Vertex : VERX Q1 2026 Earnings Call Presentation May 2026 FINAL

Published: 2026-05-07 07:35:15 ET VERX

Published on 05/07/2026 at 07:35 am EDT

NASDAQ: VERX

First Quarter 2026 Earnings Conference Call

May 7, 2026

President and

Chief Executive Officer

Revenue of

$196.6 million

up 11%

compared to first quarter 2025

First quarter guidance: $194 to $196 million

Adjusted EBITDA of

$44.1 million

up 18.4%

compared to first quarter 2025

Adjusted EBTIDA margin of 22.4 percent First quarter guidance: $40.5 to $43.5 million

Customer metrics stable compared to fourth quarter 2025

GRR 95% and NRR 105%

E-invoicing ARR up over

66% year-over-year

Notes:

Based on information as of March 31, 2026.

Adjusted EBITDA is a non-GAAP measure, for a reconciliation of this non-GAAP measure to the nearest GAAP measure, see Appendix. 4

April 2026 Value Creation Plan: Execution Reset to Reinvest

Improving operating leverage, speed, and focus while continuing to invest in the highest-impact growth initiatives

Stronger profitability and cash flow while providing capacity for investment.

What we're doing

Tighter prioritization and sequencing of initiatives (focus on highest ROI)

Simplify operating model; streamline decision-making and execution

Reduce non-value-added work, duplicative spend, complexity

Strategic rationale

Align resources with long-term growth priorities

Operate with greater discipline, speed, and efficiency

Redeploy savings to: e-invoicing & compliance, AI roadmap, customer support & success

Improve profitability and cash generation while executing strategy

Continued strong growth in ARR and revenue across the Compliance business

Accelerating ARR ahead of key upcoming mandates in Europe

France - September 2026

Germany - January 2027

Acquisition of Brinta accelerates country coverage in Latin America to support multi-national customers

Business Description

Based in Montevideo, Uruguay

AI-native, cloud-based tax compliance solution for e-commerce and digital businesses operating in Latin America

E-invoicing, tax calculation, real-time reporting, filing, and remittance across 19 countries in Latin America and over 6,000 jurisdictions

Real-time updates to tax content by anticipating regulatory changes and enabling businesses to proactively address any further modifications to local rules

In 2023, Company raised $5mm seed investment from several venture investors to launch its first product into market

Product Platform

Tax Calculation

Tax Filing

Reports & Analytics

E-invoicing

Enterprise tax must be 100% correct, explainable, and repeatable - every single time

This is a structural constraint - not a timing constraint

Deterministic Core with Auditable Outcomes

Ambiguous legislation must become auditable rules

Interpretation, prior precedent, reconciliation, and audit traceability are essential

This represents institutional knowledge - not web-scraped content

Proprietary Process for Tax Law Interpretation

Vertex sits between our customers and government tax audits

Integrations can include ERP, compliance, commerce, tax returns and audit workflows

Switching costs include heightened risk of audits and disputes

Deeply Embedded in Enterprise Order-to-Cash Workflows

Vertex optimizes for multi-entity, multi-jurisdiction, frequently-audited enterprises

AI-native tools optimize for simplicity and SMB use cases

Complexity increases switching costs - and pricing power.

Complexity is an Economic Moat

AI expands workflow ownership beyond tax determination

AI improves productivity across Vertex's operations, including engineering, sales, support, and services

AI increases stickiness, pricing power, and margin

AI as an Offensive Weapon

Vertex is the System of Record for Enterprise Indirect Tax Compliance -and is using AI to Expand that Market Position

8

Improving the way customers work with an AI-powered Vertex platform

Embedded AI

Enhance user experience through automation achieving intents and knowledge guidance.

Data Insights

Leveraging AI agents to detect patterns and anomalies in data.

AI-Infused User Experience

Enhance usability, streamline workflows and improve

overall productivity.

Ecosystem AI

Streamline workflows and connect across business processes.

Pragmatic application of AI with targeted use cases Responsible AI & Governance

Human + AI Collaboration

Multiple six-figure sales to large enterprise customers since general availability

in 2025

Smart Categorization is an AI-powered application that automates the classification of products into correct taxability categories and drives greater accuracy for O Series configuration. It reduces manual effort, minimizes errors, and ensures O Series is optimized for precise tax determination across jurisdictions.

Uses Generative AI Large Language Models (LLMs) to interpret product descriptions and attributes and automatically assign the right category.

Employs Tax Smart AI Models with Human-in-the-Loop governance, combining automation with expert oversight for accuracy.

