Vertex, Inc. (NASDAQ: VERX) (“Vertex” or the “Company”), a global
provider of tax technology solutions, today announced financial
results for its first quarter ended March 31, 2022.
“We delivered strong performance in the first
quarter, with outstanding execution from our teams around the
world,” said David DeStefano, Vertex Chief Executive Officer. “Our
revenues continue to accelerate, and the investments we are making
to drive our growth strategy are gaining momentum and advancing our
market leadership.”First Quarter 2022 Financial
Results
- Total revenues of $115.0 million,
up 17.0% year-over-year.
- Software subscription revenues of
$97.1 million, up 16.6% year-over-year.
- Cloud revenues of $38.3 million, up
42.1% year-over-year.
- Annual Recurring Revenue (“ARR”) of
$380.6 million, up 18.9% year-over-year, compared to 17.0% in the
fourth quarter of 2021.
- Average Annual Revenue per customer
(“AARPC”) was $89,700 at March 31, 2022, compared to $79,600 at
March 31, 2021 and $86,700 at December 31, 2021.
- Net Revenue Retention (“NRR”) rate
was 110% in the first quarter of 2022, an increase from 105% for
the quarter ended March 31, 2021 and 108% for the quarter ended
December 31, 2021.
- Income from operations of $0.5
million, compared to $2.1 million for the same period prior year.
Non-GAAP operating income of $16.2 million, compared to $15.4
million for the same period prior year.
- Net loss of $0.3 million, compared
to net income of $2.3 million for the same period prior year.
- Net loss per basic and diluted
Class A and Class B share of $(0.00) for 2022 compared to net
income of $0.00 for the same period prior year.
- Non-GAAP net income of $12.1
million and Non-GAAP diluted EPS of $0.08.
- Adjusted EBITDA of $19.1 million,
compared to $18.2 million for the same period prior year. Adjusted
EBITDA margin of 16.6%, compared to 18.5% for the same period prior
year.
- 4,242 customers at March 31, 2022.
Vertex Chief Financial Officer John Schwab said,
“We saw continued growth in Q1 across key metrics including Annual
Recurring Revenue and Net Revenue Retention rates. During the first
quarter, we refinanced our credit facility to increase operational
flexibility and we continued to make strategic investments in the
business to drive sustained growth and shareholder value.”
Definitions of certain key business metrics and
the non-GAAP financial measures used in this press release and
reconciliations of such measures to the most directly comparable
GAAP financial measures are included below under the headings
“Definitions of Certain Key Business Metrics” and “Use and
Reconciliation of Non-GAAP Financial Measures.”
Financial Outlook
For the second quarter of 2022, the Company
currently expects:
- Revenues of $116.0 million to
$117.5 million, representing growth of 11% to 12% from the second
quarter of 2021; and
- Adjusted EBITDA
of $16.0 million to $18.0 million, representing a decrease of $1.2
million to $3.2 million from the second quarter of 2021.
For the full-year 2022, the Company currently
expects:
- Revenues of $479 million to $483
million, representing growth of 13% to 14% from the full-year
2021;
- Cloud revenue growth of 33% from
the full-year 2021; and
- Adjusted EBITDA of $72 million to
$75 million, representing a decrease of $3 million to $6 million
from the full-year 2021, reflecting ongoing investment in research
and development, as well as selling and marketing expenses to drive
growth.
The Company is unable to reconcile
forward-looking Adjusted EBITDA to net income (loss), the most
directly comparable GAAP financial measure, 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 net income (loss) for these
periods but would not impact Adjusted EBITDA. Such items may
include stock-based compensation expense, depreciation and
amortization of capitalized software costs and acquired intangible
assets, severance, acquisition contingent consideration,
transaction costs, and other items. The unavailable information
could have a significant impact on the Company’s net income (loss).
The foregoing forward-looking statements reflect the Company’s
expectations as of today's date. Given the number of risk factors,
uncertainties and assumptions discussed below, actual results may
differ materially. The Company does not intend to update its
financial outlook until its next quarterly results
announcement.
Important disclosures in this earnings release
about and reconciliations of non-GAAP financial measures to the
most directly comparable GAAP financial measures are provided below
under “Use and Reconciliation of Non-GAAP Financial Measures.”
Conference Call and Webcast Information
Vertex will host a conference call at 8:30 a.m.
Eastern Time today, May 10, 2022, to discuss its first quarter 2022
financial results.
