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Vertex (VERX)
NASDAQ:VERX
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Vertex
(NASDAQ:VERX)
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Rating:56Neutral
Price Target:
$15.50
▲(4.45% Upside)
Action:ReiteratedDate:02/17/26
The score is driven by solid cash generation and improving profitability, supported by constructive 2026 guidance for re-accelerating growth and stronger adjusted EBITDA margins. Offsetting this are very bearish technicals (price far below key moving averages with weak momentum signals) and an unattractive valuation with an extremely high P/E.
Positive Factors
Cash generation
Consistent, substantial operating cash flow (~$165M) provides durable financial flexibility for a subscription business: it funds R&D and AI investments, supports buybacks and credit lines, and cushions profit volatility, reducing refinancing and execution risk during growth investments.
Cloud & subscription momentum
Rapid cloud and subscription growth drives higher recurring revenue and better lifetime value. Strong ARR expansion and cloud mix increase predictability, improve gross margin scalability, and enable product-led upsell, making revenue streams more durable and less cyclical over the medium term.
Constructive 2026 guidance & product traction
Management's explicit guidance for 10–11% revenue growth and mid-20s EBITDA margins reflects expected re-acceleration driven by AI, e-invoicing, and SAP migration wins. Concrete product traction and margin targets imply scalable operations and a clearer path to sustained profitability.
Negative Factors
High leverage
A sizeable debt load relative to equity raises solvency and flexibility risks if growth or margins slip. High leverage constrains capital allocation, increases interest exposure, and could force tighter spending or slower buybacks during revenue or cash-flow weakness, undermining strategic optionality.
Attrition among small accounts
Concentrated churn in smaller accounts weakens long-term NRR expansion and increases acquisition costs to replace high-volume SMB attrition. Persistent small-account turnover undermines subscription predictability and may require sustained product/price adjustments and investment to restore retention dynamics.
Margin and cash-conversion pressure
Weaker free cash flow and falling services margins signal pressure on cash conversion from collections, services mix, and higher operating investment. If sustained, this limits reinvestment capacity and raises the bar for profitable scaling, making margin recovery and positive FCF growth critical risks.
Vertex (VERX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.12B
Dividend YieldN/A
Average Volume (3M)2.77M
Price to Earnings (P/E)308.5
Beta (1Y)1.11
Revenue Growth13.83%
EPS Growth-273.23%
CountryUS
Employees1,900
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.17
Shares Outstanding77,372,320
10 Day Avg. Volume3,020,980
30 Day Avg. Volume2,770,863
Financial Highlights & Ratios
PEG Ratio-3.48
Price to Book (P/B)11.12
Price to Sales (P/S)3.85
P/FCF Ratio41.56
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue3.15
Enterprise Value/Gross Profit4.96
Enterprise Value/Ebitda34.66
Forecast
1Y Price Target
$18.45Price Target Upside24.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
EPS Forecast (FY)0.75
Revenue Forecast (FY)$827.39M
Vertex Business Overview & Revenue Model
Company DescriptionVertex, 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 MoneyVertex generates revenue primarily through the sale of its software solutions and services, which include cloud-based tax automation software, consulting services, and ongoing support and maintenance. The company operates on a subscription-based model, where clients pay recurring fees for access to their software and services. Key revenue streams include licensing fees for their software products, consulting fees for tax advisory services, and transaction-based fees for their e-commerce solutions. Vertex has established significant partnerships with various ERP and e-commerce platforms, enabling them to integrate their tax solutions seamlessly and expand their customer base, thereby contributing to their earnings.
Vertex Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Shows profitability across different segments, revealing which areas contribute most to the company's bottom line.
Shows profitability across different segments, revealing which areas contribute most to the company's bottom line.
Data provided by:
The Fly
The FlyVertex Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call conveyed a constructive and forward-looking tone: Vertex reported solid double-digit full-year revenue growth, strong cloud momentum, positive retention (NRR 105%), profitable operations (adjusted EBITDA and margins stable), meaningful AI and e-invoicing early traction, and a strong balance sheet. Headwinds included lower true-up revenue that mechanically reduced reported growth, slightly higher attrition concentrated in smaller accounts, weaker Q4 collections impacting free cash flow, and higher operating investments (R&D, S&M) to support AI and Ecosio integration. Management outlined clear plans to address controllable attrition, accelerate AI/product-led upsell, and pursue e-invoicing and SAP migration opportunities. Overall, the positives (growth, profitability, product traction, balance sheet) outweigh the near-term headwinds.Q4-2025 Updates
Positive Updates
Quarterly and Full-Year Revenue Growth
Q4 revenue of $194.7M, up 9.1% YoY and in line with guidance; full-year revenue $748.4M, up 12.2% YoY.
