Quarterly non-GAAP net income rises 46 percent
as non-GAAP revenues grow 37 percent
Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the first quarter ended March 31, 2016.
First Quarter 2016 Financial Highlights:
- Total revenue was $179.3 million, up
32.8 percent from $135.0 million for the first quarter of 2015.
Organic growth was 13.8 percent.
- Recurring revenue from maintenance and
subscriptions was $110.1 million, an increase of 33.3 percent
compared to the first quarter of 2015, and comprised 61.4 percent
of first quarter 2016 revenue.
- Operating income was $28.0 million, an
increase of 3.2 percent from $27.2 million for the first quarter of
2015.
- Net income was $17.1 million, or $0.44
per diluted share, down 1.1 percent compared to $17.3 million, or
$0.48 per diluted share, for the first quarter of 2015.
- Cash flows from operations were $40.3
million, compared to negative $2.1 million for the first quarter of
2015.
- Tyler repurchased 757,513 shares of its
common stock during the first quarter for a total of approximately
$94.5 million.
- Non-GAAP total revenue was $185.0
million, up 37.1 percent from $135.0 million for the first quarter
of 2015.
- Non-GAAP operating income was $49.1
million, up 48.1 percent from $33.1 million for the first quarter
of 2015.
- Adjusted EBITDA was $52.3 million, up
48.1 percent compared to $35.3 million for the first quarter of
2015.
- Non-GAAP net income was $31.3 million,
or $0.81 per diluted share, up 46.5 percent compared to $21.3
million, or $0.59 per diluted share, for the first quarter of
2015.
- Total backlog was $808.7 million, up
17.3 percent from $689.6 million at March 31, 2015.
Software-related backlog (excluding appraisal services) was $763.3
million, an increase of 20.5 percent compared to $633.4 million at
March 31, 2015.
“Our first quarter results provided a great start to 2016, with
strong revenue, margin and cash-flow growth,” said John S. Marr
Jr., Tyler’s president and chief executive officer. “Subscription
revenues grew 34.8 percent as our SaaS business continues to gain
momentum. Our non-GAAP gross margin expanded by 290 basis points
and our non-GAAP operating margin rose 200 basis points. We are
pleased with the contribution to results from New World Systems
Corporation, which we acquired in November 2015, and our current
outlook for New World’s revenue and earnings contributions for the
year remain unchanged. We are also pleased with our progress
integrating New World’s operations and products.
“Bookings in the first quarter were solid, growing 21 percent
over last year’s first quarter, with particularly robust growth in
subscription bookings. The broader market environment continues to
be good and our new-business pipeline is very active.”
Guidance for 2016
As of April 27, 2016, Tyler Technologies is providing the
following guidance for the full year 2016:
- GAAP total revenues are expected to be
in the range of $750 million to $765 million.
- Non-GAAP total revenues are expected to
be in the range of $765 million to $780 million.
- GAAP diluted earnings per share are
expected to be approximately $1.92 to $2.02.
- Non-GAAP diluted earnings per share are
expected to be approximately $3.35 to $3.45.
- Pretax non-cash, share-based
compensation expense is expected to be approximately $30 million to
$31 million.
- Fully diluted shares for the year are
expected to be between 38.5 million and 39.5 million shares.
- The GAAP effective tax rate is expected
to be in the range of 38.0 percent to 39.5 percent. The non-GAAP
effective tax rate is expected to be in the range of 35.5 percent
to 37.0 percent. With the issuance of ASU No. 2016-09,
“Compensation – Stock Compensation (Topic 718)” on March 31, 2016,
which will require us to recognize the income tax effects of stock
option exercises in the income statement, both our GAAP and
non-GAAP effective tax rates could differ substantially from this
guidance. We are currently assessing the impact of adopting the new
standard, and given the scope of the new standard, we are currently
unable to provide a reasonable estimate regarding the financial
impact. We expect to adopt this standard in mid- to late-2016.
