Vertex (VERX) Q2 2026 earnings summary

Executive summary

• Revenue grew 10.5% year-over-year to $204 million in Q2 2026, reaching the high end of guidance, driven by software subscriptions and services growth.

• Adjusted EBITDA increased 33% to $51 million, with margin expanding to 25%, exceeding guidance.

• Net income was $9.0 million for Q2 2026, up from a net loss of $1.0 million in Q2 2025.

• Customer metrics remained stable: gross revenue retention at 95% and net revenue retention at 105%.

• AI adoption reached 89%, improving engineering efficiency by up to 34% and reducing onboarding times by 50%.

Financial highlights

• Software subscription revenue was $174.8 million (+10.7% YoY); services revenue was $29.2 million (+9.4% YoY); cloud revenue was $101.7 million (+17.9% YoY).

• Annual recurring revenue (ARR) was $703.4 million, up 10.5% year-over-year.

• Average annual revenue per direct customer was $142,997, up 9.2% year-over-year.

• Free cash flow for Q2 was $2.7 million; pro forma free cash flow was $13.2 million, with a 6.5% margin.

• Adjusted EBITDA margin improved to 25.0% from 20.8% in Q2 2025.

Outlook and guidance

• Q3 2026 revenue expected at $208–$211 million; adjusted EBITDA at $55–$57 million.

• Full-year 2026 revenue guidance narrowed to $825–$830 million; adjusted EBITDA raised to $206–$210 million.

• Cloud revenue growth for the full year projected at 18%.

• Value Creation Plan expected to drive steady margin and cash flow improvements through 2027.

• Liquidity is considered sufficient for the next 12 months and longer-term needs.