Vertex (56X) Q3 2026 Earnings Report

The call was strongly positive, with revenue and adjusted EBITDA exceeding guidance, significant margin and cash-flow improvement, raised full-year guidance, accelerating ARR and cloud growth, strong e-invoicing momentum, successful product and AI initiatives, and multiple enterprise wins. The main negatives were the discrete payroll tax OEM loss, expected Q4 retention pressure, the lower sequential adjusted EBITDA outlook, the normalization of e-invoicing growth from its current level, and elongated SAP migration timelines. Highlights significantly outweighed lowlights.

For the fourth quarter, Vertex expects revenue of $215 million to $217 million and adjusted EBITDA of $58 million to $60 million, including marketing expenses associated with the Vertex Exchange and targeted investments to support future growth; for the full year, it raised the revenue range to $828.9 million to $830.9 million, an increase of $2.4 million at the midpoint, increased adjusted EBITDA guidance to $217.9 million to $219.9 million, an increase of $10.9 million at the midpoint, and now expects cloud revenue growth to be 19% for the full year. Vertex expects both GRR and NRR to decline by approximately 1 point in the fourth quarter, reflecting the loss of an OEM in its payroll tax business, while Q4 guidance implies revenue growth of 11% at the midpoint; during 2027, it expects to operate at approximately a 30% adjusted EBITDA margin levels and believes it can expand margins beyond that over time.