XML 28 R12.htm IDEA: XBRL DOCUMENT v3.25.0.1

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2024

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

5. 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:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Measurements Using

As of December 31, 2024

​

Fair Value

Prices in active markets for identical assets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Money Market Funds

​

$

276,374

​

$

276,374

​

$

—

​

$

—

Commercial Paper

​

​

4,920

​

​

—

​

​

4,920

​

​

—

Corporate Bonds

​

​

250

​

​

—

​

​

250

​

​

—

U.S. Treasury Securities

​

​

5,983

​

​

—

​

​

5,983

​

​

—

ecosio Cash Earn-outs

​

​

74,400

​

​

—

​

​

—

​

​

74,400

ecosio Stock Earn-outs

​

​

48,100

​

​

—

​

​

—

​

​

48,100

​

​

Fair Value Measurements Using

As of December 31, 2023

​

Fair Value

Prices in active markets for identical assets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Money Market Funds

​

$

53,049

​

$

53,049

​

$

—

​

$

—

Commercial Paper

​

​

7,168

​

​

—

​

​

7,168

​

​

—

U.S. Treasury Securities

​

​

3,621

​

​

—

​

​

3,621

​

​

—

Tellutax Contingent Consideration

​

​

4,900

​

​

—

​

​

—

​

​

4,900

Foreign Currency Forward Contracts

​

​

849

​

​

—

​

​

849

​

​

—

​

The Company has investments in Money Market Funds, which are included in cash and cash equivalents on the 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. Securities classified as available-for-sale are reported at fair value using Level 2 inputs. For the Commercial Paper, Corporate Bonds, and U.S. Treasury Securities, the Company believes that Level 2 designation is appropriate under ASC 820-10, Fair Value Measurements and Disclosures, as these securities are fixed income securities, none are exchange traded, and all are priced by correlation to observed market data. For these securities the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, U.S. government and agency yield curves, live trading levels, trade

execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other factors.

ecosio Earn-outs

​

In connection with the August 2024 ecosio acquisition, the sellers are entitled to three annual Earn-outs based on ecosio’s achievement of certain monthly software revenue targets measured over an aggregate of 12 months and paid within 90 days after the relevant measurement period. The fair values of the Cash Earn-outs and the Stock Earn-outs 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 below.

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Maximum		​	​	​	Fair Value		​	Fair Value
Cash Earn-outs/ Period	​	Payout		​	​	​	December 31, 2024		​	at Acquisition Date
Year 1 - December 1, 2024 - December 1, 2025	​	$	19,600	​	​	​	$	17,900	​	$	16,700
Year 2 - December 1, 2025 - December 1, 2026	​	​	30,625	​	​	​	​	24,400	​	​	23,200
Year 3 - December 1, 2026 - December 1, 2027	​	​	44,130	​	​	​	​	32,100	​	​	31,100
Total Cash Earn-outs	​	$	94,355	​	​	​	$	74,400	​	$	71,000
​	​	Maximum		​	​	​	Fair Value		​	Fair Value
Stock Earn-outs/ Period	​	Payout (1)		​	​	​	December 31, 2024		​	at Acquisition Date
Year 1 - December 1, 2024 - December 1, 2025	​	$	12,000	​	​	​	$	17,200	​	$	12,200
Year 2 - December 1, 2025 - December 1, 2026	​	​	12,000	​	​	​	​	16,300	​	​	11,400
Year 3 - December 1, 2026 - December 1, 2027	​	​	11,000	​	​	​	​	14,600	​	​	10,400
Total Stock Earn-outs	​	$	35,000	​	​	​	$	48,100	​	$	34,000
(1) Maximum payout based on Vertex's August 6, 2024 opening share price of $37.02, as referenced in the purchase agreement.
​	​	​	​	​	​	​	​	​	​	​	​

​

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. If actual software revenues are below 85% of the target, no payouts are made for that measurement period. The Stock Earn-outs are paid in shares of the Company’s Class A common stock.

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. Both the Cash Earn-outs and the Stock Earn-outs are recorded at fair value and are included in purchase commitment and contingent consideration liabilities, net of current portion in the consolidated balance sheets. The Earn-outs will be revalued and adjusted quarterly until the end of the Earn-out periods, and any fair value adjustments will be recorded in the change in fair value of acquisition contingent earn-outs line of the consolidated statement of loss.

