Vertex (VERX) AI Stock Analysis

• Market Cap: $6.51B
• Dividend Yield: N/A
• Average Volume (3M): 913.63K
• Price to Earnings (P/E): 235.5
• Beta (1Y): 0.92
• Revenue Growth: 15.20%
• EPS Growth: -666.94%
• Country: US
• Employees: 1,900
• Sector: Technology
• Sector Strength: 83
• Industry: Software - Application
• EPS (TTM): 0.15
• Shares Outstanding: 72,005,250
• 10 Day Avg. Volume: 818,017
• 30 Day Avg. Volume: 913,625
• PEG Ratio: -9.30
• Price to Book (P/B): 30.22
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 84.19
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 2.52
• Enterprise Value/Gross Profit: 15.10
• Enterprise Value/Ebitda: 20.45
• 1Y Price Target: $48.89
• Price Target Upside: 19.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 68 Neutral
• Price Target: $43.00 ▲(4.70%Upside)

Vertex's overall stock score is driven by strong revenue growth and strategic initiatives, particularly in AI and cloud services, but is tempered by ongoing profitability challenges and valuation concerns. While technical indicators suggest short-term bullishness, longer-term uncertainty remains.

Positive Factors

Financial Performance

Cloud revenue grew 30% year-over-year, indicating strong growth in this segment.

Growth Opportunities

Vertex's significant opportunity in the e-invoicing market presents a catalyst for future growth.

Strategic Investments

The company's investment in AI-driven sales tax compliance startup Kintsugi is seen as a strategic move to expand capabilities and market reach.

Negative Factors

Cash Flow

FCF was less than consensus estimates, falling to negative $12mm, the first negative FCF margin in two years.

Market Expectations

Vertex's ARR in the first quarter grew ~18% year-over-year to $619mm, but was slightly softer than investors were anticipating.

Revenue Growth

Organic revenue growth decelerated to 10.9% from 12.9% year-over-year.

Vertex Business Overview & Revenue Model

Company Description

Vertex, Inc. provides tax technology solutions for corporations in retail, communication, leasing, and manufacturing industries in the United States and internationally. It offers tax determination, compliance and reporting, tax data management, document management, pre-built integration, and industry-specific solutions. The company sells its software products through software license and software as a service subscriptions. It also provides implementation and training services in connection with its software license and cloud subscriptions, transaction tax returns outsourcing, and other tax-related services. Vertex, Inc. was founded in 1978 and is headquartered in King of Prussia, Pennsylvania.

How the Company Makes Money

Vertex 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 Financial Statement Overview

Summary

Vertex shows strong revenue growth and effective cash management, but struggles with profitability due to negative net income and EBIT margins. The balanced capital structure is challenged by high liabilities relative to assets.

Income Statement

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

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

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
687.06M	666.78M	572.39M	491.62M	425.55M	374.67M
	Gross Profit
436.53M	426.13M	348.58M	298.49M	263.66M	209.28M
	EBIT
3.42M	-2.23M	-7.42M	-8.08M	-2.94M	-104.76M
	EBITDA
75.68M	102.01M	56.95M	53.07M	41.84M	-72.54M
	Net Income Common Stockholders
-44.28M	-52.73M	-13.09M	-12.30M	-1.48M	-78.94M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
98.70M	305.21M	77.72M	102.98M	73.33M	303.05M
	Total Assets
759.93M	1.17B	759.93M	719.19M	670.21M	554.93M
	Total Debt
66.97M	351.89M	66.97M	73.52M	28.61M	1.11M
	Net Debt
-22.18M	55.84M	-1.21M	-18.29M	-44.73M	-301.94M
	Total Liabilities
506.95M	987.44M	506.95M	489.47M	440.12M	329.44M
	Stockholders Equity
252.98M	179.35M	252.98M	229.72M	230.08M	225.49M
Cash Flow		Free Cash Flow
77.31M	99.05M	6.10M	3.43M	46.92M	26.74M
	Operating Cash Flow
155.06M	164.82M	74.33M	76.85M	91.97M	59.54M
	Investing Cash Flow
-156.46M	-158.15M	-66.17M	-85.05M	-296.46M	-44.38M
	Financing Cash Flow
220.19M	231.26M	-26.48M	17.09M	-9.10M	213.63M

Vertex Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 41.07
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VERX, the sentiment is Positive. The current price of 41.07 is above the 20-day moving average (MA) of 39.21, above the 50-day MA of 38.49, and below the 200-day MA of 43.64, indicating a neutral trend. The MACD of 0.73 indicates Negative momentum. The RSI at 60.76 is Neutral, neither overbought nor oversold. The STOCH value of 85.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VERX.

Vertex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWAN	81 Outperform	$6.77B	14.36	58.14%	―	23.21%	―
PEGA	80 Outperform	$8.77B	49.82	39.29%	0.12%	14.29%	151.38%
CVLT	75 Outperform	$8.32B	111.77	25.23%	―	18.63%	-55.09%
QXO	75 Outperform	$10.99B	―	1.44%	―	0.22%	48.10%
U	73 Outperform	$10.45B	―	-14.15%	―	-16.74%	49.75%
VERX	68 Neutral	$6.51B	235.54	-19.65%	―	15.20%	-666.94%
Sector *	62 Neutral	$11.81B	10.34	-7.44%	2.91%	7.41%	-7.93%

Vertex Corporate Events

Vertex Highlights Growth Strategies at Investor Day

On March 19, 2025, Vertex, Inc. held an Investor Day at its Philadelphia headquarters, presenting key financial highlights and strategic insights. The event emphasized Vertex’s commitment to driving growth by solving indirect tax complexities and highlighted its strong market position, with a focus on expanding customer revenues and maintaining strategic partnerships. The presentation included discussions on the company’s financial outlook and growth strategies, reflecting its robust performance and future potential in the tax technology sector.