Does Vertex (VERX) Demonstrate Favorable Long-Term Trend?

Conestoga Capital Advisors, an asset management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their momentum that began in early April, reaching new all-time highs in the third quarter. The Conestoga Micro-Cap Composite returned 11.7% net-of-fees in the third quarter, compared to the Russell Microcap Growth Index’s return of 19.9%. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its third-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Vertex, Inc. (NASDAQ:VERX). Vertex, Inc. (NASDAQ:VERX) offers enterprise tax technology solutions for retail trade, wholesale trade, and manufacturing industries. The one-month return of Vertex, Inc. (NASDAQ:VERX) was -2.45%, and its shares lost 41.48% of their value over the last 52 weeks. On October 17, 2025, Vertex, Inc. (NASDAQ:VERX) stock closed at $24.33 per share, with a market capitalization of $3.98 billion.

Conestoga Capital Advisors stated the following regarding Vertex, Inc. (NASDAQ:VERX) in its third quarter 2025 investor letter:

"Vertex, Inc. (NASDAQ:VERX) provides cloud-based and on-premises software solutions that automate indirect tax processes such as sales, use, and value-added tax. The stock declined during the quarter as revenue growth moderated and elongated enterprise sales cycles pressured near-term results. Slower IT spending among multinational customers weighed on bookings momentum. In addition, investments in product development dampened profitability, leading to cautious investor sentiment. While the long-term trend toward digitized tax compliance remains favorable, macro challenges have hurt performance."

Vertex, Inc. (NASDAQ:VERX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 25 hedge fund portfolios held Vertex, Inc. (NASDAQ:VERX) at the end of the second quarter, compared to 27 at the end of the previous quarter. For Q2 2025, Vertex, Inc. (NASDAQ:VERX) revenue was $184.6 million, up 14.6% year-over-year. While we acknowledge the potential of Vertex, Inc. (NASDAQ:VERX) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Vertex, Inc. (NASDAQ:VERX) and shared the list of best beaten down technology stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.