0001806837--12-312021Q2false00Vertex, Inc.NASDAQ2632700039828000120117000108017000P3YP3Yus-gaap:PropertyPlantAndEquipmentNetTrue0.33P0YP1YP1YP1Y00018068372021-06-302021-06-300001806837us-gaap:CommonStockMember2020-07-282020-07-280001806837us-gaap:CommonClassAMember2021-06-302021-06-300001806837us-gaap:CommonClassAMember2020-12-012021-05-310001806837srt:MaximumMember2021-01-012021-06-3000018068372020-01-012020-12-310001806837verx:SCorporationMember2021-06-300001806837us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-04-012021-06-300001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2021-04-012021-06-300001806837us-gaap:ComputerSoftwareIntangibleAssetMember2021-04-012021-06-300001806837us-gaap:ComputerSoftwareIntangibleAssetMember2021-01-012021-06-300001806837us-gaap:ComputerSoftwareIntangibleAssetMember2020-04-012020-06-300001806837us-gaap:ComputerSoftwareIntangibleAssetMember2020-01-012020-06-300001806837verx:SystaxSistemasFiscaisLtdaMember2021-01-012021-06-300001806837us-gaap:RedeemablePreferredStockMember2020-06-300001806837us-gaap:RedeemablePreferredStockMember2020-03-310001806837us-gaap:RedeemablePreferredStockMember2019-12-310001806837us-gaap:RedeemablePreferredStockMember2020-04-012020-06-300001806837us-gaap:RedeemablePreferredStockMember2020-01-012020-03-310001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2020-04-012020-06-300001806837us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-04-012021-06-300001806837us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-01-012021-03-3100018068372020-07-282020-07-280001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2021-06-300001806837us-gaap:RetainedEarningsMember2021-06-300001806837us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-06-300001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2021-03-310001806837srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2021-03-310001806837us-gaap:RetainedEarningsMember2021-03-310001806837us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-03-310001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001806837srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-03-310001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2020-12-310001806837us-gaap:RetainedEarningsMember2020-12-310001806837us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-12-310001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001806837us-gaap:RetainedEarningsMember2020-06-300001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001806837us-gaap:RetainedEarningsMember2020-03-310001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001806837us-gaap:RetainedEarningsMember2019-12-310001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001806837us-gaap:EmployeeStockMember2021-11-300001806837us-gaap:EmployeeStockMember2021-05-310001806837us-gaap:EmployeeStockOptionMember2021-03-310001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeSevenMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeEightMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeOneMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeOneMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeSixMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeNineMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeFourMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeFiveMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeTwoMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeThreeMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeSixMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeSevenMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeNineMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeFourMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeFiveMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:PriceRangeEightMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeTwoMember2021-06-300001806837us-gaap:EmployeeStockOptionMemberverx:ExercisePriceRangeThreeMember2021-06-300001806837us-gaap:EmployeeStockMemberus-gaap:CommonClassAMember2020-12-012021-05-310001806837verx:AmendedPlanMember2021-06-300001806837us-gaap:RestrictedStockUnitsRSUMember2020-12-310001806837us-gaap:RestrictedStockMember2020-12-310001806837us-gaap:EmployeeStockOptionMember2020-12-310001806837us-gaap:RestrictedStockUnitsRSUMember2020-06-300001806837us-gaap:RestrictedStockMember2020-06-300001806837us-gaap:EmployeeStockOptionMember2020-06-300001806837us-gaap:RestrictedStockMember2020-07-282020-07-280001806837us-gaap:EmployeeStockMember2021-06-012021-11-300001806837us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001806837us-gaap:EmployeeStockMember2020-12-012021-05-310001806837us-gaap:PhantomShareUnitsPSUsMemberverx:TaxamoMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2021-05-122021-05-120001806837srt:MinimumMemberus-gaap:EmployeeStockOptionMember2021-01-012021-06-300001806837srt:MaximumMemberus-gaap:EmployeeStockOptionMember2021-01-012021-06-300001806837srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001806837srt:MinimumMemberus-gaap:RestrictedStockMember2021-01-012021-06-300001806837srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001806837srt:MaximumMemberus-gaap:RestrictedStockMember2021-01-012021-06-3000018068372021-06-302021-06-300001806837verx:SoftwareLicensesMember2021-04-012021-06-300001806837verx:CloudSubscriptionsMember2021-04-012021-06-300001806837verx:SoftwareLicensesMember2021-01-012021-06-300001806837verx:CloudSubscriptionsMember2021-01-012021-06-300001806837verx:SoftwareLicensesMember2020-04-012020-06-300001806837verx:CloudSubscriptionsMember2020-04-012020-06-300001806837verx:SoftwareLicensesMember2020-01-012020-06-300001806837verx:CloudSubscriptionsMember2020-01-012020-06-300001806837us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-01-012021-06-300001806837us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-01-012021-03-310001806837us-gaap:LongTermDebtMember2020-07-312020-07-310001806837srt:MinimumMemberverx:SoftwareDevelopedForSaleMember2021-01-012021-06-300001806837srt:MinimumMemberus-gaap:SoftwareDevelopmentMember2021-01-012021-06-300001806837srt:MaximumMemberverx:SoftwareDevelopedForSaleMember2021-01-012021-06-300001806837srt:MaximumMemberus-gaap:SoftwareDevelopmentMember2021-01-012021-06-300001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2021-06-300001806837verx:SoftwareDevelopmentCloudBasedServicesMember2021-06-300001806837us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-06-300001806837us-gaap:LeaseholdImprovementsMember2021-06-300001806837us-gaap:FurnitureAndFixturesMember2021-06-300001806837us-gaap:EquipmentMember2021-06-300001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2020-12-310001806837verx:SoftwareDevelopmentCloudBasedServicesMember2020-12-310001806837us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-12-310001806837us-gaap:LeaseholdImprovementsMember2020-12-310001806837us-gaap:FurnitureAndFixturesMember2020-12-310001806837us-gaap:EquipmentMember2020-12-310001806837us-gaap:NonvotingCommonStockMember2020-01-012020-06-300001806837verx:SoftwareDevelopmentCloudBasedServicesMember2021-01-012021-06-300001806837verx:SoftwareDevelopmentCloudBasedServicesMember2020-01-012020-06-300001806837verx:TellutaxMember2021-01-252021-01-250001806837verx:SystaxSistemasFiscaisLtdaMember2020-01-072020-01-070001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001806837us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001806837us-gaap:AccountingStandardsUpdate201602Member2021-01-010001806837us-gaap:BeneficialOwnerMemberus-gaap:CommonClassAMember2021-04-012021-06-300001806837us-gaap:BeneficialOwnerMemberus-gaap:CommonClassAMember2021-01-012021-06-300001806837us-gaap:RetainedEarningsMember2021-04-012021-06-300001806837us-gaap:RetainedEarningsMember2021-01-012021-03-310001806837us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001806837us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001806837us-gaap:FairValueMeasurementsRecurringMember2020-12-310001806837us-gaap:LineOfCreditMember2020-04-030001806837us-gaap:LineOfCreditMember2021-06-300001806837us-gaap:LineOfCreditMember2020-12-3100018068372021-01-012021-01-010001806837verx:TellutaxMember2021-01-012021-06-300001806837us-gaap:OtherIntangibleAssetsMember2021-06-300001806837us-gaap:OtherIntangibleAssetsMember2020-12-310001806837us-gaap:AssetsHeldUnderCapitalLeasesMember2021-04-012021-06-300001806837us-gaap:AssetsHeldUnderCapitalLeasesMember2021-01-012021-06-300001806837us-gaap:AssetsHeldUnderCapitalLeasesMember2020-01-012020-06-300001806837verx:BusinessCombinationContingentConsiderationMember2021-06-300001806837verx:BusinessCombinationContingentConsiderationMember2021-01-012021-06-300001806837verx:QuotaholdersMemberverx:SystaxSistemasFiscaisLtdaMember2020-01-070001806837us