Vertex: Sell as Capitalized Software CapEx and 4.49x DCF Multiple Erode ERP Tax Premium
Enterprise SAP and Oracle indirect tax migrations drive 15.16% TTM revenue growth to $787.44M, but $77.67M in capital expenditures and $57.00M in SBC compress true owner cash margin to 4.94%.
Score Locked · Full AccessResearchPublished Nov 9, 2026 · Data as of Jun 30, 2026· 2 min read · 2 exhibits
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Vertex generated $787.44M in trailing twelve-month GAAP revenue (+15.16% year over year, accelerating from +12.25% in FY2025 at $748.44M) by automating real-time sales, use, value-added (VAT), and payroll tax calculations across complex multinational supply chains. [1] Equity investors routinely award Vertex a scarcity multiple ($19.97 per share, equating to $3.19B equity capitalization plus $108.12M in net debt) on the thesis that SAP S/4HANA cloud deadlines and European continuous transaction control (CTC) e-invoicing mandates guarantee a decade-long mid-teens compounding runway.
Our primary-filing audit uncovers an acute gap between Vertex's undeniable customer lock-in and its per-share cash generation. While Vertex reports $173.61M in TTM GAAP operating cash flow, it consumes $77.67M (9.86% of revenue) in capital expenditures, primarily capitalized internal-use software and tax-content engineering, up from $31.71M in FY2021 and $49.26M in FY2023. [1] That capitalization accounting shifts engineering cash outflows off the R&D income-statement line (flattering expensed R&D to 11.19% of revenue) onto the cash flow statement, while $107.41M in trailing depreciation and amortization (including ecosio acquisition intangibles) drags GAAP operating income down to -$13.34M (-1.69% EBIT margin).
After deducting both $77.67M in CapEx and $57.00M in stock-based compensation (7.24% of revenue), Vertex retains just $38.94M in SBC-burdened Owner FCF (4.94% margin). [1] Paying $3.30B in enterprise value (84.6x EV / Owner FCF) for mid-teens top-line growth embeds 55.56% implied annual 5-year cash-flow compounding in our reverse-DCF solver, leaving severe valuation downside toward our $4.45 base mark (Sell).
Vertex compounded revenue from $425.55M to $787.44M while rising CapEx and SBC constrained Owner FCF
Filed GAAP operating results and SBC-burdened owner cash flow across verified full-disclosure periods (FY2025 revenue reached $748.44M with $165.54M OCF).
Line
FY2021
FY2022
FY2023
FY2024
TTM Q2 26
Growth & Gross Profit
RevenueFiled GAAP cloud subscription, on-premise software, and services revenue ($748.44M in FY25)
$425.55M
$491.62M
$572.39M
$666.78M
$787.44M
Gross profit
$263.66M
$298.49M
$348.58M
$426.13M
$503.58M
Gross marginBurdened by amortized capitalized software and cloud hosting infrastructure
62%
60.7%
60.9%
63.9%
64%
Operating Profit & Owner Cash
Operating income (EBIT)Includes $107.41M TTM D&A from capitalized software and ecosio intangibles
-$2.94M
-$8.08M
-$17.51M
-$2.23M
-$13.34M
Operating cash flow
$90.29M
$63.85M
$74.33M
$164.82M
$173.61M
Capital expendituresIncludes capitalized internal-use software development costs
$31.71M
$45.53M
$49.26M
$71.76M
$77.67M
Free cash flowGAAP operating cash flow less property and capitalized-software additions
Source: Vertex, Inc. SEC Form 10-K and Form 10-Q filings.
Exhibit 2Data Exhibit
Revenue scaled steadily to $787.44M while GAAP EBIT margin hovered near breakeven
Filed annual and TTM GAAP revenue (primary bars) and GAAP operating margin (secondary line).
Revenue
GAAP EBIT margin
Source: Vertex, Inc. SEC Form 10-K and Form 10-Q filings.
Unity Software: Sell as -30.4% GAAP Operating Margin, 932 bps Gross Margin Drop, and Dilution Price Shares at 4.84x DCF Value
Post-reset Vector ad-network gains lifted TTM revenue +13.6% to $2.03B, yet $616.0M in GAAP operating losses, $341.9M in SBC, and 55.2% multi-year share expansion cap DCF fair value at $9.13.
Unity Software Inc.Nov 9, 2026 · Data as of Jun 30, 2026
