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Vertex (VERX)
NASDAQ:VERX
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Vertex (VERX) AI Stock Analysis

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VERX

Vertex

(NASDAQ:VERX)

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Neutral 59 (OpenAI - 4o)
Rating:59Neutral
Price Target:
$27.00
▲(5.22% Upside)
Vertex's overall stock score is driven by its strong revenue growth and effective cost management, which are offset by ongoing profitability challenges and high leverage. The technical analysis suggests a neutral outlook, while valuation metrics indicate potential overvaluation. The earnings call provides a balanced view with both growth opportunities and risks, particularly from macroeconomic factors and regulatory challenges.
Positive Factors
Revenue Growth
Vertex's consistent revenue growth indicates strong demand for its tax technology solutions, supporting its market position and potential for future expansion.
New Product Launch
The launch of an AI-native tax solution enhances Vertex's product offerings, potentially increasing market share and addressing evolving client needs in tax compliance.
Leadership Transition
The CEO transition to Christopher Young could bring fresh strategic perspectives and leadership, potentially driving innovation and growth for Vertex.
Negative Factors
Profitability Challenges
Ongoing profitability issues, with negative net income and high leverage, may hinder Vertex's ability to reinvest in growth and manage financial risks effectively.
Regulatory Challenges
Regulatory changes in key markets like Brazil could disrupt operations and delay revenue realization, impacting Vertex's growth and market adaptability.
Reduced Guidance
Reduced financial guidance reflects potential challenges in achieving growth targets, possibly due to broader economic conditions affecting customer spending.

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 solutions, specializing in the automation of sales and use tax compliance for businesses across various sectors. The company offers a comprehensive suite of software solutions that streamline tax calculation, reporting, and compliance processes. Vertex serves a diverse clientele, including multinational corporations and small businesses, by delivering cloud-based solutions that adapt to the complexities of tax regulations globally, thereby enhancing operational efficiency and accuracy in tax management.
How the Company Makes MoneyVertex generates revenue primarily through its subscription-based model, offering its software solutions on a recurring basis to clients. Key revenue streams include fees from its cloud-based tax automation services, consulting services for tax compliance and strategy, and implementation services for integrating these solutions into client operations. The company also benefits from strategic partnerships with enterprise resource planning (ERP) providers, which expand its market reach and enhance the functionality of its offerings. Additionally, Vertex may receive revenue from training and support services, providing ongoing assistance to clients in utilizing its software effectively.

Vertex Key Performance Indicators (KPIs)

Any
Any
Gross Profit by Segment
Gross Profit by Segment
Shows profitability across different segments, revealing which areas contribute most to the company's bottom line.
Chart InsightsVertex's Software segment shows robust growth, driven by strong demand for e-invoicing and cloud ERP migrations, despite macroeconomic challenges. The Services segment, however, faces volatility with recent declines, reflecting slower ERP migrations and regulatory hurdles in Brazil. The latest earnings call highlights a balanced outlook, with reduced full-year guidance due to these challenges, but optimism remains due to strategic wins in Oracle and SAP ecosystems and strong European e-invoicing demand. Investors should watch for how these dynamics affect future profitability and strategic positioning.
Data provided by:Main Street Data

Vertex Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 03, 2025
Earnings Call Sentiment Neutral
While Vertex demonstrated strong revenue and subscription growth with notable achievements in e-invoicing and a solid customer base, the company faced significant challenges, including reduced guidance, decreased NRR, and macroeconomic factors impacting customer activity. The sentiment is balanced with both positive and negative aspects.
Q2-2025 Updates
Positive Updates
Revenue and Subscription Growth
Second quarter revenue was $184.6 million, up 14.6% year-over-year. Subscription revenue grew 15.7%, and cloud revenue increased by 29.9%.
Annual Recurring Revenue Growth
Annual recurring revenue (ARR) grew 16.1% to $636.6 million.
Strong Gross Revenue Retention
Gross revenue retention (GRR) remained at 95% in the second quarter, within the targeted range of 94% to 96%.
Ecosio Performance
Ecosio's annual recurring revenue reached $10.8 million, a 33% increase from the prior quarter.
E-Invoicing Demand in Europe
Strong demand for e-invoicing in Europe, particularly due to upcoming mandates in Belgium, France, and Germany.
Successful New Business Wins
Secured key new logos in Oracle and SAP ecosystems and several e-invoicing successes despite headwinds.
Negative Updates
Reduced Full-Year Guidance
Due to macroeconomic factors affecting customer activity, guidance for the full year was reduced.
Decreased Net Revenue Retention
Net revenue retention (NRR) decreased to 108%, down from 109% in the first quarter and 110% in the same quarter last year.
Challenges in Brazil
Regulatory changes in Brazil caused compliance confusion, leading to delayed deal activity.
Slower ERP Migrations
A slowdown in ERP migrations elongated deal cycles, impacting pipeline build and customer activity.
Softness in Large Enterprise Entitlements
Lower growth of additional entitlements as large enterprise customers showed more cautious software spending.
Company Guidance
During Vertex Inc.'s second quarter 2025 earnings call, several key metrics and guidance updates were highlighted. The company reported revenue of $184.6 million, marking a 14.6% increase year-over-year. Subscription revenue grew by 15.7%, and cloud revenue surged by 29.9%. Adjusted EBITDA reached $38.4 million, with an EBITDA margin of 20.8%. Annual recurring revenue (ARR) climbed 16.1% to $636.6 million, while gross revenue retention (GRR) stayed at 95%. However, net revenue retention (NRR) dropped to 108%, down one point from the first quarter. The company attributed this decrease to slower growth in customer entitlements and regulatory changes in Brazil. Despite these challenges, Vertex remains optimistic about its long-term growth due to global trends like increased e-invoicing mandates and cloud ERP migrations. The company adjusted its full-year revenue guidance to $750 million-$754 million and maintained its cloud revenue growth target at 28%.