-gaap:EmployeeStockOptionMember2021-06-300001806837us-gaap:RestrictedStockUnitsRSUMember2021-06-300001806837us-gaap:RestrictedStockMember2021-06-300001806837us-gaap:EmployeeStockMember2021-06-300001806837us-gaap:CommonClassBMember2021-04-012021-06-300001806837us-gaap:CommonClassAMember2021-04-012021-06-300001806837us-gaap:CommonClassBMember2021-01-012021-06-300001806837us-gaap:CommonClassAMember2021-01-012021-06-300001806837us-gaap:CommonClassBMember2020-04-012020-06-300001806837us-gaap:CommonClassAMember2020-04-012020-06-300001806837us-gaap:CommonClassBMember2020-01-012020-06-300001806837us-gaap:CommonClassAMember2020-01-012020-06-300001806837us-gaap:RetainedEarningsMember2020-04-012020-06-300001806837us-gaap:RetainedEarningsMember2020-01-012020-03-310001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2021-04-012021-06-300001806837verx:PropertyPlantAndEquipmentExcludingAllInternalUseSoftwareAndCapitalLeasesMember2021-04-012021-06-300001806837us-gaap:SoftwareDevelopmentMember2021-04-012021-06-300001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2021-01-012021-06-300001806837verx:PropertyPlantAndEquipmentExcludingAllInternalUseSoftwareAndCapitalLeasesMember2021-01-012021-06-300001806837us-gaap:SoftwareDevelopmentMember2021-01-012021-06-300001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2020-04-012020-06-300001806837verx:PropertyPlantAndEquipmentExcludingAllInternalUseSoftwareAndCapitalLeasesMember2020-04-012020-06-300001806837us-gaap:SoftwareDevelopmentMember2020-04-012020-06-300001806837us-gaap:AssetsHeldUnderCapitalLeasesMember2020-04-012020-06-300001806837verx:SoftwareDevelopmentInternalSystemsAndToolsMember2020-01-012020-06-300001806837verx:PropertyPlantAndEquipmentExcludingAllInternalUseSoftwareAndCapitalLeasesMember2020-01-012020-06-300001806837us-gaap:SoftwareDevelopmentMember2020-01-012020-06-300001806837us-gaap:LondonInterbankOfferedRateLiborSwapRateMember2021-06-300001806837us-gaap:BaseRateMember2021-06-300001806837us-gaap:LongTermDebtMember2020-04-030001806837us-gaap:LineOfCreditMember2021-01-012021-06-300001806837us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2021-04-012021-06-300001806837us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2021-01-012021-06-300001806837us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2020-04-012020-06-300001806837us-gaap:NonUsMemberus-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMember2020-01-012020-06-300001806837us-gaap:CommonClassBMember2020-07-282020-07-280001806837us-gaap:CommonClassAMember2020-07-282020-07-280001806837us-gaap:RestrictedStockMemberverx:CommonClassNonVotingMember2021-06-300001806837us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-06-300001806837us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-06-300001806837us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-03-310001806837us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-03-310001806837us-gaap:CommonClassBMemberus-gaap:CommonStockMember2020-12-310001806837us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-12-310001806837us-gaap:CommonStockMember2020-07-280001806837verx:CommonClassNonVotingMemberus-gaap:CommonStockMember2020-06-300001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2020-06-300001806837us-gaap:MajorityShareholderMemberverx:CommonClassNonVotingMember2020-06-300001806837us-gaap:MajorityShareholderMemberus-gaap:CommonClassBMember2020-06-300001806837us-gaap:BeneficialOwnerMemberus-gaap:NonvotingCommonStockMember2020-06-300001806837verx:CommonClassNonVotingMember2020-06-300001806837us-gaap:TreasuryStockMember2020-06-300001806837us-gaap:NonvotingCommonStockMember2020-06-300001806837verx:CommonClassNonVotingMemberus-gaap:CommonStockMember2020-03-310001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2020-03-310001806837us-gaap:TreasuryStockMember2020-03-310001806837verx:CommonClassNonVotingMemberus-gaap:CommonStockMember2019-12-310001806837us-gaap:NonvotingCommonStockMemberus-gaap:CommonStockMember2019-12-310001806837us-gaap:TreasuryStockMember2019-12-310001806837us-gaap:CommonClassBMember2020-07-280001806837us-gaap:CommonClassAMember2020-07-280001806837us-gaap:CommonClassBMember2021-06-300001806837us-gaap:CommonClassAMember2021-06-300001806837us-gaap:CommonClassBMember2020-12-310001806837us-gaap:CommonClassAMember2020-12-3100018068372020-07-2800018068372020-01-012020-03-310001806837us