Vertex (VERX) 7 Aug 242024 Q2 Earnings call transcript

Good morning, and welcome to the Vertex Inc.

Second Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Joe Crivelli. ahead. go Please

Schwab, for financial thanks Relations; to Vertex's and discuss De us also Hello, today. I'm joining Joe quarter John CEO; and results. our Investor CFO, Crivelli, second are Stefano, with and President us our Vice David President,

we forward-looking our and risks Commission. this and financial described expected in Actual with statements uncertainties future the Exchange These call, During may and differ uncertainties. about results. filings Securities results due may make to risks are

will refer today's available GAAP being to over we The metrics. today, Relations reconciliation of to will financial for is remarks metrics A our call Investor to is website. our In David. be also on recorded and call press I'll non-GAAP replay the these now in provided release. turn

joining position highlights, the financial you I quarter, and Welcome, second delivered important numerous thank The recently strategic the financial on hallmark priorities. everyone, had developments cover but they and us. again than In been company has growth several of to strategic sustaining want XX have once for our the for results that we announced the that more profit-driven as us years. we for

economies the customers. e-invoicing our will our making acquisition opportunities this is to Vertex. customers market more of announced new and to along revenue-based Austrian head enterprise we us a of With acquisition specializing in soon opening adopt nonuniform for proliferation in company unlock enable opportunity The compliance earnout. new with e-invoicing for we challenging Ecosio, large with mandates value today, address while EDI Earlier several million the $XX global acquisition, on. multiyear additional for requirements, reporting burgeoning for fast-growing cash a e-invoicing of This

Ecosio We number for were reasons. attracted of to a

countries scalable, fully today. have mandates that many handle its it's across to cloud-based First, e-invoicing ability second, platform.

compliance ease and Vertex fourth, the Third, its that introduced. mandates determination. platform with Ecosio O-Series offering the expand we the to coverage quickly integrate new which of with And as are ability tax can

we potential fact, have integrating been their as our on a technology partner. working on February In platform since

intend combined to shortly. So launch offering we our

we together mitigate By the continuous This tax bringing a from risk can or to will in tax capabilities of reporting, through cycle reporting. solution with deliver end-to-end turn Vertex noncompliance. entire compliance and comprehensive indirect along CTC with the Ecosio, transaction reliable control global life determination streamline

involves I'm to but partners SKUs, the Vertex a high-volume right Vertex critical essential and of numerous look as task pleased we Ecosio acquisition and designed our X businesses manual to is solution, AI to globally we it's Also Tax together artificial constantly with signed of ongoing for tax globally. time-consuming June, to the late intelligence processes and So apply it wherever the forward of with quarter. categorization bringing expedite welcome the to the simplify in announced team entire tax tax customer's capabilities. technology organizations SKUs business third This the and does in will when tax-specific applicable family categorization. This at matching success, rates of jurisdictional Consistent with new indirect the hallmark accuracy, required, deliver tax rates excellence. have up ensure to compliance only must for implementing Getting rules is XX especially scale. customers that achieving this are not manage also years changing. a be

with capabilities. tax AI categorization, deploying application furthering capabilities our product management data to acquired the industry-leading will have content database be and beyond Additionally, support we our

the acquisition. technology about potential commercial excited this of are We financial this and and

to adjusted typically and financial flow Now a growth, Rule goals, XX the investors rate. free targets, mid-XXs with EBITDA mid- mention we about cash margins adjusted to our financials. XX% talk including to When revenue turning to XX% long-term of we high-teens conversion EBITDA

year-over-year, we've high our cycle million power double Adjusted completing to multiyear adjusted conversion results, grown our full million, Notably, quarter financial goals. organization in by nearly than digits row subscription as in adjusted expand model. investment software these XX%. was $XXX.X EBITDA guidance towards growth higher was earnings cash of making year EBITDA essential and over growth cloud our was up was our Revenue basis XX.X%. XX.X% our demonstrates revenue of quarters margin in an progress financial program X-year our the adjusted for our quality second it good seen ago, accelerating and since was EBITDA the X XXX and at year $XX.X XX.X% points, margin quarter, we are mid- the a X priority following the and investment With flow second EBITDA with

while quarter far very flow cash discussed I'm AR to cash record from was million a million, free catch-up So the pleased is QX $X increase still exceeded that in due free part the have that flow performance in previously, second in internal collections $XX.X we expectations. the up the our

