Vertex (VERX) AI Stock Analysis

• Market Cap: $6.15B
• Dividend Yield: N/A
• Average Volume (3M): 1.13M
• Price to Earnings (P/E): 235.5
• Beta (1Y): 1.01
• Revenue Growth: 15.20%
• EPS Growth: -666.94%
• Country: US
• Employees: 1,900
• Sector: Technology
• Sector Strength: 82
• Industry: Software - Application
• EPS (TTM): 0.15
• Shares Outstanding: 72,005,250
• 10 Day Avg. Volume: 1,232,577
• 30 Day Avg. Volume: 1,127,370
• PEG Ratio: 0.42
• Price to Book (P/B): 33.59
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 64.58
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 2.43
• Enterprise Value/Gross Profit: 14.62
• Enterprise Value/Ebitda: 19.41
• 1Y Price Target: $48.50
• Price Target Upside: 29.26% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

Vertex, Inc. shows promising revenue growth and strategic investments, particularly in AI, indicating potential for future expansion. However, profitability challenges and high liabilities pose significant risks. The stock's current technical indicators suggest some caution, and the valuation appears stretched without profitability. Recent corporate events and earnings calls provide a positive outlook, but underlying financial risks need to be addressed for sustained growth.

Positive Factors

AI and Product Innovation

Medium-term revenue growth targets were a positive surprise driven by a combination of the consistency and long-term durability of Vertex’s revenue growth algorithm, new revenue unlock from AI and product innovation, e-Invoicing mandates globally, and accelerating contributions from partnerships.

Cloud Revenue Growth

Cloud revenue growth of 30% beat consensus by more than 300 basis points, showing strong performance.

E-Invoicing Demand

Vertex’s new e-invoicing solution is already seeing solid demand from both new and existing customers.

Negative Factors

Guidance Caution

The guidance remains cautious despite positive macro commentary, reflecting a prudent approach given the uncertainty in the market.

Organic Revenue Growth Deceleration

Organic revenue growth decelerated to 10% from 12%, and while backward looking, is indicative of lackluster growth.

Vertex Business Overview & Revenue Model

Company Description

Vertex, Inc. provides tax technology solutions for corporations in retail, communication, leasing, and manufacturing industries in the United States and internationally. It offers tax determination, compliance and reporting, tax data management, document management, pre-built integration, and industry-specific solutions. The company sells its software products through software license and software as a service subscriptions. It also provides implementation and training services in connection with its software license and cloud subscriptions, transaction tax returns outsourcing, and other tax-related services. Vertex, Inc. was founded in 1978 and is headquartered in King of Prussia, Pennsylvania.

How the Company Makes Money

Vertex makes money through a combination of software licensing, subscription fees, and professional services. The company's primary revenue stream is derived from its cloud-based and on-premise software solutions, which businesses subscribe to in order to automate their tax processes. These solutions are offered on a recurring subscription basis, providing Vertex with a steady and predictable revenue flow. Additionally, Vertex generates revenue through professional services, including consulting and implementation support, which help clients optimize the use of their tax technology solutions. The company also benefits from strategic partnerships with major enterprise resource planning (ERP) providers and other technology platforms, which expand its market reach and drive additional adoption of its solutions.

Vertex Financial Statement Overview

Summary

Vertex has demonstrated strong revenue growth, with significant improvements in free cash flow, reflecting robust cash generation capabilities. Despite these strengths, the company faces challenges in profitability, with negative net and return on equity margins, indicating inefficiencies in profit generation.

Income Statement

Vertex has demonstrated strong revenue growth, increasing from $572.4 million in 2023 to $666.8 million in 2024, a growth rate of 16.5%. However, the company has faced challenges in profitability, with a negative net profit margin of -7.9% in 2024. The gross profit margin remains healthy at 63.9%, indicating efficient cost management. Despite consistent revenue growth, EBIT and EBITDA margins remain low, at -0.3% and 2.8% respectively, reflecting ongoing operational challenges.

Balance Sheet

Vertex maintains a solid equity position with an equity ratio of 15.4% in 2024. The debt-to-equity ratio is low at 0.09, suggesting limited leverage and reduced financial risk. Return on equity is negative, at -29.4%, due to net losses, indicating inefficiencies in generating profit from shareholders' equity. The company holds substantial cash reserves, enhancing its financial flexibility.

Cash Flow

Vertex shows strong cash flow performance with a significant increase in free cash flow from $6.1 million in 2023 to $99.1 million in 2024, reflecting robust cash generation capabilities. Operating cash flow to net income ratio is notably high, suggesting efficient conversion of income to cash. The free cash flow to net income ratio is also favorable, highlighting effective cash management despite net losses.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
666.78M	572.39M	491.62M	425.55M	374.67M
	Gross Profit
426.13M	348.58M	298.49M	263.66M	209.28M
	EBIT
-2.23M	-7.42M	-8.08M	-2.94M	-104.76M
	EBITDA
102.01M	56.95M	53.07M	41.84M	-72.54M
	Net Income Common Stockholders
-52.73M	-13.09M	-12.30M	-1.48M	-78.94M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
305.21M	77.72M	102.98M	73.33M	303.05M
	Total Assets
1.17B	759.93M	719.19M	670.21M	554.93M
	Total Debt
351.89M	66.97M	73.52M	28.61M	1.11M
	Net Debt
55.84M	-1.21M	-18.29M	-44.73M	-301.94M
	Total Liabilities
987.44M	506.95M	489.47M	440.12M	329.44M
	Stockholders Equity
179.35M	252.98M	229.72M	230.08M	225.49M
Cash Flow		Free Cash Flow
99.05M	6.10M	3.43M	46.92M	26.74M
	Operating Cash Flow
164.82M	74.33M	76.85M	91.97M	59.54M
	Investing Cash Flow
-158.15M	-66.17M	-85.05M	-296.46M	-44.38M
	Financing Cash Flow
231.26M	-26.48M	17.09M	-9.10M	213.63M

Vertex Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 37.52
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VERX, the sentiment is Negative. The current price of 37.52 is below the 20-day moving average (MA) of 38.83, above the 50-day MA of 36.89, and below the 200-day MA of 43.41, indicating a neutral trend. The MACD of -0.06 indicates Positive momentum. The RSI at 45.43 is Neutral, neither overbought nor oversold. The STOCH value of 45.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VERX.

Vertex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PEGA	76 Outperform	$8.37B	47.57	39.29%	0.12%	14.29%	151.38%
CWAN	76 Outperform	$6.89B	14.46	58.14%	―	23.21%	―
CVLT	76 Outperform	$7.93B	107.90	25.23%	―	18.63%	-55.09%
U	72 Outperform	$9.12B	―	-14.15%	―	-16.74%	49.75%
QXO	70 Outperform	$8.32B	―	1.44%	―	0.22%	48.10%
VERX	66 Neutral	$6.15B	235.54	-19.65%	―	15.20%	-666.94%
Sector *	60 Neutral	$11.64B	10.63	-6.94%	2.93%	7.63%	-11.15%

Vertex Corporate Events

Vertex Highlights Growth Strategies at Investor Day

On March 19, 2025, Vertex, Inc. held an Investor Day at its Philadelphia headquarters, presenting key financial highlights and strategic insights. The event emphasized Vertex’s commitment to driving growth by solving indirect tax complexities and highlighted its strong market position, with a focus on expanding customer revenues and maintaining strategic partnerships. The presentation included discussions on the company’s financial outlook and growth strategies, reflecting its robust performance and future potential in the tax technology sector.