- Capital expenditures are expected to be
between $37 million and $39 million, including approximately $18
million related to real estate. Total depreciation and amortization
expense is expected to be between $50 million and $51 million,
including approximately $36 million of amortization of acquisition
intangibles.
Conference Call
Tyler Technologies will hold a conference call on Thursday,
April 28, at 10:00 a.m. EDT to discuss the company’s results. The
company is offering participants the opportunity to register in
advance for the conference through the following link:
http://dpregister.com/10084351. Registered participants will
receive an email with a calendar reminder and a dial-in number and
PIN that will allow them immediate access to the call on April 28,
2016.
Participants who do not wish to pre-register for the call may
dial in using 844-861-5506 (U.S. callers) or 412-317-6587
(international callers), and ask for the “Tyler Technologies” call.
A replay will be available two hours after completion of the call
through May 4, 2016. To access the replay, please dial 877-344-7529
(U.S. callers), 412-317-0088 (international callers) and
855-669-9658 (Canada callers) and reference passcode 10084351.
The live webcast and archived replay can also be accessed at
www.tylertech.com/investors.
About Tyler Technologies, Inc.
Tyler Technologies (NYSE: TYL) is a leading provider of
end-to-end information management solutions and services for local
governments. Tyler partners with clients to empower the public
sector — cities, counties, schools and other government entities —
to become more efficient, more accessible and more responsive to
the needs of citizens. Tyler’s client base includes more than
14,000 local government offices in all 50 states, Canada, the
Caribbean, the United Kingdom and other international locations.
Forbes has named Tyler one of “America’s Best Small Companies”
eight times and the company has been included six times on the
Barron’s 400 Index, a measure of the most promising companies in
America. More information about Tyler Technologies, headquartered
in Plano, Texas, can be found at www.tylertech.com.
Non-GAAP Financial Measures
Tyler Technologies has provided in this press release financial
measures that have not been prepared in accordance with generally
accepted accounting principles (GAAP) and are therefore considered
non-GAAP financial measures. This information includes non-GAAP
revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income,
non-GAAP earnings per diluted share, EBITDA, and adjusted EBITDA.
We use these non-GAAP financial measures internally in analyzing
our financial results and believe they are useful to investors, as
a supplement to GAAP measures, in evaluating Tyler’s ongoing
operational performance because they provide additional insight in
comparing results from period to period. Tyler believes the use of
these non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing our financial results with other companies in our
industry, many of which present similar non-GAAP financial
measures. Non-GAAP financial measures discussed above exclude
write-downs of acquisition-related deferred revenue and acquired
leases, share-based compensation expense, employer portion of
payroll taxes on employee stock transactions, acquisition-related
costs, and expenses associated with amortization of intangibles
arising from business combinations.
Non-GAAP financial measures should be considered in addition to,
and not as a substitute for, or superior to, financial information
prepared in accordance with GAAP. The non-GAAP measures used by
Tyler Technologies may be different from non-GAAP measures used by
other companies. Investors are encouraged to review the
reconciliation of these non-GAAP measures to their most directly
comparable GAAP financial measures, which has been provided in the
financial statement tables included below in this press
release.
