Vertex, Inc. · NASDAQ:VERX
Vertex — Investor Day (March 2025)
71 slides from Vertex's investor day presentation, Mar 19, 2025
Slide 1: Driving Durable Growth by Solving Indirect Tax Complexity
Driving Durable Growth by Solving Indirect Tax Complexity Investor Day | March 19, 2025
Slide 2: Safe Harbor Forward Looking Statements
2 Safe Harbor 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 concer
Slide 3: 2025 Investor Day Agenda
3 2025 Investor Day Agenda 8:30 a.m ET Welcome & Agenda Joe Crivelli, Vice President of Investor Relations Company & Strategy Overview Driving Durable Growth by Solving Indirect Tax Complexity 8:35 a.m ET David DeStefano, President, CEO, Chairperson of the Board Strategic Outlook Building on a Stron
Slide 4: Company & Strategy Overview
4 Company & Strategy Overview Driving Durable Growth by Solving Indirect Tax Complexity David DeStefano, President, CEO & Chairperson of the Board
Slide 5: Our North Star
5 Our North Star is to accelerate global commerce and empower businesses to transact, comply and grow with confidence… …by delivering a global, best-in-class, end-to-end indirect tax platform
Slide 6: Global Leader in Tax Technology
(1) Based on information as of December 31, 2024 6 Global Leader in Tax Technology Proven Track Record of Driving Durable Growth at Scale ~95% Gross Retention Rate (1) >60% Fortune 500 33.5% Cloud Subscription CAGR 2020-2024 (1) 85% Subscription Revenue as % of Revenue (1) 17.5% Annual Recurring Rev
Slide 7: Indirect Taxes Encompass High Degree of Complexity
(1) 2022 OECD Tax Database 7 Indirect Taxes Encompass High Degree of Complexity THOUSANDS of taxing jurisdictions THOUSANDS of products and services In REAL-TIME spanning OMNICHANNEL platforms BILLIONS of transactions And ACROSS THE GLOBAL SUPPLY CHAIN $4.4T Global Indirect Tax Revenue(1) 3.1X Great
Slide 8: Multiple Secular Growth Drivers
Multiple Secular Growth Drivers Benefiting from Constant State of Change Business Complexity Globalization Product Expansion M&A Omnichannel Supply Chain Marketplaces Regulatory Change E-invoicing Real-time Reporting Digital Services Duties & Fees Audit Cross-Border Digital Transformation Technology
Slide 9: Unmatched End-to-End Indirect Tax Solutions
9 Unmatched End-to-End Indirect Tax Solutions Business ERP e-Commerce Marketplaces Procurement Point of Sale Tax Authorities CTC/E-invoicing Real-Time Reporting & Remittance Notices & Audit Compliance Report Comply Pay File Integration Access Read Configure Determination Determine Calculate Audit &
Slide 10: A Complete Ecosystem of Comprehensive Solutions
A Complete Ecosystem of Comprehensive Solutions 10 Applications Determination Compliance Services provide broad range of administrative, operational, and optimization support • Implementation Services • System Optimization Services • Managed Services Outsourcing Supports every step of the tax determ
Slide 11: Comprehensive Tax Content Database
(1) Based on information as of December 31, 2024 11 Comprehensive Tax Content Database Key Competitive Advantage Retail | Manufacturing | Communications Services | Medical/Healthcare | Lodging | Leasing | Construction | Banking | Services, & More Industry Specific Capabilities 20,000+ Global Jurisdi
Slide 12: Mission Critical Partner to Highly Attractive Customer Base
Mission Critical Partner to Highly Attractive Customer Base Best-in-Class Solutions to Highly Complex Needs Drive Embedded Customer Relationships 12 (1) Vertex direct customers are based on the Vertex active customer list as of December 31, 2024 (2) Top 10 companies within the Fortune 500 by industr
Slide 13: Enabling Clients to Successfully Navigate Complexity
13 Enabling Clients to Successfully Navigate Complexity Competitive Strengths Demonstrate Why Complex Customers Trust Vertex Enterprise Reliability & Scalability • Powerful solutions optimized for complexity • Vast and dynamic global tax content database • Multi-cloud, deployment flexibility • Embed
Slide 14: Consistent Growth Algorithm Drives Reliable Growth
14 Consistent Growth Algorithm Drives Reliable Growth Sustainable Drivers leading to Long-term Revenue Growth of Mid to High Teens+ Growth Algorithm – New ARR ~30% New Logo Growth 95% GRR 109% NRR Consistently Delivering Value Realization Advantage ~25% Price Expanding Usage ~25% Growth ERP Migratio
