Organic revenue growth accelerates to 10.6%, as
bookings grow 33.5%
Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the fourth quarter ended December 31, 2019.
Fourth Quarter 2019 Financial Highlights:
- Total revenues were $288.8 million, up 19.4% from $242.0
million for the fourth quarter of 2018. Organic revenue growth was
10.6%. Non-GAAP total revenues were $287.4 million, up 18.3% from
$243.0 million for the fourth quarter of 2018. Non-GAAP organic
revenue growth was 10.2%.
- Recurring revenues from maintenance and subscriptions were
$194.0 million, up 22.7% compared to the fourth quarter of 2018,
and comprised 67.2% of fourth quarter 2019 revenues.
- Operating income was $45.2 million, up 16.0% from $38.9 million
for the fourth quarter of 2018. Non-GAAP operating income was $73.9
million, up 13.4% from $65.2 million for the fourth quarter of
2018.
- Net income was $46.8 million, or $1.15 per diluted share, up
48.3% compared to $31.6 million, or $0.79 per diluted share, for
the fourth quarter of 2018. Non-GAAP net income was $58.2 million,
or $1.43 per diluted share, up 15.3% compared to $50.5 million, or
$1.26 per diluted share, for the fourth quarter of 2018.
- Cash flows from operations were $76.2 million, up 7.5% compared
to $70.9 million for the fourth quarter of 2018.
- Adjusted EBITDA was $82.2 million, up 14.0% compared to $72.1
million for the fourth quarter of 2018.
- Software subscription arrangements comprised approximately 54%
of total new software contract value in the fourth quarter,
compared to approximately 40% in the fourth quarter of 2018.
- Subscription bookings in the fourth quarter added $12.0 million
in annual recurring revenue.
- Annualized non-GAAP recurring revenues were $769.9 million, up
21.0% from $636.4 million for the fourth quarter of 2018.
- On October 30, 2019, Tyler acquired Courthouse Technologies,
Ltd., a leading provider of jury management systems.
Full Year 2019 Financial Highlights:
- Total revenues were $1.086 billion, up 16.2% from $935.3
million in 2018. Organic revenue growth was 8.3%. Non-GAAP total
revenues were $1.091 billion, up 16.1% from $939.7 million in 2018.
Non-GAAP organic revenue growth was 7.9%.
- Recurring revenues from maintenance and subscriptions were
$726.7 million, up 20.1% compared to $605.1 million in 2018, and
comprised 66.9% of 2019 revenues.
- Operating income was $156.4 million, up 2.5% from $152.5
million in 2018. Non-GAAP operating income was $276.2 million, up
10.4% from $250.3 million in 2018.
- Net income was $146.5 million, or $3.65 per diluted share, down
0.6% compared to $147.5 million, or $3.68 per diluted share in
2018. Non-GAAP net income was $212.6 million, or $5.30 per diluted
share, up 10.3% compared to $192.8 million, or $4.80 per diluted
share in 2018.
- Cash flows from operations were $254.7 million, up 1.8%
compared to $250.2 million in 2018.
- Adjusted EBITDA was $303.4 million, up 10.5% compared to $274.6
million in 2018.
- Software subscription arrangements comprised approximately 63%
of total new software contract value in 2019, compared to
approximately 41% in 2018.
- Subscription bookings in 2019 added $52.6 million in annual
recurring revenue.
- Total backlog was $1.46 billion, up 16.9% from $1.25 billion at
December 31, 2018. Software-related backlog (excluding appraisal
services) was $1.43 billion, up 18.0% from $1.21 billion at
December 31, 2018.
- Effective January 1, 2019, Tyler adopted the requirements of
ASU No. 2016-02, Leases (Topic 842), utilizing the modified
retrospective method of transition.
“Tyler reached two significant milestones in the fourth quarter
- surpassing $1 billion in annual revenues and $300 million in
adjusted EBITDA,” said Lynn Moore, Tyler’s president and chief
executive officer. “Non-GAAP revenues grew 18.3% and organic growth
accelerated sequentially for the third consecutive quarter to reach
double-digits, even as our mix of new business was more heavily
weighted towards subscriptions. Subscriptions revenues continue to
pace our growth, as they rose 34.3%.
