Business Overview
Vertex Inc. (Nasdaq: VERX) is a provider of enterprise tax technology solutions focused on indirect tax automation. The company delivers software subscriptions, cloud-based tax determination, compliance and reporting tools, and related services designed to support complex global tax environments. Vertex serves enterprise and mid-market customers across industries, with a recurring revenue model supported by long-term subscription contracts and embedded integrations with major ERP and commerce platforms.
Financial Performance
For the fourth quarter ended December 31, 2025, total revenue was $194.7 million, an increase of 9.1% year over year. Software subscription revenue was $166.2 million, rising 8.9% from the prior-year period. Cloud revenue totaled $94.6 million, up 23.0% year over year.
Loss from operations improved to $(2.6) million compared with $(13.1) million in the prior-year quarter. Net loss narrowed to $7.0 million, or $0.04 per basic and diluted share, compared with a net loss of $67.8 million in the prior year. Adjusted EBITDA was $42.5 million, representing an adjusted EBITDA margin of 21.8%.
For the full year 2025, total revenue reached $748.4 million, an increase of 12.2% from 2024. Software subscription revenue was $639.7 million, up 12.8% year over year. Cloud revenue was $352.9 million, reflecting 27.9% growth year over year.
Income from operations was $2.3 million compared with $(2.2) million in the prior year. Net income for the full year was $7.2 million, compared with a net loss of $(52.7) million in 2024. Adjusted EBITDA totaled $161.5 million, with an adjusted EBITDA margin of 21.6%.
Operating Metrics
Annual Recurring Revenue (ARR) was $671.0 million as of December 31, 2025, representing growth of 11.3% year over year. Net Revenue Retention was 105% and Gross Revenue Retention was 94%. Average Annual Revenue per direct customer was $137,867.
Direct customers totaled 4,867 at quarter end, with total customers, including indirect channels, at 5,382. The company continued to expand its enterprise customer base while maintaining net revenue retention above 100%.
Key Developments
Management highlighted growth in the company’s e-invoicing business during its first full year of contribution, supported by upcoming regulatory mandates in Europe. The company also reported traction for its Artificial Intelligence-driven Smart Categorization offering aimed at improving tax workflow automation. During the quarter, Vertex repurchased approximately $10 million of Class A common stock under its existing share repurchase authorization.
Risks and Constraints
Retention rates moderated compared with prior-year levels, and Gross Revenue Retention declined to 94%. The company continues to operate in a competitive tax software environment and remains exposed to execution risks related to technology innovation, AI deployment, regulatory changes, and international expansion.
Outlook / Guidance
For the first quarter of 2026, Vertex expects revenue between $193.5 million and $196.5 million and adjusted EBITDA between $40.5 million and $43.5 million.
For full-year 2026, the company expects revenue in the range of $823.5 million to $831.5 million, cloud revenue growth of approximately 25%, and adjusted EBITDA between $188.0 million and $192.0 million.
Performance Summary
Vertex delivered fourth-quarter revenue growth of 9.1% and returned to full-year profitability in 2025. Subscription and cloud revenue expansion supported double-digit ARR growth. Management issued guidance for continued revenue growth and improving profitability in 2026.