Tyler Technologies Reports Earnings for Third Quarter 2022

Revenues grew approximately 9% organically, excluding COVID-related revenues

Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the third quarter ended September 30, 2022.

Third Quarter 2022 Financial Highlights:

  • Both GAAP and non-GAAP total revenues were $473.2 million, up 2.9% from $459.9 million and 2.7% from $460.6 million, respectively, for the third quarter of 2021. On an organic basis (excluding COVID-related revenues), GAAP revenues grew 9.0% and non-GAAP revenues grew 8.8%.
  • Recurring revenues from maintenance and subscriptions were $371.7 million, up 0.2% from $370.8 million for the third quarter of 2021, and comprised 78.5% of third quarter 2022 revenues, compared to 80.6% for the third quarter of 2021. On an organic basis (excluding COVID-related revenues), recurring revenues were $364.5 million, up 9.3%.
  • Revenues included a total of $11.7 million from NIC's COVID-related initiatives, which are expected to end in the fourth quarter. Revenues from COVID-related initiatives totaled $43.3 million in the third quarter of 2021.
  • Operating income was $60.9 million, up 8.4% from $56.2 million for the third quarter of 2021. Non-GAAP operating income was $117.8 million, up 0.9% from $116.8 million for the third quarter of 2021.
  • Net income was $53.2 million, or $1.26 per diluted share, up 20.5% from $44.2 million, or $1.04 per diluted share, for the third quarter of 2021. Non-GAAP net income was $87.4 million, or $2.06 per diluted share, up 2.8% from $85.0 million, or $2.01 per diluted share, for the third quarter of 2021.
  • The annual non-GAAP effective tax rate is 22.5%, down from 24.0% in 2021, as the result of an increase in the estimated research tax credit. For the third quarter, the non-GAAP effective tax rate was 19.6% to reflect the change in tax rate for the first nine months of the year.
  • Cash flows from operations were $129.4 million compared to $205.4 million for the third quarter of 2021. Free cash flow was $115.6 million compared to $192.8 million for the third quarter of 2021.
  • Adjusted EBITDA was $126.9 million, up 1.5% from $125.0 million for the third quarter of 2021.
  • Software subscription arrangements comprised approximately 91% of the total new software contract value for the third quarter, compared to approximately 74% for the third quarter of 2021.
  • Software subscription bookings for the third quarter added $28.1 million in annual recurring revenue.
  • Annualized non-GAAP recurring revenues (ARR) were $1.49 billion, unchanged from $1.49 billion for the third quarter of 2021 due to a reduction in COVID-related subscription revenue. On an organic basis, excluding COVID-related revenues, annualized non-GAAP ARR grew 11.2%.
  • Total backlog was $1.88 billion, up 6.3% from $1.77 billion at September 30, 2021.

"Third quarter results were highlighted by strong execution and robust public sector market demand, supported by healthy budgets," said Lynn Moore, Tyler's president and chief executive officer. "We are carrying strong momentum across our divisions, and market activity continues to build and drive larger opportunities and multi-suite wins. Professional services revenue continues to be pressured as we onboard new implementation team members and build capacity to support our growing backlog.

"Overall, we reported solid top and bottom-line results while advancing our cloud-first strategy. Total contract value for new software subscription agreements reached a new high and comprised 91% of our new software contract value this quarter. Contract signings were highlighted by a five-year $54 million contract with the U.S. Department of State for our Case Management Development Platform. This represents the largest win in our Federal Division's history, although only approximately $8 million of the contract value was included in the third quarter bookings due to certain contract provisions.

"In light of the rising interest rate environment, we continue to prioritize the use of excess cash to aggressively reduce debt, while being opportunistic toward strategic acquisitions and investments that enhance our long-term growth strategy. During the quarter, we reduced term debt by $190 million and our net leverage is now under two times proforma EBITDA.

