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Tyler Technologies Reports Earnings for Fourth Quarter 2021

Total revenues grew 53%; organic revenue increased 9.2%

Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter ended December 31, 2021.

Fourth Quarter 2021 Financial Highlights:

  • Total revenues were $433.5 million, up 53.0% from $283.3 million for the fourth quarter of 2020. On an organic basis, revenues grew 9.2%. Non-GAAP total revenues were $434.2 million, up 53.2% from $283.4 million for the fourth quarter of 2020. On an organic basis, non-GAAP revenues grew 9.2%.
  • Recurring revenues from maintenance and subscriptions were $347.2 million, up 63.4% from $212.4 million for the fourth quarter of 2020, and comprised 80.1% of fourth quarter 2021 revenues, up from 75.0% for the fourth quarter of 2020. On an organic basis, recurring revenues were $233.0 million, up 9.7%.
  • Subscription revenue and software services revenues included a total of $16.6 million from NIC's TourHealth and COVID-related initiatives, the majority of which are expected to wind down in the first half of 2022.
  • Operating income was $48.1 million compared to $48.0 million for the fourth quarter of 2020. Non-GAAP operating income was $102.5 million, up 34.2% from $76.4 million for the fourth quarter of 2020.
  • Net income was $54.8 million, or $1.29 per diluted share, up 1.3% from $54.1 million, or $1.29 per diluted share, for the fourth quarter of 2020. Non-GAAP net income was $74.3 million, or $1.75 per diluted share, up 27.4% from $58.3 million, or $1.39 per diluted share, for the fourth quarter of 2020.
  • Cash flows from operations were $115.0 million, up 29.6% from $88.8 million for the fourth quarter of 2020. Free cash flow was $95.1 million, up 13.7% from $83.7 million for the fourth quarter of 2020.
  • Adjusted EBITDA was $110.3 million, up 32.6% from $83.2 million for the fourth quarter of 2020.
  • Software subscription arrangements comprised approximately 77% of total new software contract value for the fourth quarter, compared to approximately 73% for the fourth quarter of 2020.
  • Subscription bookings for the fourth quarter added $14.8 million in annual recurring revenue.
  • Annualized non-GAAP recurring revenues were $1.39 billion, up 63.7% from $849.8 million for the fourth quarter of 2020.

Full Year 2021 Financial Highlights:

  • Total revenues were $1.592 billion, up 42.6% from $1.117 billion in 2020. On an organic basis, revenues grew 8.9%. Non-GAAP total revenues were $1.595 billion, up 42.7% from $1.117 billion in 2020. On an organic basis, non-GAAP revenues grew 8.8%.
  • Recurring revenues from maintenance and subscriptions were $1.259 billion, up 53.8% from $818.2 million in 2020, and comprised 79.1% of 2021 revenues, up from 73.3% in 2020. On an organic basis, recurring revenues were $906.2 million, up 10.8%.
  • Subscription revenue and software services revenues included a total of $75.0 million from NIC's TourHealth and other COVID-related initiatives, the majority of which are expected to wind down in the first half of 2022.
  • Operating income was $180.7 million, up 4.5% from $172.9 million in 2020. Non-GAAP operating income was $405.5 million, up 35.4% from $299.5 million in 2020.
  • Net income was $161.5 million, or $3.82 per diluted share, down 17.1% from $194.8 million, or $4.69 per diluted share in 2020. Non-GAAP net income was $296.5 million, or $7.02 per diluted share, up 29.3% from $229.3 million, or $5.52 per diluted share in 2020.
  • Cash flows from operations were $371.8 million, up 4.7% from $355.1 million in 2020. Free cash flow was $316.1 million, down 3.2% from $326.6 million in 2020.
  • Adjusted EBITDA was $435.7 million, up 33.6% from $326.0 million in 2020.
  • Software subscription arrangements comprised approximately 71% of total new software contract value in 2021, compared to approximately 62% in 2020.
  • Subscription bookings in 2021 added $59.0 million in annual recurring revenue.
  • Total backlog was a new high of $1.796 billion, up 12.6% from $1.595 billion at December 31, 2020.

