Q1 2025 Vertex Inc Earnings Call Transcript
Key Points
- Vertex Inc (VERX) reported a strong start to 2025 with a 12.9% year-over-year increase in revenue, reaching $177.1 million.
- Subscription revenue grew by 14.4%, and cloud revenue saw a significant increase of 29.6% in the first quarter.
- Annual recurring revenue (ARR) increased by 17.9% to $618.5 million, indicating strong customer retention and growth.
- Vertex Inc (VERX) announced an equity investment in Kintsugi, a startup focused on AI technology for indirect tax, which could enhance their offerings in the SMB market.
- The company achieved a gross recurring revenue (GRR) of 95%, within their targeted best-in-class range of 94% to 96%.
- Net revenue retention (NRR) decreased to 109% from 112% in the previous year's first quarter.
- Free cash flow was negative at $12.3 million, impacted by seasonal cash flow patterns and accelerated investments.
- The company experienced a decline in direct customers, attributed to lower-end customers migrating away.
- Gross margin on services decreased to 31.1% from 40.5% in the previous year's first quarter, driven by higher compensation expenses and lower-margin services.
- Adjusted EBITDA showed only a modest increase of 1.3% year over year, with expectations of a slight decrease in the second quarter.
Good day, and welcome to the Vertex, Inc. first quarter 2025 earnings conference call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Mr. Joe Crivelli, Investor Relations from Vertex. Please go ahead.
Hello, and thanks for joining us to discuss Vertex's first quarter financial results. David DeStefano, our President and CEO; and John Schwab, our CFO, are also with us today. During this call, we may make forward-looking statements about expected future results. Actual results may differ due to risks and uncertainties. These risks and uncertainties are described in our filings with the Securities and Exchange Commission.
Our remarks today will also include references to non-GAAP financial measures. A reconciliation of these non-GAAP metrics to GAAP is also provided in today's press release. This call is being recorded and will be available for replay on our Investor Relations website. I'll now turn the call over to David.
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