VERX - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Vertex's Fourth Quarter and Full Year 2020 Conference Call.

As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] With that, I would like to turn the call over to Ankit Hira, Investor Relations. sir. you, Thank Please begin.

Ankit Hira

XX, and results Vertex's fourth conference full ending everyone, you joining quarter morning, year for thank call December for Good financial us you. and Thank XXXX. for the

have On the John CEO; DeStefano; and Schwab. Vertex's call CFO, David we today,

begin, forward-looking provide a allow for the future statements This related forward-looking disclaimer the of our to Q&A therefore, results statements. the to including portion me are company call, we regarding statements. Before call, may forward-looking and include expected

may from that The are materially due financial are and a results remarks filings. projections, actual uncertainties. Our other to and number differ Today's non-GAAP release measures. will risks to our described our subject of forward-looking earnings also risks SEC to in include uncertainties and statements references

reconciliations Vertex through financials to be Additional John the will now call David. website Investor is an overview This between financial you information press I information webcast in highlights. full to With will of at conference David call begin take review that, non-GAAP via over followed GAAP Vertex's financial provided replay with the and quarter the of the Q&A. release. will a Relations ir.vertexinc.com. will for through information, available we then year proceed before turn fourth our to including by

David DeStefano

e-commerce accelerate cloud. move of adapt support in thanks creating chain, companies solutions challenges the their for tax. in drive an environments, remarkable indirect role we complexities play And revenue platforms ways their and their many call as and and the change resiliency was joining marketplaces, models technology, everyone year and pace Ankit. to managing today. new supply Thanks, believe us in on business the global This our to the global entirely and regulatory to continue will business, in We see growth through essential

our fourth as pleased quarter we very the out We year. results are with close

business, growth. grew our $XXX.X performance, our and which the by focus profitable fiscal revenues partner customer of total reflects from our EBITDA year-over-year. XX.X% to continue relationships, the up per annual We durability over year of of XXXX. at deliver $XX,XXX, year with end We our strong for sustainable customer the and strength recurring the and up full to We $XX,XXX of was revenue driving on our ended XX.X% million, XXXX adjusted

performance Vertex team partners around Our full efforts day. and our world extraordinary to on every was the the these whose by was driven customers our display of outstanding focus during dedication times and

business. with pleased are We the growth our cloud of continued

Among we full majority And applications by we the XX% We our cloud the where pandemic middle in solutions growth customers. increase. vast to QX. of the infrastructure XX% wins XXXX. continues grew revenues and increased in year, revenue cloud existing customers' For to our of new over the cloud, were the market among accelerated compared migration tax deals, believe of have our cloud QX, of logos, to adoption saw the XX%, leading our especially in may cloud complexity to

revenue in our expect Going XX% revenues growth of XXXX, in to a year. rate the million as for exceed we estimate normalized subscription $XXX more forward, cloud-based we plus

move Our our global hybrid addressable while to pursue expand their globally. to to outside large that multinational and keep cloud fourth also many among differentiated want continue forward serving our customers we competitive their cloud still We results believe our of quarter revenues they applications demonstrate who on-premise to us United we especially approach firewall, the applications advantage as market to continue the of customer a needs gives both the order-to-cash going behind States.

the fourth notable share to like highlights I'd some from quarter. Now,

forward. vector to start with key of have United us discussed, States, the of which, First, as remains I going a our I'd like outside growth progress for

increased solutions tax see where complexity. in to businesses change our regulatory demand continue and and both face We Europe significant Brazil for

continue their invest They QX, SAP S/XHANA IT Without our of possible. an good to of behind organizations have or look we management for for capabilities, relationships reasons, an leverage customer specific opportunities. implementation. released is this customer differentiated also This for end-to-end address in an accounting cloud quarter. tax cloud. and on-premise they to further their choosing tax global In we But to want have regions fourth our can global they SAP, as keep are speaks Chain the either face confidence complexities us This Vertex, with just had the cloud their ready emerging company. the In Accelerator many capitalize functionality win infrastructure the Flow a largest to order-to-cash and strong move which growth continued is enterprise-scaled value end-to-end to on that we to customer today native for they when multinational they solution internal a option, in to using the these migrate. world's have with solution This as manufacturing want to as business their process industrial our indirect We strategic and part workarounds. the They much when technology example of firewall. implementing the partners. challenges would win

of this due number our a the deals and the compliance our dynamic moving this challenge. coordinate to SAP increased We that build mapping of motion chains, go-to-market complex win modifications. streamline supply that data large These strength these relationships. and or partners the of As of practices resilient chain both technology are cross-border to notable major throughout combines we've risk. of firms transactions fiscal solution within natural relationships accounting associated companies to and a Flow of leveraged user extension global solution. in to truly quarter is supply with and with closed the manual advisory and data the address strong to and because goods it This scenarios interface the complexity cross-border without visualization U.S. the enterprises management Europe developed the help year also intelligent global This effort Chain has Accelerator continue significantly shipping tax a the and

