the ROI? You know, what's the advantage to kinda get these customers to kinda upsell and adopt some of these newer products? Amit, why don't you jump in on that one? To the question, thanks for the question. Look, a lot of our customers today are effectively doing these or buying these sorts of products somewhere else or doing it in-house, right? Tax research, you know, like TTR as a product, a lot of our customers are saying, "Hey, I know we've got a tax department that actually looks at all this research and validates all these codes." We come in and say, "Look, we've got an automated solution, and we can help you do it a lot faster." Just, you know, the standard storyline around what we've done with compliance, right? We can do it faster, more accurately, quicker, and help you manage that. As we start having these dialogues, even business licenses, right? Businesses are buying licenses and managing them, you know, internally or through some other, you know, smaller vendor or other partner. We come in, and our storyline is one partner, one place to manage. We can do end-to-end compliance. That is really the piece that starts, you know, driving some of these conversations. Especially, as I mentioned, you know, because of our transactional data, very often we know where a customer is going, what they're doing, and what their aspirations are in terms of expansion. That opens the door for these, you know, for these attachments in future kinda, you know, add-ons. I'll add that, Ross, you know, from an ROI perspective, you know, if you've got any financial wizardry, but. Going down here, I mean, I just wanna remind everybody. I mean, this is a great opportunity to remind everybody of the sort of the concept of Avalara. I mean, I call it the four horsemen of tax. I mean, I say this and Amit and Ross start to laugh because I've said it, you know, 1,000x if I've said it once. I mean, every business has to do certs, you know, Use Tax, sales tax, or returns. They have to do one or all of those. Avalara's, you know, history has been. Let's come to the market with calculation. One of the things that we have to mature and our sales team has to mature at, you know, and get better at, and marketing as well throughout the organization, is we don't wanna lead with calc specifically. We want them to come to us in the trigger event that gets them there because they're all doing those four things in one way, shape, or form. I would say the fifth horseman of this is VAT and doing global transaction because in our world today, you know, every business, you know, aspires to be able to broaden their TAM, move out, especially in e-commerce. Now you add that. Those are the five things, you know, or six things if you include cross-border in that really people have to, you know, they'd have to do. We wanna meet them at the place where they have their most pain right off the bat. Ross, you have anything to add to that? I was hoping you wouldn't leave out the fifth horseman on that one. I know. I know. Peter, you know, when I think of the question, I think about first, like, the new land. You know, historically, it's always been about complexity, right? You see customers come in, you know, they were maybe in stores 10 years ago. Now they're in e-commerce, multiple marketplaces. We always talk about this omni-channel point. It's just when you wanna think about ROI and bucking the status quo, you know, you just gotta look at complexity. You're in multiple states. You're on multiple channels. God forbid you're going cross-border and have to deal with duties and tariffs and VATs in addition to sales tax. It's just you're never gonna be able to do that manually. The ROI just goes up exponentially as you get into more states and more products and all, and more channels. That's been a great driver for our business over the last few years, and that's gonna be a great driver, we believe, for a generation to come, just 'cause you think about a business today. It's multi-channel. It's, again, e-com, stores, marketplaces. We love that. The other thing we're doing is getting better product market fit, right? When you think about down-marketing, you might say, okay, less complex. We talked about 15% of our sales and use tax return customers are single state. A lot of people say, "Well, Ross, your TAM and your SAM, your SAM's not as big as your TAM because you got a lot of people that are less complex, that they can't do it or they're not gonna do it. They're just gonna go manual. 15% of our customers are in single states. We remind people that California has over 300 jurisdictions. Texas has over 1,000 jurisdictions. As we use that complexity combined with the product market fit, how do we go down-market and do simple returns, simple calculations, simple certs that are designed for that low end of the market at the right price point? You know, we're seeing now the ability to have ROI generated even down at the end of the market as we're getting better by the product market fit. Also, think about returns for accountants. You know, how you can capture these anyway, right? If the tens of thousands of accounting firms are doing 40% of the sales and use tax returns in the U.S. or sales tax returns, and you can power them with our returns platform, now you can get a piece of all that action. Our point of sale business, we