Those wishing to participate via webcast should
access the call through the Company’s Investor Relations website at
https://ir.vertexinc.com. Those wishing to participate via
telephone may dial in at 1-877-407-4018 (USA) or 1-201-689-8471
(International). The conference call replay will be available via
webcast through the Company’s Investor Relations website.
The telephone replay will be available from
11:30 a.m. Eastern Time on May 10, 2022, through May 24, 2022, by
dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The
replay passcode will be 13728888.
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
solutions that can be tailored to specific industries for major
lines 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 1,300
professionals and serves companies across the globe.
For more information, visit www.vertexinc.com or
follow on Twitter and LinkedIn.Forward Looking
Statements
Any statements made in this press release that
are not statements of historical fact, including statements about
our beliefs and expectations, are forward-looking statements and
should be evaluated as such. Forward-looking statements include
information concerning possible or assumed future results of
operations, including descriptions of our business plan and
strategies. Forward-looking statements are based on Vertex
management’s beliefs, as well as assumptions made by, and
information currently available to, them. Because such statements
are based on expectations as to future financial and operating
results and are not statements of fact, actual results may differ
materially from those projected. Factors which may cause actual
results to differ materially from current expectations include, but
are not limited to: potential effects on our business of the
COVID-19 pandemic; our ability to attract new customers on a
cost-effective basis and the extent to which existing customers
renew and upgrade their subscriptions; our ability to sustain and
expand revenues, maintain profitability, and to effectively manage
our anticipated growth; our ability to identify acquisition targets
and to successfully integrate and operate acquired businesses; our
ability to maintain and expand our strategic relationships with
third parties; and the other factors described under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2021 as filed with the Securities Exchange
Commission (“SEC”), as may be subsequently updated by our other SEC
filings. Copies of such filings may be obtained from the Company or
the SEC.
All forward-looking statements reflect our
beliefs and assumptions only as of the date of this press release.
We undertake no obligation to update forward-looking statements to
reflect future events or circumstances.
Definitions of Certain Key Business
Metrics
Annual Recurring Revenue (“ARR”)
We derive the vast majority of our revenues from
recurring software subscriptions. We believe ARR provides us with
visibility to our projected software subscription revenues in order
to evaluate the health of our business. Because we recognize
subscription revenues ratably, we believe investors can use ARR to
measure our expansion of existing customer revenues, new customer
activity, and as an indicator of future software subscription
revenues. ARR is based on monthly recurring revenues (“MRR”) from
software subscriptions for the most recent month at period end,
multiplied by twelve. MRR is calculated by dividing the software
subscription price, inclusive of discounts, by the number of
subscription covered months. MRR only includes customers with MRR
at the end of the last month of the measurement period. AARPC
represents average annual revenue per customer and is calculated by
dividing ARR by the number of software subscription customers at
the end of the respective period.
Net Revenue Retention Rate (“NRR”)
We believe that our NRR provides insight into
our ability to retain and grow revenues from our customers, as well
as their potential long-term value to us. We also believe it
demonstrates to investors our ability to expand existing customer
revenues, which is one of our key growth strategies. Our NRR refers
to the ARR expansion during the 12 months of a reporting period for
all customers who were part of our customer base at the beginning
of the reporting period. Our NRR calculation takes into account any
revenues lost from departing customers or customers who have
downgraded or reduced usage, as well as any revenue expansion from
migrations, new licenses for additional products or contractual and
usage-based price changes.
Use and Reconciliation of Non-GAAP Financial
Measures
In addition to our results determined in
accordance with accounting principles generally accepted in the
U.S. (“GAAP”) and key business metrics described above, we have
calculated non-GAAP cost of revenues, non-GAAP gross profit,
non-GAAP gross margin, non-GAAP research and development expense,
non-GAAP selling and marketing expense, non-GAAP general and
administrative expense, non-GAAP operating income, non-GAAP net
income, non-GAAP diluted EPS, Adjusted EBITDA, Adjusted EBITDA
margin, free cash flow and free cash flow margin, which are each
non-GAAP financial measures. We have provided tabular
reconciliations of each of these non-GAAP financial measures to its
most directly comparable GAAP financial measure.