We've expanded Another is in the our in and our world. depth business of tax doing highlight breadth in required QX the to by the database environments global serve one most multinational content customers Brazil. complex

our there. in investment states enabled Our in encouraged country. Systax by In for expanded one additional into supporting these deliver global In broaden biggest XXXX us I'm we opportunities companies to of we ahead planet. of in deepen QX, the our tax helped fourth the and customers. teams continued to ecosystem us five in strengthen support supporting commerce expand companies their to some solutions applications. in lightning new management expand the global order the by integration even global the significant compliance them to has BXB requiring the we quarter, for additional our partner of and also states Brazil, technology, content extend and QX, of further new performance reach. content go-to-market our we helped our and on tax force In sales have regions and and We our channel, those expanded

CRM, procurement continues the Microsoft today's and we areas We about forward also tax these office, to Gold of complexity into move making the are systems front quarter. partners excited businesses. I'm global of e-commerce, going the a in added investments as in number new

global and provide with and worked for ability for cloud, support who us partner to implementing our infrastructure. tax. cloud-to-cloud We a SAP integrations healthcare SAP Oracle. In also because was global and capabilities particular, private continue In longstanding SAP our and an chose to Oracle cloud our partnerships QX, build platinum therapies. They focused with ERP of integration cloud growing enterprise-scale S/XHANA, tax company on strong S/XHANA rapidly with on U.S. innovative for SAP we

expanded with use customers We a with several the verticals. infrastructure QX quarter solution. We benefits wins Oracle to attributed particularly where partner our build complex, and our continue And and the managing industry-specific consumers seller we leader to and to demand our key continues with tax. content support fourth prospects see global be to with increased of through continue the highly industry ecosystem cloud-to-cloud Cloud partnership in partner leasing in tax to relationships

the homegrown as strong the This the and who companies chose customers of restaurant case of among remains largest capabilities world's of acquisition rollout. both their global one with quarter logo growing part as fourth exceeds systems. solutions our New the quick-service their was in or ERP tax complexity mid-market enterprise native point-of-sale

service demonstrating solutions logos enterprise solutions our and $XX,XXX our just in implementation. signed with U.S. because scale automation We to in systems an the $XX,XXX versus opportunity new tax growth delivery online rapid and grew the healthcare provider to in segments. pandemic. integration their their payment value And their among and mid-market network processing continued are market in to Average business our ARR XXXX in the cloud-to-cloud nearly XXXX, of also the a premier of enabling within support the the we of workday

Finally, by in customers. also was expanding revenues the existing our performance quarter driven from our

brand, and accelerate globally, and retailers. expand economy service with pandemic, in strategies, customers company, the largest food response growth online whose with our and increased rapidly luxury grow the their a with applications, of e-commerce front-office QX, goods to a revenues digital expanded them. an we As has number our including America's In fashion we adopt omnichannel customers best-of-breed sporting one delivery of

acquired had closing, actively and reflects longtime as large believe change, with into to in migrating acquisition telecom extend platforms enterprise for provider to next-generation believe In the that Visca technology their support a recognized and in in now solution I'm effectively leader what cloud capabilities the specialty applications intelligence, see we've connected a they proud February, technology IoT In and to we customers experience. technology accomplished of tremendous strength IT ability are encouraged have our believe our of Sal connected to global tax to adjacent enduring reflect investments needs we technology. tax our And strategies confidence represents us innovator conducted to about our like service payment are wherever business. opportunity challenges of to ingredient continue of and business of We our edge teams accomplished The profitable integrate as future enables and essential growth in that our of is growth equally for of also can Sal our evolve. to this point call our Its including transactions architecture Technology of over strength this We we the global We Chief indirect hybrid business customers' business solutions excited future and the experience this January, the in past and our brand an to so enable the team what and markets teams quarter our our QX first success. Despite and software. I'm their one built our validates environments Officer. into us do like value commerce XX I'm scale as technology, our balance strategic XXXX and customers. in go-to-market with e-commerce, beyond. the brand Vertex. of XXXX exists In brings roadmaps. and the this management a and the mobile us joined what scale. container working and thinking customers device already creative The in truly or the the remains seamlessly global we in management. announced need so years unique XXXX, market our we he we and full-year simplified deliver XXXX. results by and strategic which that Tellutax

partnerships accelerate to resilient and results turn We are year I our outlook And full in over to to John customer. team and success our discuss remains our and advance our to investing now it and technology, that, commerce. for committed talent, our to the XXXX. global With needed vision

John Schwab

million. transaction-based were year adjustments, with our guidance. $X.X time. annual year reach Thank subscription capital going full revenue. million full year-over-year Subscription everyone to revenues quarter our benefited then and structure provide fourth additional for to you, approximately $XX.X results and grew XX.X% comments These and grew for of accounting and Total David, revenues year-over-year revenues wrap to quarter by our million. $XX.X XX.X% thanks we'll up first XXXX fourth and discuss quarter your on Today, I'm

upgrade Our services $XXX.X projects. the same significant million revenue increased XXXX from period number for a last XX% XXXX. implementation revenues up and year Total XX.X% were of million, $XX.X due to over to year-end

to a as growth. or represents This Our annual of end $XXX.X revenue, grew of the million XXXX. XX.X% year-over-year ARR, recurring

existing both we customers. As growth to David mentioned, customers among our strong see in continue solutions new and cloud-based

XXXX. XX% which For over quarter, the XXXX. full of quarter the XX%, fourth grew growing We the is with XXXX our year XX% from full up cloud the of revenues ended in year revenue cloud third

cloud of our year. normalized XX% as base for in forward, we XXXX, targeting are crosses approximately $XXX rate Going more the million revenue in growth a

the our for continue forward and believe lead additional ARR both hybrid cloud a revenues drive to approach new on-premise as cloud-first shift competitive customer that company We opportunities differentiated We and us pursue our on opportunity to addressable our and gives believe market we to serving presents to globally. unique the a all growth. going cloud advantage needs

was net and commitment customers' XXXX, solutions. continued Our of XXX% retention our as demonstrating revenue or rate, our software NRR, end of to the

From results Our of gross XX%, and the tax basis fourth $XX.X basis non-GAAP stated, the here, and was impacted to our issued income today. year, basis, at the cloud tax the last the investment occurred XX.X% content, for XXX reflects same GAAP reconciled expenses, The management otherwise throughout XXXX investment our million, change a migrations compared our and margin. references consistent as infrastructure, and management. software success prior press please revenue On margin was point remainder retention quarter was our earnings profit our This and the an of driven infrastructure content gross in the million profit gross in points In to that discussing, with release is cloud basis continued was note areas. Notably cloud period customer XX.X% a $XX.X due results compares results, by operating our XX.X% during remained XX.X% to in standpoint, in which gross the gross to gross XXX a that that in year. by statement, customer per-share XXXX. on margin GRR are are success representing approximately subscription overall the quarters. unless

services our in in margin increased XX.X% to gross year. XX.X% the Our business from prior

will demand from anticipate as to from well for that moderate. continue but of as services margins implementation customer new We projects see existing software, the

services for full XX% software full as was was compared year, XXXX. compared XXXX, in XX.X% year, subscription margin gross And the the to in XX.X% our For gross XX.X%, in XXXX. margin to

$XX.X of on quarter fourth was end-to-end to expense points revenues. expand million Our year-over-year, research XXX increased capabilities. the or reflecting of spend increase development new our and basis solutions XX.X% An

expense year, was XX.X%, XXXX. For the R&D with compared full X.X% in

primarily in to due expense marketing marketing total million by driven XXX and and which a $XX.X in in-person of selling or Our was basis of a QX reduction revenues, decrease XX.X% points travel year-over-year, restrictions. events was COVID-XX

by quarter heading as increased XXX basis third expenses sales up marketing XXXX. ramped these the million However, points or we and $X.X into from investments

XXXX, For the full compared in year, selling and marketing expense was to XX.X% as in XXXX. XX.X%

general public XX.X% did other quarter by XXXX. and in was not costs expense revenues million of were that fourth versus by was $XX.X Our but in information This infrastructure decrease the offset initiatives driven in XXXX in increases QX revenues, administrative and technology company partially of operating or XXXX. recur of XX.X%

compared with and general year, XXXX, full XXXX. as in the was For XX.X% administrative expense XX% in

the was Class period $X.XX last $XX.X in was non-GAAP million, Class A $X.X compared for and zero, A net net GAAP share quarterly basic year. A Class for for B diluted Class income per Class same and diluted and $X.XX period income same to year. share net Our Class basic the compared of diluted income B net year. $X.XX of period and net same B the compared GAAP effectively per $XXX,XXX same was Class share non-GAAP last for net GAAP Non-GAAP period income million net GAAP compared was to income Non-GAAP $XX.X share to the income income B and income year. Class A last of last net for of to diluted million and

margin and year, EBITDA than of period was basis research as of XX Our as XX.X% well efforts. $XX.X activities, development year-over-year, while same marketing investments was the up our and acceleration XX.X% adjusted lower last approximately reflecting points quarterly selling our EBITDA million, adjusted and the our

revenues. EBITDA full XX.X% or of $XX.X million the adjusted compared our For million XX.X% $XX.X to year, of as was or revenues

million Turning statement. underwriting reflecting $XXX loan expenses. decrease selling of the net $XX.X and $XX.X repay million and public in free the our to to full $XXX.X in million used from cash $XX.X in $XXX development flow in pay and raised of quarter, with from our flow product generated cash our cash million million proceeds We free reflecting XXXX. also operating fees for a balance We decrease in for cash cash in year, sheet we generated our We which the a primarily flow marketing was where term the efforts. XXXX, million finished million offering equivalents, completion of year $XX.X investment and initial and for

XXXX. for the our quarter first guidance now of to Turning

million total of million, year-over-year increase range approximately adjusted million expect growth XXXX. million an $XX.X to EBITDA the revenues in approximately and of to the representing We of of quarter in X.X%, to of to million, X.X% be $XX.X the $XX.X representing $XXX,XXX range to $X.X to $XX.X compared first

the million and in EBITDA million range the to to XXXX. to of the EBITDA XXXX. and year-over-year our investments innovation, total includes to For capacity, million, XXXX approximately acquisition and we of with plan million, in development in of and $XXX to an marketing acceleration Tellutax representing The full plus we $XX.X of adjusted million global of revenues new outlined to during $XXX million expenses product million related growth sales IPO, expect approximately compared to currently year-over-year compared representing January of decrease of $X.X increased of $XX Adjusted the additional XXXX. operating year range X.X% the X% the $XX consistent $X

In year. XXXX. business spite slowdown able anticipated enterprise position accelerates us of the during position our grow and regulatory saw This enterprise activities buying acceleration of selling us in XXXX and out opportunity, to the future XXXX as upgrades were system some we a complexity, we of XXXX, and As growth. as their in in customer as continued and and and we nicely activity had into development of pushed growth well as timing XXXX. marketing changes increases product This this, for

Additional outlook modeling details follows. as underlying are the

We stock and share outstanding XXX,XXX,XXX December Class approximately at of common XXXX. shares XX, shares had Our outstanding. Class B count XX,XXX,XXX of A

equivalents price approximately share. weighted-average per with had XX,XXX,XXX exercise common we $X.XX a Additionally, of stock outstanding

happy to up the for it line the up tax made rate and you initiatives we Overall, XX.X%. Operator, our is open expected anticipated will the to with that, pleased And we're Q&A? have progress Our approximately on strategic questions. our we're business. open of with please performance now for be

Operator

Thank you.

will conducting first is come be now Our Stifel. with proceed Brad from [Operator session. We with Reback a question-and-answer questions. instructions] line question the Please of your

Brad Reback

Hey, guys. How you? are

David DeStefano

Great, Brad. How about yourself?

Brad Reback

good. Very Very changed a Maybe starting anything has out Competitively, from there? high level. good.

David DeStefano

No, Brad.

We We it's go we competitor. competitor. global market, that Sovos good then good market primarily for compete driving regulatory no as until the change as a overseas, see and between we the and that's and are continue first – continue enterprise against foremost, both enough enough formidable technology see deals to we see go system to or Thompson it. our into primary in-house changes Reuters middle We in Thompson the And as longer Avalara.

Brad Reback

that Great. And commentary was out on COVID on to and in think this pushing when then by we impacted obviously your should switching you XXXX XXXX. How reaccelerates? gears rate year about ARR, growth customers somewhat

John Schwab

I'll Yes, this Brad. take John. is that

gain efforts we we our sales kind as in traction about think steadily up marketing the I to talked year, QX we ramp about – start like throughout there. of think we and the growth building and

the into well we think traction the products new David market talked towards will comes happen that start to back of so heavily end a as that little hit as And year more as that that play about. the the

the a for little year the sure. see half of – of So bit that weighted towards year back I more the would back

Brad Reback

Great. Thanks very much.

John Schwab

bet. You

David DeStefano

you, Thank Brad.

Operator

you. Thank

Citigroup. line come Our of Daniel Please proceed with from with next questions Jester your questions. the

Daniel Jester

morning, Great, everyone. thanks. Good

was So you the acceleration John delays. you then I that about enterprise impacting circle XXXX, remarks, of back to David some transformation in talked in just talked said you noticed wanted I but prepared some something to sort about in digital think that

see how could So business versus and this year? has what seeing impacted recovery kind trajectory that just COVID piece throughout mid-sized you the you're enterprise of going out Thanks. and small, exactly you how maybe

David DeStefano

and And Sure, thank you I'll start the Dan jump the take question. in. John then can for you

the we environment for where workforce adopting creating and their and think as the that we companies systems, Salesforce where are demand operating mid-market Salesforce saw great more new saw in are I Workday us. – opportunity as technologies complexity regulatory acceleration and of

on logos of Obviously had prop progress, I in business. with we we also two a one, hold Oracle across got ARR that'll see a value being large think additionally, so implementation able we of sold. they of have significantly lot cloud saw remember, may drive approach note and why see deals – things large that's new the deals up enough the to continue it's showed conversations XXXX. our and where to that then where with we're I to there, we larger survive SAP until kind the of and think we or why be in have did to will – organizations, and see enterprise good hybrid And some did XXXX we put in good or our on-premise deal important we the

they to great of recognize think the the And to our in long-term cloud, have we to good what's gives migrate opportunity we're to still that's for doing part a we so ready happen, those for hybrid best migrations approach that when that's and but because customer when on them are strategy. the choose they differentiated the us our

Daniel Jester

we revenue think that on the with ago think XXXX to progresses. that the the lot year nine certainly a and was months John, just a consistent guidance. about economy of lot then is than And the there's more mentioned how six I green shoots you but framework different sort Thanks. as IPO,

think sort are of your how what expectations approaching of year for the So perspective? you philosophically, guidance full macro a did from sort the about maybe and Thanks.

