Q2 2026 Vertex Inc Earnings Call Transcript
Key Points
- Revenue grew 10.5% year over year to $204 million, at the high end of guidance, demonstrating business durability.
- Adjusted EBITDA increased 33% to $51 million, with margin expanding by more than 4 percentage points to 25%, showing strong earnings leverage from cost discipline.
- e-Invoicing was a standout performer, with strong ARR and revenue growth materially above the corporate average, driven by upcoming French and German mandates.
- AI adoption is improving operational efficiency, with a 34% improvement in engineering efficiency and a 50% reduction in e-Invoicing onboarding time.
- Customer retention metrics remain stable, with gross revenue retention at 95% and net revenue retention at 105% for the second consecutive quarter.
- Won several significant enterprise deals, including a mid-six-figure e-Invoicing win and a high six-figure expansion with a consumer-packaged goods company.
- Cloud convergence and migration have been slower than expected, leading to a lowered full-year cloud revenue growth guidance to 18%.
- Expansion within the install base and new logo performance are not yet at the expected level, indicating a need for improvement in cross-sell and migration management.
- Sales cycles are elongating, with some deals slipping from one quarter to the next, such as a seven-figure deal that moved from June to July.
- AI-attributable revenue is not yet material to Vertex, and the company is still in the build phase for customer-facing AI products.
- Scaled customer growth decelerated quarter over quarter to 8%, reflecting some one-time deal timing issues and slower new logo acquisition.
- Free cash flow was impacted by costs associated with the value creation plan, including severance and consulting fees.
Good morning and welcome to the Vertex first quarter (sic - "second quarter") 2026 earnings call. (Operator Instructions)
As a reminder, this conference is being recorded. If you have any objections, please disconnect at this time.
I will now turn the call over to Joe Crivelli, Vice President of Investor Relations, for introductory remarks.
Hello, and thanks for joining us to discuss Vertex's second-quarter results. Chris Young, our President and CEO, and John Schwab, our CFO, are with us today.
As noted on slide 2, 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 metrics. A reconciliation of these metrics to GAAP is also provided in today's press release.
This call is being recorded and will be available
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