Vertex, Inc.

Nature of Business

Vertex, Inc. (“Vertex”) and its consolidated subsidiaries (collectively, the “Company”) operate as solutions providers of state, local, and value added tax calculation, compliance, and analytics, offering software products that are sold through software license and software as a service (“cloud”) subscriptions. The Company also provides implementation and training services in connection with its software license and cloud subscriptions, transaction tax returns outsourcing, and other tax-related services. The Company sells to customers located throughout the United States (“U.S.”) and internationally.

Basis of Consolidation

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and include the accounts of the Company. All intercompany transactions have been eliminated in consolidation.

On March 2, 2026, the Company completed its acquisition of Brinta (defined in Note 3). The acquisition was accounted for as a business combination. Upon its acquisition, Brinta became a wholly owned subsidiary of the Company, and its operations have been included in the Company’s condensed consolidated financial statements commencing on the Acquisition Date (as defined below).

Unaudited Interim Financial Information

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and include the accounts of the Company. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) filed with the SEC on February 24, 2026. The condensed consolidated balance sheet as of December 31, 2025 has been derived from audited financial statements included in the 2025 Annual Report. The accompanying interim condensed consolidated balance sheet as of September 30, 2026, the interim condensed consolidated statements of comprehensive income (loss) and changes in stockholders’ equity for the three and nine months ended September 30, 2026 and 2025, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the annual audited consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items necessary for the fair presentation of the condensed consolidated financial statements. The operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results expected for the full year ending December 31, 2026.

Use of Estimates

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues, and expenses during the reporting period. Significant estimates used in preparing these condensed consolidated financial statements include: (i) the estimated allowance for subscription cancellations; (ii) expected credit losses associated with the allowance for doubtful accounts; (iii) the reserve for self-insurance; (iv) assumptions related to achievement of technological feasibility for software

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

developed for sale; (v) product life cycles; (vi) estimated useful lives and potential impairment of long-lived assets, intangible assets, and capitalized cloud computing arrangement software implementation costs; (vii) potential impairment of goodwill; (viii) determination of the fair value of tangible and intangible assets acquired, liabilities assumed, and consideration transferred in acquisitions; (ix) amortization period of deferred commissions; (x) Black-Scholes-Merton option pricing model (“Black-Scholes model”) input assumptions used to determine the fair value of certain stock-based compensation awards and Employee Stock Purchase Plan (“ESPP”) purchase rights; (xi) measurement of future purchase commitment, fair value of contingent consideration liabilities related to cash and stock earn-out payments, contingent consideration and deferred purchase consideration liabilities associated with acquisitions; (xii) measurements of long-term investment; (xiii) valuation and measurements of the note receivable under the fair value option, and (xiv) the potential outcome of future tax consequences of events that have been recognized in the condensed consolidated financial statements or tax returns. Actual results may differ from these estimates.

Supplemental Balance Sheet Disclosures** **

Supplemental balance sheet disclosures are as follows for the respective periods:

Cloud computing software implementation costs incurred in hosting arrangements are capitalized and included as a component of prepaid expenses and other current assets, or other assets, once available for their intended use. These costs are amortized using the straight-line method over their respective contract service periods, including periods covered by an option to extend, ranging fromtwo tofive years. Amortization expense for capitalized cloud computing implementation costs for the three and nine months ended September 30, 2026 were $1,419 and $3,814, respectively, and for the three and nine months ended September 30, 2025 were $871 and $2,895, respectively, and are included in general and administrative expense in the condensed consolidated statements of comprehensive income (loss).

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Recently Issued Accounting Pronouncements

• *Interim Reporting (Topic 270): Narrow-Scope Improvements

In December 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The standard provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The standard does not change the fundamental nature of interim reporting. The standard is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently evaluating the impact of the standard on its interim reporting processes, including updates to disclosure controls, and interim footnote structure. However, the Company does not expect the adoption of the standard to have a material impact on its consolidated financial statements.

Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 replaces the existing stage based capitalization model with a principles-based approach. Under the new guidance, software development costs are capitalized only when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform its intended function. The standard also consolidates guidance for website development costs from Subtopic 350-50 into Subtopic 350-40 and introduces enhanced disclosure requirements related to capitalized software costs. The standard is effective for annual reporting periods beginning after December 15, 2027, including interim reporting periods within those fiscal years. The standard can be adopted retrospectively, prospectively or on a modified prospective basis, and early adoption is permitted as of the beginning of an annual reporting period, provided that the financial statements for that period have not yet been issued or made available for issuance. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures and will determine the appropriate transition method prior to adoption.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Entities will be required to provide disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements for both interim and annual reporting periods. The standard does not change the expense captions that an entity presents on the face of the income statement. The standard will be effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods for annual reporting periods beginning after December 15, 2027, with early adoption permitted. Entities are required to adopt the standard prospectively; however, entities are permitted to apply the amendments retrospectively to any or all prior periods presented in the financial statements. The Company is continuing to assess the potential impacts of the standard but does not expect this standard to have a material effect on its financial statements, other than the required changes to the disclosures.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

