Tyler Technologies (NYSE: TYL) reported Q2 EPS of $1.18, $0.05 better than the analyst estimate of $1.13. Revenue for the quarter came in at $236.1 million versus the consensus estimate of $234.01 million.

Second Quarter 2018 Financial Highlights:

• Total revenues were $236.1 million, up 13.1 percent from $208.8 million for the second quarter of 2017. Organic growth was 11.2 percent.
• Recurring revenues from maintenance and subscriptions were $149.1 million, an increase of 15.3 percent compared to the second quarter of 2017, and comprised 63.2 percent of second quarter 2018 revenue.
• Operating income was $37.1 million, down 0.4 percent from $37.3 million for the second quarter of 2017.
• Net income was $39.2 million, or $0.97 per diluted share, up 23.3 percent compared to $31.8 million, or $0.81 per diluted share, for the second quarter of 2017.
• Cash flows from operations were $22.6 million compared to $1.4 million for the second quarter of 2017.
• Non-GAAP total revenues were $237.7 million, up 13.7 percent from $209.1 million for the second quarter of 2017. Non-GAAP organic growth was 11.8 percent.
• Non-GAAP operating income was $62.1 million, up 12.3 percent from $55.3 million for the second quarter of 2017.
• Non-GAAP net income was $47.6 million, or $1.18 per diluted share, up 33.7 percent compared to $35.6 million, or $0.91 per diluted share, for the second quarter of 2017.
• Adjusted EBITDA was $67.6 million, up 13.4 percent compared to $59.6 million for the second quarter of 2017.
• Total backlog was $1.2 billion, up 10.9 percent from $1.1 billion at June 30, 2017.
• Subscription bookings in the second quarter added $6.6 million in new annual recurring revenue.
• Tyler completed the acquisitions of Socrata, Inc. and Sage Data Security, LLC on April 30, 2018, and their results are included in Tyler\'s consolidated results from the date of acquisition.
• Effective January 1, 2018, Tyler adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the full retrospective method of transition. Prior year amounts have been restated from previously reported amounts to reflect the impact of the full retrospective adoption of Topic 606.

“We delivered very strong results for the second quarter with respect to revenues, earnings and cash flows,” said Lynn Moore Jr., Tyler’s president and chief executive officer. “Total revenues grew more than 13 percent, with greater than 11 percent organic growth - our 27th consecutive quarter with double-digit revenue growth. Revenues from both subscriptions and software licenses were robust, growing 31 percent and 16 percent, respectively. Our non-GAAP operating margin declined 40 basis points due to the expected dilution from acquisitions, as well as our increased investment in research and development.

“We faced a difficult comparison with last year\'s second quarter bookings, which included the $35 million courts contract with Cook County, Illinois. Bookings for the current quarter declined 8 percent compared to the record high in last year\'s second quarter, but grew sequentially 34 percent over the first quarter of 2018, led by strong signings for our public safety and ERP products. Our backlog at the end of the quarter was $1.2 billion, up 11 percent over last year.

“We are pleased with the results of both Socrata and Sage during their first 60 days as a part of Tyler. The integrations of their operations and products into Tyler are well underway, and we remain excited about the opportunities for the future. With our strong second quarter results and positive outlook for the second half of the year, we have also increased our full-year earnings guidance,” said Moore.

Guidance for 2018

As of July 26, 2018, Tyler Technologies is providing the following guidance for the full year 2018:

• GAAP total revenues are expected to be in the range of $934 million to $948 million.
• Non-GAAP total revenues are expected to be in the range of $940 million to $954 million.
• GAAP diluted earnings per share are expected to be in the range of $3.50 to $3.58 and may vary significantly due to the impact of stock option exercises on the GAAP effective tax rate.
• Non-GAAP diluted earnings per share are expected to be in the range of $4.76 to $4.84.
• Pretax non-cash, share-based compensation expense is expected to be approximately $54 million.
• Research and development expense is expected to be in the range of $62 million to $64 million.
• Fully diluted shares for the year are expected to be in the range of 40.0 million to 40.5 million shares.
• GAAP earnings per share assumes an estimated annual effective tax rate of approximately 10 percent after discrete tax items and includes approximately $26 million of assumed discrete tax benefits related to share-based compensation.
• The non-GAAP annual effective tax rate is expected to be 24 percent.
• Capital expenditures are expected to be in the range of $23 million to $26 million, including approximately $2 million related to real estate. Total depreciation and amortization expense is expected to be approximately $62 million, including approximately $40 million from amortization of acquisition intangibles.

GUIDANCE:

Tyler Technologies sees FY2018 EPS of $4.76-$4.84, versus the consensus of $4.79. Tyler Technologies sees FY2018 revenue of $940-954 million, versus the consensus of $946.77 million.

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