Key Highlights

  • Third quarter Revenue was USD 213.3 million, up 11.0%, against an estimate of USD 209.72 million.
  • Non-GAAP diluted EPS was USD 0.26 against USD 0.22 estimated, while the GAAP net loss was USD 0.29 per share.
  • Annual Recurring Revenue was USD 724.3 million, up 11.7%, and cloud revenues were USD 110.8 million, up 20.4%.
  • Adjusted EBITDA was USD 64.8 million at a 30.4% margin, and full-year revenue guidance was raised.

Vertex, Inc. (NASDAQ:VERX) framed its third quarter around the priorities it set earlier this year. President and CEO Christopher Young described them as stabilizing the core business, building a more efficient operating model and investing in e-invoicing and AI. Young said continued momentum in e-invoicing contributed to accelerating ARR and cloud revenue growth, and that the company has greater capacity to invest while keeping operating discipline.

Priorities Management Named

E-invoicing sits at the center of the cloud story. Cloud revenues were USD 110.8 million, up 20.4% from a year earlier, and software subscription revenues were USD 181.7 million, up 10.2%. Management described AI investments as improving how the company operates today and as opening ways to extend value to customers. The company describes itself as a global indirect tax and compliance provider.

Customer metrics moved as follows. Average Annual Revenue per direct customer was USD 145,793 at September 30, against USD 133,484 a year earlier and USD 142,997 at June 30. Net Revenue Retention was 106%, against 107% a year earlier and 105% at June 30, and Gross Revenue Retention was 95%, the same as both earlier dates.

Financial Results in the Quarter

Total revenues were USD 213.3 million, against USD 192.1 million in the third quarter of 2025 and an estimate of USD 209.72 million. Services revenue was USD 31.6 million against USD 27.3 million. Non-GAAP diluted EPS was USD 0.26 against an estimate of USD 0.22 and USD 0.17 a year earlier, and non-GAAP Net Income was USD 42.9 million.

On a GAAP basis, income from operations was USD 0.3 million against USD 4.3 million, and the net loss was USD 46.6 million, or USD 0.29 per share, against net income of USD 4.0 million a year earlier. Non-GAAP Operating Income was USD 57.3 million against USD 37.1 million. Adjusted EBITDA was USD 64.8 million, a Margin of 30.4%, against USD 43.5 million and 22.6%.

Cash, Debt and Repurchases

For nine months, revenue was USD 613.9 million against USD 553.7 million, and Adjusted EBITDA was USD 159.8 million, a margin of 26.0%. Net cash from Operating Activities was USD 122.2 million, and free cash flow, a non-GAAP measure, was USD 35.6 million against USD 37.5 million. Share repurchases were USD 73.7 million, with none in the first nine months of 2025, and net cash used in financing activities was USD 90.1 million.

Cash and cash equivalents were USD 217.8 million at September 30, against USD 314.0 million at December 31, 2025. Debt, net of current portion, was USD 339.2 million. Stock-based compensation expense for nine months was USD 47.7 million.

Guidance Versus Reported Results

Third quarter revenue of USD 213.3 million and Adjusted EBITDA of USD 64.8 million sit alongside fourth quarter guidance of USD 215.0 million to USD 217.0 million in revenue and USD 58.0 million to USD 60.0 million in Adjusted EBITDA. For full-year 2026, the company guides to revenue of USD 828.9 million to USD 830.9 million, cloud revenue growth of 19% and Adjusted EBITDA of USD 217.9 million to USD 219.9 million, and said it is raising its revenue and Adjusted EBITDA outlook. The company said it does not intend to update the outlook until its next quarterly results announcement.