Slide 15: Long Runway for Significant Growth
2020 Current Full Penetration 15 (1) Value as of December 31, 2020 and December 31, 2024 (2) Based on management estimates Long Runway for Significant Growth with Loyal Install Base $130k ~$300-400k(2) $75k Drivers Digital Transformation Business Complexity Regulatory Change Multiple tax types Compl
Slide 16: Accomplishments Since IPO
Accomplishments Since IPO Built customer success organization Accelerated new product development through enhanced R&D Expanded markets and segments through disciplined M&A Tripled content libraries from 300MM to >1B Expanded partner ecosystem Expanded Euro direct sales force Upgraded corporate infr
Slide 17: Investing for Accelerating Growth
Investing for Accelerating Growth Continuing to Build-out Advantaged E2E Platform, Integrating AI 17 Data Management E-invoicing Tax Content Expansion & Delivery Monthly Close Automation Audit Management Integration Determination Compliance Audit & Planning
Slide 18: World Class Executive Leadership Team
18 World Class Executive Leadership Team Delivering Results David DeStefano Chief Executive Officer John Schwab Chief Financial Officer Sal Visca Chief Technology Officer Chris Jones Chief Commercial Officer Chirag Patel Chief Strategy Officer Uwe Sydon Senior Vice President of Product Management An
Slide 19: Investment Thesis
Generate resilient, multi-layered growth underpinned by strong core. Perpetual change in business, commerce, regulation, and digitization drives ongoing demand for solutions Investment Thesis Established indirect tax industry leader uniquely positioned with significant competitive advantages Highly
Slide 20: Strategic Outlook
20 Strategic Outlook Building On A Strong Core & Executing Our Strategy Chirag Patel, Chief Strategy Officer
Slide 21: Vertex Plays an Indispensable Role in Enabling Global Commerce
Vertex Plays an Indispensable Role in Enabling Global Commerce Tax authorities are seeking new revenue sources Commerce is bigger, faster, and more complex than ever Business growth is impossible without compliance We are one of the few who can deliver at scale 21
Slide 22: A Vast Addressable Market for Our Solutions
22 A Vast Addressable Market for Our Solutions Key Drivers $23 B $25 B+ $7 B $10 B+ Today 2028 Indirect Tax TAM E-Invoicing TAM $30B $35B+ Expanding regulatory requirements Growth in overall trade and commerce Heightened need for determination & compliance E-invoicing mandate growth and expansion NO
Slide 23: Complexity is a Growth Driver
Complexity is a Growth Driver Product Range (narrow, wide) Business Model (C2C, B2C, B2B, B2G) Channel (wholesale, brick & mortar, eComm) Sales Footprint (local, regional, multi-region, global) Industry (retail, manufacturing, oil & gas, etc.) Transaction Systems (simple ERP, complex ERP, PoS, Procu
Slide 24: Our Strategy is Founded on Three Pillars
24 Our Strategy is Founded on Three Pillars Harnessing 40 years of trusted tax leadership to power the next phase of sustainable growth EXPAND AND DEEPEN OUR PARTNER AND ECOSYSTEM FOOTPRINT CUSTOMER PLATFORM EXPAND THE CORE Grow our geographic footprint and our mid-market customer segment 2 SCALE TH
Slide 25: Maximize the Core
25 1 Maximize the Core Leverage cloud ERP migrations to displace competitive or homegrown indirect tax solutions Grow share-of-wallet via cross-sell of use tax, VAT, compliance, e-invoicing, certificate mgmt., etc. Strengthen key influencer relationships within our customers & partners Capitalize on
Slide 26: ERP Cloud Migration Opportunity
26 ERP Cloud Migration Opportunity How we’re poised to win $1.8B TAM associated with ERP cloud migrations through 2028 (1) Strength of relationships with alliance and ecosystem partners Tight integrations with SAP and Oracle among our customers Meaningful ACV uplift realized from Vertex cloud migrat
Slide 27: Expand the Core
27 2 Extend global brand to further penetrate Europe Land with e-invoicing offering among global multinationals and expand into periodic reporting Grow the mid-market customer segment who have complex needs Focus efforts on deepening region and segment specific customer and partner relationships Exp
