Vertex Inc. (VERX)- 2Q24 Earnings Quality Update

Earnings quality remains suspect in our view

We pointed out in our Wednesday piece Vertex (VERX)- Four Down, One to Go that VERX was the only one of the five companies covered in our April report Tech Revenue Warnings that had not underperformed the tech sector since publication. Our original concern with VERX was focused on its rising receivables balances. As promised Wednesday, we reviewed VERX’s 2Q to see if these risks persisted.

For 2Q24, non-GAAP EPS of 15 cents beat by only 2 cents and revenue topped forecast by only $440,000. We can see below that VERX has a history of barely beating earnings estimates. This degree of accuracy in forecasting is quite unusual and bordering on suspicion in our minds, especially for a company in the volatile tech industry.

Our review of the quarter turned up several items that cause us to continue to question the quality of the company’s earnings. Let’s take a look behind the numbers…

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