Vertex Inc - Class A (NASDAQ:VERX) Reports Mixed Q3 2025 Results with EPS Beat and Revenue Miss

Vertex Inc - Class A (NASDAQ:VERX) reported financial results for the third quarter of 2025, delivering a performance that presented a mixed picture for investors. The company's earnings per share surpassed analyst expectations, while its revenue fell short of consensus estimates, leading to a negative market reaction in pre-market trading.

Third Quarter 2025 Financial Performance

The tax compliance software provider announced quarterly results that highlighted both strengths and challenges in its business operations. On the profitability front, Vertex delivered a solid beat on non-GAAP earnings per share, reporting $0.17 compared to analyst estimates of $0.1631. This represents a notable achievement in a quarter where many software companies have faced margin pressures.

However, the company's top-line results told a different story. Vertex reported revenue of $192.1 million for the quarter, falling short of the $195.5 million analysts had projected. This revenue miss of approximately 1.7% appears to be the primary driver behind the stock's negative price action following the earnings release.

Key financial metrics from the quarter include:

• Total revenue of $192.1 million, up 12.7% year-over-year
• Software subscription revenue of $164.8 million, also increasing 12.7%
• Cloud revenue of $92.0 million, showing robust growth of 29.6%
• Annual Recurring Revenue (ARR) of $648.2 million, up 12.4%
• Adjusted EBITDA of $43.5 million, compared to $38.6 million in the prior year

Market Reaction and Strategic Initiatives

The market's response to these results has been negative, with the stock trading down approximately 1.75% in pre-market activity. This reaction suggests investors are focusing more on the revenue miss than the earnings beat, particularly in the current environment where growth expectations for software companies remain high.

Beyond the quarterly numbers, Vertex announced a significant capital allocation decision with its first-ever stock repurchase program. The company's board authorized the repurchase of up to $150 million of its Class A common stock, signaling confidence in the company's long-term value and financial stability. This program provides management with flexibility to return capital to shareholders while continuing to invest in growth initiatives.

Leadership Transition and Business Outlook

The earnings release also highlighted an upcoming leadership transition, with Christopher Young set to join the company later this month as President and CEO, succeeding David DeStefano. Young brings experience from Microsoft's executive leadership team, particularly valuable given his background in artificial intelligence initiatives at the technology giant.

Looking ahead, Vertex provided guidance for both the fourth quarter and full year 2025. For Q4, the company expects:

• Revenues between $192.0 million and $196.0 million
• Adjusted EBITDA between $40.0 million and $42.0 million

For the full year 2025, management now anticipates:

• Revenues ranging from $745.7 million to $749.7 million
• Cloud revenue growth of 28%
• Adjusted EBITDA between $159.1 million and $161.1 million

This full-year revenue guidance falls short of analyst estimates of $767.3 million, which may be contributing to the negative market sentiment. The company acknowledged that its growth from existing customers has been lower than historical levels, though it continues to see strong demand drivers from cloud migrations and increasing complexity in global tax regimes.

For more detailed earnings analysis and future estimates, review the complete earnings data for VERX.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any securities. Investors should conduct their own research and consult with financial advisors before making investment decisions.