Good day, and welcome to the Vertex Inc. Second Quarter 2025 Earnings Call. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to Joe Crivelli, Vice President, Investor Relations. Please go ahead.

Hello, and thanks for joining us to discuss Vertex's Second Quarter Results. David De Stefano, our President and CEO; and John Schwab, our CFO, are also with us today. During this call, we may make forward-looking statements about expected future results. Actual results may differ due to risks and uncertainties. These risks and uncertainties are described in our filings with the Securities and Exchange Commission. Our remarks today will also include references to non-GAAP metrics. A reconciliation of these metrics to GAAP is also provided in today's press release. This call is being recorded and will be available for replay on our Investor Relations website. I'll now turn the call over to David.

Welcome, everyone, and thank you for joining us. In the second quarter, we delivered results that were in line with our guidance and investor expectations. However, as the quarter progressed for the first time, we saw macroeconomic factors that have been noted in the software industry in 2025 and impact our customers and begin to affect their activity with us. We took action to mitigate this, but it necessitated a reduction in our full year guidance. We will discuss all of this in today's call. For the second quarter, revenue was $184.6 million, up 14.6% year-over-year. Subscription revenue grew 15.7% and cloud revenue growth increased to 29.9%. Adjusted EBITDA rose to $38.4 million, representing an EBITDA margin of 20.8%. In addition, annual recurring revenue, or ARR, grew 16.1% to $636.6 million. Average annual revenue per customer for Vertex stand-alone increased 12.7% year-over-year to $142,600. Growth in scaled customer count was 16%. As a reminder, this number represents our customers with annual revenues greater than $100,000 and demonstrates our ongoing success in the underpenetrated enterprise market. Gross revenue retention or GRR, remained at 95% in the second quarter within our targeted best-in-class range of 94% to 96%. Finally, net revenue retention, or NRR, decreased to 108%, down 1 point from the first quarter. We attribute the decrease to 2 main factors: lower growth of additional entitlements as our customers' annual growth has slowed, keeping them within current bands of usage and recent regulatory changes in Brazil created a compliance confusion for customers, which resulted in delayed deal activity for some of our large multinational customers. More broadly, in addition to the macro impacting our customers' growth rate, we have seen a slowdown in ERP migrations, thus elongating our deal cycles. This is consistent with what publicly traded ERP providers noted in…

Thanks, David, and good morning, everyone. I'll now review our second quarter financial results and provide guidance for the third quarter and full year 2025. In the second quarter, revenue was $184.6 million, up 14.6% year-over-year. Ecosio contributed $3.4 million of revenue during the quarter. Accordingly, on an organic basis, revenue was $181.2 million, and revenue growth was 12.4%, in line with expectations for the quarter. Subscription revenue increased 15.7% period-over-period to $157.8 million. Our services revenue grew 8.3% to $26.7 million. And cloud revenue was $86.2 million in the second quarter, up 29.9% from last year's second quarter and ahead of our guidance for the year. Ecosio added about 4 points to cloud revenue growth. Annual recurring revenue, or ARR, was $636.6 million at quarter end. Ecosio added $10.8 million to ARR, up from $8.1 million in the first quarter. Approximately $600,000 of this increase was due to favorable foreign currency translation adjustments. Excluding Ecosio, organic ARR was 14.1%. Net revenue retention, or NRR, was 108% compared to 110% at last year's second quarter and 109% from the first quarter of 2025. As David noted, the decrease in NRR was attributable to lower deal activity from some of our large multinationals and a decline in additional entitlements in the enterprise market due to regulatory and tariff-driven economic uncertainty. Gross revenue retention or GRR, remained at 95% at quarter end, within our targeted range of 94% to 96%. Average annual revenue per customer or AARPC for Vertex stand-alone was $142,584, up 12.7% from last year's second quarter. Including the impact of Ecosio, AARPC was $130,934 Note that in the third quarter, we will lap the acquisition of Ecosio. So metrics such as ARR and average annual revenue per customer will be consistent on a year-over-year basis. Now for the remainder…

Thanks, John. To wrap things up, while we had a solid performance in the second quarter across several metrics, there were some areas that did not meet our expectations. The tailwinds that fuel our demand opportunity, including the proliferation of e-invoicing mandates globally, and cloud migrations being driven by the ERP providers remain in place. But with the continued uncertainty in the macro environment, I believe we have taken prudent steps while not underserving our long-term value proposition and market opportunity. With that, we will take your questions.

