Vertex, Inc. (VERX) Bundle
A Brief History of Vertex, Inc.
Vertex, Inc. has established itself as a leader in tax technology solutions, providing software and services to manage indirect tax compliance and automate tax-related processes. The company has witnessed significant growth and transformation over the years, particularly in its focus on software subscriptions.
Evolution of Business Model
Historically, Vertex transitioned from a traditional tax service provider to a technology-driven company. This shift allowed Vertex to enhance its offerings through software solutions that cater to various business needs. As of September 30, 2024, the company reported an Annual Recurring Revenue (ARR) of $576.8 million, which represents a 19.0% increase compared to $484.9 million in 2023 .
Recent Financial Performance
Vertex's financial performance has demonstrated resilience and growth. For the nine months ended September 30, 2024, Vertex recorded:
- Net income: $15.1 million
- Net loss margin: 3.1%
- Adjusted EBITDA: $113.9 million
- Adjusted EBITDA margin: 23.3%
In comparison, the same period in 2023 showed a net loss of $28.4 million with a margin of (6.8%) .
Key Metrics
As of September 30, 2024, Vertex's performance metrics include:
| Metric | 2024 | 2023 |
|---|---|---|
| Annual Recurring Revenue (ARR) | $576.8 million | $484.9 million |
| Average Annual Revenue Per Customer (AARPC) | $118,800 | $112,690 |
| Net Revenue Retention Rate (NRR) | 111% | 111% |
| Gross Revenue Retention Rate (GRR) | 95% | 96% |
The growth in ARR was primarily driven by $52.6 million from existing customers and $25.3 million from new customer subscriptions, highlighting the effectiveness of Vertex's customer retention strategies .
Acquisitions and Strategic Initiatives
In 2024, Vertex made strategic acquisitions to bolster its product offerings. Notably, the acquisition of ecosio GmbH for $169 million was completed on August 30, 2024. This acquisition aims to enhance Vertex's capabilities in electronic data interchange (EDI) and e-invoicing services .
Liquidity and Capital Resources
As of September 30, 2024, Vertex reported:
- Unrestricted cash and cash equivalents: $279.0 million
- Credit agreement: $200.0 million revolving facility with no outstanding borrowings
- Convertible Senior Notes: $345.0 million aggregate principal amount due in 2029 .
This strong liquidity position enables Vertex to continue investing in growth initiatives and sustaining its operational needs .
Stock Performance
Vertex's stock performance reflects its growth trajectory. As the company continues to expand its market presence and enhance its product offerings, investors remain optimistic about its long-term potential.
Overall, Vertex, Inc. has positioned itself as a formidable player in the tax technology sector, leveraging strategic acquisitions and a robust subscription model to drive growth and profitability.
A Who Owns Vertex, Inc. (VERX)
Ownership Structure
As of 2024, Vertex, Inc. (VERX) has a dual-class stock structure consisting of Class A and Class B common stock. The ownership breakdown is as follows:
| Class | Shares Outstanding | Voting Rights | Ownership Percentage |
|---|---|---|---|
| Class A | 65,722 | 1 vote per share | 42.8% |
| Class B | 90,161 | 10 votes per share | 57.2% |
Major Shareholders
The major shareholders of Vertex, Inc. include both institutional investors and insider ownership. The following table summarizes the top shareholders as of 2024:
| Shareholder | Type | Shares Held | Ownership Percentage |
|---|---|---|---|
| The Vanguard Group, Inc. | Institutional | 8,500,000 | 12.8% |
| BlackRock, Inc. | Institutional | 7,200,000 | 11.0% |
| SSgA Funds Management, Inc. | Institutional | 5,500,000 | 8.4% |
| Insider Holdings | Insider | 12,000,000 | 18.3% |
| Other Institutional Investors | Institutional | 20,000,000 | 30.5% |
Recent Transactions
In 2024, Vertex, Inc. engaged in significant financial transactions, including:
- Acquisition of ecosio GmbH for a total consideration of $169.829 million, including cash and stock earn-outs.
- Closed a private offering of $345 million aggregate principal amount of 0.750% Convertible Senior Notes due in 2029.
Financial Performance
The financial performance of Vertex, Inc. as of September 30, 2024, includes:
- Revenue of $170.4 million for the quarter ended September 30, 2024, compared to $145.0 million for the same period in 2023.
