Vertex, Inc. Reports 12.7% Revenue Growth in Q3 2025, Net Income Declines by 44%

Vertex, Inc. reported its financial results for the third quarter of 2025, revealing a total revenue of $192.1 million, a 12.7% increase from $170.4 million in the same period last year. The growth was primarily driven by a 12.7% rise in software subscription revenue, which reached $164.8 million, and a 12.8% increase in services revenue, totaling $27.3 million. For the nine months ending September 30, 2025, total revenue was $553.7 million, up 13.4% from $488.3 million in the prior year. However, net income for the quarter decreased by 44% to $4.0 million, compared to $7.2 million in Q3 2024, and for the nine-month period, net income fell to $14.2 million from $15.1 million.

The company experienced a notable increase in operating expenses, which rose 10.8% to $117.0 million for the third quarter, driven by higher costs in research and development, selling and marketing, and general and administrative expenses. Research and development expenses surged by 27.6% to $19.9 million, reflecting investments in new product development and enhancements. Selling and marketing expenses also increased by 12.5% to $47.4 million, attributed to expanded brand awareness efforts and growth in subscription sales. General and administrative expenses rose by 7.5% to $44.6 million, primarily due to strategic investments in IT infrastructure and personnel.

Vertex's operational metrics showed a slight decline in its Net Revenue Retention Rate (NRR), which fell to 107% from 111% year-over-year, indicating slower growth in additional entitlements from existing customers. The company reported an Annual Recurring Revenue (ARR) of $648.2 million, a 12.4% increase from the previous year, driven by both existing and new customer growth. The total customer count remained stable at 4,856, with an Average Annual Revenue Per Customer (AARPC) of approximately $133,484, up from $118,800 a year earlier.

Strategically, Vertex completed the acquisition of ecosio GmbH in August 2024, which has been integrated into its operations. The company also made a $15 million investment in Kintsugi AI, Inc., aimed at enhancing its tax software solutions through AI technology. Looking ahead, Vertex has authorized a stock repurchase program of up to $150 million, reflecting confidence in its financial position and commitment to returning value to shareholders. The company maintains a strong liquidity position with $313.5 million in cash and cash equivalents as of September 30, 2025, and no outstanding borrowings under its credit agreement.