revenue moment. ] last metrics in XX% quarter, customer In XX%. of $XXX.X quarter. XX% XXX,XXX, in by our targeted million, delivering John was revenue quarter, point Including XX.X% scaled to over achieves X year-over-year. XX% the was customers Systax completion down XX% range Two and customer which quarter. represents up second were which customer and year's addition, our provide of $XXX,XXX this grew [ color will in the per best-in-class average more NRR impacted in second up ARR of count, Systax the year-over-year, annual our from annual was second XXX% acquisition GRR XXX%, a was of

is acceleration X were of due overall reported in ECC SAP the our While and migration slower-than-expected quarters. HANA strategic lower metrics they and publicly bit SX. planned to in to the expectations, in customers growth services revenue the and part implementation slowdown customer a were with line the This rate strong than last

and that, did Beyond we somewhat the the of year. first in cross-sell lower see upsell activity half

of upsell. the second year flip the the of June a month the last our side, cross-sell positive years logo was best second the and was new quarter and more for On revenue X for trend best was

in Given to our our remain guidance our full visibility opportunities, and narrowed have revenue we range. the of upper year part into outlook second the confident half

moment. We have John also substantially in EBITDA this a discuss adjusted increased our guidance. will

we note And the were back expenses company. we in quarter, this for quarter to in ability cash Ecosio positive the third second positive common that and a flow a GAAP half related earnings the to while in Finally, the due DAS believe Vertex I'll temporarily to free makes may integration row. earnings change in positive GAAP deliver as

in notable to the Now turning quarter. wins

Edge. quarter customer existing renewed delivery in food processing increase to its One in O-Series was more May, in than biggest the tax a for to of Vertex X This upgraded with significant additional in its beverage systems food in led second The addition customer an industry. to in customer for result the the with quarter, wins global Vertex, specialty also Also revenue entitlements, second was of determination figures entitlements. the a retailer and contract growth transaction the organic new mobile Vertex.

As mobile growing adoption of requirements. rise transaction to expanding meet volumes with are app, their increased we their our partnership

partnership investment mid-X-figure transportation An seen revenue the life now XX of a customer top cloud a manufacturer. this to resulted upsell the over We've from in with increased transformation S/XHANA competitive figures. SAP-driven for the in equipment ECC mid-X

services, address in this ARR ended to their In fourfold customer. move content their this tax in the being this cloud, increase our leasing opportunity turned As this demand up a differentiated opportunity to total, part for increased complexity and industry-specific the our long-standing took customer of with favor.

the discounted their of hard customer part the very business bids with solicit competition to As significantly did tried competitive analysis, buy our pricing.

and burden a support in However, tax to a was customer customer of transformation to Vertex track advance SAP. win great well as resulted engine had from relied as leverage with their retailer. close their record and to with long-standing our to mid-X-figure of business Asia the a top-notch The Vertex Pac. we customer a within relationship with the support cloud their maintaining were clothing This on prevailed able larger ERP national relationship our migration. in long-term North as of enough America, initiate Vertex cloud move in EMEA infrastructure A

not solutions. companies the their in is did major homegrown surprised number bids still during evident are and solutions. see sometimes at which customer process, tax competitive that with indirect XX-year our of Investors the of calculate confidence Vertex This

in services quarter financial internally As M&A an their to This the that legacy activity integrate world X-year the deal inability continued wanted and that the seamlessly solution. to a of their the subsidiary sunset one developed win we the calculation of had example, with in mid largest ERP company's was a new of by a companies second with system. catalyzed code

data multibillion-dollar of to multiple these new when month the data at ERPs own analytics a manage the Oracle. transactions a a with X a solution low activities combination solution Vertex instance by of their nature peaks incumbent of end. processes. customer in billing business, consolidation to could needed when the indirect flexible overlaid Interestingly, its a conjunction company's a they of competitors' high company was reevaluated tax single subscription approached Due along Another volume the lines of on X-figure that manual

front, On transformation led the cloud international new new high Vertex. selected SAP journey. of displacements. to competitive its services over an number to for of incumbent a competitor had X Vertex professional we An provider S/XHANA logo revenue support figures This