“Our fourth quarter results were in line with our expectations and continued the positive momentum from the first three quarters to provide a strong finish to 2021,” said Lynn Moore, Tyler’s president and chief executive officer. “We're pleased that revenue growth continued to rebound, even as we experience revenue headwinds from the ongoing shift of new business to our SaaS model. Total revenues grew 53% with the inclusion of NIC and other acquisitions and organic revenue growth was a solid 9.2%. Recurring revenues continue to be very strong and represented just over 80% of total revenues, as subscriptions revenues grew 144% in total and just under 23% organically. This marked our 64th consecutive quarter of double-digit subscription revenue growth.

"NIC continued to perform well in the fourth quarter. As expected, COVID-related revenues of $16.6 million in the fourth quarter declined sequentially from approximately $43 million in the third quarter of 2021. These were slightly above our expectations as revenues from a new initiative supporting rent relief programs in Virginia came online. Excluding COVID-related revenues, NIC's core revenues grew 7.5% over last year.

"Cash flows from operations and free cash flow both had strong double-digit growth. During the fourth quarter, we repaid $87.5 million of our term debt, bringing our total repayment of debt incurred with the NIC acquisition to $395 million.

"The positive trends in public sector market activity experienced in recent quarters continued in the fourth quarter, as proposal and other sales activities are generally at or above pre-COVID levels. Bookings in the fourth quarter totaled approximately $464 million, up 39.3% over the fourth quarter of 2020; excluding NIC, bookings grew 4.2%. For the full year, bookings were approximately $1.8 billion, up 41.6%, and, excluding NIC, were approximately $1.4 billion, growing 11.7%.

"Our enthusiasm around NIC and the other acquisitions we completed in 2021 remains very high. NIC's financial performance exceeded our expectations throughout the year, and their team continues to execute at a very high level. We've already seen several examples of our ability to leverage each business's client base to drive incremental joint sales, and the pipeline of those opportunities continues to grow. We're also pleased to expand NIC's portfolio of software solutions through the acquisition of US eDirect on February 8, 2022. US eDirect's market-leading SaaS solutions for the fast-growing campground and outdoor recreation management market complement our existing strength in the hunting and fishing license market and will allow us to create an "all-in-one" outdoor solution. This will address an estimated $2 billion market while expanding our payments opportunity.

"As we turn to 2022, we are excited about the opportunities ahead of us, and particularly about our accelerated move to the cloud. Our focus continues to be on strategic activities around our cloud transition on several fronts. Those activities include taking a clear cloud-first approach to new sales, with a growing number of our products now offered only in the cloud. Even with an expected increase in the SaaS mix of new business, our 2022 revenue growth outlook is quite strong.

"We're also on track with our development projects to optimize our products for more efficient deployment in the cloud, as we migrate from our proprietary data centers to AWS. Despite creating short-term pressure on revenue growth and margins as we replace one-time license revenue with more valuable long-term recurring SaaS revenue, and absorb "bubble costs" associated with the cloud transition and the migration from our internal data centers to AWS, we believe the acceleration of this strategy is creating significant long-term value for shareholders and clients," added Moore.

Guidance for 2022

As of February 16, 2022, Tyler Technologies is providing the following guidance for the full year 2022:

  • GAAP and non-GAAP total revenues are both expected to be in the range of $1.830 billion to $1.870 billion.
  • Total revenues are expected to include approximately $36 million of COVID-related revenues from NIC's TourHealth and rent relief services. Revenues from TourHealth are expected to continue through the first half of 2022, while revenues from the rent relief program are expected to continue throughout the year.
  • GAAP diluted earnings per share are expected to be in the range of $4.09 to $4.26 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 $7.41 to $7.58.
  • Interest expense is expected to be approximately $20 million, including approximately $5 million of amortization of debt discounts and issuance costs.
  • Pretax non-cash, share-based compensation expense is expected to be approximately $105 million.
  • Research and development expense is expected to be in the range of $97 million to $100 million.
  • Fully diluted shares for the year are expected to be in the range of 42.5 million to 43.0 million shares.
  • GAAP earnings per share assumes an estimated annual effective tax rate of approximately 16% after discrete tax items including approximately $24 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 $65 million to $70 million, including approximately $7 million related to real estate and approximately $36 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $155 million, including approximately $108 million from amortization of acquisition intangibles.

