Now, let's get back to our question. Could this smaller biotech follow in the footsteps of its bigger partner? Their paths are a bit different: Vertex focused on CF for a number of years, building a billion-dollar business that's allowed it to fund programs in other areas. CRISPR Therapeutics has been applying its technology across treatment areas in preclinical and clinical studies for some time. CRISPR Therapeutics could start reporting product revenue soon. Vertex remains an excellent investment, but inv ...

A conference call replay will be available approximately one hour after the call by dialing 1-412-317-6671 and referencing passcode 10190684, or via the Company's Investor Relations website. The replay will expire on August 21, 2024 at 11:59 p.m. Eastern Time. KING OF PRUSSIA, Pa., July 11, 2024 (GLOBE NEWSWIRE) -- Vertex, Inc. (NASDAQ:VERX), a leading global technology provider of indirect tax solutions, today announced that it will release second quarter 2024 financial results before the market opens on W ...

KING OF PRUSSIA, Pa., July 11, 2024 (GLOBE NEWSWIRE) -- Vertex, Inc. (NASDAQ:VERX), a leading global technology provider of indirect tax solutions, today announced that it will release second quarter 2024 financial results before the market opens on Wednesday, August 7, 2024. A conference call to discuss the results will be held at 8:30 a.m. Eastern Time that same day. Vertex, Inc. is a leading global provider of indirect tax solutions. The Company's mission is to deliver the most trusted tax technology ena ...

AndreyPopov Since my last look in December, Vertex's (NASDAQ:VRTX) stock performance has mirrored SPY, up 18%. My focus back then followed Vertex's VX-548 Phase 2 data in diabetic peripheral neuropathy (DPN), in which the oral selective inhibitor of the NaV1.8 sodium channel was on par with the popular and blockbuster neuropathy drug, Lyrica. The company's potential in DPN, among other prospects, including their existing fortress within the cystic fibrosis market, prompted a "buy" rating. In the days preced ...

Part I - Financial Information [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Vertex reported strong Q1 2024 financial performance, achieving net income and improved operating cash flow [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Key financial metrics for Q1 2024 show significant revenue growth and a return to profitability Financial Metric | Financial Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $156,781 | $132,751 | +18.1% | | **Gross Profit** | $95,792 | $81,004 | +18.3% | | **Loss from Operations** | $(1,565) | $(8,929) | +82.5% | | **Net Income (Loss)** | $2,684 | $(18,132) | N/A | | **Net Income (Loss) per Share, diluted** | $0.02 | $(0.12) | N/A | Balance Sheet Item | Balance Sheet Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $755,802 | $759,927 | | Cash and cash equivalents | $56,134 | $68,175 | | **Total Liabilities** | $505,672 | $506,946 | | Deferred revenue, current | $296,845 | $290,143 | | **Total Stockholders' Equity** | $250,130 | $252,981 | Cash Flow Activity | Cash Flow Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $24,566 | $3,491 | | **Net cash used in investing activities** | $(19,535) | $(14,297) | | **Net cash used in financing activities** | $(1,153) | $(1,531) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes provide insights into revenue streams, stock-based compensation, and a significant post-quarter convertible notes offering Revenue Source | Revenue Source | Q1 2024 (in thousands) | Q1 2023 (in thousands) | YoY Growth | | :--- | :--- | :--- | :--- | | Software licenses | $69,994 | $62,808 | +11.4% | | Cloud subscriptions | $61,836 | $48,206 | +28.3% | | **Total Software Subscriptions** | **$131,830** | **$111,014** | **+18.8%** | | Services | $24,951 | $21,737 | +14.8% | | **Total Revenues** | **$156,781** | **$132,751** | **+18.1%** | - Total stock-based compensation expense for Q1 2024 was **$16.3 million**, an increase from **$11.4 million** in Q1 