2. REVENUE RECOGNITION

Disaggregation of revenue

The table reflects revenue by major source for the following periods:

Contract balances

Timing of revenue recognition may differ from the timing of invoicing customers. A receivable is recorded in the condensed consolidated balance sheets when customers are billed related to revenue to be collected and recognized for subscription agreements as there is an unconditional right to invoice and receive payment in the future related to these subscriptions. A receivable and related revenue may also be recorded in advance of billings to the extent services have been performed and the Company has a right under the contract to bill and collect for such performance. Subscription-based customers are generally invoiced annually at the beginning of each annual subscription period. Accounts receivable is presented net of an allowance for potentially uncollectible accounts and estimated cancellations of software license and cloud-based subscriptions (the “allowance”) of $7,157 and $11,466 at September 30, 2026 and December 31, 2025, respectively. The allowance for potentially uncollectible accounts represents future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations.

The beginning and ending balances of accounts receivable, net of allowance, are as follows:

A contract liability is recorded as deferred revenue on the condensed consolidated balance sheets when customers are billed in advance of performance obligations being satisfied, and revenue is recognized ratably over the subscription period. Deferred revenue is included net of a related deferred allowance for subscription cancellations (the “deferred allowance”) of $2,835 and $4,120 at September 30, 2026 and December 31, 2025, respectively. The deferred allowance represents the portion of the allowance for subscription cancellations associated with deferred revenue.

The beginning and ending balances of and changes to the allowance and the deferred allowance are as follows:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The portion of deferred revenue expected to be recognized in revenue beyond one year is included in deferred revenue, net of current portion in the condensed consolidated balance sheets. The following table provides information about the balances of and changes to deferred revenue for the following periods:

Contract costs

Deferred sales commissions earned by the Company’s sales force and certain sales incentive programs and vendor referral agreements are considered incremental and recoverable costs of obtaining a contract with a customer. An asset is recognized for these incremental contract costs and included as deferred commissions in the condensed consolidated balance sheets. These contract costs are amortized on a straight-line basis over a period consistent with the transfer of the associated products and services to the customer, which is generallyone tothree years. Amortization of these costs are included in selling and marketing expense in the condensed consolidated statements of comprehensive income (loss). The Company periodically reviews these contract assets to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these assets. There wereno impairment losses recorded for the periods presented.

The changes to contract cost balances as of and for the following periods are:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

3. ACQUISITIONS

On March 2, 2026 (the “Acquisition Date”), the Company completed its acquisition of 100% of the equity interests of Finta Inc. and its subsidiaries (collectively, “Brinta” or the “Acquisition”). Headquartered in Uruguay, Brinta is a Latin American provider of business-to-business integration services, specializing in indirect tax calculation, tax filing, and e-invoicing. The Company plans to fully integrate Brinta, leveraging its e-invoicing capabilities to immediately expand the Company’s coverage across the Latin American region.

Purchase Consideration

Total purchase consideration for the Acquisition was $22,070 net of $40 cash acquired, which included $10,089 for the settlement of pre-existing debt/borrowings.

Additional Consideration

Stock Consideration

In connection with the Acquisition, the Company granted the sellers 497 shares of its Class A common stock (the “Stock Consideration”) in the form of restricted stock awards (“RSAs”) with an aggregate fair value of $8,000 based on the average closing share price of the Company’s Class A common stock for the 30 consecutive trading days endingone business day prior to the Acquisition Date. The RSAs vest ratably over afour-year period (25% vesting annually), conditioned on the continued employment of the sellers during that period. The Stock Consideration is accounted for as post-combination compensation cost and will be recognized as stock-based compensation expense over the applicable service period. For further information on these RSAs, see Note 11, “Stock-Based Award Plans.”

Additional Cash Consideration

In connection with the Acquisition, the Company entered into arrangements providing for aggregate additional cash consideration payments of $10,000 to the sellers (the “Additional Cash Consideration”), consisting oftwo installment payments of $5,000, payable on each of the first and second anniversaries of the Acquisition Date. Continued service to the Company is a requirement for the sellers to receive the additional cash consideration payments; however, in the event a seller is terminated without cause, the remaining payments remain payable on the original scheduled payment dates. These payments are accounted for as post-combination compensation liabilities and will be recognized as compensation expense over the applicable service period. Additional Cash Consideration for the three and nine months ended September 30, 2026 was $1,250 and $2,917, respectively, and is included in general and administrative expense in the condensed consolidated statements of comprehensive income (loss).