"Looking forward, we are encouraged by continued strength in the public sector markets as reflected in stable or increasing RFP and demo activity across our business units. We are also pleased that our software revenue mix continues to arc towards SaaS even more rapidly than previously expected, even though the increased mix of SaaS arrangements is putting pressure on near-term revenue growth, as license revenue will decline faster than planned this year and in 2023. We have reduced the upper end of our full year revenue guidance to reflect lower license revenue, as well as pressure on professional services revenue related to staffing. The midpoint of our annual non-GAAP EPS guidance, adjusted for the reduction in our effective tax rate, is unchanged," concluded Moore.

Guidance for 2022

As of October 26, 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 $1.837 billion to $1.857 billion.
  • Total revenues are expected to include approximately $49 million of COVID-related revenues from NIC's TourHealth and rent relief services. Revenue from TourHealth concluded in the second quarter, while revenue from the rent relief program are expected to end in the fourth quarter.
  • GAAP diluted earnings per share are expected to be in the range of $3.89 to $4.05 and may vary significantly due to the impact of stock option activity on the GAAP effective tax rate.
  • Non-GAAP diluted earnings per share are expected to be in the range of $7.51 to $7.65.
  • Interest expense is expected to be approximately $28 million, including approximately $7 million of non-cash amortization of debt discounts and issuance costs.
  • Pretax non-cash, share-based compensation expense is expected to be approximately $107 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 42.4 million to 42.8 million shares.
  • GAAP earnings per share assumes an estimated annual effective tax rate of approximately 14.0% after discrete tax items, including approximately $8 million of discrete tax benefits related to share-based compensation.
  • The non-GAAP annual effective tax rate is expected to be 22.5%, down from 24% based on a change in our estimated research tax credit and its effect on our annual effective GAAP tax rate.
  • Capital expenditures are expected to be in the range of $58 million to $62 million, including approximately $34 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $147 million, including approximately $112 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 $107 million, amortization of acquired software and intangible assets of approximately $112 million, acquisition-related costs of approximately $1 million, and lease restructuring costs of approximately $1 million. Additionally, the non-GAAP tax rate of 22.5% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $8 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 27, 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: https://conferencingportals.com/event/dXimaDxA. 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 888-330-2506 (U.S. and Canada callers) or 240-789-2712 (international callers) and ask for the “Tyler Technologies” call. The live audio webcast and archived replay can also be accessed at https://investors.tylertech.com/events-and-presentations/default.aspx.

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, 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 lease restructuring costs. Annualized non-GAAP recurring revenues (ARR) is calculated by annualizing the current quarter's non-GAAP recurring revenues from maintenance and subscriptions.

Tyler currently uses a non-GAAP tax rate of 22.5%. 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, including inflation and increases in interest rates; (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,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Software licenses and royalties

$

20,269

 

 

$

22,673

 

 

$

51,784

 

 

$

55,210

 

Subscriptions

 

254,346

 

 

 

252,942

 

 

 

755,604

 

 

 

554,979

 

Professional services

 

63,180

 

 

 

54,624

 

 

 

187,802

 

 

 

155,601

 

Maintenance

 

117,338

 

 

 

117,833

 

 

 

351,182

 

 

 

356,566

 

Appraisal services

 

8,638

 

 

 

7,146

 

 

 

25,968

 

 

 

19,876

 

Hardware and other

 

9,420

 

 

 

4,655

 

 

 

25,643

 

 

 

16,518

 

Total revenues

 

473,191

 

 

 

459,873

 

 

 

1,397,983

 

 

 

1,158,750

 

 

 

 

 

 

 

 

 

Software licenses and royalties

 

3,162

 

 

 

1,547

 

 

 

8,640

 

 

 

4,151

 

Amortization of acquired software

 

13,622

 

 

 

12,896

 

 

 

40,882

 

 

 

32,683

 

Subscriptions, professional services and maintenance

 

239,928

 

 

 

241,944

 

 

 

721,017

 

 

 

576,035

 

Appraisal services

 

5,783

 

 

 

4,506

 

 

 

17,695

 

 

 

13,552

 

Hardware and other

 

6,033

 

 