John Schwab

a that's question. Dan Yes. good

about play think as we things think to I of out. sort how going are

kind as the a the it you ARR. our little into ratably know, over about it bit takes is to to year, recognize talked pull to build and The itself we we longer when itself period, itself mentioned, throughout for I stream. ARR of revenue As the pull into – as going revenue

about itself of the our the and it, into end there again And sales although sort revenue quarter capitalize that's certainly keep towards and mind, force did as tracking by on further the lot of we're well QX, to but a have on about benefited we XXXX a do I Yes, that'll of we nice revenue. see of of we I see work back out a tracking follows. think fourth think So real and that QX, it we capitalizing the to of did true-ups building certainly in sort $X.X opportunity the time continue were of over as transaction-based million in volume activity sort in standpoint. from how

it of a took of well. the on Thank that sequential place kind you. little you a there basis, question. in when So very there's as much compare bit Thanks for

Daniel Jester

you. Thank

Operator

you. Thank

your America of line Our Please Bank proceed with questions Sills with Brad of come from the Securities. questions. next

Brad Sills

ask Great. about cloud, guys. this – question. for in ARR. year good growth you Thanks Hey, it to XX% cloud taking the results my Wanted had

or implied is the deceleration is the in that business tailwind something perhaps guidance so if with a to to work deploy And and there a that you're on-prem. Thank it's on else you. will, going in the was the remote cloud in other the over cloud deceleration think forecasting ARR pandemic is I outlook? cloud for words, with in in if you XX%, deployments, easier there versus accelerant,

David DeStefano

John I'll in. please then jump start and

I new cloud continue our we their was, pretty – be allow over The our million XX% cloud sales more it's omnichannel we our base us consistently expanding cloud-first $XXX to those not think, customers majority to continue But are top-of-the-tree and the normalized going we fundamentally, deals. and footprint lead see of everything grow base, plus felt think largely on within just answer. as customers to I it's grow deals. are is to the all existing are a our overwhelming logos – important or remember, in Brad, growth

I'd different majority the see tranches, are. new existing slow we the as it's are cloud still new migrate. of three upsells largely So that existing then logos a those sales customers. and cloud it And customers to overwhelmingly to the say

bit migrating a of would trajectory solution. we new that we think of a got XXXX off we've there saw little suggest around acceleration existing I nothing customers for but their on-premise material

John Schwab

both on just for to I year. little I XX% David mentioned, full the a what growth that to add was And Yes. year-over-year about basis say, the a Brad, would as and bit,

that secondly, those sort with And of we Some dealing so did a our close so mind, blow impacted QX of sales XXXX, a are absolute quarter, out by of really was couple is XXXX an of in monster have just things, it we and terms a banner cloud acquisition quarter. certainly tough comp then January keep that. of in that's in in the we Systax did on pulling also numbers

a a the decent a couple notably of when the pullback, against acquisition going of being little of that. piece has pullback sized things look sort that of at you So bit certainly

So just out I well. thought that as point I'd

Brad Sills

delays, headwinds of with on please, you that much what gradually, the so is over Thanks business I coming thank just would deals if in have you more, say visibility guys. for the this deals year you so you the of happening Great. back some then and the And may pandemic do kind some one largely here with of much. noticed there? those And and reopening

David DeStefano

Yes.

was the pandemic, that entire bigger – beginning was obviously of large hands IT think on a multinational their get were enterprises, deck challenge. And global. at workforces it to all the all I shops

obviously Oracle of are sales with pleased the their I in OCI are people forward the had, in good normal here then as certain to a those which really about now IT – thinking six think slot. and at of, SAP S/X upon to of resume. of the getting, to roadmaps you have fit month project, we depending XX in terms size We and going implementations can back HANA conversations are terms the say, longer migrations we're be are more starting Those that

are into projects. fit really understanding we where and their it's timing best those So where they

Brad Sills

so Thanks guys. much

David DeStefano

you, Brad. Yes. Thank

Operator

with Walravens questions [Operator Instructions] Group. from questions. next line Pat JMP with Our your of come Please proceed the

Pat Walravens

guys, and Great, then thank to Visca. Sal I Congratulations want you. Tellutax about talk you

you Tellutax just bought guess you can again I go why So over first, it.