GAAP to non-GAAP guidance reconciliation

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 $105 million, and amortization of acquired software and intangible assets of approximately $108 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $24 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, February 17, 2022 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/10162869/f08f6507a0. Registered participants will receive an email with a calendar reminder and 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 February 24, 2022. 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 3638654.

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 recognized numerous times for growth and innovation, including Government Technology's GovTech 100 list and 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 annual 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

December 31,

 

Twelve Months

Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

$

19,242

 

 

$

17,465

 

 

$

74,452

 

 

$

73,164

 

Subscriptions

 

 

229,456

 

 

 

93,997

 

 

 

784,435

 

 

 

350,648

 

Software services

 

 

53,790

 

 

 

42,676

 

 

 

209,391

 

 

 

186,409

 

Maintenance

 

 

117,721

 

 

 

118,409

 

 

 

474,287

 

 

 

467,513

 

Appraisal services

 

 

7,912

 

 

 

5,274

 

 

 

27,788

 

 

 

21,127

 

Hardware and other

 

 

5,416

 

 

 

5,464

 

 

 

21,934

 

 

 

17,802

 

Total revenues

 

 

433,537

 

 

 

283,285

 

 

 

1,592,287

 

 

 

1,116,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

 

1,726

 

 

 

292

 

 

 

5,877

 

 

 

3,339

 

Acquired software

 

 

12,918

 

 

 

7,964

 

 

 

45,601

 

 

 

31,962

 

Software services, maintenance and subscriptions

 

 

223,123

 

 

 

128,557

 

 

 

799,158

 

 

 

510,504

 

Appraisal services

 

 

5,509

 

 

 

4,150

 

 

 

19,061

 

 

 

15,945

 

Hardware and other

 

 

3,101

 

 

 

3,653

 

 

 

12,946

 

 

 

12,401

 

Total cost of revenues

 

 

246,377

 

 

 

144,616

 

 

 

882,643

 

 

 

574,151

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

187,160

 

 

 

138,669

 

 

 

709,644

 

 

 

542,512

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

101,036

 

 

 

62,736

 

 

 

390,579

 

 

 

259,561

 

Research and development expense

 

 

24,238

 

 

 

22,411

 

 

 

93,481

 

 

 

88,363

 

Amortization of customer and trade name intangibles

 

 

13,834

 

 

 

5,486

 

 

 

44,849

 

 

 

21,662

 

Operating income

 

 

48,052

 

 

 

48,036

 

 

 

180,735

 

 

 

172,926

 

Interest expense

 

 

(4,987

)

 

 

(257

)

 

 

(23,298

)

 

 

(1,013

)

Other income, net

 

 

295

 

 

 

633

 

 

 

1,544

 

 

 

3,129

 

Income before income taxes

 

 

43,360

 

 

 

48,412

 

 

 

158,981

 

 

 

175,042

 

Income tax provision

 

 

(11,422

)

 

 

(5,682

)

 

 

(2,477

)

 

 

(19,778

)

Net income

 

$

54,782

 

 

$

54,094

 

 

$

161,458

 

 

$

194,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

Basic

 

$

1.33

 

 

$

1.34

 

 

$

3.95

 

 

$

4.87

 

Diluted

 

$

1.29

 

 

$

1.29

 

 

$

3.82

 

 

$

4.69

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

41,126

 

 

 

40,404

 

 

 

40,848

 

 

 

40,035

 

Diluted

 

 

42,536

 

 

 

41,925

 

 

 

42,244

 

 

 

41,526

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of non-GAAP total revenues

 

 

 

 

 

 

 

 

GAAP total revenues

 

$

433,537

 

 

$

283,285

 

 

$

1,592,287

 

 

$

1,116,663

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs and adjustments to acquisition-related deferred revenue

 

 

639

 

 

 

45

 

 

 

2,678

 

 

 

478

 

Add: Amortization of acquired subleases

 

 

 

 

 