[Operator Instructions] Today's first question comes from Chris Quintero with Morgan Stanley.

I wanted to ask on the guide. First, the cloud guide that stayed in place. So I'm curious, is the macro impact that you're calling out here more on the on-prem and services side? Just help us marry kind of the lower total revenue guide versus the maintained cloud revenue guide.

Yes, Chris, thank you for the call. Appreciate it. I think as I think about the guide and I think about the adjustment down, I kind of break it into a couple of different pieces. I think the largest driver what I think about it is really coming from entitlements, it's entitlements, which is our customers' usage of activity. We typically don't have a tremendous line of sight into that 60-ish days or so. So as those renewals are happening, we're starting -- we're then getting window what the uptick is going to be and then to the extent that there's a true up what that's going to look like. And so as Q2 developed, we started to see a little bit of -- we started to see that, that activity was lower than it's been in the past and especially in the real larger the real larger additional entitlements, those big 6-figure type of deals, the volume was much lower than we had seen. And so the good news is we haven't seen pullbacks or any changes going the other way, but just the magnitude of those additional entitlements are certainly lower than we've seen in prior quarters. And again, that's part of the driver for our NRR dropping from that 109 back to 108. So I think based on that trajectory, we really looked at that -- we looked at that and that really weigh heavily as we think about what the guide looks like. So when you take that into consideration, then you also take into consideration true-ups, which aren't very typically a giant piece of our revenue. But can be significant, and they have 100% revenue impact in the quarter in which they occur. We certainly pulled that back a little bit as we thought through that. And then finally, the last piece really has to do around the elongation of some of those sales cycles. So that's sort of how I kind of box out each of those different pieces. But we feel good and confident with the guidance that we've set and our ability to achieve it.

Got it. And then I want to follow up on the e-invoicing momentum that you're seeing, really, really encouraging to see. But just as you've seen those early customers come back to you and add additional country coverage. Like what are some of those early learnings that you're seeing in terms of the adoption rate for that product so far?

Yes, I'll take this one. So Chris, I think it's a couple of factors. One, the value of our end-to-end offering is really differentiating us and playing well in the market, meaning that we've got the front end of that termination engine, the middle point, the invoicing transmission and then the VAT compliance all on the platform. And I think that's really being validated as point number one. I think point number 2 is that this is a classic land and expand model. As we prove out to the customer that we can deliver on this they come back and say, right now we want to expand it because they're all focused on getting a single global provider as the proliferation of these invoicing requirements are expanding and getting more complex they're really looking for a single provider on a single platform. And that's playing right into our strategy. So I'm really pleased with the early pipeline deal cycles are typically running 3 to 6 months, depending upon what the customer -- how big the customer wants to start. So if you recall, we went live with the product in general availability at the very end of the first quarter. So we're just through our first 3-month cycle and already seeing really nice build -- and I think that should -- no reason that will continue as we continue to expand our country coverage.

And the next question is from Steve Enders with Citi.

This is George Kurosawa on for Steve. I wanted to circle back to the targets you laid out at your recent Investor Day, I mean just given based off of what you've seen and what's implied in the guidance here, it looks like you're looking at a bit of a deceleration through the end of the year. It all the things that you've discussed on the call here. Does that change at all how you guys are thinking about that kind of longer-term accelerating growth outlook? Just any color there?