Financials. Vertex able Organic meet selected expansion. complex scenarios Their needs. of support to Workday their to solution and was implementation requiring support greater provider scale agility management not to growth facilities national existing changed a Likewise, business their tax

looking unresponsive, from was result with outgrown Oracle a an was of were We incumbent but business extremely support implementing our a win aggressive new international competitors with we're were for customer worldwide their had their a level And a the partnership Shopify. growth and Brazilian company scaled they of largely X-figure, referred logo for plans. fashion using competitor who Vertex. Additionally, unhappy the new on partner on with been deal we which into capabilities, front, service our the customer Cloud. with segment small market, through the had could one they that the customer focused The had that previously, of

Vertex our complex went take will and the America was and This handle of John? we completed just ever support qualified tax project the to in Vertex that major a believe tax industry. automation the singularly selected most now indirect South John financials. is XX live and to North by that through technology Japanese XX-month spanning global automation X you a country we with implementation EMEA projects APAC. one Finally, conglomerate

guidance to increased year compared for results provide and last to $XXX.X at third Subscription our Thanks, revenue to $XX.X David, revenue now million, second XXXX. the was quarter XX.X% quarter $XXX.X good quarter, million. second Services XX.X% quarter. full revenue and everyone. of grew period-over-period In up financial year's morning, XX.X% the review I'll and second million.

to we source referral important As for intentionally year implementation revenue previously, services revenue this our new are steering our channel slowing by opportunities. an have who are growth mentioned we partners, software

last the and was third services a result, expect ahead year's continue the up in from quarter, of to revenue retention, XX% year. down to our million or decelerate XXX%, GRR, the quarter. second guidance we point XX%. Cloud for XX.X% and to range to remained the fourth end quarter revenue As quarter percentage growth within targeted X compared in XX% last second And gross revenue year. our revenue $XX.X was at retention Net or of NRR, at

David mentioned, second recurring the during have since annual our quarter. average ownership quarter, the first consolidated been including however, per the our with we financials revenue this As Systax Systax, company time XXXX. that remaining are This the we acquired annual in ours revenue is for the because and customer. Note, subsidiary of Brazilian

second $XXX,XXX year's Systax, last ARR was $XXX.X XX%. up AARPC and Accordingly, XX.X% was including quarter, to up million, compared

Excluding Systax, NRR inclusion $XXX,XXX up impact $XXX.X no There from and Systax. XX% or was of ARR GRR XX.X%. the was up AARPC was million,

gross $XX.X to For this morning's results will earnings the statement the metrics. profit I GAAP gross referring These million XX.X% for non-GAAP and to last income second million gross remainder metrics discussion, of non-GAAP margin compares quarter XX.X%. with the This press period $XXX.X was in year. Gross and in release. reconciled same was are margin be of the profit

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

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

XX% And or year-over-year and million guidance million. an million, Selling of last $XX.X by and was or an million marketing $XX.X XX.X% million, high the revenues, and quarterly down $X.X of exceeding million expense million Adjusted $XX.X $XX from increase our approximately was increase from of general EBITDA year. $X.X XX.X% administrative of prior end the expense year total and was $X.X period.

very $XX.X quality free had million. in flow by demonstrated by quarter. was we is was collections our impacted cash last earnings ERP the Our converted Operating million, that record record was $XX.X cash and in flow been part strong a a receivable since improved system necessary This the flow year. second accounts cash

this that be flow $XX of million We free cash a $XX additional there impact believe estimate to on will gains be We million. to had here. had positive that approximately

So we optimistic investment second and $XXX.X that cash We and cash totaled cash free basis. ended are strong bank to ongoing the continue securities unrestricted equivalents quarter we debt, million. on $X.X deliver can our an and million positive no with flow of

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

this million use press quarter. cash later when will morning, close the to noted we of is be the As expected this we release deal, $XX Ecosio approximately in which

to after closing business We full before accretive third be adjusted dilutive and million we revenue to in adjusted continue expect EBITDA as invest X $XX first of to to turning year. first modestly Ecosio approximately the the in contribute in years EBITDA for after the closing, the year

to guidance third the for quarter XXXX. of turning Now

of We do not but color We guidance the third more do total software $XXX growth year-over-year provide impact some to to do expect in break software fueled services, expect in quarter. by in teens I between revenue remain in our revenue represent range note and growth revenue the and added slowdown to We revenue XX.X% here growth. that out the will million, rate the at $XXX which the midpoint. want noticeably high would in the cloud planned third growth services quarter, overall million strong

of million would we Despite adjusted $XX which accelerating represent million EBITDA $XX of million, midpoint. second including increase at in AI-related half the $X the investments, range expect R&D, to an

the full are year, For we as adjusting follows. guidance

Prior year growth of part range of at full revenue the million, narrowing guidance expect revenue in the range midpoint. of adjusted and representing upper EBITDA increase a at the $XXX was revenue $XX are of $XXX We to total $XXX million million. million to million, We at now annual million $XXX of the expect to $XXX the $XXX year-over-year midpoint. guidance now XX.X% representing over the million

full does to $XXX the And not to impact of This prior guidance that $XXX of guidance significant year growth is Note we a from include also continue increase XX%. million. million from any expect cloud revenue this Ecosio.