Management uses these non-GAAP financial
measures to understand and compare operating results across
accounting periods, for internal budgeting and forecasting
purposes, and to evaluate financial performance and liquidity. Our
non-GAAP financial measures are presented as supplemental
disclosure as we believe they provide useful information to
investors and others in understanding and evaluating our results,
prospects, and liquidity period-over-period without the impact of
certain items that do not directly correlate to our operating
performance and that may vary significantly from period to period
for reasons unrelated to our operating performance, as well as
comparing our financial results to those of other companies. Our
definitions of these non-GAAP financial measures may differ from
similarly titled measures presented by other companies and
therefore comparability may be limited. In addition, other
companies may not publish these or similar metrics. Thus, our
non-GAAP financial measures should be considered in addition to,
not as a substitute for, or in isolation from, the financial
information prepared in accordance with GAAP, and should be read in
conjunction with the consolidated financial statements included in
our Annual Report on Form 10-K for the year ended December 31, 2021
and in our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022 to be filed with the SEC.
We calculate these non-GAAP financial measures
as follows:
- Non-GAAP cost
of revenues, software subscriptions is determined by adding back to
GAAP cost of revenues, software subscriptions, the stock-based
compensation expense, and depreciation and amortization of
capitalized software and acquired intangible assets included in
cost of subscription revenues for the respective periods.
- Non-GAAP cost
of revenues, services is determined by adding back to GAAP cost of
revenues, services, the stock-based compensation expense included
in cost of revenues, services for the respective periods.
- Non-GAAP gross
profit is determined by adding back to GAAP gross profit the
stock-based compensation expense, and depreciation and amortization
of capitalized software and acquired intangible assets included in
cost of subscription revenues for the respective periods.
- Non-GAAP gross
margin is determined by dividing non-GAAP gross profit by total
revenues for the respective periods.
- Non-GAAP
research and development expense is determined by adding back to
GAAP research and development expense the stock-based compensation
expense included in research and development expense for the
respective periods.
- Non-GAAP
selling and marketing expense is determined by adding back to GAAP
selling and marketing expense the stock-based compensation expense
and the amortization of acquired intangible assets included in
selling and marketing expense for the respective periods.
- Non-GAAP
general and administrative expense is determined by adding back to
GAAP general and administrative expense the stock-based
compensation expense and severance expense included in general and
administrative expense for the respective periods.
- Non-GAAP
operating income is determined by adding back to GAAP income or
loss from operations the stock-based compensation expense,
depreciation and amortization of capitalized software and acquired
intangible assets – cost of subscription revenues, amortization of
acquired intangible assets – selling and marketing expense,
severance expense, acquisition contingent consideration, and
transaction costs included in GAAP income or loss from operations
for the respective periods.
- Non-GAAP net
income is determined by adding back to GAAP net income or loss the
income tax benefit or expense, stock-based compensation expense,
depreciation and amortization of capitalized software and acquired
intangible assets – cost of subscription revenues, amortization of
acquired intangible assets – selling and marketing expense,
severance expense, acquisition contingent consideration and
transaction costs included in GAAP net income or loss for the
respective periods to determine non-GAAP income or loss before
income taxes. Non-GAAP income before income taxes is then adjusted
for income taxes calculated using the respective statutory tax
rates for applicable jurisdictions, which for purposes of this
determination were assumed to be 25.5%.
- Non-GAAP net
income per diluted share of Class A and Class B common stock
(“Non-GAAP diluted EPS”) is determined by dividing non-GAAP net
income by the weighted average shares outstanding of all classes of
common stock, inclusive of the impact of dilutive common stock
equivalents to purchase such common stock, including stock options,
restricted stock awards, restricted stock units and employee stock
purchase plan shares.
- Adjusted EBITDA
is determined by adding back to GAAP net income or loss the net
interest income or expense, income taxes, depreciation and
amortization of property and equipment, depreciation and
amortization of capitalized software and acquired intangible assets
included in cost of subscription revenues, amortization of acquired
intangible assets included in selling and marketing expense, asset
impairments, stock-based compensation expense, severance expense,
acquisition contingent consideration and transaction costs included
in GAAP net income or loss for the respective periods.
- Adjusted EBITDA
margin is determined by dividing Adjusted EBITDA by total revenues
for the respective periods.
- Free cash flow
is determined by adjusting net cash provided by (used in) operating
activities by adding back cash used for the converted stock
appreciation rights redeemed in connection with the initial public
offering, and reducing it for purchases of property and equipment
and capitalized software additions for the respective periods.
- Free cash flow
margin is determined by dividing free cash flow by total revenues
for the respective periods.
