The rapid pace of change—driven by shifting tax rates, evolving regulations, emerging technologies, and the increasing complexity of global commerce—creates significant challenges. With over 20,000 taxing jurisdictions worldwide requiring compliance, the adoption of AI, the move to the cloud, and the growing global focus on e-invoicing mandates, organizations must take a forward-looking approach to stay ahead.
Yet sometimes, companies must reflect on the past to stay ahead of today’s fast changing environment. This is the case for Vertex, Inc. – a leading global indirect tax technology company utilized by more than 60% of the Fortune 500.
Propelled by advanced capabilities on its global platform and proliferating legislative changes, 2024 was a transformative year for Vertex, seeing total revenues increase by more than 16% to $667 million, and its stock price nearly double. The company’s profitability increased significantly, driven by a 29% increase in cloud revenue. Even coming off such a strong year, CEO David DeStefano still looks back to Vertex’s roots in its beginnings as a family business, having been founded in 1978 by Ray Westphal.
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“We went public in 2020 after 40 years of operating privately,” said DeStefano. “Throughout my journey I learned the importance of long-term thinking. This mindset allows us to invest ahead of the curve with an eye toward the evolving landscape of technology and regulation – often considering where we need to be positioned two years from now, and sometimes even three to four years ahead for larger shifts. We work backwards from there and invest accordingly.”
DeStefano has served as President and CEO since November 2016 and was named Chairperson of the Board in 2020. His long tenure with the company started in 1999, previously serving as Executive Vice President and Chief Financial Officer. That tenure instilled a deep understanding of Vertex’s evolution and the intricacies of the tax technology landscape. Under his leadership, Vertex has expanded its global footprint and successfully transitioned to a public company amidst the challenging period of the COVID-19 pandemic.
Building on this strong foundation and leadership, Vertex is well-positioned to embrace the opportunities that lie ahead. Vertex estimates its total addressable market (TAM) for tax technology solutions at approximately $30 billion. Current adoption rates are below 10%, indicating significant growth potential as businesses increasingly seek automated tax compliance solutions.
Pain Relief Through Trust and Collaboration
Companies often start with homegrown solutions or basic ERP functionalities for indirect tax, but as they scale, expand globally or face increasing complexity, these initial setups often can’t keep up. This is where Vertex steps in, offering not just technology, but trust.
“Ultimately, what we’re selling is trust. It’s not just about solving today’s problem. It’s that business is going to continue to change, and so we must earn that trust every day through a valued experience,” said DeStefano.
He adds that Vertex is positioned at the center of commerce and compliance, enabling businesses to navigate growth and change with confidence. This support is rooted in accuracy, flexibility, and a vast tax content library encompassing more than one billion data-driven effective tax rates and rules that reflect the intricate regulations of jurisdictions worldwide.
Though important, this content is only as good as the platform that delivers it. This is why Vertex designed its technology to deliver a comprehensive end-to-end global tax platform with flexibility in mind, ensuring it can be deployed in diverse environments – multi-cloud, single tenant cloud, self-hosted, or hybrid.
Finance and tax professionals are primarily looking for efficiency gains and continuous compliance from tax technologies like Vertex offers, according to recent research from Wellesley Information Services. In fact, 61% of these professionals identified increased efficiencies as the top benefit they expect from tax compliance software. “We have less budget and headcount allocated to tax than we have had before. This has forced us to work even more efficiently with the tight deadlines that we have in front of us,” said a finance and accounting leader at a retail and distribution company.
Vertex places a strong emphasis on understanding and meeting the evolving needs of its
customers. The company’s annual “Exchange” conferences in the U.S. and Europe serve as critical touchpoints for nurturing connections, facilitating learning, product training, and peer-to-peer networking – bringing together industry leaders, tax professionals and technology innovators. These events also provide a valuable listening post for Vertex to gather customer feedback, to inform future capabilities and solutions, and foster relationships within the industry ecosystem.
Vertex has dedicated significant time and effort to achieving certifications, deep integrations, endorsements within leading ERP systems (such as SAP, Oracle and Microsoft) and fostering strong relationships with top technology providers and consulting firms. Vertex’s partnership with SAP exemplifies its strategic integration and innovative approach. DeStefano highlights the combination of tax and technology expertise and team proficiency that sets Vertex apart, reinforcing, “the amount of IP we have, combined with the expertise of our team, is evidenced in the 20+ integrations and solutions we’ve developed for SAP.” This illustrates the depth and sophistication of the company’s technical expertise.
Building trust has paid significant dividends for Vertex over the years, helping customers prepare for a shifting tax compliance landscape. DeStefano said that the company has relied on customer insights not only to build Vertex’s customer base, but also to develop solutions that continue to push innovation.
“Anytime we consider a new technology, we bring customers and partners together to co-innovate because they are part of the solutions we build. We bring them along on the journey,” said DeStefano. This collaborative process, built on a long-standing foundation of trust, is more important than ever.
Anytime we consider a new technology, we bring customers and partners together to co-innovate, because they are part of the solutions we build. We bring them along on the journey.
The company enhances its technological capabilities, expands its service offerings, and strengthens its position through strategic partnerships with companies like Shopify. In November 2023, Vertex became the first Shopify Tax Platform Partner to integrate directly into Shopify, automating global indirect tax calculations for enterprise companies. Beyond Shopify, Vertex is gaining significant momentum with ERP partners, particularly through integrations with platforms like NetSuite. This unified approach simplifies tax compliance, enabling businesses to scale efficiently while maintaining accuracy across its systems.