Subscription and Cloud Momentum
Q4 subscription revenue $166.2M (+8.9% YoY); full-year subscription $639.7M (+12.8% YoY). Cloud revenue Q4 $94.6M (+23% YoY) and full-year cloud $352.9M (+27.9% YoY).
Recurring Revenue and Retention
ARR $671M (+11.3% YoY). Net revenue retention (NRR) was 105% and gross revenue retention (GRR) was 94% (within target 94-96%).
Adjusted EBITDA and Margins
Q4 adjusted EBITDA $42.5M (+11.6% YoY) and full-year adjusted EBITDA $161.5M (+6.3% YoY). Adjusted EBITDA margins ~21.8% (Q4) and 21.6% (FY). Both were ~$0.5M above the high end of guidance.
Strong Customer-Level Metrics and New Logos
Average annual revenue per customer $137,867 (+12.4% YoY). New logo revenue grew ~20% in 2025; several large new wins including a European healthcare provider (well into seven figures) and multiple mid- to high-six-figure deals tied to SAP S/4HANA migrations.
AI and Product Innovation Traction
Significant 2025 investments in AI: launch and early traction of Smart Categorization (multiple marquee six-figure retail wins), expanded Vertex CoPilot, and partnerships (Kintsugi and cpa.com) to drive SMB and partner-led AI offerings.
E-invoicing Early Success and Upsell
First full year in e-invoicing showed strong traction; e-invoicing cross-sell increased ARR with example customers by over 20% on average. Multiple multi-country e-invoicing deals won (new logos mid- to high-five-figure ARR starts).
Healthy Balance Sheet and Share Buyback Activity
Ended Q4 with >$314M unrestricted cash, $300M unused availability on credit facility. Repurchased ~$10M of stock at ~$20/share; ~$140M remaining repurchase authorization.
Guidance Reflects Expected Acceleration
2026 guidance: revenue $823.5M–$831.5M (implied ~10–11% growth), cloud revenue growth ~25%, and adjusted EBITDA $188M–$192M (margin ~23% at midpoint).
Negative Updates
True-Up Revenue Shortfall Impacting Growth
True-up revenue in 2025 was ~$10M lower than 2024. This reduced FY 2025 revenue growth by just under ~2 percentage points and reduced Q4 YoY revenue growth by ~4 percentage points; subscription growth similarly impacted (~2 ppt for year, ~5 ppt for Q4).
Higher Attrition and Moderated Upsell/Cross-Sell
2025 saw increased customer attrition and moderation in upsell/cross-sell. Attrition concentrated in smaller accounts (average ARR of lost accounts < $50K vs company average $138K). Competitive losses described as modest but attrition was a headwind to retention metrics.
Collections and Free Cash Flow Weakness
Q4 free cash flow was $10.1M and full-year FCF $47.6M — weaker than expected with lower-than-typical Q4 collections (though ~$7M of incremental collections realized in January).
Margin Pressure in Services and Increased Operating Spend
Services gross margin in Q4 was 34.9% vs 37.6% prior-year Q4; decrease attributed to lower Ecosio margins and increased consulting investments. R&D, S&M, and G&A increased (R&D full-year $71.3M vs $56.4M prior year; S&M full-year $178M, +15.3%).
Timing and Predictability of SAP S/4HANA Opportunity
While Vertex continues to win SAP migration deals, the timing of tax engine decisions in S/4HANA migrations is taking longer and is harder to predict, making ARR acceleration from this vector less certain in the short term.
Inorganic Contribution Lapping Effects
Decrease in quarterly cloud revenue growth partly due to lapping the Ecosio acquisition and the elimination of its inorganic growth contribution, creating short-term comparability headwinds.
