Vertex(US:VERX)2025-11-03 21:36Revenue Growth - Vertex generated revenue of $192.1 million for the three months ended September 30, 2025, representing a 12.5% increase from $170.4 million in the same period of 2024[134]. - For the nine months ended September 30, 2025, Vertex reported revenue of $553.7 million, up from $488.3 million in 2024, indicating a growth of 13.4%[134]. - Total revenues increased by $21.7 million, or 12.7%, to $192.1 million for the three months ended September 30, 2025, compared to $170.4 million for the same period in 2024[171]. - Total revenues for the nine months ended September 30, 2025, increased by $65.4 million, or 13.4%, to $553.7 million, with software subscriptions up by $58.9 million, or 14.2%[186]. Profitability Metrics - Adjusted EBITDA for the three months ended September 30, 2025, was $43.5 million, compared to $38.6 million in 2024, reflecting a 12.7% increase[135]. - Gross profit for the three months ended September 30, 2025, was $121.3 million, reflecting a 9.8% increase compared to $110.5 million in the same period of 2024[165]. - Adjusted EBITDA for the three months ended September 30, 2025, was $43.5 million, with an Adjusted EBITDA margin of 22.6%, slightly down from 22.7% in 2024[228]. - Free cash flow increased by $11.8 million to $30.2 million for the three months ended September 30, 2025, with a free cash flow margin of 15.7%, up from 10.8% in 2024[234]. Expenses and Costs - Total cost of revenues increased by $10.9 million, or 18.2%, to $70.8 million for the three months ended September 30, 2025[165]. - Research and development expenses increased by $4.3 million, or 27.6%, to $19.9 million for the three months ended September 30, 2025[165]. - Selling and marketing expenses rose by $5.3 million, or 12.5%, to $47.4 million, driven by increased payroll and advertising expenditures[177]. - General and administrative expenses increased by $3.1 million, or 7.5%, to $44.6 million, due to strategic investments in IT infrastructure and business processes[178]. Cash Flow and Liquidity - As of September 30, 2025, the company had unrestricted cash and cash equivalents of $313.5 million and a $300.0 million Line of Credit with no outstanding borrowings[201]. - Net cash provided by operating activities was $123.3 million for the nine months ended September 30, 2025, slightly down from $123.7 million in 2024, a decrease of 0.3%[204]. - Net cash used in investing activities was $91.6 million for the nine months ended September 30, 2025, a decrease of 31.3% compared to $133.3 million in 2024[206]. - Net cash used in financing activities was $22.2 million for the nine months ended September 30, 2025, compared to a net cash provided of $225.0 million in 2024, reflecting a change of 109.9%[208]. Customer Metrics - Vertex's customer base includes a majority of the Fortune 500, indicating strong market penetration and demand for its solutions[129]. - The number of direct customers rose to 4,856, with Average Annual Revenue Per Customer (AARPC) increasing to approximately $133,484 from $118,800 in the previous year[220]. - Net Revenue Retention Rate (NRR) decreased to 107% as of September 30, 2025, down from 111% in 2024, attributed to slower customer growth and delayed deal activity[223]. - Gross Revenue Retention Rate (GRR) remained stable at 95% for both 2025 and 2024[225]. Research and Development - Research and development expenses are anticipated to increase in absolute dollars as Vertex invests in new product development and enhancements[151]. - Research and development expenses for the nine months rose by $14.3 million, or 30.4%, to $61.4 million, reflecting investments in new solutions and AI technologies[190]. - Non-GAAP research and development expense for the three months ended September 30, 2025, was $16,766 thousand, up from $12,897 thousand in the same period of 2024, marking a 30.3% increase[244]. Stock and Shareholder Returns - The company announced a stock repurchase program for up to $150.0 million of its Class A common stock, allowing for flexibility in share repurchases[137]. Foreign Currency Exposure - Approximately 6% of revenues for the three months ended September 30, 2025, were denominated in currencies other than U.S. Dollars, compared to 3% for the same period in 2024[252]. - For the nine months ended September 30, 2025, about 5% of revenues were in foreign currencies, compared to 4% for the same period in 2024[252].