KING OF PRUSSIA, PA — Vertex, Inc. (NASDAQ: VERX) announced financial results for its first quarter ended March 31, 2023.
David DeStefano, President, Chief Executive Officer, and Chairperson of the Board stated “Companies all around the world are struggling with the complexity of indirect taxes, and Vertex continues to differentiate itself as the provider of choice in the tax automation space, especially with large enterprises. In the first quarter we delivered solid revenue growth and profitability, but we also saw very strong momentum on the go-to-market front and landed several large new deals with high profile customers. As a result, we are pleased with the first quarter results, and we are very excited about our opportunity for continued revenue growth and improving earnings leverage through the balance of 2023.”
First Quarter 2023 Financial Results
- Total revenues of $132.8 million, up 15.5% year-over-year.
- Software subscription revenues of $111.0 million, up 14.3% year-over-year.
- Cloud revenues of $48.2 million, up 25.9% year-over-year.
- Annual Recurring Revenue (“ARR”) was $446.5 million, up 17.3% year-over-year.
- Average Annual Revenue per direct customer (“AARPC”) was $104,370 at March 31, 2023, compared to $89,700 at March 31, 2022 and $100,500 at December 31, 2022.
- Net Revenue Retention (“NRR”) was 110%, consistent with March 31, 2022, and the fourth quarter of 2022.
- Gross Revenue Retention (“GRR”) was 96%, consistent with March 31, 2022, and the fourth quarter of 2022.
- Loss from operations of $(8.9) million, compared to income from operations of $0.5 million for the same period prior year. Non-GAAP operating income of $16.5 million, compared to $16.2 million for the same period prior year.
- Net loss of $(18.1) million, compared to net loss of $(0.3) million for the same period prior year.
- Net loss per basic and diluted Class A and Class B shares of $(0.12) for 2023, compared to net loss of $(0.00) for the same period prior year.
- Non-GAAP net income of $12.5 million and Non-GAAP diluted EPS of $0.08.
- Adjusted EBITDA of $20.2 million, compared to $19.1 million for the same period prior year. Adjusted EBITDA margin of 15.2%, compared to 16.6% for the same period prior year.
John Schwab, Chief Financial Officer, stated, “Our key performance indicators all showed continued strength in the first quarter. GRR and NRR remained at industry-leading levels, and we delivered strong high-teens growth in ARR and a continued steady increase in AARPC. We believe our business is built to deliver sustained growth across economic cycles, and we remain optimistic about our outlook in 2023 and beyond.”
Definitions of certain key business metrics and the non-GAAP financial measures used and reconciliations of such measures to the most directly comparable GAAP financial measures are included within the Company’s original disclosure
Financial Outlook
For the second quarter of 2023, the Company currently expects:
- Revenues of $135 million to $137 million; and
- Adjusted EBITDA of $21 million to $22 million.
For the full-year 2023, the Company currently expects:
- Revenues of $550 to $556 million;
- Cloud revenue growth of 27%; and
- Adjusted EBITDA of $92 to $96 million.
The Company is unable to reconcile forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact net income (loss) for these periods but would not impact Adjusted EBITDA. Such items may include stock-based compensation expense, depreciation and amortization of capitalized software costs and acquired intangible assets, severance expense, acquisition contingent consideration, litigation settlements, transaction costs, and other items. The unavailable information could have a significant impact on the Company’s net income (loss). The foregoing forward-looking statements reflect the Company’s expectations as of today’s date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. The Company does not intend to update its financial outlook until its next quarterly results announcement.
Important disclosures in the Company’s earnings release about and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided within the Company’s original disclosure.
For more information, visit www.vertexinc.com.
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