Vertex (VERX) 9 Aug 232023 Q2 Earnings call transcript

Greetings. Welcome to Vertex's Second Quarter 2023 Earnings Conference Call. Please note this conference is being recorded. At this time, all participants are in listen-only mode.

At this time I'll now turn the conference over to Joe Crivelli, Vice President of Investor Relations. Mr. begin. now may you Crivelli

Schwab Hello, and quarter Investor discuss second and us David on joining the call for results. I'm joining today. John CEO; financial and President, Vertex's to CFO, Joe are DeStefano, me Vertex's President thanks our Crivelli, Relations. Vice

statements reminder, during forward-looking we results. future may call, a expected As make this about

and in Our risks and These actual and our with risks filings uncertainties. financial results to may Exchange the Securities are differ described Commission. due uncertainties

remarks our financial of non-GAAP also that Investor Please being also non-GAAP available will metrics release. will is recorded note references to press be our is Relations for today measures. website. include GAAP conference today's A these call replay provided and on This via reconciliation in to webcast

to call I'll the now turn David. over

everyone Thanks, you thank us. for and Joe. Welcome joining

investments modernization. over continues our strong in growth competitive and to years where acquisitions hold. Our success, go-to-market return We've a through capabilities and excellence our furthering second I'm company. accelerate organizational new quarter take execute to we products seeing very these team with our deliver investments advance a results excited about and as from starting differentiation. strategy the resulting to We're past are financial three made

company, XXX%, quarter Vertex. high GRR The the NRR climbed growth steady added second as second revenue another XX%, remained while which highest quarter We progression demonstrated we've our represents record consistent revenue a margin alone public and year-over-year recurring a the anticipated driving increase in improvement. of to in for increased at $XX of reported XX.X% million ARR.

was a XX% guidance exceeding Total $XXX,XXX will million grow for at high John year end to our the of revenue full second financial adjusted in continues end the was customer moment. QX and on quarter-by-quarter per EBITDA our in guidance. million and revenue ended quarter an annual the our of provide $XX guidance high update $XXX.X over year-over-year. up Average

of commerce reflects evident in of the of our challenging than market. because customers spanning efforts in scaled quarter They durability proven economic This annual These growth even future the this and revenues count, with and market-leading position accelerated most customer are teams. us ongoing These those performance land is companies vastly enterprise our dynamic with enhance in scaled are expand industry. global Also year-over-year. the every conditions. their success customer heart and customer the the NRR growth world $XXX,XXX of our success XX% profitability the for greater wins to unpenetrated

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To We commerce platforms the commerce. that to by partner have global vision we relationships into deliver value this, trusted our a powering global achieve extended solutions major in to all differentiate our help us customers. building are and accelerate backed deals

saw Again quarter, this our we are paying dividends. significant partnerships how

the to build on we customers. our year the with joint continue value extend to to SAP We provide partnership XX-plus

especially, when in leader ecosystem with of Flow the most Chain SAP enjoy, tax combined our referenceability SAP uniquely customer the certified solution as enterprise the and in unique has Vertex the market. indirect the strong the we complete capabilities, Accelerator

SAP go-to-market an we Vertex and announce between ecosystem. our the accelerating app This our to support SAP North respective entirely momentum greater designed motion, now goals. revenue we are accomplish even in to customers proud that better I'm shared teams, also sales an marketing our Accordingly, enables endorsed America seeing region. collective is I've joint for Series, previously how driving efforts. collaboration the for SAP to O are our growth, new with incredibly sales in

products. a in migration high-profile We major their customers Both semiconductor Vertex and leading engage of a initiative. as tax part label manufacturer, S/XHANA quarter, food transformation, including wins global support to private second the several manufacturer had of

products, branded creating manual also audit processes largest of risk. world's ensure around automate and their manufacturers use not the one helped they of were suppliers We overpaying food tax, to

each for Vertex, revenue opportunity. of case, drove of SAP platform this mid-six transition annual an figures In magnitude demonstrating recurring the

We years, expect announced SAP supporting this thousands will a in be new S/XHANA. customers of continue in business will driver Vertex still to platform for to stop migrate that the ECC, a XXXX, coming has as on they

medical second also quarter, won from diagnostics deal we leading high In a the six-figure a company.

