Vertex (VERX) 6 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Vertex Inc.

Third 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, Vice President, Investor Relations. Please go ahead.

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

this Actual results uncertainties. results. we expected risks due financial make statements may forward-looking During about call, future to differ and may

A metrics and risks Exchange in refer In GAAP remarks our described non-GAAP Commission. release. in will to with today's also these filings These our are reconciliation financial provided is metrics. today, to uncertainties and the of we press Securities

is This to for I'll David. Investor recorded now call on website. being available and will Relations over replay be turn call the our

results priorities. revenue growth, us. standpoint, the Welcome, the flow, fourth delivered quarter of strong third while everyone, From we a were long-term delivered and quarter for EBITDA financial and Vertex earnings advancing and strategic a we thank and GAAP row. our for financial financial joining cash free In XXXX, adjusted strong you in very positive

addition, a goal completed of achieved acquisition late e-invoicing announced our August when ecosio, we In significant EDI based in in a company Austria. and fast-growing strategic we

very ecosio Vertex We be the main the our tax for have part of indirect revenue family. international will sustained excited governments. a value-added combined are solution growth for is tax to believe springboard in as where We markets source of

our is data e-invoicing Vertex solution by built powered platform. our content on combined Our tax global and

in ecosystem. and value with previewed planning Vertex we from offering well single audit At XX customers a for determination our representatives defense manage from as This allows tremendous as in our key customer to partner This event community. workflow entire to our effectively and our creates customers Germany a platform. tax tax prospects September, the and compliance indirect and through

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compliance have convinced and energized right I customers left we strategy today and that tomorrow. events prospects tackle both challenges extremely the the enterprise and of help our to

the to Now in million turning financials. up Revenue was year-over-year. the $XXX.X quarter, second XX.X%

was was Software subscription XX.X% cloud a contribution results XX.X%. $X ecosio. in John financial This a million and moment. will revenue discuss growth revenue organic the growth includes from

cash $XX.X flow third is mid-XXXX. model we in of Adjusted quarter our our power million earnings, has Demonstrating financial the the EBITDA since adjusted our earnings quarter EBITDA of of EBITDA investment of free margin represents growth which quarter. was third quality The expanded million XX.X%. by every multiyear demonstrated in single in an program $XX.X the completed in margin adjusted

GAAP do Note net only indicators. addition, is a quarter. that performance quarter third these year's share. are Systax In XXX% additional some $X.XX per in will and XXX% key up second million moment. Vertex XXX% I'll now to NRR cover in equal of ecosio, the which impact or which $X.X and in was from John and last diluted include share income figures was the or not

quarter. average from and million, line customer revenue annual growth target customer year's up quarter. GRR represents third XX.X% which XX% revenue count, year. over the last was our stated delivering our year-over-year third in quarter, last maintains which third customers was Cloud in from $XXX,XXX recurring XX% per the $XXX up XX%. year's Scaled range targeted best-in-class of to was Annual in revenue XX% revenue $XXX,XXX XX.X% XX.X% $XXX,XXX, for with was grew

leadership we we improve continue revenue, flow of to our we our profitability room as complex. I and unique free believe My a laser-focused to market. Indirect market-leading metrics. grow are This strategy have build on software team incredibly in executing are cash are customer the is and because on further and segment taxes

rules For our example, billion rates database. effective over content X maintain tax in and we now differentiated

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these Wall a of of attention the Street received The will by space. ERP by is conversions lately, first legacy that of systems end in partly leaders be from cycle super coming life driven has the that lot ERP of

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turning customers. Now existing with to wins

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plenty will to earnings all, financials. drive John? to executing is the we of expected. continue now you John take and business have revenue growth best And through runway Our of as we leverage.

on revenue Thanks, I'll $X XX.X% and third our million David, everyone. guidance was an year-over-year. of was results the fourth end third basis, Accordingly, Ecosio up quarter million for end of of revenue organic morning, million full high contributed quarter, revenue revenue quarter and revenue acquired exceeding of XX.X%, $XXX.X the review the it and financial for $XXX.X was now growth guidance the our and the quarter. August. In XXXX. was during provide the at year good after quarter

from value a catch-up quarter. This true-up third payment which is million ARR software their are growing exceed and renewal as completed. impacts True our higher having customers about of process was growth benefit in typically billed a entitlements revenue, customers when the the large that when $X seeing up the process positively expected and represents revenue part is renewal than to