can get a piece of all the point of sale. You think about a single restaurant. We bought DAVO. We built our own point of sale solution. We've got partners that are the modern point of sale partners. We got the mainline, the old line point of sale partners. Now you can attach to every store at $80-$100 bucks, whatever it is, per store. You can get the local barber shop that's got the point of sale with the store. Better product market fit, down-market, creating better ROI for less complex scenarios. Then you've got this generational shift in complexity by the backdrop of marketplaces, e-com, stores, international. I always say you can start a orange shirt company overnight on Shopify, and you can be selling globally and have to deal with all that craziness. Hard to do. You're gonna have to use us. I hope that helps. I forget the question, but that was great. That was good. That was a good sales pitch. That was fantastic. You know, yeah, no, that definitely answered it. Maybe if I could tack one on the macro side, you know, as you do think about the macro backdrop, you know, to the extent we enter into a recession, and again, I'll leave that to you guys to think about, but can you give us an idea of how your customers, the ones that continue down their digital transformational journey, you know, eventually that pace will slow. But how do you think these customers are having to make decisions about maybe taking budgets, you know, away from other areas and giving it to you? Is there a kind of a thought behind that? I mean, there's a lot in that question there. Look, I mean, the one thing that we know about, you know, I mean, Avalara is it's just this resilient company that works in good times and in bad times. I've been through enough, you know, 2007, 2008. You know, we've been through COVID. We know that. The ROI story is always there available. Now, you know, Wayfair happens, and we get a little bit sidetracked, and you're just talking to those companies. You know that you just know that market is there and gonna continue to grow. That ROI message, you know, the change of the digital, you know, transformation that people are going to make, right? I mean, we know how this ends. I mean, I've said this so many times. It seems trite, but it really is true. We know how this story ends, right? I mean, in a digital world, it's insane to do sales tax manually. It's just crazy. You know, over time, you know that we are going to move all businesses to an automated fashion. It's not something that Avalara is going to do. The governments are going to do it. They do not wanna collect sales tax manually. They want it to be collected digitally. We are on this transformation path, you know, of accelerating the inevitable. I mean, that's really all that we're, you know, that we're really trying to do. I think that that's going to, you know, to continue to develop. You will notice in all of my earnings calls, you'll hear this all the time. I always pick out one of the customers and say, "Hey, you know, they've been doing so, you know, they've been in business 100 years, and last month they decided to solve sales tax." I mean, why was it the last month? There was some trigger event, some event, you know, that got them to do it. In these difficult times, ROI becomes one of those trigger events. I don't need to do this with people. I can do this manually, and I can get an ROI in the 90% range in the first year. It's not even moving, you know, funds away from one area to another. It can be done in that same calendar year. That's our pitch. That's what we have to get better about. That's what we have to, you know, continue to talk about. All right. Thank you, guys. Thank you. Great. That was very insightful. Our next question comes from Gabriela Borges from Goldman Sachs. Gabriela, please, go ahead. Hi, good afternoon. Thanks for taking the questions. Maybe one for Amit to start. Your cross-sell algorithm, would love to hear any observations as you've looked at what works versus what doesn't work from a cross-sell standpoint. I imagine there's a correlation between the complexity and dynamics that you've already been talking about. Be curious if there are any other nuances that you'd call out on the types of customers that are more willing versus less willing to engage in the cross-sell journey. Thank you for the question. One thing, you know, what I'll add is, you know, our real robust cross-sell journey has just started, right? We're on this journey, we've got a plan, we're executing towards it. The next best product model that we have deployed really looks for what those triggers are based on where the customer is going tied to where those transactions are. You know, to your question on, you know, is there a certain profile of customer that's actually, the answer is we're seeing this across the stack, right? If you are a small business or a large, your level of complexity that you have to deal with if you start selling internationally, for example, it's, you know, whether I'm shipping, you know, one box of shoes or 500. I still have to deal with rates, rules, you know, all the stuff that happens around, international selling. We're finding that customers across the base are reacting pretty well to this. One of the things that I think one of the parts of your question, you know, if I got it right, was