Free cash flow margins have experienced significant volatility, dropping to 6.8% in 2026Q1 from a peak of 19.3% in 2024Q2, while capital intensity remains elevated at 15.4% of revenue.
| Cash from Operations | 193.04M | 165.54M | 164.82M | 74.33M | 63.85M | 90.29M | 59.54M | 92.5M | 80.45M |
| Operating CF Margin % | - | 22.12% | 24.72% | 12.99% | 12.99% | 21.22% | 15.89% | 28.77% | 29.53% |
| Operating CF Growth % | 219.73% | 0.44% | 121.74% | 16.42% | -29.28% | 51.64% | -35.63% | 14.98% | - |
| Net Income | -6.43M | 7.21M | -52.73M | -13.09M | -12.3M | -1.48M | -75.08M | 31.06M | -6.11M |
| Depreciation & Amortization | 103.27M | 96.93M | 86.74M | 74.46M | 61.15M | 44.78M | 32.22M | 25.19M | 24.9M |
| Stock-Based Compensation | 36.72M | 57.76M | 47.42M | 33.92M | 19.73M | 26.16M | 147.9M | 9.46M | 5.11M |
| Deferred Taxes | -290K | -5.39M | 51.07M | -11.57M | -1.34M | -3.12M | -33.5M | -848K | 847K |
| Other Non-Cash Items | 20.89M | -8.76M | 20.51M | 10.27M | 7.83M | 5.01M | -20.76M | 1.54M | 33.25M |
| Working Capital Changes | 38.87M | 17.79M | 11.81M | -19.65M | -11.21M | 18.93M | 8.77M | 26.1M | 22.45M |
| Change in Receivables | -1.26M | -12.88M | -22.08M | -45.22M | -25.66M | 2.96M | -6.76M | -10.12M | -16.96M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2.09M |
| Change in Payables | 10.54M | 1.23M | 11.62M | 9.24M | 1.37M | 3.85M | -1.84M | 3.87M | 3.4M |
| Cash from Investing | -158.18M | -123.75M | -158.15M | -66.17M | -72.05M | -294.78M | -44.38M | -37.56M | -33.31M |
| Capital Expenditures | -105.16M | -96.24M | -65.77M | -49.26M | -45.53M | -31.71M | -20.95M | -20.34M | -33.31M |
| CapEx % of Revenue | 13.69% | 12.86% | 9.86% | 8.61% | 9.26% | 7.45% | 5.59% | 6.33% | 12.23% |
| Acquisitions | -21.97M | 0 | -71.75M | 0 | -474K | -251.41M | -11.57M | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - |
| Other Investing | -31.06M | -36.72M | -21.34M | -18.97M | -14.89M | -11.66M | -11.85M | -17.22M | -12.26M |
| Cash from Financing | -69.78M | -32.78M | 231.26M | -26.48M | 17.09M | -9.1M | 213.63M | -30.63M | -30.7M |
| Debt Issued (Net) | -7.6M | -4.4M | 294.13M | -2.29M | 47.71M | -964K | -51.25M | -5.57M | -3.28M |
| Equity Issued (Net) | -21.04M | 1.85M | 11.46M | 0 | 0 | 0 | 423.02M | -841K | -1.28M |
| Dividends Paid | 0 | 0 | 0 | 0 | -536K | -2.7M | -146.12M | -28.57M | -28.02M |
| Share Repurchases | -30.14M | -10.09M | 0 | 0 | 0 | 0 | 0 | -841K | -1.28M |
| Other Financing | -41.14M | -30.23M | -74.33M | -24.19M | -30.08M | -5.43M | -12.03M | 4.34M | 1.89M |
| Net Change in Cash | -75.51M | 12.23M | 236.91M | -17.6M | 8.54M | -214.07M | 228.78M | 24.32M | 16.04M |
| Free Cash Flow | 99.19M | 69.31M | 99.05M | 6.1M | 3.43M | 46.92M | 26.74M | 54.94M | 47.13M |
| FCF Margin % | 12.92% | 9.26% | 14.86% | 1.07% | 0.7% | 11.03% | 7.14% | 17.09% | 17.3% |
| FCF Growth % | 79.85% | -30.03% | 1524.07% | 77.92% | -92.69% | 75.49% | -51.33% | 16.55% | - |
| FCF per Share | 0.57 | 0.38 | 0.64 | 0.04 | 0.02 | 0.32 | 0.20 | 0.38 | 0.36 |
| FCF Conversion (FCF/Net Income) | -15.43x | 22.96x | -3.13x | -5.68x | -5.19x | -61.05x | -0.79x | 2.98x | -13.18x |
| Interest Paid | 0 | 0 | 3.29M | 3.73M | 2.22M | 223K | 2.46M | 0 | 0 |
| Taxes Paid | 0 | 0 | 8.59M | 5.65M | 3.06M | 1.29M | 588K | 0 | 0 |
Cloud transition execution risk
As reported in financial statements, Vertex exhibits a significant divergence between GAAP net income and operating cash flow, with the OCF/NI ratio reaching a volatile -15.13 in 2026Q1, suggesting that reported earnings are currently failing to capture the underlying cash-generating dynamics of the enterprise software business.
