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Vertex (VERX) 6 Nov 24 2024 Q3 Earnings call transcript

AInvestWednesday, Nov 6, 2024 9:31 pm ET
1min read

The third quarter earnings call of Vertex Inc. revealed a robust financial performance, underpinned by strong revenue growth, adjusted EBITDA, and free cash flow, as well as strategic acquisitions that position the company for future growth.

Strong Financial Performance

Vertex reported revenue of $170.4 million in the third quarter, marking a 17.5% year-over-year increase. Software subscription growth was a notable 20.6%, with cloud revenue growth surging by 29.9%. The company's financial strength was further demonstrated by an adjusted EBITDA of $38.6 million and a free cash flow of $18.4 million. GAAP net income stood at $7.2 million, or $0.04 per diluted share.

Strategic Acquisitions

A significant highlight of the call was the acquisition of ecosio, a fast-growing EDI and e-invoicing company based in Austria. This strategic move is expected to bolster Vertex's indirect tax workflow management capabilities, particularly in international markets where value-added tax is the primary source of indirect tax revenue for governments. The combined Vertex e-invoicing solution, powered by Vertex's global tax content and data platform, is poised to create significant value for the company's customers.

Customer Focus and Strategic Initiatives

Vertex's customer-centric approach was evident in the call, with a focus on enhancing customer experience through innovative AI capabilities, such as copilot and smart categorization. The company also highlighted its commitment to addressing the compliance challenges faced by enterprises, particularly those struggling with legacy systems. With a focus on ERP conversions and the upcoming wave of e-invoicing regulations, Vertex is well-positioned to capitalize on these trends and drive revenue growth.

Financial Metrics and Guidance

Key performance indicators such as NRR, GRR, and annual recurring revenue demonstrated Vertex's ability to maintain and grow its customer base. The company's financial guidance for the fourth quarter and full year of 2024 reflects continued growth and profitability, with an emphasis on leveraging its cloud solutions and strategic acquisitions.

Looking Ahead

With a strong financial performance and strategic acquisitions, Vertex Inc. is well-positioned for continued growth in the coming quarters. The company's focus on customer experience, innovation, and regulatory trends positions it to capitalize on opportunities in the indirect tax market and drive sustainable growth. As the company navigates the complexities of indirect taxes and evolving regulatory landscapes, investors and analysts will be watching closely to see how Vertex continues to execute on its strategic initiatives and capitalize on the tailwinds shaping the market.

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