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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 | |
---|---|---|---|---|---|---|---|---|
5.85 | 1.12% | 526.76 | 526.96 | 517.90 | 521.65 | 67,731 | 19:12:53 |
Subscription revenues grew 39% as bookings rose 72%
Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the second quarter ended June 30, 2019.
Second Quarter 2019 Financial Highlights:
“We are pleased with our strong second quarter results as both revenue and bookings growth accelerated from the first quarter,” said Lynn Moore, Tyler’s president and chief executive officer. “Subscription revenues continue to pace our growth, with an increase of 38.6% over the second quarter of 2018. Our non-GAAP gross margin rose 90 basis points while our non-GAAP operating margin fell 150 basis points, as research and development expenses rose 27% over the second quarter of 2018, reflecting our high level of investment in products across the company.
"Bookings in the second quarter grew more than 72% to $452 million, a new quarterly record. We signed the two largest SaaS contracts in our history during the quarter - both for our Odyssey® courts suite. One is a 10-year arrangement with the North Carolina Administrative Office of the Courts and North Carolina Judicial Branch valued at approximately $85 million, which also includes statewide e-filing services, and the other is a $20 million contract with Bexar County, Texas. Our strong bookings drove backlog to a new high of $1.43 billion, up 17%.
"While the high level of SaaS arrangements in our new bookings mix continues to pressure short-term revenue growth, we expect growth to accelerate in the second half of the year, and our outlook for the full year remains positive," added Moore.
Guidance for 2019
As of July 31, 2019, Tyler Technologies is providing the following guidance for the full year 2019:
GAAP to non-GAAP guidance reconciliation
Non-GAAP total revenues is derived from adding back the estimated full year impact of write-downs of acquisition-related deferred revenue and amortization of acquired leases of approximately $10 million. 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 $62 million, and amortization of acquired software and intangible assets of approximately $51 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $27 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, August 1, at 10:00 a.m. EDT 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/10132510. Registered participants will receive an email with a calendar reminder and a 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 August 8, 2019. 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 10132510.
The live webcast and archived replay can also be accessed at https://tylertech.irpass.com/Presentations.
About Tyler Technologies, Inc.
Tyler Technologies (NYSE: TYL) is the largest and most established provider of integrated software and technology services focused on 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 21,000 successful installations across 10,000 sites, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. A financially strong company, Tyler has achieved double-digit revenue growth every quarter since 2012. It was also named to Forbes’ "Best Midsize Employers" list in 2018 and recognized twice on its "Most Innovative Growth Companies" list. More information about Tyler Technologies, 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, and adjusted EBITDA. 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 leases, share-based compensation expense, employer portion of payroll taxes on employee stock transactions, expenses associated with amortization of intangibles arising from business combinations, and acquisition-related expenses.
