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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2025
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 3. 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 March 31, 2025 (unaudited) | ​ | 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 | ​ | $ | 246,020 | ​ | $ | 246,020 | ​ | $ | — | ​ | $ | —
ecosio Cash Earn-outs | ​ | ​ | 76,100 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 76,100
ecosio Stock Earn-outs | ​ | ​ | 31,700 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 31,700
​ | ​ | 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
​ 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. Securities classified as available-for-sale are reported at fair value using Level 2 inputs. As of December 31, 2024, the Company had additional investments in bank and corporate issued commercial paper (“Commercial Paper”), corporate bonds (“Corporate Bonds”), and U.S. treasury securities (“U.S. Treasury Securities”). The Company believes that Level 2 designation was appropriate for these securities under Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures, as these securities were fixed income securities, none were exchange-traded, and all were priced by correlation to observed market data. For these securities, the Company obtained fair value measurements from an independent pricing service. The fair value measurements considered observable data that may have included 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. These securities qualified as debt securities per ASC 320, Investments– Debt Securities, and were classified as available-for-sale as they could be liquidated and used for general corporate purposes. These securities were carried at fair value in the investment securities available-for-sale line in the condensed consolidated balance sheets, with the unrealized holding gains and (losses), net of tax, included in other comprehensive (income) loss until realized. During the three months ended March 31, 2025, the Company fully liquidated these securities, which resulted in a realized gain of $19, which is included in the interest expense (income), net line of the condensed consolidated statements of comprehensive income (loss). ​ In connection with the August 2024 ecosio acquisition, the sellers are entitled to three annual earn-outs in the form of cash, with an aggregate 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 a three-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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Maximum | ​ | Fair Value | ​ | Fair Value
Cash Earn-outs/ Period (unaudited) | ​ | Payout | ​ | March 31, 2025 | ​ | December 31, 2024
Year 1 - December 1, 2024 - December 1, 2025 | ​ | $ | 19,600 | ​ | $ | 18,300 | ​ | $ | 17,900
Year 2 - December 1, 2025 - December 1, 2026 | ​ | ​ | 30,625 | ​ | ​ | 25,100 | ​ | ​ | 24,400
Year 3 - December 1, 2026 - December 1, 2027 | ​ | ​ | 44,130 | ​ | ​ | 32,700 | ​ | ​ | 32,100
Total Cash Earn-outs | ​ | $ | 94,355 | ​ | $ | 76,100 | ​ | $ | 74,400
​ | ​ | Maximum | ​ | Fair Value | ​ | Fair Value
Stock Earn-outs/ Period (unaudited) | ​ | Payout (1) | ​ | March 31, 2025 | ​ | December 31, 2024
Year 1 - December 1, 2024 - December 1, 2025 | ​ | $ | 12,000 | ​ | $ | 11,300 | ​ | $ | 17,200
Year 2 - December 1, 2025 - December 1, 2026 | ​ | ​ | 12,000 | ​ | ​ | 10,800 | ​ | ​ | 16,300
Year 3 - December 1, 2026 - December 1, 2027 | ​ | ​ | 11,000 | ​ | ​ | 9,600 | ​ | ​ | 14,600
Total Stock Earn-outs | ​ | $ | 35,000 | ​ | $ | 31,700 | ​ | $ | 48,100
(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. ​ The Cash Earn-outs and Stock Earn-outs are recorded at fair value in the condensed consolidated balance sheets as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | As of March 31, 2025 | ​ | As of December 31, 2024
​ | (unaudited) | ​ | ​ | ​ | ​ | ​ | ​
​ | Current (1) | ​ | Non-Current (2) | ​ | Current (1) | ​ | Non-Current (2)
Cash Earn-outs | $ | 18,300 | ​ | $ | 57,800 | ​ | $ | 17,900 | ​ | $ | 56,500
Stock Earn-outs | ​ | 11,300 | ​ | ​ | 20,400 | ​ | ​ | 17,200 | ​ | ​ | 30,900
Total | $ | 29,600 | ​ | $ | 78,200 | ​ | $ | 35,100 | ​ | $ | 87,400
​
(1) Included in purchase commitment and contingent consideration liabilities, current.
(2) Included in purchase commitment and contingent consideration liabilities, net of current portion.
​ 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 other operating expense (income), net line of the condensed consolidated statement of income. During the three months ended March 31, 2025, the Company recorded fair value adjustments of $1,700 and $(16,400) to the Cash Earn-outs and Stock Earn-outs, respectively. 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. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2025 (unaudited)
Liabilities |  | Fair Value |  | ​ | Valuation Technique | ​ | Unobservable Inputs
ecosio Contingent Consideration - Cash Earn-outs | ​ | $ | 76,100 | ​ | ​ | Monte Carlo Simulation | ​ | Revenue volatility | ​ | 22.5 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Revenue discount rate | ​ | 7.4 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Term (in years) | ​ | 2.9 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
ecosio Contingent Consideration - Stock Earn-outs | ​ | $ | 31,700 | ​ | ​ | Monte Carlo Simulation | ​ | Revenue volatility | ​ | 22.5 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Revenue discount rate | ​ | 7.4 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Term (in years) | ​ | 2.9 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 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 | ​
​ In connection with the January 2021 Tellutax LLC (“Tellutax”) acquisition, the sellers were entitled to contingent consideration if sales targets are met during a period of time following the acquisition (the “Tellutax Contingent Consideration”). 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 a recurring fair value measurement 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 the payments specified in the purchase agreement. Such payments have no maximum limit, but if certain targets are not met, there will be no payment for the applicable measurement period. A fair value adjustment of $(800) was recorded in other operating expense (income), net for the three months ended March 31, 2024. As of March 31, 2025 and December 31, 2024, the Tellutax consideration balance was $0. Changes in the fair value of the Company’s level 3 liabilities during the three months ended March 31, 2025, were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ecosio
​ | ​ | Contingent Consideration
​ | ​ | Cash Earn-outs | ​ | Stock Earn-outs
​ | ​ | (unaudited)
Balance, January 1, 2025 | ​ | $ | 74,400 | ​ | $ | 48,100
Fair value adjustments | ​ | ​ | 1,700 | ​ | ​ | (16,400)
Balance, March 31, 2025 | ​ | $ | 76,100 | ​ | $ | 31,700
​ ​ 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 and the Tellutax acquisition on January 25, 2021 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. Derivative Instruments ​ The Company may periodically enter into derivative contracts to reduce our 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 our strategies, which may change from time to time. Convertible Senior Notes ​ As of March 31, 2025 and December 31, 2024, the Notes (as defined in Note 7, “Debt”) was $407,838 and $539,494, 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 7, “Debt”.

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- 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
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