Vertex, Inc. · NASDAQ:VERX
Vertex — Investor Presentation (August 2024)
23 slides from Vertex's investor presentation, August 2024
Slide 1: Investor Presentation August 2024
Investor Presentation August 2024 Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.
Slide 2: Disclaimer
Disclaimer Forward Looking Statements Any statements made in this presentation 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 concernin
Slide 3: Vertex: The Trusted Name in Tax Technology for Over 45 Years
Vertex: The Trusted Name in Tax Technology for Over 45 Years KPIs Demonstrate Consistent Execution with Strong Fundamentals Investment Highlights 1 A leader in global, growing indirect tax software market $618MM $134MM TTM 1Q24 Revenue (1) TTM 2Q24 Adjusted EBITDA (1) 2 Marquee customer base across
Slide 4: Indirect Taxes are Significant and Growing
Indirect Taxes are Significant and Growing (1) Sales tax 3.1x Use tax Indirect tax revenue vs. corporate $4.4T income tax revenue VAT Imports 20% Exports Excise $1.4T VAT as a % of GDP in OECD countries Payroll Indirect tax revenue Corporate income tax revenue Notes: 1. 2022 OECD Tax Database 4 Copy
Slide 5: Indirect Taxes are Incredibly Complex
Indirect Taxes are Incredibly Complex EVERY transaction THOUSANDS of taxing jurisdictions THOUSANDS of products and services In REAL-TIME ACROSS THE And SUPPLY CHAIN 5 Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.
Slide 6: We estimate a $22B TAM with less than 10% software adoption
We estimate a $22B TAM with less than 10% software adoption (1) $3B $7.6B Enterprise (20K Firms) (44K Firms) $15B $7B $2.3B $7.7B Mid-Market $7B Rest of (1.2M) (50K Firms) World US TAM (200K Firms) TAM $1.7B SMB (1.2M Firms) Notes: 1. Source: Dun & Bradstreet; Company data & estimates 6 Copyright ©
Slide 7: Growth Tailwinds Remain in Place
Growth Tailwinds Remain in Place Business Complexity Regulatory Technology Growth Drivers 7 Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.
Slide 8: Why Customers Choose Vertex
Why Customers Choose Vertex Deep Tax Expertise and Dynamic Platform Ensures Compliance Amidst Evolving Robust AI Capabilities Incorporating 900M+ Tax Rules and Regulations Tax Landscape Vast Tax Content Database and Frictionless Integration Deep ERP Integrations and Strategic Relationships to Power
Slide 9: We Have Built a Marquee Customer Base Across a Diverse Set of Industries
We Have Built a Marquee Customer Base Across a Diverse Set of Industries 4,438 (1) >60% (2) Direct Customers of the Fortune 500 9 7 8 8 7 6 6 of the Top 10 of the Top 10 of the Top 10 of the Top 10 of the Top 10 of the Top 10 of the Top 10 Business Services Communications Financial Services Manufact
Slide 10: Key Growth Investments – 2020 through 2023
Key Growth Investments – 2020 through 2023 Enhance investment in new product Expand go-to-market to development and R&D acquire new customers Build customer success organization Upgrade corporate Extend global footprint infrastructure to support a larger company 10 Copyright © 2024 Vertex, Inc. All
Slide 11: Key Metrics of Success
Key Metrics of Success AT IPO CURRENT CAGR Total Revenue (1) $349M $618M +15.4% ARR (2) $294.6M $548.4M +16.8% Subscription Revenue (1) $297.0M $520.3M +15.1% NRR (2) 108% 110% +200 bps AARPC (2) $73,300 $123,560 +13.9% Notes: 1. At IPO is trailing 12 months ended 6/30/2020. Current is trailing twel
Slide 12: Our Growth Opportunity Remains Compelling
Our Growth Opportunity Remains Compelling Extend leadership in Enhance earnings indirect tax content leverage as corporate Drive traction with infrastructure new products investments subside Mature go-to- Derive incremental market and growth opportunities customer success from selective M&A function
Slide 13: World Class Leadership Team
World Class Leadership Team David DeStefano John Schwab Sal Visca Chris Jones Chief Executive Officer Chief Financial Officer Chief Technology Officer Chief Commercial Officer Chirag Patel Steve Hinckley Ann Hollins Jeff Foucher Chief Strategy Officer Chief Operating Officer Chief People Officer Chi
Slide 14: Financials
Financials 14
Slide 15: Financial Highlights
Financial Highlights • Consistent mid to high teens revenue growth, with cloud revenue growth in FY 2023 Results (1)(2) 1 the high 20 percent range. • NRR improvement validates the ability to cross-sell and serve customers $572M $513M $101M Growth Acceleration Total Revenue ARR Adj. EBITDA at Scale
Slide 16: Q2'24A Results
Q2’24A Results 2Q24 Results % Growth YoY Total Revenue $161.1M +15.3% ARR $548.4M +17.3% NRR 112% (1.0%) GRR 95% (1.0%) Net Income $5.2M NM Adjusted EBITDA(1) $38.5M +75.2% Notes: 1. Adjusted EBITDA is a non-GAAP measure; for a reconciliation of this non-GAAP measure to the nearest GAAP measure, see
Slide 17: Durable Revenue Growth Over the Long Haul
Durable Revenue Growth Over the Long Haul Annual Revenue ($ in millions) $572 $492 $426 $375 $322 $272 $245 $225 $207 $188 $165 $174 $144 $154 $130 $134 $109 $121 $100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Last major Recession Notes: 1. 2005 t
Slide 18: Quarterly Revenue Track Record Since IPO
Quarterly Revenue Track Record Since IPO ($ in millions) $154.9 $156.8 $161.1 0.4% 5% NOTE: Vertex has outperformed the high end of its quarterly $145.0 revenue guidance in 14 of 16 quarters as a public company $139.7 1% 2% $132.8 $131.1 $126.2 3% 2% $119.3 $115.0 2% $110.7 $111.7 1% 2% $104.9 4% 18
Slide 19: Strong Recurring Top-Line Performance, Highlighted by Rapid Growth in Cloud Revenue
Strong Recurring Top-Line Performance, Highlighted by Rapid Growth in Cloud Revenue ($ in Millions) Annual Recurring Revenue (ARR) Cloud Subscription Revenue $513 $215 $431 $169 $370 $316 $127 $279 $233 $87 $53 $30 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 19 Copyright © 2024 Verte
Slide 20: Scaled Customers Fuel Vertex's Growth
Scaled Customers Fuel Vertex's Growth Scaled customer count has grown by over 50% since 2020 Notes: 1. Scaled customers defined as customers with annual revenues greater than $100K 20 Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.
Slide 21: With Growth Investments Largely Complete, Earnings Leverage is Now Inflecting
With Growth Investments Largely Complete, Earnings Leverage is Now Inflecting • Beginning with the IPO in Adjusted EBITDA (1) ($ in Millions) mid-2020, Vertex made significant growth investments in 3 key areas: • Go-to-market • New product Growth Investment Phase $36.7 $38.5 introductions • Corporat
Slide 22: Appendix
Appendix 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (1) ($ in Thousands) Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q1’24 Adjusted EBITDA Net Income (Loss) (29,075) (21,028) 230 2,288 808 (3,948) (627) (334) (5,520) (1,141) (5,309) (18,132) (6,896) (3,399) 15,334 2,68