up the guidance closing We we make will some adjust accordingly now after open transaction closes. David before will Q&A. David? for comments

In was Thanks, eventful first half John. it summary, an of XXXX.

With transactions continued space. stage profitable and for the accelerating the tax have strategic indirect announced, have in growth leadership we set we the technology

solution enable potential We bring what months acquisitions are very Vertex table our excited to will coming they the the years. and within the and in about the

put in is Our possible we strong drive have success. formula performance the financial place thanks to winning to

our this, delivering grows when exceptional partner turn to they their be value to platform Because service. are strengthening of to while and We customers of our tax and Vertex, to capabilities continue compliant relationships complexity customer the power need their disrupts global business be. unified and our ability extending and as a consistently

taxes as tax deals market-leading content this customers volumes. quarter and XXX database to transaction compliance mission-critical applications, the for to solutions we growth, Our jurisdictions indirect evident and Vertex was rule indirect across This our support enterprise and manage are in globally. business won global customers effectively manage million continuous looking high selected multiple

please With call questions. for that, open the operator,

[Operator Instructions]

Reback Brad come first Our question with from will Stifel.

half first sales lower out break in I and would follow-up. cross-sell have a between the lower how And renewal quick around that of in a cohort versus commentary your sort execution? then the the you half upsell on first of year, David,

to answer let I'm the just Yes, that, make going specifics John on to simple. it

would we little of a bit talked upsell. Brad, the I from a cross-sell is bit a about there, think of Yes, sort see about change as what we And we softness did again, pullback. say little the and

recall, I if there. QX, we strong a got and lot you benefit a have we very think of did

uncommon of While slower it's activity those us get cross-sell, upsell a some that that of that there, numbers little bit really years to going. start spent not are still activity as some to of for got a and the backlog see

we bit on piece additional entitlement from standpoint, an so little a was like quarter. was second softer there. feel in And think target also there I a And we're that the

So sort NRR ratio. of that's of a little -- you in saw pullback bit how see kind that that the that you a of

year-over-year, it that move of impacting larger backward-looking that but was it And was bit Was actually is know Or metric. cross-sell percentage a the there sequentially, of impacted the lower items issues X X% then were the nature down on given points I which that, it other there? upsell? a down same --

big driven again, cross-sell the the a They were of was question. one big X drivers. were by were budgets QX Again, that They fact the drivers, the upsell a Brad. really that It's was bit strong real great depleted. again, softer, the

kind for not think way see of carried So to again, us that. that And its uncommon through. I

it. we confidence surprised year, we by we we're in how So the really weren't gave year. full again, end through back of the the for the going have to And guidance work

with will Joshua question come next Reilly Our from Needham.

guess I on here. on of Ecosio deal couple the Congrats a acquisition. the details

believe offer? allow of is there operate your countries. another in number would What I of come follow-up. with customers agreement separate a a today? right is XX And deal in to in and they bidder the in the then where terms any about And are First, provision most I operating have type then business second, that

regulatory, year. It's this X we going just I window satisfy Josh, normal because that here can no had the questions. transaction. we purely one And in the obviously, regulators process, regulatory. that, outcome. the -- through their There's change no appreciate open on experience No, the that bidding can this latter of approvals to perfunctory just Yes, is QX an any

opportunity in the the to to the as great think a technology potential reason they about in the business opportunity -- here, bringing far be here our I so working And here. see As excited were we into expand in I them number so the market really have us of months leading offering. really QX with us gives moving and the why the is with hit forward. been Ecosio ability ready we'll for that We've market ways the

also just There's new that it would then players following aggressively that market obviously solution, appears modern guys. for something Is you set. market be investments entering would cloud as in you have EDI on in well lot as further that, And it. which legacy Got a up an product of that a they kind kind of e-invoicing? of envision and that