what are some of the things we have to change, to really capitalize on these shifts? For us it's really the evolution of moving from a, you know, predominantly a three-product company to a eight-product company, and the transformation that needs to happen with our, you know, CAMS or our customer account managers to. Look, we've got this formula where, you know, Scott and Ross mentioned that our, you know, upsell rate on returns is 60%. Our cross-sell rate on search is, you know, 30%+. We know how to do this. Now it's about how do you take this and apply that motion to more products, and how do you actually, you know, turn our CAMS from being a ubiquitous account manager into hunters and farmers, and going along with that journey of what all this new data and products and capabilities gives us. That's helpful. Thank you. A follow-up for Ross, if I may. I understand no comments on the near term, no comments on 2022. I'll frame this as a 12-month-plus question, which is, in the past, you've given details and statistics on the e-commerce part of the business versus non-e-commerce. As you think about your long-term growth targets, the 20%-25%, how do you think about the relative rates of e-commerce versus non-e-commerce, and any color you can provide on visibility and pipeline over the next 12 months? Yeah, it's a good question. Thanks for framing it. You know, I'll think about it in that intermediate-term model timeframe over three years. If you look back, you know, Scott can talk about history, and you can see in our pie chart of segmentation by industry, you know, we got a lot of manufacturing, wholesale, distributors, software. More than 50% of the business were those types of things. 18% was retail. More than 50% was, you know, again, manufacturing, wholesale, distributor, software technology, those kinds of companies, more B2B-oriented companies. I think what you would assume is the origination of the company was in those more B2B-oriented industries and segmentation. The last I don't know how many years, it's more than probably you all think, 'cause everyone thinks the last two-ish years around COVID, but the last I don't know, we signed Shopify in 2015. You know, it's been accelerating the last few years. You know, e-commerce has come alive. People always say, "Hey, can you separate out the e-commerce versus everything else?" It's hard to do because this omni-channel thing really is a real thing for all of us, which is you've got people in stores that are going to e-com. You've got people selling on e-commerce and marketplaces. You've got manufacturers now that are selling over the phone using NetSuite or Zuora, but then they're going direct to consumer, you know, using, you know, throwing up an e-commerce engine on Shopify and going direct to consumer. It's really hard to just pinpoint pure e-commerce from not. What we've seen is the last few years, certainly e-commerce trend and those that have an e-commerce connector, whether they're a B2B company that have started e-commerce or they're a pure 100% e-commerce company, has grown faster than the other things, right? That's how we've gotten to about 1/3 of revenue. That's certainly grown faster than the other things in the past. I would say as we think about the next three, five, seven years, however you wanna look at it, that probably continues to grow faster. Because, again, that is a complexity shift where companies, you know, any company born today or any company wanting to survive today has to figure out not only their physical, if they have a physical presence, but their e-commerce presence. E-commerce is multifaceted because it's not only the Shopifys and sort of your direct e-commerce business, but people are selling on marketplaces now. People are selling direct to consumer. I think that is a trend that will sustain for many years. That drives up complexity, causes you to sell in many jurisdictions, maybe even globally, pretty easily you can sell globally, causes you have to deal with multiple channels and systems, and it just makes that status quo. To me, it's the ultimate displacement of the status quo trend. Now, I know you want to know about this year. I can't answer for this year, but that is gonna be a generational driver for this business. Yeah, I just want to follow up on it because I think the point Ross made is really important. I mean, in an omni-channel world, this is about data aggregation, I mean, to do a return. I mean, because when it's all said and done, I mean, you know, we all think about oh, calculation for e-commerce or whatever. In the real world, it's about where are all my transactions happening, how do I get them aggregated, and then how do I do a return? Very few people are just solely doing e-commerce. I mean, you know, it's an omni-channel program. Breaking out all those components is a little bit more difficult than that, but it creates the opportunity for which Avalara really benefits from, which is the aggregation of data and doing returns, which has now grown to almost 40% of our business. We want to make sure that we're capturing everybody's transactions. The first thing that we do and what Amit's team does is when we win an e-commerce deal, it's like, okay, how do we get their ERP? How do we get their POS? How do we do those? All that e-commerce creates, you know, the backdrop