Vertex 2025 Q2 Earnings Swings to Loss as Net Income Deteriorates 118.6%

Vertex (VERX) reported its fiscal 2025 Q2 earnings on August 6, 2025. The company missed expectations with a net loss of $0.01 per share and revised guidance lower due to elongated ERP cycles and macroeconomic headwinds. Despite revenue growth, earnings declines and a weak outlook led to a challenging quarter.

Revenue
Vertex’s total revenue rose 14.6% year-over-year to $184.56 million in Q2 2025. The increase was driven by strong performance in software subscriptions, which accounted for the majority of the top-line growth at $157.84 million. Services revenue contributed an additional $26.71 million, rounding out the total. This performance reflects the company’s continued focus on its core subscription model and its ability to scale key offerings amid broader market challenges.

Earnings/Net Income
Vertex swung to a loss of $0.01 per share in Q2 2025, a 133.3% negative change from a profit of $0.03 per share in the prior-year period. The company reported a net loss of $961,000, representing a 118.6% deterioration from the net income of $5.16 million in Q2 2024. Despite the decline, the company noted it set a new record high for Q2 net income in 7 years, indicating some underlying strength.

Price Action
Vertex’s stock price gained 4.23% on the latest trading day but fell sharply over the prior week and month, dropping 20.18% and 25.03%, respectively. The volatility reflects mixed investor sentiment following the earnings release.

Post-Earnings Price Action Review
A strategy of buying Vertex shares after a revenue increase in its quarterly report and holding for 30 days has historically delivered strong returns. Over the past three years, this approach generated an overall return of 185.50%, outperforming the benchmark by 136.92%. The compound annual growth rate of 43.64% further highlights the strategy’s effectiveness. Despite 50.60% volatility, the strategy maintained a maximum drawdown of 0.00% and a Sharpe ratio of 0.86, suggesting favorable risk-adjusted returns.

CEO Commentary
David DeStefano, CEO, highlighted Q2 revenue of $184.6 million, up 14.6% year-over-year, with cloud revenue growth at 29.9%. While macroeconomic factors slowed customer activity, he emphasized Vertex’s long-term confidence due to ERP upgrade cycles, regulatory complexity, and global tax mandates. DeStefano noted e-invoicing as a key growth opportunity, with early expansion in Belgium and Europe. He acknowledged short-term challenges, including delayed deals due to ERP migration slowdowns and regulatory confusion in Brazil. Strategic priorities included leveraging AI, expanding country coverage for e-invoicing, and optimizing expenses. Despite the cautious near-term outlook, DeStefano remained optimistic about Vertex’s durable customer base and long-term market opportunities.

Guidance
Vertex guided to Q3 revenue between $190 million and $193 million and adjusted EBITDA between $38 million and $40 million. For the full year, the company expects revenue of $750 million to $754 million, with cloud revenue growth of 28% and adjusted EBITDA of $156 million to $160 million. The revised guidance reflects elongated ERP deal cycles, lower entitlements, and reduced true-up revenue, despite continued focus on long-term growth drivers like ERP migrations and regulatory complexity.

Additional News
In the three weeks following the earnings release, Vertex announced a strategic partnership with a European compliance solutions firm to expand its e-invoicing capabilities. Additionally, the company announced the appointment of a new CFO, effective October 1, 2025, as part of its leadership development strategy. Lastly, Vertex announced a share repurchase program of up to $100 million over the next 12 months, signaling confidence in its long-term value despite near-term challenges.