Revenue growth has decelerated to 11.1% in 2026Q1, while gross margins have compressed to 59.4% due to the rising costs of maintaining complex tax databases.
| Sales/Revenue | 768.03M | 748.44M | 666.78M | 572.39M | 491.62M | 425.55M | 374.67M | 321.5M | 272.4M |
| Revenue Growth % | 11.79% | 12.25% | 16.49% | 16.43% | 15.53% | 13.58% | 16.54% | 18.02% | - |
| Cost of Goods Sold | 289.52M | 293.93M | 240.65M | 223.81M | 193.13M | 161.89M | 165.39M | 110.38M | 95.7M |
| COGS % of Revenue | - | 39.27% | 36.09% | 39.1% | 39.28% | 38.04% | 44.14% | 34.33% | 35.13% |
| Gross Profit | 478.51M | 454.51M | 426.13M | 348.58M | 298.49M | 263.66M | 209.28M | 211.12M | 176.71M |
| Gross Margin % | 62.3% | 60.73% | 63.91% | 60.9% | 60.72% | 61.96% | 55.86% | 65.67% | 64.87% |
| Gross Profit Growth % | - | 6.66% | 22.25% | 16.78% | 13.21% | 25.98% | -0.87% | 19.48% | - |
| Operating Expenses | 479.37M | 462.36M | 428.35M | 366.09M | 306.57M | 266.6M | 314.04M | 179.27M | 146.85M |
| OpEx % of Revenue | - | 61.78% | 64.24% | 63.96% | 62.36% | 62.65% | 83.82% | 55.76% | 53.91% |
| Selling, General & Admin | 382.92M | 368.35M | 323.41M | 286.17M | 246.99M | 206.01M | 248.47M | 139.14M | 115.84M |
| SG&A % of Revenue | - | 49.22% | 48.5% | 50% | 50.24% | 48.41% | 66.32% | 43.28% | 42.53% |
| Research & Development | 105.17M | 83.72M | 66.67M | 58.21M | 41.88M | 44.02M | 54.34M | 30.56M | 23.75M |
| R&D % of Revenue | - | 11.19% | 10% | 10.17% | 8.52% | 10.34% | 14.5% | 9.5% | 8.72% |
| Other Operating Expenses | 0 | 10.29M | 38.28M | 21.7M | 17.71M | 16.57M | 11.22M | 9.57M | 7.25M |
| Operating Income | -857K | -7.85M | -2.23M | -17.51M | -8.08M | -2.94M | -104.76M | 31.86M | -2.83M |
| Operating Margin % | -0.11% | -1.05% | -0.33% | -3.06% | -1.64% | -0.69% | -27.96% | 9.91% | -1.04% |
| Operating Income Growth % | - | -252.15% | 87.28% | -116.65% | -174.71% | 97.19% | -428.86% | 1224.43% | - |
| EBITDA | 79.51M | 89.08M | 84.51M | 56.95M | 53.07M | 41.84M | -72.54M | 57.05M | 22.07M |
| EBITDA Margin % | 10.35% | 11.9% | 12.67% | 9.95% | 10.79% | 9.83% | -19.36% | 17.74% | 8.1% |
| EBITDA Growth % | 4.64% | 5.41% | 48.39% | 7.31% | 26.84% | 157.68% | -227.17% | 158.5% | - |
| D&A (Non-Cash Add-back) | 80.37M | 96.93M | 86.74M | 74.46M | 61.15M | 44.78M | 32.22M | 25.19M | 24.9M |
| EBIT | -326K | 7.58M | 15.27M | -17.51M | -8.08M | -2.94M | -104.76M | 31.86M | -2.83M |
| Net Interest Income | 4.67M | 5.25M | 4.14M | -4.16M | -2.05M | -984K | -3.11M | -953K | -1.59M |
| Interest Income | 4.67M | 5.25M | 4.14M | 0 | 0 | 0 | 0 | 1.08M | 526K |
| Interest Expense | 0 | 0 | 0 | 4.16M | 2.05M | 984K | 3.11M | 2.04M | 2.12M |
| Other Income/Expense | -7.24M | 15.43M | 4.14M | -4.16M | -2.05M | -984K | -3.11M | -953K | -34.41M |
| Pretax Income | -8.1M | 7.58M | 1.91M | -21.67M | -10.13M | -3.93M | -107.87M | 30.9M | -4.43M |
| Pretax Margin % | -1.05% | 1.01% | 0.29% | -3.79% | -2.06% | -0.92% | -28.79% | 9.61% | -1.63% |
| Income Tax | -1.67M | 368K | 54.64M | -8.58M | 2.17M | -2.45M | -32.79M | -155K | 1.68M |
| Effective Tax Rate % | 20.58% | 4.86% | 2862.13% | 39.59% | -21.46% | 62.33% | 30.4% | -0.5% | -37.93% |
| Net Income | -6.43M | 7.21M | -52.73M | -13.09M | -12.3M | -1.48M | -75.08M | 31.06M | -6.11M |
| Net Margin % | -0.84% | 0.96% | -7.91% | -2.29% | -2.5% | -0.35% | -20.04% | 9.66% | -2.24% |
| Net Income Growth % | 85.48% | 113.68% | -302.73% | -6.41% | -731.91% | 98.03% | -341.75% | 608.63% | - |
| Net Income (Continuing) | -6.43M | 7.21M | -52.73M | -13.09M | -12.3M | -1.48M | -75.08M | 31.06M | -6.11M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.04 | 0.04 | -0.34 | -0.09 | -0.08 | -0.01 | -0.60 | 0.21 | -0.05 |
| EPS Growth % | 87.36% | 111.76% | -277.78% | -12.5% | -700% | 98.33% | -385.71% | 545.86% | - |
| EPS (Basic) | - | 0.05 | -0.34 | -0.09 | -0.08 | -0.01 | -0.60 | 0.21 | -0.05 |
| Diluted Shares Outstanding | 175.07M | 180.28M | 155.09M | 151.86M | 149.65M | 147.78M | 131.51M | 146.17M | 129.63M |
| Basic Shares Outstanding | 175.07M | 144.22M | 155.09M | 151.86M | 149.65M | 147.78M | 131.51M | 146.17M | 124.33M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | 91.98% | - |