for us to do add-on sales to ultimately get to returns. Thanks for the color. Do you have a follow-up, Gabriela, before I move on? Okay. I'm all set. Thank you. Okay. Thank you. Our next question is from Siti Panigrahi from Mizuho. Siti, please go ahead. Right. Thanks for taking my question. Just wanted to ask a follow-up to earlier question on cross-sell opportunity and Amit's comment about the product now you have. Particularly on the net retention rate, recently you have 115%, but you guys talked about, like, how the product expansion right now through acquisition and organic. And if I look at even 2020 NRR was like 117% or even higher. Wondering, as you're looking forward, as you're starting on this cross-sell opportunity, how are you looking about the NRR, you know, in near term to mid-term? What's kind of baked into your assumptions? Yeah. I mean. Go ahead. Thanks, Siti. Good question. Our focus is on sustaining NRR, you know, in the levels that it's been. It's been about 115%, so plus or minus that area is our focus on sustaining. The way we think about it is, when you think about the things that make NRR go down, that would be churn, which we've always talked about churn, and we have low churn. Once people get up and running on the platform, very, very sticky, not a lot of switching, so very low churn historically. And then there's downsell, other things that cause it to go down and contract, whether you're going down a pricing tier or there's a concession or, you know, some people don't get up and running completely. You know, there's various buckets of that. What we think about is the things that drive it down are roughly offset by pricing. When I say pricing, I'm talking about discount recapture. In the first year, if you get a discount, we try to bring that back up to list. Some we get right back up to list. We have very few price locks or pretty much annual subscriptions, few price locks. Bring up the list. If we don't get it fully up the list, you know, there's a migration up to list. Then something newer to us that we've not really done in the past is actual list price increases. Those have been modest. A lot of people ask, are you passing inflation, are you passing a lot? No, you know, we're doing a few%. We're just trying to get to the standard of what most others have done in the market, where every year, you know, you're bringing list prices up in a reasonable way. I think, you know, if you start with, you know, $100 coming into the year, the things that make it go down are roughly offset by those pricing mechanisms, and you're back to your dollar or $100, I forget where I started, $100. Then you expand and cross-sell. The components of upsell are expansion and cross-sell. Expansion would be up-tiering of buckets. It would be the company has more nexus in more jurisdictions, so they need to buy more things, those kinds of things, expansion, which has been a higher percentage of sales over the past. You know, a lot has come from expansion in the past, certainly more than half. 2021 was a really good expansion year for us, and I think expansion will continue, but it'll be a greater percent will come from cross-sell going forward as we drive this cross-sell motion. So again, you go from a 100, things downsell are offset by pricing, you're still at a 100, and then you've got to get to the 15%, you've got expansions, you've got cross-sell. Okay. Expansions has been more than cross-sell in the past. Now we have to drive more cross-sell than expansion as that wave of expansion from Wayfair and COVID comes down. It'll still be there. We're still gonna have expansions, but we need to do more cross-sell, and that should be the dominant percent of bookings when you look at the upsell going forward. We think that if you just think about what we've talked about here, all the new products, the new capabilities, we should be able to drive that cross-sell. We take all that together, healthy churn, pricing, strategic pricing that we can do and discount recapture and get all these new products going plus expansion, we think that's a recipe that should allow us, in the intermediate-term horizon, to sustain that 115% area. That's a good color, Ross. Another quick follow-up on international opportunity. You guys talked about a lot of, you know, challenges and opportunity on the European side. We're wondering if you could give some color on the, you know, Latin America and recent entry to India market. Sure, Siti. You know, our as you know, you know, the majority of our international business is, you know, in Europe, and we're given the size of that market and opportunity, we're so focused now on and what's happening with e-invoicing and other pieces. As Scott, you know, mentioned earlier, e-invoicing is not just a European phenomenon, right? It's happening in LatAm as well. As we, you know, two predominant regions, as we think about what we are doing in one region, a lot of it flows into what's happening within Brazil and Latin America and how we expand out from there. That's how I think about it. It's not, you know, they both are based on, you know, VAT-like systems, and they both have these, you know, these transformations that are happening. For us, you know, one drives the other. Similar kind of motions are happening in India, right? As GST is picking up and, you