Tyler (TYL) Rides on Digital Transformation, Buyouts & Deal Wins
Tyler Technologies TYL is benefiting from a robust demand environment with the public sector increasingly adopting new technologies for smooth functioning amid the ongoing pandemic-led work from home wave and social distancing norms adopted worldwide.
The pandemic disrupted almost every area of the federal government through mandated shutdowns, which led to the growing demand for contactless, digital interaction with the government among citizens and businesses.
With the markets rebounding to pre-COVID levels as evident from an upsurge in market trends, the high level areas in the state governments are focusing on transforming their operations digitally. This is quite evident from the rapid adoption of Tyler’s information-management solutions of late.
As the public sector is transitioning from on-premise and outdated systems to scalable cloud-based systems, Tyler has been gradually advancing its core software applications and expanding complementary product and service portfolios to cater to the evolving needs of customers and keep pace with technological advancements.
In the last reported quarter, the company added 170 new subscription-based arrangements and converted 62 existing on-premises clients, accounting for approximately $73 million in total contract value.
Key Acquisitions
In recent times, Tyler’s growth trajectory has been driven by acquisitions. In September 2021, it announced the buyout of Arx with an aim to integrate Arx under its Public Safety Division. In the same month, it completed the acquisition of VendEngine, a company providing cloud-based software for correctional facilities, in a cash deal worth $84 million. VendEngine is a provider of financial management applications and communication platforms used by inmates of jails and prisons.
Prior to that, in April 2021, the company completed the buyout of NIC to bank on the pandemic-induced shift to online services and electronic payments by governments. Following the acquisition, the company reported revenues of $405.4 million in second-quarter 2021, reflecting a surge of 49.4% year over year. Management believes that such revenue hikes were primarily caused by post-acquisition contributions of NIC.
We believe that Tyler’s sustained focus on expanding its business through such strategic acquisitions and investments will fuel growth in the long run.
Additionally, Tyler’s technology collaborations with the likes of big tech companies including Amazon’s AMZN Amazon Web Services, Microsoft MSFT and Accenture ACN helps it in providing solutions with the highest level of data security to clients.
Consecutive Deal Wins
Tyler recently signed an agreement with the United States Department of Agriculture's Forest Service Law Enforcement and Investigations to modernize the Criminal Justice Information System with the company’s low-code application development platform – Entellitrak. Also, it inked an agreement with the Texas Office of Court Administration to provide Odyssey Case Manager and Court Insights solutions in the small county courts of Texas.
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