Vertex Stock

Vertex, Inc. (Vertex) operates as a provider of enterprise tax technology solutions.

The company’s software, content, and services help customers stay in compliance with indirect taxes that occur in taxing jurisdictions all over the world. Collectively, indirect taxes refer to taxes that are collected and remitted to the government by an entity other than the one being taxed. As an example, sales tax is paid by a person or entity that is purchasing a product or service, but it is collected and remitted by the company or entity selling that product or service. This contrasts with direct taxes, such as income tax, which are paid directly by the entity being taxed.

Indirect taxes, such as sales tax, use tax, and value-added tax (VAT) are complex. In the United States (U.S.) alone, Vertex tax content addresses indirect taxes for over 13,000 unique taxing jurisdictions. Compounding the complexity, rules, regulations, and indirect tax rates are constantly changing. For a company doing business in multiple jurisdictions, compliance with these taxes is a significant challenge and one they encounter in literally every sale or purchase transaction they execute on a daily basis.

Vertex helps companies with complex tax operations to automate their indirect tax processes. The company’s software, content and services address the increasing complexities of global commerce and compliance by reducing friction, enhancing transparency, and enabling greater confidence in meeting indirect tax obligations. As a result, the company’s software is ubiquitous within its customers' business systems, touching nearly every line item of every transaction that an enterprise can conduct.

The company has over 4,200 customers, including the majority of the Fortune 500, and provides its customers with tax support in over 130 countries. The company’s software enables tax determination, compliance and reporting, tax data management and document management, and analytics and insights with powerful pre-built integrations to core business applications used by most companies, particularly those applications that have a significant impact on global commerce transactions. The company’s software is fueled by over 500 million data-driven effective tax rules and supports indirect tax compliance in more than 19,000 jurisdictions worldwide. The company’s solutions can be deployed in the cloud, on-premise environments, or at the network edge, all with implementation services available to enable optimal customer outcomes and satisfy unique business requirements.

Solutions

The company’s Vertex solutions can automate the end-to-end indirect tax processes for all companies with complex tax operations and audit risk. The company’s software includes tax determination, compliance and reporting, tax data management and document management tools, analytics and insights, as well as pre-built integrations to major business applications. Customers can utilize these solutions individually or as part of a broader suite and can choose the delivery model that best aligns to their enterprise technology environments.

Tax Determination: The company’s tax determination solutions enable real-time calculation of indirect taxes and applicable fees for sale and purchase transactions. This solution includes a powerful indirect tax calculation engine that applies rules-based logic from the company’s proprietary content database to determine taxability, identify precise taxing jurisdictions, and consistently apply the appropriate amount of tax to each transaction in real-time. The company’s solution supports determination for sales tax, consumer and seller use tax, VAT, communications tax, leasing tax, payroll tax and lodging and occupancy tax.

Compliance and Reporting: The company’s compliance and reporting solutions enable the automation of signature-ready returns and remittance of indirect tax to appropriate jurisdictions. Companies use these solutions to leverage tax data files imported from Vertex or third-party applications to establish visible audit trails of tax determinations and user-made adjustments. The company’s solutions also include workflow management tools, such as calendar and document management, and role-based security and event logging, which supports its customers' internal control over financial reporting and compliance with the Sarbanes-Oxley Act. The company supports e-filing and print formats for returns, schedules, worksheets, tax reports and payment requests, and provides archiving and retrieval of all filings.

Tax Data Management: The company’s tax data management tools enable enterprises to unify transaction data from multiple business applications and sources. These solutions enable tax teams to view detailed transaction-level tax data, identify anomalies or errors, and establish necessary rules to address gaps in data and audit logs for any adjustments or corrections that have been made.

Document Management: The company’s document management solutions automate the validation and storage of, and tax audit support for, sales tax exemptions and reseller certificates, enabling enterprises to manage large quantities of documents, such as tax exemption certificates.

Analytics and Insights: The company’s analytics and insights tools improve data quality and provide data intelligence to optimize the end-to-end tax process and improve business outcomes.

Pre-Built Integrations: The company’s solutions are supported by a suite of powerful, pre-built integrations that enable real-time coordination between its solutions and major business applications, such as Adobe/Magento, Coupa, Microsoft Dynamics, NetSuite, Oracle, Salesforce, SAP, SAP Ariba, Workday and Zuora, among many others. Much more than traditional application programming interfaces, the company’s integrations include mapping data fields, business logic and configurations to improve the processing of transactions to and from its solutions. The majority of the company’s integrations are designed, tested and supported by it. The company also allows for partner-developed integrations as part of a rigorous certification program.

