Vertex : Investor Presentation June 2024 William Blair Conference

William Blair

44th Annual Growth Stock Conference June 2024

Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.

Disclaimer

Forward Looking Statements

Any statements made in this presentation that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. Forward-looking statements are based on Vertex management's beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; our ability to maintain and expand our strategic relationships with third parties; and the other factors described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities Exchange Commission ("SEC") and the Company's subsequent filings with the SEC. Copies of each filing may be obtained from the Company or the SEC. All forward-looking statements reflect our beliefs and assumptions only as of the date of this presentation. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Definitions of Certain Key Business Metrics

Annual Recurring Revenue ("ARR") - We derive the vast majority of our revenues from recurring software subscriptions. We believe ARR provides us with visibility to our projected software subscription revenues in order to evaluate the health of our business. Because we recognize subscription revenues ratably, we believe investors can use ARR to measure our expansion of existing customer revenues, new customer activity, and as an indicator of future software subscription revenues. ARR is based on monthly recurring revenues ("MRR") from software subscriptions for the most recent month at period end, multiplied by twelve. MRR is calculated by dividing the software subscription price, inclusive of discounts, by the number of subscription covered months. MRR only includes customers with MRR at the end of the last month of the measurement period.

Net Revenue Retention Rate ("NRR") - We believe that our NRR provides insight into our ability to retain and grow revenues from our customers, as well as their potential long-term value to us. We also believe it demonstrates to investors our ability to expand existing customer revenues, which is one of our key growth strategies. Our NRR refers to the ARR expansion during the 12 months of a reporting period for all customers who were part of our customer base at the beginning of the reporting period. Our NRR calculation takes into account any revenues lost from departing customers or customers who have downgraded or reduced usage, as well as any revenue expansion from migrations, new licenses for additional products or contractual and usage-based price changes.

Use and Reconciliation of Non-GAAP Financial Measures

In addition to our results determined in accordance with accounting principles generally accepted in the U.S. ("GAAP"), we have calculated non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling and marketing expense, non-GAAP general and administrative expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and free cash flow margin, which are each non-GAAP financial measures. We have provided tabular reconciliations of each of these non-GAAP financial measures used in this presentation to its most directly comparable GAAP financial measure.

Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity. Our non-GAAP financial measures are presented as supplemental disclosure as we believe they provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our operating performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as comparing our financial results to those of other companies. Our definitions of these non-GAAP financial measures may differ from similarly titled measures presented by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP financial measures, and should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our other reports periodically filed with the SEC.

Market & Industry Data

Market data and industry information used throughout this presentation are based on management's knowledge of the industry and the good faith estimates of management. The Company also relied, to the extent available, upon management's review of independent industry surveys and publications and other publicly available information prepared by a number of third-party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such assumptions and resulting estimates. Although the Company believes that these sources are reliable, the Company cannot guarantee the accuracy or completeness of this information, and the Company has not independently verified this information. While the Company believes the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management's estimates and beliefs, is inherently uncertain and imprecise. No representations or warranties are made by the Company, any of its affiliates or underwriters as to the accuracy of any such statements or projections. Projections, assumptions and estimates of the Company's future performance and the future performance of the industry in which the Company operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in the Company's estimates and beliefs and in the estimates prepared by independent parties.

2	Copyright © 2024 Vertex, Inc. All rights reserved. Proprietary and confidential.

Vertex: The Trusted Name in Tax Technology for Over 40 Years

KPIs Demonstrate Consistent Execution with Strong Fundamentals

Investment Highlights

$596MM

TTM 1Q24 Revenue (1)

>60%

of the Fortune 500 (2)

95%

Gross Revenue Retention (3)

Notes:

1. Reflects last twelve months information through March 31, 2024.
2. Based on information as of December 31, 2023.
3. Based on information as of March 31, 2024.

$117MM

TTM 1Q24 Adjusted EBITDA (1)

>190

Countries Supported (2)

84%

Subscription Revenues as a % of Revenue (3)

1. A leader in global, growing indirect tax software market
2. Marquee customer base across a diverse set of industries
3. Significant cloud growth and subscription revenues
4. Meaningful land-and-expand motion with upsell track record
5. Market leadership due to dynamic, comprehensive content library
6. Highly scalable tax technology platform to support mission-criticalworkflows
7. Durable growth and profitability at scale

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Indirect Taxes are Significant and Growing (1)

Sales tax

Use tax

VAT$4.4T

Imports

	Exports	$1.4T
	Excise
	Payroll		Indirect tax revenue	Corporate income tax revenue
Notes:
1. 2022 OECD Tax Database
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3.1x

Indirect tax revenue vs. corporate income tax revenue

20%

VAT as a % of GDP in OECD countries

Indirect Taxes are Incredibly Complex

EVERY

transaction

THOUSANDS

of taxing jurisdictions

THOUSANDS

of products and services

In REAL-TIME

And ACROSS THE

SUPPLY CHAIN

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We estimate a $22B TAM with less than 10% software adoption (1)

Enterprise

$3B$7.6B

(20K Firms)	$15B	(44K Firms)

Mid-Market

SMB

$7B $7B	$2.3B	Rest of	$7.7B
(1.2M)	(50K Firms)	World	(200K Firms)
US TAM	TAM

$1.7B

(1.2M Firms)

Notes:

1. Source: Dun & Bradstreet; Company data & estimates

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Growth Tailwinds Remain in Place

Complexity

Business

Regulatory

Technology

Growth Drivers

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Why Customers Choose Vertex

Deep Tax Expertise and Dynamic Platform Ensures Compliance Amidst Evolving Tax Landscape

Vast Tax Content Database and Frictionless Integration to Power Growth

Powerful Solutions Optimized for Complexity	Enterprise
Reliability&
	Scalability

	Robust AI Capabilities Incorporating 900M+ Tax Rules and Regulations
	Deep ERP Integrations and Strategic Relationships
Product & Platform	A Many-to-One Platform Solution
Leadership

Go-to-Market

Unparalleled Go-to-Market Experience

Alliance Partner Preference

Strong Customer References

Superior Services
& Support	40+ Years of Leadership in Tax Technology
	Fully Managed & Differentiated Support Teams
	Client First Mentality

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We Have Built a Marquee Customer Base Across a Diverse Set of Industries

4,309(1)>60%(2)

Direct Customers

of the Fortune 500

9

of the Top 10

Business Services

7

of the Top 10

Communications and Transport

8

of the Top 10

Financial Services

8

of the Top 10

Manufacturing

7

of the Top 10

Marketplaces

6

of the Top 10

Retail

6

of the Top 10

Wholesale Trade

1. Vertex direct customers are based on the Vertex active customer list as of March 31, 2024.
2. Top 10 companies within the Fortune 500 are based on annual revenues as of December 31, 2023.

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Key Growth Investments - 2020 through 2023

Enhance investment in	Expand go-to-market to
new product
development and R&D	acquire new customers

Build customer success organization

Upgrade corporate

Extend global footprintinfrastructure to support a larger company

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