know, e-invoicing, like, you know, products and capabilities and infrastructure is being requested. For us, you know, I think what we will be doing is building out and looking at Europe, but also looking at where the cross-pollination is and how do we feed one off the other is how I think about, you know, international expansion and where it's going. Scott, I don't know if you have No, I think that that's right. I think that that's right on the mark. I mean, there's big opportunities to expand Europe, and there's big opportunities to expand in LatAm. I think e-invoicing is going to help that considerably in both regions. India, you know, we've got such a big presence there. I mean, we really have to, you know, continue to grow out that GST market. Then using, you know, AvaTax to sell customers, you know, that are doing business in the United States. So that's how I see it, that's how I see it developing. Then over time, we'll sprinkle in, you know, expanding to other markets. You know, our modus operandi to move into other markets is really we have to put a person on the ground or two people on the ground, and you have to get to understand the market. You have to get to understand the content. It's a long-term process in what we're doing. We'll focus on you know the biggest markets with the largest with the biggest problems around tax compliance. That's how we see it expanding. One last thing I'll just add to Scott's comments, Siti, is if you think about e-invoicing really gives us, you know, the moat that was effectively, you know, missing internationally like we have in the U.S. as e-invoicing comes along, you know, we strongly believe that e-invoicing coupled with other forms of, you know, other parts of compliance and tax is really the rails in what end users and partners want. Another big piece for me is what are we gonna be doing with the partner ecosystem? A lot. You know, some of these partners are global, and so, you know, again, it's kind of like Scott mentioned, AvaTax is a, you know, is a universal problem of someone selling, whether you're in LatAm or Europe, into the U.S. Same thing with some of these partnerships that occur. There's a lot of these overlap areas that you know I'm really excited about because I think once you crack the code on these, you know, it really helps you kind of you know be a part of a large market. I'm gonna use this as a springboard to just talk about a subject that I think hasn't been addressed here, but it really goes to the international market. You know, when we dominated the mid-market here in the United States using our partner ecosystem, I think I assumed, and I think probably you all have assumed, that that would just translate into a partnering moat internationally, and that would, you know, I mean, really work, that would really work, and it would be the same motion. What we've learned over the years is that the partnering opportunity internationally is not as strong as it is domestically here in the United States because of the transactional nature of tax. Because you need to be connected to do the calculation at the time of the transaction. What e-invoicing does is it actually, I mean, changes that to make it transactional, and therefore our model, which was, you know, partner-based here, can now be exactly what we've done before. I think, and I said this earlier in my comments, but it's so important that everybody realize that just because you can do e-invoicing doesn't mean you can do calculation. Our view is that calculation and e-invoicing together should be the solution, and it should be done through the partners that are creating the invoices, and which is exactly what Avalara's, you know, immense strength is to do. That's how we see that market unfolding. Thanks for the comment. Thank you. Thank you, Siti. Our next question is from Keith Weiss of Morgan Stanley. Keith, please go ahead. Excellent. Thank you guys for taking the question. Ross, thanks for all the additional detail in the presentation. That is super helpful. You took the opportunity to give us an intermediate-term target, and we appreciate that. But you're doing so at a time when I think investors are kind of at max nervousness, if you will. Two kind of related questions. One, why now in terms of the right time to give kind of that intermediate target? Two, 20%-25% top-line growth or organic top-line growth is pretty robust. You did 24% organic growth in the most recent quarter, so a good real durability of growth through 2025. Can you help us understand what gives you guys confidence in that durability of growth over a multiyear period? Yeah. Yeah, sure. I'm glad I thought no one was gonna ask about the intermediate term model, which would be disappointing. I mean, for us, this goes back to probably last summer when the three of us, you know, got together and said, "Okay, what do the next three, four years look like?" You know, we said, "Hey," you know, Scott, since I got here, has always talked about getting to $1 billion in revenue, and now we're pretty close to a billion-dollar revenue run rate. We're knocking on that door. Now we've reset our sights to $3 billion, right? What are the things that we wanna preserve that got us to $1 billion, and what are the things that need to change to get us to $3 billion around, you know, durability, scalability, efficiency, profitability, all