We encourage investors and others to review our
financial information in its entirety, not to rely on any single
financial measure and to view these non-GAAP financial measures in
conjunction with the related GAAP financial measures.
Vertex, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(Unaudited)
|
|
March 31, |
|
December 31, |
(In thousands, except
per share data) |
|
2022 |
|
2021 |
|
|
(unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
97,340 |
|
|
$ |
73,333 |
|
Funds held for customers |
|
|
25,899 |
|
|
|
24,873 |
|
Accounts receivable, net of allowance of $8,450 and $9,151,
respectively |
|
|
75,807 |
|
|
|
76,929 |
|
Prepaid expenses and other current assets |
|
|
21,513 |
|
|
|
20,536 |
|
Total current assets |
|
|
220,559 |
|
|
|
195,671 |
|
Property and equipment, net of accumulated depreciation |
|
|
102,228 |
|
|
|
98,390 |
|
Capitalized software, net of accumulated amortization |
|
|
33,053 |
|
|
|
33,442 |
|
Goodwill and other intangible assets |
|
|
272,633 |
|
|
|
272,702 |
|
Deferred commissions |
|
|
11,679 |
|
|
|
12,555 |
|
Deferred income tax asset |
|
|
34,554 |
|
|
|
35,298 |
|
Operating lease right of use assets |
|
|
19,644 |
|
|
|
20,249 |
|
Other assets |
|
|
3,158 |
|
|
|
1,900 |
|
Total assets |
|
$ |
697,508 |
|
|
$ |
670,207 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
1,250 |
|
|
$ |
— |
|
Accounts payable |
|
|
14,578 |
|
|
|
13,000 |
|
Accrued expenses |
|
|
27,286 |
|
|
|
22,966 |
|
Tax sharing agreement distributions payable |
|
|
— |
|
|
|
536 |
|
Customer funds obligations |
|
|
24,507 |
|
|
|
23,461 |
|
Accrued salaries and benefits |
|
|
13,992 |
|
|
|
16,671 |
|
Accrued variable compensation |
|
|
9,917 |
|
|
|
26,462 |
|
Deferred compensation, current |
|
|
4,202 |
|
|
|
4,202 |
|
Deferred revenue, current |
|
|
235,236 |
|
|
|
237,344 |
|
Current portion of operating lease liabilities |
|
|
4,145 |
|
|
|
3,933 |
|
Current portion of finance lease liabilities |
|
|
286 |
|
|
|
284 |
|
Deferred purchase consideration, current |
|
|
19,905 |
|
|
|
19,805 |
|
Purchase commitment and contingent consideration liabilities,
current |
|
|
1,258 |
|
|
|
468 |
|
Total current liabilities |
|
|
356,562 |
|
|
|
369,132 |
|
Deferred compensation, net of current portion |
|
|
2,056 |
|
|
|
1,963 |
|
Deferred revenue, net of current portion |
|
|
10,479 |
|
|
|
11,666 |
|
Debt, net of current portion |
|
|
48,554 |
|
|
|
— |
|
Operating lease liabilities, net of current portion |
|
|
23,360 |
|
|
|
24,320 |
|
Finance lease liabilities, net of current portion |
|
|
68 |
|
|
|
68 |
|
Deferred purchase consideration, net of current portion |
|
|
9,519 |
|
|
|
19,419 |
|
Purchase commitment and contingent consideration liabilities, net
of current portion |
|
|
12,152 |
|
|
|
10,829 |
|
Deferred other liabilities |
|
|
1,927 |
|
|
|
2,726 |
|
Total liabilities |
|
|
464,677 |
|
|
|
440,123 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred shares, $0.001 par value, 30,000 shares authorized; no
shares issued and outstanding |
|
|
— |
|
|
|
— |
|
Class A voting common stock, $0.001 par value, 300,000 shares
authorized; 42,561 and 42,286 shares issued and outstanding,
respectively |
|
|
42 |
|
|
|
42 |
|
Class B voting common stock, $0.001 par value, 150,000 shares
authorized; 106,807 shares issued and outstanding |
|
|
107 |
|
|
|
107 |
|
Additional paid in capital |
|
|
227,751 |
|
|
|
222,621 |