The X.X% an increased important period-over-period Subscription direct Services channel discussed million. growth software revenue are reflects $XXX.X partners revenue quarter to to source new to grew slower to the impact this opportunities revenue who opportunities. of services our XX.X% for effort implementation million. referral our more previously $XX.X

point In was end. for Cloud and are $X.X services $XXX.X ARR at revenue we quarter, last longer-term million added was $XX million. Ecosio quarter Annual Ecosio quarter revenue X to up about third revenue. implementation near-term software trading ahead essence, or guidance year's third added recurring recurring to the year. of for million ARR, growth. our cloud revenue, $X.X XX.X% the Systax added and from in revenue million

at Excluding sequentially last retention, and revenue up amounts, was equal was third point Net year's XXX% X ARR to NRR, or quarter. these organic XX.X%.

Our or XX% GRR, gross our remained end targeted within XX%. quarter retention of at range to XX% at revenue

per Vertex year's annual $XXX,XXX, revenue for average AARPC, stand-alone up from quarter. or Our XX.X% customer last was third

and the Systax, impact $XXX,XXX. of was Including Ecosio AARPC

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

compared software third and subscription million and year. year's the XX.X% a gross quarter the This was second last $XXX.X same XX.X% XX.X% in compares period last XXXX. in to Gross profit margin gross in margin quarter revenue of of on XX.X% with

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

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

Selling million million total was or of XX.X% XX.X% and the $XX.X of prior marketing an and revenues, expense $X.X year approximately period. from increase

$X $X.X that expenses shifted million This higher of second million million was $XX.X million, was exceeding and end million, by quarter the XXXX. the up and of year general million. quarter about XXXX from to expense $X.X ago timing second Our an of last half administrative XX.X% due our the EBITDA high of to the Adjusted year. guidance than was first both the quarterly year-over-year from $XX $XX.X or half increase of and

long of cash flow In $XX.X continue can conversion generated a we cash on was $XX.X EBITDA the the free to believe quarter free cash flow free note this term, trailing increase deliver to of to XX% XX%. rate of $XX.X On fourth million. We cash I'll have flow an million flow basis. cash positive third to quarter, and the we XX-month operating flow million year. free over for flow cash basis, an believe XX.X%. free was that our we quarter is historically can strongest We that the ongoing strong

free the fourth unrestricted over level $XXX and the of We cash cash flow quarter Our and $X.X the trailing XX.X% was since XXXX. securities third XX-month highest totaled million. million margin equivalents quarter ended cash and with of investment

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

ecosio implementation of of opportunities midpoint. million guidance, and our represent of partners. in which services the $X expectations $XXX million, Ecosio in revenue to of our the services we expect be at to year-over-year additional fourth XXXX, expected fourth to all quarter growth growth the would which is turning revenue is the contribute to our expected fourth total includes to range revenue to quarter, for Now the now strategy flat million XX.X% $XXX reflecting quarter directing approximately for

million, year-over-year of $X year of million be the in million of $XXX.X revenue revenue $XX EBITDA Adjusted This to full $XX And $XXX.X a growth be in guidance the XX.X% a to to be range ecosio's year-over-year increase assist growth expected results of million million, year XXXX the of at expected is annual adjusted of margin increase a million. range at representing in midpoint. modeling million And year and $XX full for the XX.X%. in of full the $XXX.X would range you approximately XX-month midpoint. XXXX is to to of revenue EBITDA To which million $XX total in the represent at XX%. forward $XXX.X million, is cloud revenue EBITDA representing to midpoint adjusted expected

David million David? EBITDA to to adjusted Ecosio addition quarter per In comments some now make expected up to we is will be dilutive $X million by approximately closing XXXX. open through $X before Q&A. for

of are Thanks, the love extremely to be We XXXX with we the where sector. market team. the many Vertex positioned has continues on continue tough John. results. performance is our Vertex a I and companies, now. strong execute but entire to leader believe I been opportunity deliver SaaS for the right very undisputed in pleased Vertex year financial enterprise

companies sophisticated serve us. enter their are grow that acquisitions, ultimately to with expand, and business proud markets new large We make

relationships world-class with year. and experience best the in retain revenue best-in-class reflected in customer these year and business. This a firms consulting retention. that We trusted long-standing customers accounting the we implementers provide is maintain gross after We so technology providers, our

