KING OF PRUSSIA, Pa., Nov. 10, 2020 (GLOBE NEWSWIRE) -- Vertex, Inc. (Nasdaq: VERX), a leading provider of tax technology and services, today announced financial results for its third quarter ended September 30, 2020.

“Vertex delivered strong third quarter results across many of our key metrics,” said David DeStefano, Chief Executive Officer. “As digital transformation continues to accelerate, so does the scale and complexity of our customers’ tax operations supporting these initiatives. We experienced solid revenue growth and accelerated cloud adoption among new and existing customers. Our strong financial results underscore the value that Vertex brings to our customers every day, and the confidence in our solutions to help them meet the challenges ahead. Despite economic uncertainties, we continue to accelerate investments to pursue growth opportunities, while still delivering strong financial performance.”

Third Quarter 2020 Financial Results

• Total revenue of $94.6 million, up 14.8% year-over-year.
• Software subscription revenue of $79.8 million, up 12.3% year-over-year.
• Annual Recurring Revenue (“ARR”) of $306.5 million, up 15.4% year-over-year.
• Net Revenue Retention Rate (“NRR”) was 108%, which was consistent with last quarter and down slightly from 109% from the third quarter of 2019.
• GAAP operating loss of $50.0 million, compared to GAAP operating income of $12.3 million for the same period last year. Non-GAAP operating income of $19.8 million, compared to non-GAAP operating income of $17.3 million for the same period last year.
• GAAP net loss was $21.0 million, compared to a GAAP net income of $11.9 million for the same period last year. GAAP net loss per basic and diluted Class A and Class B share was $(0.15), compared to a GAAP net income per basic and diluted Class A and Class B share of $0.10 per share, respectively for the same period last year.
• Non-GAAP net income was $21.6 million, compared to a Non-GAAP net income of $16.9 million for the same period last year. Non-GAAP net income per diluted Class A and Class B share was $0.15 as compared to $0.14 for the same period last year.
• Adjusted EBITDA of $22.5 million, up 14.7% year-over-year. Adjusted EBITDA margin of 23.8% was consistent on a year-over-year basis.
• Cash flow from operations for the third quarter of 2020 was $(0.7) million as compared to $12.9 million for the same period in 2019. Free cash flow for the third quarter of 2020 was $15.8 million, up from $3.7 million in the third quarter of 2019.

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

• Accelerated growth in cloud-based solutions through new sales and new customer acquisition as compared to the third quarter of 2019.
• Extended our technology ecosystem with new integrations supporting OroCommerce, one of the leading B2B ecommerce platforms; with Concur® Invoice from SAP Concur, one of the world’s leading brand for integrated travel, expense and invoice management solutions; and certified integration with Acumatica, a cloud ERP provider focused on mid-market.
• Expanded our relationship with BDO to provide services to members of the BDO Alliance USA program, a nationwide association of independently owned local and regional accounting, consulting and service firms.
• Delivered new and expanded tax content to increase coverage in Brazil and support VAT COVID-19 changes around the world; and enhanced content for the leasing, retail and food and beverage industries in North America.

Financial Outlook

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

• Total revenue in the range of $93 million to $95 million representing growth of 8.0% to 10.4%.
• Adjusted EBITDA to be in the range of $18.5 to $19.5 million, representing an increase of 8.0% to 13.8%.

For the full year 2020, the Company currently expects:

• Total revenue in the range of $368 million to $370 million, representing annual growth of 14.5% to 15.1%.
• Adjusted EBITDA in the range of $78.0 million to $79.0 million, representing annual growth of 14.9% to 16.3%.

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, income tax (benefit) expense from S to C Corporation conversion 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.