Yes, George, it's a super fair question, and we spent a lot of time, as you can imagine, thinking about that. I think when we looked at it, we actually looked at the transactional volume that's happening in e-invoicing and the type of regulatory tailwinds that we're seeing actually accelerate in that area as a key driver and that's number one. And then number two, as we continue to expand with SAP and Microsoft and some of the ecosystems with some of the work we're doing, we continue to see that cloud migration being a persistent driver for them, which means the tailwind has to continue for us because it's so disruptive to a tax department. And so we really paused on like, do we change anything? And those tailwinds are so solidly in place right now. There was no compelling reason to think that the company isn't going to resume its I mean this franchise has been around for 45 years. We've been through these journeys where we see economic blip but the steady durability of our customer base and then the continued growth both in new logos and recurring and cross-functional sales as our customers continue to grow has not changed. The fundamental model is just rock solid. And so that's why we felt really confident in sustaining our current position on it should play out as we expect.

Okay. Great. That's really helpful. And then in the prepared remarks, you alluded to maybe some changes in your hiring plans for the year. I just love a little more detail there. What are you expecting to change? And how should we think about the model impacts there?

Yes. I think what we've looked at that and said, we've been gaining leverage from internal investments we've made, we've disclosed to investors over the past several years. On internal leverage about where we can drive more efficiency in the business and gain scale to ultimately drive margins. We prioritize some of those as we saw some of the short-term transactional challenges that John described in our performance and leaning into that, look, then you start to assess itself in terms of what you need in future head count. And so most of the pullback is in the areas that are not strategic to the core strategy that I just focused on in terms of how we advance our #1 priority around the invoicing and how we continue to optimize against Microsoft, Oracle and SAP. It's more in other areas of the business that are going to be less impacted by those strategies.

The next question is from Joshua Reilly with Needham.

All right. Great. Maybe just starting out, can we get some more color on how the quarter progressed and what happened post Q1 as that print was pretty strong, and it seemed like the pipeline was pretty strong for the balance of the year. Was it really just the end of June where the weakness started to come into play? Or help us understand how the linearity of the quarter progressed?

Yes. In terms of how the quarter progressed, what I would say is when I think about kind of Q1 and the activity in Q1, we had a nice -- we had a good Q1. As Q2 started to develop, again, we started to see a little bit of softness as we got through May. And as we got -- April seems strong. As we got through May, we started to see a little bit of softness start to show up, but we didn't think it was -- we wanted to monitor and manage it to see what that happened. And then as we got through May and then into June, that's when we started to see a bit of that elongation a little bit of that push out. Again, very similar with how the additional entitlements and that activity that I described earlier sort of played out during the period. So it really, really manifested itself towards the back end of the quarter. And again, that's why we stopped and took a pause and made sure that we understood some of the big drivers that we're gathering that we're building in the business.

Got it. That's helpful. And then you kind of alluded to a little bit slower activity in the SAP ECC base. If I interpreted the signal there correctly, what do you think is going on there? And why haven't the trajectory of those deals accelerated this year like maybe we would have expected?

Yes. I mean as best we can tell, I think it's just the -- given the uncertainty in the macro environment in general, companies are judging when do we want to embark on this march to make the cloud transformation and they're looking at where do we prioritize our investment. Obviously, AI elsewhere inside of those organizations is a priority investment for many companies. And I think in general, they're saying if we can defer this a little longer, hopefully, get through some of the tariff uncertainty and the macro challenges, they'll be able to absorb that expense model. And I think that's kind of the basic feedback we're hearing. We don't have obviously direct visibility into those. But I think that seems to be the themes that were most hearing. It's just pushing out the timing of those creating a little bit of that bubble that it's going to come in the back end of the process, which is really going to be '26 and '27.

Our next question is from Adam Hotchkiss with Goldman Sachs.

David, I'd be curious how you think about the deals that did get pushed from Q2 into Q3. I think you had mentioned you closed some quarter-to-date. Is there any way you can sort of quantify for us what percent of those deals that were pushed have been closed or you have a sort of near-term lens on when those might be closed versus folks that have sort of delayed indefinitely due to those conditions?

