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Vertex (VERX)
NASDAQ:VERX

Vertex (VERX) AI Stock Analysis

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Vertex

(NASDAQ:VERX)

Rating:58Neutral
Price Target:
$35.00
▼(-0.96%Downside)
The overall score reflects strong earnings call outcomes and financial performance, despite bearish technical indicators and valuation concerns due to negative earnings.
Positive Factors
Market Position
VERX has established a market-leading position in tax software compliance for large enterprises with a 1B+ tax rules engine.
Strategic Partnerships
Strong partnerships at SAP and ORCL could emerge as a new growth vector across new and existing customers.
Negative Factors
Free Cash Flow
FCF was less than consensus estimates, falling to negative $12mm, the first negative FCF margin in two years.
Shareholder Activity
After market close, major family shareholder / former CEO Jeff Westphal sold a ~$3 million block of Vertex stock.

Vertex (VERX) vs. SPDR S&P 500 ETF (SPY)

Vertex Business Overview & Revenue Model

Company DescriptionVertex, Inc. (VERX) is a leading provider of tax technology and services, specializing in solutions that enable businesses to automate, integrate, and manage their indirect tax processes. Vertex offers a comprehensive range of products, including tax determination, compliance, reporting, and data management services, catering to a diverse range of industries such as retail, manufacturing, and ecommerce. Headquartered in Pennsylvania, Vertex serves clients worldwide, helping them navigate the complexities of tax regulations and improve their overall tax performance.
How the Company Makes MoneyVertex generates revenue primarily through the sale of its software and services, which include both cloud-based and on-premise solutions. The company's key revenue streams involve subscription fees for its software-as-a-service (SaaS) offerings, professional services, and customer support. Vertex's SaaS model provides recurring revenue as clients subscribe to use their automated tax solutions. Additionally, the company earns income through consulting services that help businesses implement and optimize their tax management systems. Partnerships with major ERP and financial software providers, such as SAP, Oracle, and Microsoft, enhance Vertex's market reach and integration capabilities, contributing to its revenue growth.

Vertex Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: -8.68%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with notable revenue and ARR growth, strategic investments in AI, and new customer wins. However, there are concerns about NRR pressure, decreased services margins, and negative cash flow.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Revenue for Q1 2025 was $177.1 million, up 12.9% year-over-year, with subscription revenue growing 14.4% and cloud revenue increasing by 29.6%.
Annual Recurring Revenue (ARR) Increase
ARR grew 17.9% to $618.5 million. Organic ARR growth was 15.1%, excluding contributions from acquisitions.
Successful Customer Engagements
Several notable customer wins across different ecosystems, including a 7-figure deal with a major electronic payments processor and a major real estate investment trust.
Investment in AI and Strategic Partnerships
Equity investment in Kintsugi, an AI startup, to enhance sales tax compliance solutions for SMBs and explore AI applications for enterprise markets.
E-Invoicing Solution Launch
The joint e-invoicing solution with ecosio achieved general availability, positioning Vertex well in anticipation of regulatory changes in major European markets.
Negative Updates
Net Revenue Retention (NRR) Pressure
NRR was 109%, down from 112% in the same quarter last year, though expected to rebound above 110% by year-end.
Decreased Services Gross Margin
Gross margin on services was 31.1%, down from 40.5% in the previous year’s first quarter, due to higher compensation expenses and lower-margin ecosio services.
Negative Free Cash Flow
Free cash flow was negative $12.3 million due to seasonal patterns, including annual bonus payments and accelerated investments.
Impact of Ecosystem Migration
Decline in direct customers, primarily low-end customers, though mitigated by focus on scaled customers.
Company Guidance
During the Vertex, Inc. First Quarter 2025 Earnings Conference Call, the company provided strong financial guidance with revenue for the quarter reaching $177.1 million, a 12.9% increase year-over-year, and subscription revenue growing 14.4%. Cloud revenue growth was notably robust at 29.6%. The company reported an adjusted EBITDA of $37.8 million, yielding an EBITDA margin of 21.3%, which exceeded the high-end of their guidance range. Furthermore, annual recurring revenue (ARR) rose by 17.9% to $618.5 million, while net recurring revenue (NRR) remained strong at 109%, with expectations of it surpassing 110% by year-end. Gross recurring revenue (GRR) was stable at 95%, within the targeted range of 94% to 96%. The company anticipates continued growth in 2025, supported by strategic initiatives like e-invoicing and AI, and highlighted an equity investment in the AI-focused startup Kintsugi.

