TYL Tyler Technologies Corp

Operating cash flows increased over 60% as operating income grew double-digits

Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Financial Highlights:

• Total revenues were $271.1 million, down 1.5% from $275.1 million for the second quarter of 2019. Organic revenues declined by 1.9%. Non-GAAP total revenues were $271.3 million, down 2.4% from $278.0 million for the second quarter of 2019. Non-GAAP organic revenues declined by 2.8%.
• Recurring revenues from maintenance and subscriptions were $202.4 million, up 12.3% from $180.2 million for the second quarter of 2019, and comprised 74.7% of second quarter 2020 revenue.
• Operating income was $41.3 million, up 12.8% from $36.7 million for the second quarter of 2019. Non-GAAP operating income was $74.6 million, up 9.1% from $68.4 million for the second quarter of 2019.
• Net income was $53.9 million, or $1.30 per diluted share, up 68.4% compared to $32.0 million, or $0.80 per diluted share, for the second quarter of 2019. Non-GAAP net income was $57.1 million, or $1.38 per diluted share, up 10.2% compared to $51.8 million, or $1.30 per diluted share, for the second quarter of 2019.
• Cash flows from operations were $39.8 million, up 62.5% compared to $24.5 million for the second quarter of 2019.
• Adjusted EBITDA was $80.7 million, up 8.2% compared to $74.6 million for the second quarter of 2019.
• Software subscription arrangements comprised approximately 43% of the total new software contract value in the second quarter, compared to approximately 80% in the second quarter of 2019.
• Total bookings were $309 million, down 31.6% compared to the second quarter of 2019. Subscription bookings in the second quarter added $9.2 million in annual recurring revenue.
• Total backlog was $1.54 billion, up 7.4% from $1.43 billion at June 30, 2019. Software-related backlog (excluding appraisal services) was $1.51 billion, up 8.0% from $1.40 billion at June 30, 2019.

“We are very pleased with our execution during the second quarter in light of the extraordinary impact of the COVID-19 pandemic, with earnings that exceeded our expectations and extremely strong cash flow,” said Lynn Moore, Tyler’s president and chief executive officer. “Total revenues were approximately $35 million below our pre-COVID plan. As expected, recurring revenue growth remained strong, and subscription revenues grew 16.6%. However, some procurement processes encountered delays as clients focused on addressing COVID-19, which resulted in several decisions being pushed out of the quarter, affecting license revenue. In addition, professional services revenues declined as a result of delays in projects and the near-elimination of billable travel revenue. The cancellation of our Connect user conference also impacted revenues by more than $6 million.

"Our operating expenses in the quarter were also well below plan, with significant savings in commissions, travel, marketing, health claims and other employee-related costs. As a result, our non-GAAP operating margin expanded 290 basis points to 27.5%. Cash flow was very robust in the quarter, and we ended the quarter with $473 million in cash and investments. Cash flows from operations grew 62.5%, and free cash flow rose 226%. With our strong financial position, we continued to invest in strategic initiatives at a high level, resulting in a 9.2% increase in research and development expense for the quarter.

"As expected, bookings declined in the face of a difficult comparison to last year's second quarter, when we signed two very large SaaS deals, including an $85 million contract that was the largest in the company's history," added Moore. "Although we have not experienced meaningful cancellations, we continue to see longer sales cycles as a result of COVID-19. Nonetheless, our backlog at quarter-end rose 7.4% over last year to reach a new all-time high.

"I couldn't be prouder of how our team of 5,500 professionals are supporting each other, delivering exceptional client service and displaying the spirit of innovation that has long been a hallmark of Tyler's success. We're delivering solutions that help our clients cope with current challenges, from providing critical information regarding the pandemic to government leaders and citizens to enabling courts to conduct virtual hearings. While we remain confident in our long-term outlook, it is clear that the COVID-19 pandemic will continue to have a significant effect on our business in the second half of 2020, and that is reflected in our reinstituted annual guidance for 2020," concluded Moore.

Guidance for 2020

As of June 30, 2020, Tyler Technologies is providing the following guidance for the full year 2020:

• GAAP total revenues are expected to be in the range of $1.124 billion to $1.144 billion. Non-GAAP total revenues are expected to be in the range of $1.125 billion and $1.145 billion.
• GAAP diluted earnings per share are expected to be in the range of $4.71 to $4.91 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 $5.30 to $5.50.
• Pre-tax non-cash, share-based compensation expense is expected to be approximately $79 million.
• Research and development expense is expected to be in the range of $90 million to $92 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 negative 23% after discrete tax items and includes approximately $82 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 $34 million to $35 million, including approximately $10 million related to real estate and approximately $6 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $81 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 acquired leases of approximately $1 million. Non-GAAP diluted earnings per share excludes the full year impact of non-cash share-based compensation expense and employer portion of payroll tax related to employee stock transactions of approximately $79 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 $82 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, July 30, at 10:00 a.m. Eastern Time 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/10145197. 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 7, 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 10145197.

