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| Statement |
|---|
| As I look to 2024, I'm extremely confident in the momentum we continue to build |
| But we feel very good that those margins will be able to kind of stay in that range of where they are right now |
| 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 |
| So, we feel very good about that |
| What that is, the world will be informed as we go forward, but rest assured, there's strong confidence across from the board down through management on that |
| And I think what happened over the last three years is the company has continued to perform better than expected, beating our own budget and guidance expectations |
| This represents an EBITDA margin of 20.7%, our highest EBITDA margin in over three years |
| I think on the customer front, it's probably in the long run, more exciting because, obviously, I think we can drive more revenue from the business |
| We've made a conscious effort to look at ways to improve productivity and drive more efficiency in our business and we're seeing some really good sprouts of opportunity |
| And so, I think when you take those two and add in ongoing digital transformations and ERP upgrades, the strength of what we've envisioned happening and what we embarked on over three years ago in our investment strategy is really playing out quite nicely |
| And so, I think the team has done a good job of positioning us inside of those ecosystems |
| As a reminder, this number represents our customers with annual revenues greater than $100,000 and demonstrates our ongoing success in the underpenetrated enterprise market |
| I think you really have to marry it well with the alliance community, because it's the combination of the two that is really differentiated for us and supports the strong win rate we have |
| We continue to see really solid performance across the base there |
| I feel very good about where that is |
| But we've got real good momentum and traction regarding some of the R&D efforts and some of the other areas for additional new products and things going forward |
| I still feel like we're very well-positioned in that space |
| And if you think about again, one of our larger ecosystems along with Oracle is SAP and we're enjoying some really nice positioning inside of the SAP customer environment right now |
| Our Europe team has done a great job of building a very strong customer reference base, which is essential in the indirect tax community |
| With this investment program largely complete in mid-2023, we saw accelerating revenue growth and strengthening profit margins in the second half of the year, but we believe we are just getting started |
| But some of the bigger economies that are looking at it have pushed out their dates, which just again affords us the ability to be very strategic and disciplined in what we do, which is something we've always tried to do to drive long-term shareholder value |
| We are confident that, all three of these tailwinds will drive Vertex's growth for the foreseeable future |
| I would say, the combination of those two things has really fueled and been additive to our consistent growth story |
| I would say that our investment in our partner ecosystem and alliances has really strengthened our growth vectors |
| So, to summarize, the fourth quarter results were excellent and I'm very confident in how our business is positioned for consistent execution in the quarters years to come |
| Really, really impressive |
| Accordingly, with continued strong execution, we see plenty of runway and opportunity to continue the standard of performance we set in 2023 in the years to come |
| As I said at the top of the call, I'm very pleased with our execution in 2023 |
| Statement |
|---|
| While the full year revenue growth embedded in our guidance is slightly lower than what we delivered for the full year of 2023, this is due to two factors |
| As you may recall, our ERP conversion in the second quarter resulted in short-term to disruptions to billings, which in turn impacted our cash flow in the second and third quarters |
| As a result of this shift of focus, you are seeing and will continue to see a reduced growth rate for our Services business |
| The decrease in gross margins was driven by increased cloud and hosting support customers in the multi-cloud environments |
| Inevitably, this approach led to inaccuracies for the customer, which in turn led to audit pressure and liability for back taxes and penalties |
| We have mentioned that our cloud revenue and our cloud margins, if you will, were a little bit lower than our on-prem margins |
| Secondly, we do not expect the high level of fourth quarter usage tier true-up revenue that I mentioned earlier to reoccur in the fourth quarter of 2024 |
| Second, audit and reporting requirements demonstrate that an in-house solution is not delivering sufficiently accurate tax compliance |
| Even so, the competitor could not successfully compete in solving the tax complexity of the portfolio company |
| This customer quickly acknowledged that, tax complexity for a global marketplace was beyond their internal capabilities as well as the compliance risk that this represented |
| And I think business model changes and mergers and acquisitions at the enterprise space continue to play out, the regulatory environment is only getting more complex and painful |
| This company moved to Oracle Cloud and in doing so, re-bid their indirect tax solution as they were unhappy with their existing provider, one of our competitors |
| Our actual financial results may differ due to risks and uncertainties |
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