those things. We said, "Okay, what are different permutations of the top line? You know, can we grow faster? Can we grow slower? What would that look like? What would need to happen?" We started looking externally at peers as well and saying, "How do we benchmark, you know, companies that are like $750 million of revenue to $2 billion, what does that look like?" You quickly realize that, you know, you're gonna be an outlier at that scale if you're not, you know, profitable and driving, you know, some kinda leverage. Now, all different companies do the leverage differently. Some are pretty flat, some are like this. Some of them do correlate to growth, some of them don't correlate to growth. We just said, "Hey, we wanna build a company that can continue to grow," and at that time we were saying in the 20-30 organic range, and that can drive leverage. We think that there's things that we've been talking about doing and wanting to do that if we can succeed, and we lay them out for you, and pretty much all in our control, regardless of short-term macro, by the way, that we can control, that can drive leverage, and we think we can sustain healthy growth. You know, we laid out different permutations, and we settled on, you know, that model. First was, can we gain confidence over a multi-year horizon in 20-25% organic? As we said, this isn't a comment on this year or the macro. Things can change with macro, and that'll play out. You know, in a multi-year horizon, we have confidence in that because we still see ourselves as around 10% penetrated in the U.S. market. We're not an expansion story yet. We're still very much a new plus expansion story of the base, right? We should be able to grow new logos in a normalized environment at similar rates. We should be able to sustain, maybe even improve ASPs while doing that. With our base, now 20,000 core customers, almost 35,000 billable accounts, and almost 100,000 total end customers that we touch with at least our calculation product and all these new products, between the pricing, strategic pricing, you know, discount recapture, cross-sell, and expansions, you know, when you bake all that in, the new and the cross-sell, we're like, "Gosh, we gotta be able to do that." That recipe, you know, made us feel confident. You know, any given year, everyone wants to talk about macro and this year and that, and we're not, we're not gonna comment specifically. Any given year, things can change. In a multi-year horizon, you know, we think that we've got the firepower to be able to drive that, and we think that what we talked about around the leverage are pretty much all in our control. Now we gotta execute, we gotta be disciplined, we gotta make tough choices, but that's within our control. And that's the model we settled on, and we presented to our board and rallied around and are presenting to you. The timing with the macro, you know, it just, this was a good time to put it out, and we're taking a long-term view here, not a short-term view. I'll just say what I really like, and we've done this in many presentations, and I think we've done it in other Analyst Day, where we do that rolling, that scrolling of the customers that come into us. I mean, and you just have to go from the backdrop that we fundamentally believe, and I think most people would agree that sales tax done, you know, manually is absurd, right? In a digital world. What should give everybody confidence is that you see that scrolling, and we are set up to do volume business of, you know, medium-sized, big-sized deals just constantly going through it. We can not only get them, you know, sell them, but we can bring them live. You know, we've proven that we can get them up and going, and as that process just continues, it's going to go on for a considerable length of time till we get that, you know, 10%, you know, the 30%, the 50% penetrated. You know, adding on all the add-on sales and continuing to do what Avalara does, I call it future-proofing the business. I think we've set ourselves up for really that kind of growth rate, you know, over time. Good question. Excellent. Super helpful, guys. Thank you. Thank you, Keith. At this juncture, we have time for two more questions. The next question comes from Scott Berg at Needham. Scott, please go ahead. Sure. Thanks, Jennifer. Thanks for the time today, everyone. Appreciate it. I guess I wanted to dive into two items just a little bit more or develop them a little bit more from your prior answers. Scott, I love that the e-invoicing has new legs to your government in the middle team. Definitely like to see that. I guess along the e-invoicing components, governments are notoriously slow in their application development for their own systems. I guess two questions are they ready to accept the invoicing? You kind of talked about the you know what the time frames look like. Then relative to your 2025 estimates, how should we think about the impact of that product in those numbers? My guess is it's reasonably slow or reasonably small, but just wanted to understand how you've handicapped that product in those assumptions. You wanna go ahead and jump on that one? I mean, we think about, you know, and I'm not gonna say what the mix of international is over the three years, but we've definitely modeled out, you know, how we