Slide 28: E-Invoicing Opportunity
E-Invoicing Opportunity 28 The market is highly fragmented, and our existing global customers’ needs are evolving We have unique access to tax data required to fulfill the mandates With the advent of e-invoicing, no opportunity to correct anymore…Once you send it off, it's in the authorities' hands
Slide 29: Scale the Offering
29 3 Expand end-to-end platform capabilities to address all aspects of the indirect tax workflow Launch tax data management offering Leverage AI to optimize workflows and commercialize new offerings Deliver an exceptional customer experience E2E PLATFORM; DATA MANAGEMENT; AI APPLICATIONS Scale the O
Slide 30: Our AI Strategy is Focused in Four Key Areas
30 Our AI Strategy is Focused in Four Key Areas Internal Transformation Commercial Productivity (e.g., Marketing and Sales AI) General Productivity (e.g., General purpose / Function-specific co-pilots) Commercial Value Intelligent Tax Research (e.g., Accelerating new industry categories) New Offerin
Slide 31: Corporate Development as a Growth Accelerator
Corporate Development as a Growth Accelerator 31 Acquisitions Drive market & offering expansion Partnerships Accelerate go-to-market & cross-sell Investments Unlock innovation & insights
Slide 32: Key Takeaways
Key Takeaways Uniquely positioned as a leader in the must-have indirect tax technology space Unmatched ability to address the complexities of tax providing durable competitive advantage Addressable market of $30 Billion for our products and services, and growing (1) A well-defined strategy to delive
Slide 33: Product Solution Panel
PRODUCT SOLUTION PANEL 33 End-to-End Platform with Unmatched Capabilities Moderated by Jeff Foucher Sal Visca Chief Technology Officer Uwe Sydon SVP Product Management Michael Bernard VP Chief Tax Officer
Slide 34: Break
BREAK 15 MINUTES VERTEX:
Slide 35: Leading Commercial Position
Leading Commercial Position Positioned to Win with Multiple Layers of Growth Chris Jones, Chief Commercial Officer 35
Slide 36: Accomplishments Since IPO: Expanded Markets and Competitive Differentiation
36 Accomplishments Since IPO: Expanded Markets and Competitive Differentiation (1) Vertex only; does not include Systax or ecosio 2020 - 2024 Invested in customer success function Expanded global partner ecosystem Added indirect sales: sell-with / sell-through models Increased sales capacity globall
Slide 37: Differentiated Products and Infrastructure Go-to-Market
37 Differentiated Products and Infrastructure Go-to-Market • Growing business complexity • M&A • Omnichannel • Geographic Expansion Growing tax complexity Home-grown legacy solutions System complexity Customer Challenges Technology Partners Alliance Partners System Integration Partners • Large / Hig
Slide 38: Go-to-Market Model Optimized for Customer Acquisition
38 Go-to-Market Model Optimized for Customer Acquisition and Revenue Growth Field Sales Inside Sales Indirect Sales Strategic Accounts Customer Success Global Professional Services Partner Success Ecosystem Sales Customer Experience Tax & Accounting Firms Technology Partners System Integrators Custo
Slide 39: Global Customer Success Delivering Strong Growth in ARR
39 Global Customer Success Delivering Strong Growth in ARR Upsell & Cross Sell While Enhancing Efficiency Relationships Actions Outcomes $0 $100 $200 $300 $400 Non CS CS 2022 2023 2024 ARR Growth within CS Headcount vs Closed Opportunities Upsell/Cross Sell Revenue per CS Resource 0 50 100 150 200 2
Slide 40: Key Partnerships Fuel Our Sales Funnel
40 Key Partnerships Fuel Our Sales Funnel GTM Initiatives Why They Partner with Vertex Dedicated Indirect Sales Engagement Teams Collaborative consulting approach with battle tested solutions and technical know-how around complex integrations Leverage broad professional services expertise built by t
Slide 41: Broad Base of Referenceable Customers
41 Broad Base of Referenceable Customers Spans Wide Range of Segments, Sectors, Geographies
Slide 42: US Sales and Use Tax
42 US Sales and Use Tax Proven Pipelines for Growth Competitive Advantages • Industry validated solutions • Superior tax content database • Expansive partner ecosystem • Capabilities to handle complex ecosystem integrations • Digital transformation, e-commerce, procurement, subscription billing, and