And and so Christian, both are they joining Vertex? it's Eric right,

David DeStefano

that attractive steep we Eric into and down Eric joined when about you years, he an really at the where the obviously some point out a – industry which solution and innovations can for was indirect for customers. from taking of yes that very with think footprint gone the where history we a the solutions he'd need really mobile IoT architected perspective pleased in will in container on his for were deployment has of own Eric tax our having level and of shrink it container make enterprise technology

So in a we they wanted value that as quick sure got we great into integrated as products building and possible. to our were what saw make

Pat Walravens

say I'd my questions. up messed I Okay.

two there Eric there's So Erics, were Christian. Rudd Eric and right,

is Okay, are it Eric or just they joining both Christian?

David DeStefano

No.

the Just technology, Christian. Eric. Eric

Pat Walravens

be going role Okay. is his And what? to

David DeStefano

He's the our product innovation product driving working integration implementation of into driving group, around in a stack. Architect as Lead the that our

Pat Walravens

in. time, Sal at coming And great. Okay, the same you have then Visca

coming him you do candidates, a this you one to what – you this… are to going what why pick top priority did So his Brazilian is talked I'm tell sure and you

David DeStefano

that e-commerce, spent years in space to really Yes. opportunity experience as growth Sal the he has where critical last the accelerating. extraordinary which that see complexity office is and an front is background – XX we great

scale so which the I for and at of spent he data that. our type to be time large Business BI brings office the with in certainly ERP in the and SAP, played to he and and the space, back that data so you at touch need Objects, regularly. enterprise us there's used think And he then there given – customers. sets footprint opportunity we be his understands of enterprise the for through So has experience He interact CTO software, some our

of So just Sal great excited our brings a more experience wealth innovation and any him have just couldn't to team, be we and to joined.

Pat Walravens

is the him in you would what for And here? Great. coming top say priority

David DeStefano

like about accelerating platform I Sal accelerating He's our is things we got things roadmap. in and nice He's and everything certain expansion looking e-commerce innovation accelerate said. He's M&A Tellutax some about very focused product across his deliveries area. on of also just other some can of our how he's products. accelerate focused how can we're Systax And our in inorganic background that. we at, given the much

three priorities. those So probably his top are

Pat Walravens

Okay, perfect. you. Thank

John Schwab

you, Thank Pat.

Operator

you. Thank

proceed next Please Goldman come of Merwin from Chris your Our questions questions. with Sachs. the with line

Chris Merwin

for Okay. guess ask I in lingering taking retention. the of that my the pandemic. Thanks question. imagine I that net I I the from to about impact wanted that's know much very dipped effects slightly quarter,

you will, the XXXX the we should metric, suite of is here, how that of know into product breadth trajectory important be cross-sell I focus, just you have. thinking As with we very a move if about that curious

you could the just share Thank about So that comment curious any trajectory of metric? you.

David DeStefano

that. Chris. the very very at for much question good one Yes, and a Thanks

right, as existing with things, drop a volume of saw an it's we we I fourth the cross-sell we of looked standpoint, it's sort additional and NRR that at here by think decrease, in two customers. the the bit get you're the really really little a from migrations driven quarter

each down similarly probably a fell bit. that pieces two little the side were that of they taking kind So

think going of will about impact forward. how where we this standpoint that As are and kind from we of kind

kind feel But the now but this to ARR buy year mentioned, to through. continue it's pretty more ARR maybe move pick customers is of largely it'll then bit, by our in this some where additional they migrate back the a products to we'll certain it again back see volume additional they little the start that as as durable that that improvements to and from base the opportunity entitlements there's continue well. we pretty since feel ARR. move start good very we and we'll very down we continue driven good area, to as so And in get we as itself start it half to but moderate of enhancements coming about again, across we back the it. and in strong, is activity, customer map of to to I picks itself As as Again, up, has itself through have up there cloud, on-prem about see

Chris Merwin

on around migrations. follow-up that maybe just And last Great. a point

in migration. you was impact gross remarks, that there I from XX% think number was to said that prepared and the some retention around cloud

would you're migration to sure and them I the just takes migrating impact want basically expect cloud, customers to around gross make puts keeping retention how So the and understand obviously your rate?

David DeStefano

Yes, Chris. Great point.

to into GRR back adds comes the of NRR. solution, When that that new that walk they it of another as out they have solution, I've measure shows so and to as we walked and a sale, people it shows one initially we left when that that a NRR sort it through. our many customers GRR And shows As loss. into in monitor move solution then getting

the number. final a included decrease GRR increase NRR for it's in it's in and the So the

it's it a basis an a takes of look that that that as going a people say, guys XX% you and movement does different story However, to – get move. GRR and GRR clear and XXX I bit? stickiness about think make when up – at can bit how it basis, you that's if being and certainly impacts little movement overall enterprise the such 'hey, a impacted certainly the customer movement calculation, of such conversion you shows there, really initially that of at that that software', as on it it's place. basis, down On that be did points tell because Does it because with we

Chris Merwin

very Definitely. Thanks much.

David DeStefano

Great.