the they is together, we're for as They EDI foremost portfolio really further. were sides of already really, we'll with the expand explore exceptionally great and And have journey going focus customers. XX focus we there. that that our was first The CTC. countries do they countries There overlap cover we the how around And in through in good clear. with some terms priority cover. But go what the to are think both I Josh,

move supportive be it, that and The going here. your focus are our is we be volume like they now bigger They is Germany, us see that that EDI in invoicing to with to space. of at platform with to CTC move scales needs the the in starting France and really in customers' the those to positions going believe us what this a into we're economies the opportunity volume as And well we built jurisdictions. give the forward

from come will Oliver with question Baird. Rob next Our

the the comments on -- half your your upsell. being John, and cross-sell With and weaker comments about slightly first

cross-sell year. prepared your other month was the June the in that best of said a the On remarks, you hand, David,

buy? pipeline from here And on, to you terms of quick something does So then change get is a look in and I how that just color looking follow-up. some Is internally? willingness And wanted guys there market to QX? through incremental stepping that up are a it the you had people into doing out in dynamics a

question. I No, the Rob, appreciate really

point. right cross-sells did I lot hitting on the think of QX. a We you're in

lot budget an a back our and we half of tends you would. of see, the And June, in the customers year expect I the enterprise operate we certainly, enjoy to think, if So on the indication business. is in of down, year we to pipeline of took half typically stronger see success visibility the be we

what guidance half makes of And the the do have we can what's was that coming about the it we the for and we good because raised team and reason our expect. our visibility year execution back to us optimistic

So opportunities we our seeing at changes as any I not do all. I'm anything than cross-sell get partners Certainly, it a more support not fundamental and issue all. new changed timing much view our from around competitive brand else. the dynamic at has

comfortable So I'd saying -- a issue. really it's timing be just very I'm

I follow-up And is or think to current to hear way guys then the the partnership there or willing unwind think relative Piero or to either just that about like we transition that right extent to are in a you can would timing? comment, potential quick should the about to how what

actually, spot Rob, impressive the address forward other served be technology unwind them and what on. partners period it we head we other on the acquired to with looking forward scalability -- enjoyed seen were was Obviously, moving wonderful us now and a partners. we've while super our We'll time, here. of should relationship and for to that it it here moving we or relative to of but with with us Yes,

be a efficient forward. move more actually a customers and our So for us good for this going move is

Our next Morgan Stanley. Chris question will Quinter come with from

contribution that that over those or next are the wanted months XX $XX stand-alone Ecosio you of inclusive there then rate? on growth know Just on Ecosio? I to you at revenue synergies Is acquisition. provide high million the mentioned you expect the follow growth. in any can And just color up

-- size million we'll getting Ecosio. and of be The of size amount that's we and a sort magnitude on for the evaluate But a give but that's what the we the is basis modest going. believe acquisition. of stand-alone of kind to $XX be Yes. -- as paid synergy versus up want stand-alone of that's There'll there, a the in people the of Ecosio they feel we

from we that that's standpoint. to give So what wanted

growth rate was the on an actually rate We growth been that are private the actually Mean growth Yes, company, their to business. on specifics a They impressive. want were for impressive don't attracted out us We their process give it to sure. of has rate. go but the technology. auditing.

then And to wanted internal recent a software ask back use about I Amazon AI article And internal seen that step create using at level. take there a of to AI We've tool. to adopt cases. a and companies its higher AI is tools build across multiple tax different some was compliance own

of So will to kind on think hear the your you are how it thoughts opportunities for.... out? And and that what risks great would shake the be landscape

said, the #X customers the as we we've what often Yes, is capabilities That's of often our work competitor Chris, with. in-house we're replacing.

AI. not it's like apply how Amazon they exploring so is leading-edge can surprising company a And to that me

for finance in think a which validation, a tax more primarily using versus just that they're invoice scenario, accounting it I solution. of is compliance