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001806837us-gaap:FairValueMeasurementsRecurringMember2021-06-300001806837verx:TaxamoMember2021-05-122021-05-120001806837us-gaap:AssetUnderConstructionMember2021-06-300001806837us-gaap:AssetUnderConstructionMember2020-12-310001806837us-gaap:ComputerSoftwareIntangibleAssetMember2021-06-300001806837us-gaap:ComputerSoftwareIntangibleAssetMember2020-12-310001806837verx:TaxamoMember2021-01-012021-06-300001806837verx:TellutaxMember2021-01-250001806837verx:SystaxSistemasFiscaisLtdaMember2020-12-310001806837verx:MeasurementInputRevenueVolatilityMember2021-06-300001806837us-gaap:MeasurementInputExpectedTermMember2021-06-300001806837us-gaap:MeasurementInputDiscountRateMember2021-06-300001806837verx:TaxamoMemberus-gaap:OtherOperatingIncomeExpenseMember2021-04-012021-06-300001806837verx:TaxamoMemberus-gaap:OtherOperatingIncomeExpenseMember2021-01-012021-06-300001806837verx:TaxamoMember2021-05-120001806837verx:SystaxSistemasFiscaisLtdaMember2020-01-070001806837us-gaap:CostOfSalesMember2021-04-012021-06-300001806837us-gaap:CostOfSalesMember2021-01-012021-06-3000018068372021-03-3100018068372020-06-3000018068372020-03-310001806837verx:AmendedPlanMember2021-04-012021-06-300001806837us-gaap:StockAppreciationRightsSARSMember2021-04-012021-06-300001806837us-gaap:ServiceOtherMember2021-04-012021-06-300001806837us-gaap:SellingAndMarketingExpenseMember2021-04-012021-06-300001806837us-gaap:RestrictedStockUnitsRSUMember2021-04-012021-06-300001806837us-gaap:RestrictedStockMember2021-04-012021-06-300001806837us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001806837us-gaap:LicenseAndServiceMember2021-04-012021-06-300001806837us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001806837us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001806837us-gaap:EmployeeStockMember2021-04-012021-06-300001806837verx:AmendedPlanMember2021-01-012021-06-300001806837us-gaap:StockAppreciationRightsSARSMember2021-01-012021-06-300001806837us-gaap:ServiceOtherMember2021-01-012021-06-300001806837us-gaap:SellingAndMarketingExpenseMember2021-01-012021-06-300001806837us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001806837us-gaap:RestrictedStockMember2021-01-012021-06-300001806837us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001806837us-gaap:PhantomShareUnitsPSUsMember2021-01-012021-06-300001806837us-gaap:LicenseAndServiceMember2021-01-012021-06-300001806837us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001806837us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001806837us-gaap:EmployeeStockMember2021-01-012021-06-300001806837us-gaap:StockAppreciationRightsSARSMember2020-04-012020-06-300001806837us-gaap:ServiceOtherMember2020-04-012020-06-300001806837us-gaap:SellingAndMarketingExpenseMember2020-04-012020-06-300001806837us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001806837us-gaap:LicenseAndServiceMember2020-04-012020-06-300001806837us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-3000018068372020-04-012020-06-300001806837verx:AmendedPlanMember2020-01-012020-06-300001806837us-gaap:StockAppreciationRightsSARSMember2020-01-012020-06-300001806837us-gaap:ServiceOtherMember2020-01-012020-06-300001806837us-gaap:SellingAndMarketingExpenseMember2020-01-012020-06-300001806837us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001806837us-gaap:LicenseAndServiceMember2020-01-012020-06-300001806837us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-3000018068372020-01-012020-06-300001806837us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-012021-03-3100018068372021-01-012021-03-310001806837us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-04-012021-06-3000018068372021-04-012021-06-300001806837us-gaap:OtherIntangibleAssetsMember2021-01-012021-06-300001806837us-gaap:OtherIntangibleAssetsMember2020-01-012020-12-310001806837verx:AssetsHeldUnderFinanceLeasesMember2021-06-300001806837us-gaap:SoftwareDevelopmentMember2021-06-300001806837us-gaap:SoftwareDevelopmentMember2020-12-310001806837us-gaap:AssetsHeldUnderCapitalLeasesMember2020-12-3100018068372019-12-3100018068372021-06-3000018068372020-12-310001806837us-gaap:CommonClassBMember2021-08-090001806837us-gaap:CommonClassAMember2021-08-0900018068372021-01-012021-06-30xbrli:sharesiso4217:USDxbrli:pureiso4217:USDxbrli:sharesverx:segmentverx:payment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