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scale. companies enhance leverage Accelerator Europe, Flow seeing tools, a which in entire a multiple well extend tax to global Chain as tax the ability value to and ecosystem, partner were the to their single their and Data as decision link We're compliance of Visualization our part solutions company's connected transformation tax systems as system our focused by key as across our collaborative of efforts. our approach Our

deal the cloud strategy of are cloud, seamlessly but business one the when to of Because not the with transition growth. solution. their experience. how our support implemented the our differentiated and ready longtime can trusted our they reflects relationship to they to chose to only in move continue of us customer journey customers with transition also our over customers an to years, have their we This importance As second example, the we Oracle quarter a earned cloud-first

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evaluation won a also to in Workday. brought us their billing looking of the management for a the disparate on trusted is their with Vertex platform was by that Their competitive deal one homegrown U.S. largest and companies one business We work into consolidating adviser with system local improve This processes implementer key partner waste and this customer process. harmoniously and could new

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solution transaction can through within this volumes our us, new offerings increasing of customer grow. as For or existing mean our opportunities base use new their existing either by

mobile sales quarter due a our the high customers to to food the their each where a X-figure global contract and the second of one user In orders that place. largest included signed growth. app in they increase support growing and variety order. beverage of this of of retailer expansion volume a taking Adoption along rapidly is locations needed with With number a items mobile are

thriving and of why business. Vertex performance they've hallmarks Cloud trust their are the The with they us with high solutions experienced reliability

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for for Last the usage quarter. the relationship X-year space quarter delivery augments we of drove marketplace deal figures new food of discussed industry. in annual Vertex. this our second our revenue We players with six and leadership This in expanded additional in one major the support

Edge the advancing a Our significant solutions and industries. early differentiator any days of we're offering from various our offering mobile diverse model calculation accurate business in as the is pinpoint customer's tax believe for Edge still requiring across We location. multiple was business

and Edge where regardless deployment scalability occur. greater enables of flexibility transactions

key in invest our markets. expansion to drive continually also database into We growth

end of the our robust and of tax rates effective As XXX content covers database over million rules. QX

of taxes. With commerce telecommunications more to in subject customers the are our rise mobile

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business able parent of were additional a figures EU six result the As this of driving win company's we acquisition, to revenue.

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data. Our types products interact of with many

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John take through willl the John? now you financials.

David, Thanks, $X.X the to I'm to Total financial XXXX. and provide the guidance good second of $XXX.X and full XX.X% everyone. and review approximately third end by quarter quarterly our for Today, year going year-over-year upper exceeding quarter morning grew second million, revenues results our guidance quarter million.

to quarter end up grew revenues increased subscription services or Our recurring Annual to $XXX.X million. revenue period-over-period XX.X% $XXX.X XX.X% year-over-year. revenues million at ARR $XX.X was and XX.X% million

retention retention at revenue with quarter gross historical was and And XX% or XX% quarters prior from range of first revenue XXX% consistent to end net quarter our to and for or the NRR XXXX prior of Our up XX%. year. XX% within the increased our GRR

steadily per increase in AARPC that which first revenue release from customer XXXX. issued was press in that the direct disclosed on AARPC $XXX,XXX earnings or our annual was is is the quarter second to up the Note continues customer this average and count, in quarter morning. of Our $XXX,XXX based

year. second Our XX.X% million in from cloud was revenue $XX.X last the quarter, up

$XX.X For discussion, was income be second of This million year. profit compares was with the and in last will metrics. the remainder and XX.X%. same to the gross I non-GAAP period million $XX.X margin profit margin for Gross the a XX.X% gross of statement referring quarter gross

margin compared first quarter in software last XX.X% second was to and subscription XXXX. XX.X% to compared services Gross in XX% revenue on year's was revenue on second of margin the quarter in XX.X% last XX.X% quarter. Gross year's

last Turning represents quarter, quarter spend to second of to the software year research period. million spend for included, was which With compared R&D $XX.X XX.X% the year. $X.X expenses. in $XX.X capitalized In million development prior and was expense XX.X% revenue revenue million the second as of to compared

expense or the Selling period. end million investment $X.X second success period. Our increase and our of has growth in selling revenues, organizations and approximately marketing total and million marketing half $XX.X result was our the expansion the an we and of reached go-to-market expense since XX.X% XXXX. as XX.X% customer The increase of heavy moderated the from was prior of year-over-year a of of year

was The revenues, million million the and general growth. due Our G&A investments prior $X $XX.X the administrative increase was long-term increase million total XX.X% expense $X from to to is making we of are of expense an or infrastructure support sequentially. year period. also up our