see international returning to growth over the next few years and, you know, getting back to increasing it as a percent of revenue and outgrowing the business. You know, that's multifaceted. It's fueled by a number of initiatives. Amit can talk more about it, but, you know, getting back to some product launches, you know, that'll be able to serve more partners. There's a vast sea of partners out there that have to accommodate, you know, everything from the small to the larger and just implementing the partner strategy we have in the U.S. internationally, something that we're focused on. Two, having a product that we can better sell to the masses at high velocity is really important. That's something coming out later this year. Three, we have the e-invoicing engine that we bought with our INPOSIA acquisition last year, and we've got last mile to, I think, 19 or 20 countries, and we're looking to expand that and accelerate that. It's gonna take a few years to play out. But I think that we're already seeing multinationals that have to deal with. They're in multiple countries, and they're having to deal with these standards already. We're already seeing partners, you know, important partners that we're already playing with, that we've been playing with for a long time, starting to make decisions around e-invoicing partnerships. That's gonna help accelerate it. I don't think this—Scott, I don't think this is like the government, you know, sits on it for five years, and this is a five to seven-year thing. This is a revenue driver in the next one to three years, both selling e-invoicing specifically but also building it into our product. Ultimately, it just becomes a core differentiating capability within the product set that allows us to win these customers, starting with multinationals and then going more intracountry. I'm not gonna quantify it for you, Scott, but it is an important driver in the next few years, and it'll start to take hold. No, super helpful. Thanks for the feedback there, Ross. I guess then expanding on the international side is on the go-to-market strategy. You all have talked about partners, distribution there. I guess, as you look back over the last two years, what are the tweaks or changes you're making on the go-to-market side there, to sell more effectively? 'Cause my guess is the partner playbook that you used here in the U.S., isn't exactly the same internationally. Good point. Go ahead, guys. Thanks for the question. There are a couple major shifts that are happening. One, you know, in my earlier remarks, you know, I commented that, you know, a big chunk of our, you know, European business, for example, is U.K., dominated and one other region. One of the major go-to-market shifts that we are doing is we've actually picked the next big GDPs, and we are going there with our AvaTax product and program and actively going, you know, on the ground in marketing and bringing in more customers into that portfolio. Germany, Italy, France, Spain, you can, you know, you know the list of GDPs is where we are actively going out and starting to establish a presence. The other big piece is, you know, e-invoicing. What Scott and Ross were mentioning was we've already got a whole bunch and swath of partners that are asking about it and talking about it, and we're starting to engage and drive and build upon the momentum that is coming in e-invoicing being led in Europe and other areas. That is a major kinda play on where we are. We also continue to win other, you know, other partners, right? We spoke about, you know, winning a really large, one of the, you know, largest marketplaces in Europe who are now looking to us to say, "We need help with compliance." That momentum and shift has already started, and so we're gonna continue expanding on the globalization that we're seeing and these other marketplaces and partners coming to us to go drive that. I would say a lot of it's around, you know, so making some product changes. I think, you know, when people think about the international market, it really is about multinationals. I mean, that's where we are today. That's where all the competitors are. That's the market, you know, and it's predominantly doing compliance. When we bought a company to enter that market, and we've been upgrading that product, and I think that, you know, it isn't exactly where we want it, where we wanted it to be. I think it's moving to really be a, you know, the dominant player in the space. That's a tweak we're making, improving our SaaS product, you know, I mean, from a VAT perspective. I think the area that I would really like to call out is that taking that same kind of you know mentality and moving it downstream. That's what Ross referred to as we'll probably have that product out at the end of this year you know maybe a little bit sooner than that where we can really start to go after the more simplistic easier you know I mean international markets. I think from a product perspective there are some tweaks that we can make to what we've been doing that are going to lend itself to you know a better product and a better outcome and better partner relationships even as we move forward internationally. Very helpful. Thanks, everyone. Thanks, Scott. Thank you, Scott. We have time for one final question. That question is from Hannah Rudoff from