Vertex, Inc. (NASDAQ: VERX) (“Vertex” or the “Company”), a global provider of tax technology solutions, today announced financial results for its second quarter ended June 30, 2021.
“Our performance reflects strong demand across all our segments and product lines this quarter, as global businesses, governments and communities work to emerge from this past year stronger than ever,” said David DeStefano, Vertex President and Chief Executive Officer. “We continue to execute on our strategy to accelerate global commerce, with investments in go-to-market expansion and our cloud platform driving revenues from our cloud business up 59.5% year-over-year in the second quarter.”
Second Quarter 2021 Financial Results
Total revenues of $104.9 million, up 15.0% year-over-year.
Software subscription revenues of $89.6 million, up 15.9% year-over-year.
Cloud revenues of $32.1 million, up 59.5% year-over-year.
Annual Recurring Revenue (“ARR”) of $336.2 million, up 14.1% year-over-year. ARR per customer (“ARRPC”) was $80,500 at June 30, 2021.
Net Revenue Retention (“NRR”) rate was 106% in the second quarter of 2021 as compared to 105% in the first quarter of 2021.
Loss from operations of $(1.5) million, compared to a loss from operations of $(29.0) million for the same period prior year. Non-GAAP operating income of $16.3 million, compared to $19.0 million for the same period prior year.
Net income of $0.8 million, compared to a net loss of $(29.1) million for the same period prior year.
Net income (loss) per basic and diluted Class A and Class B share of $0.01, compared to $(0.24) per basic and diluted Class A and Class B share for the same period prior year.
Non-GAAP net income of $12.4 million and Non-GAAP diluted EPS of $0.08.
Adjusted EBITDA of $19.2 million, compared to $21.5 million for the same period prior year. Adjusted EBITDA margin of 18.3%, compared to 23.6% for the same period prior year.
Over 4,175 customers at June 30, 2021.
Vertex Chief Financial Officer John Schwab said, “Our business performed well this quarter with sequential quarterly growth in software subscription revenues, ARR and NRR, demonstrating a focus on our customers and the ability to unlock long-term, sustainable value from our solutions.”
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.”
Recent Business Highlights
Introduced the Taxamo Assure solution that enables e-commerce sellers to comply with the complex value-added tax (“VAT”) calculation and reporting obligations for the new VAT regulations that went into effect July 1, 2021.
Announced an expanded partnership and release integration with the Mirakl Marketplace Platform with full VAT support.
Announced a certified integration with the Coupa Business Spend Management (BSM) Platform.
Announced the integration of Vertex Lease Tax O Series with Alfa Start, built exclusively for auto leasing operations of all sizes on the cloud-based Alfa Systems.
For the third quarter of 2021, the Company currently expects:
Revenues in the range of $104 million to $106 million, representing growth of 9.9% to 12.1% from the third quarter of 2020; and
Adjusted EBITDA in the range of $15 million to $17 million, representing a decrease of $(5.5) million to $(7.5) million from the third quarter of 2020.
For the full-year 2021, the Company currently expects:
Revenues in the range of $414 million to $417 million, representing growth of 10.5% to 11.3% from the full-year 2020;
Cloud revenues to grow in excess of 40% from the full-year 2020; and
Adjusted EBITDA in the range of $68 million to $72 million, representing a decrease of $6.4 million to $10.4 million from the full-year 2020, reflecting additional spend 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, 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 to discuss the second quarter 2021 financial results on August 11, 2021 at 8:30 a.m. Eastern Time (“ET”). The conference call can be accessed live over the phone by dialing 1-877-407-4018, or for international callers 1-201-689-8471. A replay will be available from 11:30 a.m. ET on August 11, 2021 through August 25, 2021, by dialing 1-844-512-2921, or for international callers 1-412-317-6671. The replay passcode will be 13721451.
The call will also be webcast live from Vertex’s investor relations website at https://ir.vertexinc.com. Following the completion of the call, a recorded replay of the webcast will be available on the website.
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 cloud-based and on-premise 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 1,200 professionals and serves companies across the globe.
Forward Looking Statements
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, 2020 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.