Our major went sequential live quarter in ERP second increase. and the monetization the the driver of was

As investment we expect mostly G&A growth moderate this forward. to is expense now complete, going

in Adjusted EBITDA was XXXX, $X.X guidance. the an quarterly of the $XX million quarter our year-over-year upper million second in line increase and of end of with

certain been accounts. both has and normalize modernization in which flow second the were customer in timing coming cash billing operating free largely corrected collections of billing a to confident and very delay the the quarter, the cash collection slight the ERP in I'm delay While due This that was months. negative of activity this and project, caused will

expect to already continue positive than cash cash be for year. free collections we the to usual significantly seen this We Demonstrating higher flow in full July. have

million. We the cash unrestricted equivalents $XX.X with was bank $XX second ended quarter and and million in total debt over

securities $XX.X million. Our totaled investment

also we have unused credit. of our availability under liquidity, additional million of line For $XXX

$X.X guidance. of the the would $XXX to represent and midpoint. we $XX third to the which year-over-year at XXXX, midpoint of of million which represent EBITDA increase million of growth would expect year-over-year in revenue the $XXX million, In at quarter $XX now in Turning XX% adjusted range to the approximately total million million, range

which set the our year growth XX% guidance. to as We outperform the XXXX. revenues total the well full million for of Vertex year in represents the range we at follows. year full initial our results first increasing midpoint million up growth $XXX in at full up expect our from $XXX midpoint to are prior half XX.X% for financial strong expectations year The Accordingly, guidance now

from full We $XX million to also $XX are million. to our up increasing of EBITDA $XX outlook to million, adjusted year a range million $XX

Our represents year-over-year new the of increase a midpoint. guidance million $XX at

XX% year. to expect of approximately continue for We the cloud growth revenue full

will David comments up David? few we now before make for open a closing Q&A.

the and to to they on entire to proud Every I'm grow, organization throughout thank track Thanks, record the our few worked John. our team. Vertex business profit build driving the to long them want hard extremely past our and value. employee are company this of acknowledge all. shareholder build years of strengthen success. XX-year Collectively, and I over extremely for haul

the of new From our to journey, us outset I achieve expected heights.

that and to Our revenue be acceleration are and strong profitability to in QX expected our where good visibility continue on show we have me executing we strategy.

Our are paying off. growth investments

Our increasingly to we confident growth. are position our market strengthening in is sustain and profitable ability leadership

the well for Net-net continue to we positioned we foreseeable are future. current believe trajectory our

that. Our of for reflects increased guidance balance the the year

Operator, that, please With will your we questions. go take ahead.

Company. the Thank Needham Our your Instructions] & from with you. proceed [Operator is Joshua question first question. with coming line Reilly Please of

just And deals primarily you Dynamics quarter Workday overall has All SAP? Salesforce has forecasting any Oracle Can on impact with somewhat a here. of more shifted stronger how increased taking leads net new coming here? job my Microsoft does level and demand? for or your of visibility have from Nice shift question. right. and explain versus mix And historically with your the to bit it growth leads Thanks. on Thanks this the

part our additive to general. I motions see increased of this to strategy. strong. SAP would very number overall though, of I our we as with continue say, continue has I Josh. view as would Oracle our say be Thanks it leads being and in with

seeing ecosystems and We about and very we're targeted conscious there. have good progress been Oracle, SAP into below moving

size as speaks -- me newer are well. solving is is I getting AARPC. the those additive. And very just the market so ecosystems able we're the to in What's me, valued deals up value still think mean, that complexity I -- from still been we're fascinating to of for to how of it's drive to our that, complexity

leverage about some we you guidance the margin into EBITDA adjusted going and in guidance. the are beat would think the with investors here left versus then half in thinking maybe you Even the go I higher quarter, as forward. How say I are expecting unchanged. guess, the end growing And it. second operating of profitability Got slight investments was maybe or And XXXX?

margin it Well know to projected as in two it's notably may first and you QX quarters our in as progressed EBITDA the increase and QX.

and year. we through year So raised to we've operating now That into from our as see leverage continue business half of built the the coming move back that. the we was

of that. forecast advantage I continue and to will along schedule of that will in -- of AI and the of continue on part increase we're seeing the that we're mindful opportunity right pursue XXXX an all XXXX. decision-making year to in our and are is seeing goes revenue we as ahead being said we've into we're see now to taking on But important margins good the continue opportunities -- because and market. and of we're the we rubric as our investments rest that expect we seeing

Great. Thanks, guys.