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. Tyler was named to Forbes' "Best Midsize Employers" list in 2019 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, 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, 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 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) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) 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; (7) general economic, political and market conditions; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) 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; (10) 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 (11) 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.

(Comparative results follow)

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,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

$

17,025

 

 

$

20,675

 

 

$

35,762

 

 

$

42,468

 

Subscriptions

 

85,638

 

 

73,475

 

 

167,361

 

 

140,750

 

Software services

 

43,654

 

 

57,401

 

 

95,787

 

 

105,844

 

Maintenance

 

116,760

 

 

106,689

 

 

231,125

 

 

206,841

 

Appraisal services

 

4,696

 

 

6,233

 

 

10,459

 

 

11,447

 

Hardware and other

 

3,318

 

 

10,651

 

 

7,138

 

 

14,840

 

Total revenues

 

271,091

 

 

275,124

 

 

547,632

 

 

522,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

1,130

 

 

891

 

 

1,870

 

 

1,709

 

Acquired software

 

8,006

 

 

7,988

 

 

16,033

 

 

14,670

 

Subscriptions, software services and maintenance

 

124,287

 

 

125,759

 

 

256,066

 

 

242,919

 

Appraisal services

 

3,976

 

 

3,758

 

 

8,361

 

 

7,210

 

Hardware and other

 

2,489

 

 

8,868

 

 

4,968

 

 

11,774

 

Total cost of revenues

 

139,888

 

 

147,264

 

 

287,298

 

 

278,282

 

 

 

 

 

 

 

 

 

 

Gross profit

 

131,203

 

 

127,860

 

 

260,334

 

 

243,908

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

62,521

 

 

65,827

 

 

130,006

 

 

123,593

 

Research and development expense

 

21,949

 

 

20,101

 

 

44,310

 

 

39,042

 

Amortization of customer and trade name intangibles

 

5,392

 

 

5,266

 

 

10,784

 

 

10,116

 

Operating income

 

41,341

 

 

36,666

 

 

75,234

 

 

71,157

 

Other income (expense), net

 

470

 

 

(247)

 

 

1,460

 

 

339

 

Income before income taxes

 

41,811

 

 

36,419

 

 

76,694

 

 

71,496

 

Income tax (benefit) provision

 

(12,081)

 

 

4,420

 

 

(24,748)

 

 

12,149

 

Net income

 

$

53,892

 

 

$

31,999

 

 

$

101,442

 

 

$

59,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

Basic

 

$

1.35

 

 

$

0.83

 

 

$

2.54

 

 

$

1.54

 

Diluted

 

$

1.30

 

 

$

0.80

 

 

$

2.44

 

 

$

1.49

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

39,963

 

 

38,402

 

 

39,984

 

 

38,462

 

Diluted

 

41,416

 

 

39,813

 

 

41,532

 

 

39,806

 

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,

 

 

 

2020

 

2019

 

2020

 

2019

Reconciliation of non-GAAP total revenues

 

 

 

 

 

 

 

 

 

GAAP total revenues

 

 

$

271,091

 

 

$

275,124

 

 

$

547,632

 

 

$

522,190

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

160

 

 

2,757

 

 

320

 

 

4,354

 

Add: Amortization of acquired leases

 

 

78

 

 

100

 

 

157

 

 

200

 

Non-GAAP total revenues

 

 

$

271,329

 

 

$

277,981

 

 

$

548,109

 

 

$

526,744

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP gross profit and margin

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

 

$

131,203

 

 

$

127,860

 

 

$

260,334

 

 

$

243,908

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

160

 

 

2,757

 

 

320

 

 

4,354

 

Add: Amortization of acquired leases

 

 

78

 

 

100

 

 

157

 

 

200

 

Add: Share-based compensation expense included in cost of revenues

 

4,369

 

 

3,756

 

 

8,621

 

 

7,554

 

Add: Amortization of acquired software

 

 

8,006

 

 

7,988

 

 

16,033

 

 

14,670

 

Non-GAAP gross profit

 

 

$

143,816

 

 

$

142,461

 

 

$

285,465

 

 

$

270,686

 

GAAP gross margin

 

 

48.4

%

 

46.5

%

 

47.5

%

 

46.7

%

Non-GAAP gross margin

 

 

53.0

%

 

51.2

%

 