recent commitment certification TrustRadius the recognition continuously our reaffirm Our quality to support HDI provided. further and of enhancing

we believe have And Most free with in a multiple mid- will model teens and that us and year in cash coming to we revenue profitability our growth importantly, to years. new have delivers along business year strong financial out, flow. in high tailwinds the heights we that propel

upcoming March haven't Investor please Philadelphia. in If your City, Center already done on for mark XX, our so, you calendars XXXX, Day

financial results I'm ones questions. group we also of XXXX. this deep to our experts operator, open and seen piloting the call excited well strategic team, in the leadership provide that the as to that, business extremely of a financial give Vertex a exposure With for to an of During proud dive are other who since went members great the public on please I'm you've our the as will update plan. investors targets on long-term event, we

from The Needham. with question Reilly [Operator Instructions] comes first Joshua

ago? of the super characterize right. driving quarter. migration of projects there a here you your of set All any Nice way of business projects obviously, projects. the these the you're is see acceleration And what of cycle is execution leads talk, in acceleration or today in even versus seeing migration current -- lot ERP a about an can few in XXXX? been do you that that an years there more There's Is coming

Josh, thanks the for question.

because year, in the we was visibility as second think the raised we good guidance had to it and both of our activity I QX for QX. half

And programs. lot seeing believe that, to also back success. go OCI the I around demand a we're continues migration source are and you a that in driven If Oracle, will that activity seeing QX both we're it by of regulatory of say for be pressures was to call. continuing to world that I the our SAP's drive us.

'XX. will both those think to I of out So play continue in

Got -- a you terms in then in out getting it. enacting sense just integration of any are countries is of a be we either are perspective there XXXX from in opportunity, that going in or urgency mandate? the a specific And Europe? be should And that for to create of there that sales specifically does process to the country e-invoicing on be aware going

we partnership actually started we Yes. launched I'm before acquisition months with our thrilled that our had the that solutions.

actively we we integrated are from go-to-market that solution have So we're a a activity selling. already.

Those perspective, from Josh, basis. for we're a I move, think regular So prepared countries well the mandates. that all on

those our mandates here in go-to-market both queue, have we're are they to 'XX coming QX place. out of and as going into starting in as countries force with But going terms of the -- activity to of adoption, Germany XXXX. going watching it's we both in that be is in get the and then -- full in forward France we're something

The with Steve next question from comes Citi. Enders

of I want some follow guess I migration or kind quarter, that and new to on ecosystem to be get cycle a that SAP last from here. kind is it you of about I up net like was kind your that on of how a But becoming forward. contributor little kind to slower play expected thinking coming would kind of expect and than view just understand bit great you're the of how moving question. cycle to out maybe here

right, you're the slower. little Yes. did Sure, in the did it half Steve. for you out Thank did year, of -- a play highlight It question. we the first

you see current reports we talk the about they if a some and read than think third-party I have Gartner or expected. slower others, of moved little like all the migrations vendors of some adoption

backwards can So I demand little a move a move take on companies that's of more large quicker enterprises The going and we sometimes as the in Remember, 'XX this. think midsized fill to little create of 'XX. forward longer. a

what of they'll start of that's them. And as we think So but there's kind seen cycle. at look we've earlier, our I demand fewer

I'm In it's different I determination solid, seeing little engines. that more we that grow from -- U.S. in for that slightly the assume here because sales to likelihood from There engines, still and clearly. Europe, market going mean it's So that's for the have we're would a it's There's play of urgency been of more perspective as the but mature why we move that adoption or tax more perspective. a are out very more a in it's beyond I forward. activity, little to 'XX encouraged with and different. runway little a

context helpful guess, the and that. you. partner Oracle. want around then And to SAP ask I and I Got That's beyond ecosystem, on

been of there? partnerships seeing what those her are out kind on update of giving you you've and kind other Just be focusing that broadening with an

Yes.

some ways Shopify in work things interrupt mean well. then and I'd activity. and interesting all work Microsoft team as X, be been with highlight activity, we've The good with, some X Workday nice some seeing and Steve. did and The on really really nice you has I the stepped to them up would of Sorry, Microsoft there, Workday there phenomenal seen

So I remain think those activity across all solid.