2023, distributed across various departments[86](index=86&type=chunk) - Subsequent to the quarter end, on April 26, 2024, the company closed a private offering of **$345 million** in 0.750% Convertible Senior Notes due 2029, with net proceeds of approximately **$333.7 million**[93](index=93&type=chunk)[98](index=98&type=chunk) - The company's effective income tax rate was **245.0%** for Q1 2024, resulting in a tax benefit of **$4.5 million**, contrasting with a **(111.4)%** rate and **$9.6 million** tax expense in Q1 2023 due to tax benefits from stock-based awards[89](index=89&type=chunk)[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong revenue growth driven by software subscriptions, improved profitability, and positive trends in key business metrics [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Revenue growth, particularly in software subscriptions, led to improved gross profit and a significant reduction in operating loss, resulting in net income - The **18.8%** increase in software subscriptions revenue was primarily driven by cross-selling to existing customers and expanded use, with new customer revenue accounting for **5.6%** of total software subscriptions revenue in Q1 2024[146](index=146&type=chunk) - Cost of software subscriptions revenues increased **20.7%** YoY, mainly due to higher personnel costs and a **$2.9 million** increase in depreciation and amortization of capitalized software and acquired intangible assets[148](index=148&type=chunk) - Selling and marketing expenses rose **13.3%** YoY, driven by a **$5.8 million** increase in payroll and related expenses, partially offset by decreased advertising and promotional spending[151](index=151&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with substantial cash, an undrawn credit line, and significantly enhanced capital from a recent convertible notes offering Cash Flow Summary | Cash Flow Summary | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,566 | $3,491 | | Net cash used in investing activities | $(19,535) | $(14,297) | | Net cash used in financing activities | $(1,153) | $(1,531) | - The company believes its existing cash, line of credit, and expected access to capital markets are sufficient to meet its operating and capital requirements for the next 12 months and beyond[159](index=159&type=chunk) - In April 2024, the company closed a private offering of **$345.0 million** in Convertible Senior Notes, significantly enhancing its capital resources[161](index=161&type=chunk)[174](index=174&type=chunk) [Key Business Metrics](index=56&type=section&id=Key%20Business%20Metrics) Key business metrics demonstrate strong growth in Annual Recurring Revenue and Net Revenue Retention, alongside significant improvements in non-GAAP profitability Metric | Metric | As of March 31, 2024 | As of March 31, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $524.5 million | $446.5 million | +17.5% | | Average Annual Revenue Per Customer (AARPC) | $121,720 | $104,370 | +16.6% | | Net Revenue Retention Rate (NRR) | 112% | 110% | +2 p.p. | | Gross Revenue Retention Rate (GRR) | 95% | 96% | -1 p.p. | Non-GAAP Metric | Non-GAAP Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Adjusted EBITDA | $36.7 million | $20.2 million | | Adjusted EBITDA Margin | 23.4% | 15.2% | | Free Cash Flow | $4.5 million | $(10.6) million | | Free Cash Flow Margin | 2.9% | (8.0)% | [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from variable-rate debt and foreign currency risk from international operations, partially hedged by forward contracts - A **100 basis point** increase in the bank prime or SOFR rates is projected to increase annual interest expense by **$0.4 million** on outstanding borrowings[207](index=207&type=chunk) - Approximately **4%** of revenues in Q1 2024 were denominated in currencies other than the U.S. Dollar, with increased exposure to the Brazilian Real due to the Systax acquisition[208](index=208&type=chunk)[209](index=209&type=chunk) [Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures with no material changes to internal controls over financial reporting - The principal executive officer and principal financial officer concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level[211](index=211&type=chunk) Part II - Other Information [Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in ongoing legal proceedings against a competitor, alleging unfair competition and trade secret misappropriation - The company filed a complaint against Avalara, Inc. alleging unfair competition and trade secret misappropriation, seeking both injunctive relief and monetary damages[215](index=215&type=chunk) [Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) Key risks include increased indebtedness from recent convertible notes, potential impacts on cash flow, and stock price volatility from associated hedging activities - In April 2024, the company incurred an additional **$345.0 million** in debt through the issuance of Convertible Senior Notes, which significantly increases its total indebtedness[218](index=218&type=chunk) - The company's indebtedness could limit its ability to obtain additional financing, require a substantial portion of cash flow for debt service, and reduce flexibility in business planning[220](index=220&type=chunk) - The Capped Call Transactions entered into in connection with the notes offering expose the company to credit risk from financial institution counterparties, and their hedging activities could affect the value of the Class A common stock[232](index=232&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - There were no unregistered sales of equity securities or use of proceeds to report for the period[236](index=236&type=chunk) [Other Information](index=71&type=section&id=Item%205.%20Other%20Information) Director Eric Andersen terminated a Rule 10b5-1 trading arrangement during the quarter, with no other similar changes reported - Director Eric Andersen terminated a Rule 10b5-1 trading plan on March 4, 2024[239](index=239&type=chunk) [Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications and Inline XBRL documents

Vertex, Inc. (NASDAQ:VERX) Q1 2024 Earnings Conference Call May 8, 2024 8:30 AM ET Company Participants Joe Crivelli – Vice President-Investor Relations David DeStefano – President and Chief Executive Officer John Schwab – Chief Financial Officer Conference Call Participants Chris Quintero – Morgan Stanley Daniel Jester – BMO Capital Joshua Reilly – Needham Adam Hotchkiss – Goldman Sachs Brad Reback – Stifel Natalie Howe – Bank of America Alex Sklar – Raymond James Austin Cole – Citizens Operator Greetings, ...

Financial Performance - Vertex's TTM Q1 2024 revenue reached $596 million[8] - The company's TTM Q1 2024 Adjusted EBITDA was $117 million[8] - Subscription revenues accounted for 84% of the company's total revenue[9] - In Q1 2024, Vertex achieved total revenue of $157 million, representing an 18% year-over-year growth[29] - The ARR reached $525 million in Q1 2024[29] - Q1 2024 Adjusted EBITDA increased by more than 80% compared to Q1 2023[29] Market Position and Growth - Over 60% of the Fortune 500 are Vertex customers[8, 19] - Vertex supports customers in over 190 countries[8] - The company estimates a $22 billion total addressable market (TAM) with less than 10% software adoption[12] - The Net Revenue Retention Rate (NRR) was 112%[25, 32] - Gross Revenue Retention (GRR) was 95%[9, 32] Strategic Focus - Vertex is focused on extending its leadership in indirect tax content[26]

Exhibit 99.1 Vertex Announces First Quarter 2024 Financial Results KING OF PRUSSIA, PA – May 8, 2024: Vertex, Inc. (NASDAQ: VERX) ("Vertex" or the "Company"), a leading global provider of indirect tax solutions, today announced financial results for its first quarter ended March 31, 2024. "The year is off to a solid start, and I am very pleased with our financial performance in the first quarter," stated David DeStefano, Vertex's President, Chief Executive Officer and Chairperson of the Board. "Revenue trac ...