Thank you.

next the Morgan with Please proceed with Quintero Our question. from is your line coming Chris of question Stanley.

guys. would that we're for here. of the other then a like And Hey, integrators broader John. as ability not attribute transformational put around is that your Congrats follow-up deceleration a you large seems and on results despite much. these have strong backdrop? software hearing been in system yields, it affecting enterprise of but up kind there I companies bit from you to Is anything work implementation a strong new that seeing We've results

remember think a have of to opportunities. lead business that to I you our Chris number that drivers Sure. there's

may their which do model, The first nothing company's with is in the changes systems. have anything operating business that to

revenue could new all or put That us the for demand on. a tax do a that way the running model department. nothing expanding could pressure they're jurisdictions making So to it absolutely which systems with acquisitions on expanding the their they're has change be generates into

it regulatory your is you're environment opportunity whether cause we for an Again regulatory continue impact -- to our definitely The not we obviously heated seeing changes. no are we for us a that value it find and can system changing generate and second the as see revenue. add governments the to get or then new ways systems then then environment in with And to capability. from

have of So I pool drivers a able because we source are our see that's why for to think the diversified business. we're results demand still strong what

the year cloud in revenue so kept total or better it. -- but John, board? performance Very raised interpret are the confident across performance and you you we full clear. expecting as on-prem guidance, should better to Got with cloud, services compared the revenue you're that

Well, the I saw coming of think, what coming was in performance strong anyway on-prem. we -- half out of real certainly first out

I put And sure thought in about so that what we as very Again we that we reflected the back half looks forward. we guidance wanted think like to the make cloud. that the for of good about feel was that year

I feel throughout forward as implementation. well opportunity very we the strong. And growth we there's of shape. year move and think again in services the some very as think both as MSO in -- consulting the good side is We additional XX% in are service for

you. Thank Excellent.

Thanks, Chris.

Thank you.

proceed your Hotchkiss coming question. with of from question the next Our Adam is with Sachs. Goldman line Please

as that this improving are a get partner you Good in of would part Europe. the on great a I the things for and how saw an and and referenceability perspective just on call. for that would from been Great. things to I you question. things curious if thanks going in have morning mentioned to you guess strength be quarter there know be some accelerate the start I taking quarter. update momentum just the David,

I accelerated. No, it wouldn't Yes. say

I we pipeline it about building. have has it's degradation, customers I X,XXX material but SAP we're not got the that XX,XXX you activity say any seen haven't XX,XXX again If would We so or of really like accelerated. of think SAP those. or only

to march driving. migration plans the to they're continue they that as So

I'm new opportunities and activity that confident of accelerated, see I We we opportunities the to have say in the growth. doubt more saw we for motions historically to but wouldn't I SAP. space we good continue continue than see ever with because continued it's

really cycle evolving Got helpful. like seeing curious earlier be I Chain product That's are Edge. some then it. your would And just expectations? just stories How of those demand and kind you're Flow what Accelerator of

I'll Yes, -- are Edge differentiator Edge. of a real first focus has both on been differentiators. those real

team ago. is encouraging Edge. a Taking If to you still a about are that advantage the early very is our to use continues years of deploy us different customers creative of in how apps launched even looking was the just moving in which cases as days key because technology to me Edge how we customers team industries into tells to get evolve, there the than think the me traction spaces different And of infrastructure going strategic and to are of to very exciting. the is we're initiative that very which couple of taking dreamed which

gives we the that Chain the SAP SAP for as our add find really reps. in us sales They really market certified us. that end customer interesting being that the up has offering and SAP relative many when differentiation real see only some Flow doors experience talking a to to value a competitors We our of the offering in space. by the from to certified start

offerings place. So, good in both a very are

of in and for get early And for satisfaction we become as the opportunity a or said adopters that references us. referenceability huge really I've starts past two, As issue. the get a year strong flywheel very is they and they these

future. tailwind think future uptick. our seeing I traditional be a we're we in think And into we're our base for pattern following go so And I opportunity in going start as -- that's the where we're and the a installed that to