52.1

%

 

51.4

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP operating income and margin

 

 

 

 

 

 

 

 

 

GAAP operating income

 

 

$

41,341

 

 

$

36,666

 

 

$

75,234

 

 

$

71,157

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

160

 

 

2,757

 

 

320

 

 

4,354

 

Add: Amortization of acquired leases

 

 

78

 

 

100

 

 

157

 

 

200

 

Add: Share-based compensation expense

 

 

18,386

 

 

15,066

 

 

35,688

 

 

29,482

 

Add: Employer portion of payroll tax related to employee stock transactions

 

1,259

 

 

308

 

 

2,457

 

 

431

 

Add: Acquisition related costs

 

 

—

 

 

245

 

 

—

 

 

940

 

Add: COVID-19 incremental costs

 

 

—

 

 

—

 

 

727

 

 

—

 

Add: Amortization of acquired software

 

 

8,006

 

 

7,988

 

 

16,033

 

 

14,670

 

Add: Amortization of customer and trade name intangibles

 

 

5,392

 

 

5,266

 

 

10,784

 

 

10,116

 

Non-GAAP adjustments subtotal

 

 

33,281

 

 

31,730

 

 

66,166

 

 

60,193

 

Non-GAAP operating income

 

 

$

74,622

 

 

$

68,396

 

 

$

141,400

 

 

$

131,350

 

GAAP operating margin

 

 

15.2

%

 

13.3

%

 

13.7

%

 

13.6

%

Non-GAAP operating margin

 

 

27.5

%

 

24.6

%

 

25.8

%

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2020

 

2019

 

2020

 

2019

Reconciliation of non-GAAP net income and earnings per share

 

 

 

 

 

 

 

 

 

GAAP net income

 

 

$

53,892

 

 

$

31,999

 

 

$

101,442

 

 

$

59,347

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Add: Total non-GAAP adjustments to operating income

 

 

33,281

 

 

31,730

 

 

66,166

 

 

60,193

 

Less: Tax impact related to non-GAAP adjustments

 

 

(30,103)

 

 

(11,935)

 

 

(59,034)

 

 

(19,456)

 

Non-GAAP net income

 

 

$

57,070

 

 

$

51,794

 

 

$

108,574

 

 

$

100,084

 

GAAP earnings per diluted share

 

 

$

1.30

 

 

$

0.80

 

 

$

2.44

 

 

$

1.49

 

Non-GAAP earnings per diluted share

 

 

$

1.38

 

 

$

1.30

 

 

$

2.61

 

 

$

2.51

 

 

 

 

 

 

 

 

 

 

 

Detail of share-based compensation expense

 

 

 

 

 

 

 

 

 

Cost of subscriptions, software services and maintenance

 

 

$

4,369

 

 

$

3,756

 

 

$

8,621

 

 

$

7,554

 

Selling, general and administrative expenses

 

 

14,017

 

 

11,310

 

 

27,067

 

 

21,928

 

Total share-based compensation expense

 

 

$

18,386

 

 

$

15,066

 

 

$

35,688

 

 

$

29,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and adjusted EBITDA

 

 

 

 

 

 

 

 

 

GAAP net income

 

 

$

53,892

 

 

$

31,999

 

 

$

101,442

 

 

$

59,347

 

Amortization of customer and trade name intangibles

 

 

5,392

 

 

5,266

 

 

10,784

 

 

10,116

 

Depreciation and amortization included in

 

 

 

 

 

 

 

 

 

cost of revenues, SG&A and other expenses

 

 

14,800

 

 

14,136

 

 

29,349

 

 

26,562

 

Interest expense included in other income, net

 

 

151

 

 

709

 

 

303

 

 

1,173

 

Income tax (benefit) provision

 

 

(12,081)

 

 

4,420

 

 

(24,748)

 

 

12,149

 

EBITDA

 

 

$

62,154

 

 

$

56,530

 

 

$

117,130

 

 

$

109,347

 

Write-downs of acquisition-related deferred revenue

 

 

160

 

 

2,757

 

 

320

 

 

4,354

 

Share-based compensation expense

 

 

18,386

 

 

15,066

 

 

35,688

 

 

29,482

 

Acquisition related costs

 

 

—

 

 

245

 

 

—

 

 

940

 

COVID-19 incremental costs

 

 

—

 

 

—

 

 

727

 

 

—

 

Adjusted EBITDA

 

 

$

80,700

 

 

$

74,598

 

 

$

153,865

 

 

$

144,123

 

 

 

 

 

 

 

 

 

 

 

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

 (Unaudited)

 

 

 

June 30, 2020

 

December 31, 2019

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

351,336

 