making on go-to-market have execution, and is sure their teams. solutions delivering the with Our really we're focused motion quality team right

with Quintero Christopher from Stanley. comes Morgan question next The

on [indiscernible] see interesting really kind to that whole of quarter ERP out on call It's I follow here. wanted here. discussion. David, up that to you

a to and how really into when timing? So migrations ask these I someone long take expectation those big wanted of that, your So transformational happen like before does brought Vertex and typically kind that around get about projects? the

good at one nuance really about a when question is more of forefront to a not cloud making that. the business decision a of to that's space. Chris, our Tax platforms, Obviously, Yes, modern the migrate larger, is

several company hey, to going live. it's decision to go say, want a be following we by to a So actually quarters

largest through start some how They're process. going going a We're migration the partners and of to of consulting to with going all, business organize. to parts and and the start They're they're they invoice they doing move to live go to going country in that work business. prove have you cycle. before because in your need every out to is can Tax come you're well

mission-critical of implementation. a So the it's part

the get customer it a to -- adopted quarters good go they cycle. process. the So does typically we contract Vertex. get The when are brought once is lag going in, those from X news but for probably maybe life full X-year projects value be enterprises, can quarters, And they've like starts few large it's the

to will the testing if be prove they valid new haven't jurisdictions Even because new along invoices they're out way value by when go the full gone the with in live the with solution, it system. getting they live those

actually quite always slight it to So see well from perspective. But a you're going that works delay.

color offering there. launched Ryan know And then a you just on I ton a Got acquisition sense, it. in touch I and to you really, copilot the Yes. of at conference. that Tech helpful really wanted No, June your on a makes bit made

technology the are some find examples And this So some early really finding are docking or key maybe wondering, expect I by what to customers that you are ROI was cases them of technology? you're those for? targeting use what

Yes.

can the as an rules. new changing launching hardest larger with from of tax again, the in the enterprises. department, enterprise for Their a SKUs products constant and mapping to companies categorization smart of of the the are I tax one products perspective, the jurisdictions is market, for think categories deal projects some these millions be they are in indirect to have

current they're to And always having make going to to they're taxed every in effectively be sure jurisdiction. stay

the So risk one will And our compelling. help is to real smart future on tool creating customers hard partners. and going to think be stay I we've categorization minimize enable be the where done -- the is design that's a we've to current customer ROI audit that -- worked with

Customers the build are design a of answer. that and solution we're in think and partners and actually our trust part if process deterministic you because doing is needs probabilistic to a about technology tax it, AI

design the we're so of that validated by bringing And as is that And bringing to feedback some the importance build think in be solution confidence good there. market. them partners the going really to getting is I we're

think we the about touch. deeper, we that start data think Going I to as

AI well some to their efficiency will of insights to the get have platform. data tool transactional be the their data data on of off about benefit fabric compelling more with a we layer tax customers insights and touching. business that of as our bring as help cloud get our the we overall that data

with from question James. Alex next comes The Raymond Sklar

to out rip of sense any it's solution? how where for those another question I just help maybe those had a maybe of near-term are rules? impacted base. having can your X-part for many what percentage by current haven't opportunity your today invoicing the invoicing going frame Great you? some purchased across solution on to Any be of really Versus you really first David, the and customers installed greenfield

Yes, sure.

or lots work countries we multinationals, business over which with is around news a there's they're e-invoicing. deploying XX good countries the -- of have currently So that are in means doing mandate

varies So of where it operations are. business to choose where Obviously, it's do going customers. our most impact they to by their

and economies more larger the As start will France that, to to Germany impact is it customers. adopt highlighting world, our the of of

had adopting in that. are a the So because just with those hasn't that company to deal greenfield it's jurisdictions

the which at been mandates for already that take solving that level. been has have around in a For place, years, customers our are local Brazil, problem

solution. want customers the changed is global now conversation What's in a

we want a and provider X/X of with provider having can Argentina and what VAT jurisdictions in to in business pair know is provider compliance instead bring you doing different solution. they're want enterprise of we Hungary So Brazil in a all that our that with our acquisition and an for what, saying, do handle Malaysia, but only to the we've to ecosio, it not market and decided

the end-to-end prop value it's that see. we a So really is seamless capability set

while of local some provider may in Brazil, a much that be Brazil-only replacing the like we're solution, more a process. we're disruption in where giving value So there customer