Yes. Adam, I don't -- I think delayed indefinitely would be a wrong characterization because they're still going through their migrations. They're still going to address the issues, have to address the issue of tax. It's just a question of the pacing of the ERP adoption and whether they're -- you and I have had the conversation I think I've spoken to investors about, it's the process of an integration, we get brought in about the midpoint of an onboarding of a new cloud offering. And so in terms of the customer doing a new ERP system. And so if those are pushing in the early periods where they're slowing down their process, then it's pushing our process out. And I think that's really a contributing factor here. I don't have visibility to actually how many number of deals closed. I know from the sales teams, and we talk to them weekly and monthly. We have different processes to do that. I'm comfortable that they are closing. I think it's just the timing issue again. in terms of taking it to where the customers' migration process is.

Okay. Great. That's really helpful. And then, John, just on guidance philosophy and maybe how that's evolved on this print relative to how you've looked at things previously, in particular related to things like entitlements and true-ups. Would you say you're taking a particularly conservative view on the second half of the year around entitlements and true-ups relative to what you've done historically? Or is this something that's just purely reflecting what happened in the second quarter?

Yes. I think, Adam, what I would say is this. I think we took into consideration what we saw develop in the second quarter and how it developed and the types of customers that, that came from and built -- and certainly built that in. I wouldn't say that we have changed our philosophy at all. Certainly, they were the levers that we kind of pulled on to make the changes that we pulled. But I wouldn't say that we have changed on our philosophy of how we think about it. But I think what we did see is that magnitude start to come down in terms of kind of those true-ups. And again, they are the ones that have a big impact on dollar for dollar in the revenue line items. But again, similarly, with the additional entitlements, Same thing. I think we're just reevaluating based on what we're seeing and trying to be very thoughtful about how we think about that going forward. I think we've always had a pretty conservative philosophy around guidance and setting it and making sure that we have good visibility in there. And I think as we saw a little bit of that visibility get hazy in the second quarter, we want to make sure we adjust it accordingly.

The next question is from Rob Oliver with Baird.

First 1 is on just the SAP comments that SAP called out on their call, some weakness in public sector, which I know is not an end market for you guys as well as in North American industrial and manufacturing. So I know, David, you mentioned somewhat limited visibility into exactly where those deals are for you guys and when you're brought in. But to the extent that perhaps you've gotten color from your CRM, your sales folks as to where that weakness was so we can match that up with some of the other companies that we follow, which are actually calling out strength within the SAP channel? And then I had a quick follow-up.

Yes. Rob, as we've talked, the driver for us in tax is around a disruption to the tax department, which is what a migration is. So it's not like a nice-to-have solution. It's a must-have when you're going through a migration. We've seen that process elongate. I don't have any great visibility that I can add color in terms of how far out. But the softness is largely focused, I think, in the U.S. where I think there's been reports of some of that slowdown that you noted. And I think that given that's our larger market, that has been our larger market opportunity and remains so that's why it's showing up more -- impacting us more we've actually had a strong European quarters as we noted, but that's a smaller part of our business still. And so I think that's kind of where we're seeing it the most.

Okay. Helpful. Appreciate it. And then, John, just a quick follow-up for you, maybe a 2-parter here. One, is just maybe a corollary to Adam's question earlier about guidance philosophy, going back to the Analyst Day, obviously, SAP is an important part of the story as our ERP migrations broadly for you guys. And given the absence of visibility and getting tripped up here very early after the Analyst Day, how that might impact how you think about or the contribution from SAP in any given year and how you guide to that? And then is there any potential impact? Or how do we think about the margin trajectory into next year? Is the accelerated investment cycle kind of need to be pushed out a little bit?

