Vertex?s Q1 Earnings: A Taxing Success Story

Vertex, Inc. Reports Strong First Quarter 2023 Results

KING OF PRUSSIA, PA ? May 10, 2023: Vertex, Inc. (NASDAQ: VERX) has unveiled its financial results for the first quarter ending March 31, 2023, and let?s just say, they are anything but taxing. With a revenue forecast that exceeds expectations, Vertex is demonstrating that even in a complex tax environment, it can deliver solid numbers.

Revenue Growth and Earnings Surprise

The company reported total revenues of $132.8 million, reflecting a robust 15.5% year-over-year growth. This performance suggests that Vertex has successfully navigated the turbulent waters of indirect tax solutions, positioning itself as a frontrunner in the tax automation space?particularly for large enterprises.

Software subscription revenues came in at $111.0 million, a 14.3% increase from the previous year, while cloud revenues surged to $48.2 million?up a staggering 25.9%. This indicates not just a growth story, but a compelling one at that. With such figures, one might expect an earnings surprise, especially when the EPS consensus had set the bar a tad lower.

Key Metrics that Matter

Vertex's Annual Recurring Revenue (ARR) hit an impressive $446.5 million, up 17.3% year-over-year. The Average Annual Revenue per direct customer (AARPC) also showed positive momentum, climbing to $104,370 compared to $89,700 a year prior. The company?s Net Revenue Retention (NRR) remained steady at 110%, suggesting that once Vertex gets a customer, it?s hard for them to leave?much like a sock in a dryer.

Operating Challenges and Future Outlook

However, it?s not all sunshine and rainbows. Vertex reported a net loss of $(18.1) million, compared to a net loss of $(0.3) million for the same period last year. This raises questions about operational efficiencies and future profitability. David DeStefano, President and CEO, acknowledged the challenges but emphasized the momentum on the go-to-market front, showcasing several large new deals with high-profile customers.

Looking ahead, Vertex appears to be well-positioned for continued revenue growth and improving earnings leverage throughout 2023. The complexities of indirect taxes aren?t going away, and if Vertex can maintain its competitive edge, it could find itself not just surviving but thriving.