But can't is the because unwieldy And that made of tool, maintain us becomes part to it. customer feels they we It they it's up they this as continues over grow. keep the it. good business to and morph affords then that do a it how thing productize have that time, when launch when the like all acquisition challenge did we reason oftentimes June the it in creates exciting is a something

successful support with. with and tools so been customers scalable not legislative turning things that that models is one our that like design the also we've them changes so going that are dealing taking the term, business are on in only they're products built and the short happen but to And that to of around the into

very, acquired I'm me that so being we've track. the positioned so and on on the fact what we're doing customers we're design right tells partners very are interested with recently And well what in many

from Steve Enders with will Our Citi. next question come

great going upgrade to you're the And I the some that of and guess get see cycles years? maybe versus comment I here I you out expectations? guess, be on few from into maybe the maybe would over of just changed SAP to your kind what's playing ecosystem to about kind slower-than-expected cycle how seeing view on start, it there. next wanted your dig what

Yes, Steve. sure,

impacts past, we've X success we ERP it transformation I a our success, to of last XX,XXX see that. time to terms of would We've X would quarters seen As more year, behind went June in of quarters companies first. the bit in time life the that end go typically public, from knew approximately said announced X meaning in little takes the typically think X customers. a a and we to followed in big They to are we implementations and the this go unfold. take boys largest the -- world big of with first, there bigger their

I billion data companies prudent more a center. mean billion path, that I are companies migration going think taking the X the that to their size suggests they're the companies, what SAP like we're seeing in other midsized slower small are the and Gartner meaning data XX

sooner be that with a some with, had of midsize, of We little so we So we've big I that uptick expected would create masses. a think saw some boys volume started less engaged to this from year, in an more the the push. beginning of the it but of

I think in the shift. the guidance as about we in to half to of start think second starting that is the pipeline, our year

couple just is it that again, to impact. a going have pushed of out So which quarters,

good still activity really Obviously, us. to XX.X% little still a at But with position through are seeing. pleased with perspective. platform. a or teams working our drive And cloud from incredibly we're our in impacts the well X%, SAP overall rate, the with year recognition bit enjoying really growth we're Their that that revenue cloud just overall to that continue policies with

-- bit That's bit out the the digging I of that shifting like and half into second improvement with both that a there. cross-sell little of maybe here I are feels into here. guess, upsell some [indiscernible] expectations little half shifting it around to guess more sounds super over And back in else into of the anything a of June half. just, or out feeling . helpful kind that? pipeline some of again, an second I context maybe you expectations impact kind guess, like ramp-up of that, that comfortable have into the revenue call I it Like and the how guess, about in might

built over mean, to across bear customer that with well starting through Right the positioned the pipeline. we're with that it's to -- success now, the function visibility in opportunities last fruit, we've the been move years I really stuff of we've again, invested just that team the have, seeing. starting world-class I'm on customer the we to execute activity how really Yes. that pleased base X is has

So very And we in good the margins revenue guidance in and the about can't to suggest feeling have reason any because the year. raised execution -- we in both strong our really expect of don't I'm that. reason back I half

question Our Daniel from BMO come next Jester Capital with will Markets.

of the is their and Maybe that plan on projects post country things this it of acquisition an the seems sort Yes. noticed, sort you there earlier of in envision? X-year I investment Europe. like are most that a sort of Ecosio, big on is -- maybe basis of particular any follow-up question One

Latin opportunity to serve America regions? an to So is other asset globalize there and this

Yes. the Dan. question, Really appreciate

even Europe, based needs. the global So though -- a coverage, but customer base of lot U.S., customer like global have they certainly, in base, in based primary it is the they their have our is just

thing. the for. they're covering same requirements the CTC the experienced XX-plus they countries I Hence think have already reason they've that

is our that about more in some expand investment Systax do already great The it's be you Latin cover think is Brazil, would e-invoicing, they we of But really we there. news one. can the talk up we're for I move Brazil various importantly, that platform the with in jurisdictions covering America how to don't about from

So existing we've expand them position we got work deliver to that. a is service, how opportunity to do nice that for best believe customers. to value this Ultimately, we the our

volume the the U.S., that the based You the think bringing brings. that work that with in of Ecosio about here multinationals scale platform and with invoicing we in the efficiency

because opportunity we acquisition on to are a our for forward for controlled bring partnership lot planning a base. it's regardless. side. This been do makes month working to it great think that Hence, now that customer our we've just a more We into

of on that then be as the smaller should I'm about and year. renewal growth inflation gone environment. XXXX, your customers lifted XXXX just in maybe you've the -- this made And thinking the in comment you very about helpful. environment, high of sort very we half about That's through to the first the bands wondering, entitlements

we're moderate going Now a into environment. more

sort of do you about play see back for remainder how in so, more of customers the in you next? If the out maybe with we the if of expect they're this year, past, And to being entitlements? should how sort this tactical look thinking