Part I [Business Overview](index=4&type=section&id=Item%201.%20Business) Vertex, Inc. is a leading provider of enterprise tax technology solutions, specializing in indirect taxes for over 4,300 global customers - Vertex is a leading provider of enterprise tax technology solutions, specializing in indirect taxes for over **19,000 unique taxing jurisdictions** in the U.S. alone[21](index=21&type=chunk)[23](index=23&type=chunk) - The company serves over **4,300 customers**, including the majority of the Fortune 500, with tax support in over **190 countries**. As of December 31, 2023, the **Annual Recurring Revenue (ARR) per customer was $118,910**[26](index=26&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) - Core solutions include tax determination, compliance and reporting, tax data management, document management, and pre-built integrations with major ERP, CRM, and eCommerce platforms like SAP, Oracle, and Salesforce[27](index=27&type=chunk)[29](index=29&type=chunk) - Key growth strategies include retaining and expanding revenue from existing customers, acquiring new customers, broadening the partner ecosystem, and investing in new product innovation, particularly in international markets like Latin America and Europe[38](index=38&type=chunk)[46](index=46&type=chunk) - As of December 31, 2023, Vertex had over **1,500 full-time employees**, with **88% based in the U.S.**[57](index=57&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to customer retention, partner relationships, technological change, cybersecurity, and its controlled company status - A substantial portion of revenue depends on maintaining and growing business with existing customers and adding new ones. Failure to do so would harm financial results[64](index=64&type=chunk) - The business depends on strategic relationships with third parties, including its partner ecosystem. Failure to maintain or expand these relationships could harm the business[67](index=67&type=chunk) - The market is characterized by rapid technological change. Failure to introduce new and enhanced solutions, including those incorporating AI, could adversely affect the business[70](index=70&type=chunk)[72](index=72&type=chunk) - The company faces significant competition from other tax software vendors, outsourced compliance services, and native ERP functions[76](index=76&type=chunk) - Cybersecurity and data privacy risks, including those from cyber-attacks, data breaches, and remote work arrangements, could expose the company to legal liability and reputational damage[103](index=103&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Changes in tax laws and regulations, such as the evolution of economic nexus laws following the *South Dakota v. Wayfair, Inc.* decision, may require substantial investment to modify software and could alter the competitive landscape[101](index=101&type=chunk)[102](index=102&type=chunk) - As a "controlled company," Vertex is exempt from certain NASDAQ corporate governance requirements, including having a majority of independent directors, which may result in fewer protections for stockholders[142](index=142&type=chunk)[143](index=143&type=chunk) [Unresolved Staff Comments](index=47&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - Not applicable[149](index=149&type=chunk) [Cybersecurity Disclosures](index=47&type=section&id=Item%201C.%20Cybersecurity%20Disclosures) Vertex outlines its cybersecurity risk management program, integrated into enterprise risk management and overseen by the Board's Audit Committee - The company's cybersecurity risk management program is based on the **National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)**[151](index=151&type=chunk) - The Board of Directors has delegated oversight of cybersecurity risk to the Audit Committee, which receives quarterly reports from management[156](index=156&type=chunk)[157](index=157&type=chunk) - The General Counsel is responsible for assessing and managing the company's material risks from cybersecurity threats[159](index=159&type=chunk) - The company has not identified any risks from known cybersecurity threats or prior incidents that have materially affected its operations, business strategy, or financial condition[153](index=153&type=chunk) [Properties](index=49&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters in King of Prussia, Pennsylvania, and maintains additional offices domestically and internationally - The corporate headquarters is located in King of Prussia, Pennsylvania, under a lease expiring in September 2028[161](index=161&type=chunk) - Additional leased offices are located in Naperville, Illinois; Frankfurt, Germany; Sao Paulo, Brazil; Chennai, India; and Killorglin and Cork, Ireland[161](index=161&type=chunk) [Legal Proceedings](index=49&type=section&id=Item%203.