Thanks Really David. it. helpful. Got

Great.

you. Thank

Our Markets. coming proceed BMO question. Capital Please with Jester of line with your the from Daniel next question is

a David comment Hey question. good morning. on maybe environment. Thanks competitive for the taking my just

how the had you. were just that prepared environment in mentioned are lot competitive you a seeing remarks big wins your of the moment? overall You at maybe those competitive Thank you And takeaways?

have I or that off two those of The -- one bulk was new. there of were might the There takeaways. were head specifically top think net been my Yes.

opportunities. see I think we unpenetrated continue large to a

number As Oracle us fertile of ground I've to our in said, of continue for create installs just just enormously core to expand to penetration the segment. and SAP

what of resorting on delivering is tells The most to competitive me of compete is try value price, differentiated us a price really to being I dynamics, competitors as to the lower which already. and we're only see focus the than materially continue against what way us to

so And the Thomson continues they customers to that give that's where still as us our middle mid-market our typically we're I complexity space it wins competing the Sovos into largely market that get think the and primary because value the when we're in When then be continue In we see moving solving overseas. for upmarket, into competitor. we'll them. still Avalara to

Great. color the the issues in quarter operating there. cash And the I some the of on appreciate then John and

give And As for the maybe back can a gets the some about as you half, done? of seasonality little Thank about of I color just you. trajectory going billing the think of bit the remainder the year? generation those are some for to catch-up issues more us you get cash

you're Yes. much Dan for the question. Yes, thanks so right.

to I back the half of year, generation cash QX we is be think strongest typically our anticipate to our that the strongest. back is what expect same. quarter and in the the half we see

have as June. expected a remarks, in of in prepared did I July, see in we we slower in we an would cash up-tick month again, see coming cash through as receipts a my consistent with did mentioned bit what But

very get momentum to seeing into are fourth back think to see add on up. I quarter. the we as traditionally is we're that's get order. So going in going back which us caught that roll do again certainly short to strongest to quarter there we -- And the that track on our I anticipate And

feel because good follow it's think the same -- So historic pretty I shape past. that's we we've going about to patterns in going to how seen as the up

very Okay. Thank you much.

Thanks.

you. Thank

coming the Please line is Matt of William with from your question Stotler question. proceed Blair. with next Our

my Hey you Yeah. taking for questions. Thank there.

could expanding you've right? the double-click around mentioned maybe extrapolate let's those how well. off, I motions double and partners? installed that bases little you think first more up opens given that David, then think to of sales some dig as SAP two relationships, SAP click commentary you a new some substantial of you're how more into with and I'll you I with expect bit on the Oracle just on those it

Yeah.

So we continue the of -- we thanks continue ways. question, our a to in motion number Matt, SAP – expand for

So number there's unique product that very differentiated built. into products we now with We -- and We through we've bringing have then the talked sales where times about their to we that being opportunities. for a that of moved set teams us and we've working need start had and take acquisitions product. actually they're rewarded

sales us endorsed reached marketing we've collaboration app their with and new give get to Now, teams status which whole will a experience to more access their base. customer

for done with SAP been did the fascinating who number partnering that that they're really some opportunity also We're And SIs involved historically like in. largest not them has a levels. we it's they with. is to transformations now large multiple us, what IBM surround are which continue -- So of very in of on work an

also customer it's referred us broader I even with to into of so partners SI in to circle where moved success. that customer bring are partnering we're an think And value opportunities and

So I'm continuing way really team to pleased with opportunity. this the the on capitalize is

motion them They to move longtime their with enjoy cloud down, we Oracle their app both we are strong us teams. access partner. They've a mentioned as trusted As given well. and very continue you a to

-- shown to our which we've the has products really value performance joint bring experience sides opportunities that to and customer of both on well in platform seen of of prop working we're quality so access customer. great situations. from And on competitive in bring And the terms the OCI customer up

you then, drivers the just Very to are think think helpful. what to you. where here? want NRR, that there tick I a high a follow-up metric new through right? up you XXX%, as Would And see I from and Thank again on walk go that can

