Vertex (VERX) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01A large portion of our revenue depends on maintaining and growing our revenue from existing customers and adding new customers, and if we fail to add new customers, retain our customers, or expand their usage of our solutions, our business, results of operations, financial condition, and cash flows would be harmed
2. 02Our business and success depend in part on our strategic relationships with third parties, including our partner ecosystem, and our business would be harmed if we fail to maintain or expand these relationships
3. 03We face competitive pressures from other tax software and services providers, as well as the challenge of convincing businesses using native ERP functions to switch to our software
4. 04Our recent success may not be indicative of our future results of operations
5. 05Changes to customers’ and partners’ software systems may impact our ability to offer a specific software deployment method to existing customers, which could cause a termination of customer contracts utilizing that deployment method, or otherwise affect our results of operations, financial condition, and cash flows
6. 06We need to continue making significant investments in software development and equipment to improve our business
7. 07If we fail to effectively manage our growth, our business, results of operations, financial condition, and cash flows will be harmed
8. 08Future acquisitions of, and investments in, other businesses, software, tax content or technologies may not yield expected benefits, and our inability to successfully integrate acquisitions may negatively impact our business, results of operations, financial condition and cash flows
9. 09Our quarterly and annual results of operations may fluctuate in future periods
10. 10Operating globally involves challenges that may adversely affect our ability to grow
11. 11If we are unable to successfully adapt to organizational changes and effectively implement strategic initiatives, our reputation and results of operations could be impacted71% rewritten
12. 12If economic conditions worsen, it may negatively affect our business and financial performance
13. 13Natural disasters, epidemic or pandemic outbreaks, terrorist acts and political events could disrupt business and result in lower sales and otherwise have a material adverse effect on our business, financial performance and results of operations
14. 14Our ability to obtain additional capital on commercially reasonable terms may be limited59% rewritten
15. 15If we fail to attract and retain qualified technical and tax-content personnel, our business could be harmed67% rewritten

Risks Related to Technology and Intellectual Property

1. 16If we are unable to adapt to technological change by successfully introducing new and enhanced solutions and services, our business, results of operations, financial condition, and cash flows would be adversely affected
2. 17Any failures in information technology or infrastructure could lead to disruptions of our software, loss of customer data or untimely remittance of taxes, any of which could adversely affect our reputation and financial condition
3. 18If we fail to effectively protect, maintain and enhance our brand, our business may suffer
4. 19We may face challenges in using and properly managing use of Artificial Intelligence (“AI”) in our business, which could result in reputational or competitive harm, and legal liability, and could adversely and materially affect the results of our business, operations, financial condition, and cash flows58% rewritten
5. 20Expansion into e-invoicing services increases our dependency on government infrastructure and exposes us to operational disruptionsNew
6. 21We are exposed to cybersecurity and data privacy risks that, if realized, could materially impact our reputation and business66% rewritten
7. 22Undetected errors, bugs or defects in our software could harm our reputation or decrease market acceptance of our software, which would harm our business and results of operations
8. 23Our software utilizes open-source software, and any defects or security vulnerabilities in the open-source software could negatively affect our business
9. 24We rely on third-party data centers, systems and technologies to operate our business, and interruptions or performance problems with these third-party providers may adversely affect our business and results of operations
10. 25Our ability to protect our intellectual property is limited, and we may be subject to claims of infringement by third parties

Risks Related to Our Customers

1. 26Incorrect or improper implementation, integration, or use of our solutions could result in customer dissatisfaction and negatively affect our business, results of operations, financial condition, and cash flows
2. 27We hold significant amounts of money that we remit to taxing authorities on behalf of our customers, and this may expose us to liability from errors, delays, fraud or system failures, which may not be covered by insurance
3. 28Errors in our customers' transaction tax determinations and reporting functions, or delays in the remittance of their tax payments, could harm our reputation, results of operations and growth prospects

Risks Related to Our Tax, Legal, and Regulatory Environment

1. 29Changes in tax laws and regulations, or their interpretation or enforcement, may cause us to invest substantial amounts to modify our software, cause us to change our business model or draw new competitors to the market
2. 30We may become involved in material legal proceedings and audits, the outcomes which could adversely affect our business, results of operations, financial condition and cash flows
3. 31Changes in the application, scope, interpretation or enforcement of laws and regulations pertaining to our operations may harm our business or results of operations, subject us to liabilities and require us to implement new compliance programs or business methods
4. 32We are subject to anti-corruption, anti-bribery and similar laws and noncompliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation

Risks Related to Ownership of Our Class A Common Stock

1. 33The price of our Class A common stock may fluctuate significantly, and you could lose all or part of your investment
2. 34Our share repurchase program may increase the volatility of the market price of our stock and adversely affect our liquidity. Further, we may not realize the anticipated long-term stockholder value of our share repurchase programNew
3. 35If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, or if they adversely change their recommendations regarding our Class A common stock, the market price of our Class A common stock and trading volume could declineNew
4. 36We are a “controlled company” within the meaning of the NASDAQ Rules and, as a result, expect to qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements

Risks Related to Our Indebtedness

1. 37Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our indebtedness
2. 38Despite current indebtedness levels, we may incur substantially more debt or take other actions which would further intensify the risks associated with our indebtedness
3. 39We may be unable to raise the funds necessary to repurchase the Notes for cash following a “fundamental change,” or to pay any cash amounts due upon conversion, and applicable law, regulatory authorities and our other indebtedness may limit our ability to repurchase the Notes or pay cash upon their conversion
4. 40Provisions in the Indenture could delay or prevent an otherwise beneficial takeover of us
5. 41The Capped Call Transactions may affect the value of our Class A common stock
6. 42In addition, if any such Capped Call Transactions are terminated for any reason, the Option Counterparties or their respective affiliates may unwind their hedge positions with respect to our Class A common stock, which could adversely affect the value of our Class A common stock