Growth Fund Dumps $25 Million in Vertex Stock as Weak Quarter Hit Returns

Core Insights - Conestoga Capital Advisors sold 855,435 shares of Vertex, valued at approximately $24.8 million, during the third quarter, reducing its position in the company [1][2][7] - Vertex now constitutes 1.0% of Conestoga's reportable assets under management (AUM), with the fund holding 2.5 million shares at the end of the quarter [2][3] Company Overview - Vertex specializes in tax technology software and services, utilizing software licensing and cloud-based subscription models to provide scalable tax compliance solutions [6][9] - The company reported a total revenue of $710.5 million and a net income loss of $50.4 million, with a market capitalization of $4.1 billion [4] Financial Performance - In the second quarter, Vertex's revenue increased by 15% year over year to $184.6 million, but the company experienced a net loss of $961,000 compared to a profit of $5.2 million in the previous year [10] - As of the latest market close, Vertex shares were priced at $25.41, reflecting a 39.5% decline over the past year, underperforming the S&P 500's nearly 17% gain during the same period [3] Investment Context - Conestoga's reduction in Vertex shares is indicative of a broader trend of retreating from underperforming software investments that negatively impacted the fund's returns [7][11] - Despite the recent pullback, Vertex's recurring revenue model and strong enterprise presence suggest potential for long-term growth if margins stabilize [11]