KING OF PRUSSIA, PA — Vertex, Inc. (NASDAQ: VERX) raised its 2026 adjusted EBITDA outlook after second-quarter revenue increased 10.5% and cloud sales climbed nearly 18%, as the tax software company reported stronger profitability despite a wider operating loss.
Vertex now expects full-year adjusted EBITDA of $206 million to $210 million while narrowing its revenue forecast to $825 million to $830 million. The company continues to project 18% cloud revenue growth for the year.
Chief Financial Officer John Schwab attributed the revised outlook to first-half performance and the company’s operating model, noting that Vertex expects “expanding profitability and stronger cash generation in the third and fourth quarters.”
Second-quarter revenue rose to $204 million from about $184.6 million a year earlier. Software subscription revenue increased 10.7% to $174.8 million, while cloud revenue advanced 17.9% to $101.7 million.
Annual recurring revenue reached $703.4 million at June 30, up 10.5% from a year earlier.
Average annual revenue per direct customer increased to $142,997 from $130,934 a year earlier and $140,464 at the end of the first quarter.
Net revenue retention, a measure of recurring revenue retained from existing customers after accounting for expansion and contraction, was 105%, down from 108% a year earlier and unchanged from the first quarter. Gross revenue retention remained at 95%.
Vertex posted net income of $9 million, or 6 cents per basic and diluted Class A and Class B share, compared with a $1 million net loss, or 1 cent per share, a year earlier.
The company remained in the red on a GAAP operating basis, with its operating loss widening to $4.4 million from $3.9 million.
Non-GAAP operating income increased to $44.3 million from $32.2 million, while adjusted EBITDA rose 32.8% to $51 million. Adjusted EBITDA margin expanded to 25% from 20.8%.
Non-GAAP net income was $33.3 million, or 20 cents per diluted share.
Chief Executive Officer Christopher Young said customer retention remained stable while demand related to electronic invoicing improved as companies prepare for additional compliance mandates.
Vertex is also implementing an “AI-First” strategy that Young said has begun improving the speed and efficiency of selected engineering and customer-delivery workflows. The company has also made changes to its leadership team as part of a broader operational transformation.
For the third quarter, Vertex expects revenue of $208 million to $211 million and adjusted EBITDA of $55 million to $57 million.
The company cautioned that it cannot reconcile its forward-looking adjusted EBITDA projections with expected GAAP net income or loss because it cannot reasonably predict certain expenses and adjustments. Those items may include stock-based compensation, depreciation and amortization, severance costs, acquisition-related expenses and changes in contingent consideration.
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