Vertex's "AI-First" Strategy Fuels Profit Surge and Strong Q2 Growth

KING OF PRUSSIA, PA – August 03, 2026 – Tax technology firm Vertex, Inc. today announced robust second-quarter financial results that significantly surpassed expectations, signaling that its strategic pivot towards operational discipline and an “AI-First” culture is yielding substantial returns. The company reported a 10.5% year-over-year increase in total revenues to $204.0 million, driven by a powerful 17.9% surge in its cloud segment, which now accounts for over half of its software subscription revenue.

More impressively, Vertex posted an adjusted EBITDA of $51.0 million, a dramatic increase from $38.4 million in the same period last year, expanding its margin to a healthy 25.0%. This strong performance fueled a notable turnaround to a net income of $9.0 million, compared to a net loss of $1.0 million in the prior-year quarter. Citing confidence from this solid execution, the company raised its full-year profitability outlook.

“Vertex delivered solid second-quarter results, with revenue at the high end of our guidance and adjusted EBITDA exceeding our expectations,” said Christopher Young, President and Chief Executive Officer. “The quarter demonstrated the durability of our business and the earnings leverage we can generate through greater operating focus and discipline.”

The “AI-First” Engine of Efficiency

Beyond the headline numbers, the driving force behind Vertex’s transformation is its aggressive adoption of artificial intelligence. Young emphasized that the company’s “AI-First” strategy is no longer a future ambition but a present-day reality that is fundamentally improving both internal operations and customer-facing solutions.

“Our ‘AI-First’ strategy is beginning to improve the speed and efficiency of selected engineering and customer-delivery workflows,” Young stated, hinting at tangible productivity gains. Internally, the company has integrated AI tools across its software engineering teams, reportedly boosting code merge rates by as much as 30%. This acceleration in development cycles allows Vertex to innovate faster and respond more nimbly to the complex, ever-changing landscape of global tax regulations.

The impact extends directly to clients. By leveraging AI, Vertex is working to compress customer implementation timelines from months toward days, a significant value proposition in the fast-paced world of enterprise technology. The strategy is also enhancing its product offerings, with new AI capabilities embedded into the Vertex Cloud platform. These features are designed to help tax and finance teams move from reactive compliance to proactive risk management by identifying potential issues earlier, applying tax rules more consistently, and automatically detecting anomalies in vast datasets. This approach leverages proprietary Large Language Models (LLMs) combined with a “human-in-the-loop” system, where high-confidence tasks are automated while complex cases are flagged for expert review, ensuring both efficiency and accuracy.

This strategic focus aligns with a broader industry shift. Recent reports indicate that tax professionals are rapidly moving from merely experimenting with AI to relying on it for core tasks, citing significant time savings and improved accuracy as key benefits. By embedding responsible AI—with explainable and auditable outcomes—directly into its platform, Vertex is positioning itself at the forefront of this technological wave.

Navigating the Global E-Invoicing Maze

Another critical tailwind for Vertex is the accelerating global adoption of mandatory electronic invoicing. Governments across Europe, Latin America, and Asia are increasingly requiring businesses to report transaction data in real-time to enhance tax transparency and combat fraud. For multinational corporations, this creates a dauntingly complex and fragmented regulatory environment, with each jurisdiction imposing unique formats and protocols.

This complexity, however, represents a significant market opportunity. Young noted that “e-invoicing momentum improved” during the quarter as enterprises scramble to find comprehensive compliance solutions. Vertex’s “Decision-to-Defense™” model is a key differentiator here. Instead of offering a point solution for e-invoicing, the company provides an end-to-end platform that manages the entire indirect tax lifecycle—from initial tax determination on a transaction to automated e-invoice creation, reporting, filing, and ultimately, audit defense. This holistic approach simplifies compliance for global businesses, allowing them to manage diverse regulatory requirements through a single, integrated system.

As more countries announce and implement e-invoicing mandates, the demand for robust, automated, and globally-aware platforms is expected to grow, placing Vertex in a strong position to capture new business and expand its footprint within its existing customer base, which already includes over 60% of the Fortune 500.

A Foundation of Financial Discipline

The second-quarter results underscore a new era of operational rigor at Vertex. The significant expansion of its adjusted EBITDA margin from 20.8% to 25.0% in just one year is a testament to the success of its value creation plan. This focus on profitability and efficiency allows the company to self-fund its investments in AI and other strategic growth areas.

Chief Financial Officer John Schwab commented on this execution, stating, “The consistency of our first-half results and the strength of our operating model increased our confidence in the full year, allowing us to narrow our revenue guidance range while raising our adjusted EBITDA outlook.”

This financial health is built on a stable and loyal customer base. The company reported a Gross Revenue Retention (GRR) rate of 95%, indicating very low customer churn. Furthermore, its Net Revenue Retention (NRR) rate of 105% demonstrates that Vertex is successfully expanding its relationships with existing customers, who are adding new services or increasing their usage as their own businesses grow and face greater tax complexity. This durable recurring revenue model provides a predictable foundation for future growth and investment.

A Confident Outlook on Innovation and Growth

With a strengthened leadership team and a clear strategic focus, Vertex is confidently looking toward the second half of the year. The company’s progress has prompted it to update its full-year 2026 forecast, narrowing its revenue guidance to a range of $825.0 million to $830.0 million and, more significantly, raising its adjusted EBITDA outlook to between $206.0 million and $210.0 million.

“While we have more work to do, we enter the second half with a stronger operating foundation and clear opportunities to create additional value for customers and stockholders,” Young concluded. The company’s performance this quarter suggests that its strategic bets on AI, operational excellence, and comprehensive global compliance are not just paying off but are accelerating its trajectory in the competitive tax technology industry.