Greetings. Welcome to Vertex's fourth quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Joe Crivelli, Vice President of Investor Relations. Mr. Crivelli, you may now begin. Hello, thanks for joining us to discuss Vertex's financial results for the fourth quarter and year ended December 31st, 2022. I'm Joe Crivelli, Vice President, Investor Relations. With me on the call today are David DeStefano, Vertex's President and CEO, and our CFO, John Schwab. As a reminder, during this call, we may make forward-looking statements related to expected future results. Our actual results may differ materially from our projections due to risks and uncertainties. These risks and uncertainties are described in our earnings release and filings with the Securities and Exchange Commission. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release. This conference call is being recorded and will be available for replay via webcast on our investor relations website. With that, I'll now turn the call over to David. Thanks, Joe. Welcome, everyone, thank you for joining us. I'm pleased to speak with you today about Vertex's financial results. Businesses today face immense regulatory change and indirect tax complexity. These challenges intensify as they expand into new regions, diversify offerings, and accelerate e-commerce growth. That's why we continue to see tax technology growing in both value and demand. Our company's vision to accelerate global commerce has never been more relevant. Our solutions give enterprise and mid-market businesses alike the confidence to manage tax compliance at scale in over 20,000 jurisdictions around the world. Against this backdrop, Vertex executed extremely well in 2022, finishing on a high note with our best quarter of the year. Revenues in the quarter reached a record $131.1 million, up 17.4% from Q4 2021. This is the highest year-over-year revenue growth that we have delivered as a public company. We closed the fourth quarter with Adjusted EBITDA of $20.8 million, up 8% from last year. Our strong performance in an uncertain economic environment reinforces the durability of our business, the financial strength of our customer base, and our ability to sustain profitable growth. Free cash flow in the quarter was $24 million, which helped us deliver positive free cash flow for the full year while making a multi-million dollar growth investment. We are seeing benefits from our strategic acquisition and the targeted investments we are making in R&D, go-to-market, and ecosystem expansion. These investments are helping us further penetrate the $22 billion addressable market for tax automation solutions. Our investments are focused in four key areas. First, expanding our install base through accelerated go-to-market investment to drive customer success and high-value new logos within our target markets. Second, broadening and deepening our strategic partnerships. Third, strengthening our global presence with a spotlight on Europe. Finally, driving new product innovation with heavy investment in emerging technologies and tax content to have the power to transform our industry. We are seeing adoption from both new and existing customers, evidenced by strong performance across all our key performance indicators for customer success in the fourth quarter. ARR was $431 million, up 16.5% year-over-year. NRR was 110%, up from 108% last year. GR was 96%, up slightly from 95% last year. Average annual revenue per customer increased 16% from last year's fourth quarter and exceeded $100,000 for the first time in our history. On the technology front, we continue to advance our next generation cloud solution to offer even greater scale and elasticity. We are enabling tax calculation at the point of transaction with the latest edge computing technology, and we are accelerating our use of intelligent automation to help our customers increase efficiency, reducing the friction between commerce and compliance. Vertex also continues to make significant investments in our tools and technology to enable our tax professionals' business operations. Through intelligent automation, data and analytic tools, and robotic process automation, we are driving operational efficiencies and adding more content faster than ever before. We're proud to help the most dynamic and discerning businesses on the planet stay compliant with our tax content database, which has more than 700 million effective rates and rules. Our performance in 2022 confirms for me that we are just getting started. We have only scratched the surface of our addressable market given the multiple trends triggering the need for tax automation. This gives me confidence that we can continue to grow both our top and bottom lines as these tailwinds take hold and accelerate. I'd like to share a few business highlights from the quarter illustrating these trends. Today, a significant segment of enterprise markets still relies on homegrown solutions or manual processes to address indirect taxes. This means incredible growth potential still exists within this highly valued segment of the addressable market, where we are the clear market leader. As tax complexity grows, compliance becomes unmanageable, triggering a need for change. As an example, one of the leading global commodities trading companies in Europe reached a tipping point when new regulatory requirements for near and real-time reporting pressure tested manual processes and their ability to maintain compliance. The time was right to automate tax determination in the cloud, and our ability to win this competitive six-figure deal was based on three things: the technical capabilities of our cloud solution to support data accuracy in every global jurisdiction with tight integration into their SAP platform, the referenceability of current customers who represent some of the most influential and complex businesses in Europe, and the expertise demonstrated by our in-region Vertex team. This is a differentiated value that allowed us to achieve record growth in our business in Europe in 2022. When we speak with prospective customers, our ability to uniquely connect disparate systems to a single tax platform is another clear differentiator. This led to a significant six-figure ARR win this quarter. We were selected by one of the largest consumer insurance companies in the United States as their provider of choice for indirect tax automation. This significant new logo opportunity was driven by the company's implementation of Coupa P rocurement. As they integrated Coupa into their Oracle infrastructure, it was the ideal time to transition from their homegrown indirect tax system, which could no longer keep pace with their compliance needs in today's modern cloud ecosystem. Another area of investment that I touched on earlier centers on new product innovation. We had a notable win the quarter that highlights how our continued portfolio enhancement to better support the SAP ecosystem makes Vertex the clear choice for tax technology in that space. After being spun off from their parent company, our cloud solution was selected by a well-known consumer products brand to manage sales tax compliance. The company was familiar with our industry-recognized customer experience and the strength of our solutions, having previously used our managed services offering. As an independent company, they needed a tax engine that connects seamlessly to SAP. They also licensed our PLUS Tools that launched in 2022 with the acquisition of LCR-Dixon. This deal reflects the value we are receiving from this strategic investment and gives us an edge with the most complete and differentiated tax automation solution for SAP. Each quarter, I highlight how trusted relationships across the partner ecosystem create value for our joint customers and differentiate us in competitive deals. Across the board, we continue to enhance our integrations globally with our strategic partners and actively engage with their sales teams. Additionally, we are working closely with our alliance partners to focus on key ecosystems where we share strengths and differentiation. Together, we deliver a better overall experience for our customers. In the mid-market, we continue to work closely with Microsoft Dynamics team and strengthen our technical integrations and go-to-market motions together. In the quarter, we had multiple deals where we were able to drive value for Microsoft customers. As an example, our solutions allowed a premium retailer in the US to consolidate tax and billing systems as part of a larger financial systems transformation on Microsoft Dynamics 365. Our unique ability to integrate into multiple financial systems for accurate tax calculation allowed us to win this new logo. This retailer now has a trusted tax partner that is supporting their long-term omni-channel strategy. This was a highly competitive deal as the customer was using solutions from two of our competitors in other areas of their business. Another powerful example of how our multi-systems integrations and partner relationships are setting Vertex apart from the competition involved a national restaurant chain looking to streamline their tax processes. Their systems integrator, TopBloc, brought us into the opportunity. The fact that we were named a preferred ISV and premier partner for their Workday financials environment was key to earning their confidence. The strength of our tax content for the food and beverage industry reinforced that Vertex is the right choice to help them manage tax compliance. Looking forward, I'm excited to build on our preferred position within Workday in 2023 and beyond. Across all our highlighted wins this quarter, the breadth and depth of our tax content database is a clear advantage for us time and again. The expansion of our vertical-specific tax content in it is another example of how investments we are making are quickly delivering value to our customer and shareholders. B2B marketplaces are growing at a rapid pace, and emerging regulations seek to ensure governments get their fair share of the revenue on these new platforms. This creates increased complexity for businesses using this e-commerce channel. Because of this, marketplaces continue to be a focal point of our growth efforts, and we continue to leverage the acquisitions of Taxamo and its integration with our other products to strengthen our partnerships with marketplace operators. A great example of this was how we expanded our relationship with Mirakl in the fourth quarter. Mirakl is a leading enterprise SaaS platform that powers over 300 online marketplaces. We initially announced our strategic partnership in 2021 with an integration to help their customers comply with emerging VAT e-commerce regulations. This quarter, we launched an enhanced connector to enable full service global support for Mirakl expansion into North America. Interestingly enough, Mirakl also became a new customer of Vertex in Q4, which is very common with many of our tech partners. They are customers as well as go-to-market partner, which I think speaks volumes about our leadership in the industry. Before I turn the call to John, I want to thank the entire global Vertex team who have worked hard to get us to this inflection point. Their relentless commitment to deliver an exceptional customer experience was once again recognized this quarter by Help Desk Institute. Vertex achieved HDI support center certification, which is an internationally recognized standard for best practices in customer support and the highest level of recognition for customer experience. Quite frankly, that is something enterprise customers deeply value, and we consistently differentiate on. We are the only tax technology provider to earn this level of certification, and we've now done it twice. I could not be prouder of our team. When you work with the best customers and partners in the industry, you also attract top talent. We have continued to invest in and grow the Vertex team. Among the new additions to our team in 2022, we welcome Brad Cameron as Senior Vice President of Software Engineering. I could not be more excited to have Brad join us from Salesforce to lead our world-class engineering team in the development of our next generation of solutions and continue to advance technical innovation. Reflecting on our performance in quarter and all of 2022, our team is executing well across every area of our business in direct alignment with that strategy. John, I will now hand the call over to you to provide additional details on the quarterly results. Thanks, David, and good morning everyone. I'll now review our results in detail and provide financial guidance for the first quarter and year. In the fourth quarter, revenue was $131.1 million, up 17.4% compared to last year's fourth quarter. For the full year, total revenue was $491.6 million, up 15.5% from 2021. This exceeded the high end of both our fourth quarter and full year revenue guidance by $4.1 million. Annual recurring revenue, or ARR, was $431.1 million at the end of the year, representing 16.5% year-over-year growth. Net revenue retention, or NRR, remained strong at 110%. This was up from 108% in the comparable 2021 period, and up a point from 109% in the third quarter. Gross revenue retention, or GRR, was 96% at quarter end, consistent with prior quarters and within our targeted range of 94%-96%. These metrics continue to demonstrate the stickiness of our solutions as well as the strength of our customer relationships. Our returns processing managed services business generated recurring service revenue of over $24.4 million for the full year, compared to $20.8 million for the comparable prior year period. We also processed over $13 billion of tax payments for our customers and earned over $1 million of cash from the float on the funds. Customer count increased in the fourth quarter. At December 31st, we had 4,559 total customers, up by 61 from 4,498 at the end of the third quarter. As we've discussed with investors previously, customers with ARR greater than $100,000 or scaled customers is a better metric than gross customer count to gauge our sales performance in the enterprise space and upper middle market where we focus. Accordingly, in the fourth quarter, scaled customers grew 15% compared to the prior year and 17% on an annualized sequential basis. Our average annual revenue per customer, or AARPC, continues to steadily increase and was $100,500 in the fourth quarter, up from $97,300 in the third quarter. Note that AARPC is based on the direct customer count, which is disclosed in the press release. Cloud Revenue was $46.6 million in the fourth quarter, up 34.4% compared to the fourth quarter of 2021. This was also up $2.8 million from $43.8 million in the third quarter. Full year Cloud Revenue was $168.9 million, up 33% year-over-year and in line with our guidance. For the remainder of the income statement discussion, I will be referring to non-GAAP metrics. All of these non-GAAP metrics are reconciled to GAAP results in the earnings press release that was issued this morning. Gross profit for the fourth quarter was $94.4 million, and our gross margin was 72%. This compares with a gross profit of $79 million and 70.7% gross margin in the same period last year. Gross margin on subscription software was 78.4% compared to 76.9% in last year's fourth quarter and 76.5% in the third quarter of 2022. Gross margin on services revenues was 36.8% compared to 39.2% in last year's fourth quarter and 31.3% in the third quarter of 2022. Turning to operating expenses. In the fourth quarter, research and development expense was $11 million compared to $10.1 million last year. For the full year, R&D was $40.1 million. With capitalized software spend included, R&D spend was $22.5 million for the fourth quarter and $83.9 million for the full year, which represents 17% of revenues for each period, reflecting our ongoing investments in new product development and enhancing existing products to address customer needs. Selling and marketing expense was $33.2 million, up 25% from last year's fourth quarter. For the year, selling and marketing expense was $115.3 million, up 26% from last year. The quarterly and year-over-year increase was a result of the expansion of our go-to-market and customer success organizations in 2022. Our general and administrative expense was $28.8 million, up $5.7 million from last year. For the full year, our general and administrative expense was $112.7 million compared to $89.5 million last year. This increase is due to the infrastructure investments we are making to support long-term growth. Adjusted EBITDA was $21 million in the fourth quarter, an increase of $1.8 million year-over-year. For the full year, our Adjusted EBITDA was $78.7 million, up $700,000 from last year. Now turning to cash flow. We delivered $23.7 million of free cash flow in the fourth quarter. This enabled us to deliver positive free cash flow for the full year, despite the significant growth investments we made in 2022. Accordingly, for the full year, our free cash flow was a positive $3.4 million. We ended the fourth quarter with $91.8 million in unrestricted cash and cash equivalents. Total bank debt was $48.9 million, and investment securities totaled $11.2 million. For additional liquidity, we also have $200 million of unused availability under our line of credit. Vertex has demonstrated throughout our history as a public company that we are thoughtful about our approach to guidance and strive to deliver on these promises consistently. Given the current economic uncertainty, we have been mindful with our 2023 expectations. Accordingly, for the first quarter of 2023, we expect total revenue in the range of $131 million-$133 million, which would represent 15% year-over-year growth at the midpoint. Adjusted EBITDA in the range of $19 million-$21 million, which would represent an increase of approximately $1 million at the midpoint. For the full year 2023, we expect total revenue in the range of $550 million-$556 million, representing annual revenue growth of 12.5% at the midpoint. Adjusted EBITDA in the range of $92 million-$96 million, representing an increase of more than $15 million at the midpoint. We believe that Cloud Revenue will grow by approximately 27% in 2023. This guidance reflects our view of the business in the early going of 2023. As we have mentioned, we believe Vertex's revenue base will be resilient even if the economy does turn downward. David will now make some closing comments before we open up to Q&A. David? Thanks, John. A few points to leave you with before we open the call for questions. First, I'm very pleased with our performance in the fourth quarter and in 2022 as a whole. It's clear to me the investments we've made are helping us attack the significant growth opportunity in front of us. This is showing up in our double-digit growth, strong profitability, and positive cash flow in the fourth quarter. We are where we had expected to be when we began our investment strategy two years ago. Second, while we continue to invest in our strategy and growth intentions, we are nearing the point we're no longer intending to accelerate investments. In the back half of 2023, these should taper off, and the growth trends will start to be even more visible to our investors. Finally, we will continue to take prudent steps to invest wisely and strengthen our financial position as we have throughout our 40-year history. During economic downturns, taxing authorities rely heavily on revenues from indirect taxes to fund budgets, and enterprise customers still invest for the future. This drives ongoing demand for our solutions and allows us to continue to grow even in recessionary times. Our team is executing well, and we are energized about 2023 and beyond. With that, we'll take your questions. Operator, please go ahead. Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question today is coming from the line of Matt Stotler with William Blair. Please proceed with your questions. Hey there. Appreciate you guys taking the questions. Maybe just to start off with one on the, on the macro. Obviously some interesting commentary. It seems like you guys are obviously not seeing, particular difficulties and talked about the criticality of tax compliance here. Would love to just double-click on some of the observations that you're seeing, you know, within the business, how customers are coping, if there's any, you know, changes in usage, and, you know, there's just kinda stability based on the pricing structure that you guys have put in place. If you're seeing, you know, any differences in deal cycles, what have you, I would love to just double-click on your observations there. Sure, Matt. You know, fundamentally, no usage concerns. You know, the product is exceptionally sticky. We have pretty strong price uptake, you know, relative to our GRR and our, you know, our install base. That we're not seeing any downward pressure there at all. I think on the deal cycle, I think customers remain thoughtful. The value prop of our software and our solutions continues to show through, on versus our competitors. You know, customers continue to drive both digital transformations, and this is really what enterprise customers are focused on, digital transformation, ERP upgrades, and, you know, other system upgrades to drive more efficiency in their business, and both of those things continue to serve us well. You know, we do see occasional deals that'll miss by a month of when we expect them, but we have not seen material push off or, you know, we're canceling budget on this project. We've not experienced that yet. Got it. That's helpful. Maybe one, you know, kinda looking forward. I mean, you mentioned emerging tech, and some of your investments in emerging tech there. You know, would love to kinda get your view on, you know, where you're focused on in terms of additional, you know, kinda capabilities there and what you're most excited about in the R&D pipeline at this point. Yeah. We continue to expand on our edge and edge solutions and cloud platform. I continue to think that that is a strength for us that will be a differentiator. Looking forward, we've had a number of healthy discussions about data transformation, data intelligence, and we see some opportunities there. Then we're always staying close to driving ML and AI and thinking about more automation, both in our business and in our solutions. So those are areas that I think we'll continue to push forward in 2023 and beyond. Great. Thanks again. Thank you, Matt. Our next question is from the line of Joshua Reilly with Needham & Company. Please proceed with your questions. Hey, guys. Thanks for taking my questions. Nice job on the quarter here. I think, you know, if you look at in-store retail, I think it continued to be stronger in Q4 than maybe what people expected. Can you just discuss your exposure to in-store retail versus e-commerce, and how is the Edge Cloud Solution, which I think has been out now for roughly a year, how that's either helping you know, win net new customers or retain customers you have and migrate them to the cloud? Sure. Josh, you know, I think the great news is our customer base is really well-balanced across both e-commerce and in-store. You know, it's sorta like left pocket, right pocket. We've enjoyed success on both sides. When the pandemic hit, and we saw people start shifting heavily to e-commerce, we were running omni-channel for our customer base, and so we enjoyed sort of an uptick there, and now we're seeing it more on the in-store side. I think that's the benefit of our position with the enterprise customer base. We're on both sides, and Edge is really furthering that experience. It's really getting uptake across not only retail, but we're seeing other deployments where customers really wanna containerize their solutions, and they're seeing value in what we're doing there. It is, we're seeing good uptake there. Got it. That's helpful. If you look at your Q4 subscription revenue, I guess a couple quick questions there are, was there any overages in the quarter there to note in the subscription revenue line item? If you look at, as you look at how customers are buying, it's, you know, based on revenue bands for 2023, would you say that people are being cautious with their expectations around revenue growth, or are the buying patterns normal? Yeah, Josh, thanks for the question. You know, first on overages, there wasn't anything in the fourth quarter that was notable in terms of to call out in terms of what, you know, if there's anything that was above normal. I would say there's really nothing there. Then we think about, you know, kind of new opportunities and what people are buying from a band level. I wouldn't say that there's anything there that's driving us, that's causing for change. We're not seeing people taking anything down or buying less than they normally would in anticipation of something in the future. Again, that stuff does get trued up, so it really gets caught up. We're not seeing people, you know, buy anything lower. There's really nothing meaningful in the numbers yet that are indicating any kind of a pullback there. Got it. Super helpful. Thanks, guys. You bet. Our next question is from the line of Daniel Jester with BMO Capital Markets. Please proceed with your questions. Hey, good morning, everyone. Thanks for taking my question. Maybe first to start off on the guidance for 2023, 27% growth in the cloud, if I have my math right, implies maybe 5% growth in the rest of the business. Can you just provide a little more context about beyond the cloud, what your growth expectations for the different other parts of the business are this year? Yeah. Thanks for the question, Daniel. Much appreciated. As we think about, you know, as we think about growth, again, you called out cloud, and we feel pretty good about where that's gonna come in. As we've talked about, you know, the on-prem business is gonna continue to be there and be something that our customers use, and those that have it may continue to add on to that. We've seen a nice split between people adding additional cloud onto their existing on-prem infrastructure, as well as, you know, adding some on-prem activity if they need it. You know, we're seeing some modest growth that's gonna come out of that. From a services standpoint, we're gonna see that, we're gonna see that increase a little bit over last year in terms of kind of what our growth expectations are. My guess is that's gonna be in that, you know, kinda 13-ish% kinda zone, kinda year-over-year basis. That's kinda how we break that out. We're always mindful, Dan, to work closely with our ecosystem partners because we really there's a nice symbiotic relationship between our organizations and theirs, and we always wanna be mindful about the growth there versus our relationships. Gotcha. That's helpful context. Thank you. On the free cash flow, you know, certainly, big improvement in the fourth quarter. As I think to 2023 in your comments that we're starting to end the investments, how should we think about the EBITDA, the free cash flow conversion? Can that tighten up into later this year into 2024? I know that's a long way out, but just how should we be thinking about that? Thank you. Yeah, great question, Daniel. I think you're thinking about it correctly. As David talked to and I talked to in some of our prepared remarks, we do anticipate as we kind of get through this big investment cycle, some of which has started to end, but then some of the bigger projects will be wrapping up here in the, you know, first half of 2023. We will start to see a little bit of leverage show through in the back half of the year. I think it's more a 2024 thing, and again, I don't... You know, I anticipate that we'll see a bit of improvement from a free cash flow standpoint, but I'm really looking towards 2024 to see that start to move more meaningfully, as we get ourselves past these investment cycles. Great. Thank you very much. You bet. Our next question is from the line of Andrew DeGasperi with Berenberg. Please proceed with your questions. Thanks for taking my question. I guess the one question I have is in terms of the direct customer count increasing sequentially by such a large amount in Q4. Maybe can you elaborate a little more what drove that new logo growth? Then, you know, in terms of SAP, obviously, that's a relatively new relationship. If you could elaborate as well in terms of what the contribution was from them, was it more meaningful in Q4 than you've seen it before? Thanks. Sure, Sam. Sure. I think a couple things there. The first is, you know, the continued investment we made in Microsoft and the Microsoft connectors and our strength growing in that ecosystem, I think, as well as Workday. Those would be the two areas that I think we saw some real nice new logo wins. I would add Salesforce as well. That partnership continues to grow nicely, and I think those three ecosystems and the investments we've made there are starting to drive more activity, which serves the new logo, the new logo growth that you referenced. I think broader SAP, while obviously, we've got a 30-plus year relationship with SAP, the relationship in working with their sales team is a new experience for us, and we're definitely seeing a new rhythm in working with that organization and really driving more customer value and better customer experience. When you think about it, having the most robust tax technology solutions for SAP between our Chain Flow Accelerator, our PLUS Tools, the depth of our integration, you bring that together, and you start going and talking to the SAP sales teams, we're really able to differentiate in a meaningful way. I think that supports both our European growth and on some of our North American growth that you saw in 2022, and will continue in 2023. I think from a customer count perspective, you know, as David was alluding to, you know, there's a lot of drivers there that are pushing things along and giving us opportunity for growth. You know, again, we continue to see good logo growth in each of the periods, and, you know, we feel good about the motions that are there. You know, again, we did have a nice Q4 in terms of that. Again, we started to see some of that mid-market activity go along. One of the things that we called out this quarter, and, you know, I think is really important, is that thinking about those scaled customers, looking at those guys that deliver over $100,000 of ARR, I think that's the important metric when we think about our customers, not necessarily the total numbers that are there, but it's really what are the ones that are playing in the field that where we do our best, and that's that scaled customer. We're gonna continue to report that, and hopefully, that'll give people a real good understanding of kinda how the business drivers are moving. That's helpful. Then maybe, on the margins, just wondering, is there any movement on the stock-based comp that we should be aware of? I mean, it seemed to have gone down this year relative to 2021 as a% of revenue. Just maybe if you could elaborate a little more on that'd be helpful. Yeah. Historically, when you take a look at it, Andrew, as we came through the IPO, that we had some overhang of things that kinda had the vest of some old granted things that, yeah, that we really had to get caught up on just as, you know, in the normal accounting pace. I think we're seeing a little bit of that and a little bit of that go away, and now we've got at our normal pace as we go forward in terms of kinda what we've been granting. We'll continue to be very thoughtful about that and the level of stock-based comp that goes into the grants, but I don't think there's any material change there to call out. The number from 21 into 22, the fact that it's gone down has more to do with some of the older stuff pre-IPO. Got it. Thank you. You bet. The next question come from the line of Samad Samana with Jefferies. Please proceed with your questions. Hi, good morning. Thanks for taking my questions. Maybe first, just, I wanted to follow up on the, on the Cloud Revenue outlook. John, could you maybe unpack how you're thinking about conversions versus, new attach at existing customers versus new customer acquisition as kind of the three main drivers of cloud in 2023 and how we should model that? I'll unpack it a little bit. I'm gonna be a little thoughtful in terms of kinda how we sorta give guidance here. I mean, I think we guide to the total amount of 27%, but I think as we think about the drivers there, that we'll have the new logos that will be coming straight into, straight into cloud that are looking for it. We continue to see with our existing customers that have on-prem, that as they look to buy, it's about a 50/50 kinda ratio, that 50% are buying additional on-prem, other 50% are buying into the cloud and using the cloud in addition to their on-prem, creating a hybrid environment. I think that's, you know, that's a continues to be a very strong motion there. Given some of the uncertainty as we kinda look forward, we're not exactly sure how this is gonna impact people's move to further digitization. We haven't seen any impact on our pipeline yet as it stands, but I think as people think about where to spend money, I think that's something out there that they may kinda hold on and use the on-prem for slightly a little bit longer, perhaps. I think about that as I think about sort of that conversion or that migration, if you will, Samad, from on-prem to cloud. We'll see how that kind of susses out as the year kind of plays through. But right now, it's hard to really give guidance on exactly each of those three components. I think I don't expect to see a whole lot different, but it's something that we're going to certainly keep our eye on and probably be talking to you guys about going forward. Thanks. Very helpful. Maybe, David, a follow-up for you, just thinking about the partnerships and how they've ramped. Would you say that from a distribution perspective that the partnerships are kind of firing on all cylinders? Is there more gas left in terms of how they could ramp? Just how should we think about that in the context of your own sales and marketing investments as well in 2023? Yeah. You know, I'm really pleased with the maturity of each of them. They're all in different stages. Obviously, if you think about our relationship with Oracle and SAP, they go back, you know, generations. We've, we've really enjoyed wonderful experiences there. They've moved to a new level with working with their sales teams, that's a new motion for us. I still think we're in early days of getting the uptake there, which is great 'cause that gives me more confidence in the opportunities moving forward, given the massive install base that they both have that we don't have access to yet. I think there's considerable upside there. I'm really encouraged by some of the motions we're seeing with folks like Workday and Salesforce as they're expanding their indirect tax partnership. Workday, you know, is expanding in Europe, which will give us another, you know, another partnership there. We're also seeing good motion now starting up in Microsoft. I think that's probably the one that I see the most growth potential in, both within the ecosystem and some of the work we're doing with them, as both a customer and a partner where I see great opportunity. Great. Very helpful. Thank you. Our next questions are from the line of Keith Weiss with Morgan Stanley. Please proceed with your questions. Hey, good morning. This is Jonathan on for Keith. Thanks for taking our questions. I think you already touched on macro here to a degree, but want to understand what's contemplated in your outlook from a macro perspective. Yeah. I think as we built the guidance, we tried to be very thoughtful, kind of with what we've done, you know, kind of what we've done in the past and how we've delivered. I think we've had a pretty good pace of sort of, I'll say, underpromising and trying to overdeliver in terms of kind of expectations. I think as we thought about guidance and we thought about the future, you know, we built some of that into mind as we look forward. That's kind of been how we built that in a very general standpoint. Again, we do know that there's some tensions out there that are in the marketplace, that there are concerns on people's minds. We've not yet started to see them show up. That said, I think we wanted to be mindful as we built guidance that could start to manifest itself at some point. We feel good about what we've put out there for now. Got it. That's helpful. Can you help us understand what you're thinking around the opportunities and incremental investments in the mid-market? Sure. We are laser-focused in the ecosystems of, you know, Microsoft, Workday. We're seeing great uptake in Salesforce. You know, being targeted, again, we look at the platforms that a majority of mid-market businesses run on and the growing into corporate and enterprise customers. That's really our focus. We really don't wanna peanut butter spread with, you know, 1,000 connectors. We don't see that as the right strategy for the target customers we run on 'cause they all end up consolidating on the primary platforms, whether it be a Coupa or a Workday, et cetera. I think that's really where our focus is. Our investments, I think, are well suited for that right now. I'm comfortable with our go-to-market team, and we continue to just add, you know, quality around both the content that we use to support that customer base, as well as some of the new offerings that we have coming forward. Helpful color, guys. Thank you. Thanks. Our next question comes from the line of Steven Enders with Citi. Please proceed with your question. Okay, great. Thanks for, thanks for taking the question here. I guess I wanna ask a little bit about, you know, the kind of key catalysts for adoption and what you've been seeing, you know, both within the quarter and if there's been any changes you think about, you know, new top of funnel or new opportunities coming in that are in the pipeline right now. Sure, sure. There's three fundamental drivers for our business. They are either gonna be a business model transformation, whether you're adopting omni-channel, you're making acquisitions, something that's fundamentally disrupting the normal way a business operates as they search for or pursue revenue growth, which makes it hard for a tax department to keep up. The second will be in the regulatory space. Either it can come in the form of new regulations or audit pressure. Either one of those things can, again, attack an in-house team to say, "Hey, we're gonna have to do something different, and our in-house solution is no longer viable." The third is a technology refresh. Some part of their business... Remember, these large multinationals have multiple ERP systems, multiple invoicing, billing systems, they can be upgrading any one of those through a, you know, an acquisition they had made over the years. That, again, will be a disruptive force for change. That will be our entrée into an organization that we then land and expand, which has sort of been our motion, our success. I think when we look at it in, you know, if you go back two years ago in the pandemic, omni-channel and business model were changes were really, and acquisitions became very hot, that was a real driver. Our experience in the recessionary times, you know, the regulators are always looking for more revenue. They need to get their portion to fund their budgets. They'll increase audit pressure or they will. We'll see continued complexity as we are seeing around the world. You know, we're fortunate enterprise customers that we target are really still very much focused on digital transformation and system upgrades for efficiency. We're still seeing really good drivers in those areas in the dialogues we're having. I guess as you think about like the new type of funnel coming in the pipeline, has there been kind of any change in that and the mix there? 'Cause, you know, I think there has been a lot more maybe commentary on this call versus some of the past about macro, you know, macro impacts beginning to come in there. Yeah, just wondering how you're, you know, seeing new opportunities, you know, flowing in, given some of those, some of those dynamics. No, I think, you know, I would say it's still running the traditional way that we have experienced in the past. When I, you know, again, when I add to it the new motions we have with the sales teams of some of these larger ERPs, that's giving us, you know, good insights into where they are in their dialogues with their customers. I think, you know, I still feel very. That's why we're not seeing any material change, and we're able to drive, you know, our guidance up over expectations. Okay, perfect. That's helpful context there. I guess just as we, you know, think about the, you know, kind of geo-geographic, you know, view and footprint, I know Europe has been a good point of growth for a bit now. Just kind of wondering how you're thinking about Europe going forward from a demand perspective, and if there's been any, anything to call out there, in terms of the strength or, you know, potential macro impacts in that region. Yeah. We had a record year in Europe last year, I think that team is very well positioned for 2023. I mean, when you look at what we have, you know, the largest platform over there, for, again, our customer target customer base is SAP. We have the most differentiated set of capabilities between our Chain Flow, the LCR-Dixon PLUS Tools that we've added, the depth of integrations, now this customer reference ability. I can't emphasize that enough. Having the largest customers in Europe working with our software has really given us a further differentiation because it's a small community of tax players, so they really wanna talk to who else you're doing business with in the region. That has helped us. When I look at some of the new reg changes as they continue to evolve near and real-time reporting, all those things play well in our favors as we look forward in Europe. I remain, you know, confident that team is gonna continue to execute well. Okay. Perfect. Great to hear. Thanks for taking the question. Thank you. Our next question is from the line of Alex Sklar with Raymond James. Please proceed with your questions. Great. Thanks. I want to follow up on Steve's question on international. What are you seeing in terms of overall pipeline makeup from businesses outside of the U.S.? Then specifically, David, you called out a real-time win in terms of in the prepared remarks. How do you feel about your positioning to address the real-time compliance challenges? Thanks. Yeah. I guess, you know, when we think about sort of the pipeline and what we're seeing European companies focused on, clearly, you know, we've got a lot of US companies doing business in Europe, but the European companies certainly are focused on VAT, certainly focused on some of the VAT solutions that we've been offering. I think David called out and mentioned, you know, kind of the Chain Flow, et cetera. I think more and more, as Europe continues to evolve, complexity is coming into its VAT needs, and those VAT needs are requiring automated solutions to get through. We're seeing it start with only the largest companies in Europe, and I think that's gonna continue to proliferate and kinda follow its way down. I don't know that there's a whole lot. You know, again, I think he talked about Chain Flow. We talked about those things. I think they're the key drivers, and they're a little bit perhaps a little bit different than things that get solved in the U.S., which are perhaps can start a little bit more with sales and use, which are a little more U.S.-centric type things. As far as the real-time reporting, you know, we continue to advance some of the work we're doing in that area, and we're being pretty thoughtful about watching health and talking to our customers about what their demands are. We are seeing a growing conversation and opportunity to expand our product portfolio in that area, and it is something we're, you know, we are actively pursuing. Okay. Great. John, one for you. In terms of kind of the embedded assumptions around hiring for 2023, how are you thinking about growth investments broadly and any areas you're gonna be pulling back on in the back half of the year? No. I think David touched a little bit on it, you know, earlier in his, in his remarks. As we think about growth, we do anticipate we'll be hiring certainly in 2023. You know, we continue to focus on, you know, our engineering teams and bringing new products to market. Those new products to market require additional investment in personnel. I mean, that's very important. I think as we think about, you know, some of the other go-to-market activities, that we feel really good about the positioning of our go-to-market teams in terms of the growth that they've seen over the last couple of years. We feel pretty, we feel good about that, but I think we're gonna be looking across the board at, you know, different opportunities there. I think, again, our growth focus continues to be on new product, go to market, you know, looking at Europe, just as David has kinda discussed throughout here. They're kind of the areas that we're gonna continue to lean in on. Again, we do see some of the internal projects that we've been doing for the last year or so start to lighten up, but that's more in-internal stuff and outsourced resources there. All right. Great. Thank you both. Great. Thanks, Alex. Our next question comes from the line of Adam Hotchkiss with Goldman Sachs. Please proceed with your question. Great. Good morning, and thanks for taking my questions. Great to see the success with some of the new logos you called out. Could you just give us a quick update on what you're seeing on the competitive front, how you're feeling about win rates, relative to the prior quarter and sort of the first half of the year, and then sort of breaking that down between folks who are competing against you in the enterprise versus some of those that are more down market and trying to work their way up market? Sure. You know, I think we've enjoyed a strengthening in our competitive dynamics from our side. I think with the product portfolio, and the focus we put into the platforms that we focus on, the team is doing exceptionally well in that area. Our primary competitor in the enterprise market remains Thomson Reuters. No change there whatsoever. You know, we treat them obviously as a very formidable competitor. Our tax content database, the depth of our ERP, the reference ability, the Big Four relationships, all of those dynamics come into play as a differentiator for us. I would be remiss if I didn't highlight the customer success and customer experience organization. you know, big customers, larger enterprises are very discerning about that customer experience and support that they're gonna get, and we continue to leverage that, Adam, and differentiate in our win rate across that. As far as we go into the mid-market, that's where we're running the competitors that are looking to move into that space from the SMB side. I'd say, you know, in the ecosystems that we're focused on, we're starting to see growing traction and success with our solutions and our win rate. You know, we're not intending to again, peanut butter spread the market there. I don't think that's a sustainable economic model for us. We really wanna be able to drive EBITDA as well. Our focused investments are in the ecosystems that we see the largest number of players that will evolve to be enterprise companies for us in the long term. That's served us well for 40 years, and we're very focused there. Great. No, that's really helpful. Thanks. John, when you think about the major growth drivers that are embedded into guidance, how are you approaching expectations for new logos versus net expansion drivers like new geos, products, volume in this environment? Any particular strength to call out? Yeah, I think as we thought about guidance, as we thought about guidance, again, I think as I mentioned earlier, we feel pretty good about kind of what we've built in Europe and how that's been going. We've been building that for the last, you know, since the IPO for the last couple of years. you know, that group is largely getting in place, and now we're getting some time with everybody to really, you know, kind of hone our skills. I think we feel good about that. you know, from a new logo standpoint, that's always an area of focus for us. We think the opportunity there to continue to kind of lean in and work with some of these partners that David talked about is really gonna help us find some new logos and generate some new logo activity. We'll start to see incremental improvement there. Again, the customer base we have is so strong. That's why historically we've seen, you know, kind of 70% of new opportunities come from existing customers. We intend to kind of try to drive new logo opportunity and grow that over time. I think that's an area that we think there's that there's opportunity for improvement. We're gonna keep focused on that. I can't call out anything specifically to say we expect that to change by a certain%, you know, a certain number of percentage points. Really helpful. Thanks, John. Thanks, David. You bet. Thank you, Adam. Thank you. Our last question comes from Patrick Walravens with JMP Securities. Please proceed with your questions. Oh, great. Thank you. Congratulations. David, summing it all up, what are your top two or three priorities for this year? Execution, execution, and execution. I think we have invested heavily in our new product portfolio, our sales and marketing, capacity, our customer success and customer experience organizations. Pat, I really wanna see the team just continue to stay focused on that. I think, we're fortunate to work with the best customers in the world, through the best partners in the world, and it's really on us to execute. That would be number one. I think number two is continuing to, you know, advance the Vertex team and its talent. I think I'm fortunate to attract some of the best people in the industry, and we wanna keep doing that. We've really been able to differentiate, with our people over the years, investing in those folks is really critical to our success. All right. Congratulations again. Thank you, guys. Thank you, Pat. Thank you. At this time, we've reached the end of our question and answer session. I'll turn the call to Joe Crivelli for closing remarks. Thanks, everybody, for joining us today. If you have any follow-up questions or if you'd like to schedule additional time with the team, please reach out to me via email at ir@vertex.com. Thanks. Have a great day. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.