78

 

 

 

 

 

 

313

 

Non-GAAP total revenues

 

$

434,176

 

 

$

283,408

 

 

$

1,594,965

 

 

$

1,117,454

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP gross profit and margin

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

187,160

 

 

$

138,669

 

 

$

709,644

 

 

$

542,512

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs and adjustments to acquisition-related deferred revenue

 

 

639

 

 

 

45

 

 

 

2,678

 

 

 

478

 

Add: Amortization of acquired leases

 

 

 

 

 

78

 

 

 

 

 

 

313

 

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

 

6,493

 

 

 

4,949

 

 

 

23,705

 

 

 

18,125

 

Add: Amortization of acquired software

 

 

12,918

 

 

 

7,964

 

 

 

45,601

 

 

 

31,962

 

Non-GAAP gross profit

 

$

207,210

 

 

$

151,705

 

 

$

781,628

 

 

$

593,390

 

GAAP gross margin

 

 

43.2

%

 

 

49.0

%

 

 

44.6

%

 

 

48.6

%

Non-GAAP gross margin

 

 

47.7

%

 

 

53.5

%

 

 

49.0

%

 

 

53.1

%

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP operating income and margin

 

 

 

 

 

 

 

 

GAAP operating income

 

$

48,052

 

 

$

48,036

 

 

$

180,735

 

 

$

172,926

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

639

 

 

 

45

 

 

 

2,678

 

 

 

478

 

Add: Amortization of acquired leases

 

 

 

 

 

78

 

 

 

 

 

 

313

 

Add: Share-based compensation expense

 

 

24,366

 

 

 

13,253

 

 

 

104,726

 

 

 

67,365

 

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

 

1,876

 

 

 

703

 

 

 

3,437

 

 

 

3,294

 

Add: Acquisition related costs

 

 

777

 

 

 

 

 

 

23,495

 

 

 

 

Add: COVID-19 incremental costs

 

 

 

 

 

810

 

 

 

 

 

 

1,537

 

Add: Amortization of acquired software

 

 

12,918

 

 

 

7,964

 

 

 

45,601

 

 

 

31,962

 

Add: Amortization of customer and trade name intangibles

 

 

13,834

 

 

 

5,486

 

 

 

44,849

 

 

 

21,662

 

Non-GAAP adjustments subtotal

 

 

54,410

 

 

 

28,339

 

 

$

224,786

 

 

$

126,611

 

Non-GAAP operating income

 

$

102,462

 

 

$

76,375

 

 

$

405,521

 

 

$

299,537

 

GAAP operating margin

 

 

11.1

%

 

 

17.0

%

 

 

11.4

%

 

 

15.5

%

Non-GAAP operating margin

 

 

23.6

%

 

 

26.9

%

 

 

25.4

%

 

 

26.8

%

 

 

 

 

 

 

 

 

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of non-GAAP net income and earnings per share

 

 

 

 

 

 

 

 

GAAP net income

 

$

54,782

 

 

$

54,094

 

 

$

161,458

 

 

$

194,820

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Total non-GAAP adjustments to operating income

 

 

54,410

 

 

 

28,339

 

 

 

224,786

 

 

 

126,611

 

Add: Acquisition related costs in interest expense

 

 

 

 

 

 

 

 

6,407

 

 

 

 

Less: Tax impact related to non-GAAP adjustments

 

 

(34,887

)

 

 

(24,102

)

 

 

(96,119

)

 

 

(92,175

)

Non-GAAP net income

 

$

74,305

 

 

$

58,331

 

 

$

296,532

 

 

$

229,256

 

GAAP earnings per diluted share

 

$

1.29

 

 

$

1.29

 

 

$

3.82

 

 

$

4.69

 

Non-GAAP earnings per diluted share

 

$

1.75

 

 

$

1.39

 

 

$

7.02

 

 

$

5.52

 

 

 

 

 

 

 

 

 

 

Detail of share-based compensation expense

 

 

 

 

 

 

 

 

Cost of software services, maintenance and subscriptions

 

$

6,493

 

 

$

4,949

 

 

$

23,705

 

 

$

18,125

 

Selling, general and administrative expenses

 

 

17,873

 

 

 

8,304

 

 

 

81,021

 

 

 

49,240

 

Total share-based compensation expense

 

$

24,366

 

 

$

13,253

 

 

$

104,726

 

 

$

67,365

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net income

 

$

54,782

 

 

$

54,094

 

 

$

161,458

 

 

$

194,820

 

Amortization of customer and trade name intangibles

 

 

13,834

 

 

 

5,486

 

 

 

44,849

 

 

 

21,662

 

Depreciation and amortization included in

 

 

 

 

 

 

 

 

Cost of revenues, SG&A and other expenses

 

 

22,360

 

 

 

14,965

 

 

 

77,651

 

 

 

58,936

 

Amortization of debt discounts and issuance costs included in interest expense

 

 

1,104

 

 

 

103

 

 

 

11,187

 

 

 

403

 

Interest expense

 

 

3,883

 

 

 

154

 

 

 

12,111

 

 

 

610

 

Income tax provision

 

 

(11,422

)

 

 

(5,682

)

 

 

(2,477

)

 

 

(19,778

)

EBITDA

 

$

84,541

 

 

$

69,120

 

 

$

304,779

 

 

$

256,653

 

Write-downs and adjustments to acquisition-related deferred revenue

 

 

639

 

 

 

45

 

 

 

2,678

 

 

 

478

 

Share-based compensation expense

 

 

24,366

 

 

 

13,253

 

 

 

104,726

 

 

 

67,365

 

Acquisition related costs

 

 

777

 

 

 

 

 

 

23,495

 

 

 

 

COVID-19 incremental costs

 

 

 

 

 

810

 

 

 

 

 

 

1,537

 

Adjusted EBITDA

 

$

110,323

 

 

$

83,228

 

 

$

435,678

 

 

$

326,033

 

TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of free cash flow

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

115,010

 

 

$

88,761

 

 

$

371,753

 

 

$

355,089

 

Less: additions to property and equipment

 

 

(13,149

)

 

 

(3,626

)

 

 

(33,919

)

 

 

(22,690

)

Less: capitalized software development costs

 

 

(6,727

)

 

 

(1,460

)

 

 

(21,693

)

 

 

(5,776

)

Free cash flow

 

$

95,134

 

 

$

83,675

 

 

$

316,141

 

 

$

326,623

 

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

December 31, 2021

 

December 31, 2020

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

309,171

 

$

603,623

Accounts receivable, net

 

 

521,059

 

 

382,319

Short-term investments

 

 

52,300

 

 

72,187

Prepaid expenses and other current assets

 

 

63,664

 

 

33,343

Income tax receivable

 

 

18,137

 

 

21,598

Total current assets

 

 

964,331

 

 

1,113,070

 

 

 

 

 

Accounts receivable, long-term portion

 

 

13,937

 

 

21,417

Operating lease right-of-use assets

 

 

39,720

 

 

18,734

Property and equipment, net

 

 

181,193

 

 

168,004

 

 

 

 

 

Other assets:

 

 

 

 

Software development costs, net

 

 

28,489

 

 

9,121

Goodwill

 

 

2,359,674

 

 

838,428

Other intangibles, net

 

 

1,052,493

 

 

322,068

Non-current investments

 

 

46,353

 

 

82,640

Other non-current assets

 

 

45,971

 

 

33,792

 

 

 

 

 

Total assets

 

$

4,732,161

 

$

2,607,274

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

278,412

 

$

97,095

Operating lease liabilities

 

 

10,560

 

 

5,904

Deferred revenue

 

 

510,529

 

 

461,278

Current portion of term loans

 

 

30,000

 

 

Total current liabilities

 

 

829,501

 

 

564,277

 

 

 

 

 

Revolving line of credit

 

 

 

 

Term loans

 

 

718,511

 

 

Convertible senior notes due 2026, net

 

 

592,765

 

 

Deferred revenue, long-term

 

 

38

 

 

100

Deferred income taxes

 

 

228,085

 

 

40,507

Operating lease liabilities, long-term

 

 

36,336

 

 

16,279

Other long-term liabilities

 

 

2,893

 

 

Total liabilities

 

 

2,408,129

 

 

621,163

Shareholders' equity

 

 

2,324,032

 

 

1,986,111

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

4,732,161

 

$

2,607,274

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

54,782

 

 

$

54,094

 

 

$

161,458

 

 

$

194,820

 

Adjustments to reconcile net income to cash

 

 

 

 

 

 

 

 

provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

37,760

 

 

 

20,911

 

 

 

135,624

 

 

 

81,657

 

Share-based compensation expense

 

 

24,366

 

 

 

13,253

 

 

 

104,726

 

 

 

67,365

 

Provision for losses - accounts receivable

 

 

2,831

 

 

 

3,517

 

 

 

2,831

 

 

 

3,517

 

Operating lease right-of-use assets - non cash

 

 

3,200

 

 

 

1,549

 

 

 

10,216

 

 

 

5,782

 

Deferred income tax expense (benefit)

 

 

2,410

 

 

 

(5,478

)

 

 

(13,271

)

 

 

(7,936

)

Changes in operating assets and liabilities,

 

 

 

 

 

 

 

 

exclusive of effects of acquired companies

 

 

(10,339

)

 

 

915

 

 

 

(29,831

)

 

 

9,884

 

Net cash provided by operating activities

 

 

115,010

 

 

 

88,761

 

 

 

371,753

 

 

 

355,089

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(13,149

)

 

 

(3,626

)

 

 

(33,919

)

 

 

(22,690

)

Purchase of marketable security investments

 

 

(1,766

)

 

 

(45,289

)

 

 

(77,450

)

 

 

(156,618

)

Proceeds from marketable security investments

 

 

16,886

 

 

 

20,948

 

 

 

131,449

 

 

 

82,742

 

Purchase of equity investment of common shares

 

 

 

 

 

 

 

 

 

 

 

(10,000

)

Proceeds from the sale of equity investment of preferred shares

 

 

 

 

 

 

 

 

 

 

 

15,000

 

Capitalized software development costs

 

 

(6,727

)

 

 

(1,460

)

 

 

(21,693

)

 

 

(5,776

)

Cost of acquisitions, net of cash acquired

 

 

(1,312

)

 

 

(1,031

)

 

 

(2,089,706

)

 

 

(1,292

)

(Increase) decrease in other

 

 

(79

)

 

 

301

 

 

 

384

 

 

 

314

 

Net cash used by investing activities

 

 

(6,147

)

 

 

(30,157

)

 

 

(2,090,935

)

 

 

(98,320

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Decrease in net borrowings on revolving line of credit

 

 

 

 

 

 

 

 

 

 

 

 

Payment on term loans

 

 

(87,500

)

 

 

 

 

 

(145,000

)

 

 

 

Proceeds from term loans

 

 

 

 

 

 

 

 

900,000

 

 

 

 

Proceeds from issuance of convertible senior notes

 

 

 

 

 

 

 

 

600,000

 

 

 

 

Payment of debt issuance costs

 

 

 

 

 

 

 

 

(27,165

)

 

 

 

Purchase of treasury shares

 

 

(2

)

 

 

 

 

 

(12,977

)

 

 

(15,484

)

Payment of contingent consideration

 

 

 

 

 

 

 

 

 

 

(5,619

)

Proceeds from exercise of stock options

 

 

50,281

 

 

 

23,631

 

 

 

96,714

 

 

 

124,363

 

Contributions from employee stock purchase plan

 

 

3,401

 

 

 

2,703

 

 

 

13,158

 

 

 

10,912

 

Net cash (used) provided by financing activities

 

 

(33,820

)

 

 

26,334

 

 

 

1,424,730

 

 

 

114,172

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

75,043

 

 

 

84,938

 

 

 

(294,452

)

 

 

370,941

 

Cash and cash equivalents at beginning of period

 

 

234,128

 

 

 

518,685

 

 

 

603,623

 

 

 

232,682

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

309,171

 

 

$

603,623

 

 

$

309,171

 

 

$

603,623

 

 

.@tylertech announces its earnings for fourth quarter 2021.

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