Tyler Technologies (TYL) Reports In-Line Q4 EPS, Revenues Beat; Offers FY20 EPS Guidance Below Consensus, Provides FY20 Revenue Outlook

Tyler Technologies (NYSE: TYL) reported Q4 EPS of $1.43, in-line with the analyst estimate of $1.43. Revenue for the quarter came in at $288.8 million versus the consensus estimate of $290.98 million.

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.

“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:

Tyler Technologies sees FY2020 EPS of $5.60-$5.72, versus the consensus of $5.90. Tyler Technologies sees FY2020 revenue of $1.205-1.225 billion, versus the consensus of $1.21 billion.

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.

For earnings history and earnings-related data on Tyler Technologies (TYL) click here.

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