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Tyler (TYL) Q4 Earnings & Revenues Lag Estimates, Up Y/Y

·4 min read

Tyler Technologies TYL reported fourth-quarter 2020 non-GAAP earnings of $1.39 per share, which missed the Zacks Consensus Estimate by 1.42%. Moreover, the bottom line decreased 2.8% from the year-ago quarter’s reported figure.

Revenues on a non-GAAP basis increased 1.4% year on year to $283.41 million, missing the consensus mark by 2.56%. Tyler also recorded a 2.1% year-over-year decline in organic revenues.

However, recurring revenues increased 9.5% year over year to $212.4 million and accounted for 75% of total revenues.

Notably, Tyler also simultaneously announced its plan to acquire payments company, NIC Inc., for approximately $2.3 billion. Tyler expects to tap this area, taking advantage of the coronavirus-led shift to online services and electronic payments by governments.

Tyler plans to use $700 million of cash and new debt to fund the transaction, which is likely to close in the second quarter of 2021. The deal is expected to be accretive to the company’s non-GAAP earnings in 2021.

Tyler Technologies, Inc. Price, Consensus and EPS Surprise

Tyler Technologies, Inc. Price, Consensus and EPS Surprise
Tyler Technologies, Inc. Price, Consensus and EPS Surprise

Tyler Technologies, Inc. price-consensus-eps-surprise-chart | Tyler Technologies, Inc. Quote

Q4 Results in Detail

Segment-wise, Maintenance revenues (41.8% of total revenues) came in at $118.4 million, up 4.2% year over year.

Subscription revenues (33.2% of total revenues) climbed 17% year over year to $94 million.

Software licenses and royalties (6.2% of total revenues) of $17.5 million slid 46% on a year-over-year basis.

Software Services revenues (15% of total revenues) of $42.7 million dropped 18.3% from the year-ago quarter.

Appraisal services revenues (1.9% of total revenues) declined 12.5% to $5.3 million.

Hardware and other revenues (1.9% of total revenues) rose 28% to $5.5 million.

Backlog at the end of the quarter was $1.59 billion, up 9.4% year over year. Of this, software-related backlog (excluding appraisal services) increased 8.7% to $1.55 billion.

Bookings remained flat year on year at $333 million. Some deals were pushed out of the quarter due to the indecisiveness of clients stemming from the pandemic. Subscription bookings added $11 million in annual recurring revenues.

Operating Details

Tyler’s non-GAAP gross profit decreased to $151.7 million from the year-earlier quarter’s $152.7 million. However, non-GAAP gross margin expanded 40 basis points (bps) to 53.5%.

Adjusted EBITDA was $83.2 million, up 1.2% year over year.

The company’s non-GAAP operating income increased 3.4% year over year to $76.4 million. Its operating margin advanced 120 bps to 26.9%.

Balance Sheet and Cash Flow

As of Dec 31, 2020, cash and cash equivalents were $603.6 million compared with $518.7 million as of Sep 30, 2020.

The company generated an operating cash flow of $88.8 million during the fourth quarter and $355.1 million in 2020.

Free cash flow was $83.7 million during the fourth quarter.

Full-Year Highlights

Organic non-GAAP revenues were up 0.9% year on year. Non-GAAP total revenues of $1.117 billion increased 2.4% year over year. On an organic basis, non-GAAP revenues grew 0.9%.

Non-GAAP earnings of $5.52 per share were up from $5.30 in 2019.

Full-Year Outlook

Tyler provided its full-year revenue guidance of $1.119-$1.22 billion. Moreover, non-GAAP earnings outlook stands at $5.65-$5.77 per share.

Zacks Rank & Stocks to Consider

Tyler currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Qorvo, Inc. QRVO, NXP Semiconductors NXPI and Shopify SHOP, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Qorvo, NXP Semiconductors and Shopify is currently pegged at 13.99%, 10% and 32.5%, respectively.

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