KING OF PRUSSIA, PA — Vertex, Inc. (NASDAQ: VERX) recently announced financial results for its third quarter ended September 30, 2023.
“We delivered strong results in the third quarter, reflecting our recent growth investments”, noted David DeStefano, Vertex Chief Executive Officer. “We have built a durable execution engine and an unmatched competitive position in the enterprise segment. Our solutions are a must-have for today’s global businesses facing increased tax complexity, and we believe this will continue to create a strong demand environment.”
Third Quarter 2023 Financial Results
- Total revenues of $145.0 million, up 14.9% year-over-year.
- Software subscription revenues of $121.3 million, up 14.0% year-over-year.
- Cloud revenues of $54.6 million, up 24.8% year-over-year.
- Annual Recurring Revenue (“ARR”) was $484.9 million, up 17.8% year-over-year.
- Average Annual Revenue per direct customer (“AARPC”) was $112,690 at September 30, 2023, compared to $97,300 at September 30, 2022 and $109,170 at June 30, 2023.
- Net Revenue Retention (“NRR”) was 111%, compared to 109% at September 30, 2022, and 111% at June 30, 2023.
- Gross Revenue Retention (“GRR”) was 96%, consistent with September 30, 2022, and the second quarter of 2023.
- Loss from operations of $(2.0) million, compared to loss from operations of $(0.9) million for the same period prior year. Non-GAAP operating income of $22.8 million, compared to $17.8 million for the same period prior year.
- Net loss of $(3.4) million, compared to net loss of $(1.1) million for the same period prior year.
- Net loss per basic and diluted Class A and Class B shares of $(0.02) for 2023, compared to net loss of $(0.01) for the same period prior year.
- Non-GAAP net income of $16.6 million and Non-GAAP diluted EPS of $0.10.
- Adjusted EBITDA of $26.6 million, compared to $20.7 million for the same period prior year. Adjusted EBITDA margin of 18.4%, compared to 16.4% for the same period prior year.
Definitions of certain key business metrics and the non-GAAP financial measures used in this press release and reconciliations of such measures to the most directly comparable GAAP financial measures are included below under the headings “Definitions of Certain Key Business Metrics” and “Use and Reconciliation of Non-GAAP Financial Measures.”
Financial Outlook
For the fourth quarter of 2023, the Company currently expects:
- Revenues of $145 million to $147 million; and
- Adjusted EBITDA of $27.5 million to $29.5 million.
For the full-year 2023, the Company currently expects:
- Revenues of $562.5 to $564.5 million;
- Cloud revenue growth of 25%; and
- Adjusted EBITDA of $96.3 to $98.3 million.
John Schwab, Chief Financial Officer added, “Throughout the first nine months of 2023, we have consistently exceeded our financial expectations. Accordingly, we are once again increasing our full-year guidance for both revenue and Adjusted EBITDA to reflect the strong year-to-date financial results.”
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 about and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided within the Company’s original announcement.
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