Vertex (VERX) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 results with 15.3% revenue growth to $161.1M, record free cash flow, and a return to GAAP profitability, driven by software subscription and cloud adoption.

• Adjusted EBITDA rose 75.2% to $38.5M (23.9% margin), the highest since IPO.

• Strategic acquisitions included ecosio ($69M cash plus earn-out) to expand e-invoicing/CTC, and tax-specific AI technology to enhance automation and product offerings.

• Completed $345M convertible debt offering to strengthen liquidity and support investments.

• Vertex serves over 60% of the Fortune 500 and supports customers in more than 190 countries.

Financial highlights

• Q2 2024 revenue: $161.1M (+15.3% YoY); subscription revenue: $136.4M (+15.8%); cloud revenue: $66.3M (+29.6%).

• Adjusted EBITDA: $38.5M (23.9% margin), up from $22.0M; net income: $5.2M (vs. $(6.9)M prior year); EPS: $0.03.

• Free cash flow: $36.9M, up from $(21.2)M; operating cash flow: $57.7M.

• ARR reached $548.4M (+17.3% YoY); AARPC was $123,570.

• NRR was 110% (down 1pt YoY); GRR at 95% within target range.

Outlook and guidance

• Q3 2024 revenue expected at $164M–$167M; adjusted EBITDA $33M–$35M.

• Full-year 2024 revenue guidance narrowed to $654M–$660M; adjusted EBITDA raised to $139M–$145M.

• Cloud revenue growth for the year expected at 28%; guidance excludes ecosio impact until deal closes.

• Management expects continued growth in cloud-based subscriptions and recurring revenue, supported by customer expansion and product innovation.

• Liquidity and capital resources are ample for operating and strategic needs.