Vertex(US:VERX)2023-03-08 14:55Financial Data and Key Metrics Changes - Revenues in Q4 2022 reached a record $131.1 million, up 17.4% from Q4 2021, marking the highest year-over-year revenue growth since going public [7][32] - Adjusted EBITDA for Q4 was $20.8 million, an increase of 8% year-over-year [8][43] - Free cash flow in Q4 was $24 million, contributing to a positive free cash flow of $3.4 million for the full year [9][44] - Annual recurring revenue (ARR) was $431 million, up 16.5% year-over-year [10][33] - Gross profit for Q4 was $94.4 million, with a gross margin of 72%, compared to 70.7% in the same period last year [39] Business Line Data and Key Metrics Changes - Cloud revenue in Q4 was $46.6 million, up 34.4% year-over-year [38] - Managed Services business generated recurring service revenue of over $24.4 million for the full year, compared to $20.8 million in the prior year [35] Market Data and Key Metrics Changes - Customer count increased to 4,559 by the end of Q4, up by 61 from the previous quarter [36] - Scaled customers (those with ARR greater than $100,000) grew 15% year-over-year [36] Company Strategy and Development Direction - The company is focused on expanding its installed base, broadening strategic partnerships, strengthening global presence, and driving new product innovation [10][12] - Investments are being made in emerging technologies and tax content to transform the industry [10][12] - The company aims to penetrate the $22 billion addressable market for tax automation solutions [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain profitable growth despite economic uncertainties [8][51] - The company anticipates continued demand for tax compliance solutions, even during economic downturns [51] - Guidance for Q1 2023 expects total revenue between $131 million to $133 million, representing 15% year-over-year growth [47] Other Important Information - Vertex achieved HDI support center certification, recognizing its commitment to exceptional customer experience [29] - The company is investing in its team, including the addition of a Senior Vice President of Software Engineering from Salesforce [30] Q&A Session Summary Question: Observations on macroeconomic conditions and customer behavior - Management noted no usage concerns and strong price uptake, with customers focused on digital transformations and ERP upgrades [54] Question: Focus on emerging technologies in R&D - The company is expanding its edge solutions and exploring opportunities in data transformation and automation [55] Question: Exposure to in-store retail versus e-commerce - The customer base is balanced across both e-commerce and in-store, benefiting from the edge cloud solution [58][59] Question: Guidance for 2023 and growth expectations - Cloud revenue is expected to grow by approximately 27%, with modest growth in other business areas [64][66] Question: Drivers for customer count increase in Q4 - Growth was driven by investments in Microsoft, Workday, and Salesforce ecosystems [74] Question: Stock-based compensation trends - The decrease in stock-based compensation as a percentage of revenue is attributed to the normalization of grants post-IPO [80]