Vertex, Inc. Reports 12.9% Revenue Growth to $177.1 Million in Q1 2025

Vertex, Inc. reported a significant increase in financial performance for the first quarter of 2025, with total revenues reaching $177.1 million, a 12.9% increase from $156.8 million in the same period of 2024. The growth was primarily driven by a 14.4% rise in software subscription revenues, which amounted to $150.8 million, up from $131.8 million. The company also saw a 5.4% increase in service revenues, totaling $26.3 million, compared to $25.0 million in the prior year. Vertex's net income surged to $11.1 million, a substantial increase from $2.7 million in the previous year, reflecting a net income margin of 6.4%.

In terms of operational metrics, Vertex's annual recurring revenue (ARR) increased by 17.9% year-over-year, reaching $618.5 million as of March 31, 2025. The company reported 4,888 direct customers, up from 4,309 a year earlier, with an average annual revenue per customer (AARPC) of approximately $126,534. The growth in customer count and revenue per customer was attributed to expanded usage of existing solutions and the addition of new customers, including contributions from recent acquisitions such as Systax and ecosio.

Vertex has also made strategic investments, including a $15 million minority investment in Kintsugi AI, Inc., aimed at enhancing its capabilities in automating sales tax compliance for small and mid-sized businesses. This investment aligns with Vertex's ongoing commitment to leverage artificial intelligence in its product offerings. The company continues to focus on expanding its cloud-based subscription services, which accounted for 53% of software subscription revenue in the latest quarter, up from 47% a year prior.

Despite the positive financial results, Vertex experienced a decrease in cash flow from operating activities, which fell to $14.8 million from $24.6 million in the previous year. This decline was primarily due to timing differences in cash payments and increased investments in property and equipment. The company reported unrestricted cash and cash equivalents of $270.4 million as of March 31, 2025, and has no outstanding borrowings under its $300 million credit facility, indicating a strong liquidity position.

Looking ahead, Vertex anticipates continued growth driven by its strategic initiatives and market expansion. The company remains focused on enhancing its product offerings and leveraging its partner ecosystem to capture additional market share. Vertex's management expressed confidence in its ability to sustain revenue growth and profitability, despite the competitive landscape and potential market fluctuations.