Why Vertex Stock Got Mashed on Monday

The stock of niche financial software company Vertex (NASDAQ: VERX) didn't get a very good start to the trading week at all. Its value fell by nearly 10% that day, due largely to a quarterly earnings report that many considered to be underwhelming. By contrast, the benchmark S&P 500 index rose on the day, closing slightly (0.2%) higher.

Two slight beats

That morning, Vertex revealed that its total revenue was slightly over $192 million in the third quarter, a figure that was up by nearly 13% year-over-year. Subscriptions, which form the bulk of its top line, grew by the same rate to almost $165 million.

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On the bottom line, net income not according to generally accepted accounting principles (GAAP) saw a less impressive rise. It grew by 6% to just under $28.6 million.

Both headline numbers topped the average analyst estimates, although not by much. Pundits tracking Vertex stock were modeling a bit under $192 million for revenue, and per-share, non-GAAP (adjusted) earnings of $0.16.

Guidance falls short

It wasn't the narrow beats that doomed Vertex stock on Monday -- it was guidance.

The company proffered revenue and adjusted earnings before interest, taxes, depreciation, and amortization forecasts for both its current (fourth) quarter and the entirety of 2025. Its top-line guidance for the quarter is $192 million to $196 million, which falls short of the consensus analyst projection of over $199 million.

Ditto for the yearly estimate. Vertex is guiding for $745.7 million to $749.7 million, however those prognosticators as a group are expecting more than $752 million.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.