Vertex (VERX) Wells Fargo 8th Annual TMT Summit Conference summary

Business overview and demand drivers

• Provides tax compliance software integrated with billing, ERP, and procurement systems for global enterprises, addressing complex jurisdictional tax rules.

• Demand is driven by business model changes, regulatory shifts, and technology upgrades, with in-house solutions often replaced when complexity increases.

• Regulatory changes, especially in indirect tax, are frequent and create ongoing compliance challenges, prompting adoption of third-party solutions.

• Technology migrations, such as SAP ECC to S/4HANA, trigger adoption of new tax solutions as legacy systems become inadequate.

E-invoicing and Ecosio acquisition

• Acquired Ecosio, a $12M ARR business, to address mandated e-invoicing regulations in over 50 countries, with expansion planned for 2025.

• E-invoicing is becoming a regulatory requirement, turning invoices into mini tax returns and creating new compliance needs.

• Early adopter phase underway, with significant ARR growth expected from 2026 as more countries and customers adopt e-invoicing.

• Ecosio's cloud-native platform supports scalability and global coverage, aligning with the company's expertise in jurisdictional expansion.

Technology trends and cloud migration

• Leading provider of tax technology in the SAP ecosystem, benefiting from SAP's migration of 10,000 ECC customers to S/4HANA by 2027.

• Cloud adoption is at 50% of revenue, with 90-95% of new customers choosing cloud solutions; migrations from on-premise yield 30-40% revenue uplift.

• Migration pace is steady at 2-4% of on-prem customers annually, with larger infrastructure decisions driving core migrations.

• Land-and-expand model enables upsell of additional modules and coverage across divisions, with significant wallet share opportunity remaining.