Financial Data and Key Metrics Changes - Revenue for the fourth quarter was $194.7 million, up 9.1% year-over-year, and in line with guidance [21] - Full-year revenue reached $748.4 million, an increase of 12.2% from 2024 [21] - Adjusted EBITDA for the fourth quarter was $42.5 million, reflecting an increase of 11.6% year-over-year [28] - Annual recurring revenue (ARR) was $671 million at quarter end, up 11.3% year-over-year [24] - Gross profit for the fourth quarter was $147.4 million, with a gross margin of 75.7% [25] Business Line Data and Key Metrics Changes - Subscription revenue in the fourth quarter increased 8.9% year-over-year to $166.2 million [21] - Services revenue grew 10.2% year-over-year to $28.5 million in the fourth quarter [23] - Cloud revenue for the fourth quarter was $94.6 million, up 23% year-over-year [23] Market Data and Key Metrics Changes - New logo revenue was up 20% in 2025, indicating healthy demand for Vertex's solutions [9] - E-invoicing mandates are expected to drive growth, particularly in the second half of 2026 [39] Company Strategy and Development Direction - The company aims to accelerate revenue growth through AI transformation and innovation [7][10] - Vertex is focusing on expanding its customer success coverage and leveraging AI tools to enhance customer engagement [9] - The company plans to broaden its Smart Categorization offering and expand into additional industries [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in 2025, including lower entitlement growth and higher customer attrition, primarily among smaller accounts [8] - The company is optimistic about restoring growth through new product offerings and proactive customer engagement [20] - Management emphasized the importance of AI in improving workflows and driving future growth [10][12] Other Important Information - The company repurchased approximately $10 million of its shares in the open market [29] - Vertex ended the fourth quarter with over $314 million in unrestricted cash and cash equivalents [29] Q&A Session Summary Question: Can you elaborate on the losses to competitors at the lower end of the market? - Management indicated that attrition was higher in 2025, driven by M&A and bankruptcies, particularly among smaller customers [35] Question: How confident are you in achieving the guidance for next year? - Management expressed confidence in the guidance, citing e-invoicing and AI products as potential growth drivers [39] Question: What parallels can you draw from your previous experiences that will help at Vertex? - Management highlighted the importance of AI and the need for accurate tax compliance as key areas where previous experiences will be beneficial [44][48] Question: What are the expectations around net retention rates? - Management is focused on improving net retention rates through new product offerings and proactive customer engagement [50] Question: How is the pipeline for 2026 shaping up, particularly with SAP customers? - Management noted steady growth in the SAP pipeline, with ongoing partnerships and win rates remaining strong [55] Question: Have you seen any AI tech budget crowding out that might have driven the entitlement slowdown? - Management has not observed explicit budget crowding out affecting their business [88]