Okay. I appreciate it, Rob. A couple of good questions there. The first, in terms of kind of our view trajectory of SAP and as we think about sort of longer term. I don't think, as David described earlier in 1 of the earlier questions, I don't think there's a change in our view on sort of end markets and our ability to drive growth into the future, and we feel good about that. And so I think we obviously are taking all the factors into consideration as we think about guidance and we think about our plan and how the business is developing over time. But I don't think there's anything that I'm seeing that occurred this quarter that occurred this quarter that would change how we're looking at either the longer-term plan or the way that we're evaluating different contributors into our longer-term growth algorithm. In terms of margins, again, I think, as David had also mentioned, we did take some actions in terms of ensuring that we've got a good cost structure in place. but also prioritizing some of those investment areas, ensuring that we're getting after e-invoicing, getting the country coverage that we need and continuing to build out for those goals because, again, that's going to be a driver of our success as we move forward. So we continue to focus on those important things. Again, we still feel good about that investment. The investment program that we're on. We talked about, again, that country coverage, extending through the middle -- getting that up and going, some AI investments and really that plays itself out through the middle of next year. And I think then we'll start to see more leverage come. But we certainly, just given some of the headwinds that we saw, we're very mindful around our cost structure and the contribution that we're seeing there. So we'll see how that develops over time. And I think we're still focused on those investments. We're still -- and we are still focused on driving that leverage in our business and trying to find ways to accelerate it where possible.

Our next question is from Andrew DeGasperi with BNP Paribas.

I guess in terms of -- just a follow-up with Rob's question that -- just to be clear, that sort of leverage you expect in the back half of next year, that is not changing, right, as these investments are getting pushed out? And then I have a follow-up.

Yes, I don't think we're going to alter -- we haven't offered any guidance for '26 yet, obviously. The fundamentals of our strategy are -- as I said, we're not -- while quarterly performance is critical, we understand that the long-term strategic opportunities we're pursuing are significant enough. We want to be thoughtful about what we back off on. I'm going to look to see where we can deliver leverage from our internal investments already and use that to drive continued margin opportunity to fund the long-term strategic things that we're pursuing. But pursuing the invoicing expansion right now is mission -- we think it's strategically high ground that we have to complete. It will put us in the best position for the long-term durability that we've enjoyed for 45 years. So that's why we're not going to back off that. .

Great. And -- that's helpful. And then I guess I wanted to follow up on the -- I think you mentioned on the call earlier, some compliance confusion for customers. Was it Brazil, I think you mentioned -- maybe you could just expand on that, what did that mean? I mean, how impactful was that like relative to all the other factors you've looked as to the lower guidance?

Yes. Sorry for interrupting you there. Yes. So the impact, I think, was 0.5 point in MRR, John, roughly? Yes. So that's about the impact to NRR that it was. But the bigger issue there is Brazil has introduced a new VAT set of requirements that will actually -- they have 2 different sets of requirements in place right now. They have their legacy system and they are transitioning into this new 1 over a period of 10 years, which is actually creating confusion for customers in terms of how much has to be applied again how much has to be complied against the old rules versus the new regulations as they're being phased in. And it has clearly caused some frustration for customers down in that area. We view that actually that confusion and frustration to be another complexity that will serve us well, and we've got a number of initiatives that are moving forward in Brazil right now to actually address. So I'm actually strategically super pleased with how we're positioned and we're delivering value. But in the short term, again, customer deal flow has slowed a little bit as customers are sorting through what their compliance needs are going to be. And that's all that was -- but in the long run, again, it's just enhanced complexity from the regulators that only creates opportunity for us.

And our next question is from Brent Bracelin with Piper Sandler.

I wanted to go back to the on-prem license versus cloud discussion. Very clear entitlements and true-ups are more variable here. That's the drag in the second half. My question here is around the longer-term trend. Why would you see on-prem license maybe start to be a bit of a drag, especially if we start to see a more acceleration to cloud ERP. I know you're agnostic. It's the smart thing to do, but curious if you see any sort of early signs that some of these migrations might become a longer-term drag in license, but potentially accelerate to cloud.