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Fair Value of Assets Acquired and Liabilities Assumed

The purchase price was allocated to the net assets acquired based on the Company’s determination of their estimated fair values using available information as of the Acquisition Date. The excess of purchase consideration over the net assets acquired is recorded as goodwill, which primarily reflects the existence of intangible assets not recognized under U.S. GAAP such as the value of expected future synergies, the value of the assembled workforce and other market factors.

The fair value, valuation methodology, estimated useful life, and significant assumptions of the identifiable intangible asset acquired in the Acquisition are summarized in the table below:

Any subsequent adjustments to the preliminary values not associated with determination of their fair values on the Acquisition Date will be recorded in the consolidated statements of comprehensive income (loss) in the period in which the adjustment is identified.

Total transaction costs associated with the Acquisition were $69 and $804 for the three and nine months ended September 30, 2026, respectively, and are recorded in other operating expense (income), net in the condensed consolidated statements of comprehensive income (loss).

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

4. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company’s fair value for its financial assets and liabilities measured at fair value on a recurring basis:

Money Market Funds

The Company has investments in high quality, short-term money market instruments, which are issued and payable in U.S. dollars (“Money Market Funds”) and included in cash and cash equivalents on the condensed consolidated balance sheets. Fair value inputs for these investments are considered Level 1 measurements within the fair value hierarchy since Money Market Fund fair values are known and observable through daily published floating net asset values.

ecosio Earn-outs

In connection with the August 2024 acquisition of ecosio GmbH (“ecosio”), the sellers are entitled tothree annual earn-outs in the form of cash, with an aggregate value of up to $94,355 (the “Cash Earn-outs”), and stock, with an aggregate value of up to $35,000 (the “Stock Earn-outs,” and together with the Cash Earn-outs, the “Earn-outs”), assuming maximum payouts. The Earn-outs are based on ecosio’s achievement of certain monthly software revenue targets over athree-year period, measured over an aggregate of 12 months and paid within 90 days after the relevant measurement period. At the acquisition date, the fair value of the Cash Earn-outs and Stock Earn-outs were $71,000 and $34,000, respectively.

The fair value of the Cash Earn-out and the Stock Earn-out were measured on the acquisition date using a Monte Carlo simulation in a risk-neutral framework, calibrated to management’s revenue forecasts. Additional information on the Cash Earn-outs and the Stock Earn-outs is presented in the following table:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Actual payouts are further adjusted depending on ecosio’s software revenue attainment for each of the measurement periods. In the event that actual software revenues exceed 100% of the target, additional payments may be made up to a maximum of 122.5% of the annual target. Under the original purchase agreement, if actual software revenues were below 85% of the target, no payout would have been made for that measurement period. During the third quarter of 2026, the Company amended the purchase agreement to, among other things, establish guaranteed minimum payments for the second and third measurement periods. The Cash Earn-outs are subject to guaranteed minimum software revenue attainment achievement of 107.5% of the applicable target or $27,813 and $38,939 for the second and third measurement periods, respectively. If actual software revenue attainment exceeds 107.5% of the applicable target, the Cash Earn-outs will be based on actual attainment, subject to the existing caps in the purchase agreement. The amendment also guarantees the Stock Earn-outs in full for the second and third measurement periods. The Stock Earn-outs are payable in shares of the Company’s Class A common stock.

The Cash Earn-outs and Stock Earn-outs are recorded at fair value in the condensed consolidated balance sheets as follows:

These Earn-outs represent recurring fair value measurements with significant unobservable inputs, which management considers to be Level 3 measurements under the fair value hierarchy. The final payments may be adjusted depending on the actual amount, above or below the target. The Earn-outs will be revalued and adjusted quarterly until the end of the Earn-out period, and any fair value adjustments will be recorded in the change in fair value of acquisition contingent earn-outs line of the condensed consolidated statements of income (loss).

During the three months ended September 30, 2026, the Company recorded fair value adjustments of $2,500 and $300 to the Cash Earn-outs and Stock Earn-outs, respectively. During the nine months ended September 30, 2026, the Company recorded fair value adjustments of $2,500 and $(5,538) to the Cash Earn-outs and Stock Earn-outs, respectively. During the three months ended September 30, 2025, the Company recorded fair value adjustments of $5,100 and $(9,100) to the

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Cash Earn-outs and Stock Earn-outs, respectively. During the nine months ended September 30, 2025, the Company recorded fair value adjustments of $8,600 and $(25,000) to the Cash Earn-outs and Stock Earn-outs, respectively.

During the nine months ended September 30, 2026, the Company paid Cash Earn-outs of $19,600 for the annual payout period ended November 30, 2025. During the nine months ended September 30, 2026, the Company issued 324 shares of its Class A common stock, valued at a total of $6,062, for the Stock Earn-out period ended November 30, 2025.

The fair values of the Cash Earn-outs and the Stock Earn-outs and unobservable inputs used for the Monte Carlo Simulation valuation are shown in the table below.