Company Guidance
Management guided full-year 2026 revenue of $823.5 million to $831.5 million (implying roughly 10.0%–11.1% growth vs. 2025's $748.4M), cloud revenue growth of 25%, and adjusted EBITDA of $188.0 million to $192.0 million (about a 23% margin at the midpoint); for Q1 2026 they guided revenue of $193.5 million to $196.5 million and adjusted EBITDA of $40.5 million to $43.5 million (approximately a 21.5% margin at the midpoint).Vertex Financial Statement Overview
Summary
Cash flow is a key strength with consistently positive and strong operating cash flow (~$165M in 2024–2025) and solid free cash flow, though FCF dipped in 2025. Profitability has improved to slightly positive net income in 2025, but operating leverage remains inconsistent and EBITDA margin volatility is a concern. The balance sheet adds risk with sizeable debt (~$360M) relative to equity (~$259M).Income Statement
Revenue growth has been consistently strong from 2020–2024 (mid-teens annually), but growth cooled sharply in 2025 (~2%). Profitability has improved materially versus the deep 2020 loss, with 2025 turning slightly profitable (net margin ~1%), though operating profit remains around break-even/negative, suggesting the business is still working through operating leverage. Gross margins are consistently healthy (~61–64%), but the sharp step-down in EBITDA margin in 2025 (vs. 2024) highlights volatility in operating profitability.62
Positive
Balance Sheet
The balance sheet is mixed: equity has strengthened in 2025, but debt remains sizeable (Total Debt ~$360M vs. Equity ~$259M). Leverage increased substantially versus earlier years (2020–2022), and while 2025 shows improved net income, returns on equity were negative in prior years, indicating historical difficulty converting the capital base into durable earnings. Overall, the company has adequate scale in assets, but the higher leverage profile raises financial risk if profitability softens.58
Neutral
Cash Flow
Cash generation is a relative strength: operating cash flow is consistently positive and has grown meaningfully since 2022, remaining strong in 2024–2025 (~$165M each year). Free cash flow is solid and positive, though it declined modestly in 2025 after a strong 2024, indicating some pressure from reinvestment or working capital. With net income near breakeven, the company’s ability to produce substantial cash flow provides a cushion, but the recent free-cash-flow pullback is worth monitoring.73
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 748.44M | 666.78M | 572.39M | 491.62M | 425.55M |
| Gross Profit | 454.51M | 426.13M | 348.58M | 298.49M | 263.66M |
| EBITDA | 104.51M | 102.01M | 56.95M | 53.07M | 41.84M |
| Net Income | 7.21M | -52.73M | -13.09M | -12.30M | -1.48M |
Balance Sheet | |||||
| Total Assets | 1.27B | 1.17B | 759.93M | 719.19M | 670.21M |
| Cash, Cash Equivalents and Short-Term Investments | 314.01M | 305.21M | 77.72M | 102.98M | 73.33M |
| Total Debt | 359.62M | 351.89M | 66.97M | 73.52M | 28.61M |
| Total Liabilities | 1.01B | 987.44M | 506.95M | 489.47M | 440.12M |
| Stockholders Equity | 258.92M | 179.35M | 252.98M | 229.72M | 230.08M |
Cash Flow | |||||
| Free Cash Flow | 69.31M | 99.05M | 6.10M | 3.43M | 46.92M |
| Operating Cash Flow | 165.54M | 164.82M | 74.33M | 63.85M | 90.29M |
| Investing Cash Flow | -123.75M | -158.15M | -66.17M | -72.05M | -294.78M |
| Financing Cash Flow | -32.78M | 231.26M | -26.48M | 17.09M | -9.10M |
Vertex Technical Analysis
Neutral
14.84
Price Trends
17.66
Negative
19.76
Negative
25.83
Negative
Market Momentum
-1.39
Negative
47.80
Neutral
72.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VERX, the sentiment is Neutral. The current price of 14.84 is above the 20-day moving average (MA) of 14.48, below the 50-day MA of 17.66, and below the 200-day MA of 25.83, indicating a neutral trend. The MACD of -1.39 indicates Negative momentum. The RSI at 47.80 is Neutral, neither overbought nor oversold. The STOCH value of 72.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.02B | 11.19 | 16.93% | ― | 18.18% | 70.94% | |
68 Neutral | $3.51B | 203.30 | 2.18% | ― | 4.89% | 55.80% | |
66 Neutral | $1.71B | -74.08 | -5.41% | ― | 17.11% | -19.12% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $2.67B | 24.47 | 0.76% | ― | 5.71% | ― | |
59 Neutral | $1.76B | -83.70 | -2.04% | ― | 12.14% | -19.29% | |
56 Neutral | $2.12B | 308.53 | 3.29% | ― | 13.83% | -273.23% |
* Technology Sector Average
VERX
Vertex
14.48
-17.81
-55.16%
CALX
Calix
51.77
14.75
39.84%
NCNO
nCino
16.14
-15.17
-48.45%
GBTG
Global Business Travel Group
5.47
-2.84
-34.18%
INTA
Intapp
22.43
-43.53
-65.99%
FRSH
Freshworks
7.82
-9.24
-54.16%
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.