Vertex, Inc. (NASDAQ:VERX) Q4 2023 Earnings Call Transcript February 29, 2024 8:30 AM ET

Company Participants

Joe Crivelli - Vice President, Investor Relations

David DeStefano - President & Chief Executive Officer

John Schwab - Chief Financial Officer

Conference Call Participants

Chris Quintero - Morgan Stanley

Matt Stotler - William Blair

Adam Hotchkiss - Goldman Sachs

Samad Samana - Jefferies

Alex Sklar - Raymond James

Daniel Jester - BMO Capital Markets

Pat Walravens - JMP Securities

Brad Reback - Stifel

Operator

Greetings. Welcome to Vertex's Fourth Quarter 2023 Earnings Conference Call. Please note this conference is being recorded. At this time, all participants are in listen-only mode.

I will turn the conference over to Joe Crivelli, Vice President of Investor Relations. Mr. Crivelli, you may now begin.

Joe Crivelli

Hello, and thanks for joining us to discuss Vertex's fourth quarter financial results. I'm Joe Crivelli, Vice President, Investor Relations. David DeStefano, our President and CEO; and John Schwab our CFO, are also with us today. During this call, we may make forward-looking statements about expected future results. Our actual financial results may differ due to risks and uncertainties. These risks and uncertainties are described in our filings with the Securities and Exchange Commission.

Please note that our remarks today will also include references to non-GAAP financial measures. A reconciliation of these non-GAAP metrics to GAAP is also provided in today's press release. This conference call is being recorded and will be available for replay on our Investor Relations website.

I'll now turn the call over to David.

David DeStefano

Thanks, Joe. Welcome everyone and thank you for joining us. The fourth quarter was our strongest quarter of 2023, wrapping up a year of outstanding execution across all areas of the business. I'm extremely proud of the entire Vertex team. Our employees' focus and commitment underpin our market-leading solutions and customer value. This in turn enabled our strong performance this year.

Revenue in the fourth quarter was $154.9 million, up 18.1% year-over-year. This exceeds the high end of our fourth quarter revenue guidance by $7.9 million. Our adjusted EBITDA was $32 million, up more than 50% compared to last year's fourth quarter. This represents an EBITDA margin of 20.7%, our highest EBITDA margin in over three years. In addition, this quarter ARR exceeded $500 million for the first time in our history, growing nearly 19% to $512.5 million. NRR was a record 113% up two full percentage points from the third quarter. Average annual revenue per customer increased 19% year-over-year to nearly $119,000.