Vertex, Inc. Reports 11.1% Revenue Growth but Faces Net Loss in Q1 2026

Vertex, Inc. reported its financial results for the first quarter of 2026, revealing total revenues of $196.6 million, an increase of 11.1% from $177.1 million in the same period last year. The growth was primarily driven by a 10.9% rise in software subscription revenues, which reached $167.1 million, and a 12.2% increase in services revenue, totaling $29.5 million. However, the company experienced a net loss of $2.5 million, a significant decline from the net income of $11.1 million reported in the first quarter of 2025.

The company's operating expenses rose sharply by 24.9% to $135.5 million, compared to $108.5 million in the prior year. This increase was attributed to higher costs in research and development, selling and marketing, and general and administrative expenses, which collectively accounted for a significant portion of the total operating expenses. Notably, general and administrative expenses surged by 20.7% to $54.3 million, largely due to strategic investments and severance costs related to a global Value Creation Plan announced in April 2026.

In terms of operational metrics, Vertex reported an annual recurring revenue (ARR) of $687.6 million, reflecting an 11.2% increase year-over-year. The company also maintained a customer base of 4,895 direct customers, with an average annual revenue per customer (AARPC) of approximately $140,464. However, the net revenue retention rate (NRR) decreased to 105% from 109% a year earlier, indicating a slowdown in revenue growth from existing customers.

Strategically, Vertex completed the acquisition of Brinta, a provider of business-to-business integration services, for $22 million on March 2, 2026. This acquisition is expected to enhance Vertex's capabilities in indirect tax calculation and e-invoicing, particularly in the Latin American market. The company also initiated a restructuring plan aimed at improving operational efficiency, which includes a reduction of approximately 170 employees and is projected to yield annualized cash savings of $60 million to $70 million starting in fiscal 2027.

Looking ahead, Vertex anticipates continued growth in its cloud-based subscription services, which accounted for 58% of software subscription revenue in the first quarter of 2026. The company remains focused on leveraging its technology partnerships and expanding its market presence, while also managing costs and enhancing profitability through strategic initiatives.