at really the with they up jurisdictions, or where other implement and Yes. has us have Thanks think in for picks a the needs break activity a a question, demands that move us Dan. rate. to just that renewals in of other in lot areas When their entitlements, and point don't business own we see coming volume do typically and as they to find they about the a we higher of -- we their band they through demand

a economy on massive impact don't I so that. see having And

and and as seen to and But move, points will drivers we've fluctuate driving accelerate that of time. their gone tens to here impact back entitlement over and businesses, haven't the generally activity. percentage there. expand the speaking, business again, looked We that things it are to that at of the things demand are a couple It

saw a dramatically anticipate recur over something we but a impacted relates the little time. this And seeing continue pullback so a to recurring as over a change -- bit to to period, be -- as really I going big wouldn't see Again, don't of that's I it don't that. I here

Adam will Hotchkiss from Our Goldman with question Sachs. come next

in the start, seen strength I the this the mentioned for you And out? quarter think to that's partner far you think business. second this guess have that best was quarter to so I just Any year, calling when worth regions of new you out? then traction verticals ecosystem, the and particularly or particular where about logo the call most

sure. Yes,

partnering doing Shopify think ecosystem, live between we're year. investment earlier nice some success. in inside community talked Azure, the highlighted So with another to the things our make I of of going Microsoft TCS the that progress. continue our about and with the we We've solution launch

growth We continue their partnership to support there. some our enjoy appreciate and in

continue we the do then to work And nice in some NetSuite space.

And it's able to NetSuite the that Our we've with and Oracle with space. has leverage been wonderful. them, then partner going as relationship been into

other So being those and would Microsoft performer be solid call-outs Workday highlight other a probably NetSuite Financials the Workday be to continues as they the ones for but being as Shopify I'd highlight. I'd the in X bought X enjoy -- the continue to quarter. there's success, those

asked. that's you think primary the I question

rest want As to you far the as of handle that..

Yes.

any terms new I of there's industry of any say any in business. particular the logos, In segment or particular concentration been wouldn't

that we think I in. of serve the we companies industries nice participation spectrum the we and types real participate across of kind the had of

really metric great, forward, into puts and really helpful. back just looks gross we as like should And That's this margin, we then what half strong medium go and around that the term? quarter. John, that that came on in how just going think Okay. about the takes over

see Yes. margins. a We in jump did nice

of not the seeing I coming think of rest about year, the growth that area. additional As I'm any out anticipating

in we think real it time. see leveraging success have over scale that as good a did. quarter. come surprised I strong We've we little to Again, a the did business in as the of were seen

between rest And kind so terms in year. somewhere the kind of in looks of the think in what I we're that of between of like for somewhere

anticipate Kevin, it. upside seeing now, in was leverage we're where We any margin point is expect that continue right and increase X will of that I pleased don't a that they'll sort but with very certainly from strong, -- or

Sklar will Raymond with question from James. next Alex come Our

with on start a question I tacos. had to X-part off

standpoint? for you're on any that one, for technology What of the an targets John, period? overnet are benefits benefits Or all Ecosio-like kind maybe you, there David. kind the need then another First, owning Is or of to you of or benefits this invoicing technology scale And from solution? And color retention being second earn-out growth any any or more context you, targets? is embedding in on earn-out? just that kind factored too on

Yes.

first Okay. I'll technology. one the relative the take to

and base forward a our to for what single our learned experience. we've makes have that technology it we our want is integrates platform easier best great Given customer to a customers core all bring platform current with and really

them will try in cobble think versus we other intent to at jurisdictions out we build had the businesses go on be together times. that's platform and small to way, then So some a in to the buy harder road

going investment with on having that big good our approach fortune them building taken platform. we're so work to so a was that's many gained and and months That there. for the partner confidence well lot scales so to on And diligence part of that the it the our be target on a of -- we'll

kind color as think additional the of What at to X- a over not is significant It year revenue-based. we period. some it's targets terms liberty I of earn-out of talk kind company, years. mechanics are. through the over from In earn-out, goes expect, had they a I'm would talked would regarding smaller what I say you growth of those the

We trajectory of expect the a the based of will -- size that we and sort on that, growth that continue. in company range. growth -- significant earnout that on