%20Legal%20Proceedings) Vertex has filed a complaint against Avalara, Inc. alleging unfair competition and trade secret misappropriation, seeking injunction and monetary damages - On January 25, 2022, Vertex filed a complaint against Avalara, Inc. in the U.S. District Court for the Eastern District of Pennsylvania[163](index=163&type=chunk) - The complaint alleges unfair competition, intentional interference with contractual relations, and trade secret misappropriation. Vertex is seeking an injunction and monetary damages[163](index=163&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[166](index=166&type=chunk) Part II [Market for Common Equity and Related Matters](index=52&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Vertex's Class A common stock trades on NASDAQ, while Class B is not public; the company does not anticipate paying dividends, retaining earnings for operations - Class A common stock trades on the **NASDAQ Global Market** under the symbol "VERX". Class B common stock is not publicly traded[169](index=169&type=chunk)[170](index=170&type=chunk) - The company intends to retain all available funds for business operations and does not anticipate paying dividends on its common stock in the foreseeable future[173](index=173&type=chunk) Stock Performance Comparison (from 7/28/20 to 12/31/23) | Company / Index | 7/28/20 | 12/31/23 | |---|---|---| | Vertex, Inc. | $100.00 | $112.55 | | S&P 500 | $100.00 | $154.56 | | NASDAQ U.S. Benchmark Software TR | $100.00 | $159.09 | [[Reserved]](index=53&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis (MD&A)](index=55&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Vertex achieved significant revenue growth in 2023, driven by software subscriptions and cloud adoption, while increasing investments led to a wider net loss Financial Performance Summary (2023 vs. 2022) | Metric (in thousands) | 2023 | 2022 | % Change | |---|---|---|---| | Total Revenues | $572,387 | $491,624 | 16.4% | | Software Subscriptions Revenue | $480,830 | $415,473 | 15.7% | | Gross Profit | $348,579 | $298,492 | 16.8% | | Loss from Operations | ($17,510) | ($8,082) | 116.7% | | Net Loss | ($13,093) | ($12,304) | 6.4% | - Cloud-based subscriptions accounted for **45% of software subscription revenues** in 2023, up from **41% in 2022**, indicating a continued shift to cloud solutions[186](index=186&type=chunk)[199](index=199&type=chunk) Key Business Metrics (as of Dec 31) | Metric | 2023 | 2022 | |---|---|---| | Annual Recurring Revenue (ARR) | $512.5 million | $431.1 million | | Net Revenue Retention Rate (NRR) | 113% | 110% | | Gross Revenue Retention Rate (GRR) | 95% | 96% | | Number of Customers | 4,310 | 4,289 | | Avg. Annual Revenue Per Customer (AARPC) | $118,910 | $100,500 | Non-GAAP Financial Measures (2023 vs. 2022) | Metric (in thousands) | 2023 | 2022 | |---|---|---| | Adjusted EBITDA | $100,848 | $78,673 | | Adjusted EBITDA Margin | 17.6% | 16.0% | | Free Cash Flow | $6,099 | $3,428 | - Operating expenses increased significantly, with **R&D up 39.0%** and **G&A up 20.0%**, reflecting strategic investments in technology, business process re-engineering, and resources to support growth[240](index=240&type=chunk)[245](index=245&type=chunk) - The company has a **$200 million line of credit** and a **$50 million term loan**. As of December 31, 2023, **$46.9 million was outstanding** on the term loan and there were no borrowings under the line of credit[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk on variable-rate debt and foreign currency risk from international operations, while inflation has not had a material effect - The company is exposed to interest rate risk on its variable-rate debt. A **100 basis point increase** in rates is projected to increase annual interest expense by **$0.5 million**[315](index=315&type=chunk) - Foreign currency risk exists as approximately **4% of 2023 revenues** were generated in currencies other than the U.S. dollar. The company specifically hedges a portion of its exposure to the Brazilian Real[316](index=316&type=chunk)[317](index=317&type=chunk) - Inflation is not considered to have had a material effect on the business, as the company generally offsets cost increases through price adjustments[318](index=318&type=chunk) [Financial Statements and Supplementary Data](index=94&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that the required financial statements and supplementary data are presented at the end of the report, beginning on page F-1 - The required information for this item is presented at the end of this report beginning on page F-1[319](index=319&type=chunk) [Changes in and Disagreements with Accountants](index=94&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[321](index=321&type=chunk) [Controls and Procedures](index=96&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with an unqualified audit opinion - Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were **effective** at a reasonable assurance level[326](index=326&type=chunk) - Management concluded that as of December 31, 2023, the company's internal control over financial reporting was **effective**, based on the COSO framework[329](index=329&type=chunk) - The independent registered public accounting firm, Crowe LLP, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[332](index=332&type=chunk) [Other Information](index=100&type=section&id=Item%209B.