Vertex(VERX) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties, with actual results potentially differing due to operational, technological, and economic factors - Forward-looking statements in this report are subject to risks, uncertainties, and assumptions, and actual results may differ materially from expectations[9] - Key risk factors include the ability to maintain and grow revenue, expand strategic relationships, adapt to technological change (including AI), manage IT risks, attract and retain talent, and navigate competitive and economic pressures[9] - Additional factors include risks related to failures in information technology, incorrect solution implementation, changes in tax laws, cybersecurity, legal proceedings, global economic weakness, and intellectual property protection[11] Part I - Financial Information Item 1. Financial Statements Vertex's unaudited condensed consolidated financial statements for Q2 2025 and FY 2024, covering balance sheets, income, equity, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets (Amounts in millions) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--------------------------------- | :------------------------ | :------------------ | | Assets | | | | Total current assets | $502.731 | $536.333 | | Property and equipment, net | $195.034 | $177.559 | | Capitalized software, net | $35.659 | $36.350 | | Goodwill and other intangible assets | $397.312 | $363.021 | | Long-term investment | $15.000 | — | | Total assets | $1,198.189 | $1,166.791 | | Liabilities | | | | Total current liabilities | $506.324 | $537.376 | | Debt, net of current portion | $336.349 | $335.220 | | Total liabilities | $950.147 | $987.439 | | Stockholders' Equity | | | | Total stockholders' equity | $248.042 | $179.352 | | Total liabilities and stockholders' equity | $1,198.189 | $1,166.791 | Condensed Consolidated Statements of Comprehensive Income (Loss) (Amounts in millions, except per share data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $184.559 | $161.104 | $361.621 | $317.885 | | Gross profit | $121.200 | $102.688 | $234.194 | $198.480 | | Income (loss) from operations | $(3.864) | $7.545 | $0.622 | $5.980 | | Net income (loss) | $(0.961) | $5.164 | $10.169 | $7.848 | | Net income (loss) per share, basic | $(0.01) | $0.03 | $0.06 | $0.05 | | Net income (loss) per share, dilutive | $(0.01) | $0.03 | $0.06 | $0.05 | Condensed Consolidated Statements of Changes in Stockholders' Equity (Amounts in millions) | Metric | Balance, January 1, 2025 | Balance, June 30, 2025 | Balance, January 1, 2024 | Balance, June 30, 2024 | | :--------------------------------- | :----------------------- | :--------------------- | :----------------------- | :--------------------- | | Total Stockholders' Equity | $179.352 | $248.042 | $252.981 | $233.130 | | Net income (loss) (6 months) | $10.169 | $10.169 | $7.848 | $7.848 | | Stock-based compensation expense (6 months) | $30.325 | $30.325 | $24.769 | $24.769 | | Foreign currency translation adjustments (6 months) | $44.839 | $44.839 | $(7.346) | $(7.346) | Condensed Consolidated Statements of Cash Flows (Amounts in millions) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $60.808 | $82.292 | | Net cash used in investing activities | $(59.262) | $(47.837) | | Net cash provided by (used in) financing activities | $(20.157) | $238.126 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(15.304) | $271.792 | | Cash, cash equivalents and restricted cash, end of period | $310.762 | $360.943 | Notes to Condensed Consolidated Financial Statements Detailed explanations for Vertex's condensed consolidated financial statements, covering accounting policies, revenue, investments, and other key financial areas Note 1. Summary of Significant Accounting Policies - Vertex provides state, local, and value-added tax calculation, compliance, and analytics solutions through software license and cloud subscriptions, along with implementation, training, and tax-related services to U.S. and international customers[24] - The company completed the acquisition of ecosio GmbH on August 30, 2024, and acquired the remaining 20% equity interest in Systax Sistemas Fiscais LTDA on June 5, 2024, making both wholly-owned subsidiaries[26][27] - New accounting pronouncements, ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), are effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively, and are not expected to materially affect financial statements other than disclosures[32][33] Note 2. Revenue Recognition Revenue by Major Source (Amounts in millions) | Revenue Source | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Software licenses | $71.632 | $70.098 | $142.243 | $140.092 | | Cloud subscriptions | $86.212 | $66.345 | $166.362 | $128.181 | | Total software subscriptions | $157.844 | $136.443 | $308.605 | $268.273 | | Services | $26.715 | $24.661 | $53.016 | $49.612 | | Total revenues | $184.559 | $161.104 | $361.621 | **$