So a we us. -- it's conversation it's a think, for pretty straightforward

Okay. just on for Nicosia Great John, And color. then, you. maybe follow-up

Just color million on $X maybe bridge. should Or there? about in million Just the next is isn't out the of think of ARR? on that XXX%? a ARR Is that services that as kind and kind big any contribution, growth you of is there north implication component component Or the there there's of captured think $XX volume a called ARR you of revenue. XX-month the of kind we

in some question. a for activity of that services and products of other the that the Thanks they have of that not the in Yes, some implementation they have. but component EDI goes e-invoicing, with ecosio their business do, does with work only the on

bit and little amount the disparity a amount is revenue of ARR that of the the So revenue sort amount. and between the

So that's been kind their of standard and that's in business.

unusual expect things very going But for nothing there. good no, forward. ecosio So we

Capital next from Jester The Daniel Markets. BMO with comes question

great that was new some to of highlighted you or hear the about It them. logo win

growth of ERP growth you customer super around cycle. be As versus sort in current sort the base? growth and invoicing the thinking forward How your the I going think about mentioned with new that of the invoice we algorithm things logo should about mix of

Yes. Dan. appreciate I the question,

the good invoicing, largest with have and being of on the working in world. we world. have volume the in the in They're obviously, So years the largest I business think going to for fortune enterprises the invoicing XX-plus

are job make sure one can So customers making sure is we're to value we existing delivering we high share. to wallet where expand

a again, us. for that's And opportunity significant

land side, no opportunity and cycle that have It some important and we're new some help certainly priorities. we with So well as customers that Microsoft and highlight from you that it's logo Shopify The super that in already as bigger capability. of us space. a doubt, our that logos wins is seen our Workday, serve we new doing with of is clearly seeing the the us to nice some will already to expansion But one expand e-invoicing we're logos. it

look of So that's from how I would that perspective. kind it at

Great. last couple then, you, margin expansion maybe quarters. impressive over John, And to of the

guidance you're margin would comments of not trajectory As we about as next today, the us go the of make probably any of to give going you profile think know about XXXX, year? into business I but we sort the

for Listen, Thanks end feel the since that the that came we about big we kind the and on Dan. Yes. or seen year. of of of the -- went the we ended from to we've growth about expansion IPO, activity kind mid Yes. good ended question, last

expansion feel We margin good have it. about we and nice very seen real

we think the quarter quarter make we the here in I make did that When third we at quarter. additional think fourth it we in up. margin. called we've the about to wrap investments good as will plan here. give some year, Dan. about we've some and out I second I'm The right, you're out that and I sort next is what that seen in not to the out though one of growth we seen call feel guidance thing investments planning

an my standpoint. that detailed bring adjusted the of But I a a little call. Ecosio does EBITDA pullback And of bit acquisition in from

our that of the would think different normal be of out I the thing there any thanks for would from only would operating business. But out that's I call that than question. kind about So the that ordinary

with The Jefferies. next Samana comes question from Samad

election obviously curious it if could are globally, Dave seen So we U.S., night decision-making in comes, maybe it that's accelerate create to always and Just We've but tend and lines? just type obviously, a how change, you there's of here. what cycles. business your impact I'm in on you've the changed it cycle long year have cycles. a just big guys us decision-making? what not historically? us regulatory had remind quickly Whatever that's you've air experts last reverberates [indiscernible] time had how past in I'm time. does for And change what past remind post-election pocket, John, experienced you any that sure Does maybe capped

given And election affect the Samad. States to is impactful is it question, that have macro as with. that Obviously, deal news. not this appreciate tax United economy, Vertex. the certainly may federal to the we a legislation but it It morning's I Yes. timely doesn't affect in

local have the U.S. really XX,XXX driving jurisdictions state We and opportunity have that that the we are in market

see tailwind huge or a level. you and what's state at the more local happening don't would. we It's diversion, if So

primary source revenue the indirect know, of revenue corporate for struggling As in is running an And we uneven all are of the -- for them. revenue economy. tax states

which rule changes, of So team, research -- when content tax database see the usually our the content what modify to research tax in our but where regulatory rules. of we is so our that database and urgency terms we and the in to response some adept those has vast side, proven rules new about is beauty to on it's and quickly adapt

to. processing react speed and that And change urgency. now at technology team we those content It's a are adept advanced like more certainly our we a really proven with to has not and leveraging technologies have increasingly it's So change.