 

$

232,682

 

Accounts receivable, net

 

405,731

 

 

374,089

 

Current investments and other assets

 

88,940

 

 

66,444

 

Income tax receivable

 

27,935

 

 

6,482

 

Total current assets

 

873,942

 

 

679,697

 

 

 

 

 

 

Accounts receivable, long-term portion

 

21,121

 

 

22,432

 

Operating lease right-of-use assets

 

16,659

 

 

18,992

 

Property and equipment, net

 

174,967

 

 

171,861

 

 

 

 

 

 

Other assets:

 

 

 

 

Goodwill

 

840,028

 

 

840,117

 

Other intangibles, net

 

354,115

 

 

378,914

 

Non-current investments and other assets

 

101,764

 

 

79,601

 

 

 

 

 

 

Total assets

 

$

2,382,596

 

 

$

2,191,614

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

65,008

 

 

$

90,211

 

Operating lease liabilities

 

6,217

 

 

6,387

 

Deferred revenue

 

423,037

 

 

412,495

 

Total current liabilities

 

494,262

 

 

509,093

 

 

 

 

 

 

Revolving line of credit

 

—

 

 

—

 

Deferred revenue, long-term

 

167

 

 

199

 

Deferred income taxes

 

44,713

 

 

48,442

 

Operating lease liabilities, long-term

 

14,126

 

 

16,822

 

Shareholders' equity

 

1,829,328

 

 

1,617,058

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

2,382,596

 

 

$

2,191,614

 

 

 

 

 

 

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

53,892

 

 

$

31,999

 

 

$

101,442

 

 

$

59,347

 

Adjustments to reconcile net income to cash

 

 

 

 

 

 

 

 

provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20,285

 

 

19,436

 

 

40,270

 

 

36,744

 

Share-based compensation expense

 

18,386

 

 

15,066

 

 

35,688

 

 

29,482

 

Operating lease right-of-use assets expense

 

1,386

 

 

1,386

 

 

2,843

 

 

2,551

 

Deferred income tax benefit

 

(1,061)

 

 

(2,655)

 

 

(3,729)

 

 

(7,440)

 

Changes in operating assets and liabilities,

 

 

 

 

 

 

 

 

exclusive of effects of acquired companies

 

(53,074)

 

 

(40,735)

 

 

(79,994)

 

 

(72,230)

 

Net cash provided by operating activities

 

39,814

 

 

24,497

 

 

96,520

 

 

48,454

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment

 

(6,919)

 

 

(11,732)

 

 

(16,268)

 

 

(24,052)

 

Purchase of marketable security investments

 

(52,476)

 

 

(6,527)

 

 

(79,747)

 

 

(10,117)

 

Proceeds from marketable security investments

 

21,783

 

 

19,412

 

 

40,020

 

 

39,688

 

Proceeds from the sale of investment of preferred shares

 

—

 

 

—

 

 

15,000

 

 

—

 

Purchase of investment of common shares

 

—

 

 

—

 

 

(10,000)

 

 

—

 

Investment in software

 

(1,380)

 

 

(1,542)

 

 

(2,695)

 

 

(2,232)

 

Cost of acquisitions, net of cash acquired

 

—

 

 

(90)

 

 

(261)

 

 

(199,220)

 

(Increase) decrease in other

 

(280)

 

 

(132)

 

 

(328)

 

 

432

 

Net cash used by investing activities

 

(39,272)

 

 

(611)

 

 

(54,279)

 

 

(195,501)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

(Decrease) increase in net borrowings on revolving line of credit

 

—

 

 

(70,000)

 

 

—

 

 

15,000

 

Purchase of treasury shares

 

—

 

 

—

 

 

(15,482)

 

 

(17,786)

 

Proceeds from exercise of stock options

 

46,101

 

 

15,604

 

 

92,337

 

 

22,132

 

Payment of contingent consideration

 

—

 

 

—

 

 

(5,619)

 

 

—

 

Contributions from employee stock purchase plan

 

2,708

 

 

2,260

 

 

5,177

 

 

4,609

 

Net cash provided (used) by financing activities

 

48,809

 

 

(52,136)

 

 

76,413

 

 

23,955

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

49,351

 

 

(28,250)

 

 

118,654

 

 

(123,092)

 

Cash and cash equivalents at beginning of period

 

301,985

 

 

39,437

 

 

232,682

 

 

134,279

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

351,336

 

 

$

11,187

 

 

$

351,336

 

 

$

11,187

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200729005939/en/

Brian K. Miller Executive Vice President & CFO Tyler Technologies, Inc. 972-713-3720 brian.miller@tylertech.com