Vertex, Inc. (NASDAQ:VERX) Has Found A Path To Profitability

We feel now is a pretty good time to analyse Vertex, Inc.'s (NASDAQ:VERX) business as it appears the company may be on the cusp of a considerable accomplishment. Vertex, Inc., together with its subsidiaries, provides enterprise tax technology solutions for retail trade, wholesale trade, and manufacturing industries in the United States and internationally. On 31 December 2024, the US$5.6b market-cap company posted a loss of US$53m for its most recent financial year. The most pressing concern for investors is Vertex's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

According to the 13 industry analysts covering Vertex, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$18m in 2025. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 70%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Vertex's growth isn’t the focus of this broad overview, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

See our latest analysis for Vertex

One thing we would like to bring into light with Vertex is its debt-to-equity ratio of 187%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Vertex which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Vertex, take a look at Vertex's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Valuation: What is Vertex worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Vertex is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Vertex’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.