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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 | |
---|---|---|---|---|---|---|---|---|
3.98 | 0.76% | 524.89 | 524.89 | 517.90 | 521.65 | 3,589 | 14:41:48 |
Subscription revenue growth remains strong at 17%
Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights:
Full Year 2020 Financial Highlights:
“Tyler's team executed well in a challenging environment during the fourth quarter, concluding 2020 with strong earnings and record cash flows,” said Lynn Moore, Tyler’s president and chief executive officer. “Software license and service revenues continued to be pressured by longer sales cycles, delays in projects, and the near elimination of billable travel as a result of the COVID-19 pandemic. However, recurring revenues were strong, and subscriptions revenues grew 17%, marking our 60th consecutive quarter of double-digit subscription revenue growth. Our revenue mix and cost efficiencies contributed to a 120 basis point improvement in the non-GAAP operating margin to 26.9%.
"Bookings in the fourth quarter of approximately $333 million were relatively flat with last year, as the pandemic impacted the timing of some client decisions and pushed some deals out of the quarter. Our new business pipeline remains stable, but in some cases the timing of new contract executions is less predictable. Our largest contract signed in the fourth quarter, and the largest contract in our history, was an agreement with the Texas Office of Court Administration to extend our existing statewide electronic filing arrangement through at least 2027. Although the total value of the contract is approximately $98 million, very little of the value is included in backlog and bookings because of certain contract provisions. If the entire amount of the contract had been included, bookings growth for the quarter would have been approximately 28%.
"We are excited about our opportunities to accelerate revenue growth and achieve our margin objectives in 2021, as our elevated investments in product development and acquisitions in recent years have broadened our addressable market and strengthened our competitive position. We've learned a lot from the challenges of 2020. While 2021 will also be an unusual year, we are confident in our ability to continue to execute on our long-term initiatives in a manner that provides value for our shareholders, clients, and employees. Our plans for 2021 include increasing our investments to accelerate our move to the cloud, including significant additional development resources dedicated to optimizing our products for the cloud," added Moore.
Guidance for 2021
As of February 10, 2021, Tyler Technologies is providing the following guidance for the full year 2021, which excludes the impact of any acquisitions which may be completed during the year:
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 $116 million, and amortization of acquired software and intangible assets of approximately $53 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $67 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 Wednesday, February 10, 2021 at 9:00 a.m. EST to discuss the company’s results. The company is offering participants the opportunity to register in advance for the conference through the following link: http://dpregister.com/sreg/10151750/e15a0630ce. 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.
Participants who do not wish to pre-register for the call may dial in using 844-861-5506 (U.S. callers) or 412-317-6587 (international callers) or 866-450-4696 (Canada callers) and ask for the “Tyler Technologies” call. A replay will be available two hours after completion of the call through February 17, 2021. To access the replay, please dial 877-344-7529 (U.S. callers), 412-317-0088 (international callers) and 855-669-9658 (Canada callers) and reference passcode 10151750.
The live webcast and archived replay can also be accessed at https://tylertech.irpass.com/Presentations.
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 connect more transparently with their constituents and with each other. By connecting data and processes across disparate systems, Tyler's solutions are transforming how clients gain actionable insights that solve problems in their communities. Tyler has more than 27,000 successful installations across more than 11,000 sites, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. Tyler has been named to Government Technology's GovTech 100 list five times and has been recognized three times on Forbes' "Most Innovative Growth Companies" 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 revenues, 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 write-downs of acquisition-related deferred revenue and acquired subleases, 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 incremental costs associated with COVID-19.