Yeah. I'll start the hit John, and can specifics. overall then with

up-tick build the I on growth I of and we to focus to of function. really continue customer that's success our And continue products. seeing think, we're new think terms we in where

best We we the We strategy. have very new build customers world. clear products have a in

to be products customer continues when We the on investments the those a base to motion as of that we've build to playing seeing maturity And need successfully to and last the able we is there good couple have out, years what be educate made them we're of to out. the bring function that to evolve and opportunities that over add value. there's

the is I this think in our products usage We And be expansions that their the also nice Commerce. usage to of expanding – speaks saw entitlement drive the the to which again quarter our existing to forward. growth. heart businesses continuing on of customers continues world They're some on largest in Globe very the backbone

break the of let for and specifics highlight I'll John As that. the

Yeah.

entitlements that again, take components migration as and I it to needs as the of there. It's it upon. products number from that you've your -- in the NRR taking last with a XX% And front customers cross-sell cross that about of touched additional stability sort different lot seen really we there that we've as that up. there with you are. the kind think customer with point again then, has three really growth the there -- make of what they had as for the success GRR that quarters. it's to to that the up And starts do really customer place serve, Real posting number drivers are strong kind activity of and into deal that's David's staying expand the we David really think of in well existing teams those order

in price And those growth again, increases. then we is each last piece in of each growth over -- finally the areas And saw quarter. seeing the we're last

out this we it's a so, adoption that followed that. nice kind that's pretty the that's through you're Again, hard the again, the -- And due we is there. front market. come now about feel right, feel product first opportunity our to XX that lot by good good of But playing on first of of again we've proud end, and our in that very seen, of work that

Thank you, Great. again.

Thank you.

your with with of DeGasperi line the from Berenberg. coming question. proceed is question next Andrew Please Our

for my question. Thanks

the being is that you're your free on QX. implied And I and Is laying mean, on on the recent really cash on there for then history like for any comments number? QX, out, of a that to have it come I in flow way First year, the for total that QX in conservatism this in you're strong your in full Thanks. for guiding growth part mean that guidance strongly XX% follow-up. quarter. tend given sounds your the an I you revenue based just given really

as had we think, thanks Andrew, question. for the very some half. saw, we good I first posted Again, Yes, results the for

drivers we that guidance, we business of strong, how As we've the be sure kind what some of have think continue level to deeper year. we but want set stuff future that's feel -- the like the very are make there. the like, looks confidence always about We to of in we thoughtful about that mindful into we're the just

look an could and thoughtful guidance the be. we we're on what be thoughtful we But be as that Again, just of increasing back. again that in we basis, from want did So, we growth the amount we some revenue set at that up try what our set. the looks at guidance about guidance back of half like. the always increasing And to bring that look very overall initial again, to

in mean, side, cash or G&A, are the could I'm to But anything going modernization else the on improve we that highlight? know And I then QX. I decline growth wondering, benefit what flow besides in you is intensity higher ERP see is the -- billings what much collection, model? going CapEx probably will slow should cash than to just the come

Yes.

when Andrew. a the there's a Again, out, modernization. that's free couple call ERP Again, built think about the the we of ERP pieces think of certainly modernization good flow. cost into is cash I actual the

bottom over end And so, of or ending really to going with a line. then again towards the getting to us ensuring with our is see allow better kind stuff developed needs, to years allow -- going getting that And the cadence the into done. older out of the to is the -- on coming of bit then there more getting flow-through that -- to that future the an come get kind and billings the little visibility client with accuracy, getting system us we've years respect much going to

the right throughput on we the that funnel collection sales and opportunity back to good of starts leverage back give is the very system side. to beginning it goes better which about from billing So, feel end us the which through and the the

a going is that area. lot throughout the G&A give cost a to organization. us from it's So, the benefit bit really of resident standpoint, little But of in a

Thank you. Great.

