One-glance verdict
Undervalued
$52.04 our estimate vs market $12.26
Wall Street consensus: $17.15 (-67.0% lower than our fair-value estimate)
76% below our estimate, below the bear case
Fundamentals snapshot
Vertex, Inc.
VERX · NGM · Technology · Software - Application
Current price
$12.26
52-week range
$10.21 - $26.54
Market cap
$1.99B
Balance sheet
Distressed
-3.52x Concerning
Net debt $119.43M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 5.2% last year.
- Reward Returns 1.5% on equity, ahead of 20% of its peers.
- Reward Free cash flow was positive in 7/10 years.
- Risk Stock trades 22.8% above its 5-year average P/E.
What this company does
Vertex, Inc.
Vertex provides software to big companies that automatically calculates and manages complex taxes, such as the sales tax on items they sell. Most of its money comes from recurring revenue (predictable income from customers who pay a regular subscription fee), which can make its business more stable. Because tax rules are complicated and differ from place to place, many large businesses rely on Vertex's service to avoid making costly mistakes with the government.
How the company got here
Founded in 1978 by Ray Westphal, Vertex began with a focus on helping businesses deal with increasingly complex sales tax rules. For decades, it operated as a private, family-controlled company, building a reputation for providing reliable tax software to large corporations. A key turning point came in 2020 when the company went public on the Nasdaq stock exchange, which provided funds to expand its technology and global reach. More recently, Vertex has been acquiring smaller tech companies to strengthen its capabilities in areas like e-invoicing and to expand into international markets like Europe and Latin America.
What it actually does
Imagine a large online store that sells products to customers in every state. Each state, county, and city can have its own sales tax rate, and these rates are constantly changing. Vertex provides software that automatically calculates the correct tax for every single transaction in real-time. It's like a super-smart calculator that connects to a company's checkout or accounting system to handle all the complex tax rules. This helps businesses stay compliant with tax laws, prepare tax returns, and manage documents, saving them from having to figure it all out themselves.
Cloud Subscriptions
This is the company's largest and fastest-growing business, making up nearly half of its revenue. Instead of installing software on their own computers, customers pay a recurring fee to access Vertex's tax solutions online through the cloud (similar to a Netflix subscription). This segment is growing quickly because many businesses prefer the flexibility and scalability of cloud-based software. Customers in this segment range from large enterprises to mid-sized companies that need reliable, real-time tax calculations for their e-commerce and other business systems.
Software Licenses
This is the more traditional way Vertex has made money, and it still accounts for a significant portion of sales, at just under 40%. In this model, a company pays for a license to install and run Vertex's tax software on its own computer servers (often called on-premise software). While many new customers are choosing the cloud, large enterprises with complex, established accounting systems often continue to use this model. Revenue here comes from the initial license sale and ongoing maintenance fees.
Services
This part of the business, representing a smaller slice of total revenue, provides expert help to customers. This includes implementation services (helping companies set up and integrate the software), training, and consulting. For example, a company might hire Vertex's team to help migrate its data or configure the software to work with its specific industry needs. This segment ensures customers can effectively use the company's powerful software tools.
What management is betting on now
Vertex is heavily focused on expanding its cloud-based subscription offerings, seeing this as the primary way businesses will want to use its software in the future. The company is also pushing into international markets, especially in Europe and Latin America, where tax rules and e-invoicing (the process of sending and receiving invoices electronically) are becoming more complex. Finally, Vertex is investing in Artificial Intelligence (AI) to make its tax compliance software smarter and more automated, helping businesses identify risks and improve accuracy with less manual effort.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-24.28M
FY2024 Q4
$41.13M
FY2026 Q1
$16.01M
FY2026 Q2
$30.90M
Revenue
$203.97M
Net income
$9.04M
Diluted EPS
—
Operating cash flow
$30.90M
Free cash flow
$30.90M
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Sources
Revenue
$196.65M
Net income
$-2.51M
Diluted EPS
—
Operating cash flow
$37.98M
Free cash flow
$16.01M
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Sources
Revenue
$194.71M
Net income
$-7.00M
Diluted EPS
—
Operating cash flow
$42.27M
Free cash flow
—
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Sources
Revenue
$192.11M
Net income
$4.04M
Diluted EPS
—
Operating cash flow
$62.47M
Free cash flow
—
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Sources
Revenue
$184.56M
Net income
$-961.00K
Diluted EPS
—
Operating cash flow
$46.00M
Free cash flow
—
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Sources
Revenue
$177.06M
Net income
$11.13M
Diluted EPS
—
Operating cash flow
$14.80M
Free cash flow
—
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Sources
Revenue
$178.46M
Net income
$-67.80M
Diluted EPS
—
Operating cash flow
$41.13M
Free cash flow
$41.13M
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Sources
Revenue
$170.44M
Net income
$7.22M
Diluted EPS
—
Operating cash flow
$41.40M
Free cash flow
$-24.28M
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Sources
Is it cheap or expensive?
Fair value $52.04 vs current price $12.26
Wall Street consensus is the average analyst price target: $17.15 (-67.0% lower than our fair-value estimate).
Our most-likely fair value is $52.04 a share — about 324.5% above today's price of $12.26, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $119.4M. Interest coverage -3.5x.
Net debt
$119.43M
Interest coverage
-3.52x
Vertex, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
VERX
BASELINE
Vertex, Inc.
Total debt $349.92M Interest coverage -3.52x This is the baseline the peer rows are being compared against.
Total debt $3.20B Interest coverage 10.87x This peer still has a real interest-payment cushion, while VERX does not.
Total debt $690.74M Interest coverage 3.96x This peer still has a real interest-payment cushion, while VERX does not.
Total debt $792.68M Interest coverage -3.32x Neither company has much profit cushion over interest right now.
Total debt $8.42B Interest coverage 24.13x This peer still has a real interest-payment cushion, while VERX does not.
Total debt $1.90B Interest coverage 0.90x This peer still has a real interest-payment cushion, while VERX does not.
What you should know
The case for and against VERX
3 Rewards
1 Risk
Rewards
-
Revenue grew 5.2% last year.
-
Returns 1.5% on equity, ahead of 20% of its peers.
-
Free cash flow was positive in 7/10 years.
Risks
-
Stock trades 22.8% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
613.00x
Forward P/E
11.99x
P/B
8.02x
P/S
2.53x
EV/EBITDA
108.83x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
64.0%
Operating margin
3.4%
Net margin
0.5%
ROE
1.5%
ROA
0.6%
Health
Liquidity and balance-sheet strength
Debt / equity
1.45x
Current ratio
0.87x
Quick ratio
0.68x
Total debt
$349.92M
Total cash
$230.49M
Growth
How the business has been compounding
Revenue TTM
$787.44M
Revenue 5Y CAGR
15.2%
EPS TTM
0.02
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$173.61M
Free CF TTM
$93.79M
FCF margin
11.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—