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New companies buying cloud installations fed the revenue for Vertex for the third quarter ended September 30. This was the part of the information in the first publicly reported period since Vertex went public last month.

“New logos then to come in 85 to 90 percent cloud,” CEO David DeStefano said during this week’s earnings webcast. The indirect tax software company ost slightly more than $21 million for the most recently ended period, compared to net income of $11.9 million a year ago. Revenue reached $94.6 million, up 14.7 percent from $82.4 million in last year’s corresponding period. The offering had a big impact on GAAP results as stock-based compensation was 16.6 of revenue. That led GAAP gross margins to drop to 49.4 percent 66.7 percent a year earlier. On a non-GAAP basis, that non-cash charge is excluded and gross margins fell slightly to 71.4 percent from 71.6 percent. Vertex continues to emphasize a hybrid model of on-premise and clouds systems as many large enterprise are still measuring their move to the cloud.  Vertex said 73 percent of sales were made to existing customers. The company also had a sharp increase in operating expenses with DeStefano promising to invest more in R&D. “There is a great opportunity to expand products in Europe, which is where our focus is,” DeStefano said   Operating expenses were $96.6 million, more than doubled to $42.7 million, with R&D  spending also more than doubling. DeStefano noted that the  COVID-19 crisis has spurred growth in the company’s outsourcing business, although he did not provide separate results for that aspect. “We have a lot of customer returns to us and we process and manage the returns and remit the dollars to the jurisdictions,” he noted/ “It continues to be a strong growth driver.”

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