Changes in the fair value of the Company’s Level 3 liabilities during the nine months ended September 30, 2026 were as follows:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Long-Term Investment

In April 2025, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with Kintsugi AI, Inc. (“Kintsugi”), a San Francisco-based, AI startup focused on automating sales tax compliance for small and mid-size businesses (the “Kintsugi Investment”).

Pursuant to the Purchase Agreement, the Company purchased 1,568 preferred shares (the “Preferred Stock”) for aggregate consideration of approximately $15,000 (the “Purchase Price”), representing approximately 10% of the fully diluted shares outstanding of Kintsugi on an “as converted” basis, and received a warrant to purchase 320 shares of Kintsugi’s Class A common stock at a price of $0.01 per share (the “Warrant”). The fair value of the Warrant was determined to benil and therefore the Company allocated the full Purchase Price to the value of the Preferred Stock. The Warrant expired unexercised during the third quarter of 2026 and is no longer outstanding or exercisable.

The Company classified the Preferred Stock as an equity security under ASC 321, Investments – Equity Securities. As Kintsugi is a privately held company without a readily determinable fair value, the Preferred Stock qualifies for the measurement alternative under ASC 321 and is measured at cost, less impairment, subject to upward and downward adjustments resulting from observable price changes for identical or similar investments of the same issuer. These adjustments require quantitative assessments of the fair value, which may require the use of unobservable inputs, which management considers to be Level 3 measurements under the fair value hierarchy. The Company performs a qualitative assessment each reporting period to identify indicators of impairment. No observable price change or impairment adjustments have been recorded for either the three or nine months ended September 30, 2026 or 2025. The $15,000 carrying value of the Kintsugi Investment is presented in the long-term investment line in the condensed consolidated balance sheets.

Note Receivable

On September 3, 2026, the Company funded a $10,000 convertible promissory note issued by Kintsugi (the “Note Receivable”). The Note Receivable bears interest at an annual rate of 8%, compounded annually, and matures on September 3, 2028. Upon the occurrence of certain financing events, the outstanding principal and accrued interest may convert into preferred stock at a 20% discount to the price paid by investors in the applicable financing.

The Company elected the fair value option under ASC 825 to better align reported results with changes in the underlying value of the Note Receivable. The Company measures the Note Receivable at fair value each reporting period, with changes in fair value recognized in the condensed consolidated statements of comprehensive income (loss). As of September 30, 2026, the transaction price approximated fair value. Accordingly, the Company didnot recognize an unrealized gain or loss for the three and nine months ended September 30, 2026. During the three and nine months ended September 30, 2026, the Company recognized $59 of interest income in the interest income, net, line of the condensed consolidated statements of comprehensive income (loss). The Note Receivable is reported within the other assets line in the condensed consolidated balance sheets.

The Note Receivable is classified within Level 3 of the fair value hierarchy because its valuation incorporates significant unobservable inputs. The Company estimates the fair value of the Note Receivable using a scenario-based discounted cash flow analysis that considers the contractual proceeds under various potential outcomes. Significant assumptions include the probability and expected timing of each outcome, the credit spread, and the risk-free interest rate. As of September 30, 2026, no portion of the Note Receivable was 90 days or more past due.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Assets and Liabilities for Which Fair Value is Only Disclosed

The carrying amounts of cash and cash equivalents and the carrying amount of funds held for customers were the same as their respective fair values and are considered Level 1 measurements.

The carrying amount of the Company’s bank debt approximates fair value as the variable rates on the debt approximate those commercially available in the market and is considered a Level 3 measurement.

Non-recurring Fair Value Measurements

The Brinta acquisition on March 2, 2026, and the ecosio acquisition on August 30, 2024, were accounted for as business combinations and the total purchase price for each acquisition was allocated to the net assets acquired and liabilities assumed based on their estimated fair values on the dates of acquisition.

Derivative Instruments

The Company may periodically enter into derivative contracts to reduce its exposure to foreign currency exchange rates. Historically, the Company has not designated derivative contracts as hedges. Such derivative contracts are typically designed to manage specific risks according to the Company’s strategies, which may change from time to time.

Convertible Senior Notes

As of September 30, 2026 and December 31, 2025, the fair value of the Notes (as defined in Note 8) was $306,950 and $327,043, respectively. The fair value was determined based on the quoted price of the Notes in an over-the-counter market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. For further information on the Notes, refer to Note 8, “Debt”.

5. PROPERTY AND EQUIPMENT

The major components of property and equipment are as follows:

Depreciation expense for property and equipment, excluding all internal-use software developed and finance leases, was $1,254 and $1,089 for the three months ended September 30, 2026 and 2025, respectively, and $3,628 and $3,213 for

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

the nine months ended September 30, 2026 and 2025, respectively, and is included in depreciation and amortization in the condensed consolidated statements of comprehensive income (loss).

Finance lease amortization was $8 and $18 for the three months ended September 30, 2026 and 2025, respectively, and $34 and $56 for the nine months ended September 30, 2026 and 2025, respectively, and is included in depreciation and amortization in the condensed consolidated statements of comprehensive income (loss).