    

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

    

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39413

VERTEX, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

    

 

    

23-2081753

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2301 Renaissance Blvd
King of Prussia, Pennsylvania

 

19406 

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (800) 355-3500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading symbol

    

Name of each exchange on which registered

Class A Common Stock, Par Value $0.001 Per Share

VERX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

    

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of August 9, 2021, the registrant had 39,963,083 shares of Class A common stock, $0.001 par value per share, and 108,017,000 shares of Class B common stock, $0.001 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

9

    

 

Page

Part I - Financial Information 

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 (unaudited)

5

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)

6

Condensed Consolidated Statements of Changes in Equity (Deficit) for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)

7

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited)

9

Notes to Condensed Consolidated Financial Statements (unaudited)

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

38

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

60

Item 4.

Controls and Procedures

61

Part II - Other Information

61

Item 1.

Legal Proceedings

61

Item 1A.

Risk Factors

61

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

62

Item 3.

Defaults Upon Senior Securities

62

Item 4.

Mine Safety Disclosures

62

Item 5.

Other Information

62

Item 6.

Exhibits

63

Signatures

64

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations and regarding future events or our future results of operations, financial condition, business, strategies, financial needs, and the plans and objectives of management, are forward-looking statements and should be evaluated as such. These statements often include words such as “anticipate,” “believe,” “expect,” “suggests,” “plans,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” and other similar expressions or the negatives of those terms. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. Important factors that may materially affect such forward-looking statements include, but are not limited to:

the potential effects on our business of the coronavirus disease 2019 (“COVID-19”) pandemic;
our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions;
our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth;
the timing of our introduction of new solutions or updates to existing solutions;
our ability to successfully diversify our solutions by developing or introducing new solutions or acquiring and integrating additional businesses, products, services or content;
our ability to maintain and expand our strategic relationships with third parties;
risks related to our expanding international operations;
our ability to deliver our solutions to customers without disruption or delay;
our exposure to liability from errors, delays, fraud or system failures, which may not be covered by insurance;
risks related to our determinations of customers’ transaction tax and tax payments;
risks related to changes in tax laws and regulations or their interpretation or enforcement;
our ability to manage cybersecurity and data privacy risks;
risks related to failures in information technology, infrastructure and third-party service providers;
our ability to effectively protect, maintain and enhance our brand;
global economic weakness and uncertainties, and disruption in the capital and credit markets;
business disruptions related to natural disasters, epidemic outbreaks, terrorist acts, political events or other events outside of our control;
our ability to comply with anti-corruption, anti-bribery and similar laws;
changes in interest rates, security ratings and market perceptions of the industry in which we operate, or our ability to obtain capital on commercially reasonable terms or at all;
any statements of belief and any statements of assumptions underlying any of the foregoing; and
other factors beyond our control.

Table of Contents

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in our Annual Report on Form 10-K for the year ended December 31, 2020 and in other sections of this Quarterly Report on Form 10-Q, including under Part II, Item 1A, Risk Factors. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to identify all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on our forward-looking statements, and you should not rely on forward-looking statements as predictions of future events. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this report. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Vertex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of June 30, 2021 and December 31, 2020

(Amounts in thousands, except per share data)

June 30, 2021

    

December 31, 2020

    

(unaudited)

    

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

101,593

$

303,051

Funds held for customers

 

31,060

 

9,222

Accounts receivable, net of allowance of $9,399, and $8,592, respectively

 

73,130

 

77,159

Prepaid expenses and other current assets

 

17,593

 

13,259

Total current assets

 

223,376

 

402,691

Property and equipment, net of accumulated depreciation

 

61,611

 

56,557

Capitalized software, net of accumulated amortization

 

34,364

 

31,989

Goodwill and other intangible assets

 

220,818

 

18,711

Deferred commissions

 

11,545

 

11,743

Deferred income tax asset

32,573

29,974

Operating lease right-of-use assets

22,156

Other assets

 

3,086

 

3,263

Total assets

$

609,529

$

554,928

 

 

Liabilities and stockholders' equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

11,694

$

8,876

Accrued expenses

 

19,974

 

19,176

Distributions payable

 

 

2,700

Customer funds obligations

 

31,462

 

9,235

Accrued salaries and benefits

 

22,994

 

17,326

Accrued and deferred compensation, current

 

15,648

 

24,429

Deferred revenue

 

210,587

 

207,560

Current portion of long-term debt

882

Current portion of operating lease liabilities

3,641

Current portion of finance lease liabilities

271

Deferred rent and other

 

 

939

Purchase commitment and contingent consideration liabilities, current

 

10,458

 

845

Total current liabilities

 

326,729

 

291,968

Deferred compensation, net of current portion

 

4,244

 

5,010

Deferred revenue, net of current portion

 

12,025

 