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you. Thank

question. Alex with question is Sklar James. your with Our Please next Raymond from coming proceed

wanted Thank doing that got Thanks. just on the they maybe was you you? Can what What talked how provider they've kind to were before to booking eight-figure catalyst previously? telecom when with I switch the you And about them elaborate bit into a opportunity? of with pulled in you. using more little Dave, start what quarter. been you for

Yes.

part They parts series make our So, of part they terms that to chance of that a business a we changes -- access and into their with point step don't and an the they look serve. the existing initially catalyst initial they to have run with when operating we of we in another motion land relationship oftentimes a they relationship customer, ours customer just in. to and a some other number business of challenge get which is that's or that systems you have work we our were pain others expand diverse get continue we'll their but get system And is that's of have didn't when in working there's of previously of expanding that with. into acquisitions a to of we were through

nice we was I our catalysts of catalysts solution. Edge computing have two What here One think one -- was the here. big

the were thinking with struggling capabilities of they they facing. were as quality some they again, think that were I they accuracy and the were in-house through of getting point the They had. from need

the that it. need our switching they them gives solution Edge And over confidence so to really

we the was, coverage new continue can of their business. this really And then part we reached we've point point that to second them were I And think content. of excited them them we we to -- invest this efficiency a that give in at handle covered telecommunication with the our

and And to continue in continue opportunities we it so of drivers really market, to more address just up this new fit the content with well situation. what capability opens it the those bring are existing two big to in customers and

And John, That's Thank great you. maybe one for color. then, you.

started to in if reps growth year, you Thanks. start and in the versus can just you investment prior sales seen lap about you've of period of obtaining the are ramp any the As terms faster talk that quarters? of kind last number quota

get the opportunities. in those, the as the as target Yes. investments think canvassing name, US areas focused in Again are I as certain bigger and we're ensure investments that of on certain to those to of stems drive and the in to some you pretty marketing mentioned, we the systems of channels, Again we opportunity those both really that were has mentioned, as and well David did of we some good benefit starting market see some selling where of some domestically bigger make Europe, play to out. other

we're the report anything From pretty making. overall what in standpoint, these about we to mentioned we've those opportunities productivity that been again, don't earlier of are groups. had nurture investments of feel beginning traction But to as feel some of we down that next starting ERP as to I terms an sort good of newer We tier of and see we relationships like. looks some along, of level -- have those continue around kind out second some like to see really David the of to develop

both color. for you Thank right. the All

you. Thank

Thank you.

proceed Our Please is with of coming next Citi. line Enders question from with the Steve your question.

and guess side. pretty this on are want to feeling taking impressive the I morning. pipeline larger for year? How ask or quarter environment of Okay. I surprised kind any strong deal the ARR I about the broader And in the the mean upside there. demand first as anything Great. just for the growth I questions to in, Thanks maybe you well? you the the were of rest guess pulled

anything think the surprised us for I quarter. don't

of of a think QX, team we pretty the and good job executing we did out quarter I it had plan. nice had visibility on the to coming

to We forecasting year. think the raise have the our guidance. to for we've I have -- that's why been we comfortable good of do visibility rest And

of or drivers expanding enjoy been those we we've Because diverse some et cetera. opportunity it successful of been relationships SAP in Microsoft about we've and very talking

that economy feel we our as present uncertainties that's balances why some. those think still I numbers. are with the continues to think I -- really good of some to for do we And the confident

question -- helpful think maybe through flow. thinking is was billings magnitude just the a a I how the And more And directly way then XQ ask on about That's maybe on into XQ? actual, actual guess, Great. from impact in there or be the Okay. context any to John cash there. flowing we the in about in what I'll that should the now? impact quarter little the

little what think is results were to seen standpoint. show in to the collection collections got back you still bit cash our then tell through up Again, as month I June. of I go room saw I bit a I've Yes. Again, we've a a again would the cash soft in from come were that July. a little

kind don't to magnitude of to really I number So around. a have pass

resolved. again think on in prepared So do I like I feel right I done. as the but remarks We're target. billing my That's is mentioned delay

collections free now the some of the anticipate of part cash really of to of And again, with July. as going cash the that and up. from are been to implementation that operating move we piece starting in that delayed start coming have through and is see half continue make else largely The around a flow a spend to we is in to as be the big lack for back system. everything in show again standpoint forward continue come driver saw fees billing as our to some we that was that we'll of and I

have year can don't for a full about get I on from about behind I see think where million you but basis So number I we we're were you ago. a X-month a $XX to X-month magnitude

progress good half some bridging pretty and on through to the hopefully up And see the that I making year. of that certainly so back anticipate

for Thanks the Perfect. taking Okay. questions.