Assets under finance leases of $141 and $265, net of accumulated amortization of $81 and $171, respectively, at September 30, 2026 and December 31, 2025, respectively, are included in property and equipment, net in the condensed consolidated balance sheets.

The major components of internal-use software developed are as follows:

Amounts included in property and equipment additions related to capitalized internal-use software on the condensed consolidated statements of cash flows are as follows:

In-process internal-use software developed is not depreciated until it is available for its intended use. Depreciation expense for internal-use software developed for cloud-based customer solutions for the three months ended September 30, 2026 and 2025 was $17,719 and $12,522, respectively, and $47,820 and $33,791, for the nine months ended September 30, 2026 and 2025, respectively, and is included in cost of revenues, software subscriptions in the condensed consolidated statements of comprehensive income (loss).

Depreciation expense for internal-use software developed for internal systems and tools for the three months ended September 30, 2026 and 2025 was $6,218 and $5,264, respectively and $16,979 and $15,170 for the nine months ended September 30, 2026 and 2025, respectively, and is included in depreciation and amortization in the condensed consolidated statements of comprehensive income (loss).

6. CAPITALIZED SOFTWARE

Capitalized software includes acquired software and direct labor and related expenses for software developed for sale for new products and enhancements to existing products.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The major components of capitalized software are as follows:

Software development costs capitalized for the three months ended September 30, 2026 and 2025, were $5,321 and $5,879, respectively, and $15,969 and $16,444 for the nine months ended September 30, 2026 and 2025, respectively.

Capitalized software amortization expense, including amortization of acquired technology, was $5,425 and $5,621 for the three months ended September 30, 2026 and 2025, respectively, and $17,292 and $16,877 for the nine months ended September 30, 2026 and 2025, respectively, and is included in cost of revenues, software subscriptions in the condensed consolidated statements of comprehensive income (loss).

7.GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets are as follows for the periods presented:

The Company has recognized various amortizable other intangible assets in connection with acquisitions related to customer relationships, technology, and tradenames. The following tables provide additional information for other intangible assets, which are individually not material to the condensed consolidated financial statements, for the periods presented:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The following table presents amortization of other intangible assets:

**8.**DEBT

Credit Agreement

The Company has a credit agreement (“Credit Agreement”) with a banking syndicate, which currently provides a $300,000 revolving facility (the “Line of Credit”). The Company hadno outstanding borrowings under the Credit Agreement at September 30, 2026 or December 31, 2025.

Indenture and Notes

On April 26, 2024, the Company issued $345,000 aggregate principal amount of 0.750% Convertible Senior Notes due 2029 (the “Notes”) to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes bear interest at a rate of 0.750% per annum on the principal amount thereof, payable semi-annually in arrears on May 1 and November 1 of each year. The Notes will mature on May 1, 2029, unless earlier repurchased, redeemed or converted in accordance with their terms.

There have beenno changes to the initial conversion price of the Notes since issuance. The Notes are convertible into the Company’s Class A common stock at the option of the holders. As of September 30, 2026, none of the Notes were converted.

Capped Call Transactions

In connection with the pricing of the Notes on April 23, 2024, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with certain financial institutions (together, the “Option Counterparties”). In connection with the exercise of the option to purchase the additional Notes in full, the Company entered into additional capped call transactions with the Option Counterparties (together with the Base Capped Call Transactions, the “Capped Call Transactions”).

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The Company’s indebtedness at September 30, 2026 and December 31, 2025 was as follows:

The Company’s interest expense related to the Notes is as follows:

9**.STOCKHOLDERS’ EQUITY **

Common Stock

During the three months ended September 30, 2026, the Company issued (i)2 shares of Class A common stock related to the exercise of options and (ii)51 shares of Class A common stock in connection with the vesting of Restricted Stock Units (“RSUs”), net of 25 shares returned to the Company in lieu of payment of taxes due on the vesting of these RSUs. During the nine months ended September 30, 2026, the Company issued (i)308 shares of Class A common stock related to the exercise of options, net of 59 shares returned to the Company in lieu of payment of the exercise price and taxes due on these exercises, (ii)1,076 shares of Class A common stock in connection with the vesting of RSUs, net of 615 shares returned to the Company in lieu of payment of taxes due on the vesting of these RSUs, (iii)37 shares of Class A common stock in connection with the vesting of Restricted Stock Awards (“RSAs”), (iv)324 shares of its Class A common stock for the Stock Earn-out period ended November 30, 2025, and (v)142 shares of Class A common stock in connection with the ESPP.

