Vertex, Inc. Segments Disclosure
15. SEGMENT DISCLOSURES
The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise in which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, reviews financial information regularly at the consolidated level. Net income (loss) and adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), a non-GAAP measure, are both used as metrics to evaluate performance of the business in deciding whether to reinvest profits into software development, acquisitions or into other areas of the Company. The Company believes that Adjusted EBITDA is a useful supplemental measure to evaluate overall operating performance as it measures business performance by focusing on cash related results and it is an important metric to lenders under the Company’s Credit Agreement. The most directly comparable GAAP measure to Adjusted EBITDA is net income (loss).
The CODM monitors consolidated forecasted versus actual net income (loss) and Adjusted EBITDA results for the purpose of determining the general health of the Company and assessing the performance of the Company as compared to management’s expectations.
The following significant expense categories and measures of segment income (loss) are regularly reported to the CODM for the Company’s single segment:
For the year ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Total Revenues | $ | 748,444 | $ | 666,776 | $ | 572,387 | |||
Less: | |||||||||
Cost of revenues – software subscriptions | 187,816 | 175,580 | 162,920 | ||||||
Cost of revenues – services | 79,027 | 65,071 | 60,888 | ||||||
Research & development | 83,715 | 66,666 | 58,212 | ||||||
Selling & marketing | 196,488 | 170,574 | 140,237 | ||||||
General & administrative | 178,685 | 152,835 | 145,936 | ||||||
Depreciation & amortization | 24,812 | 20,953 | 15,202 | ||||||
Change in fair value of acquisition contingent earn-outs | (17,000) | 17,500 | — | ||||||
Other segment items (1) | 12,570 | (175) | 6,502 | ||||||
Interest expense (income), net | (5,248) | (4,137) | 4,164 | ||||||
Income tax expense (benefit) | 368 | 54,638 | (8,581) | ||||||
Net income (loss) (GAAP) | $ | 7,211 | $ | (52,729) | $ | (13,093) | |||
Adjustments: | |||||||||
Interest expense (income), net | (5,248) | (4,137) | 4,164 | ||||||
Income tax expense | 368 | 54,638 | (8,581) | ||||||
Depreciation and amortization – property and equipment | 24,812 | 20,953 | 15,202 | ||||||
Depreciation and amortization of capitalized software and acquired intangible assets – cost of subscription revenues | 69,842 | 59,302 | 54,048 | ||||||
Amortization of acquired intangible assets – selling and marketing expense | 2,277 | 2,478 | 2,641 | ||||||
Amortization of cloud computing implementation costs – general and administrative expense | 3,738 | 4,007 | 2,570 | ||||||
Stock-based compensation expense | 57,763 | 47,425 | 33,919 | ||||||
Severance expense | 6,823 | 3,048 | 3,576 | ||||||
Acquisition contingent consideration | 200 | (2,575) | 1,549 | ||||||
Change in fair value of acquisition contingent earn-outs | (17,000) | 17,500 | — | ||||||
Transaction costs (2) | 10,754 | 2,032 | 4,853 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 161,540 | $ | 151,942 | $ | 100,848 | |||
(1) Other segment items include professional fees, contracted labor, transaction costs, acquisition related earn-out adjustments and foreign currency exchange gains (losses). | |||||||||
(2) The year ended December 31, 2025 includes legal expenses associated with pending litigation related to claims the Company has made against a competitor. For further information, refer to Note 14, “Commitments and Contingencies” to the consolidated financial statements. | |||||||||
Additionally, the Company considers stock-based compensation expense a significant expense category. For further information, refer to Note 13, “Employee Benefit and Deferred Compensation Plans.”
As the Company operates solely within one segment, total assets, property and equipment, net, and capitalized software, net are reported at the consolidated level on the consolidated balance sheets. The Company’s assets include both current and long-lived assets, and corporate assets. As of December 31, 2025 and 2024, $1,347 and $687, respectively, of the Company’s property and equipment assets were held outside of the U.S.
Depreciation and amortization, property and equipment additions, and capital software additions are reported at the consolidated level on the Consolidated Statements of Cash Flows.
The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types as described in Note 1, “Summary of Significant Accounting Policies.” For the years ended December 31, 2025, 2024, and 2023, approximately 10%, 8%, and 8%, respectively, of the Company’s revenues were generated outside of the U.S. None of the Company’s customers represented more than 10% of total revenues for the years ended December 31, 2025, 2024 or 2023. For further information including disaggregation of revenues, refer to Note 2, “Revenue Recognition.”
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.