Forward-looking Statements
This document contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 that are not historical
in nature and typically address future or anticipated events,
trends, expectations or beliefs with respect to our financial
condition, results of operations or business. Forward-looking
statements often contain words such as “believes,” “expects,”
“anticipates,” “foresees,” “forecasts,” “estimates,” “plans,”
“intends,” “continues,” “may,” “will,” “should,” “projects,”
“might,” “could” or other similar words or phrases. Similarly,
statements that describe our business strategy, outlook,
objectives, plans, intentions or goals also are forward-looking
statements. We believe there is a reasonable basis for our
forward-looking statements, but they are inherently subject to
risks and uncertainties and actual results could differ materially
from the expectations and beliefs reflected in the forward-looking
statements. We presently consider the following to be among the
important factors that could cause actual results to differ
materially from our expectations and beliefs: (1) changes in the
budgets or regulatory environments of our clients, primarily local
and state governments, that could negatively impact information
technology spending; (2) our ability to protect client information
from security breaches and provide uninterrupted operations of data
centers; (3) our ability to achieve growth or operational synergies
through the integration of acquired businesses, while avoiding
unanticipated costs and disruptions to existing operations; (4)
material portions of our business require the Internet
infrastructure to be adequately maintained; (5) our ability to
achieve our financial forecasts due to various factors, including
project delays by our clients, reductions in transaction size,
fewer transactions, delays in delivery of new products or releases
or a decline in our renewal rates for service agreements; (6)
general economic, political and market conditions; (7)
technological and market risks associated with the development of
new products or services or of new versions of existing or acquired
products or services; (8) competition in the industry in which we
conduct business and the impact of competition on pricing, client
retention and pressure for new products or services; (9) the
ability to attract and retain qualified personnel and dealing with
the loss or retirement of key members of management or other key
personnel; and (10) costs of compliance and any failure to comply
with government and stock exchange regulations. A detailed
discussion of these factors and other risks that affect our
business are described in our filings with the Securities and
Exchange Commission, including the detailed “Risk Factors”
contained in our most recent annual report on Form 10-K. We
expressly disclaim any obligation to publicly update or revise our
forward-looking statements.
TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (Amounts in thousands, except per share data)
(Unaudited) Three Months Ended March
31,
2016 2015 Revenues: Software licenses and royalties
$ 16,850 $ 14,300 Subscriptions
34,089 25,288
Software services
42,430 30,804 Maintenance
76,032
57,348 Appraisal services
6,558 6,089 Hardware and other
3,334 1,137 Total revenues
179,293 134,966 Cost of revenues: Software licenses
and royalties
638 553 Acquired software
5,459 456
Software services, maintenance and subscriptions
85,270
65,377 Appraisal services
3,962 4,135 Hardware and other
1,846 566 Total cost of revenues
97,175 71,087 Gross profit
82,118 63,879
Selling, general and administrative expenses
40,759
28,545 Research and development expense
9,956 7,004
Amortization of customer and trade name intangibles
3,362 1,152 Operating income
28,041
27,178 Other (expense) income, net
(467 )
181 Income before income taxes
27,574 27,359 Income
tax provision
10,495 10,086 Net income
$ 17,079 $ 17,273
Earnings per common share: Basic
$ 0.47 $ 0.51
Diluted
$ 0.44 $ 0.48 Weighted average
common shares outstanding: Basic
36,549 33,562 Diluted
38,557 35,895 TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Amounts in
thousands, except per share data) (Unaudited)
Three Months Ended March 31,
2016
2015 Reconciliation of non-GAAP total revenues GAAP
total revenues
$ 179,293 $ 134,966 Non-GAAP
adjustments: Add: Write-downs of acquisition-related deferred
revenue
5,584 - Add: Amortization of acquired leases
111 - Non-GAAP total revenues
$
184,988 $ 134,966 Reconciliation
of non-GAAP gross profit and margin GAAP gross profit
$
82,118 $ 63,879 Non-GAAP adjustments: Add: Write-downs of
acquisition-related deferred revenue