Industry-Specific Solution: The company offers a range of solutions that support certain industries that have specific indirect tax needs, such as retail, communications, and leasing. For example, the company’s retail solution supports omnichannel transactions spanning store kiosks, eCommerce websites, catalog sales and mobile device transactions. The company’s communications solution supports the determination of taxes, surcharges and fees affecting U.S. providers of communication services, including wireless, voice-over-IP, satellite, internet and video and audio streaming services. The company has pre-built integrations specific to the leading providers of business applications used by these industries.

Technology Specific Solutions – Chain Flow Accelerator, SAP-Specific Tools: The company offers a number of technology solutions that offer tools and enhancements to certain ecosystems, like SAP or Oracle, that are deeply integrated into their technology stack. For example, the company’s Chain Flow Accelerator tool allows configuration of tax specific flows within the SAP stack. In addition, through the acquisition of LCR-Dixon Corporation (LCR-Dixon), in 2021, the company acquired an SAP specific tool set that provides customers the ability to maintain, analyze and validate tax data in procure-to-pay, as well as sales and billing systems that enhance its usefulness for indirect taxes, as well as other business applications.

Implementation Services: Due to the ubiquitous nature of its software in its customers' technology environments, the company also offers implementation services to enable its customers to realize the full benefit of its solution at initial deployment. These software implementation services include configuration, data migration and implementation, and premium support and training.

Managed Services: Customers can also license indirect tax returns outsourcing as a managed service for compliance in the U.S. and Canada. These managed services include indirect tax return preparation, filing and tax payment and notice management.

Tax Content

All its software and solutions are underpinned by its proprietary content database, which supports over 500 million effective tax rules. The company’s content quality and accuracy are key components of its software subscriptions revenue and customer value. The company’s content quality and accuracy are critical to the longevity of its customer relationships. On a monthly basis, the company’s content team combines legislative research, analysis, technical logic, and automation to embed updated rules into its software. Unlike many enterprise software solutions where maintenance and support are focused solely on periodic technology upgrades, the company’s monthly updates are a critical element of allowing its customers to ensure that they are utilizing the latest tax changes to accurately calculate their indirect taxes.

Technology

The company’s software and solutions are built upon a robust set of technology capabilities designed for the flexibility, configurability, speed, and scale to handle complex tax scenarios and processing volumes and interoperability across core business applications.

Real-Time Engine: The company’s real-time engine determines the appropriate tax rules to apply to a line item in a transaction through a sequence of real-time processes that combine tax algorithms and tax content with transaction line-item level detail. Combining tax content stored as structured data with sequencing and decision tree logic results in one or more individual tax rules that are applied to each line item in a transaction. This is built within memory and cached for performance. The in-memory processes of the core calculation engine are tuned to accommodate high-volume and complex transactions at speed and scale.

Configuration: The company’s solutions are built to be highly configurable. Through its graphical user interfaces, users can configure and map their taxability to ensure the correct tax rules are executed. The company’s flexibility in configuration also extends to users who can create their own taxability rules, as appropriate. These user-defined taxability rules act as an override, providing flexibility to ensure that non-standard tax scenarios and processes can be addressed. Additionally, users can augment transactions entering and exiting the engine by building their own logic through the company’s drag-and-drop experience. This logic is saved to then execute within the engine.

Tax Geography: Accuracy in determining the appropriate taxation of a transaction depends on many factors, including detailed location information for where a transaction is occurring. The company designed and created a proprietary solution for tax jurisdiction identification that leverages industry geographic information system tools and geospatial data. With its proprietary technology the company is able to create and map multiple tax jurisdictions for a particular location and assign a unique identifier to each location so that it can be used by the engine to allow for higher accuracy. This technology is highly relevant to emerging economic shifts, such as the sharing economy, where the physical nexus of transactions is unclear, such as ride-sharing services.

Security: The company’s application security framework allows its customers to define how users can interact with sensitive enterprise data and how they are authorized to use certain aspects of its software. Users are mapped to a set of predefined roles, and the company provides its customers with the ability to create user-defined roles. User-defined role-based access can be defined on a screen-by-screen level and further refined with read and/or write privileges.

Cloud Solutions: The company provides cloud services from six geographically separate data centers located on two continents: North America and Europe. The data centers are paired for failover of operations to an alternate, geographically separate production facility in case any single data center becomes unavailable. All data centers are operated by leading vendors providing physical security, internet access, environmental controls, and data retention services.

