Tax software company Avalara nearly doubled in its first day of trading

  • Shares closed up 87 percent at $44.94 after opening at $35.
  • It's another successful cloud software IPO for the tech sector.
  • Avalara sells automated tax compliance software for enterprise use and offers integrations with software makers like Oracle, Workday and Stripe.

Shares of tax software company Avalara nearly doubled in their opening day of trading on Friday.

Shares closed up 87 percent at $44.94 after opening at $35. Shares priced at $24 in the company's $180 million IPO on Thursday.

It's another successful cloud software IPO for the tech sector. Zuora and Ceridian each jumped roughly 40 percent on their opening days in April. Cloud storage provider Dropbox went public in March and has gained more than 70 percent since its debut.

Seattle-based Avalara sells automated tax compliance software for enterprise use and offers integrations with software giants like Oracle, Workday and Stripe, according to SEC filings. Its customers include Pinterest, the New York Times and Fandango.

Scott McFarlane, chief executive officer of Avalara Inc., center, points to a monitor during the company's initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, June 15, 2018.
Michael Nagle | Bloomberg | Getty Images
Scott McFarlane, chief executive officer of Avalara Inc., center, points to a monitor during the company's initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, June 15, 2018.

Revenue in 2017 climbed 27 percent to $213.2 million, driven by rising demand from digital commerce companies that have to navigate numerous state and local tax laws.

CEO Scott McFarlane, who co-founded the company in 2004, told CNBC's "Squawk Alley" on Friday that in the next seven to 12 years, sales tax will have to be entirely automated.

"In a digital world the concept of doing sales tax manually is really absurd," McFarlane said. "And we saw that and we knew that we were swimming with the tide for those 14 years."

Avalara covers 6 billion transactions a year across 208 countries, and McFarlane said the company's ultimate goal is to have a hand in every transaction.

The stock is listed on the New York Stock Exchange under the ticker symbol "AVLR."

Goldman Sachs, J.P. Morgan and Bank of American Merrill Lynch were the lead underwriters.