Yes, I want to make sure I'm understanding your question. I think that fundamentally, when customers migrate from on-prem to the cloud, we get typically a 30% to 40% increase dollar for dollar for the same license. So it's not a drag when those existing customers who are on-prem move to the cloud, it's actually an upsell opportunity for us just to make sure I'm paying off that part of the story. I think because everything we're doing is cloud first, probably 90% to 95% of all of our new logos and with our platform expansion, we're continuing to drive all of our activity to the cloud and onto our platform. I see that being the accelerant for our future growth, not the drag. The migrations will happen. It actually will start to eliminate over time will be the true-ups because we'll have a cloud, it's over 55-or-so percent of our revenue now. And as it continues to accelerate and become probably 60%, 70%, 80% of our revenue, it will be more just the entitlement. So we won't have those one-off true-ups anymore in the on-prem business because it will become a smaller percentage of our total revenue.

Got it. Very clear. So it's the true-ups that might be impacted, entitlements will continue in that cloud mix shift helpful. And then just last 1 here on e-invoicing in Europe specifically. If I think about the momentum there over 30% sequential growth, it is very small. Belgium is very small. But France and Germany are 10x larger GDP areas. I'm curious to hear, are there different competitors in each country in the EU that you have to fight against. And then from a timing standpoint, when would you start to see France, if that doesn't happen until September 2026 in Germany and 2027, when would you start to see some of those deals light up?

Yes, 2 good questions. So I think, again, as the global providers, and you think about it from a global -- there's hundreds of local providers in every country. We've known that from the moment we entered the space. The mid and enterprise market is looking for the single provider that can do business in all the jurisdictions that they do -- that they operate in. So if I'm doing business in 30 countries, I want a provider that can handle my e-invoicing in 30 countries. And so that's critical to our strategy that we are 1 of the very few that can do that. So it kind of changes the plan. The customer is only looking for a point solution. That's going to be a much harder sale. And candidly, it may not be 1 than want to pursue. It's like selling into the SMB market in the U.S. sales tax. It's not going to be a high-value opportunity. But the customer who's like, "Hey, I got to solve for Belgium now, but I'm going to solve for 12 other countries in the next 2 years is exactly our target market. And so that's where we're focused. And the number of competitors there really shrinks down to Sovos and Thomson are probably the 2 primary ones that have the same capabilities, the similar capabilities that we would have that we would be most of our RFPs we're seeing. And France -- France and Germany should start to light up here as we get through the back half of this year and probably more so France, just because of the looming deadline and then really much more into 2026, which is pretty consistent with what we've said all along. The rates for us was, which is why we're not slowing down our investment in the invoicing is we want to be where we need to be. We already have France in our -- we've already covered France. We can handle it right now. But we want to be in all the right jurisdictions with our investments over the next 12 months. Hence, the investment cycle we're in so that we're incredibly well positioned as customers are making global decisions on who are going to be our providers. We've got the country coverage and the protocols they need in place to provide.

The next question is from Alex Sklar with Raymond James.

David, in your prepared remarks, you talked about some of the expected state and local budget pressures from reduced federal funding. You've been operating for 40-plus years. What have you seen in prior cycles when state budgets are tightened in terms of accelerating rate and complexity changes and then more importantly, how that correlates to buying Vertex?

Yes. So the new tax bill that was passed by the federal government here is change in Medicaid and food stamp funding to states. So mission-critical for their citizenship that they're going to have to address. Indirect tax is the most predictable form of revenue for a government. So I think we have seen consistently in the past when governments are in search of revenue, they turn a transaction tax. They do it somewhat in rates, they do it more in rules. Rates are helpful. But obviously, it's hard to get reelected if you're a local politician and you just keep raising the sales tax rates. So they come up with more complexity in the rules, they'll add a sugar tax and new beverage or something like that, again, which increases compliance pain for the prospects, which creates demand opportunities for us. And that's what we have seen in the past. And I don't see any reason why that's not going to continue again because of the predictability of the revenue and because of the need to fund these gaps that are now increasing as a result of the new tax bill.

Okay. Great color there. And I have another 1 on the e-invoicing to add to the bunch. But -- in terms of the partner channel, you've got a mature partner channel for your core solutions. How does that look on the e-invoicing opportunity? How has enablement been there? How much of e-invoicing deals are partner influence versus the rest of your business?