Piper Sandler. Hannah, please go ahead. Great. Hi, guys. Thanks for taking my question today. Really great content. Super helpful. Just one quick one from me. I guess, as you increasingly lean into this cross-sell motion, how have you seen the number of products adopted upfront change, and where do you expect that to land over time, especially with those strategic products you're now focusing on more? I'll take it. Thank you for the question. We are seeing, you know, a lift in average products being sold, not only, you know, at point of sale when a customer first comes in, but we're also seeing that lift in the base. Now, I'm not gonna quantify the exact number and the target, but that motion has already started. You know, where we've seen and what's really exciting to me about this whole shift is it's. I know Ross spoke a lot about the base, and the opportunity there is huge, and I'm super excited. It's also, you know, happening at a really rapid rate when a customer comes in, because the motion has shifted to solution selling. It's no longer, hey, Avalara is just your sales tax compliance company. We are moving into, you know, the six clouds. We are moving into being a compliance company. We're seeing take rates starting there, and then as they move into becoming a base, you know, customers kinda adding on and building on into that. Ross, anything you Yeah, I mean, I think, Hannah, the long term of it, you know, is playing out, right? How the mix is gonna be. You know, we talked about the NRR and the sustainability, which implies that, you know, we're still selling a couple products up front for the most part and expanding more later. I think that's how we see it over the next few years. We're very focused on and doing testing around just, like, new land velocity, right? Because we don't wanna sell everything up front and get a higher ticket, is it gonna take nine months to sell it? You know? Is it hard to sell? Is it frustrating to sell? Is it a good customer experience? We're still tooling with, you know, land and expand. If it were up to me, it would be, like, land and expand with the best product to solve that pain point. I think you referred to it as, you know, solving that tax type, that pain point right there. You know, and then getting really good at next best opportunity, you know, in the base with really good hunters that can say, "Okay, at the front end, we sold calc and returns, and we know that they need these other things over time, and we're really good at creating the next best opportunity and cross-selling over time." We just don't wanna slow down the velocity of new lands, you know, to get all the ACV, all the ASP. That said, Amit is exactly right. You know, we have seen in the new logo lands, we continue to see ASP inch up as pricing, higher willingness to pay due to complexity, little bit more product up front, and we continue to see good expansion, you know, from expansions as well as cross-sell more products. The mix. We'll play through the mix, but that's my view. Yeah, I'm really impressed with what these guys have done. Because when you stop and think about it, I mean, we, you know, we're set up as a, you know, hunting and farming, you know, team, right? Where the hunters go out and they sell, and the ASP is going up and they're selling more products. They're attaching more products up front. But we've been able to maintain the same, you know, NRR at the back end, you know, continuing to sell that even though we're selling more up front. So if we can continue to sort of tweak that model so we can get, you know, good upfront attachment and then, you know, grow NRR, man, that's the best scenario that you can possibly have, because it. You know, you're not, you know, taking away from the back end, you know, the back end sales. It's awesome. Yeah. Really good job. Thanks, Hannah. Great. Thank you. Thank you, Hannah. Thank you, everybody, for all of your questions. This now concludes the Q&A portion of the Analyst Day. I'd like to turn it back over to Scott for some closing comments. Scott? Yeah. Well, thank you, everybody, for participating. This is, you know, a special day for us, so we really get to talk deeply about the business. Ross, I mean, excellent job. You and your team, you know, pulled it off again. I think the transparency that you have as a parent, you know, we've really tried to do everything. Amit, you know, all the work that you and your teams have been doing is really impressive. I would just finally say that, you know, I think Avalara is this interesting, special company, right? I mean, it's. It has so many things that make it, you know, really resilient in good and bad times, and it has so many growth vectors, you know, that we've been able to do. You know, I think we have a really focused, you know, sort of myopic approach on, you know, that interim model that you've put. You know, whether we said it in the past or, you know, whether we've outlined it's sort of the journey we've been on, and I love the fact that we've put it out there and said, you know, "That's what we're gonna go, you know, go do," and I'm like, "Good luck, guys." But it's really been a great journey to do it with you all and the like. Jennifer, thank you very much for, you know, getting us through all this. Thank you all. Appreciate it. See you next year. Take care.