Slide 43: Value Added Tax
43 Value Added Tax (Europe, LATAM, and AsiaPac) Multiple Critical Channel Partners Competitive Advantages • Global multi-national customer base • End-to-end global solution with integrated e-invoicing functionality • Established partnerships and model Go-to-Market Strategy • Partner-first model - he
Slide 44: E-commerce: Accelerating Relationships with Partners and Platforms
44 E-commerce: Accelerating Relationships with Partners and Platforms *Vertex Estimate Vertex revenue from E-commerce and marketplaces more than doubled in 2024 Significant Market Opportunity • Estimated $600 million TAM Competitive Advantages • Omnichannel approach with wide breadth of solutions •
Slide 45: Multiple Drivers of New Logo Growth
45 Multiple Drivers of New Logo Growth e-Invoicing: European SaaS software company preparing for the upcoming e-invoicing mandate in Germany. Additionally led to full-suite product sales. Winning vs. Competition: Major electric vehicle manufacturer switched from a competitive solution that was not c
Slide 46: Customer Case Studies
= p= Customer Case Studies
Slide 47: Customer Journey Case Study: Diversified Manufacturer
47 Customer Journey Case Study: Diversified Manufacturer ARR Grew >10X Since 2018 $185 $300 $334 $411 $1,112 $1,877 $1,878 2018 2019 2020 2021 2022 2023 2024 ARR by Product Line ($000s) Customer Description / Challenges • Longstanding Vertex Customer – early 00's • Consolidation of ERP systems and o
Slide 48: Customer Journey Case Study: Upscale Grocery Store Chain
48 Customer Journey Case Study: Upscale Grocery Store Chain ARR Grew >20X Since Relationship Inception $32 $42 $62 $435 $480 $663 $704 2018 2019 2020 2021 2022 2023 2024 Customer Description / Challenges • Inception - 2018 • Initial Vertex relationship based on an e-commerce prepared meals pilot pro
Slide 49: Customer Journey Case Study: Consumer Delivery Company
Customer Journey Case Study: Consumer Delivery Company 55% ARR CAGR Since Relationship Inception Customer Description / Challenges • Inception - 2020 • Enhance compliance with global indirect taxes in preparation for IPO • Support massive worldwide transaction growth Vertex Solution / System Connect
Slide 50: Drivers of Future Success
50 Drivers of Future Success Provide customers with unrivaled support and engagement to maintain our industry-leading revenue retention metrics Execute on our leading go-to-market organization and platform Leverage status as partner of choice for our technology, alliance, and SI partners Seize on ou
Slide 51: Customer / Partner Panel
CUSTOMER / PARTNER PANEL 51 Unparalleled Customer Value Proposition Moderated by Chris Jones Dominic Zambrano Senior Director - Tax, Comcast Maria Hevia Alvarez Global Indirect Tax Deputy Leader, EY Jeff Craskey VP Business Development, SAP
Slide 52: Financial Overview & Outlook
52 Financial Overview & Outlook Well -Positioned for Durable Growth John Schwab, CFO
Slide 53: Consistent Long-term Revenue Growth
Last Major Recession $100 $109 $121 $130 $134 $144 $154 $165 $174 $188 $207 $225 $245 $272 $322 $375 $426 $492 $572 $666.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 53 Consistent Long-term Revenue Growth Sustained Revenue Momentum Since Strat
Slide 54: Well-Positioned for Durable Growth
Well-Positioned for Durable Growth 54 Highly Recurring Revenue Model Consistent and Durable Growth at Scale Proven Ability to Drive Earnings Leverage Sustainable Growth Opportunities 85% of revenue derived from long-term subscriptions Mission critical (1), best-in-class offering with 94-96% GRR (1)
Slide 55: Resilient Recurring Revenue
Cloud Subscription Revenue $316 $370 $431 $513 $603 2020 2021 2022 2023 2024 $87 $127 $169 $215 $276 2020 2021 2022 2023 2024 55 Resilient Recurring Revenue Annual Recurring Revenue (ARR) Recurring revenue model with multiple levers for growth 33.5% CAGR 2020 – 2024 17.5% CAGR 2020 – 2024 Cloud reve
Slide 56: Reaping the Rewards of Prudent Investments for Growth