Operator

you. Thank

Our Zlotsky next questions with proceed Morgan questions. from your Stanley. the Stan of come with Please line

Stan Zlotsky

Maybe thank on Perfect. Thank before. guys you up you much question so taking following my just and for Chris' questions.

follow-up. for the have have a it thinking you quick much the that cloud are then revenue that does XX% And into how and cloud into subscription migrations, about in play right, growth the XXXX I guidance On how year? you

John Schwab

of start changes take Yes, model just in Stan you didn't we and from as I'll – had because significant out, cloud as we built any that, no the to that's his place. forced remarks, them we're cloud. to taking customers certainly is customers there the and presents talking not and opportunity itself, going we're but If really migration about again, mentioned guess David accelerating start, to want move pushing assumptions and to migration, – okay this over we I some

anticipation cloud past. on-prem level the the consistent a And for been really it's sort so, with cloud for migration the migrate how been in – that from of it's to our is

not terms how jump that plays. activity anticipating of big of in there we're any So kind

David DeStefano

bigger now. a base on Just

cloud sure what about more should be for like it's to be plus. thoughtful able XX% we be growth So rate little do try good we a and a feel would

Stan Zlotsky

for And has then, average looks of? the the perfect. you on ending a a and of do last at that to quarters, function declining with is maybe that Thank the customer like three be with divide math is this there ARR, your mindful customer you great. the calculation of that anything taking Just just if us revenue help it the some so need low end, that'll be Okay, is per little bit going churn been but the count nuanced, something you. can disclose into that – we we

John Schwab

Yes.

hit, Stan think you as nothing I the going there's calculation. with on

a that's the is with per do the of tell of think rise we think I end, really because with do doing our I at about more the of that some precipitously the of average lot some low again A to little all. what churn seeing. see really really there lower smaller is is lot consolidation can number but end, that There a has churn higher the you think bit we to customer. in slightly, talked a wouldn't levels David customers end. I as has as it We're to type It at more about, churn ARR at than more smaller, at of dropping but you're perhaps customers. impact the it continue

Stan Zlotsky

Got it. so you much. Thank

John Schwab

you. Thank

David DeStefano

Thank you, Stan.

Operator

Thank you.

questions your of Bhavan Suri next from Blair. William Our come the with with questions. Please proceed line

Bhavan Suri

compliance for bit congrats that solid the of which of those a is sort cloud bunch strategic the can't to company next treasury sort a help there on think its us five more tax, a starting guys here, bunch you've I to How start product my think the and seen the of us whether growth wanted consolidation and little CFO how growth, about there. whether you and see space say in tax. Hey, consolidation or to it's of an give on taking roadmap, I of that least you three guys. that and Thanks maybe at address it's you're and years? was you question tax, but question know in pretty consolidation space at touch ARAP broader a whether do again, office your to do role exact

David DeStefano

is it Bhavan. evolving good an sure. So, question, for world very And

is in invasiveness item much. our We element the a line very I of the to think very also IT big important because it's note that of part function. play it's product, heavily our of

I about – I us the Visca have those it previously to tax part. the we consolidation out evolve. a that joining of would compliance firms you're space, I plays think Sal level, of CFO. strength global alliance we're because a big And at some the seeing So, that Regulatory conversations to well with that back the tax of technology different said, as That a big was indirect because the four our consolidation income them, continue deep partners. mean big integration often well more asked organization the partnerships than conversations of and other positions with also as is differently the and as the often part it of tie the in little the us.

an there for some see we our suite expanding opportunity will us innovation and think that to space. in help nice I bring product Sal that

Bhavan Suri

then John, And two is you annually. one had parts. have may so increase about X% David. quickly typically John for which the price maybe a XXX% guys NDRR, Thanks on

because things to that? like months, think like the quantify you're it this that you. the a even XXX mean going SAP over how wave seeing was any – but not I So did points, that? maybe we do price Oracle year, pressure Thank X% me but and of and that on over HANA to this think any we next think way that it but basis XXX, is, provide is XX you from about can year, you it, then concessions, part little a second be that see year should I plays you help that it, And does me headwind help might tailwind any bridge bit increase should think that there into how did the we just about give churn at obviously the understand

John Schwab

Yes. the question. No. Thank you for

Let first. me one first take the

mind the starts NRR GRR price as we X% a to XX% hey itself have As with X% you XXX% it relates and and price build in you and really start about of up. that it said builds it with the to number, Keep sort think increase that you the increase. about has

at It's So we pass standpoint, I numbers. last year, we have very consistent not look pricing to seen customers. price increases from ability a our any with the our where to as along impact were

so there's And really gone. there been impact that's in no how of terms

So to to that our customers get to we we and invest that content of delivered, and more because the product. good product buy about they that in continue tax gets that continue pretty the feel deliver, our

our may a increases have So as unaffected I And from migration that again the as again again additional again point made as price by customers. it's little volumes slowed bit people as well earlier, that cross-sell for lower to walk certain anything. the are volume of through, just – going a

a there increase that real So big change other not really standpoint, a pieces two price from drove it. the in

that see migration come as other talked out, we opportunity Yes, systems Listen, the activity as still those takes remarks, their those place that little in that be. they my So – kind and the movements don't look in we should how – we you as certainly again a to certainly about. pullback there goes. driving additional things as and in and things mentioned to those for I guess a opportunities provide as standpoint, are migrate think the us revenue bit that be that to enterprise game see that from I of big of I we did walk those of think, tailwinds that's from sort customers. other

Bhavan Suri

you. Thank That's gentlemen. very helpful Great.