Customers

The company serves a large, diverse, and growing global customer base. The company’s market leadership in key industries can be demonstrated by its relationships with many of the largest and most well-known companies in retail trade, wholesale trade, and manufacturing. The company’s customers include the majority of the Fortune 500, as well as a majority of the top 10 companies by revenue in industries, such as retail, technology, and manufacturing, in addition to leading digital marketplaces. The company has significant expansion opportunities with these customers driven by its growing product portfolio and geographic coverage.

A distinct and growing subset of its customer base includes digital marketplaces and various professional service providers, including accounting firms and outsourcing firms. The company’s robust technology and deep tax content differentiate it in its ability to serve the indirect tax needs of 7 of the top 10 digital marketplace providers in North America by revenue. These customers support tens of thousands of merchants who rely on their platform for their eCommerce transaction processing. The company also supports service providers such as outsourcing and accounting firms who use its technology to calculate tax and file tax returns for their end-customers. While its include these marketplaces and service providers in the company’s customer counts, the tens of thousands of their end-user customers are not included in its customer counts.

As of December 31, 2022, the company had 4,289 customers and its Annual Recurring Revenue (ARR) per customer. The company also provides tax software solutions outside the U.S., primarily in Canada and Europe.

Strategy

The key elements of the company’s strategy are to retention and expansion of revenues from existing customers; acquire new customer; broaden and deepen its partner ecosystem; extend global footprint; and sustained investment in new product innovation.

Sales and Marketing

The company licenses its software and solutions primarily through its direct and indirect sales organization, with a focus on enterprise and midmarket businesses that have complex tax operations. The company’s direct sales team consists of inside sales and field sales, supported by its technical pre-sales and services teams. Teams are organized by territory and company size. The company also has customer success teams focused on onboarding, usage, retention, renewals, and cross-selling additional products.

The company’s direct sales force leverages its partnerships with technology providers, such as Oracle, SAP, Microsoft, and Salesforce, and a growing network of system integrators to influence and drive growth opportunities. These partnerships can include certified integrations that drive ease of implementation and rapid time-to-value for the company’s joint customers. The company leverages its relationships with professional services firms, such as Deloitte, PwC, Ernst and Young, and KPMG to drive tax software adoption in partnership with their tax advisory and tax technology practices.

The company also utilizes indirect sales to efficiently grow and scale its revenues. The company’s indirect sales team focuses on building relationships with leading system integrators who implement eCommerce and other platforms, and resellers who offer its software, services, and training to their customer networks. These partnerships allow the company to extend its demand generation and market reach efforts. The company also extends its reach efficiently through marketplaces and service providers who use its technology to calculate tax and/or file tax returns for their end-customers.

The company’s marketing investments are focused on establishing and expanding its brand recognition, creating sales leads and growing itscustomer relationships. The company generates sales leads through online and offline marketing channels, including search engine marketing, outbound lead generation, technology events and conferences, and digital marketing programs. Word-of-mouth referrals from the company’s customers, technology partners and consulting firms further scale its market reach. The company engages and grows its customer revenues through hosted events, customer advisory boards and user groups, and digital seminars. The company extends brand awareness through advertising, press coverage and social media, as well as through sponsorships of industry associations, such as Tax Executive Institute, Council on State Taxation, and CPA.com.

Partners

The company’s partner ecosystem consists of multiple types of partners that provide it access to their customers and clients.

Accounting and Consulting Partners: The company collaborates with over 50 tax, accounting, and consulting firms, which not only complement its global, local, and industry-specific regulatory expertise but also point it towards specific commercial opportunities. The company’s wide range of offerings and sophisticated technology align with these firms' areas of specialization, enabling organizations to strengthen end-to-end delivery capabilities for a diverse array of clients.

Technology Partners: The company’s pre-built integrations with key partners, including Adobe/Magento, Coupa, Microsoft Dynamics, NetSuite, Oracle, Salesforce, SAP, SAP Ariba, Workday, and Zuora, among many others, are key differentiators that enable its customers to seamlessly connect its solutions into their business applications and processes. The company’s trusted brand reputation has allowed it to be the leading SAP and Oracle tax technology provider, with a relationship spanning many years with these vendors. The company’s technology software and solutions and highly scalable transaction volume throughput has earned the trust of world-class online marketplaces. These deep partnerships allow the company to expand the frontier of tax technology innovation and market opportunity.

Channel and Resellers: The company continues to expand its indirect go-to-market reach to capitalize on the significant mid-market growth opportunities. These partners include value-added resellers, service providers and original equipment manufacturer relationships with technology firms, system integrators, tax consultants and industry groups, such as Avanade, Acumatica and CPA.com. These investments enable certification, training, and enablement to deliver rapid time-to-value and scale.

Research and Development

The company’s research and development expenses were $41.9 million in 2022.

History

Vertex, Inc. was founded in 1978.