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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue710.51M666.78M572.39M491.62M425.55M374.67M
Gross Profit461.84M426.13M348.58M298.49M263.66M209.28M
EBITDA72.74M102.01M56.95M53.07M41.84M-72.54M
Net Income-50.41M-52.73M-13.09M-12.30M-1.48M-78.94M
Balance Sheet
Total Assets1.20B1.17B759.93M719.19M670.21M554.93M
Cash, Cash Equivalents and Short-Term Investments284.39M305.21M77.72M102.98M73.33M303.05M
Total Debt351.89M351.89M66.97M73.52M28.61M1.11M
Total Liabilities950.15M987.44M506.95M489.47M440.12M329.44M
Stockholders Equity248.04M179.35M252.98M229.72M230.08M225.49M
Cash Flow
Free Cash Flow81.81M99.05M6.10M3.43M46.92M26.74M
Operating Cash Flow143.34M164.82M74.33M76.85M91.97M59.54M
Investing Cash Flow-169.58M-158.15M-66.17M-85.05M-296.46M-44.38M
Financing Cash Flow-29.88M231.26M-26.48M17.09M-9.10M213.63M

Vertex Technical Analysis

Technical Analysis Sentiment
Negative
Last Price25.66
Price Trends
50DMA
25.04
Positive
100DMA
29.38
Negative
200DMA
35.71
Negative
Market Momentum
MACD
0.02
Negative
RSI
48.50
Neutral
STOCH
51.82
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 25.66 is above the 20-day moving average (MA) of 25.09, above the 50-day MA of 25.04, and below the 200-day MA of 35.71, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 48.50 is Neutral, neither overbought nor oversold. The STOCH value of 51.82 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
$3.32B-5.23%19.78%47.51%
$3.84B-4.72%3.61%-44.99%
$4.03B-152.32-3.52%-8.80%-657.91%
$3.26B-3.95%17.09%48.66%
$37.18B12.37-10.20%1.83%8.50%-7.62%
$3.11B-3.15%13.24%-12.97%
$4.05B-20.95%15.00%-349.61%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VERX
Vertex
25.11
-17.69
-41.33%
CALX
Calix
61.78
24.04
63.70%
NCNO
nCino
26.84
-11.58
-30.14%
GBTG
Global Business Travel Group
8.13
0.25
3.17%
INTA
Intapp
39.62
-11.19
-22.02%
FRSH
Freshworks
11.30
-0.49
-4.16%

Vertex Corporate Events

Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Vertex Announces CEO Transition with Christopher Young
Positive
Oct 21, 2025

On October 21, 2025, Vertex announced the retirement of David DeStefano as CEO, effective November 10, 2025, with Christopher Young succeeding him. DeStefano will continue as non-executive Chairperson and provide consulting services until the end of 2025. Young, a seasoned executive with experience at Microsoft and McAfee, will lead Vertex into its next growth phase, focusing on leveraging generative AI in tax and compliance. The company also reported preliminary third-quarter 2025 financial results, with expected revenue of $192 million, up from $170.4 million the previous year, and adjusted EBITDA of $43 million, compared to $38.6 million.

The most recent analyst rating on (VERX) stock is a Hold with a $25.00 price target. To see the full list of analyst forecasts on Vertex stock, see the VERX Stock Forecast page.

Vertex, Inc. Reports Strong Revenue Growth Amid Challenges
Aug 7, 2025

Vertex, Inc. is a leading global provider of indirect tax solutions, offering tailored tax technology for businesses across various industries to manage complex tax compliance. In its second quarter of 2025, Vertex reported a double-digit revenue growth, driven by increased demand for its solutions amid growing complexities in indirect tax regulations. Key financial highlights include a 14.6% year-over-year increase in total revenues to $184.6 million, with software subscription revenues rising by 15.7% and cloud revenues surging by 29.9%. The company’s Annual Recurring Revenue (ARR) reached $636.6 million, marking a 16.1% increase compared to the previous year. Despite these positive trends, Vertex reported a net loss of $1.0 million, contrasting with a net income of $5.2 million in the same period last year, attributed to extended sales cycles and delayed customer decision-making impacting new contract signings. Looking ahead, Vertex remains optimistic about its growth prospects, with expectations for continued revenue increases driven by ERP cloud conversions and global e-invoicing mandates, although it has adjusted its financial guidance for the full year 2025 due to recent market challenges.

Vertex, Inc. Navigates Growth Amid Challenges
Aug 7, 2025

Vertex, Inc. Balances Growth with Challenges in Latest Earnings Call

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: Oct 29, 2025