During the three months ended September 30, 2025, the Company issued (i)7 shares of Class A common stock related to the exercise of options, and (ii)66 shares of Class A common stock in connection with the vesting of RSUs net of 34 shares returned to the Company in lieu of payment of taxes due on the vesting of these RSUs. During the nine months ended September 30, 2025, the Company issued (i)1,252 shares of Class A common stock related to the exercise of options, net of 18 shares returned to the Company in lieu of payment of the exercise price and taxes due on these exercises, (ii)981 shares of Class A common stock in connection with the vesting of RSUs, net of 604 shares returned to the Company in lieu of payment of taxes due on the vesting of these RSUs, (iii)34 shares of Class A common stock in connection with the vesting of RSAs, (iv)53 shares of Class A common stock in connection with the ESPP, and

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

(v)4,325 shares of Class A common stock related to a stockholder’s election to convert an equivalent number of shares of Class B common stock.

Treasury Stock

The Repurchase Program

On October 30, 2025, the board of directors (the “Board”) authorized a stock repurchase program for up to $150,000 of the Company’s outstanding shares of Class A common stock (the “Repurchase Program”). Under the Repurchase Program, share repurchases may be made from time to time in one or more open market or privately negotiated transactions, and/or through other legally permissible means in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. Any repurchased shares will be available for use in connection with the Company’s stock plans and for other corporate purposes. The Repurchase Program has no termination date and may be modified, suspended or discontinued at any time.

The table below sets forth information regarding repurchase of shares under the Repurchase Program (in thousands, except per share data):

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

10. EARNINGS PER SHARE

The tables below illustrate the calculation of basic and diluted net income per common share for the Class A common stock and Class B common stock for the periods reflected below.

The following weighted-average outstanding shares of Class A common stock equivalents by award type were excluded from the computation of diluted net income (loss) per share attributable to Class A common stock stockholders, as the impact of including them would have been anti-dilutive.

11. STOCK-BASED AWARD PLANS

The 2020 Incentive Award Plan (the “2020 Plan”) provides the ability to grant cash and equity-based incentive awards to eligible employees, directors and service providers in order to attract, retain and motivate those that make important contributions to the Company. The Company issued stock options, RSAs, RSUs, and PSUs (as defined below) under the

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

2020 Plan. As of September 30, 2026,12,821 shares of Class A common stock were available for issuance under the 2020 Plan.

Options

The following table summarizes activity for options outstanding under the 2020 Plan for the nine months ended September 30, 2026:

The details of options outstanding, vested, and exercisable under the 2020 Plan as of September 30, 2026 are as follows:

The Board intends all options granted to be exercisable at a price per share not less than the per share fair market value of the Company’s Class A common stock underlying the options on the date of grant. Compensation expense for option awards are measured based on the grant date fair value of the awards and recognized in the condensed consolidated statements of comprehensive income (loss) over the period during which the participant is required to perform the requisite services. The vesting period is generallyone tofour years. The grant date fair value of options is estimated using the Black-Scholes model.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

There wereno options issued under the 2020 Plan during the nine months ended September 30, 2026 or 2025. At September 30, 2026, all compensation expense associated with the options was fully recognized.

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2026:

Stock-based compensation cost for RSUs is measured based on the fair value of the Company’s underlying common stock on the date of grant and is recognized on a straight-line basis in the condensed consolidated statements of comprehensive income (loss) over the period during which the participant is required to perform services in exchange for the award, which is generallyone tofour years. Vested RSUs are settled by issuing Class A common stock or the equivalent value in cash at the Board’s discretion. At September 30, 2026, $110,627 of unrecognized compensation expense for RSUs is expected to be recognized over a weighted average period of approximately 2.9 years.

Restricted Stock Awards

The following table summarizes Restricted Stock Awards (“RSAs”) activity for the nine months ended September 30, 2026:

Stock-based compensation cost for RSAs is measured based on the fair value of the Company’s underlying common stock on the date of grant and is recognized on a straight-line basis in the condensed consolidated statements of comprehensive income (loss) over the period during which the participant is required to perform services in exchange for the award, which is generallyone tofour years.

In connection with the Brinta acquisition, the Company granted the sellers 497 RSAs with an aggregate fair value of $7,151, based on the value of the Company's Class A common stock on the Acquisition Date. The RSAs vest ratably over afour-year service period, with 25% vesting annually and are recognized on a straight-line basis in the condensed consolidated statements of comprehensive income (loss).

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

At September 30, 2026, $7,222 of unrecognized compensation expense for RSAs is expected to be recognized over a weighted average period of approximately 3.1 years.

Performance Stock Units** **

On August 3, 2026, the Board approved Performance Stock Units (“PSUs”) for certain members of the Company’s leadership team under the Company’s 2020 Incentive Award Plan. The PSUs are divided into three equal annual tranches and may be earned based on the achievement of specified annual financial and operational goals established for each applicable performance period, which includes fiscal years 2026, 2027, and 2028. Each annual tranche may be earned from 0% to 200% of the Board approved targets. Earned PSUs vest on December 31, 2028, subject to continued service through that date and the terms of the applicable award agreement. The 2026 tranche had a grant date of August 3, 2026. The 2027 and 2028 tranches will have separate grant dates established when their respective performance goals are approved and communicated, provided the other grant-date criteria are met.

