Vertex, Inc. (NASDAQ: VERX) (“Vertex” or the “Company”), a global provider of tax technology solutions, today announced financial results for its first quarter ended March 31, 2022.
“We delivered strong performance in the first quarter, with outstanding execution from our teams around the world,” said David DeStefano, Vertex Chief Executive Officer. “Our revenues continue to accelerate, and the investments we are making to drive our growth strategy are gaining momentum and advancing our market leadership.”
First Quarter 2022 Financial Results
Total revenues of $115.0 million, up 17.0% year-over-year.
Software subscription revenues of $97.1 million, up 16.6% year-over-year.
Cloud revenues of $38.3 million, up 42.1% year-over-year.
Annual Recurring Revenue (“ARR”) of $380.6 million, up 18.9% year-over-year, compared to 17.0% in the fourth quarter of 2021.
Average Annual Revenue per customer (“AARPC”) was $89,700 at March 31, 2022, compared to $79,600 at March 31, 2021 and $86,700 at December 31, 2021.
Net Revenue Retention (“NRR”) rate was 110% in the first quarter of 2022, an increase from 105% for the quarter ended March 31, 2021 and 108% for the quarter ended December 31, 2021.
Income from operations of $0.5 million, compared to $2.1 million for the same period prior year. Non-GAAP operating income of $16.2 million, compared to $15.4 million for the same period prior year.
Net loss of $0.3 million, compared to net income of $2.3 million for the same period prior year.
Net loss per basic and diluted Class A and Class B share of $(0.00) for 2022 compared to net income of $0.00 for the same period prior year.
Non-GAAP net income of $12.1 million and Non-GAAP diluted EPS of $0.08.
Adjusted EBITDA of $19.1 million, compared to $18.2 million for the same period prior year. Adjusted EBITDA margin of 16.6%, compared to 18.5% for the same period prior year.
4,242 customers at March 31, 2022.
Vertex Chief Financial Officer John Schwab said, “We saw continued growth in Q1 across key metrics including Annual Recurring Revenue and Net Revenue Retention rates. During the first quarter, we refinanced our credit facility to increase operational flexibility and we continued to make strategic investments in the business to drive sustained growth and shareholder value.”
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.”
For the second quarter of 2022, the Company currently expects:
Revenues of $116.0 million to $117.5 million, representing growth of 11% to 12% from the second quarter of 2021; and
Adjusted EBITDA of $16.0 million to $18.0 million, representing a decrease of $1.2 million to $3.2 million from the second quarter of 2021.
For the full-year 2022, the Company currently expects:
Revenues of $479 million to $483 million, representing growth of 13% to 14% from the full-year 2021;
Cloud revenue growth of 33% from the full-year 2021; and
Adjusted EBITDA of $72 million to $75 million, representing a decrease of $3 million to $6 million from the full-year 2021, reflecting ongoing investment in research and development, as well as selling and marketing expenses to drive growth.
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, acquisition contingent consideration, 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 in this earnings release about and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below under “Use and Reconciliation of Non-GAAP Financial Measures.”
Conference Call and Webcast Information
Vertex will host a conference call at 8:30 a.m. Eastern Time today, May 10, 2022, to discuss its first quarter 2022 financial results.
Those wishing to participate via webcast should access the call through the Company’s Investor Relations website at https://ir.vertexinc.com. Those wishing to participate via telephone may dial in at 1-877-407-4018 (USA) or 1-201-689-8471 (International). The conference call replay will be available via webcast through the Company’s Investor Relations website.
The telephone replay will be available from 11:30 a.m. Eastern Time on May 10, 2022, through May 24, 2022, by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The replay passcode will be 13728888.
Vertex, Inc. is a leading global provider of indirect tax software and solutions. The Company’s mission is to deliver the most trusted tax technology enabling global businesses to transact, comply and grow with confidence. Vertex provides solutions that can be tailored to specific industries for major lines of indirect tax, including sales and consumer use, value added and payroll. Headquartered in North America, and with offices in South America and Europe, Vertex employs over 1,300 professionals and serves companies across the globe.
Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. Forward-looking statements are based on Vertex management’s beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: potential effects on our business of the COVID-19 pandemic; our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; our ability to identify acquisition targets and to successfully integrate and operate acquired businesses; our ability to maintain and expand our strategic relationships with third parties; and the other factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities Exchange Commission (“SEC”), as may be subsequently updated by our other SEC filings. Copies of such filings may be obtained from the Company or the SEC.
All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.