56 (1) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures; for a reconciliation non-GAAP measures to the nearest GAAP equivalent, see the Appendix Reaping the Rewards of Prudent Investments for Growth Increasing Earnings Leverage Prudent Investments in Growth and Innovation A
Slide 57: Increasing Free Cash Flow Generation
$49.6 $46.9 $3.4 $6.1 63.3% $77.7 60.2% 4.3% 6.1% 51.2% -7.00% 3.0 0% 13. 00% 23. 00% 33. 00% 43. 00% 53. 00% 63. 00% $0. 00 $10 .00 $20 .00 $30 .00 $40 .00 $50 .00 $60 .00 $70 .00 $80 .00 2020 2021 2022 2023 2024 57 Increasing Free Cash Flow Generation Increasing FCF Accelerating Financial Momentum
Slide 58: Consistency of New ARR Fuels Our Growth Algorithm
49% 50% 50% 49% 49% 50% 27% 25% 25% 27% 27% 26% 24% 25% 25% 24% 24% 24% 2020 2021 2022 2023 2024 Average Cross-sell Price Entitlements 67% 71% 70% 78% 72% 72% 33% 29% 30% 22% 28% 28% 2020 2021 2022 2023 2024 Average Existing Customer New Logo 58 Consistency of New ARR Fuels Our Growth Algorithm Reli
Slide 59: Selectively Targeting Accretive, Bolt-on M&A
Selectively Targeting Accretive, Bolt-on M&A Acquisition Criteria 59 Complement and accelerate organic growth Provide complementary products and services Expand new market opportunities Accretive over short run with IRR > WACC M&A growth is supplemental to current long-term projections • e-Invoicing
Slide 60: Investment at a Glance
Investment at a Glance ($M) 60 2024 2025 2026 Total Investment ecosio AEBITDA loss and R&D Investment Upfront Purchase Price Maximum Earn Out Total Acquisition Price Total ecosio Investment ~$31.5 $65 $130 $195 $226.5 $4.5(A) $18(E) $9(E)
Slide 61: Investing in Growth through R&D
61 Investing in Growth through R&D NOTE: Research and Development Expense is presented on a non-GAAP basis; for a reconciliation to GAAP, see the Appendix Continuing to Enhance the Platform through Innovation 17.7% 17.1% 17.1% 17.6% 18.5% Expect to Remain in Similar Range Percent of Revenue Annual R
Slide 62: 2025 Financial Outlook
62 2025 Financial Outlook 1Q25 2025 Total Revenue $175M to $178M $760M to $768M Cloud Revenue N/A Growth of 28% Adjusted EBITDA $33M to $36M $161M to $165M
Slide 63: Accelerating Financial Momentum: 2028 Targets
63 Accelerating Financial Momentum: 2028 Targets(*) *Excludes future M&A activity 63 Prior Long-Term Target 2028 Target Growth Drivers E-Invoicing solution contributing 7%-10% of revenue by 2028 Other new products including Smart Categorization and Data Management Additional penetration of complex m
Slide 64: Disciplined Capital Allocation Framework
Disciplined Capital Allocation Framework Strategically Focused on Indirect Tax Lifecycle Capital Allocation Priorities 64 e-Invoicing Additional country coverage ecosio integration Other Organic Investments R&D/New Product Development Tax Content Enhancements Go-to-Market Targeted M&A Opportunistic
Slide 65: Key Takeaways
65 Key Takeaways 2028 growth targets demonstrate clear path to consistent growth Highly attractive recurring revenue model, sticky customer relationships Durable growth algorithm delivering mid -high teen revenue growth Proven earnings leverage from disciplined investment cycle Disciplined capital a
Slide 66: Q&A
Q&A VERTE™
Slide 67: Thank You
THANK YOU VERTE
Slide 68: Appendix
68 Appendix
Slide 69: Adjusted EBITDA and Adjusted EBITDA margin Reconciliation
Adjusted EBITDA and Adjusted EBITDA margin Reconciliation (1) (1) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. The above table reconciles these non-GAAP financial measures to the most directly comparable GAAP financial measures. Refer to Form 10-K for the twelve months
Slide 70: Free Cash Flow and Free Cash Flow Conversion Reconciliation
Free Cash Flow and Free Cash Flow Conversion Reconciliation (1) ($ in Thousands) Free Cash Flow: 2020 2021 2022 2023 2024 Cash provided by operating activities 59,543 90,289 63,848 74,332 164,821 Redemption of Converted SARs 22,889 - - - - Property and equipment additions (20,955) (31,706) (45,532)
Slide 71: Research & Development Expense Reconciliation
Research & Development Expense Reconciliation (1) ($ in Thousands) Non-GAAP Research and Development Expense: 2020 2021 2022 2023 2024 Research and development expense 54,340 44,018 41,877 58,212 66,666 Stock-based compensation expense (14,694) (2,620) (1,798) (5,994) (9,548) Transaction costs - - -