 

2,764

 

 

 

19,219

 

 

 

9,845

 

Total cost of revenues

 

268,528

 

 

 

263,657

 

 

 

807,453

 

 

 

636,266

 

 

 

 

 

 

 

 

 

Gross profit

 

204,663

 

 

 

196,216

 

 

 

590,530

 

 

 

522,484

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

103,619

 

 

 

101,847

 

 

 

301,216

 

 

 

289,543

 

Research and development expense

 

25,190

 

 

 

24,002

 

 

 

72,517

 

 

 

69,243

 

Amortization of customer and trade name intangibles

 

14,941

 

 

 

14,183

 

 

 

43,259

 

 

 

31,015

 

 

 

 

 

 

 

 

 

Operating income

 

60,913

 

 

 

56,184

 

 

 

173,538

 

 

 

132,683

 

 

 

 

 

 

 

 

 

Interest expense

 

(9,258

)

 

 

(5,396

)

 

 

(20,276

)

 

 

(18,311

)

Other income, net

 

131

 

 

 

445

 

 

 

712

 

 

 

1,249

 

Income before income taxes

 

51,786

 

 

 

51,233

 

 

 

153,974

 

 

 

115,621

 

Income tax (benefit) provision

 

(1,447

)

 

 

7,063

 

 

 

20,811

 

 

 

8,945

 

Net income

$

53,233

 

 

$

44,170

 

 

$

133,163

 

 

$

106,676

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Basic

$

1.28

 

 

$

1.08

 

 

$

3.21

 

 

$

2.61

 

Diluted

$

1.26

 

 

$

1.04

 

 

$

3.14

 

 

$

2.53

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

41,600

 

 

 

40,888

 

 

 

41,523

 

 

 

40,805

 

Diluted

 

42,407

 

 

 

42,286

 

 

 

42,425

 

 

 

42,196

 

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,

Reconciliation of non-GAAP total revenues

 

2022

 

2021

 

2022

 

2021

GAAP total revenues

 

$

473,191

 

 

$

459,873

 

 

$

1,397,983

 

 

$

1,158,750

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

 

 

 

751

 

 

 

 

 

 

2,039

 

Non-GAAP total revenues

 

$

473,191

 

 

$

460,624

 

 

$

1,397,983

 

 

$

1,160,789

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Reconciliation of non-GAAP gross profit and margin

 

2022

 

2021

 

2022

 

2021

GAAP gross profit

 

$

204,663

 

 

$

196,216

 

 

$

590,530

 

 

$

522,484

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

 

 

 

751

 

 

 

 

 

 

2,039

 

Add: Share-based compensation expense included in cost of

revenues

 

 

7,181

 

 

 

6,303

 

 

 

20,820

 

 

 

17,212

 

Add: Amortization of acquired software

 

 

13,622

 

 

 

12,896

 

 

 

40,882

 

 

 

32,683

 

Non-GAAP gross profit

 

$

225,466

 

 

$

216,166

 

 

$

652,232

 

 

$

574,418

 

GAAP gross margin

 

 

43.3

%

 

 

42.7

%

 

 

42.2

%

 

 

45.1

%

Non-GAAP gross margin

 

 

47.6

%

 

 

46.9

%

 

 

46.7

%

 

 

49.5

%

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September

Reconciliation of non-GAAP operating income and margin

 

2022

 

2021

 

2022

 

2021

GAAP operating income

 

$

60,913

 

 

$

56,184

 

 

$

173,538

 

 

$

132,683

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Write-downs of acquisition-related deferred revenue

 

 

 

 

 

751

 

 

 

 

 

 

2,039

 

Add: Share-based compensation expense

 

 

26,912

 

 

 

29,461

 

 

 

77,991

 

 

 

80,360

 

Add: Employer portion of payroll tax related to employee stock

transactions

 

 

86

 

 

 

401

 

 

 

1,196

 

 

 

1,561

 

Add: Acquisition related costs

 

 

183

 

 

 

2,888

 

 

 