"Bookings in the fourth quarter were robust across our product
suites, growing 33.5% to approximately $331 million. For the full
year, bookings rose 32.3%. The number of new contracts signed in
the fourth quarter reached a new high and increased 69% from last
year's fourth quarter. Bookings were particularly strong for our
public safety solutions, where the total value of contracts signed
during the fourth quarter more than doubled last year's fourth
quarter. We exited the year with backlog at a new high of $1.46
billion.
"As we turn to 2020, we are excited about the opportunities in
front of us. Our elevated investments in product development and
acquisitions over recent years have broadened our addressable
market and strengthened our competitive position, and we continue
to focus intensely on competitiveness, revenue growth, and
long-term margin expansion. We expect to continue to show progress
toward those objectives in 2020, as we continue our move to the
cloud in partnership with Amazon Web Services," added Moore.
Guidance for 2020
As of February 12, 2020, Tyler Technologies is providing the
following guidance for the full year 2020:
- GAAP total revenues are expected to be in the range of $1.204
billion to $1.224 billion. Non-GAAP total revenues are expected to
be in the range of $1.205 billion to $1.225 billion.
- GAAP diluted earnings per share are expected to be in the range
of $3.81 to $3.93 and may vary significantly due to the impact of
stock incentive awards on the GAAP effective tax rate, as well as
final valuation of acquired intangibles.
- Non-GAAP diluted earnings per share are expected to be in the
range of $5.60 to $5.72, of which approximately 55% to 60% is
expected to be generated in the second half of the year.
- Pretax non-cash, share-based compensation expense is expected
to be approximately $77 million.
- Research and development expense is expected to be in the range
of $92 million to $94 million.
- Fully diluted shares for the year are expected to be in the
range of 41.5 million to 42.0 million shares.
- GAAP earnings per share assumes an estimated annual effective
tax rate of approximately 10% after discrete tax items including
approximately $31 million of discrete tax benefits related to
share-based compensation.
- The non-GAAP annual effective tax rate is expected to be
24%.
- Capital expenditures are expected to be in the range of $36
million to $38 million, including approximately $9 million related
to real estate and approximately $7 million of capitalized software
development costs. Total depreciation and amortization expense is
expected to be approximately $80 million, including approximately
$54 million from amortization of acquisition intangibles.
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 rental income associated with
acquired subleases of approximately $1 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
$77 million, and amortization of acquired software and intangible
assets of approximately $54 million. Additionally, the non-GAAP tax
rate of 24% is estimated periodically as described below under
"Non-GAAP Financial Measures" and excludes approximately $31
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,
February 13, 2020 at 10:00 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/10134985. 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 February 20, 2020. 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 10134985.