Adjustments to the fair values of the Cash Earn-outs and the Stock Earn-outs of $3,400 and $14,100, respectively, were recorded in change in fair value of acquisition contingent earn-outs for the year ended December 31, 2024. At December 31, 2024, the Cash Earn-outs and the Stock Earn-outs of $17,900 and $17,200, respectively, are included in purchase commitment and contingent consideration liabilities, current in the consolidated balance sheets. At December 31, 2024, the Cash Earn-outs and the Stock Earn-outs of $56,500 and $30,900, respectively, are included in the purchase commitment and contingent consideration liabilities, net of current portion in the consolidated balance sheets.

The fair values of the Cash Earn-outs and the Stock Earn-outs as of December 31, 2024 and the Acquisition Date, and unobservable inputs used for the Monte Carlo Simulation valuation, are shown in the tables below:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2024

Liabilities

Fair Value

​

Valuation Technique

​

Unobservable Inputs

ecosio Contingent Consideration - Cash Earn-outs

​

$

74,400

​

​

Monte Carlo Simulation

​

​

Revenue volatility

​

21.0

%

​

​

​

​

​

​

​

​

​

Revenue discount rate

​

7.7

%

​

​

​

​

​

​

​

​

​

Term (in years)

​

3.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

ecosio Contingent Consideration - Stock Earn-outs

​

$

48,100

​

​

Monte Carlo Simulation

​

​

Revenue volatility

​

21.0

%

​

​

​

​

​

​

​

​

​

Revenue discount rate

​

7.7

%

​

​

​

​

​

​

​

​

​

Term (in years)

​

3.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acquisition Date

Liabilities

Fair Value

​

Valuation Technique

​

Unobservable Inputs

ecosio Contingent Consideration - Cash Earn-outs

​

$

71,000

​

​

Monte Carlo Simulation

​

​

Revenue volatility

​

21.0

%

​

​

​

​

​

​

​

​

​

Revenue discount rate

​

7.6

%

​

​

​

​

​

​

​

​

​

Term (in years)

​

3.5

​

​

​

​

​

​

​

​

​

​

​

​

​

​

ecosio Contingent Consideration - Stock Earn-outs

​

$

34,000

​

​

Monte Carlo Simulation

​

​

Revenue volatility

​

21.0

%

​

​

​

​

​

​

​

​

​

Revenue discount rate

​

7.6

%

​

​

​

​

​

​

​

​

​

Term (in years)

​

3.5

​

​

Tellutax, LLC Contingent Consideration

The 2021 Tellutax, LLC (“Tellutax”) acquisition entitled the sellers to contingent consideration if sales targets are met during a period of time following the acquisition (the “Tellutax Contingent Consideration”). The estimated fair value of the Tellutax Contingent Consideration as of the acquisition date of January 25, 2021 was $2,200.

The Tellutax Contingent Consideration was based on three potential earn-out payments determined by periodic revenue achievements over a thirty-month period. Such estimates represented recurring fair value measurements with significant unobservable inputs, which management considered to be Level 3 measurements under the Fair Value Hierarchy. The significant assumptions used in these calculations included forecasted results and the estimated likelihood for each performance scenario. The fair value of Tellutax Contingent Consideration was estimated using a Monte Carlo Simulation to compute the expected cash flows from earn-out payments specified in the purchase agreement. The earn-out payments had no maximum limit, but when certain targets were not met, there was no earn-out payment for the applicable measurement period.

Adjustments to the Tellutax Contingent Consideration fair value of $(2,575), $1,549, and $2,300 were recorded in other operating expense, net for the years ended December 31, 2024, 2023, and 2022, respectively. At December 31, 2024, the Tellutax Contingent Consideration balance was $0. At December 31, 2023, the Tellutax Contingent Consideration of $2,300 and $2,600 is included in purchase commitment and contingent consideration liabilities, current, and purchase

commitment and contingent consideration liabilities, net of current portion, respectively, in the consolidated balance sheets.

Tellutax Contingent Consideration fair value and unobservable inputs used for the Monte Carlo Simulation valuation were as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

Liability

Fair Value

​

Valuation Technique

​

Unobservable Inputs

Tellutax Contingent Consideration

​

$

4,900

​

​

Monte Carlo Simulation

​

​

Revenue volatility

​

60.0

%

​

​

​

​

​

​

​

​

​

Revenue discount rate

​

20.8

%

​

​

​

​

​

​

​

​

​

Term (in years)