|
Retained earnings |
|
|
24,477 |
|
|
|
24,811 |
|
Accumulated other comprehensive loss |
|
|
(19,546 |
) |
|
|
(17,497 |
) |
Total stockholders'
equity |
|
|
232,831 |
|
|
|
230,084 |
|
Total liabilities and stockholders' equity |
|
$ |
697,508 |
|
|
$ |
670,207 |
|
Vertex, Inc. and
SubsidiariesCondensed Consolidated Statements of
Comprehensive (Loss) Income
(Unaudited)
|
|
Three months ended |
|
|
March 31, |
(In thousands, except
per share data) |
|
2022 |
|
2021 |
Revenues: |
|
|
Software subscriptions |
|
$ |
97,131 |
|
|
$ |
83,280 |
|
Services |
|
|
17,853 |
|
|
|
14,956 |
|
Total revenues |
|
|
114,984 |
|
|
|
98,236 |
|
Cost of revenues: |
|
|
|
|
|
|
Software subscriptions |
|
|
32,913 |
|
|
|
25,590 |
|
Services |
|
|
11,953 |
|
|
|
11,343 |
|
Total cost of revenues |
|
|
44,866 |
|
|
|
36,933 |
|
Gross profit |
|
|
70,118 |
|
|
|
61,303 |
|
Operating expenses: |
|
|
|
|
|
|
Research and development |
|
|
9,633 |
|
|
|
11,459 |
|
Selling and marketing |
|
|
27,452 |
|
|
|
20,150 |
|
General and administrative |
|
|
28,757 |
|
|
|
24,852 |
|
Depreciation and amortization |
|
|
2,960 |
|
|
|
2,827 |
|
Other operating expense, net |
|
|
848 |
|
|
|
(129 |
) |
Total operating expenses |
|
|
69,650 |
|
|
|
59,159 |
|
Income from operations |
|
|
468 |
|
|
|
2,144 |
|
Interest (income) expense,
net |
|
|
(6 |
) |
|
|
535 |
|
Income before income taxes |
|
|
474 |
|
|
|
1,609 |
|
Income tax expense (benefit) |
|
|
808 |
|
|
|
(679 |
) |
Net (loss) income |
|
|
(334 |
) |
|
|
2,288 |
|
Other comprehensive loss from
foreign currency translation adjustments and revaluations, net of
tax |
|
|
2,049 |
|
|
|
977 |
|
Total comprehensive (loss) income |
|
$ |
(2,383 |
) |
|
$ |
1,311 |
|
|
|
|
|
|
|
|
Net (loss) income attributable
to Class A stockholders, basic |
|
$ |
(95 |
) |
|
$ |
413 |
|
Net (loss) income per Class A share, basic |
|
$ |
(0.00 |
) |
|
$ |
0.02 |
|
Weighted average Class A common stock, basic |
|
|
42,349 |
|
|
|
26,458 |
|
Net (loss) income attributable to Class A stockholders,
diluted |
|
$ |
(95 |
) |
|
$ |
550 |
|
Net (loss) income per Class A share, diluted |
|
$ |
(0.00 |
) |
|
$ |
0.01 |
|
Weighted average Class A common stock, diluted |
|
|
42,349 |
|
|
|
38,003 |
|
|
|
|
|
|
|
|
Net (loss) income attributable to Class B stockholders, basic |
|
$ |
(239 |
) |
|
$ |
1,875 |
|
Net (loss) income per Class B share, basic |
|
$ |
(0.00 |
) |
|
$ |
0.02 |
|
Weighted average Class B common stock, basic |
|
|
106,807 |
|
|
|
120,117 |
|
Net (loss) income attributable to Class B stockholders,
diluted |
|
$ |
(239 |
) |
|
$ |
1,738 |
|
Net (loss) income per Class B share, diluted |
|
$ |
(0.00 |
) |
|
$ |
0.01 |
|
Weighted average Class B common stock, diluted |
|
|
106,807 |
|
|
|
120,117 |
|
Vertex, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash Flows(Unaudited)
|
|
Three months ended |
|
|
March 31, |
(In
thousands) |
|
2022 |
|
2021 |
Cash flows from operating activities: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(334 |
) |
|
$ |
2,288 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
12,906 |
|
|
|
8,816 |
|
Provision for subscription cancellations and non-renewals, net of
deferred allowance |
|
|
(279 |
) |
|
|
379 |
|
Amortization of deferred financing costs |
|
|
53 |
|
|
|
53 |
|
Change in fair value of contingent consideration liability |
|
|
700 |
|
|
|
— |
|
Write-off of deferred financing costs |