14,702

Debt, net of current portion

 

 

225

Operating lease liabilities, net of current portion

26,726

Finance lease liabilities, net of current portion

334

Purchase commitment and contingent consideration liabilities, net of current portion

 

11,610

 

8,905

Deferred other liabilities

 

17

 

8,632

Total liabilities

 

381,685

 

329,442

Commitments and contingencies (Note 13)

 

  

 

  

Stockholders' equity:

 

  

 

  

Preferred shares, $0.001 par value, 30,000 shares authorized; no shares issued and outstanding

Class A common stock, $0.001 par value, 300,000 shares authorized; 39,828 and 26,327 shares issued and outstanding, respectively

40

26

Class B common stock, $0.001 par value, 150,000 shares authorized; 108,017 and 120,117 shares issued and outstanding, respectively

108

120

Additional paid in capital

209,629

206,541

Retained earnings

 

25,530

 

21,926

Accumulated other comprehensive loss

 

(7,463)

 

(3,127)

Total stockholders' equity

 

227,844

 

225,486

Total liabilities and stockholders' equity

$

609,529

$

554,928

The accompanying notes are an integral part of these condensed consolidated financial statements.

-5-

Table of Contents

Vertex, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

For the three and six months ended June 30, 2021 and 2020

(Amounts in thousands, except per share data)

Three months ended

Six Months Ended

June 30, 

June 30, 

2021

2020

2021

2020

(unaudited)

(unaudited)

Revenues:

    

  

    

  

  

    

  

Software subscriptions

$

89,604

$

77,306

$

172,884

$

153,066

Services

 

15,334

 

13,965

 

30,290

 

27,450

Total revenues

 

104,938

 

91,271

 

203,174

 

180,516

Cost of revenues:

 

  

 

  

 

  

 

  

Software subscriptions

 

26,829

 

26,001

 

52,419

 

50,685

Services

 

10,550

 

15,744

 

21,893

 

30,522

Total cost of revenues

 

37,379

 

41,745

 

74,312

 

81,207

Gross profit

 

67,559

 

49,526

 

128,862

 

99,309

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

 

11,926

 

13,617

 

23,385

 

26,696

Selling and marketing

 

24,865

 

24,544

 

45,015

 

48,877

General and administrative

 

24,865

 

37,758

 

49,717

 

75,394

Depreciation and amortization

 

2,878

 

2,505

 

5,705

 

5,374

Other operating expense, net

 

4,483

 

103

 

4,354

 

214

Total operating expenses

 

69,017

 

78,527

 

128,176

 

156,555

Income (loss) from operations

 

(1,458)

 

(29,001)

 

686

 

(57,246)

Interest (income) expense, net

 

(385)

 

1,059

 

150

 

1,628

Income (loss) before income taxes

 

(1,073)

 

(30,060)

 

536

 

(58,874)

Income tax benefit

 

(1,881)

 

(985)

 

(2,560)

 

(735)

Net income (loss)

 

808

 

(29,075)

 

3,096

 

(58,139)

Other comprehensive loss from foreign currency translation adjustments and revaluations, net of tax

 

3,359

 

276

 

4,336

 

3,274

Total comprehensive loss

$

(2,551)

$

(29,351)

$

(1,240)

$

(61,413)

Net income (loss) attributable to Class A stockholders

$

190

$

(32)

$

644

$

(16)

Net income (loss) per Class A share, basic

$

0.01

$

(0.24)

$

0.02

$

(0.24)

Weighted average Class A common stock, basic

 

34,726

 

132

 

30,592

 

66

Net income (loss) attributable to Class A stockholders, diluted

$

229

$

(32)

$

811

$

(16)

Net income (loss) per Class A share, diluted

$

0.01

$

(0.24)

$

0.02

$

(0.24)

Weighted average Class A common stock, diluted

 

44,711

 

132

 

41,357

 

66

Net income (loss) attributable to Class B stockholders

$

618

$

(29,043)

$

2,452

$

(58,123)

Net income (loss) per Class B share, basic

$

0.01

$

(0.24)

$

0.02

$

(0.48)

Weighted average Class B common stock, basic

 

112,804

 

120,417

 

116,460

 

120,417

Net income (loss) attributable to Class B stockholders, diluted

$

579

$

(29,043)

$

2,285

$

(58,123)

Net income (loss) per Class B share, diluted

$

0.01

$

(0.24)

$

0.02

$

(0.48)

Weighted average Class B common stock, diluted

112,804

120,417

116,460

120,417

The accompanying notes are an integral part of these condensed consolidated financial statements.