You bet.

you. Thank

Securities. Please Our next coming Walravens question of proceed the Patrick line with is your from questions. JMP with

It's you. congratulations. Thank see. to And great Great.

and you it So March. linearity in What then January last that you up the made us a QX? slow little remember told quarter I guys in was was like

better. was It

different had a business for it than definitely there our but is a there of do quarter not in was of quarter. little seen. the of a I QX saw anomaly as was quarter. it's end different. it like this it better no no Certainly, we always a think was the better last across was month the QX. But more that quarter bit hugely We better was anomalies every definitely alignment And at We think typically an little bit I little business. the

you internally ask determine get Great. strategy? been this impact the answer sort And terms front then the things on AI exploring it how been What before have to way. me the let whole in of been What have questions of may you your David AI trying your you've to business.

this I customer active at very are area. we external We've and the Well, appreciate looking productivity been internal Yes. experience. in it both Pat. question

very going looking enhance And for us as some potentially we're experience are really doing side value is new is, And productivity. internally interesting I and opportunities how the there open team can existing becomes of what AI interesting on for a that up some our we critical creating we started it markets deliver customers forward. think us. for part really to things commercial the think I the customer

our of we business. done. us the our to do and And technologies capabilities to we've of, ML work productive customer that productivity add more which years leverage Obviously, is technology generation there most in and give bottom used our of technology sort the amount how we tax We've for just next we in ultimately can now line. which high-value do the leverage and to the more that data curate will touch experience we leverage the to large can be always how this

is our those the comment the note the I and deterministic. be the -- the important And it's probabilistic think so quality to of one built you made And on things can't content. right. of I that really, about brand approximately is are It's important our

for us deliver. You've that accuracy got our to we -- customers be the count

over something so earned in I'm we're And rush would years. the undermine and we've in not sure anything think vigilant that XX doing that's something that making to I trust very brand

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Instructions] Reback Our [Operator question Please Stifel. from Brad the of coming you. with your next is Thank proceed with question. line

up Great. in quarter-over-quarter. cost services Thanks very much. John substantially just a of there Were pretty any The was tactical question. one-time items there?

that Yes. ensure What of -- to we we and to we've some there's manage in developing back hiring after up. got was labor Brad. services to of there sort question some Thanks have for end an is in seen going need additional the that make sure Cost believe of opportunity forward. that those the we get the we are costs

ourselves bit think full -- utilization would that again, slowness has we a there's we that days been coming. of to getting headcount ready terms what additional to we've there So, expect for productivity early And of and up there. get some added is in there

So in that a and that developing at was I think that. bit little area play

that piece get the was fast. the down. and of to -- see So that that one moving was crew was that Again, of we'll probably expect I speed some -- driving up biggest that

to And rebound. expect see we so hopefully, that

step increase asking a to is the up profile the and of think think And do in line maybe business? you'll reinvested couple system about in for you function new next in the the term, near what the there's differently. the Great. gets what bottom of then that How think is David, margins in it as other margin it cost the or ERP moderate you investments years? we sort the to slightly generate savings Do from versus And you've made. about drop

question, a it's Yes, good Brian.

then I to back XX already margin we're up in from half moving this think from in margins QX. the and year, EBITDA XX of XX.X to

I And expect into that to see we'll already performance continue solid an across So margin, move planning we we increase in XXXX. our EBITDA nice there. are for as leverage would

and success have the the end to our in on more us bottom All has front content drop we're now put of the line. and customer making our investments our to sales a position

we think not go. when thoughtfully opportunities, we're And I if let in we're think to is, it going seeing acceleration those so about

building invest that's in And and margin a not And and going sales to just improvement I that's continue. thought. it going to those R&D, will opportunities from in because the in it's opportunistic. throw if already there to more I'm so We're happen business. would always than progression something and bottom in I otherwise the will seeing to marketing outperforming would to we're -- back line. we're But natural this miss that our in forecast half I'm not considerable be revenue, expect we again, going

much. very Thanks Great.

questions Thank are additional this you. no There at time.

back remarks. like for additional to to concluding So I'd floor the any management pass over

everybody joining right. for All Thanks today. us

me As and at day. always, rest a if follow-up have out have to please of ir@vertexinc.com you your great questions, reach

lines Ladies for time. does thank this your again, participation, and teleconference. you and your conclude you disconnect gentlemen, we at today's Once this may