|
|
372 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
4,933 |
|
|
|
6,543 |
|
Deferred income tax (benefit) provision |
|
|
62 |
|
|
|
(615 |
) |
Non-cash operating lease costs |
|
|
622 |
|
|
|
998 |
|
Other |
|
|
412 |
|
|
|
(14 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
2,688 |
|
|
|
13,810 |
|
Prepaid expenses and other current assets |
|
|
(1,091 |
) |
|
|
(13,437 |
) |
Deferred commissions |
|
|
875 |
|
|
|
50 |
|
Accounts payable |
|
|
1,555 |
|
|
|
2,258 |
|
Accrued expenses |
|
|
3,806 |
|
|
|
(3,048 |
) |
Accrued and deferred compensation |
|
|
(19,254 |
) |
|
|
(14,966 |
) |
Deferred revenue |
|
|
(3,718 |
) |
|
|
(5,046 |
) |
Operating lease liabilities |
|
|
(763 |
) |
|
|
(1,519 |
) |
Other |
|
|
(950 |
) |
|
|
485 |
|
Net cash provided by (used in) operating activities |
|
|
2,595 |
|
|
|
(2,965 |
) |
Cash flows from investing
activities: |
|
|
|
|
|
|
Acquisition of business, net of cash acquired |
|
|
(474 |
) |
|
|
(6,100 |
) |
Property and equipment additions |
|
|
(13,873 |
) |
|
|
(6,195 |
) |
Capitalized software additions |
|
|
(2,912 |
) |
|
|
(2,221 |
) |
Net cash used in investing activities |
|
|
(17,259 |
) |
|
|
(14,516 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Net increase (decrease) in customer funds obligations |
|
|
1,046 |
|
|
|
(438 |
) |
Proceeds from term loan |
|
|
50,000 |
|
|
|
— |
|
Payments for deferred financing costs |
|
|
(993 |
) |
|
|
— |
|
Payments for taxes related to net share settlement of stock-based
awards |
|
|
(337 |
) |
|
|
(7,178 |
) |
Proceeds from exercise of stock options |
|
|
600 |
|
|
|
147 |
|
Distributions under Tax Sharing Agreement |
|
|
(536 |
) |
|
|
— |
|
Payments of finance lease liabilities |
|
|
— |
|
|
|
(671 |
) |
Payments for deferred purchase commitments |
|
|
(10,000 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
39,780 |
|
|
|
(8,140 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
|
(83 |
) |
|
|
(226 |
) |
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
|
25,033 |
|
|
|
(25,847 |
) |
Cash, cash equivalents and restricted cash, beginning of
period |
|
|
98,206 |
|
|
|
312,273 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
123,239 |
|
|
$ |
286,426 |
|
Reconciliation of cash, cash equivalents and restricted cash to the
Consolidated Balance Sheets, end of period: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
97,340 |
|
|
$ |
277,681 |
|
Restricted cash—funds held for customers |
|
|
25,899 |
|
|
|
8,745 |
|
Total cash, cash equivalents and restricted cash, end of
period |
|
$ |
123,239 |
|
|
$ |
286,426 |
|
Summary of Non-GAAP Financial
Measures(Unaudited)
|
|
Three months ended |
|
|
|
March 31, |
|
(Dollars in thousands,
except per share data) |
|
2022 |
|
|
2021 |
|
|
Non-GAAP cost of revenues, software subscriptions |
|
$ |
22,770 |
|
|
$ |
19,125 |
|
|
Non-GAAP cost of revenues,
services |
|
$ |
11,547 |
|
|
$ |
10,749 |
|
|
Non-GAAP gross profit |
|
$ |
80,667 |
|
|
$ |
68,362 |
|
|
Non-GAAP gross margin |
|
|
70.2 |
|
% |
|
69.7 |
|
% |
Non-GAAP research and
development expense |
|
$ |
9,519 |
|
|
$ |
10,898 |
|
|
Non-GAAP selling and marketing
expense |
|
$ |
25,631 |
|
|
$ |
18,779 |
|
|
Non-GAAP general and
administrative expense |
|
$ |
26,233 |
|
|
$ |
20,630 |
|
|
Non-GAAP operating income |
|
$ |
16,176 |
|
|
$ |
15,357 |
|
|
Non-GAAP net income |
|
$ |
12,056 |
|
|
$ |
11,042 |
|
|