So I well feel very positioned here.

then as fundamentally of as sources globally primary they're I the e-invoicing I opportunities around shifted, it's think, they've the as of and financial global to how are again, gaps. now And VAT that and challenges many facing some jurisdictions close to turning still elections those look debt at think we and

of And opportunity so for is that us. all a tailwind

on ecosio, And that the already, can and much is you're know that -- what it current base when help runs maybe XXXX how for just you year questions Great. revenue at that maybe that run case, you'll its more but John, about several or year, on you X? synergies assuming I gotten in that, think assuming of then, you've largely the is acceleration rate understand get is ecosio synergies first us in assuming

ecosio us just that help what assuming you're and progression understand the in Maybe initial guidance. of

It little assumes initial them assumes that with normal on doing work going very synergy activity pace the together. be that In Yes. at we'll with it guidance, has. its ecosio's the from that what running

see nice some growth they and that's But how that. we But that their Again, we'll about in have think we're excited out. aspirations it. how So plays about business, real there

year more opportunity, with into can there, for companies described years that that the think and fully is late end-to-end the next and out really David we offer. coming really into solution we plays Again, looking and really mandates out it following as the

Blair. Next William with question Roberge Jake comes from

Congrats on the ecosio up the wanted cover an on today. I well. great follow to know there quarter. Yes, that perspective ecosio just I deal invoicing few as are a geographies from

in you're curious So of that covered fully to kind building versus kind space be get solution. buying how just of thinking moving forward, the the of I'd

the sure question. we're to was I part content core years making over our appreciate Remember, putting That's investment the business that's the regulatory content referring about that into what that for couple out build that we be Jake, of coverage. is is technology business really -- to to leveraging the content going Yes, John of deliver. really next

do But and well, really years. been doing it's what we we've for

it, acquisition to countries. need as achieve those content another on our gap currently sure that's be and there, where so applying together that we areas the we necessarily get in go we something much focus to countries that they and I so in deliver expertise to understand really And cover issue. the content cover, buy where see have exists will that It's and have making gap an team there great just not extra and on don't need they as the don't they the we between our to they but coverage the a see currently what development investment it's to need ecosio

And migrations a meaningful Is of SAP much the you've new there that helpful. having growth largely how by landing? is behind kind SAP already of are logo historically hear or you're actually the the logos new impact good how see sense being today you're new to on logos from any the to still model then driven impacting Like, logos. that opportunity. Very new starting Okay. some momentum landed

we're starting Just to trying ramp migration more? that see up if to see

-- fair end-of-life it's had ago, Yes. only question. announcement. really or we've simple the announced to a It's good say the Obviously, year migration I I that had wish question, XX a June of of give out. you and the really terms appreciate in and proven of rubric I a And a I kind I started wish

certainly we're you give it think I the good to still earlier seeing So uplift of in We're quantifiable. in days momentum. a

for I very -- like we've data me to a it's I'd now just it. to regulatory data the has know is to the of don't demand has record I by support being got But hard changes for sure that don't as XXXX pipeline in reconcile created right that give stand I been you environment But could that. because opportunity rates, that enough if make enough in I can certainly behind. us dynamic tax influenced sales and well. a

little that's my out there. there's why a it's cautious answer being no to playing in So our I'm doubt just But favor.

Yes, Congrats the makes on a sense. results. lot of

comes Rob question with next from Baird. The Oliver

Dave, I capital know And out deal that, hesitant out leading semiconductor be deals. at you you were mid-X noted you called all indicator that forward would the of equipment on extrapolate to figures. that sort

efforts norm that sales of how saw contract migrations? what I'm that learnings repeat other in the just However, take the you deal value that in or out. the fact drive of it curious drove an either is kind you hopefully appreciably to from deal your and that higher sort that you called driven S/XHANA than such

It that Yes, on. nuanced question. hitting I you're a that appreciate Rob. point is

the they content about portion a us they of content. tax when typically, trust can replace upon So current work The make business. to the we these news typically, it's and this their how migrations, for when just customer all be they're And But solving. making of on their is a obviously, XX, customer, good we member, solve they've they're maybe been tax using in migration, platform. covering might XX is they with when years, we're a want problem all business, long depending the using us, our

move, So making platform it's just the with one pretty they're a to to going logical new and us the stay with go us.