Maintains strict data security: Customer data never becomes part of the LLM and is never stored on LLM servers.

Smart Categorization Solution Summary

Companies may carry more than 30,000 items.

These products can be classified hundreds of ways based on ingredients, components, package type, size, quantity and more

Where Smart Categorization helps

Volume and Granularity

Recurring Product Categorization for Supply Chain Management

Manual tax categorization for ever-changing new products is time-consuming, cumbersome, and error-prone.

Product Classification for Taxability

With over 12,000 taxing jurisdictions in the U.S., each with unique levels of granularity that define product taxability, companies are forced to know and classify their catalogs at the lowest level of granularity to ensure tax accuracy wherever they do business.

Complex, Seasonal or Other SKU Fluctuation

Frequent SKU changes, whether daily, weekly, or monthly - can create taxability issues.

Validating Entire Product Catalog Sets

Manual validation of complex catalogs is time-consuming and challenging, increasing audit risk. Inconsistencies in categorization and jurisdictional changes may lead to unnecessary liability and surprises.

New Customer, LOB, and M&A Implementation

Implementing a new system, additional platforms, or unfamiliar product and services is difficult. Managing product lines and inventory while maintaining consistency is a challenge.

© Vertex, Inc. All rights reserved.

Reduce manual effort and strengthen competitiveness

Managed Services

Boost precision targeting and seller effectiveness with AI insights, opportunity health, and coaching.

Sales

Accelerate regulatory analysis and expand coverage while driving efficiency

Tax Research

Drive proactive, predictive care using AI routing, virtual assistants, telemetry, and knowledge base expansion.

Customer Success & Support

Streamline workflows, increase quality, and speed delivery.

Engineering

12

Industry New Revenue Ecosystem Catalyst Solution

Artificial Intelligence LLMs

Low seven figures Oracle Business expansion and complexity

E-invoicing, O Series Cloud for North American Sales Tax, Value-Added Tax

Airlines High six figures SAP SAP cloud transformation

O Series Cloud, North America Use Tax, SAP Accelerator, Plus Tools, Vertex Consulting

Social Technology Mid six figures Oracle Solution expansion Local Indirect Tax

Engine

Industry New ACV Ecosystem Catalyst Solution

Healthcare Low six figures Workday Competitive

displacement

O Series Cloud for North American Sales Tax and Use Tax, Vertex Consulting

Chemical Manufacturing

Mid six figures SAP New business segment

O Series Cloud, North America Use Tax, Plus Tools, Address Cleansing Vertex Consulting

Fashion/Apparel High six figures Oracle Transaction volume

growth

O Series Cloud, Sales Tax, Value Added Tax

Quarter Ended - March 31, 2026

TOTAL REVENUE

$196.6M

SOFTWARE SUBSCRIPTION REVENUE

$167.1M

SERVICES REVENUE

$29.5M

+11.1%

Year-Over-Year Change

+10.9%

Year-Over-Year Change

+12.2%

Year-Over-Year Change

CLOUD REVENUE

$96.8M

ANNUAL RECURRING REVENUE (ARR)

$687.6M

+20.7%

Year-Over-Year Change

+11.2%

Year-Over-Year Change

17

Notes:

1. Based on information as of March 31, 2026.

Gross Revenue Retention

95%

Net Revenue Retention

105%

Scaled Customer Growth (Count)

+12%

+1% Q/Q

Stable Q/Q

Stable Q/Q

Average Annual Revenue Per Direct Customer (AARPC)

$140,464

+11% YoY

18

Notes:

1. Based on information as of March 31, 2026.

Overall Gross Margin

75.5%

Software Subscription Gross Margin

82.4%

Services Gross Margin

35.9%

Adjusted EBITDA

$44.1M

+50 bps YoY

-20 bps YoY

+480 bps YoY

+18.4% YoY

AEBITDA Margin

22.4%

Free Cash Flow

7.7M

Free Cash Flow Margin

3.9%

+140 bps YoY

+19.9M YoY

+1081 bps YoY

19

Notes:

Based on information as of March 31, 2026.

Adjusted EBITDA is a non-GAAP measure, for a reconciliation of this non-GAAP measure to the nearest GAAP measure, see Appendix.

Overview FY 2026 Impact

9%

workforce reduction

Q1 pretax charge of

$6.2 million

Fully annualized cash savings of approximately

Approximately

$14-$16 million

increase in 2026 AEBITDA

per year beginning in 2027

Significant reduction in third party spend

Disclaimer

Vertex Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2026 at 11:32 UTC.