Yes, we've made a very important decision to work very much through the same partner channel that we built our brand with for years. So we are working very closely with all of the alliance partners. And we are leveraging them. We've enabled them. We're training them in terms of how they can implement our software, our invoicing solution and then bring more value around it for their own for their own practices. And so it's a key part of our go-to-market strategy. And they are active in most of the transactions that we're securing right now, that's we expect that to continue because tax is such a critical part of the decision process. And so the big 4 are going to be players in that space, and we see it as a natural to continue to leverage the relationship. It actually opens up the entire end-to-end platform even more for them in terms of how they can work across our platform with their customer base. But this is a good point of entry that then allows them to bring more -- demonstrate where elsewhere takes to bring value in the process.

And our next question is from Patrick Walravens with Citizens JMP Securities.

Great. So at the Analyst Day in March, you guys guided to 2028 revenue growth in the high teens subscription, 20% plus and cloud 30%-plus. Are you standing by those targets?

Yes. We -- as I said earlier, Pat, I appreciate cloud is going to remain the primary focus of everything we sell. So it's going to continue to be a material growth driver and everything around e-invoicing and the classic land and expand model that is becoming. I see that driving both NRR and continued cloud revenue. So fundamentally, that hasn't changed. All the activity that has slowed in the ERP cloud migration or it hasn't materialized like we thought it would, and it's still going to play out, and we are still incredibly well positioned around how we can leverage that and we continue to expand our relationship inside of areas like Microsoft, where we're now on the Microsoft commercial marketplace, giving us a broader footprint inside of the Microsoft ecosystem. I definitely feel those targets are not something we should back off of at this point.

Okay. And then great. The follow-up would be -- I mean, the stock was already down 38% year-to-date -- now more today. Is the board considering a buyback?

Yes. No, I appreciate the question, Pat. I mean it's something that we certainly will consider and give some thought to and something that we will update people on as needed. But it's we'll continue to pay attention to it and monitor the stock and consider that in the other uses of our capital as we evaluate our model.

The next question is from Jake Roberge with William Blair.

Yes. I understand things have been a little bit slower on the migration front, but curious what you're actually hearing from SAP and your other partners on when those headwinds start to abate? Is it all just a macro timing dynamic? Or are you seeing SAP kind of extended deadlines have any impact on when customers might look to go online with your platform?

I haven't seen any initial indications of that. I think you need special approvals and you have to make certain investments to even secure that extension. So certainly, we've seen no shift in their public announcements about their intend to move that forward at the current deadline. And I think, again, it's not the only driver of cloud migration. It's occurring across the ecosystem, occurring in our Oracle opportunities. It's a big driver of some of the Oracle wins we had in the quarter. It's occurring now more so in the Microsoft Dynamics area, where we're seeing, again, new -- we're expanding our relationship there and seeing new opportunities. So I don't see that fundamentally changing. And at this point, I haven't seen any change in the deadline.

Okay. That's helpful. And then I know most of the impact to the guide was related to migration activity in true-ups, but just wanted to double click on how that initial ramp for invoicing has been and just how win rates for that solution might compare to kind of the core platform. I know it's a much earlier solution, but just curious what you're seeing early days on that front.

Yes. I think I think I'm seeing the things I thought I would see in terms of the strategic value of our differentiation, playing really well and competitively with the node to comment around the need to continue to build out the countries. So there are net companies that are just focused on an individual region, our cloud-based approach is playing really well with the end-to-end value prop. When a customer says, yes, but as part of this, I need to handle country X and it's not 1 we are currently covering, then we don't show up as well. That's why we're putting such urgency on continuing to expand our footprint across the globe in terms of country coverage to make sure that's not a competitive differentiator that we can't compete on.

And this concludes our question-and-answer session. I would now like to turn the conference back over to Joe Crivelli for any closing remarks.

Thanks, everybody, for joining us today. If you have any follow-up questions or would like to schedule additional timing with the team, please send me an e-mail at investors@vertexinc.com. Have a great rest of your day, and we look forward to speaking to you in the coming weeks.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.