%20Other%20Information) The company reports no changes to Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers in Q4 2023 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended December 31, 2023[339](index=339&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=100&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[340](index=340&type=chunk) Part III [Directors, Compensation, Security Ownership, and Accountant Fees](index=101&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for Items 10 through 14 is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Shareholders - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Shareholders[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=102&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section states that consolidated financial statements are filed, while all financial statement schedules are omitted or included elsewhere - The financial statements are filed with the report, while all financial statement schedules are omitted[350](index=350&type=chunk) [Form 10-K Summary](index=102&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports that there is no Form 10-K summary - None[351](index=351&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=110&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Crowe LLP issued unqualified opinions on Vertex, Inc.'s consolidated financial statements and internal control over financial reporting for 2023, with no critical audit matters - Crowe LLP issued an **unqualified opinion** on the consolidated financial statements for the three years ended December 31, 2023[369](index=369&type=chunk) - The firm also issued an **unqualified opinion** on the effectiveness of the Company's internal control over financial reporting as of December 31, 2023[370](index=370&type=chunk) - The audit determined there were **no critical audit matters**[373](index=373&type=chunk) [Consolidated Financial Statements](index=112&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position, results of operations, changes in equity, and cash flows, reporting a **$13.1 million** net loss on **$572.4 million** revenues in 2023 Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2023 | 2022 | |---|---|---| | Cash and cash equivalents | $68,175 | $91,803 | | Goodwill and other intangible assets | $260,238 | $257,023 | | Total Assets | $759,927 | $719,192 | | Deferred revenue, current | $290,143 | $268,847 | | Total Liabilities | $506,946 | $489,467 | | Total Stockholders' Equity | $252,981 | $229,725 | Consolidated Statement of Comprehensive Loss Highlights (Year Ended Dec 31) | (in thousands) | 2023 | 2022 | 2021 | |---|---|---|---| | Total Revenues | $572,387 | $491,624 | $425,548 | | Gross Profit | $348,579 | $298,492 | $263,656 | | Loss from Operations | ($17,510) | ($8,082) | ($2,942) | | Net Loss | ($13,093) | ($12,304) | ($1,479) | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31) | (in thousands) | 2023 | 2022 | |---|---|---| | Net cash provided by operating activities | $74,332 | $63,848 | | Net cash used in investing activities | ($66,171) | ($72,048) | | Net cash (used in) provided by financing activities | ($26,482) | $17,094 | [Notes to Consolidated Financial Statements](index=117&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed financial disclosures, including revenue recognition, business combinations, debt, stock-based compensation, and income tax calculations, with a revision for cloud computing arrangement costs - Previously issued financial statements were revised to correct an immaterial error in the presentation of capitalized Cloud Computing Arrangement (CCA) implementation costs, which were incorrectly shown as property and equipment instead of other assets[391](index=391&type=chunk)[392](index=392&type=chunk) Disaggregation of Revenue (Year Ended Dec 31) | Revenue Source (in thousands) | 2023 | 2022 | |---|---|---| | Software licenses | $266,213 | $246,577 | | Cloud subscriptions | $214,617 | $168,896 | | **Total Software Subscriptions** | **$480,830** | **$415,473** | | Services | $91,557 | $76,151 | | **Total Revenues** | **$572,387** | **$491,624** | - The company details several business combinations, including the 2021 acquisitions of **LCR-Dixon ($99.1 million purchase price)** and **Taxamo ($200.7 million purchase price)**, and the 2021 acquisition of Tellutax, which includes contingent consideration[484](index=484&type=chunk)[491](index=491&type=chunk)[497](index=497&type=chunk) - As of December 31, 2023, the company had **$46.9 million in outstanding borrowings** under its Term Loan and no outstanding borrowings under its **$200 million Line of Credit**[554](index=554&type=chunk)[555](index=555&type=chunk) - Total stock-based compensation expense was **$33.9 million in 2023**, a significant increase from **$19.7 million in 2022**, primarily driven by RSU expense[591](index=591&type=chunk) - The company's effective tax rate was **39.6% in 2023**, resulting in an income tax benefit of **$8.6 million** on a pre-tax loss of **$21.7 million**. This was a significant shift from the **(21.5)% effective rate** (a tax expense) in 2022[599](index=599&type=chunk)

Financial Data and Key Metrics Changes - Revenue in Q4 2023 was $154.9 million, an increase of 18.1% year-over-year, exceeding guidance by $7.9 million [6][28] - Adjusted EBITDA was $32 million, up over 52% compared to Q4 2022, with an EBITDA margin of 20.7%, the highest in over three years [6][34] - Annual Recurring Revenue (ARR) exceeded $500 million for the first time, growing nearly 19% to $512.5 million [6][30] - Net Revenue Retention (NRR) reached a record 113%, up from 110% in the previous year [6][30] - Average Annual Revenue per Customer (AARPC) increased 19% year-over-year to nearly $119,000 [6][30] Business Line Data and Key Metrics Changes - Subscription revenue in Q4 increased 17.9% year-over-year to $130.7 million, while full-year subscription revenue was $480.8 million, up 15.7% [29] - Services revenue grew 19.7% year-over-year to $24.2 million in Q4, with full-year services revenue at $91.6 million, up 20.2% [29] - Cloud revenue was $60.6 million in Q4, up 29.9% year-over-year, with full-year cloud revenue at $214.6 million, up 27.1% [29] Market Data and Key Metrics Changes - Growth in scaled customer count was 13% year-over-year, indicating success in the enterprise market [7] - Gross Revenue Retention (GRR) was 95% in Q4, within the target range of 94% to 96% [7][30] - The company noted a record high in U.S. sales tax rate changes in 2023, indicating a complex regulatory environment [21] Company Strategy and Development Direction - The company launched a strategic investment program in 2020 aimed at accelerating global commerce and targeting $1 billion in revenue [8] - Continued focus on enhancing partnerships with major players like Oracle, SAP, Microsoft, and Salesforce to drive growth [8][19] - The company is confident in the growth potential driven by ongoing digital transformations and regulatory pressures [12][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for consistent execution in the coming years, citing strong performance in 2023 [13][28] - The company anticipates continued growth driven by regulatory pressures and digital transformation initiatives [12][25] - Management highlighted the importance of customer success teams and strategic partnerships in driving revenue growth [9][19] Other Important Information - The company completed several technology and tax content-focused acquisitions to support growth [9] - Free cash flow for the full year was $6.1 million, compared to $3.4 million in the previous year [35] - The company ended Q4 with over $68.2 million in unrestricted cash and cash equivalents [35] Q&A Session Summary Question: Key needle movers from the investment cycle - Management identified investments in the partner ecosystem and customer success function as key drivers of growth [41] Question: Confidence in cloud growth guidance - Management cited regulatory pressure and ongoing digital transformations as reasons for confidence in the 28% cloud growth guidance [42][43] Question: E-invoicing and Pagero partnership - Management confirmed that there are other potential partnerships and acquisition options beyond Pagero [45][46] Question: Future appetite for M&A - Management indicated a willingness to pursue M&A opportunities that align with long-term strategy and customer needs [75][77] Question: Impact of true-ups on ARR - Management explained that true-ups impact revenue for prior periods but typically lead to higher future ARR due to customer renewals at higher tiers [78] Question: Cloud business impact on gross margin - Management noted that while cloud margins are currently lower than on-prem margins, they expect margins to improve as cloud adoption increases [80]