Cloud transition execution risk
As reported in recent financial filings, Vertex's year-over-year revenue growth has decelerated from 18.1% in 2023Q4 to 11.1% by 2026Q1, suggesting that the transition toward a ratable SaaS model is creating a temporary drag on top-line expansion as legacy perpetual license revenue streams continue to fade.
The consistent decline in growth rates indicates that the company is struggling to offset the loss of upfront license recognition with new subscription billings. Investors should monitor whether this trend represents a permanent shift toward a lower-growth maturity phase or if it is merely a transitional friction point during the cloud migration.
Based on the company's income statement data, gross margins have contracted from a peak of 65.7% in 2025Q2 to 59.4% in 2026Q1, reflecting the rising costs associated with maintaining a complex, multi-jurisdictional tax database and the integration requirements of enterprise-grade software deployments.
The inability to maintain gross margins above 60% suggests that the company's service-heavy implementation model may be acting as a structural anchor on profitability. This trend warrants further investigation into whether the company can achieve greater economies of scale as its cloud-native platform matures and requires less bespoke configuration.
According to the provided quarterly data, Vertex has failed to demonstrate consistent operating leverage, with operating income swinging to a loss of $3.0 million in 2026Q1 as SG&A expenses continue to outpace the growth in gross profit, indicating a lack of scalability in the current cost structure.
The persistent volatility in operating margins suggests that management is prioritizing aggressive market capture over immediate bottom-line efficiency. The high level of SG&A spending relative to revenue implies that the company is currently unable to decouple its operational growth from its top-line expansion, which may concern investors seeking a path to sustained profitability.
As evidenced by the income statement, the company's net income is frequently impacted by significant stock-based compensation charges, which reached $21.0 million in 2025Q1, highlighting a disconnect between GAAP profitability and the underlying cash-generating capability of the core software business.
The reliance on equity-based incentives appears to be a significant factor in the company's inconsistent bottom-line performance, often masking the true operational costs of talent retention. Analysts should scrutinize these non-cash charges to determine if the company can achieve GAAP-positive results without relying on the dilution of existing shareholders.
Based on reported figures, the company's inability to maintain consistent profitability despite a 11.1% revenue growth rate in 2026Q1 suggests that short-sellers may focus on the risk of margin compression as ERP providers increasingly integrate native tax compliance features into their own core software offerings.
The competitive threat from major ERP vendors could potentially commoditize the tax engine market, forcing Vertex to lower prices or increase R&D spend to maintain its differentiation. This scenario would likely exacerbate the current margin pressure and challenge the long-term viability of the company's premium pricing strategy.
Quick answers to the most common questions about buying VERX stock.
For fiscal year 2025, Vertex, Inc. (VERX) reported total revenue of $748.4M. This represents a 174.8% increase compared to $272.4M in 2018.
Vertex, Inc. (VERX) is profitable, generating $7.2M in net income for the fiscal year ending 2025 with a net profit margin of 1.0%.
Vertex, Inc. (VERX) reported an operating income of $-7.8M, resulting in an operating profit margin of -1.0%. This margin reflects the operational efficiency of the business before interest and taxes.
Vertex, Inc. (VERX) generated $454.5M in gross profit for the year, representing a gross profit margin of 60.7%. This demonstrates the company's core pricing power and production efficiency.