-6-

Table of Contents

Vertex, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Deficit)

For the three and six months ended June 30, 2021 (unaudited)

(Amounts in thousands)

Before Recapitalization

After Recapitalization

Accumulated

Outstanding

Class A

Outstanding

Class B

Outstanding

Class A

Outstanding

Class B

Additional

  

  

Other 

  

Treasury

  

  

Total

  

Options for

Class A

Common

Class B

Common

Class A

Common

Class B

Common

Paid-in

Retained

Comprehensive 

Shares

Treasury

Stockholders'

Redeemable

  

Shares

  

 Stock

  

Shares

  

Stock

  

Shares

  

 Stock

  

Shares

  

Stock

  

Capital

  

Earnings

  

Loss

  

Issued

  

Stock

  

Equity

  

Shares

Balance, January 1, 2021

$

$

26,327

$

26

120,117

$

120

$

206,541

$

21,926

$

(3,127)

$

$

225,486

$

ASC 842 transition adjustment

 

 

 

508

508

Exercise of stock options, net

640

 

1

 

 

(6,998)

(6,997)

Shares issued upon vesting of Restricted Stock Units, net

5

 

 

 

(34)

(34)

Stock-based compensation expense

 

 

 

6,302

6,302

Foreign currency translation adjustments and revaluations, net of tax

 

 

 

(977)

(977)

Net income

 

 

 

2,288

2,288

Balance, March 31, 2021

 

26,972

27

 

120,117

120

205,811

24,722

(4,104)

226,576

Exercise of stock options, net

462

1

(3,293)

(3,292)

Shares issued upon vesting of Restricted Stock Awards

234

Stock-based compensation expense

6,101

6,101

Shares issued under ESPP

60

1,010

1,010

Class B shares exchanged for Class A shares

12,100

12

(12,100)

(12)

Foreign currency translation adjustments and revaluations, net of tax

(3,359)

(3,359)

Net income

808

808

Balance, June 30, 2021

$

 

$

39,828

$

40

 

108,017

$

108

$

209,629

$

25,530

$

(7,463)

$

$

227,844

$

The accompanying notes are an integral part of these condensed consolidated financial statements.

-7-

Table of Contents

Vertex, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Deficit)

For the three and six months ended June 30, 2020 (unaudited)

(Amounts in thousands)

Before Recapitalization

After Recapitalization

Accumulated

Outstanding

Class A

Outstanding

Class B

Outstanding

Class A

Outstanding

Class B

Additional

  

  

Other 

  

Treasury

  

  

Total

  

Options for

Class A

Common

Class B

Common

Class A

Common

Class B

Common

Paid In

Accumulated

Comprehensive 

Shares

Treasury

Stockholders'

Redeemable

  

Shares

  

 Stock

  

Shares

  

Stock

  

Shares

  

 Stock

  

Shares

  

Stock

  

Capital

  

Deficit

  

Loss

  

Issued

  

Stock

  

Deficit

  

Shares

Balance, January 1, 2020

147

$

 

120,270

$

54

$

 

$

$

$

(90,701)

$

(491)

 

41,910

$

(38,638)

$

(129,776)

$

17,344

Remeasurement of options for redeemable shares

 

 

 

 

 

 

 

 

(15,242)

 

 

 

 

(15,242)

 

15,242

Distributions declared

(4,010)

(4,010)

Foreign currency translation adjustments and revaluations, net of tax

 

 

 

 

 

 

 

 

 

(2,998)

 

 

 

(2,998)

 

Net loss

 

 

 

 

 

 

 

 

(29,064)

 

 

 

 

(29,064)

 

Balance, March 31, 2020

147

 

120,270

54

 

 

(139,017)

(3,489)

 

41,910

(38,638)

(181,090)

32,586

Remeasurement of options for redeemable shares

(14,637)

(14,637)

14,637

Exercise of stock options, net

173

53

53

Distributions declared

(123,185)

(123,185)

Foreign currency translation adjustments and revaluations, net of tax

(276)

(276)

Net loss

(29,075)

(29,075)

Balance, June 30, 2020

147

$

120,443

$

54

$

$

$

$

(305,861)

$

(3,765)

41,910

$

(38,638)

(348,210)

$

47,223

The accompanying notes are an integral part of these condensed consolidated financial statements.

-8-