Non-GAAP diluted EPS |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
Adjusted EBITDA |
|
$ |
19,136 |
|
|
$ |
18,184 |
|
|
Adjusted EBITDA margin |
|
|
16.6 |
|
% |
|
18.5 |
|
% |
Free cash flow |
|
$ |
(14,190 |
) |
|
$ |
(11,381 |
) |
|
Free cash flow margin |
|
|
(12.3 |
) |
% |
|
(11.6 |
) |
% |
Vertex, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP
Financial Measures(Unaudited)
|
|
Three months ended |
|
|
|
March 31, |
|
(Dollars in
thousands) |
|
2022 |
|
|
2021 |
|
|
Non-GAAP Cost of
Revenues, Software Subscriptions: |
|
|
|
|
|
|
|
Cost of revenues, software subscriptions |
|
$ |
32,913 |
|
|
$ |
25,590 |
|
|
Stock-based compensation expense |
|
|
(446 |
) |
|
|
(560 |
) |
|
Depreciation and amortization of capitalized software and acquired
intangible assets – cost of subscription revenues |
|
|
(9,697 |
) |
|
|
(5,905 |
) |
|
Non-GAAP cost of revenues, software
subscriptions |
|
$ |
22,770 |
|
|
$ |
19,125 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cost of
Revenues, Services: |
|
|
|
|
|
|
|
Cost of revenues, services |
|
$ |
11,953 |
|
|
$ |
11,343 |
|
|
Stock-based compensation expense |
|
|
(406 |
) |
|
|
(594 |
) |
|
Non-GAAP cost of revenues, services |
|
$ |
11,547 |
|
|
$ |
10,749 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Profit: |
|
|
|
|
|
|
|
Gross profit |
|
$ |
70,118 |
|
|
$ |
61,303 |
|
|
Stock-based compensation expense |
|
|
852 |
|
|
|
1,154 |
|
|
Depreciation and amortization of capitalized software and acquired
intangible assets – cost of subscription revenues |
|
|
9,697 |
|
|
|
5,905 |
|
|
Non-GAAP gross profit |
|
$ |
80,667 |
|
|
$ |
68,362 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin: |
|
|
|
|
|
|
|
Total Revenues |
|
$ |
114,984 |
|
|
$ |
98,236 |
|
|
Non-GAAP gross margin |
|
|
70.2 |
|
% |
|
69.7 |
|
% |
|
|
|
|
|
|
|
|
Non-GAAP Research and
Development Expense: |
|
|
|
|
|
|
|
Research and development expense |
|
$ |
9,633 |
|
|
$ |
11,459 |
|
|
Stock-based compensation expense |
|
|
(114 |
) |
|
|
(561 |
) |
|
Non-GAAP research and development expense |
|
$ |
9,519 |
|
|
$ |
10,898 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Selling and
Marketing Expense: |
|
|
|
|
|
|
|
Selling and marketing expense |
|
$ |
27,452 |
|
|
$ |
20,150 |
|
|
Stock-based compensation expense |
|
|
(1,572 |
) |
|
|
(1,287 |
) |
|
Amortization of acquired intangible assets – selling and marketing
expense |
|
|
(249 |
) |
|
|
(84 |
) |
|
Non-GAAP selling and marketing expense |
|
$ |
25,631 |
|
|
$ |
18,779 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP General and
Administrative Expense: |
|
|
|
|
|
|
|
General and administrative expense |
|
$ |
28,757 |
|
|
$ |
24,852 |
|
|
Stock-based compensation expense |
|
|
(2,395 |
) |
|
|
(3,541 |
) |
|
Severance expense |
|
|
(122 |
) |
|
|
(531 |
) |
|
Transaction costs |
|
|
(7 |
) |
|
|
(150 |
) |
|
Non-GAAP general and administrative expense |
|
$ |
26,233 |
|
|
$ |
20,630 |
|
|
Vertex, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP
Financial Measures
(continued)(Unaudited)
|
Three months ended |
|
March 31, |
(In thousands, except
per share data) |
2022 |
|
|
2021 |
|
Non-GAAP Operating
Income: |
|
|
|
|
|
Income from operations |
$ |
468 |
|
|
$ |
2,144 |
|
Stock-based compensation expense |
|
4,933 |
|
|
|
6,543 |
|
Depreciation and amortization of capitalized software and acquired
intangible assets - cost of subscription revenues |