Vertex Financial Statement Overview

Summary
Vertex shows strong revenue growth and effective cash management, indicating positive financial health. However, recurring net losses and negative EBIT margins highlight profitability challenges. Liabilities are high relative to assets, posing potential risks without proper management.
Income Statement
72
Positive
Vertex has shown a consistent revenue growth trajectory over the years, with a significant increase in revenue from 2020 to TTM 2025. Despite the positive revenue growth, the company struggles with profitability, as indicated by negative net income margins across all periods. The gross profit margin remains healthy, suggesting good control over production costs, but the negative EBIT and net income margins indicate challenges in managing operating and other expenses.
Balance Sheet
65
Positive
The balance sheet reflects a stable equity base with a moderate debt-to-equity ratio, which suggests a balanced capital structure. Stockholders' equity has been gradually increasing, indicating a positive financial health trajectory. However, the company’s liabilities are high compared to its assets, which could pose risks if not managed properly.
Cash Flow
78
Positive
Vertex's cash flow statement shows strong operating cash flows, which consistently cover the net income, indicating good cash management. The free cash flow has also improved over time, showing efficient capital expenditure management. However, fluctuations in investing and financing cash flows suggest variability in investment and funding strategies.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue687.06M666.78M572.39M491.62M425.55M374.67M
Gross Profit436.53M426.13M348.58M298.49M263.66M209.28M
EBITDA75.68M102.01M56.95M53.07M41.84M-72.54M
Net Income-44.28M-52.73M-13.09M-12.30M-1.48M-78.94M
Balance Sheet
Total Assets1.15B1.17B759.93M719.19M670.21M554.93M
Cash, Cash Equivalents and Short-Term Investments270.39M305.21M77.72M102.98M73.33M303.05M
Total Debt351.37M351.89M66.97M73.52M28.61M1.11M
Total Liabilities953.65M987.44M506.95M489.47M440.12M329.44M
Stockholders Equity200.49M179.35M252.98M229.72M230.08M225.49M
Cash Flow
Free Cash Flow77.31M99.05M6.10M3.43M46.92M26.74M
Operating Cash Flow155.06M164.82M74.33M76.85M91.97M59.54M
Investing Cash Flow-156.46M-158.15M-66.17M-85.05M-296.46M-44.38M
Financing Cash Flow220.19M231.26M-26.48M17.09M-9.10M213.63M

Vertex Technical Analysis

Technical Analysis Sentiment
Negative
Last Price35.34
Price Trends
50DMA
38.24
Negative
100DMA
38.80
Negative
200DMA
43.59
Negative
Market Momentum
MACD
-1.22
Positive
RSI
42.32
Neutral
STOCH
31.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VERX, the sentiment is Negative. The current price of 35.34 is below the 20-day moving average (MA) of 37.31, below the 50-day MA of 38.24, and below the 200-day MA of 43.59, indicating a bearish trend. The MACD of -1.22 indicates Positive momentum. The RSI at 42.32 is Neutral, neither overbought nor oversold. The STOCH value of 31.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VERX.

Vertex Risk Analysis

Vertex disclosed 41 risk factors in its most recent earnings report. Vertex reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Vertex Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$9.13B51.8539.29%0.23%14.29%151.35%
78
Outperform
$6.23B13.1758.14%23.21%
QXQXO
78
Outperform
$13.90B1.44%0.22%48.10%
74
Outperform
$7.76B103.3325.23%18.63%-55.09%
UU
68
Neutral
$10.11B-14.15%-16.74%49.75%
63
Neutral
$33.26B5.86-11.55%1.91%5.52%-20.13%
58
Neutral
$5.47B235.54-19.65%15.20%-666.94%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VERX
Vertex
35.34
-0.41
-1.15%
CVLT
CommVault Systems
174.33
52.65
43.27%
PEGA
Pegasystems
54.13
24.53
82.87%
QXO
QXO Inc
21.54
-40.72
-65.40%
U
Unity Software
24.20
8.39
53.07%
CWAN
Clearwater Analytics Holdings
21.93
3.59
19.57%

Vertex Corporate Events

Executive/Board ChangesShareholder Meetings
Vertex Elects New Directors at Annual Meeting
Neutral
Jun 17, 2025

On June 11, 2025, Vertex, Inc. conducted its Annual Meeting of Stockholders where Philip Saunders, J. Richard Stamm, and Mark J. Mendola were elected as directors, each to serve until the 2028 Annual Meeting. Additionally, the appointment of Crowe LLP as the independent auditor for the fiscal year ending December 31, 2025, was ratified.

The most recent analyst rating on (VERX) stock is a Hold with a $44.00 price target. To see the full list of analyst forecasts on Vertex stock, see the VERX Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 26, 2025