The persistent gap between net income and operating cash flow indicates that non-cash charges and working capital fluctuations are heavily distorting the company's profitability profile. Investors should monitor whether this disconnect is a temporary byproduct of the cloud transition or a structural issue regarding the cash-conversion efficiency of the current business model.
Based on Vertex's reported figures, free cash flow margins have fluctuated significantly, dropping to 6.8% in 2026Q1 from a peak of 19.3% in 2024Q2, which highlights the difficulty in maintaining consistent cash generation while simultaneously funding the ongoing shift toward a cloud-native subscription revenue model.
The erratic nature of FCF margins suggests that the company's cash flow trajectory is highly sensitive to the timing of large enterprise implementations and associated professional services revenue. This volatility may indicate that the business has not yet achieved the scale required to decouple cash generation from the high-touch, capital-intensive nature of its current service-heavy operations.
According to recent SEC filings, Vertex's capital intensity has trended upward, with CapEx as a percentage of revenue reaching 15.4% in 2026Q1, reflecting the substantial investment required to maintain and modernize the proprietary tax logic database that serves as the company's primary competitive moat.
The rising CapEx burden suggests that the company is in a heavy investment phase, likely prioritizing the development of cloud-native infrastructure over immediate cash flow maximization. This level of capital intensity warrants further investigation to determine if these expenditures are truly growth-oriented or merely maintenance costs required to keep legacy systems functional.
As evidenced by quarterly data, working capital changes have been inconsistent, swinging from a $26.7 million outflow in 2025Q1 to a $13.4 million inflow in 2025Q4, which suggests that the company's ability to manage collections and payables is currently tied to the uneven timing of enterprise contract renewals.
The lack of a stable working capital cycle implies that the company's cash flow is susceptible to the payment behaviors of its large-scale enterprise clients. Investors should monitor whether the shift to SaaS subscriptions will eventually smooth out these fluctuations or if the complexity of enterprise tax compliance will continue to drive unpredictable cash cycles.
Based on the provided financial data, Vertex has utilized cash for share repurchases, including $20.0 million in 2026Q1, even while operating cash flow remains volatile and net income is negative, suggesting a management preference for returning capital to shareholders despite the ongoing costs of the cloud transition.
The decision to prioritize share repurchases during a period of negative GAAP earnings and fluctuating cash flow may indicate management's confidence in the long-term stability of the business. However, this strategy warrants further investigation to ensure that such capital deployment does not come at the expense of necessary R&D investments required to defend against emerging competitive threats.
Quick answers to the most common questions about buying VERX stock.
Vertex, Inc. (VERX) generated $165.5M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Vertex, Inc. (VERX) generated $69.3M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Vertex, Inc. (VERX) spent $96.2M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Vertex, Inc. (VERX) spent $10.1M on share repurchases. This shows the company's commitment to returning capital to its equity investors.