Tight SAP Integrations
Vertex maintains a strong, longstanding partnership with SAP, driven by ongoing collaboration and engagement. Dedicated efforts to enhance and expand this relationship ensure continued support for SAP customers at every stage of their SAP S/4HANA journey.
“As SAP has sharpened its focus on transformation, Vertex has established a go-to-market strategy with SAP to accelerate value delivery. Positioned to support customers throughout this journey, Vertex helps navigate the transition from ECC to SAP S/4HANA, including engagement with the RISE with SAP and GROW with SAP programs,” said DeStefano.
This strategic partnership is integral to Vertex’s global go-to-market strategy. The close relationship with SAP has evolved into a multi-faceted collaboration encompassing technology alignment, joint initiatives, and deep integration within the SAP ecosystem.
The development of purpose-built Accelerators for SAP further enhances the user experience and reduces manual requirements. This provides Vertex with a key advantage in its ability to support customers across different deployment models, acknowledging that while SAP drives for cloud adoption, many enterprises still operate on-premise
ERP systems.
“Vertex is SAP’s indirect tax solution and partner, no matter the platform. Whether SAP is offering on-premise or cloud solutions, Vertex ensures indirect tax is covered. While the focus is on the cloud, solving tax challenges for all SAP customers remains the priority,” said DeStefano.
Likewise, Vertex continues to expand its partner network with other leading ERP providers such as Oracle and Microsoft – ensuring customers can seamlessly integrate tax automation into their existing business systems.
Looking Ahead: AI and Tax Compliance
Companies are becoming more familiar and adopting artificial intelligence (AI) technologies to support business functions and efficiencies for essential tax workflows. Looking to the future, AI is poised to play an increasingly significant role in tax compliance. Vertex approaches AI with a pragmatic perspective, emphasizing the need for “human in the
loop” guidance, governance, and controls.
The use of Generative AI (GenAI) and Large Language Models (LLMs) may not be appropriate for all tax processes. Indirect tax calculation requires a “deterministic” logic to produce precise and consistent outcomes, whereas the probabilistic nature of AI does not always guarantee the exact same results each and every time.
That said, Vertex sees opportunities to develop and integrate AI capabilities in different aspects of the tax lifecycle management processes. The company is actively integrating GenAI with applications such as Smart Categorization to manage vast product catalogs as well as Vertex Copilot to help customers gain higher productivity with their use of Vertex applications. AI is driving innovation across new features, capabilities and products and will be a foundational key and strategic technology foundation for their product portfolio.
What fires me up is the enormous opportunity in front of us to support customers. Constant change in business models, regulatory requirements and technological advancements create opportunity for innovation.
“We’ve already launched copilots, but we’re taking it further. Smart Categorization is phase one, and now we’re looking at agentic AI not only in our products, but how it can work across the entire indirect tax lifecycle. You start upstream from tax determination, but you ultimately have to go down through compliance, filing, and audit where agentic AI could play. We’re also thinking about how agentic AI can work to improve the relationship and engagement between some of our ecosystem partners,” said DeStefano.
Culture is Crucial
After 25 years with Vertex, DeStefano remains just as passionate about helping customers solve their biggest challenges. He attributes this to the company’s collaborative culture. This allows Vertex to continue to innovate in the tax space and take advantage of the opportunities that come with change.
“What fires me up is the enormous opportunity in front of us to support our customers. Constant change in business models, regulatory requirements and technological advancements create opportunity for innovation. Our team is filled with passionate individuals who are eager to embrace these changes and drive new developments,” said DeStefano.
The company has been recognized among the “50 Best Remote Large Places to Work,” reflecting its dedication to embracing remote work and investing in employee well-being and development. To foster a collaborative culture, Vertex demonstrates a strong commitment to community involvement and engagement. Initiatives like a global week of service, support for disaster relief efforts, and the integration of philanthropic activities into its customer conferences underscore this value-driven approach.
In his personal life, DeStefano remains committed to community engagement, serving on the Advisory Board for Corporate Social Responsibility at the Satell Institute and the Board of Trustees of the Joseph Fund in Camden, New Jersey.
The focus on culture permeates Vertex’s growth strategy. Recent acquisitions like ecosio and LCR Dixon exemplify a targeted approach based on cultural alignment, recognizing that a strong cultural fit is crucial for successful integration. These acquisitions are also one of many ways the company seeks to expand its organizational capabilities and market reach.
The company also fosters business resource groups, open to all employees, which play a key role in creating a supportive and inclusive environment where every employee can thrive. Vertex’s highly engaged workforce and commitment to continuous collaboration enables them to remain agile and responsive to global customers and employees.
With a mission to support businesses worldwide, Vertex is actively broadening its reach into new global markets. This expansion aims to provide localized tax solutions that cater to the specific regulatory requirements of diverse regions, enabling companies to navigate complex tax landscapes with confidence. As Vertex continues to navigate the complexities of indirect tax in a rapidly evolving technological and regulatory landscape, its enduring principles of long-term vision, a focus on people and culture, deep customer understanding, and strategic innovation position it for continued success. The journey, marked by adaptability and a commitment to solving real-world challenges for its clients, offers a compelling case study in sustained growth and relevance in the dynamic world of enterprise software.