The PSUs are equity-classified under ASC 718 because participants cannot require cash settlement and the Company intends and has historically settled comparable awards in shares, although it may elect cash settlement. Compensation cost for each tranche is based on grant-date fair value and the probable number of units earned, recognized over the requisite service period and adjusted cumulatively for changes in the probable outcome.

The following table summarizes the PSU activity for the nine months ended September 30, 2026:

At September 30, 2026, $2,486 of unrecognized compensation expense for the 2026 tranche of the PSUs is expected to be recognized over a weighted average period of approximately 2.0 years.

ecosio PSUs

In connection with the 2024 ecosio acquisition, current and newly hired employees of ecosio have or may receive RSUs that vest upon continuing service and performance conditions (the “ecosio PSUs”). These performance conditions are based upon ecosio’s monthly software revenues meeting specified annual targets over athree-year period. The annual targets are based on a range of performance targets in which grantees may earn a prorated portion of the base number of awards granted up to 100%.

The stock-compensation expense associated with the awards will be accounted for as compensation expense over the vesting periods based on the Company’s assessment of the probability of achieving the targets. If the required conditions are not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Compensation cost for each tranche is based on grant-date fair value and the probable number of units earned, recognized over the requisite service period and adjusted cumulatively for changes in the probable outcome.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The following table summarizes the ecosio PSU activity for the nine months ended September 30, 2026:

At September 30, 2026, a maximum of $2,053 of unrecognized compensation expense for the ecosio PSUs, pending achievement of targets, may be recognized over a weighted average period of approximately 1.2 years.

Employee Stock Purchase Plan

The ESPP provides eligible employees with rights during eachsix-month ESPP offering period to purchase shares of the Company’s Class A common stock through payroll deductions of up to a specified percentage of their eligible compensation. The purchase price of the shares, in the absence of a contrary designation, is 85% of the lower of the fair value of the Class A common stock on the first or last day of the ESPP offering period. Amounts withheld from participants are included in accrued salaries and benefits in the condensed consolidated balance sheets until such shares are purchased. Amounts withheld from participants for the offering period ending November 30, 2026 aggregated $1,557 as of September 30, 2026. As of September 30, 2026,5,990 shares of Class A common stock were available for issuance under the ESPP.

As of September 30, 2026, there was approximately $183 of unrecognized ESPP stock-based compensation expense expected to be recognized on a straight-line basis over the remaining term of the six-month offering period ending November 30, 2026.

At September 30, 2026 and 2025, there weretwo ESPP offering periods open that end November 30, 2026 and 2025, respectively. The fair value of ESPP purchase rights for the offering periods is comprised of the value of the 15% ESPP discount and the value associated with the call or put over the respective ESPP offering period. ESPP offering periods reported in the September 30, 2026 and 2025 financial statements include the periods noted below in the table. The value of the call or put was estimated using the Black-Scholes model with the following assumptions:

Volatility is representative of expected stock price volatility over the offering period based on the Company’s historic stock price volatility. The expected term represents the term of the ESPP offering period, which is six months. The Company does not expect to pay dividends. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the award at the date nearest to the offering term.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Stock-Based Compensation

The Company recognized total stock-based compensation expense related to incentive awards, net of forfeitures, as follows:

The Company recognized stock-based compensation expense in the condensed consolidated statements of comprehensive income (loss) as follows:

12. COMMITMENTS AND CONTINGENCIES** **

In January 2022, the Company filed a complaint against a competitor alleging claims of unfair competition, intentional interference with contractual relations, and trade secret misappropriation. Following a jury trial, on October 29, 2026, a verdict was reached concluding that no trade secret misappropriation occurred. The Company is currently evaluating its options with respect to the verdict, including potential appeal. The Company has not recognized any potential impact to the condensed consolidated financial statements related to the outcome of the case.

During the three months ended September 30, 2026 and 2025, the Company recognized $2,613 and $2,785, respectively, and during the nine months ended September 30, 2026 and 2025, the Company recognized $6,396 and $8,093, respectively, for legal expenses associated with the case within the other operating expense, net line of the condensed consolidated statements of comprehensive income (loss).

The Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. The Company is not aware of any such legal proceedings or claims that management believes will have a material adverse effect on its business, financial condition, or operating results.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

13. SEGMENT DISCLOSURES

The Company operates its business asone operating segment. Operating segments are defined as components of an enterprise in which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, reviews financial information regularly at the consolidated level. Net income (loss) and adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), a non-GAAP measure, are both used as metrics to evaluate performance of the business in deciding whether to reinvest profits into software development, acquisitions or into other areas of the Company. The Company believes that Adjusted EBITDA is a useful supplemental measure to evaluate overall operating performance as it measures business performance by focusing on cash related results and it is an important metric to lenders under the Company’s Credit Agreement. The most directly comparable GAAP measure to Adjusted EBITDA is net income (loss).