1,214

 

 

 

22,718

 

Add: Lease restructuring costs

 

 

1,159

 

 

 

 

 

 

1,159

 

 

 

 

Add: Amortization of acquired software

 

 

13,622

 

 

 

12,896

 

 

 

40,882

 

 

 

32,683

 

Add: Amortization of customer and trade name intangibles

 

 

14,941

 

 

 

14,183

 

 

 

43,259

 

 

 

31,015

 

Non-GAAP adjustments subtotal

 

 

56,903

 

 

 

60,580

 

 

 

165,701

 

 

 

170,376

 

Non-GAAP operating income

 

$

117,816

 

 

$

116,764

 

 

$

339,239

 

 

$

303,059

 

GAAP operating margin

 

 

12.9

%

 

 

12.2

%

 

 

12.4

%

 

 

11.5

%

Non-GAAP operating margin

 

 

24.9

%

 

 

25.3

%

 

 

24.3

%

 

 

26.1

%

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,

Reconciliation of non-GAAP net income and earnings per share

 

2022

 

2021

 

2022

 

2021

GAAP net income

 

$

53,233

 

 

$

44,170

 

 

$

133,163

 

 

$

106,676

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Add: Total non-GAAP adjustments to operating income

 

 

56,903

 

 

 

60,580

 

 

 

165,701

 

 

 

170,376

 

Add: Acquisition related costs in interest expense

 

 

 

 

 

 

 

 

 

 

6,407

 

Less: Tax impact related to non-GAAP adjustments

 

 

(22,737

)

 

 

(19,772

)

 

 

(51,115

)

 

 

(61,232

)

Non-GAAP net income

 

$

87,399

 

 

$

84,978

 

 

$

247,749

 

 

$

222,227

 

GAAP earnings per diluted share

 

$

1.26

 

 

$

1.04

 

 

$

3.14

 

 

$

2.53

 

Non-GAAP earnings per diluted share

 

$

2.06

 

 

$

2.01

 

 

$

5.84

 

 

$

5.27

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Detail of share-based compensation expense

 

2022

 

2021

 

2022

 

2021

Subscriptions, professional services and maintenance

 

$

7,181

 

 

$

6,303

 

 

$

20,820

 

 

$

17,212

 

Selling, general and administrative expenses

 

 

19,731

 

 

 

23,158

 

 

 

57,171

 

 

 

63,148

 

Total share-based compensation expense

 

$

26,912

 

 

$

29,461

 

 

$

77,991

 

 

$

80,360

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Reconciliation of EBITDA and adjusted EBITDA

 

2022

 

2021

 

2022

 

2021

GAAP net income

 

$

53,233

 

 

$

44,170

 

 

$

133,163

 

 

$

106,676

 

Amortization of customer and trade name intangibles

 

 

14,941

 

 

 

14,183

 

 

 

43,259

 

 

 

31,015

 

Depreciation and amortization included in cost of revenues, SG&A and other expenses

 

 

22,646

 

 

 

21,112

 

 

 

67,262

 

 

 

55,290

 

Amortization of debt discounts and issuance costs included in interest expense

 

 

3,329

 

 

 

1,133

 

 

 

5,600

 

 

 

10,083

 

Interest expense

 

 

5,928

 

 

 

4,262

 

 

 

14,676

 

 

 

8,228

 

Income tax (benefit) provision

 

 

(1,447

)

 

 

7,063

 

 

 

20,811

 

 

 

8,945

 

EBITDA

 

$

98,630

 

 

$

91,923

 

 

$

284,771

 

 

$

220,237

 

Write-downs of acquisition-related deferred revenue

 

 

 

 

 

751

 

 

 

 

 

 

2,039

 

Share-based compensation expense

 

 

26,912

 

 

 

29,461

 

 

 

77,991

 

 

 

80,360

 

Acquisition related costs

 

 

183

 

 

 

2,888

 

 

 

1,214

 

 

 

22,718

 

Lease restructuring costs

 

 

1,159

 

 

 

