Vertex (NASDAQ:VERX) executives used the company’s fourth-quarter earnings call to outline a plan to reaccelerate growth after what management described as a year of slower entitlement expansion, softer upsell activity, and higher attrition concentrated among smaller customers. The company reported fourth-quarter revenue of $194.7 million, up 9.1% year-over-year and in line with guidance, while adjusted EBITDA of $42.5 million exceeded the high end of the company’s outlook.
Quarterly results and full-year performance
CFO John Schwab said full-year 2025 revenue was $748.4 million, up 12.2% from 2024, including subscription revenue of $639.7 million, up 12.8%. Fourth-quarter subscription revenue rose 8.9% to $166.2 million, while services revenue grew 10.2% to $28.5 million.
Cloud revenue in the fourth quarter was $94.6 million, up 23% from the prior year period. Schwab noted the quarterly cloud growth rate was affected by lapping the Ecosio acquisition and the reduced inorganic contribution. For the full year, cloud revenue was $352.9 million, up 27.9% and generally in line with the company’s 28% growth guidance.
Retention metrics and attrition drivers
Schwab reported annual recurring revenue (ARR) of $671 million at quarter end, up 11.3% year-over-year. Net revenue retention (NRR) ended the year at 105%, and gross revenue retention (GRR) was 94%, which the company said was within its targeted range of 94% to 96%. Average annual revenue per customer was $137,867, up 12.4%.
President and CEO Chris Young, on his first earnings call in the role, said 2025 results reflected lower entitlement growth, a moderation of new upsell and cross-sell revenue, and slightly higher customer attrition. Young said the largest driver of attrition was business and market factors such as M&A and bankruptcy, which he characterized as “largely uncontrollable.” He added that attrition was concentrated in smaller accounts, with the average annual revenue per customer for lost accounts under $50,000 compared with an overall average of about $138,000.
Young also said competitive losses were a “modest component” of attrition and that the company continues to win more ARR from competitors than it loses. In response, Vertex is expanding customer success coverage and using analytics to predict churn risk, including executive outreach to at-risk customers. The company is also positioning its product AI Copilot to help customers answer questions without contacting support.
AI initiatives and product velocity focus
Young said he joined Vertex in part because he sees an opportunity to help tax departments transform workflows using artificial intelligence, describing indirect tax compliance as rule-dense, data-heavy, and repetitive. He also highlighted Vertex’s revenue-based pricing model as a factor he believes reduces concerns around seat-based licensing dynamics.
In 2025, the company invested in AI products including Smart Categorization, which Young said reduces manual work by helping tax departments map product SKUs to correct tax rates across jurisdictions. He said early adoption produced several six-figure wins in retail and that Vertex plans to broaden Smart Categorization functionality across its retail base and expand to other industries.
Young said the company expanded Vertex Copilot capabilities in 2025 and continues to leverage its partnership with Kintsugi. He highlighted a December partnership among Kintsugi, Vertex, and CPA.com to launch an AI-driven solution aimed at helping accounting firms deliver automated sales tax compliance for their clients.
During Q&A, Young said he has not seen AI budgets explicitly crowding out spending on Vertex products, and described customer AI mandates as “all over the map.” He said customers generally remain open to AI investments if value can be demonstrated, and he is pressing internally to accelerate product delivery timelines.
Customer wins and e-invoicing traction
Young highlighted multiple wins in the fourth quarter across the installed base and new logos. Examples included:
- A metals and mining customer that standardized on Vertex during an SAP S/4HANA transformation, expanding into a mid-six-figure relationship including tax calculation and multiple Vertex offerings.
- A global quick-service food and beverage retailer that moved in-store point-of-sale tax calculation from a homegrown solution to Vertex, generating high six figures of new revenue.
- A computer products manufacturer in the Oracle ecosystem that added sales tax calculation after a prior use tax selection, resulting in six figures of new annual revenue.
- A major European healthcare provider landed as one of Vertex’s largest new logos in Europe, with revenue “well into the seven figures,” including VAT calculation and end-to-end VAT compliance for returns in 30 countries.
- A North American power utility selecting Vertex as its first indirect tax provider in a mid-six-figure deal tied to an SAP S/4HANA transformation.
Young also discussed momentum in e-invoicing, citing demand around mandates, particularly Belgium’s January launch. He said Vertex’s end-to-end platform combines e-invoicing with VAT calculation and compliance. He described fourth-quarter e-invoicing wins with existing customers across multiple European mandates and said those cross-sells increased ARR with those customers by an average of over 20%.
During Q&A, management said Vertex is now in 39 countries for e-invoicing coverage and expects to be ready for upcoming mandates such as France and Germany, building on the Ecosio team’s execution.
Profitability, cash flow, and 2026 guidance
On a non-GAAP basis, Schwab reported fourth-quarter gross margin of 75.7%, up from 75% a year earlier. Adjusted EBITDA rose 11.6% year-over-year to $42.5 million, and full-year adjusted EBITDA was $161.5 million, representing a 21.6% margin. Free cash flow was $10.1 million in the quarter and $47.6 million for the year; Schwab said fourth-quarter collections were lower than typical, but the first week of January produced approximately $7 million of cash collections above prior-year patterns.
The company repurchased about $10 million of shares in the fourth quarter at an average price of $20 per share, and Schwab said approximately $140 million remained under authorization. Vertex ended the quarter with more than $314 million of unrestricted cash and cash equivalents and $300 million of unused availability under its line of credit.
For 2026, Vertex guided to revenue of $823.5 million to $831.5 million, cloud revenue growth of 25%, and adjusted EBITDA of $188 million to $192 million, implying a 23% margin at the midpoint. For the first quarter of 2026, the company expects revenue of $193.5 million to $196.5 million and adjusted EBITDA of $40.5 million to $43.5 million.
About Vertex (NASDAQ:VERX)
Vertex Energy, Inc (NASDAQ: VERX) is a specialty refiner and marketer of transportation fuels and petrochemical feedstocks in the United States. The company collects and processes a variety of waste petroleum products, including used motor oil and industrial lubricants, which it converts into ultra-low-sulfur diesel, asphalt, and other refined products. By leveraging proprietary re-refining technologies and strategic feedstock sourcing, Vertex Energy aims to deliver cost-effective, lower-carbon fuel solutions to wholesale and retail customers across the country.
Headquartered in Houston, Texas, Vertex operates a network of refining and blending facilities in key regions, including the Central, Northeast and Mid-Atlantic markets.
