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Vertex, Inc. serves large and midsize businesses that must apply different tax rules across sales, purchases and locations. Its flagship O Series software uses a proprietary tax-rule database to determine which taxes apply and calculate the amount due for each transaction. Its broader software also prepares tax returns and handles electronic invoices, including submission for government validation where that is required for an invoice to be legally valid.
Customers pay for cloud-hosted or on-premise software subscriptions, including monthly tax-content updates. These subscriptions provide most of Vertex’s revenue; implementation, support and managed tax-filing and payment services provide a smaller share. Pricing principally reflects the customer’s revenue base, so business expansion and greater use can increase spending. Vertex sells directly and through partners, including service providers that use its technology for their own customers. Most revenue comes from U.S.-based customers.
Most revenue and growth come from existing customers, making renewals, wider usage and additional product purchases central to the business. Vertex must keep its tax content accurate and current and its software working with customers’ business systems. Integrations with SAP and Oracle are important relationships, and the company depends on software partners to maintain compatibility and reach customers.
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Thomson Reuters competes with Vertex for enterprise spending on software that calculates indirect taxes and handles tax reporting and compliance: its ONESOURCE software addresses those same tasks.
Workiva and Vertex both draw on large companies’ spending to automate compliance, but Workiva sells financial reporting and governance software while Vertex sells tax calculation and filing software. Workiva’s subscription and support revenue is worth watching for signs of spending on reporting automation among large corporate customers.
BlackLine and Vertex both sell to large and midmarket businesses modernizing finance operations: BlackLine automates closing the books and collecting customer payments, while Vertex automates indirect-tax compliance. Demand for BlackLine’s financial-close and receivables software offers a view of those customers’ appetite for finance automation.
SAP’s customers modernizing their transaction and finance systems also create opportunities for Vertex’s integrated tax-compliance software. SAP sells the systems businesses use to manage transactions and finances; Vertex connects to those systems to handle tax compliance.
SAP SE earningsSAP
SAP's report will show whether businesses are still modernizing the systems Vertex connects to when it automates their tax compliance.
Look for signs of demand and growth in SAP's business systems. Stronger demand for those systems would create more openings for Vertex to connect its tax-compliance software, but would not mean Vertex wins the business. Weaker demand would make this source of opportunity less supportive, not prove that Vertex's own sales have fallen.
Thomson Reuters Corporation earningsTRI
Thomson Reuters' report offers a read on demand and competition in indirect-tax software, where Vertex is competing for the same enterprise budgets.
If Thomson Reuters reports stronger demand or revenue for ONESOURCE, companies are still paying for indirect-tax calculation and filing software, but Vertex is facing active competition for that spending. If the signal weakens, demand may be soft or Thomson Reuters may be losing momentum; it does not establish that Vertex has won customers.
Vertex, Inc. earningsThis company
Vertex earns most of its revenue from software subscriptions, and this report will show whether existing customers keep expanding their purchases as cloud growth affects gross margin.
Read software subscription growth alongside net revenue retention, which shows whether revenue from existing customers has grown or shrunk and can reflect added products, usage and pricing. If subscriptions grow while retention stabilizes or improves, and gross margin holds, existing-customer expansion is supporting growth without cloud costs clearly eroding profitability. If revenue grows while retention weakens and gross margin falls, the growth base is narrowing as cloud expansion adds cost pressure.
Workiva Inc. earningsWK
Workiva's report will show whether large companies keep paying for compliance and reporting automation, a useful read on spending by the businesses Vertex also serves.
Watch Workiva's subscription and support revenue growth alongside its comments on demand. Strength on both would show that large companies are still paying for compliance and reporting automation, a supportive sign for the business-spending environment Vertex serves. Weakness would offer less support, but Workiva sells reporting and governance software, not Vertex's tax software, so it does not directly establish a change in Vertex sales.