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 26,000 successful installations
across more than 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 2019 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
subleases, 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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Software licenses and royalties
$
32,358
$
25,821
$
100,205
$
93,441
Subscriptions
80,330
59,811
296,352
220,547
Software services
52,220
46,457
213,061
191,269
Maintenance
113,644
98,333
430,318
384,521
Appraisal services
6,024
5,376
23,479
21,846
Hardware and other
4,261
6,183
23,012
23,658
Total revenues
288,837
241,981
1,086,427
935,282
Software licenses and royalties
1,258
863
3,938
3,802
Acquired software
7,997
5,969
30,642
22,972
Software services, maintenance and
subscriptions
130,674
111,843
502,138
438,923
Appraisal services
4,031
3,445
15,337
14,299
Hardware and other
2,602
3,990
17,472
15,708
Total cost of revenues
146,562
126,110
569,527
495,704
Gross profit
142,275
115,871
516,900
439,578
Selling, general and administrative
expenses
70,265
55,134
257,746
207,605
Research and development expense
21,170
17,335
81,342
63,264
Amortization of customer and trade name
intangibles
5,683
4,475
21,445
16,217
Operating income
45,157
38,927
156,367
152,492
Other income, net
2,633
1,180
3,471
3,378
Income before income taxes
47,790
40,107
159,838
155,870
Income tax provision
1,000
8,555
13,311
8,408
Net income
$
46,790
$
31,552
$
146,527
$
147,462
Earnings per common share:
Basic
$
1.20
$
0.82
$
3.79
$
3.84
Diluted
$
1.15
$
0.79
$
3.65
$
3.68
Weighted average common shares
outstanding:
Basic
39,076
38,614
38,640
38,445
Diluted
40,736
39,891
40,105
40,123
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,
2019
2018
2019
2018
Reconciliation of
non-GAAP total revenues
GAAP total revenues
$
288,837
$
241,981
$
1,086,427
$
935,282
Non-GAAP adjustments:
Write-downs of acquisition-related
deferred revenue
(1,495
)
952
4,557
4,000
Amortization of acquired subleases
83
100
372
426
Non-GAAP total revenues
$
287,425
$
243,033
$
1,091,356
$
939,708
Reconciliation of
non-GAAP gross profit and margin
GAAP gross profit
$
142,275
$
115,871
$
516,900
$
439,578
Non-GAAP adjustments:
Write-downs of acquisition-related
deferred revenue
(1,495
)
952
4,557
4,000
Amortization of acquired leases
83
100
372
426
Share-based compensation expense included
in cost of revenues
3,836
3,948
15,002
13,588
Amortization of acquired software
7,997
5,969
30,642
22,972
Non-GAAP gross profit
$
152,696
$
126,840
$
567,473
$
480,564
GAAP gross margin
49.3
%
47.9
%
47.6
%
47.0
%
Non-GAAP gross margin
53.1
%
52.2
%
52.0
%
51.1
%
Reconciliation of
non-GAAP operating income and margin
GAAP operating income
$
45,157
$
38,927
$
156,367
$
152,492
Non-GAAP adjustments:
Write-downs of acquisition-related
deferred revenue
(1,495
)
952
4,557
4,000
Amortization of acquired leases
83
100
372
426
Share-based compensation expense
15,598
14,774
59,967
52,740
Employer portion of payroll tax related to
employee stock transactions
693
4
1,745
1,412
Acquisition related costs
197
—
1,142
—
Amortization of acquired software
7,997
5,969
30,642
22,972
Amortization of customer and trade name
intangibles
5,683
4,475
21,445
16,217
Non-GAAP adjustments subtotal
28,756
26,274
$
119,870
$
97,767
Non-GAAP operating income
$
73,913
$
65,201
$
276,237
$
250,259
GAAP operating margin
15.6
%
16.1
%
14.4
%
16.3
%
Non-GAAP operating margin
25.7
%
26.8
%
25.3
%
26.6
%
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Reconciliation of
non-GAAP net income and earnings per share
GAAP net income
$
46,790
$
31,552
$
146,527
$
147,462
Non-GAAP adjustments:
Total non-GAAP adjustments to operating
income
28,756
26,274
119,870
97,767
Tax impact related to non-GAAP
adjustments
(17,371
)
(7,376
)
(53,819
)
(52,464
)
Non-GAAP net income
$
58,175
$
50,450
$
212,578
$
192,765
GAAP earnings per diluted share
$
1.15
$
0.79
$
3.65
$
3.68
Non-GAAP earnings per diluted share
$
1.43
$
1.26
$
5.30
$
4.80
Detail of
share-based compensation expense
Cost of software services, maintenance and
subscriptions
$
3,836
$
3,948
$
15,002
$
13,588
