KING OF PRUSSIA, Pa., Sept. 09, 2020 (GLOBE NEWSWIRE) -- Vertex, Inc. (Nasdaq: VERX), a leading provider of tax technology and services, today announced financial results for its second quarter ended June 30, 2020.

“We are pleased with our strong second quarter performance, driven by revenue growth of 16.5% and ARR growth of 16.4% versus the prior year period,” said David DeStefano, Chairperson and Chief Executive Officer of Vertex. “We’ve also been able to effectively balance our commitment to growth and innovation with profitability by delivering adjusted net income growth of 47.4% to $18.9 million and Adjusted EBITDA margin of 23.6%, an increase of 380 basis points, compared to the second quarter of 2019.”

DeStefano continued, “The rapid changes taking place in today's global business, technology and regulatory environments are having a compounded effect on the complexity of indirect tax management, giving us significant growth opportunity. Our recent performance speaks to the trust our customers have in us to help them continue to transact, comply and grow with confidence. Our recent IPO was a significant milestone for us. Although we are very proud of all that we have achieved so far, we are more excited that this is just the next step forward in our vision to accelerate global commerce.”

Second Quarter 2020 Financial Results

• Total revenue of $91.3 million, up 16.5% year-over-year.
• Software subscription revenue of $77.3 million, up 14.9% year-over-year.
• Annual Recurring Revenue (“ARR”) of $294.6 million, up 16.4% year-over-year.
• Net Revenue Retention Rate (“NRR”) was 108%, which was consistent on a year-over-year basis.
• GAAP operating loss of $29.0 million, compared to GAAP operating income of $7.7 million for the same period last year. Non-GAAP operating income of $19.0 million, compared to non-GAAP operating income of $13.4 million for the same period last year.
• GAAP net loss was $29.1 million, compared to a GAAP net income of $7.1 million for the same period last year. GAAP net loss per basic and diluted Class A and Class B share was $(0.24), compared to a GAAP net income per basic and diluted Class A and Class B share of $0.06 for the same period last year.
• Non-GAAP net income was $18.9 million, compared to a Non-GAAP net income of $12.8 million for the same period last year. Non-GAAP net income per diluted Class A share was $0.16 as compared to $0.11 for the same period last year. Non-GAAP net income per diluted Class B share was $0.15 as compared to $0.10 for the same period last year.
• Adjusted EBITDA of $21.5 million, up 38.4% year-over-year. Adjusted EBITDA margin of 23.6%, an increase of 380 basis points year-over-year.
• Cash flow from operations for the second quarter of 2020 was $27.2 million as compared to $23.0 million for the same period in 2019. Free cash flow for the second quarter of 2020 was $18.7 million, up 27.1% year-over-year.

Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to their nearest GAAP equivalents is included below under the heading “Use and Reconciliation of Non-GAAP Financial Measures.”

Recent Business Highlights

• In July 2020, Vertex completed its initial public offering (“IPO”) of its stock at a price of $19.00 per share and issued 24.3 million shares, including 3.2 million shares issued pursuant to the full exercise of the underwriters' option to purchase additional shares. The IPO raised proceeds net of underwriting fees of approximately $423.0 million for Vertex.

Financial Outlook

For the third quarter of 2020, the Company currently expects:

• Total revenue in the range of $89 million to $91 million, representing growth of 8.0% to 10.4%.
• Adjusted EBITDA in the range of $17.5 million to $18.5 million, representing a decrease of 10.7% to 5.6%.

For the full year 2020, the Company currently expects:

• Total revenue in the range of $362 million to $365 million, representing annual growth of 12.6% to 13.5%.
• Adjusted EBITDA in the range of $73 million to $75 million, representing annual growth of 7.5% to 10.5%.

Certain non-GAAP measures included in our financial outlook were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. The company is unable to reconcile these forward looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include stock-based compensation charges, public offering related charges, depreciation and amortization of capitalized software costs and acquired intangible assets, severance, IPO costs and other items. The unavailable information could have a significant impact on the Company’s GAAP financial results.

The foregoing forward-looking statements reflect Vertex’s expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. Vertex does not intend to update its financial outlook until its next quarterly results announcement.

Important disclosures in this earnings release about and reconciliations of historical and forward-looking non-GAAP measures to the nearest corresponding GAAP measures are provided below under “Use and Reconciliation of Non-GAAP Financial Measures.”.

About Vertex

Vertex, Inc. is a leading global provider of indirect tax software and solutions. The company’s mission is to deliver the most trusted tax technology enabling global businesses to transact, comply and grow with confidence. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for every major line of indirect tax, including sales and consumer use, value added and payroll. Headquartered in North America, and with offices in South America and Europe, Vertex employs over 1,100 professionals and serves companies across the globe. More information can be found at www.vertexinc.com.