KING OF PRUSSIA, PA — Vertex, Inc. (NASDAQ: VERX) reported solid top-line growth for the second quarter of 2025, driven by rising demand for cloud-based services and continued momentum in software subscriptions. However, the company’s profitability dipped and full-year guidance was revised downward due to extended sales cycles and delayed customer decisions.
Total revenue for the quarter ended June 30 rose to $184.6 million, up 14.6% from the prior year. Cloud revenues jumped nearly 30% year-over-year to $86.2 million, and subscription software revenue reached $157.8 million, marking a 15.7% increase.
Annual Recurring Revenue (ARR) climbed to $636.6 million, representing a 16.1% year-over-year increase, aided by the integration of ecosio following its acquisition in Q3 of 2024. Excluding ecosio’s contribution, ARR grew 14.1%. Vertex also reported steady customer growth, with Average Annual Revenue per Direct Customer rising to $130,934.
Despite these gains, Vertex posted a net loss of $1.0 million for the quarter, compared to net income of $5.2 million in the same period last year. Loss from operations totaled $3.9 million, while non-GAAP operating income was $32.2 million, slightly below last year’s $33.3 million. Adjusted EBITDA came in at $38.4 million, effectively flat compared to a year ago, though the adjusted EBITDA margin fell to 20.8% from 23.9%.
“This quarter’s results were in line with expectations, with double-digit revenue growth and healthy profitability and cash flow,” said David DeStefano, Vertex’s President, CEO, and Chairperson. “We continue to be optimistic about the future for Vertex. As indirect taxes continue to grow in complexity, our customers need our solutions more than ever.”
The company attributed slower contract signings late in the quarter to customer hesitation, which prompted a downward revision in its 2025 outlook. Vertex now expects full-year revenues to range between $750 million and $754 million, with adjusted EBITDA between $156 million and $160 million. Previous expectations had implied stronger topline performance.
“While underlying demand for our solutions remains strong, extended sales cycles and delayed customer decision-making impacted the timing of new contract signings in the latter part of the second quarter,” said CFO John Schwab. “This, in turn, impacts our full-year 2025 expected revenue.”
Looking ahead to the third quarter, Vertex projects revenues between $190 million and $193 million, with adjusted EBITDA ranging from $38 million to $40 million. The company remains bullish on long-term growth drivers, including global e-invoicing mandates and increased ERP cloud migrations, both of which are expected to sustain demand for Vertex’s tax automation and compliance tools.
Despite near-term challenges, the company’s recurring revenue model, product breadth, and international expansion continue to position it well within a complex regulatory environment. However, investors will be watching closely to see if revenue acceleration rebounds in the second half of the year.
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