The CODM monitors consolidated forecasted versus actual net income (loss) and Adjusted EBITDA results for the purpose of determining the general health of the Company and assessing the performance of the Company as compared to management’s expectations.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

The following significant expense categories and measures of segment income (loss) are regularly reported to the CODM for the Company’s single segment:

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

Additionally, the Company considers stock-based compensation expense a significant expense category. For further information, refer to Note 11, “Stock-Based Award Plans.”

As the Company operates solely withinone segment, total assets, property and equipment, net, and capitalized software, net are reported at the consolidated level on the condensed consolidated balance sheets. The Company’s assets include both current and long-lived assets, and corporate assets. As of September 30, 2026 and December 31, 2025, $1,421 and $1,347, respectively, of the Company’s property and equipment assets were held outside of the U.S.

Depreciation and amortization, property and equipment additions, and capital software additions are reported at the consolidated level on the condensed consolidated statements of cash flows.

The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types. For the three and nine months ended September 30, 2026, approximately 13% and 12% of the Company’s revenues were generated from customers located outside the U.S. For both the three and nine months ended September 30, 2025, approximately 9% of the Company’s revenues were generated from customers located outside the U.S. None of the Company’s customers represented more than 10% of total revenues for the three or nine months ended September 30, 2026 or 2025. For further information, including disaggregation of revenues, refer to Note 2, “Revenue Recognition.”

14. INCOME TAXES** **

The Company reported income tax expense (benefit) of $47,289 and $1,520 for the three months ended September 30, 2026 and 2025, respectively, and $27,008 and $(5,260) for the nine months ended September 30, 2026 and 2025, respectively. The effective income tax rate was 7,208.7% for the three months ended September 30, 2026, compared to 27.3% for the three months ended September 30, 2025, and (206.3)% for the nine months ended September 30, 2026, compared to (58.7)% for the nine months ended September 30, 2025.

In determining interim provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income (loss) adjusted for discrete items arising year-to-date. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, state taxes, tax credits, tax benefits on the exercises and vesting of stock awards, limitations on deductions of certain employees’ compensation under Internal Revenue Code Section 162(m), foreign taxes, and fluctuations in nondeductible contingent consideration liabilities and transaction costs.

The income tax expense for the three months ended September 30, 2026 was primarily attributable to reduced forecasted pre-tax income in profitable jurisdictions, which resulted in a negative estimated annual effective tax rate applied to pre-tax loss for the nine months ended September 30, 2026. This resulted in income tax expense for the nine months ended September 30, 2026 compared to the income tax benefit for the six months ended June 30, 2026. The income tax expense for the nine months ended September 30, 2026 was primarily attributable to fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, tax expense from stock-based awards exercised or vested, state taxes, and the application of the negative estimated annual effective tax rate applied to the pre-tax loss for the nine months ended September 30, 2026.

The income tax expense for the three months ended September 30, 2025 was primarily attributable to taxes in profitable jurisdictions and fluctuations in valuation allowance on net deferred tax assets established for U.S. and certain foreign jurisdictions. This income tax expense was partially offset by fluctuations in tax credits and nondeductible contingent consideration liabilities. The income tax benefit for the nine months ended September 30, 2025 was primarily attributable to tax benefits from stock-based awards exercised or vested, tax credits, and fluctuations in nondeductible contingent consideration liabilities. These were partially offset by limitations on deductions of certain employees’ compensation, fluctuations in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, and taxes in profitable jurisdictions.

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Vertex, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

(Amounts in thousands, except per share data) ​

15. RESTRUCTURING

On April 28, 2026, the Company announced its Board approved a global Value Creation Plan (the “Plan”) with the intention to become a more AI-enabled company, focusing investments on key growth opportunities and driving operational efficiency to better align the Company’s workforce and resources with its long-term strategic priorities. The Plan initially included a reduction in force of approximately 170 employees along with a significant reduction of third party spend across the Company, and is expected to continue to evolve as the Company evaluates additional actions to further align its cost structure and operations with its long-term strategic priorities. In connection with the Plan, the Company recognized pre-tax charges of $3,324 and $11,207 during the three and nine months ended September 30, 2026, respectively, which are included in the general and administrative expense line of the condensed consolidated statements of comprehensive income (loss). These charges consist primarily of cash expenditures related to employee severance, notice pay, statutory termination indemnities, and other employee separation benefits. The majority of the related cash payments are expected to be made during 2026. Any changes to the estimates or timing of the Plan will be reflected in the Company’s results of operations in future periods.

Total liabilities related to the Plan are recorded in the accrued salaries and benefits line of the condensed consolidated balance sheet at September 30, 2026. The following table summarizes the Company’s restructuring liability activities for the nine months ended September 30, 2026: