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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tyler Technologies Corp | NYSE:TYL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 520.91 | 0 | 11:30:01 |
SaaS revenues grew 24.4%
Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Financial Highlights:
Revenues
Total revenues were $471.9 million, up 3.5% from the first quarter of 2022. On an organic basis, which also excludes COVID-related revenues, revenues grew 7.2%.
Recurring Revenues
Recurring revenues from maintenance and subscriptions were $395.6 million, up 9.1% from the first quarter of 2022, and comprised 83.8% of total revenues (compared to 79.5% for the first quarter of 2022). On an organic basis, recurring revenues grew 10.4%.
Earnings/EBITDA
Cash Flow
Cash flows from operations were $74.7 million, up 39.5% from the first quarter of 2022. Free cash flow was $63.6 million, up 55.1% from the first quarter of 2022.
"We began 2023 by delivering strong first quarter results that met or exceeded our expectations for most key metrics," said Lynn Moore, Tyler's president and chief executive officer. "We achieved organic revenue growth of 7.2% even with the impact of short-term headwinds from our new business mix shift and the related decline in software license revenues. Cloud adoption trended higher than anticipated with SaaS comprising 87% of our new software contract value, and free cash flow was robust. We continued to direct cash flow to debt repayment as we reduced our term debt by $120 million during the quarter, bringing our net leverage to 1.5 times proforma EBITDA.
"We saw strong sales performance across our product portfolios as momentum continues to build with cross-division sales synergies and a growing pipeline of active opportunities. The public sector market remains very active, and we are experiencing a robust demand environment reflected in high volumes of request for proposal and demo activity.
"Our cloud initiatives are on track in what we see as a pivotal year in our cloud transition. Importantly, our unparalleled competitive strengths, including the breadth of our products and the depth of our client base, position us well to execute our long-term strategic growth roadmap. We look forward to sharing more details of our mid- to long-term strategy supporting our Tyler 2030 vision during our upcoming investor day on June 15, 2023," concluded Moore.
Guidance for 2023
As of April 26, 2023, Tyler Technologies is providing the following guidance for the full year 2023:
GAAP to non-GAAP guidance reconciliation
Non-GAAP diluted earnings per share excludes the estimated full-year impact of non-cash share-based compensation expense and employer portion of payroll tax related to employee stock transactions of approximately $109 million, amortization of acquired software and intangible assets of approximately $109 million, and acquisition-related costs, lease restructuring and other asset write-off costs of approximately $2 million. Additionally, the non-GAAP tax rate of 22.0% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $7 million of estimated discrete tax benefits that are included in the GAAP estimated annual effective tax rate.
Conference Call
Tyler Technologies will hold a conference call on Thursday, April 27, 2023, at 10:00 a.m. ET to discuss the company’s results. The company is offering participants the opportunity to register in advance for the conference through the following link: https://conferencingportals.com/event/dXimaDxA. Registered participants will receive an email with a calendar reminder and dial-in number and PIN that will allow them to listen to the call live.
The live audio webcast and archived replay can also be accessed at http://investors.tylertech.com/events-and-presentations/default.aspx.
About Tyler Technologies, Inc.
Tyler Technologies (NYSE: TYL) provides integrated software and technology services to the public sector. Tyler's end-to-end solutions empower local, state, and federal government entities to operate more efficiently and transparently with residents and each other. By connecting data and processes across disparate systems, Tyler's solutions transform how clients turn actionable insights into opportunities and solutions for their communities. Tyler has more than 40,000 successful installations across more than 13,000 locations, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. Tyler has been recognized numerous times for growth and innovation, including Government Technology's GovTech 100 list. More information about Tyler Technologies, an S&P 500 company headquartered in Plano, Texas, can be found at tylertech.com.
Non-GAAP Financial Measures
Tyler Technologies has provided in this press release financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share, EBITDA, adjusted EBITDA, and free cash flow. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating Tyler’s ongoing operational performance because they provide additional insight in comparing results from period to period. Tyler believes the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures discussed above exclude share-based compensation expense, employer portion of payroll taxes on employee stock transactions, expenses associated with amortization of intangibles arising from business combinations, acquisition-related expenses, and lease restructuring costs and other asset write-offs. Annualized recurring revenues (ARR) is calculated by annualizing the current quarter's recurring revenues from maintenance and subscriptions.
Tyler currently uses a non-GAAP tax rate of 22.0%. This rate is based on Tyler's estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating Tyler's non-GAAP income, as well as significant non-recurring tax adjustments. The non-GAAP tax rate used in future periods will be reviewed periodically to determine whether it remains appropriate in consideration of factors including Tyler's periodic annual effective tax rate calculated in accordance with GAAP, changes resulting from tax legislation, changes in the geographic mix of revenues and expenses, and other factors deemed significant. Due to differences in tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to Tyler's estimated annual tax rate as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from Tyler's actual tax liabilities.
Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP. The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial statement tables included below in this press release.
Forward-looking Statements
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) the effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; (2) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology spending; (3) disruption to our business and harm to our competitive position resulting from cyber-attacks and security vulnerabilities; (4) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (5) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (6) material portions of our business require the Internet infrastructure to be adequately maintained; (7) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (8) general economic, political and market conditions, including inflation and increases in interest rates; (9) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (10) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (11) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (12) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed “Risk Factors” contained in our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.
(Comparative results follow)
#TYL_Financial
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended March 31,
2023
2022
Revenues:
Subscriptions
$
280,465
$
245,443
Maintenance
115,130
117,029
Professional services
60,929
70,015
Software licenses and royalties
10,130
16,506
Hardware and other
5,199
7,115
Total revenues
471,853
456,108
Cost of revenues:
Subscriptions, maintenance, and professional services
252,415
242,832
Software licenses and royalties
2,313
1,445
Amortization of software development
2,588
1,164
Amortization of acquired software
8,920
13,221
Hardware and other
5,780
5,028
Total cost of revenues
272,016
263,690
Gross profit
199,837
192,418
Sales and marketing expense
37,103
35,206
General and administrative expense
72,360
62,689
Research and development expense
26,987
23,941
Amortization of other intangibles
18,407
14,714
Operating income
44,980
55,868
Interest expense
(7,684
)
(4,804
)
Other income, net
1,246
364
Income before income taxes
38,542
51,428
Income tax provision
7,667
11,444
Net income
$
30,875
$
39,984
Earnings per common share:
Basic
$
0.74
$
0.97
Diluted
$
0.73
$
0.94
Weighted average common shares outstanding:
Basic
41,832
41,364
Diluted
42,506
42,443
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended March 31,
Reconciliation of non-GAAP gross profit and margin
2023
2022
GAAP gross profit
$
199,837
$
192,418
Non-GAAP adjustments:
Add: Share-based compensation expense included in cost of revenues
6,342
6,772
Add: Amortization of acquired software
8,920
13,221
Non-GAAP gross profit
$
215,099
$
212,411
GAAP gross margin
42.4
%
42.2
%
Non-GAAP gross margin
45.6
%
46.6
%
Three months ended March 31,
Reconciliation of non-GAAP operating income and margin
2023
2022
GAAP operating income
$
44,980
$
55,868
Non-GAAP adjustments:
Add: Share-based compensation expense
27,896
25,279
Add: Employer portion of payroll tax related to employee stock transactions
479
712
Add: Acquisition-related costs
22
1,031
Add: Lease restructuring costs and other asset write-offs
1,545
—
Add: Amortization of acquired software
8,920
13,221
Add: Amortization of customer and trade name intangibles
18,407
14,714
Non-GAAP adjustments subtotal
57,269
54,957
Non-GAAP operating income
$
102,249
$
110,825
GAAP operating margin
9.5
%
12.2
%
Non-GAAP operating margin
21.7
%
24.3
%
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended March 31,
Reconciliation of non-GAAP net income and earnings per share
2023
2022
GAAP net income
$
30,875
$
39,984
Non-GAAP adjustments:
Add: Total non-GAAP adjustments to operating income
57,269
54,957
Less: Tax impact related to non-GAAP adjustments
(13,411
)
(14,088
)
Non-GAAP net income
$
74,733
$
80,853
GAAP earnings per diluted share
$
0.73
$
0.94
Non-GAAP earnings per diluted share
$
1.76
$
1.90
Three months ended March 31,
Detail of share-based compensation expense
2023
2022
Subscriptions, maintenance and professional services
$
6,342
$
6,772
Sales and marketing expense
2,393
2,140
General and administrative expense
19,161
16,367
Total share-based compensation expense
$
27,896
$
25,279
Three months ended March 31,
Reconciliation of EBITDA and adjusted EBITDA
2023
2022
GAAP net income
$
30,875
$
39,984
Amortization of customer and trade name intangibles
18,407
14,714
Depreciation and amortization included in cost of revenues, sales and marketing expense, general and administrative expense, and research and development expense
18,420
21,935
Interest expense
7,673
4,813
Income tax provision
7,667
11,444
EBITDA
$
83,042
$
92,890
Share-based compensation expense
27,896
25,279
Acquisition-related costs
22
1,031
Lease restructuring costs and other asset write-offs
1,545
—
Adjusted EBITDA
$
112,505
$
119,200
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three months ended March 31,
Reconciliation of free cash flow
2023
2022
Net cash provided by operating activities
$
74,709
$
53,541
Less: additions to property and equipment
(2,020
)
(4,579
)
Less: capitalized software development
(9,079
)
(7,947
)
Free cash flow
$
63,610
$
41,015
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
130,845
$
173,857
Accounts receivable, net
508,683
577,257
Short-term investments
28,810
37,030
Prepaid expenses and other current assets
77,325
59,098
Total current assets
745,663
847,242
Accounts receivable, long-term portion
9,282
8,271
Operating lease right-of-use assets
48,627
50,989
Property and equipment, net
167,683
172,786
Other assets:
Software development costs, net
54,565
48,189
Goodwill
2,489,084
2,489,308
Other intangibles, net
976,359
1,002,164
Non-current investments
14,544
18,508
Other non-current assets
49,828
49,960
Total assets
$
4,555,635
$
4,687,417
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
226,883
$
236,754
Operating lease liabilities
11,413
10,736
Current income tax payable
69,337
43,667
Deferred revenue
497,395
568,538
Current portion of term loans
30,000
30,000
Total current liabilities
835,028
889,695
Term loans
243,603
362,905
Convertible senior notes due 2026, net
594,914
594,484
Deferred revenue, long-term
1,600
2,037
Deferred income taxes
130,367
148,891
Operating lease liabilities, long-term
46,567
48,049
Other long-term liabilities
17,423
16,967
Total liabilities
1,869,502
2,063,028
Shareholders' equity
$
2,686,133
$
2,624,389
Total liabilities and shareholders' equity
$
4,555,635
$
4,687,417
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three months ended March 31,
2023
2022
Cash flows from operating activities:
Net income
$
30,875
$
39,984
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization
38,112
38,149
Gains from sale of investments
—
(55
)
Share-based compensation expense
27,896
25,279
Operating lease right-of-use assets expense
3,804
3,082
Deferred income tax benefit
(18,556
)
(9,438
)
Other
499
—
Changes in operating assets and liabilities, exclusive of effects of acquired companies
(7,921
)
(43,460
)
Net cash provided by operating activities
74,709
53,541
Cash flows from investing activities:
Additions to property and equipment
(2,020
)
(4,579
)
Purchase of marketable security investments
(10,617
)
(4,592
)
Proceeds and maturities from marketable security investments
22,975
22,672
Investment in software development
(9,079
)
(7,947
)
Cost of acquisitions, net of cash acquired
(1,875
)
(116,698
)
Other
16
(29
)
Net cash provided used by investing activities
(600
)
(111,173
)
Cash flows from financing activities:
Payment on term loans
(120,000
)
(20,000
)
Proceeds from exercise of stock options, net of withheld shares for taxes upon equity award
(158
)
8,045
Contributions from employee stock purchase plan
3,037
3,678
Net cash used provided by financing activities
(117,121
)
(8,277
)
Net decrease in cash and cash equivalents
(43,012
)
(65,909
)
Cash and cash equivalents at beginning of period
173,857
309,171
Cash and cash equivalents at end of period
$
130,845
$
243,262
View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005822/en/
Brian K. Miller Executive Vice President & CFO Tyler Technologies, Inc. 972-713-3720 brian.miller@tylertech.com
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