Adam's one great from of that's for color more appreciate just you, David, you. of on I back the follow-up question. both Maybe

quarter. contribution logo to this up ticked ARR New

just terms displacement in out called And forward? competitive of a has opportunity displacements. anything how if going viewing vended You changed of curious kind the few I'm you're

-- they're triggered just always continues of those transformation customer where the we or -- the expects be business or model and services be to call. get competitor their the is that getting a our keep the Obviously, competitor complex the it. more up. competitor customer that by service typically a is can ongoing It can not are phone as That customer opportunistic. outgrows a

any changed, ecosystem, us. But fortunate really dynamic of space really work target that We're and fundamentally with they're unique in in Deloittes supportive Thorton, that I to partner world, wouldn't for Grant process Alex. we the any that that's DMAs, that a say PwC, there's factor we're the seeing

Our Patrick Securities. JMP with Walravens Citizens next question will come from

Congratulations bit, in is on a One the for little high. the acquisition the of each relatively Why so weeds for allowance doubtful starting you, accounts you guys John.

receivable. was been acquired the I XXXX, in because quarter looking would this I back is $XX.X [ of or thought million, it by I think, comparison, just like around accounts other And have when XX% X% was more enterprise. ] So Avalara would was way you're have it

we So need there? what to understand do

I Avalara's our comment and on Yes. ratios can't ratios.

of periods in than bit a because again, them. annually goes we've regarding set work of policies But billing could through periods advance, it's that -- others been is -- our our allowance has very our how annual have we sometimes maintaining the the amount methodology because, on. larger allowances of time bill full been offset be over we a time. Again, it long and for We consistent we how

new do seen and year However, that we've system. grow over the so, the that with implementation ERP a said, some I of had lot of allowance think of last or it our to

of kind flow that terms we to expect quarter I of the cash that accounts little perspective we're bit to seen Now going perspective, see and you've receivable that. nice a -- a what's of tick to makeup in start kind down an had of from the

bump. come the flow and especially cash do we we good progress had in in feel XXXX with we the out. quarter little to very bit But progress about So that saw where that, a that really yes, second made the

of it's the collectibility kind terms strong. of in So very, of accounts very our receivable,

there. blue-chip a base not and have with issues client any have experienced We respect collectibility significant to

to a And putting then next important over for what XX execution strategic side is right you to for of most the the From get view, guys second. months? a thing David, point the

The X acquisitions well. position made we us

think interesting can we're doing and we that So to things adjacencies market. data in industry those start I other over ultimately, with we in user from management a bring a then the both cloud now at supporting areas the us into as see there's forward time. as customers bringing some got for We've moving new things natural AI strategic now look we we're potential with we open and our as with -- forward perspective, compliance the well platform exploit that experience. out, that And us building verticals platform up can X

Can adjacency? a an example like on we get hint that an of of

that, we at all we the prove where share the earn to but me, continuing that that before what we're to opportunities. to steps new path did trust look we want We to right did as we continue X you deserve first to

Instructions] [Operator

Jake next Blair. from with will Roberge come Our William question

place address invoicing ramp Just Europe? more on you now of fully Or to to have you from that like opportunity product there the kind do right need have place in you've team you with Ecosio? you a up go-to-market feel front perspective, in that in the is that that

Yes.

a the we go Europe, got I of our and that customer that think in then in to U.S. space. about coverage. want obviously, hires couple And with support talent. be There base right thoughtful be will we'll probably we we've strategic make decent how really

guidance, investment we're over actually acquisition teed So is give that in doing the once thinking how guidance the closed. specifics of the that quarters you our next we X that, about includes part some up we'll definitely and more on

unwinding about that with partnership Helpful. to else the Is the that former those anything And that deals partnership, early was ] now that Or still had then days, is the but think with logos I on that [ happen Pegaro over smooth there closed just for a what already will Ecosio? that know front? very relationship? to you're you transition

had portal, that the those the straightforward. out with our way for ability designed provider back We actually relationships. as team We to customer. partner swap end relationship the is own another one a never pretty always the news good relationship is our put really The Yes. direct that another

and So it's swap a out. very easy smooth

to our turn would like remarks. over conference closing the any Crivelli concludes I session. question-and-answer to back Joe This for

today. Thank you, us everybody, for joining

follow-up more And your a If me with the schedule day. you any that, you'd or have team, if have rest e-mail to with please like of great questions at time investors@vertexinc.com.

for Thank now you The presentation. concluded. has today's conference attending

disconnect. may now You