Vertex, Inc. Reports 17.5% Revenue Growth to $170.4 Million in Latest Quarter

Vertex, Inc. reported significant financial performance improvements in its latest quarterly filing, with total revenues reaching $170.4 million for the three months ended September 30, 2024, a 17.5% increase from $145.0 million in the same period last year. For the nine months ended September 30, 2024, revenues totaled $488.3 million, up 17.0% from $417.5 million in the prior year. The company achieved a net income of $7.2 million for the third quarter, compared to a net loss of $3.4 million in the same quarter of 2023. Year-to-date, Vertex reported a net income of $15.1 million, a substantial recovery from a net loss of $28.4 million in the previous year.

The growth in revenue was primarily driven by a 20.6% increase in software subscription revenues, which amounted to $146.3 million for the quarter, attributed to cross-selling efforts and expanded usage among existing customers. Service revenues also saw a modest increase, rising to $24.2 million. The company’s gross profit for the third quarter was $110.5 million, reflecting a gross margin of 64.9%, up from 60.8% in the prior year. Operating expenses increased to $105.6 million, largely due to higher selling and marketing costs, which rose by 24.2% to $42.1 million.

In terms of strategic developments, Vertex completed the acquisition of ecosio GmbH on August 30, 2024, for a total purchase consideration of $169.0 million. This acquisition is expected to enhance Vertex's capabilities in electronic data interchange and e-invoicing services. Additionally, Vertex acquired the remaining 20% equity interest in Systax, a Brazilian tax software provider, further consolidating its market position. The company also made a strategic investment in artificial intelligence capabilities through the acquisition of Ryan, LLC, aimed at improving tax mapping processes.

Operationally, Vertex reported a customer base of 4,855 direct customers as of September 30, 2024, with an average annual revenue per customer (AARPC) of approximately $118,800, up from $112,690 a year earlier. The company’s annual recurring revenue (ARR) increased by 19.0% year-over-year to $576.8 million, driven by both existing customer growth and new customer acquisitions. The net revenue retention rate remained strong at 111%, indicating effective customer retention and expansion strategies.

Looking ahead, Vertex expressed confidence in its growth trajectory, supported by its strategic acquisitions and investments in technology. The company anticipates continued revenue growth driven by increased demand for its cloud-based solutions and ongoing enhancements to its product offerings. Vertex's liquidity position remains robust, with unrestricted cash and cash equivalents of $279.0 million as of September 30, 2024, positioning it well to meet future operational needs and capitalize on growth opportunities.