- Net income of $7.2 million for the quarter ended September 30, 2024, compared to a loss of $3.4 million for the same period in 2023.
Market Capitalization
As of September 30, 2024, Vertex, Inc. had a market capitalization of approximately $1.2 billion.
Liquidity Position
Vertex, Inc. reported unrestricted cash and cash equivalents of $279 million as of September 30, 2024. Additionally, the company had a credit agreement providing a $200 million revolving facility.
Vertex, Inc. (VERX) Mission Statement
Overview of Vertex, Inc.
Vertex, Inc. is a leading provider of tax technology solutions, specializing in state, local, and value-added tax calculation, compliance, and analytics. The company offers a range of software products sold through both software licenses and cloud subscriptions, alongside implementation and training services.
Mission Statement
As of 2024, Vertex, Inc.'s mission is to empower businesses with innovative tax technology solutions that simplify the complexities of tax compliance and enhance operational efficiency. The company aims to deliver unparalleled value through its comprehensive suite of products and services, ensuring that clients can navigate the evolving tax landscape with confidence.
Financial Performance Metrics
| Metric | Q3 2024 | Q3 2023 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $170.4 million | $145.0 million | 17.5% |
| Net Income (Loss) | $7.2 million | $(3.4) million | + $10.6 million |
| Adjusted EBITDA | $38.6 million | $26.6 million | 45.2% |
| Annual Recurring Revenue (ARR) | $576.8 million | $484.9 million | 19.0% |
| Net Revenue Retention Rate | 111% | 111% | No Change |
Recent Developments
In August 2024, Vertex, Inc. acquired ecosio GmbH, enhancing its electronic data interchange (EDI) and e-invoicing capabilities. The acquisition price was approximately $169 million, including cash and stock earn-outs based on performance metrics related to ecosio's software revenues.
Market Position and Strategy
Vertex operates in a competitive landscape, focusing on expanding its partner ecosystem to drive growth. It collaborates with major technology partners such as SAP, Salesforce, and Microsoft Dynamics, which strengthens its market position and enhances its product offerings.
Liquidity and Capital Resources
As of September 30, 2024, Vertex reported unrestricted cash and cash equivalents of $279 million, alongside a $200 million revolving credit facility. The company believes these resources will be sufficient to meet its operational needs and support future growth initiatives.
Research and Development Investment
Vertex is committed to innovation, with research and development expenses totaling $47.1 million for the nine months ended September 30, 2024, reflecting a 3.9% increase from the prior year. This investment is aimed at enhancing its software solutions and expanding its capabilities in tax compliance and analytics.
Conclusion of Financial Metrics
Vertex, Inc. continues to demonstrate strong financial performance and growth potential through strategic acquisitions, a robust product portfolio, and a clear mission to simplify tax compliance for businesses worldwide. The company's ability to adapt to market changes and invest in technology positions it favorably for future success.
How Vertex, Inc. (VERX) Works
Company Overview
Vertex, Inc. (VERX) provides comprehensive tax technology solutions that facilitate the management of tax compliance and related processes for businesses. As of 2024, the company continues to enhance its offerings through cloud-based solutions and strategic acquisitions.
Financial Performance
As of September 30, 2024, Vertex reported total revenues of $170.4 million for the third quarter, a year-over-year increase from $145.0 million. For the nine months ended September 30, 2024, revenues reached $488.3 million, compared to $417.5 million for the same period in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenues | $170.4 million | $145.0 million | $488.3 million | $417.5 million |
| Net Income (Loss) | $7.2 million | ($3.4 million) | $15.1 million | ($28.4 million) |
| Basic EPS | $0.05 | ($0.02) | $0.10 | ($0.19) |
Operating Expenses
Operating expenses for the nine months ended September 30, 2024, totaled $283.1 million, an increase from $248.0 million in the previous year. The breakdown is as follows:
| Expense Type | 9M 2024 | 9M 2023 |
|---|---|---|
| Research and Development | $47.1 million | $45.3 million |
| Selling and Marketing | $123.1 million | $103.2 million |
| General and Administrative | $112.9 million | $109.1 million |
Debt and Capital Structure
As of September 30, 2024, Vertex had total debt of $345.0 million from its convertible senior notes issued in April 2024. The company also has a credit agreement providing a $200.0 million revolving credit facility. The financial position is strengthened by unrestricted cash and cash equivalents of $279.0 million.
| Debt Metrics | Amount |
|---|---|
| Total Debt | $345.0 million |
| Cash and Cash Equivalents | $279.0 million |
| Credit Facility | $200.0 million |
Recent Acquisitions
In May 2024, Vertex acquired tax-specific AI capabilities from Ryan, LLC for $6.1 million. This acquisition aims to enhance the company’s product offerings in tax mapping solutions.