​

1.3

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning and ending balances in fair value of the Company’s Level 3 liabilities were as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Tellutax		​	ecosio		​	ecosio
​	​	Contingent		​	Contingent Consideration		​	Contingent Consideration
​	​	Consideration		​	Cash Earn-outs		​	Stock Earn-outs
Balance, January 1, 2022	​	$	2,500	​	$	—	​	$	—
Fair value adjustments	​	​	2,300	​	​	—	​	​	—
Balance, December 31, 2022	​	​	4,800	​	​	—	​	​	—
Fair value adjustments	​	​	1,549	​	​	—	​	​	—
Payments	​	​	(1,449)	​	​	—	​	​	—
Balance, December 31, 2023	​	​	4,900	​	​	—	​	​	—
ecosio acquisition (Note 3)	​	​	—	​	​	71,000	​	​	34,000
Fair value adjustments	​	​	(2,575)	​	​	3,400	​	​	14,100
Payments	​	​	(2,325)	​	​	—	​	​	—
Balance, December 31, 2024	​	$	—	​	$	74,400	​	$	48,100

​

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 our 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 ecosio acquisition on August 30, 2024, the Tellutax acquisition on January 25, 2021, and the Systax acquisition on January 10, 2020, 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 January 7, 2020, the Company acquired a 60% controlling interest in Systax, a provider of Brazilian transaction tax content and software. The Company had a contractual commitment to acquire the remaining equity interest from the original Systax Quotaholders incrementally through 2024. Purchase commitment payments for these incremental acquisition amounts were based on a multiple of Systax revenue and earnings before interest, depreciation, amortization, and income taxes (“EBITDA”) performance at the end of 2022 and 2023. Management determined these incremental purchase commitments to be a forward contract, resulting in the Company being required to estimate and record an estimated future purchase commitment amount (the “Purchase Commitment Liability”) in connection with recording the initial purchase. The fair value of the Purchase Commitment Liability at the acquisition date was finalized to be $12,592. This amount has fluctuated as a result of changes in foreign currency exchange rates and was reflected in purchase commitment and contingent consideration liabilities in the consolidated balance sheets, with such changes in exchange rates being reflected in other comprehensive loss or income in the consolidated statements of comprehensive loss. Adjustments to the settlement date value that arose as a result of remeasurement at each balance sheet were recorded as interest expense related to financing costs in the consolidated statements of comprehensive loss in the period the change was identified. The Company recorded increases in interest expense of $423, $4,020 and $990 during 2024, 2023, and 2022, respectively, associated with recording an increase in the settlement value.

​

The Company acquired an additional 5% equity interest of Systax during 2021 for $788, increasing the Company’s equity interest in Systax to 65%. The Company acquired an additional 15% equity interest of Systax through a Purchase Commitment Liability payment of $4,975 during 2023, increasing the Company’s equity interest in Systax to 80%.  During the year ended December 31, 2024, the Company paid $9,622 to acquire the remaining 20% equity interest of Systax, which increased the Company’s ownership percentage of Systax to 100%, and settled the outstanding Purchase Commitment Liability.

The Purchase Commitment Liability at December 31, 2023 included in purchase commitment and contingent consideration liabilities, current, in the consolidated balance sheets was $9,601. The carrying amount approximated its respective fair value at December 31, 2023 and was considered a Level 3 non-recurring fair value measurement.

The Company estimated the initial fair value of the Purchase Commitment Liability using a Monte Carlo Simulation, which the Company considers to be a Level 3 measurement. The significant assumptions used in the Monte Carlo Simulation include, among other variables, forecasted cash flow projections consistent with those used to support the overall purchase price, selection of comparable companies, asset volatility and discount rate determinations, and the total number of simulations to compute.

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. The derivative contracts are typically designed to manage specific risks according to the Company’s strategies, which may change from time to time.

The Company entered into a series of foreign currency forward contracts to reduce its exposure to adverse fluctuations in the Brazilian Real associated with a portion of the Purchase Commitment Liability. Such forward contracts, were not designated as a hedge, did not qualify for hedge accounting and were not material to the consolidated financial statements. During 2024, the forward currency contracts matured as the Company settled the outstanding Purchase Commitment Liability. These forward contacts were remeasured at fair value on a recurring basis and are included in other assets in the December 31, 2023 consolidated balance sheets, with changes in their estimated fair value recognized as interest expense in the consolidated statements of comprehensive loss. The Company’s fair value determinations were based on foreign currency exchange rates in active markets, which are considered to be Level 2 measurements within the Fair Value Hierarchy.

Convertible Senior Notes

​

At December 31, 2024 and 2023, the fair value of the Notes were $539,494 and $0, 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 10, “Debt.”

X

- References

No definition available.

+ Details

Name:	us-gaap_FairValueDisclosuresAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 107
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-107

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 940
-SubTopic 820
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478119/940-820-50-1

+ Details

Name:	us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration