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Tyler Technologies Reports Earnings for Third Quarter 2021

Total revenues grew 61%; cash flows from operations and free cash flow reached record highs

Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights:

  • Total revenues were $459.9 million, up 60.9% from $285.7 million for the third quarter of 2020. On an organic basis, total revenues grew 7.6%. Non-GAAP total revenues were $460.6 million, up 61.1% from $285.9 million for the third quarter of 2020. On an organic basis, non-GAAP total revenues grew 7.5%.
  • Recurring revenues from maintenance and subscriptions were $370.8 million, up 78.9% from $207.3 million for the third quarter of 2020, and comprised 80.6% of third quarter 2021 revenue, up from 72.5% for the third quarter of 2020. On an organic basis, recurring revenues were $226.3 million, up 9.2%.
  • Subscriptions revenue and software services revenues included a total of $43.3 million from NIC's TourHealth and COVID-related initiatives that are expected to wind down in the first half of 2022.
  • Operating income was $56.2 million, up 13.1% from $49.7 million for the third quarter of 2020. Non-GAAP operating income was $116.8 million, up 42.8% from $81.8 million for the third quarter of 2020.
  • Net income was $44.2 million, or $1.04 per diluted share, up 12.4% from $39.3 million, or $0.94 per diluted share, for the third quarter of 2020. Non-GAAP net income was $85.0 million, or $2.01 per diluted share, up 36.3% from $62.4 million, or $1.50 per diluted share, for the third quarter of 2020.
  • Cash flows from operations were $205.4 million, up 21.0% from $169.8 million for the third quarter of 2020. Free cash flow was $192.8 million, up 16.6% from $165.4 million for the third quarter of 2020.
  • Adjusted EBITDA was $125.0 million, up 40.6% from $88.9 million for the third quarter of 2020.
  • Software subscription arrangements comprised approximately 74% of the total new software contract value in the third quarter, compared to approximately 47% in the third quarter of 2020.
  • Subscription bookings in the third quarter added $19.0 million in annual recurring revenue.
  • Annualized non-GAAP recurring revenues were $1.486 billion, up 79.2% from $829.5 million for the third quarter of 2020.
  • Total backlog was $1.77 billion, up 14.3% from $1.55 billion at September 30, 2020.
  • During the third quarter, Tyler completed the acquisitions of VendEngine and Arx for a combined purchase price of approximately $96 million.

“Our third quarter results were exceptionally strong as we continued to build on the momentum established in the first half of the year. It was our best quarter ever by most financial measures, and we achieved new quarterly highs in revenues, non-GAAP earnings per share, free cash flow, adjusted EBITDA and bookings,” said Lynn Moore, Tyler’s president and chief executive officer. “With the inclusion of NIC's results for the full quarter, total revenues grew more than 60%, led by subscription revenue growth of 183%. In addition, for the first time, recurring revenues exceeded 80% of total revenues for the quarter.

"We're very pleased that NIC continued its strong performance in the first full quarter as a part of Tyler. As a result of the surge in the Delta variant, NIC's COVID-related revenues, which we had expected to wind down, were significantly above plan at $43.3 million, which contributed to a reduction in consolidated margins. Excluding the COVID-related revenues, NIC's core revenues grew 5% over last year.

"Cash flows from operations and free cash flow both reached new quarterly highs, and our balance sheet remains very solid. During the third quarter, we paid down $122.5 million of bank debt and used $89.5 million in cash to fund the acquisitions of VendEngine and Arx.

"We continue to see positive trends in public sector market activity, with indicators such as proposals, sales demonstrations and pipelines generally at or above pre-COVID levels, and we're beginning to see client purchasing that is being funded through federal stimulus programs. Bookings in the third quarter, including NIC's activity, were very robust at approximately $601 million, more than double the third quarter of 2020. Excluding NIC, bookings rose nearly 52%, fueled by both new contracts and renewals with existing clients.

"Our team's enthusiasm around the integration of NIC and Tyler continues to grow as we begin to execute on our strategy to leverage existing relationships in both of our client bases. We further strengthened our justice and public safety solution suites through the September acquisitions of VendEngine and Arx, and we believe our strong competitive position validates our accelerated shift to the cloud, as well as our elevated product investments, both before and during the pandemic. We look forward to a strong finish to 2021, and to continuing our momentum into next year," concluded Moore.

Guidance for 2021

As of October 27, 2021, Tyler Technologies is providing the following guidance for the full year 2021:

  • GAAP total revenues are expected to be in the range of $1.577 billion to $1.597 billion.
  • Non-GAAP total revenues are expected to be in the range of $1.580 billion to $1.600 billion.
  • Total revenues are expected to include approximately $72 million of COVID-related revenues from NIC's TourHealth and pandemic unemployment services that are expected to wind down in the first half of 2022.
  • GAAP diluted earnings per share are expected to be in the range of $3.55 to $3.63 and may vary significantly due to the impact of stock incentive awards on the GAAP effective tax rate.
  • Non-GAAP diluted earnings per share are expected to be in the range of $6.94 to $7.02.
  • Interest expense is expected to be approximately $23 million, including approximately $11 million of amortization of debt discounts and issuance costs.
  • Pretax non-cash, share-based compensation expense is expected to be approximately $108 million.
  • Research and development expense is expected to be in the range of $94 million to $96 million.
  • Fully diluted shares for the year are expected to be in the range of 42.0 million to 42.5 million shares.
  • GAAP earnings per share assumes an estimated annual effective tax rate of approximately 4.0% after discrete tax items, including approximately $37 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 $47 million to $49 million, including approximately $21 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $122 million, including approximately $91 million from amortization of acquisition intangibles.

GAAP to non-GAAP guidance reconciliation

Non-GAAP total revenues is derived from adding back the estimated full year impact of write-downs of acquisition-related deferred revenue of approximately $3 million. Non-GAAP diluted earnings per share excludes the estimated full year impact of non-cash share-based compensation expense and employer portion of payroll tax related to employee stock transactions of approximately $108 million, amortization of acquired software and intangible assets of approximately $91 million, and acquisition-related costs of approximately $29 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $37 million of estimated discrete tax benefits that are included in the GAAP estimated annual effective tax rate.

Conference Call

Tyler Technologies will hold a conference call on Thursday, October 28, 2021, at 10:00 a.m. ET 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/sreg/10160514/edb7b60a0c. Registered participants will receive an email with a calendar reminder and a dial-in number and PIN that will allow them to listen to the call live.

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) or 866-450-4696 (Canada callers) and ask for the “Tyler Technologies” call. A replay will be available two hours after completion of the call through November 4, 2021. 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 10160514.

The live webcast and archived replay can also be accessed at https://tylertech.irpass.com/Presentations.

About Tyler Technologies, Inc.

Tyler Technologies (NYSE: TYL) provides integrated software and technology services to the public sector. Tyler's end-to-end solutions empower local, state, and federal government entities to operate more efficiently and connect more transparently with their constituents and with each other. By connecting data and processes across disparate systems, Tyler's solutions are transforming how clients gain actionable insights that solve problems in their communities. Tyler has more than 37,000 successful installations across more than 12,000 locations, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. Tyler has been named to Government Technology's GovTech 100 list five times and has been recognized three times on Forbes' "Most Innovative Growth Companies" list. More information about Tyler Technologies, an S&P 500 company headquartered in Plano, Texas, can be found at 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, adjusted EBITDA, and free cash flow. 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 subleases, share-based compensation expense, employer portion of payroll taxes on employee stock transactions, expenses associated with amortization of intangibles arising from business combinations, acquisition-related expenses, and incremental costs associated with COVID-19.

Tyler currently uses a non-GAAP tax rate of 24%. This rate is based on Tyler's estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating Tyler's non-GAAP income, as well as significant non-recurring tax adjustments. The non-GAAP tax rate used in future periods will be reviewed periodically to determine whether it remains appropriate in consideration of factors including Tyler's periodic effective tax rate calculated in accordance with GAAP, changes resulting from tax legislation, changes in the geographic mix of revenues and expenses, and other factors deemed significant. Due to differences in tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to Tyler's estimated annual tax rate as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from Tyler's actual tax liabilities.

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) the effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; (2) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology spending; (3) disruption to our business and harm to our competitive position resulting from cyber-attacks and security vulnerabilities; (4) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (5) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (6) material portions of our business require the Internet infrastructure to be adequately maintained; (7) 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; (8) general economic, political and market conditions; (9) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (10) 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; (11) 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 (12) costs of compliance and any failure to comply with government and stock exchange regulations. 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 and quarterly report on Form 10-Q. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

(Comparative results follow)

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

$

22,673

 

 

$

19,937

 

 

$

55,210

 

 

$

55,699

 

Subscriptions

 

 

252,942

 

 

 

89,290

 

 

 

554,979

 

 

 

256,651

 

Software services

 

 

54,624

 

 

 

47,946

 

 

 

155,601

 

 

 

143,733

 

Maintenance

 

 

117,833

 

 

 

117,979

 

 

 

356,566

 

 

 

349,104

 

Appraisal services

 

 

7,146

 

 

 

5,394

 

 

 

19,876

 

 

 

15,853

 

Hardware and other

 

 

4,655

 

 

 

5,200

 

 

 

16,518

 

 

 

12,338

 

Total revenues

 

 

459,873

 

 

 

285,746

 

 

 

1,158,750

 

 

 

833,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

 

1,547

 

 

 

1,177

 

 

 

4,151

 

 

 

3,047

 

Acquired software

 

 

12,896

 

 

 

7,965

 

 

 

32,683

 

 

 

23,998

 

Subscriptions, software services and maintenance

 

 

241,944

 

 

 

125,881

 

 

 

576,035

 

 

 

381,947

 

Appraisal services

 

 

4,506

 

 

 

3,434

 

 

 

13,552

 

 

 

11,795

 

Hardware and other

 

 

2,764

 

 

 

3,780

 

 

 

9,845

 

 

 

8,748

 

Total cost of revenues

 

 

263,657

 

 

 

142,237

 

 

 

636,266

 

 

 

429,535

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

196,216

 

 

 

143,509

 

 

 

522,484

 

 

 

403,843

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

101,847

 

 

 

66,819

 

 

 

289,543

 

 

 

196,825

 

Research and development expense

 

 

24,002

 

 

 

21,642

 

 

 

69,243

 

 

 

65,952

 

Amortization of customer and trade name intangibles

 

 

14,183

 

 

 

5,392

 

 

 

31,015

 

 

 

16,176

 

Operating income

 

 

56,184

 

 

 

49,656

 

 

 

132,683

 

 

 

124,890

 

Interest expense

 

 

(5,396

)

 

 

(254

)

 

 

(18,311

)

 

 

(757

)

Other income, net

 

 

445

 

 

 

534

 

 

 

1,249

 

 

 

2,497

 

Income before income taxes

 

 

51,233

 

 

 

49,936

 

 

 

115,621

 

 

 

126,630

 

Income tax provision (benefit)

 

 

7,063

 

 

 

10,652

 

 

 

8,945

 

 

 

(14,096

)

Net income

 

$

44,170

 

 

$

39,284

 

 

$

106,676

 

 

$

140,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

Basic

 

$

1.08

 

 

$

0.98

 

 

$

2.61

 

 

$

3.52

 

Diluted

 

$

1.04

 

 

$

0.94

 

 

$

2.53

 

 

$

3.39

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

40,888

 

 

 

40,261

 

 

 

40,805

 

 

 

40,013

 

Diluted

 

 

42,286

 

 

 

41,606

 

 

 

42,196

 

 

 

41,493

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of non-GAAP total revenues

 

 

 

 

 

 

 

 

GAAP total revenues

 

$

459,873

 

 

$

285,746

 

 

$

1,158,750

 

 

$

833,378

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

751

 

 

 

113

 

 

 

2,039

 

 

 

433

 

Add: Amortization of acquired leases

 

 

 

 

 

78

 

 

 

 

 

 

235

 

Non-GAAP total revenues

 

$

460,624

 

 

$

285,937

 

 

$

1,160,789

 

 

$

834,046

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP gross profit and margin

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

196,216

 

 

$

143,509

 

 

$

522,484

 

 

$

403,843

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

751

 

 

 

113

 

 

 

2,039

 

 

 

433

 

Add: Amortization of acquired leases

 

 

 

 

 

78

 

 

 

 

 

 

235

 

Add: Share-based compensation expense included in cost of revenues

 

 

6,303

 

 

 

4,555

 

 

 

17,212

 

 

 

13,176

 

Add: Amortization of acquired software

 

 

12,896

 

 

 

7,965

 

 

 

32,683

 

 

 

23,998

 

Non-GAAP gross profit

 

$

216,166

 

 

$

156,220

 

 

$

574,418

 

 

$

441,685

 

GAAP gross margin

 

 

42.7

%

 

 

50.2

%

 

 

45.1

%

 

 

48.5

%

Non-GAAP gross margin

 

 

46.9

%

 

 

54.6

%

 

 

49.5

%

 

 

53.0

%

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP operating income and margin

 

 

 

 

 

 

 

 

GAAP operating income

 

$

56,184

 

 

$

49,656

 

 

$

132,683

 

 

$

124,890

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

751

 

 

 

113

 

 

 

2,039

 

 

 

433

 

Add: Amortization of acquired leases

 

 

 

 

 

78

 

 

 

 

 

 

235

 

Add: Share-based compensation expense

 

 

29,461

 

 

 

18,424

 

 

 

80,360

 

 

 

54,112

 

Add: Employer portion of payroll tax related to employee stock transactions

 

 

401

 

 

 

134

 

 

 

1,561

 

 

 

2,591

 

Add: Acquisition related costs

 

 

2,888

 

 

 

 

 

 

22,718

 

 

 

 

Add: COVID-19 incremental costs

 

 

 

 

 

 

 

 

 

 

 

727

 

Add: Amortization of acquired software

 

 

12,896

 

 

 

7,965

 

 

 

32,683

 

 

 

23,998

 

Add: Amortization of customer and trade name intangibles

 

 

14,183

 

 

 

5,392

 

 

 

31,015

 

 

 

16,176

 

Non-GAAP adjustments subtotal

 

 

60,580

 

 

 

32,106

 

 

 

170,376

 

 

 

98,272

 

Non-GAAP operating income

 

$

116,764

 

 

$

81,762

 

 

$

303,059

 

 

$

223,162

 

GAAP operating margin

 

 

12.2

%

 

 

17.4

%

 

 

11.5

%

 

 

15.0

%

Non-GAAP operating margin

 

 

25.3

%

 

 

28.6

%

 

 

26.1

%

 

 

26.8

%

 

 

 

 

 

 

 

 

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of non-GAAP net income and earnings per share

 

 

 

 

 

 

 

 

GAAP net income

 

$

44,170

 

 

$

39,284

 

 

$

106,676

 

 

$

140,726

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Total non-GAAP adjustments to operating income

 

 

60,580

 

 

 

32,106

 

 

 

170,376

 

 

 

98,272

 

Add: Acquisition related costs in interest expense

 

 

 

 

 

 

 

 

6,407

 

 

 

 

Less: Tax impact related to non-GAAP adjustments

 

 

(19,772

)

 

 

(9,038

)

 

 

(61,232

)

 

 

(68,073

)

Non-GAAP net income

 

$

84,978

 

 

$

62,352

 

 

$

222,227

 

 

$

170,925

 

GAAP earnings per diluted share

 

$

1.04

 

 

$

0.94

 

 

$

2.53

 

 

$

3.39

 

Non-GAAP earnings per diluted share

 

$

2.01

 

 

$

1.50

 

 

$

5.27

 

 

$

4.12

 

 

 

 

 

 

 

 

 

 

Detail of share-based compensation expense

 

 

 

 

 

 

 

 

Subscriptions, software services and maintenance

 

$

6,303

 

 

$

4,555

 

 

$

17,212

 

 

$

13,176

 

Selling, general and administrative expenses

 

 

23,158

 

 

 

13,869

 

 

 

63,148

 

 

 

40,936

 

Total share-based compensation expense

 

$

29,461

 

 

$

18,424

 

 

$

80,360

 

 

$

54,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net income

 

$

44,170

 

 

$

39,284

 

 

$

106,676

 

 

$

140,726

 

Amortization of customer and trade name intangibles

 

 

14,183

 

 

 

5,392

 

 

 

31,015

 

 

 

16,176

 

Depreciation and amortization included in

 

 

 

 

 

 

 

 

cost of revenues, SG&A and other expenses

 

 

21,112

 

 

 

14,921

 

 

 

55,290

 

 

 

44,271

 

Amortization of debt discounts and issuance costs included in interest expense

 

 

1,133

 

 

 

 

 

 

10,083

 

 

 

 

Interest expense

 

 

4,262

 

 

 

153

 

 

 

8,228

 

 

 

456

 

Income tax provision (benefit)

 

 

7,063

 

 

 

10,652

 

 

 

8,945

 

 

 

(14,096

)

EBITDA

 

$

91,923

 

 

$

70,402

 

 

$

220,237

 

 

$

187,533

 

Write-downs of acquisition-related deferred revenue

 

 

751

 

 

 

113

 

 

 

2,039

 

 

 

433

 

Share-based compensation expense

 

 

29,461

 

 

 

18,424

 

 

 

80,360

 

 

 

54,112

 

Acquisition related costs

 

 

2,888

 

 

 

 

 

 

22,718

 

 

 

 

COVID-19 incremental costs

 

 

 

 

 

 

 

 

 

 

 

727

 

Adjusted EBITDA

 

$

125,023

 

 

$

88,939

 

 

$

325,354

 

 

$

242,805

 

 

 

 

 

 

 

 

 

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of free cash flow

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

205,387

 

 

$

169,808

 

 

$

256,743

 

 

$

266,328

 

Less: additions to property and equipment

 

 

(6,547

)

 

 

(2,796

)

 

 

(20,770

)

 

 

(19,064

)

Less: capitalized software development costs

 

 

(6,019

)

 

 

(1,621

)

 

 

(14,966

)

 

 

(4,316

)

Free cash flow

 

$

192,821

 

 

$

165,391

 

 

$

221,007

 

 

$

242,948

 

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

September 30, 2021

 

December 31, 2020

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

234,128

 

$

603,623

Accounts receivable, net

 

 

538,119

 

 

382,319

Short-term investments

 

 

49,355

 

 

72,187

Prepaid expenses and other current assets

 

 

53,145

 

 

33,343

Income tax receivable

 

 

3,509

 

 

21,598

Total current assets

 

 

878,256

 

 

1,113,070

 

 

 

 

 

Accounts receivable, long-term portion

 

 

14,917

 

 

21,417

Operating lease right-of-use assets

 

 

40,449

 

 

18,734

Property and equipment, net

 

 

176,745

 

 

168,004

 

 

 

 

 

Other assets:

 

 

 

 

Software development costs, net

 

 

22,570

 

 

9,121

Goodwill

 

 

2,355,144

 

 

838,428

Other intangibles, net

 

 

1,086,457

 

 

322,068

Non-current investments

 

 

64,916

 

 

82,640

Other non-current assets

 

 

43,484

 

 

33,792

 

 

 

 

 

Total assets

 

$

4,682,938

 

$

2,607,274

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

280,850

 

$

97,095

Operating lease liabilities

 

 

10,125

 

 

5,904

Deferred revenue

 

 

495,250

 

 

461,278

Current portion of term loans

 

 

30,000

 

 

Total current liabilities

 

 

816,225

 

 

564,277

 

 

 

 

 

Revolving line of credit

 

 

 

 

Term loans

 

 

805,535

 

 

Convertible senior notes due 2026, net

 

 

592,335

 

 

Deferred revenue, long-term

 

 

53

 

 

100

Deferred income taxes

 

 

227,537

 

 

40,507

Operating lease liabilities, long-term

 

 

37,348

 

 

16,279

Other long-term liabilities

 

 

3,132

 

 

Total liabilities

 

 

2,482,165

 

 

621,163

Shareholders' equity

 

 

2,200,773

 

 

1,986,111

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

4,682,938

 

$

2,607,274

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

44,170

 

 

$

39,284

 

 

$

106,676

 

 

$

140,726

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

36,888

 

 

 

20,476

 

 

 

97,864

 

 

 

60,746

 

Share-based compensation expense

 

 

29,461

 

 

 

18,424

 

 

 

80,360

 

 

 

54,112

 

Operating lease right-of-use assets expense

 

 

2,982

 

 

 

1,390

 

 

 

7,016

 

 

 

4,233

 

Deferred income tax benefit

 

 

(9,251

)

 

 

1,271

 

 

 

(15,681

)

 

 

(2,458

)

Changes in operating assets and liabilities, exclusive of effects of acquired companies

 

 

101,137

 

 

 

88,963

 

 

 

(19,492

)

 

 

8,969

 

Net cash provided by operating activities

 

 

205,387

 

 

 

169,808

 

 

 

256,743

 

 

 

266,328

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(6,547

)

 

 

(2,796

)

 

 

(20,770

)

 

 

(19,064

)

Purchase of marketable security investments

 

 

(7,630

)

 

 

(31,582

)

 

 

(75,684

)

 

 

(111,329

)

Proceeds from marketable security investments

 

 

23,168

 

 

 

21,774

 

 

 

114,563

 

 

 

61,794

 

Proceeds from the sale of investment of preferred shares

 

 

 

 

 

 

 

 

 

 

 

15,000

 

Purchase of investment of common shares

 

 

 

 

 

 

 

 

 

 

 

(10,000

)

Investment in software

 

 

(6,019

)

 

 

(1,621

)

 

 

(14,966

)

 

 

(4,316

)

Cost of acquisitions, net of cash acquired

 

 

(89,492

)

 

 

 

 

 

(2,088,394

)

 

 

(261

)

Decrease in other

 

 

424

 

 

 

341

 

 

 

463

 

 

 

13

 

Net cash used by investing activities

 

 

(86,096

)

 

 

(13,884

)

 

 

(2,084,788

)

 

 

(68,163

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Decrease in net borrowings on revolving line of credit

 

 

(65,000

)

 

 

 

 

 

 

 

 

 

Payment on term loans

 

 

(57,500

)

 

 

 

 

 

(57,500

)

 

 

 

Proceeds from term loans

 

 

 

 

 

 

 

 

900,000

 

 

 

 

Proceeds from issuance of convertible senior notes

 

 

 

 

 

 

 

 

600,000

 

 

 

 

Payment of debt issuance costs

 

 

(38

)

 

 

 

 

 

(27,165

)

 

 

 

Purchase of treasury shares

 

 

 

 

 

(2

)

 

 

(12,975

)

 

 

(15,484

)

Proceeds from exercise of stock options

 

 

17,045

 

 

 

8,395

 

 

 

46,433

 

 

 

100,732

 

Payment of contingent consideration

 

 

 

 

 

 

 

 

 

 

 

(5,619

)

Contributions from employee stock purchase plan

 

 

3,557

 

 

 

3,032

 

 

 

9,757

 

 

 

8,209

 

Net cash (used) provided by financing activities

 

 

(101,936

)

 

 

11,425

 

 

 

1,458,550

 

 

 

87,838

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

17,355

 

 

 

167,349

 

 

 

(369,495

)

 

 

286,003

 

Cash and cash equivalents at beginning of period

 

 

216,773

 

 

 

351,336

 

 

 

603,623

 

 

 

232,682

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

234,128

 

 

$

518,685

 

 

$

234,128

 

 

$

518,685

 

 

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