Selling, general and administrative
expenses
11,762
10,826
44,965
39,152
Total share-based compensation expense
$
15,598
$
14,774
$
59,967
$
52,740
Reconciliation of
EBITDA and adjusted EBITDA
GAAP net income
$
46,790
$
31,552
$
146,527
$
147,462
Amortization of customer and trade name
intangibles
5,683
4,475
21,445
16,217
Depreciation and amortization included
in
cost of revenues, SG&A and other
expenses
14,260
11,580
54,899
45,052
Interest expense included in other income,
net
155
193
1,564
763
Income tax provision
1,000
8,555
13,311
8,408
EBITDA
$
67,888
$
56,355
$
237,746
$
217,902
Write-downs of acquisition-related
deferred revenue
(1,495
)
952
4,557
4,000
Share-based compensation expense
15,598
14,774
59,967
52,740
Acquisition related costs
197
—
$
1,142
$
—
Adjusted EBITDA
$
82,188
$
72,081
$
303,412
$
274,642
TYLER TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Amounts in thousands)
(Unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
232,682
$
134,279
Accounts receivable, net
374,089
298,912
Current investments and other assets
66,444
80,970
Income tax receivable
6,482
4,697
Total current assets
679,697
518,858
Accounts receivable, long-term portion
22,432
16,020
Operating lease right-of-use assets
18,992
—
Property and equipment, net
171,861
155,177
Other assets:
Goodwill
840,117
753,718
Other intangibles, net
378,914
276,852
Non-current investments and other
assets
79,601
70,338
Total assets
$
2,191,614
$
1,790,963
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
90,211
$
73,390
Operating lease liabilities
6,387
—
Deferred revenue
412,495
350,512
Total current liabilities
509,093
423,902
Revolving line of credit
—
—
Deferred revenue, long-term
199
424
Deferred income taxes
48,442
41,791
Operating lease liabilities, long-term
16,822
—
Shareholders' equity
1,617,058
1,324,846
Total liabilities and shareholders'
equity
$
2,191,614
$
1,790,963
TYLER TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Cash flows from operating activities:
Net income
$
46,790
$
31,552
$
146,527
$
147,462
Adjustments to reconcile net income to
cash
provided by operations:
Depreciation and amortization
20,125
16,132
76,672
61,759
Share-based compensation expense
15,598
14,774
59,967
52,740
Provision for losses - accounts
receivable
5,514
2,286
5,514
2,286
Operating lease right-of-use assets - non
cash
1,418
—
5,397
—
Deferred income tax expense (benefit)
4,241
(35
)
(6,088
)
(5,069
)
Changes in operating assets and
liabilities,
exclusive of effects of acquired
companies
(17,493
)
6,141
(33,269
)
(8,975
)
Net cash provided by operating
activities
76,193
70,850
254,720
250,203
Cash flows from investing activities:
Additions to property and equipment
(8,403
)
(3,964
)
(37,236
)
(27,424
)
Purchase of marketable security
investments
(27,420
)
(22,987
)
(54,742
)
(115,625
)
Proceeds from marketable security
investments
13,942
20,997
70,796
81,205
Capitalized software development costs
(1,264
)
—
(4,804
)
—
Cost of acquisitions, net of cash
acquired
(18,864
)
(10,785
)
(218,734
)
(178,093
)
Decrease (increase) in other
198
825
(295
)
1,682
Net cash used by investing activities
(41,811
)
(15,914
)
(245,015
)
(238,255
)
Cash flows from financing activities:
Decrease in net borrowings on revolving
line of credit
—
—
—
—
Purchase of treasury shares
—
(146,553
)
(17,786
)
(146,553
)
Proceeds from exercise of stock
options
34,613
2,073
96,908
74,907
Contributions from employee stock purchase
plan
2,249
4,371
9,576
8,051
Net cash provided (used) by financing
activities
36,862
(140,109
)
88,698
(63,595
)
Net increase (decrease) in cash and cash
equivalents
71,244
(85,173
)
98,403
(51,647
)
Cash and cash equivalents at beginning of
period
161,438
219,452
134,279
185,926
Cash and cash equivalents at end of
period
$
232,682
$
134,279
$
232,682
$
134,279
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212005784/en/
Brian K. Miller Executive Vice President & CFO Tyler
Technologies, Inc. 972-713-3720 brian.miller@tylertech.com
Tyler Technologies (NYSE:TYL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tyler Technologies (NYSE:TYL)
Historical Stock Chart
From Sep 2023 to Sep 2024