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 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) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology spending; (2) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (3) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (4) material portions of our business require the Internet infrastructure to be adequately maintained; (5) 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; (6) general economic, political and market conditions; (7) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (8) 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; (9) 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 (10) 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. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Revenues:
Software licenses and royalties
$
20,675
$
22,400
$
42,468
$
45,176
Subscriptions
73,475
53,009
140,750
102,037
Software services
57,401
50,674
105,844
96,613
Maintenance
106,689
96,076
206,841
189,973
Appraisal services
6,233
5,532
11,447
10,926
Hardware and other
10,651
8,369
14,840
12,509
Total revenues
275,124
236,060
522,190
457,234
Cost of revenues:
Software licenses and royalties
891
1,204
1,709
1,982
Acquired software
7,988
5,724
14,670
11,106
Software services, maintenance and subscriptions
125,759
109,487
242,919
215,572
Appraisal services
3,758
3,568
7,210
7,349
Hardware and other
8,868
6,801
11,774
9,144
Total cost of revenues
147,264
126,784
278,282
245,153
Gross profit
127,860
109,276
243,908
212,081
Selling, general and administrative expenses
65,827
52,262
123,593
99,866
Research and development expense
20,101
15,831
39,042
28,879
Amortization of customer and trade name intangibles
5,266
4,041
10,116
7,356
Operating income
36,666
37,142
71,157
75,980
Other (expense) income, net
(247
)
558
339
1,157
Income before income taxes
36,419
37,700
71,496
77,137
Income tax provision (benefit)
4,420
(1,461
)
12,149
151
Net income
$
31,999
$
39,161
$
59,347
$
76,986
Earnings per common share:
Basic
$
0.83
$
1.02
$
1.54
$
2.00
Diluted
$
0.80
$
0.97
$
1.49
$
1.91
Weighted average common shares outstanding:
Basic
38,402
38,390
38,462
38,416
Diluted
39,813
40,224
39,806
40,250
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Reconciliation of non-GAAP total revenues
GAAP total revenues
$
275,124
$
236,060
$
522,190
$
457,234
Non-GAAP adjustments:
Add: Write-downs of acquisition-related deferred revenue
2,757
1,551
4,354
1,651
Add: Amortization of acquired leases
100
111
200
222
Non-GAAP total revenues
$
277,981
$
237,722
$
526,744
$
459,107
Reconciliation of non-GAAP gross profit and margin
GAAP gross profit
$
127,860
$
109,276
$
243,908
$
212,081
Non-GAAP adjustments:
Add: Write-downs of acquisition-related deferred revenue
2,757
1,551
4,354
1,651
Add: Amortization of acquired leases
100
111
200
222
Add: Share-based compensation expense included in cost of revenues
3,756
2,955
7,554
5,731
Add: Amortization of acquired software
7,988
5,724
14,670
11,106
Non-GAAP gross profit
$
142,461
$
119,617
$
270,686
$
230,791
GAAP gross margin
46.5
%
46.3
%
46.7
%
46.4
%
Non-GAAP gross margin
51.2
%
50.3
%
51.4
%
50.3
%
Reconciliation of non-GAAP operating income and margin
GAAP operating income
$
36,666
$
37,142
$
71,157
$
75,980
Non-GAAP adjustments:
Add: Write-downs of acquisition-related deferred revenue
2,757
1,551
4,354
1,651
Add: Amortization of acquired leases
100
111
200
222
Add: Share-based compensation expense
15,066
12,933
29,482
23,490
Add: Employer portion of payroll tax related to employee stock transactions
308
604
431
924
Add: Acquisition related costs
245
—
940
—
Add: Amortization of acquired software
7,988
5,724
14,670
11,106
Add: Amortization of customer and trade name intangibles
5,266
4,041
10,116
7,356
Non-GAAP adjustments subtotal
31,730
24,964
$
60,193
$
44,749
Non-GAAP operating income
$
68,396
$
62,106
$
131,350
$
120,729
GAAP operating margin
13.3
%
15.7
%
13.6
%
16.6
%
Non-GAAP operating margin
24.6
%
26.1
%
24.9
%
26.3
%
TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Reconciliation of non-GAAP net income and earnings per share
GAAP net income
$
31,999
$
39,161
$
59,347
$
76,986
Non-GAAP adjustments:
Add: Total non-GAAP adjustments to operating income
31,730
24,964
60,193
44,749
Less: Tax impact related to non-GAAP adjustments
(11,935
)
(16,500
)
(19,456
)
(29,101
)
Non-GAAP net income
$
51,794
$
47,625
$
100,084
$
92,634
GAAP earnings per diluted share
$
0.80
$
0.97
$
1.49
$
1.91
Non-GAAP earnings per diluted share
$
1.30
$
1.18
$
2.51
$
2.30
Detail of share-based compensation expense
Cost of software services, maintenance and subscriptions
$
3,756
$
2,955
$
7,554
$
5,731
Selling, general and administrative expenses
11,310
9,978
21,928
17,759
Total share-based compensation expense
$
15,066
$
12,933
$
29,482
$
23,490
Reconciliation of EBITDA and adjusted EBITDA
GAAP net income
$
31,999
$
39,161
$
59,347
$
76,986
Amortization of customer and trade name intangibles
5,266
4,041
10,116
7,356
Depreciation and amortization included in
cost of revenues, SG&A and other expenses
14,136
11,209
26,562
22,006
Interest expense included in other income, net
709
189
1,173
378
Income tax provision
4,420
(1,461
)
12,149
151
EBITDA
$
56,530
$
53,139
$
109,347
$
106,877
Write-downs of acquisition-related deferred revenue
2,757
1,551
4,354
1,651
Share-based compensation expense
15,066
12,933
29,482
23,490
Acquisition related costs
245
—
$
940
$
—
Adjusted EBITDA
$
74,598
$
67,623
$
144,123
$
132,018
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
11,187
$
134,279
Accounts receivable, net
381,379
298,912
Current investments and other assets
61,004
80,970
Income tax receivable
—
4,697
Total current assets
453,570
518,858
Accounts receivable, long-term portion
20,511
16,020
Operating lease right-of-use assets
20,349
—
Property and equipment, net
170,150
155,177
Other assets:
Goodwill
835,911
753,718
Other intangibles, net
377,478
276,852
Non-current investments and other assets
71,462
70,338
Total assets
$
1,949,431
$
1,790,963
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
78,956
$
73,390
Current income tax payable
249
—
Operating lease liabilities
6,039
—
Deferred revenue
368,488
350,512
Total current liabilities
453,732
423,902
Revolving line of credit
15,000
—
Deferred revenue, long-term
551
424
Deferred income taxes
39,749
41,791
Operating lease liabilities, long-term
18,769
—
Shareholders' equity
1,421,630
1,324,846
Total liabilities and shareholders' equity
$
1,949,431
$
1,790,963
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Cash flows from operating activities:
Net income
$
31,999
$
39,161
$
59,347
$
76,986
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization
19,436
15,537
36,744
29,649
Share-based compensation expense
15,066
12,933
29,482
23,490
Deferred income tax benefit
(2,655
)
(2,538
)
(7,440
)
(5,196
)
Changes in operating assets and liabilities,
exclusive of effects of acquired companies
(39,349
)
(42,494
)
(69,679
)
(57,699
)
Net cash provided by operating activities
24,497
22,599
48,454
67,230
Cash flows from investing activities:
Additions to property and equipment
(11,732
)
(6,057
)
(24,052
)
(14,952
)
Purchase of marketable security investments
(6,527
)
(30,888
)
(10,117
)
(74,850
)
Proceeds from marketable security investments
19,412
28,077
39,688
39,154
Investment in software
(1,542
)
—
(2,232
)
—
Cost of acquisitions, net of cash acquired
(90
)
(157,152
)
(199,220
)
(157,152
)
(Increase) decrease in other
(132
)
(929
)
432
(186
)
Net cash used by investing activities
(611
)
(166,949
)
(195,501
)
(207,986
)
Cash flows from financing activities:
(Decrease) increase in net borrowings on revolving line of credit
(70,000
)
—
15,000
—
Purchase of treasury shares
—
—
(17,786
)
—
Proceeds from exercise of stock options
15,604
25,019
22,132
44,317
Contributions from employee stock purchase plan
2,260
1,962
4,609
3,760
Net cash (used) provided by financing activities
(52,136
)
26,981
23,955
48,077
Net decrease in cash and cash equivalents
(28,250
)
(117,369
)
(123,092
)
(92,679
)
Cash and cash equivalents at beginning of period
39,437
210,616
134,279
185,926
Cash and cash equivalents at end of period
$
11,187
$
93,247
$
11,187
$
93,247
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005940/en/
Brian K. Miller Executive Vice President & CFO Tyler Technologies, Inc. 972-713-3720 brian.miller@tylertech.com
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