Tyler currently uses a non-GAAP tax rate of 24%. 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; (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)
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2020
2019
2020
2019
Software licenses and royalties
$
17,465
$
32,358
$
73,164
$
100,205
Subscriptions
93,997
80,330
350,648
296,352
Software services
42,676
52,220
186,409
213,061
Maintenance
118,409
113,644
467,513
430,318
Appraisal services
5,274
6,024
21,127
23,479
Hardware and other
5,464
4,261
17,802
23,012
Total revenues
283,285
288,837
1,116,663
1,086,427
Software licenses and royalties
292
1,258
3,339
3,938
Acquired software
7,964
7,997
31,962
30,642
Software services, maintenance and subscriptions
128,557
130,674
510,504
502,138
Appraisal services
4,150
4,031
15,945
15,337
Hardware and other
3,653
2,602
12,401
17,472
Total cost of revenues
144,616
146,562
574,151
569,527
Gross profit
138,669
142,275
542,512
516,900
Selling, general and administrative expenses
62,736
70,265
259,561
257,746
Research and development expense
22,411
21,170
88,363
81,342
Amortization of customer and trade name intangibles
5,486
5,683
21,662
21,445
Operating income
48,036
45,157
172,926
156,367
Other income, net
376
2,633
2,116
3,471
Income before income taxes
48,412
47,790
175,042
159,838
Income tax provision
(5,682)
1,000
(19,778)
13,311
Net income
$
54,094
$
46,790
$
194,820
$
146,527
Earnings per common share:
Basic
$
1.34
$
1.20
$
4.87
$
3.79
Diluted
$
1.29
$
1.15
$
4.69
$
3.65
Weighted average common shares outstanding:
Basic
40,404
39,076
40,035
38,640
Diluted
41,925
40,736
41,526
40,105
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2020
2019
2020
2019
Reconciliation of non-GAAP total revenues
GAAP total revenues
$
283,285
$
288,837
$
1,116,663
$
1,086,427
Non-GAAP adjustments:
Write-downs and adjustments to acquisition-related deferred revenue
45
(1,495)
478
4,557
Amortization of acquired subleases
78
83
313
372
Non-GAAP total revenues
$
283,408
$
287,425
$
1,117,454
$
1,091,356
Reconciliation of non-GAAP gross profit and margin
GAAP gross profit
$
138,669
$
142,275
$
542,512
$
516,900
Non-GAAP adjustments:
Write-downs and adjustments to acquisition-related deferred revenue
45
(1,495)
478
4,557
Amortization of acquired leases
78
83
313
372
Share-based compensation expense included in cost of revenues
4,949
3,836
18,125
15,002
Amortization of acquired software
7,964
7,997
31,962
30,642
Non-GAAP gross profit
$
151,705
$
152,696
$
593,390
$
567,473
GAAP gross margin
49.0
%
49.3
%
48.6
%
47.6
%
Non-GAAP gross margin
53.5
%
53.1
%
53.1
%
52.0
%
Reconciliation of non-GAAP operating income and margin
GAAP operating income
$
48,036
$
45,157
$
172,926
$
156,367
Non-GAAP adjustments:
Write-downs of acquisition-related deferred revenue
45
(1,495)
478
4,557
Amortization of acquired leases
78
83
313
372
Share-based compensation expense
13,253
15,598
67,365
59,967
Employer portion of payroll tax related to employee stock transactions
703
693
3,294
1,745
Acquisition related costs
—
197
—
1,142
COVID-19 incremental costs
810
—
1,537
—
Amortization of acquired software
7,964
7,997
31,962
30,642
Amortization of customer and trade name intangibles
5,486
5,683
21,662
21,445
Non-GAAP adjustments subtotal
28,339
28,756
$
126,611
$
119,870
Non-GAAP operating income
$
76,375
$
73,913
$
299,537
$
276,237
GAAP operating margin
17.0
%
15.6
%
15.5
%
14.4
%
Non-GAAP operating margin
26.9
%
25.7
%
26.8
%
25.3
%
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2020
2019
2020
2019
Reconciliation of non-GAAP net income and earnings per share
GAAP net income
$
54,094
$
46,790
$
194,820
$
146,527
Non-GAAP adjustments:
Total non-GAAP adjustments to operating income
28,339
28,756
126,611
119,870
Tax impact related to non-GAAP adjustments
(24,102)
(17,371)
(92,175)
(53,819)
Non-GAAP net income
$
58,331
$
58,175
$
229,256
$
212,578
GAAP earnings per diluted share
$
1.29
$
1.15
$
4.69
$
3.65
Non-GAAP earnings per diluted share
$
1.39
$
1.43
$
5.52
$
5.30
Detail of share-based compensation expense
Cost of software services, maintenance and subscriptions
$
4,949
$
3,836
$
18,125
$
15,002
Selling, general and administrative expenses
8,304
11,762
49,240
44,965
Total share-based compensation expense
$
13,253
$
15,598
$
67,365
$
59,967
Reconciliation of EBITDA and adjusted EBITDA
GAAP net income
$
54,094
$
46,790
$