|
9,697 |
|
|
|
5,905 |
|
Amortization of acquired intangible assets – selling and marketing
expense |
|
249 |
|
|
|
84 |
|
Severance expense |
|
122 |
|
|
|
531 |
|
Acquisition contingent consideration |
|
700 |
|
|
|
— |
|
Transaction costs |
|
7 |
|
|
|
150 |
|
Non-GAAP operating income |
$ |
16,176 |
|
|
$ |
15,357 |
|
|
|
|
|
|
|
Non-GAAP Net
Income: |
|
|
|
|
|
Net (loss) income |
$ |
(334 |
) |
|
$ |
2,288 |
|
Income tax expense (benefit) |
|
808 |
|
|
|
(679 |
) |
Stock-based compensation expense |
|
4,933 |
|
|
|
6,543 |
|
Depreciation and amortization of capitalized software and acquired
intangible assets - cost of subscription revenues |
|
9,697 |
|
|
|
5,905 |
|
Amortization of acquired intangible assets – selling and marketing
expense |
|
249 |
|
|
|
84 |
|
Severance expense |
|
122 |
|
|
|
531 |
|
Acquisition contingent consideration |
|
700 |
|
|
|
— |
|
Transaction costs |
|
7 |
|
|
|
150 |
|
Non-GAAP income before income taxes |
|
16,182 |
|
|
|
14,822 |
|
Income tax adjustment at statutory rate |
|
(4,126 |
) |
|
|
(3,780 |
) |
Non-GAAP net income |
$ |
12,056 |
|
|
$ |
11,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income |
$ |
12,056 |
|
|
$ |
11,042 |
|
Weighted average Class A and B common stock, diluted |
|
158,117 |
|
|
|
158,120 |
|
Non-GAAP diluted EPS |
$ |
0.08 |
|
|
$ |
0.07 |
|
Vertex, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP
Financial Measures
(continued)(Unaudited)
|
|
Three months ended |
|
|
|
March 31, |
|
(Dollars in
thousands) |
|
2022 |
|
|
2021 |
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(334 |
) |
|
$ |
2,288 |
|
|
Interest (income) expense, net |
|
|
(6 |
) |
|
|
535 |
|
|
Income tax expense (benefit) |
|
|
808 |
|
|
|
(679 |
) |
|
Depreciation and amortization - property and equipment |
|
|
2,960 |
|
|
|
2,827 |
|
|
Depreciation and amortization of capitalized software and acquired
intangible assets - cost of subscription revenues |
|
|
9,697 |
|
|
|
5,905 |
|
|
Amortization of acquired intangible assets - selling and marketing
expense |
|
|
249 |
|
|
|
84 |
|
|
Stock-based compensation expense |
|
|
4,933 |
|
|
|
6,543 |
|
|
Severance expense |
|
|
122 |
|
|
|
531 |
|
|
Acquisition contingent consideration |
|
|
700 |
|
|
|
— |
|
|
Transaction costs |
|
|
7 |
|
|
|
150 |
|
|
Adjusted EBITDA |
|
$ |
19,136 |
|
|
$ |
18,184 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin: |
|
|
|
|
|
|
|
Total revenues |
|
$ |
114,984 |
|
|
$ |
98,236 |
|
|
Adjusted EBITDA margin |
|
|
16.6 |
|
% |
|
18.5 |
|
% |
|
|
Three months ended |
|
|
|
March 31, |
|
(Dollars in
thousands) |
|
2022 |
|
|
2021 |
|
|
Free Cash
Flow: |
|
|
|
|
|
|
|
Cash provided by (used in) operating
activities |
|
$ |
2,595 |
|
|
$ |
(2,965 |
) |
|
Property and equipment additions |
|
|
(13,873 |
) |
|
|
(6,195 |
) |
|
Capitalized software additions |
|
|
(2,912 |
) |
|
|
(2,221 |
) |
|
Free cash flow |
|
$ |
(14,190 |
) |
|
$ |
(11,381 |
) |
|
|
|
|
|
|
|
|
|
Free Cash Flow
Margin: |
|
|
|
|
|
|
|
Total revenues |
|
$ |
114,984 |
|
|
$ |
98,236 |
|
|
Free cash flow margin |
|
|
(12.3 |
) |
% |
|
(11.6 |
) |
% |
Investor Relations Contact:Ankit Hira or Ed
YuenSolebury Trout for
Vertex, Inc.ir@vertexinc.com610.312.2890
Media Contact:Marisa
NorrisVertex, Inc.mediainquiries@vertexinc.com610.283.6284
Grafico Azioni Vertex (NASDAQ:VERX)
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