Vertex (VERX) AI Stock Analysis

• Market Cap: $3.83B
• Dividend Yield: N/A
• Average Volume (3M): 1.71M
• Price to Earnings (P/E): 235.5
• Beta (1Y): 0.88
• Revenue Growth: 15.00%
• EPS Growth: -349.61%
• Country: US
• Employees: 1,900
• Sector: Technology
• Sector Strength: 84
• Industry: Software - Application
• EPS (TTM): 0.15
• Shares Outstanding: 77,318,570
• 10 Day Avg. Volume: 1,494,844
• 30 Day Avg. Volume: 1,707,064
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.48
• Enterprise Value/Revenue: 7.96
• Enterprise Value/Gross Profit: 12.25
• Enterprise Value/Ebitda: 77.76
• 1Y Price Target: $37.00
• Price Target Upside: 42.69% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 56 Neutral
• Price Target: $28.00 ▲(7.98% Upside)

Vertex's overall stock score is primarily influenced by its financial performance and earnings call insights. While the company shows strong revenue growth and effective cost management, profitability challenges and high leverage weigh heavily on its financial health. Technical analysis indicates bearish momentum, and valuation metrics are unattractive due to negative earnings. Despite these challenges, the earnings call provided some optimism with strong subscription and cloud revenue growth, though tempered by reduced guidance and macroeconomic concerns.

Positive Factors

Cloud and E-Invoicing Adoption

Vertex is the leader in the enterprise segment, benefitting from a gradual move to the cloud and an e-invoicing adoption cycle.

E-Invoicing Expansion

The launch of e-invoicing in Belgium had a positive impact, and new mandates in France and Germany could provide a needed catalyst in the emerging e-invoicing category.

Market Position and Growth

Vertex has established a market-leading position in tax software compliance for large enterprises with a 1B+ tax rules engine.

Negative Factors

ERP Migrations Slowdown

The downward revision to full year guidance was a result of uncertain macro, and also highlighted a slowdown in ERP migrations elongating deal cycles.

Macro Headwinds

Macro headwinds accelerated towards the end of the quarter, limiting upside to revenue due to lower true-ups, entitlements, and net new business activity.

Revenue Guidance Cut

Vertex reported mixed second-quarter results with the company cutting its revenue guidance by $12 million at the midpoint.

Vertex Business Overview & Revenue Model

Company Description

Vertex, 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 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 promising revenue growth and effective cost management, as reflected in its strong gross profit margin. However, profitability remains a concern due to persistent negative net income and high leverage. The company demonstrates solid cash flow generation, which could be leveraged to improve financial health. Addressing profitability and reducing leverage are key to enhancing overall financial performance.

Income Statement

Vertex shows a consistent revenue growth trend, with a TTM growth rate of 3.41%. However, profitability remains a challenge, as evidenced by negative net profit margins and EBIT margins. The gross profit margin is relatively strong at 63.54% TTM, indicating efficient cost management. Despite revenue growth, the company needs to address its negative net income to improve overall profitability.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio of 1.75 TTM, indicating significant leverage. Return on equity is negative, suggesting inefficiencies in generating returns for shareholders. The equity ratio is not directly provided, but the high leverage and negative ROE highlight potential financial risks. Strengthening equity and reducing debt could enhance financial stability.

Cash Flow

Vertex demonstrates positive cash flow trends, with a TTM free cash flow growth rate of 5.81%. The operating cash flow to net income ratio is strong, indicating good cash generation relative to net income. However, the free cash flow to net income ratio suggests room for improvement in converting earnings into free cash flow. Overall, cash flow management appears solid, but further enhancement is needed to support profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	710.51M	666.78M	572.39M	491.62M	425.55M	374.67M
Gross Profit	461.84M	426.13M	348.58M	298.49M	263.66M	209.28M
EBITDA	72.74M	102.01M	56.95M	53.07M	41.84M	-72.54M
Net Income	-50.41M	-52.73M	-13.09M	-12.30M	-1.48M	-78.94M
Balance Sheet
Total Assets	1.20B	1.17B	759.93M	719.19M	670.21M	554.93M
Cash, Cash Equivalents and Short-Term Investments	284.39M	305.21M	77.72M	102.98M	73.33M	303.05M
Total Debt	351.89M	351.89M	66.97M	73.52M	28.61M	1.11M
Total Liabilities	950.15M	987.44M	506.95M	489.47M	440.12M	329.44M
Stockholders Equity	248.04M	179.35M	252.98M	229.72M	230.08M	225.49M
Cash Flow
Free Cash Flow	81.81M	99.05M	6.10M	3.43M	46.92M	26.74M
Operating Cash Flow	143.34M	164.82M	74.33M	76.85M	91.97M	59.54M
Investing Cash Flow	-169.58M	-158.15M	-66.17M	-85.05M	-296.46M	-44.38M
Financing Cash Flow	-29.88M	231.26M	-26.48M	17.09M	-9.10M	213.63M

Vertex Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 25.93
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: 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 25.93 is above the 20-day moving average (MA) of 25.28, below the 50-day MA of 30.68, and below the 200-day MA of 40.98, indicating a bearish trend. The MACD of -1.80 indicates Negative momentum. The RSI at 29.12 is Positive, neither overbought nor oversold. The STOCH value of 21.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VERX.

Vertex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GBTG	68 Neutral	$3.88B	―	-4.72%	―	3.61%	-44.99%
INTA	68 Neutral	$3.67B	―	-3.95%	―	17.09%	48.66%
NCNO	68 Neutral	$3.52B	―	-3.15%	―	13.24%	-12.97%
FRSH	67 Neutral	$3.74B	―	-5.23%	―	19.78%	47.51%
CALX	65 Neutral	$3.96B	―	-3.52%	―	-8.80%	-657.91%
Sector *	61 Neutral	$35.56B	8.99	-10.49%	1.86%	8.45%	-8.32%
VERX	56 Neutral	$3.83B	235.54	-20.95%	―	15.00%	-349.61%

Vertex Corporate Events

Vertex Elects New Directors at Annual Meeting

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.