customer So don't was let's as in Vertex. of areas broaden rethink long -- some that from that as we're said, doing where And use the our really the know what other this, situation relationship. the happened we well you works let's

function success our the so of them, products created of we out delivery I And that tell building we the think sold customer some with to since prop broader a value much them. our to and our an opportunity of team proven created first other

highlight And uplift to lot you're as accounts. that as into the kind and we gives was go to existing encouragement that going just an word is just forward. you don't I to enough use I other us And we're learning think something our of it a customers, of I see have leverage that the to thing. of But ECC absolutely going that's to all try goes team that took that exciting wanted caveat it. on to there's yes, data an learning why from

a Okay. That's just quick for very helpful. And you. then, one John,

ARR that, ] [ the been math, and the follow-up any on unwind I anything make the to just lower not weren't have just up a deal, model? sure per but impact deal the we organically, to think by relative for our wanted then anything there? might to direct call quick that have missing Pagero just And if would out customer to

call second sort all second the quarter. out on or That flushed us quarter itself back through the -- Yes. of first Nothing in to unwind. Pagero

So I on again, an little customer. really don't of ecosio. think with ads they're a size standpoint, And the in some ARPC both about you revenue bit and and there. think put from Systax anything of new a than of some the as smaller customers we traditional our Typically, with at new coming

call Rob. in have good And that But down little a touch. of an a that out, impact bringing so does bit

comes question from with Sachs. next Goldman Adam The Hotchkiss

about just flesh other know and lot maybe you of step ERP upgrade to a you're just accelerative a lot solutions catalysts driver e-invoicing out but tax complexity Great. notable of David, systems guess curious, I watching? talk more manual the as any to back, talked about I we tax a you that tax I'm take just and breakage vended a could cycle, complexity businesses

steady the about tax about just drumbeat really talked it of increases a is years. of Or for complexity number we've

struggling governments for it's for make revenue governments. revenue going primary it are Yes. to they're corporate this And to mean, really -- their the I these source just again, where latter. of budget. get is the It's

rates, revenue. let's to or X it's politically increase process So to whatever given state to using just do more not election say, its raise from needs -- X savvy to

execution dynamic bag with rules other up pace are for to and a states says, and Colorado, fees in delivery business is up for real keep this more a creating minute, fees us that wait So jurisdictional with they the like Minnesota that change. too drives that just complex pressure and come and this

also settlements out as is they The -- to the were up trigger that reserves regulatory And be, then companies saying, wait to accurate that CFO these weren't. needed thought something up they as they audit as that and finding capital. pressure are a happening we're minute, follow-up is are setting working for the is hey, or unacceptable. will a changes they We're tying

Let's go solution confidence vended let's in. a we have get

that's really watching. the no so jurisdiction we're there's been that unique And thing

think That's I big a hit is completely. the the e-invoicing. regulatory trend you dynamic on new

unified of space, how platform. could then give software RFPs across offer what deeper And in. Okay. seen us We've in you're Great. you the just focus this actually That's really you traditional e-invoicing sense that is helpful. tax a much indirect impacting on

versus just are those is if RFPs an how after impacted asking space separate? much and diligent invoicing X whether I'm going am indirect being tax your really in I wondering things what have solution, in a So company you the

Yes.

to it's platform have I that required determination that customers supports value interesting invoice compliance. when your across that -- solution that prop think on I upstream XX-plus an your to the was met really your in highlighted accuracy now market, it's how and and creating with all Germany, VAT single VAT we're the to have you into and starting the do seeing you'll you're to that flow make that then e-invoicing entire I really of were we it then bringing session. our have in across value do the Now And connections interesting that was in of engine customers -- an the partners

is were value resonating the a and prospects phenomenon number in e-invoicing a customers accelerating. it's because of regulatory think talking that with about. I really we And environment wonderfully new was But prop

them. And even it's starting dynamic is a are are companies world. so this adopting hey, it, to becoming And wake up bigger as more the economies different for to,

And we've to timed this I optimistic need we've but believe, we and think it why very I'm execute, that's I well. timed