194,820
$
146,527
Amortization of customer and trade name intangibles
5,486
5,683
21,662
21,445
Depreciation and amortization included in cost of revenues, SG&A and other expenses
15,068
14,260
59,339
54,899
Interest expense included in other income, net
154
155
610
1,564
Income tax (benefit) provision
(5,682)
1,000
(19,778)
13,311
EBITDA
$
69,120
$
67,888
$
256,653
$
237,746
Write-downs and adjustments to acquisition-related deferred revenue
45
(1,495)
478
4,557
Share-based compensation expense
13,253
15,598
67,365
59,967
Acquisition related costs
—
197
—
1,142
COVID-19 incremental costs
810
—
1,537
—
Adjusted EBITDA
$
83,228
$
82,188
$
326,033
$
303,412
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2020
2019
2020
2019
Reconciliation of free cash flow
Net cash provided by operating activities
$
88,761
$
76,193
$
355,089
$
254,720
Less: additions to property and equipment
(3,626)
(8,403)
(22,690)
(37,236)
Less: capitalized software development costs
(1,460)
(1,264)
(5,776)
(4,804)
Free cash flow
$
83,675
$
66,526
$
326,623
$
212,680
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
603,623
$
232,682
Accounts receivable, net
382,319
374,089
Current investments and other assets
105,530
66,444
Income tax receivable
21,598
6,482
Total current assets
1,113,070
679,697
Accounts receivable, long-term portion
21,417
22,432
Operating lease right-of-use assets
18,734
18,992
Property and equipment, net
168,004
171,861
Other assets:
Goodwill
838,428
840,117
Other intangibles, net
331,189
378,914
Non-current investments
82,640
42,235
Other non-current assets
33,792
37,366
Total assets
$
2,607,274
$
2,191,614
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
97,095
$
90,211
Operating lease liabilities
5,904
6,387
Deferred revenue
461,278
412,495
Total current liabilities
564,277
509,093
Revolving line of credit
—
—
Deferred revenue, long-term
100
199
Deferred income taxes
40,507
48,442
Operating lease liabilities, long-term
16,279
16,822
Shareholders' equity
1,986,111
1,617,058
Total liabilities and shareholders' equity
$
2,607,274
$
2,191,614
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2020
2019
2020
2019
Cash flows from operating activities:
Net income
$
54,094
$
46,790
$
194,820
$
146,527
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization
20,911
20,125
81,657
76,672
Share-based compensation expense
13,253
15,598
67,365
59,967
Provision for losses - accounts receivable
3,517
1,636
3,517
1,636
Operating lease right-of-use assets - non cash
1,549
1,418
5,782
5,397
Deferred income tax (benefit) expense
(5,478)
4,241
(7,936)
(6,088)
Changes in operating assets and liabilities, exclusive of effects of acquired companies
915
(13,615)
9,884
(29,391)
Net cash provided by operating activities
88,761
76,193
355,089
254,720
Cash flows from investing activities:
Additions to property and equipment
(3,626)
(8,403)
(22,690)
(37,236)
Purchase of marketable security investments
(45,289)
(27,420)
(156,618)
(54,742)
Proceeds from marketable security investments
20,948
13,942
82,742
70,796
Purchase of equity investment of common shares
—
—
(10,000)
—
Proceeds from the sale of equity investment of preferred shares
—
—
15,000
—
Capitalized software development costs
(1,460)
(1,264)
(5,776)
(4,804)
Cost of acquisitions, net of cash acquired
(1,031)
(18,864)
(1,292)
(218,734)
Decrease (increase) in other
301
198
314
(295)
Net cash used by investing activities
(30,157)
(41,811)
(98,320)
(245,015)
Cash flows from financing activities:
Decrease in net borrowings on revolving line of credit
—
—
—
—
Purchase of treasury shares
—
—
(15,484)
(17,786)
Payment of contingent consideration
—
—
(5,619)
—
Proceeds from exercise of stock options
23,631
34,613
124,363
96,908
Contributions from employee stock purchase plan
2,703
2,249
10,912
9,576
Net cash provided by financing activities
26,334
36,862
114,172
88,698
Net increase in cash and cash equivalents
84,938
71,244
370,941
98,403
Cash and cash equivalents at beginning of period
518,685
161,438
232,682
134,279
Cash and cash equivalents at end of period
$
603,623
$
232,682
$
603,623
$
232,682
View source version on businesswire.com: https://www.businesswire.com/news/home/20210210005147/en/
Brian K. Miller Executive Vice President & CFO Tyler Technologies, Inc. 972-713-3720 brian.miller@tylertech.com
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