5,584 - Add:
Amortization of acquired leases
111 - Add: Share-based
compensation expense included in cost of revenues
1,317 701
Add: Amortization of acquired software
5,459
456 Non-GAAP gross profit
$ 94,589
$ 65,036 Non-GAAP gross margin
51.1 % 48.2 % Reconciliation of
non-GAAP operating income and margin GAAP operating income
$
28,041 $ 27,178 Non-GAAP adjustments: Add: Write-downs of
acquisition-related deferred revenue
5,584 - Add:
Amortization of acquired leases
111 - Add: Share-based
compensation expense
6,480 4,258 Add: Employer portion of
payroll tax related to employee stock transactions
18 76
Add: Amortization of acquired software
5,459 456 Add:
Amortization of customer and trade name intangibles
3,362 1,152 Non-GAAP adjustments
subtotal
$ 21,014 $ 5,942 Non-GAAP
operating income
$ 49,055 $ 33,120
Non-GAAP operating margin
26.5 %
24.5 % Reconciliation of non-GAAP net income and
earnings per share GAAP net income
$ 17,079 $ 17,273
Non-GAAP adjustments: Add: Total non-GAAP adjustments to operating
income
21,014 5,942 Less: Tax impact related to non-GAAP
adjustments
(6,819 ) (1,866 ) Non-GAAP
net income
$ 31,274 $ 21,349
Non-GAAP earnings per diluted share
$ 0.81 $
0.59 Detail of share-based compensation
expense Cost of software services, maintenance and subscriptions
$ 1,317 $ 701 Selling, general and administrative
expenses
5,163 3,557 Total
share-based compensation expense
$ 6,480 $
4,258 Reconciliation of EBITDA and adjusted
EBITDA GAAP net income
$ 17,079 $ 17,273 Amortization
of customer and trade name intangibles
3,362 1,152
Depreciation and other amortization
included in cost of revenues, SG&A and other expenses
8,814 2,561 Interest expense included in other expense, net
501 - Income tax provision
10,495
10,086 EBITDA
$ 40,251 $ 31,072
Write-downs of acquisition-related deferred revenue
5,584 -
Share-based compensation expense
6,480
4,258 Adjusted EBITDA
$ 52,315 $ 35,330
TYLER TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
March 31, December 31,
2016 2015
(Unaudited) ASSETS Current assets: Cash and
cash equivalents
$ 35,341 $ 33,087 Accounts
receivable, net
137,332 176,360 Current investments and
other assets
41,065 37,688 Income tax receivable
11,798 21,080 Total current assets
225,536
268,215 Accounts receivable, long-term portion
3,098
2,777 Property and equipment, net
114,291 101,112
Other assets: Goodwill
655,167 653,666 Other intangibles,
net
286,475 295,378 Non-current investments and other assets
33,442 35,422 Total assets
$
1,318,009 $ 1,356,570 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable
and accrued liabilities
$ 39,576 $ 55,945 Deferred
revenue
250,108
281,627 Total current liabilities
289,684
337,572 Revolving line of credit
140,000 66,000
Deferred revenue, long-term
4,561 3,115 Deferred income
taxes
91,775 91,026 Shareholders' equity
791,989 858,857 Total liabilities and
shareholders' equity
$ 1,318,009 $ 1,356,570
TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (Amounts in thousands) (Unaudited)
Three months ended March 31,
2016
2015 Cash flows from operating activities: Net
income
$ 17,079 $ 17,273 Adjustments to reconcile net
income to cash provided (used) by operations: Depreciation and
amortization
12,176 3,713 Share-based compensation expense
6,480 4,258 Excess tax benefit from exercise of share-based
arrangements
(1,051 ) (3,558 ) Changes in operating
assets and liabilities
5,586 (23,781 )
Net cash provided (used) by operating activities
40,270 (2,095 ) Cash flows from
investing activities: Purchase of marketable security investments
(6,410 ) - Proceeds from marketable security
investments
3,025 - Cost of acquisitions
(2,000
) (325 ) Additions to property and equipment
(16,722
) (1,909 ) Investment in Record Holdings Pty Limited
- (15,000 ) Increase in other
(49 )
- Net cash used by investing activities
(22,156 ) (17,234 ) Cash flows from
financing activities: Increase in net borrowings on revolving line
of credit
74,000 - Purchase of treasury shares
(93,930 ) - Proceeds from exercise of stock options
1,781 3,425 Contributions from employee stock purchase plan
1,238 900 Excess tax benefit from exercise of share-based
arrangements
1,051 3,558 Net
cash (used) provided by financing activities
(15,860
) 7,883 Net increase (decrease) in cash
and cash equivalents
2,254 (11,446 ) Cash and cash
equivalents at beginning of period
33,087
206,167 Cash and cash equivalents at end of
period
$ 35,341 $ 194,721
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160427006673/en/
Tyler Technologies, Inc.Brian K. Miller, 972-713-3720Executive
Vice President - CFObrian.miller@tylertech.com
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