David DeStefano

Thank you, Bhavan.

Operator

Thank you.

with Samad questions next Samana with Jefferies. proceed Please questions. line Our from of your come the

Jordan Bret

a This Bret is my on congrats Samad. quarter. for Jordan strong Thanks guys. taking question on Hey, for and

Systax up last to M&A? strategy question, remind this could follow just Pat's of Tellutax, you I now on your wanted you just year So acquired year and us around

David DeStefano

Jordan, call. appreciate joining the you

part expand to it our and see to of opportunity continue was key We decision.

to resources to make acquisitions. Going public have was more

and out. end-to-end technology content there's expand to that we I the add support opportunity we think As a will continue niche globally, that suite fill select of lot to acquisitions tuck-in and

to the are tax in cross-border show now for capabilities of As customs and they types going continues forward. other duties and complexity looking department, up

so we're around in opportunities. And those the consciously engaging market

Jordan Bret

you. Great. Thank

David DeStefano

Sure.

Operator

Thank you.

& line the Needham Reilly of from Please your come proceed questions with with Josh next question. Company. Our

Josh Reilly

for Hey question. Thanks my there guys. taking

revenue look there, QX we growth delta if and the So the now subscription for the trying year. over you're at in the guidance ARR last understand quarters just several to I'm expect, would puts a about bit we little think should how than and the it one or the is seems it right environment conservatism what wider primarily macro takes around there? now

John Schwab

we from good. Yes, growth a Josh. I feel The terms Again, question. about feel ARR for what is there. out marketplace the things, of mean Thanks the a that's we've – good seen pretty couple we activity in of

into think sort translates the guidance couple it As of and quarter. of about quarter growth a things. the as And we we in the about think

of First, QX real year-end the first services running. keep real quarter, have a had customers strong does up trying some we to from a little services in dip standpoint in strong get we implementations take and a in a – bit mind with

that mentioned, had transaction-based of we drops we total true-ups as it had bit a little some backside of really So take not but nice XXXX, there real standpoint, forward. a fourth revenue QX, a that sort impacting From and at I happened that pricing the when quarter, move a little bit certainly year a were in good was the that on we in giant from some us, anomalies, again as of for standpoint. an look invoicing

continue it revenue I out sort in revenue in that I it push slowness how rolls and my that's remarks a the XXXX it. but standpoint, saw from itself continues in of little and manifest activity sort talked as momentum that again grow, about of some XXXX, we a summarize some So would of into of to to of the that see we bit

Josh Reilly

a got it. follow-up. then Okay, And just

business of hit sale COVID end a And point ERP new – partners then business are that mid-market understand had and but driver technology a to to you drivers is the is of any So the there? took high those in it kind shift do trying COVID driving go of just in driving then technology obviously market the in any been era, partners what ERP, macro? – strongest the expect during in which post more procurement the maybe at

David DeStefano

certainly well the I both mid-market at Salesforce in Workday we good them you enterprise play at of we're and of think sort level, seeing enterprise players. and with as level. momentum emerging say Also the very the

relationships and played we primary we've drivers space in that of So I our in the additional space, relationship at Microsoft drivers. some and that have space partners space. is some in – the the that been Avanade forward, be we're drivers Acumatica added of and and be in integrations e-commerce going mid-market, all the the procurement great to and is XXXX, think see well we of actively added the opportunity – to Certainly, something for have partnerships expanding would that gold QX, Microsoft we're we where specific have

Josh Reilly

it. guys. Got Thanks

David DeStefano

Josh. to Happy

Operator

are like would Thank to turn no questions call over this to I comments. the back any David at for you. There further closing time. DeStefano

David DeStefano

also closing, your the Vertex heading shareholder. you year. what ahead, to for for tremendous while stay you again safe In our Vertex commitment soon. you. ability families on to Thank well business growth value Thank in look reconnecting in and and your and their We joining we momentum call for confident delivering and an think team hope customers, efforts truly entire like partners and healthy, in thank interest unprecedented forward I'm opportunities in the to to our was into to our today. I'd the significant I XXXX. capitalize our continue and significant positioned we're

Operator

does Thank thank teleconference, participation. your today's and you. This for conclude you

this Have time. a your may great You lines disconnect at day.

Vertex (VERX) 10 Mar 212020 Q4 Earnings call transcript