Tyler Technologies (TYL) Q3 Earnings Beat, Revenues Miss
Tyler Technologies TYL reported third-quarter 2023 non-GAAP earnings of $2.14 per share, which beat the Zacks Consensus Estimate of $1.97. The bottom line was higher than the year-ago quarter’s earnings of $2.06 per share.
Non-GAAP revenues increased 4.54% year over year to $494.7 million. However, the top line missed the Zacks Consensus Estimate of $495.5 million.
The robust year-over-year top-line growth was primarily driven by a rise in subscription revenues. During the third quarter, software subscription arrangements comprised approximately 80% of the total new software contract value as the company continued to transform into a software-as-a-service model from its on-premise license-based model.
Tyler Technologies, Inc. Price, Consensus and EPS Surprise
Tyler Technologies, Inc. price-consensus-eps-surprise-chart | Tyler Technologies, Inc. Quote
Quarterly Details
Tyler’s recurring revenues from maintenance and subscriptions increased 11% year over year to $412.7 million and accounted for 83.4% of the total quarterly revenues.
TYL reported annualized recurring revenues on a non-GAAP basis of $1.65 billion, up 11% year over year.
Segment-wise, Maintenance revenues (accounting for 23.7% of total revenues) were $117.5 million, slightly up from $117.3 million in the year-ago quarter. Our model estimates for Maintenance revenues were pegged at $115.4 million.
Subscription revenues (59.6% of total revenues) grew 16.1% year over year to $295.2 million, while our model estimates for the same was $291.9 million. On an organic basis, Subscription revenues soared 14.7% year over year.
Software licenses and royalties (2.1% of total revenues) of $10.5 million decreased 47.9% on a year-over-year basis. Our model predicted Software licenses and royalties sales to decline 40.1% to $12.1 million.
Professional Services revenues (12.3% of total revenues) amounted to $61.1 million, down 17.5% from the year-ago quarter. Our model estimates for the same were pegged at $65.2 million.
Hardware and other revenues (2.1% of total revenues) climbed 9.7% from the year-ago quarter to $10.3 million. Our model estimates for Hardware and other revenues were pegged at $9.7 million.
The backlog at the quarter-end was $1.95 billion, up 2.5% year over year.
Bookings increased 8.6% year over year at $542 million. Moreover, in the trailing 12 months, bookings increased 2.8% year over year to $1.99 billion.
Operating Details
Tyler’s non-GAAP gross profit increased 6.9% year over year to $241 million. Non-GAAP gross margin expanded 110 basis points (bps) to 48.7%.
Adjusted EBITDA increased 4.4% year over year to $132.5 million.
Non-GAAP operating income for the quarter totaled $122.5 million and went up 3.9% year over year. However, the non-GAAP operating margin contracted 10 bps to 24.8%.
Balance Sheet & Other Details
As of Sep 30, 2023, Tyler’s cash and cash equivalents were $131.4 million compared with $118.7 million as of Jun 30, 2023.
The company generated an operating cash flow of $177.5 million in the third quarter and $233 million in the first nine months of 2023. During the third quarter, it generated a free cash flow of $162.7 million. With its robust free cash flow, TYL is focusing on reducing debt. In the third quarter of 2023, Tyler reduced its term debt by $135 million.
Guidance
For 2023, Tyler expects GAAP and non-GAAP revenues in the range of $1.942-$1.962 billion. TYL forecasts adjusted earnings guidance in the range of $7.66-$7.80 per share.
Zacks Rank and Stocks to Consider
Currently, TYL carries a Zacks Rank #3 (Hold). Shares of the company have returned 15% year to date.
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, NetEase NTES and Dell Technologies DELL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVDA’s third-quarter fiscal 2024 earnings has been revised by a penny northward to $2.10 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 7 cents to $10.74 in the past 30 days.
NVIDIA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 189.6% year to date.
The Zacks Consensus Estimate for NetEase's third-quarter 2024 earnings has been revised downward by a penny to $1.56 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 35 cents to $6.54 per share in the past 90 days.
NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 24.54%. Shares of NTES have gained 49.2% year to date.
The Zacks Consensus Estimate for DELL's third-quarter 2024 earnings has been revised downward by 2 cents to $1.10 per share in the past 7 days. For fiscal 2024, earnings estimates have increased by 3 cents to $6.33 per share in the past 30 days.
Dell’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 39.52%. Shares of DELL have climbed 70.7% year to date.
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