The with Brad comes Stifel. next Reback question from

math think my XX% new it or I'll a doing core about is level? around repeatable I'm the it, about call subscription variability seems sequentially. if or right, Should on a as we grew like, this basis, that which uptick John, sustainable Vertex nice go-forward continued

kind I some We've start the probably we question. opportunity I think out said you wouldn't here. good seen But some some Again, there. late. advance operating from we're of have putting this think that's to of quarter. to nice saw in you we of I of Brad, the because bar poor activity excluded of of as Yes, true-up that ready say that seen the sort good things performance as

that grow. of And this being the ARR very that would there But say I have strong I fourth the of we've and feel good about do. little real a fourth bit year, comp a What last Again, guidance we we thing seen the past quarter. the around and sort quarter. again, did that's a the that to you've seen you've for is, fair business to we've so seen growth in solidly business that in how think it's quarter certainly XX been there. able our momentum consistently tougher in

very the We the bar that. I high raising you're say I'm feel of. to ready good teens start -- to high that talking about that up wouldn't

of around Vertex coming count. I great. see flat base back fairly the the If do -- on to there? circling last acceleration and also you number, That's years core And of meaningful an quarters Systax. of the there's David, a quarters a and couple I we get question over customer think and going understand I growth algorithm kind sort taking out earlier then, ecosio the in do of that transition the in or

transition predominant think that driver customers? in being ARPC the installed happens base Or about that bigger as should subscription we to of really

end on and future. more the pay us, the we that been the they some our that That's legacy what scaled still that's because for the very talked since will from is customer just is buy are that the priority of bottom strategy today aside. us customers growth cloud #X in we set market, Brad, being focus There that. those really at bills direct noise about long

tentacles we're just But us on as focus priority am yet. that we're NetSuite, to can right in scaled about of don't Microsoft, part of giving broaden growth. logos. e-invoicing customer Salesforce and as any opportunities logos I the Workday, drive think remains well new there's into excited guidance the ecosystems to no continuing we that's though. doubt growing and now strategy to expand the also our new is the That bring that I into

growth customer And it. I'm sorry I missed What quarter? in the if the scaled was

XX%.

Perfect.

The with next America. Sills Bank from comes Brad of question

This is Howe for on Natalie Brad.

I So bit to wanted about cross-selling talk deals. your little a

mentioned you see in how to some big rate in second see change of I any I back tracking year? that You of I that year. was seeing pretty and for sort correctly, guess with rest pick the remember in you there. if mentioned the wins And XQ, activity if the half of the your wanted you up anticipate that expectations

in space, that's what in the the that them track the budget second thought Natalie, activity departments it tax we good with we get visibility had available question. year. enterprise I to of coming. did the was yes, our the consistent unusual half that appreciate space more Yes, Not

So a was it little slower.

but into see our had solidly the and that been good it's to of that visibility that first I out, called budget guidance in baked to We was the think that going that honestly, here continuing accelerate half spend in we year, QX.

JMP The next with from Walravens Patrick Citizens comes question Securities.

And let add my congratulations. me

Ecosio. have I questions around David, X So

is and little second a that opens your transaction core can the deeper. one on engine demand a briefly, one -- think but continuous in Ecosio bit then for does is, on touch you how European does little Europe? How drive e-invoicing you did solution the processing? Vertex number having for this for data So And around I up touch a tax opportunity

question the and on Sure. Thank comment you, quarter. the Pat, the for

out data, invoice e-invoicing you this almost return. if it mini like of about like kind tax a is what makes think so is, sending you're which yes, it, So

sending You're the point the the information tax government transaction. at of

filing Normally, you quarter of didn't process. didn't the or the the month upon tax do any until that information the -- end you the them end of send depending

I the because starting than now I'm to on so to I'm to. more want governments sooner invoice going in are the the to I put And that to the are as of taxability it accuracy realize, customers going see used confidence what have owe that

gives that and assessment So them much because leveraging a from, some our is invoice determination from that comes think tax content master the where on I they're our one. way doesn't taxability And in coming that's where controlled data, influence seeing value have prop more to which upstream in have the confidence business then the the number department as tax itself. interesting we're because conversations engine

the platform on focused going touching data. And and been process. relative layer workflow, our we transparency is best for to question, their place end-to-end our if compliance What accuracy the I more support data is data accuracy that they departments of the to end-to-end data them have to the we've that cloud tax and have the we're Number the much ensure it's things expanding two, be think need. learned throughout that to to just it's one

of in really about what And quality a transparency to talk that's give excites to the e-invoicing we're fuel customers. the us to our that new value data prop me going to what doing is about

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

Thank today. us you, for joining everyone,

time As schedule your Have please me always, the to additional if to of reach great rest at you have vertexinc.com. follow-up day. team investors.vertex.com questions or a would like out with

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