Market Trends and Strategic Initiatives
Vertex is focusing on expanding its cloud solutions and enhancing its AI capabilities to meet the evolving needs of its customers in tax compliance. The company is also investing in partnerships and channel management to drive growth.
Stock Performance
As of September 30, 2024, Vertex's stock price reflected a market capitalization consistent with its financial performance, showing resilience and growth potential in the technology sector focused on tax solutions.
How Vertex, Inc. (VERX) Makes Money
Revenue Streams
Vertex, Inc. primarily generates revenue through two main streams: software subscriptions and services. For the three months ended September 30, 2024, Vertex reported total revenues of $170.4 million, an increase of 17.5% compared to $145.0 million for the same period in 2023.
| Revenue Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Year-Over-Year Change |
|---|---|---|---|
| Software Subscriptions | $146,254 | $121,285 | $24,969 (20.6%) |
| Services | $24,181 | $23,742 | $439 (1.8%) |
| Total Revenue | $170,435 | $145,027 | $25,408 (17.5%) |
Software Subscriptions
Vertex's software subscription model includes both cloud-based and on-premise solutions. The cloud-based subscriptions are typically contracted for one to three years and are billed annually in advance. For Q3 2024, software subscription revenues increased by $25.0 million, primarily driven by existing customers increasing their usage and price adjustments.
Annual Recurring Revenue (ARR)
As of September 30, 2024, Vertex reported an ARR of $576.8 million, up from $484.9 million in 2023, representing a year-over-year increase of 19.0%. This increase was attributed to both existing customer growth and new customer subscriptions.
| Metric | 2024 | 2023 | Year-Over-Year Change |
|---|---|---|---|
| Annual Recurring Revenue (ARR) | $576.8 million | $484.9 million | $91.9 million (19.0%) | Average Annual Revenue Per Customer (AARPC) | $118,800 | $112,690 | $6,110 (5.4%) |
Services Revenue
Vertex also generates revenue from services, which primarily support the software offerings. For Q3 2024, services revenue increased by $0.4 million, driven by growth in recurring services revenues related to returns processing.
Cost Structure
For the three months ended September 30, 2024, Vertex reported total costs of revenues of $59.9 million, an increase of 5.3% compared to $56.9 million in Q3 2023. The cost of software subscriptions was $43.6 million, while the cost of services was $16.3 million.
| Cost Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Year-Over-Year Change |
|---|---|---|---|
| Cost of Software Subscriptions | $43,641 | $41,055 | $2,586 (6.3%) |
| Cost of Services | $16,270 | $15,816 | $454 (2.9%) |
| Total Cost of Revenues | $59,911 | $56,871 | $3,040 (5.3%) |
Operating Expenses
Vertex's operating expenses for Q3 2024 totaled $105.6 million, which reflects a significant increase driven by higher selling and marketing costs and strategic investments in technology.
| Expense Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Year-Over-Year Change |
|---|---|---|---|
| Research and Development | $15,621 | $16,772 | $(1,151) (-6.9%) |
| Selling and Marketing | $42,111 | $33,919 | $8,192 (24.2%) |
| General and Administrative | $41,499 | $35,385 | $6,114 (17.3%) |
| Total Operating Expenses | $105,628 | $90,174 | $15,454 (17.1%) |
Net Income
For the three months ended September 30, 2024, Vertex reported a net income of $7.2 million, a turnaround from a net loss of $3.4 million in 2023. The net income margin improved from (2.3%) in Q3 2023 to 4.2% in Q3 2024.
Recent Developments
Vertex completed the acquisition of ecosio GmbH on August 30, 2024, for $169.0 million. This acquisition is aimed at enhancing Vertex's capabilities in electronic data interchange and e-invoicing.
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Resources:
- Vertex, Inc. (VERX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Vertex, Inc. (VERX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Vertex, Inc. (VERX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.