 

 

 

1,159

 

 

 

 

Adjusted EBITDA

 

$

126,884

 

 

$

125,023

 

 

$

365,135

 

 

$

325,354

 

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,

Reconciliation of free cash flow

 

2022

 

2021

 

2022

 

2021

Net cash provided by operating activities

 

$

129,378

 

 

$

205,387

 

 

$

259,598

 

 

$

256,743

 

Less: additions to property and equipment

 

 

(4,684

)

 

 

(6,547

)

 

 

(17,441

)

 

 

(20,770

)

Less: capitalized software development costs

 

 

(9,094

)

 

 

(6,019

)

 

 

(25,557

)

 

 

(14,966

)

Free cash flow

 

$

115,600

 

 

$

192,821

 

 

$

216,600

 

 

$

221,007

 

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

September 30, 2022

 

December 31, 2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

185,927

 

$

309,171

Accounts receivable, net

 

561,780

 

 

521,059

Short-term investments

 

39,360

 

 

52,300

Prepaid expenses and other current assets

 

65,704

 

 

63,664

Income tax receivable

 

7,379

 

 

18,137

Total current assets

 

860,150

 

 

964,331

 

 

 

 

Accounts receivable, long-term portion

 

9,213

 

 

13,937

Operating lease right-of-use assets

 

53,202

 

 

39,720

Property and equipment, net

 

175,196

 

 

181,193

 

 

 

 

Other assets:

 

 

 

Software development costs, net

 

51,092

 

 

28,489

Goodwill

 

2,449,405

 

 

2,359,674

Other intangibles, net

 

1,004,045

 

 

1,052,493

Non-current investments

 

22,627

 

 

46,353

Other non-current assets

 

50,443

 

 

45,971

Total assets

$

4,675,373

 

$

4,732,161

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

242,434

 

$

278,412

Operating lease liabilities

 

10,581

 

 

10,560

Deferred revenue

 

529,233

 

 

510,529

Current portion of term loans

 

30,000

 

 

30,000

Total current liabilities

 

812,248

 

 

829,501

 

 

 

 

Revolving line of credit

 

 

 

Term loans

 

452,138

 

 

718,511

Convertible senior notes due 2026, net

 

594,054

 

 

592,765

Deferred revenue, long-term

 

2,473

 

 

38

Deferred income taxes

 

203,204

 

 

228,085

Operating lease liabilities, long-term

 

49,759

 

 

36,336

Other long-term liabilities

 

14,199

 

 

2,893

Total liabilities

 

2,128,075

 

 

2,408,129

 

 

 

 

Shareholders' equity

$

2,547,298

 

$

2,324,032

Total liabilities and shareholders' equity

$

4,675,373

 

$

4,732,161

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

53,233

 

 

$

44,170

 

 

$

133,163

 

 

$

106,676

 

Adjustments to reconcile net income to cash

provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

41,084

 

 

 

36,888

 

 

 

116,950

 

 

 

97,864

 

Losses (gains) from sale of investments

 

 

97

 

 

 

 

 

 

44

 

 

 

 

Share-based compensation expense

 

 

26,912

 

 

 

29,461

 

 

 

77,991

 

 

 

80,360

 

Operating lease right-of-use assets expense

 

 

4,136

 

 

 

2,982

 

 

 

9,240

 

 

 

7,016

 

Deferred income tax benefit

 

 

(13,709

)

 

 

(9,251

)

 

 

(32,845

)

 

 

(15,681

)

Changes in operating assets and liabilities,

exclusive of effects of acquired companies

 

 

17,625

 

 

 

101,137

 

 

 

(44,945

)

 

 

(19,492

)

Net cash provided by operating activities

 

 

129,378

 

 

 

205,387

 

 

 

259,598

 

 

 

256,743

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(4,684

)

 

 

(6,547

)

 

 

(17,441

)

 

 

(20,770

)

Purchase of marketable security investments

 

 

(15,836

)

 

 

(7,630

)

 

 

(20,428

)

 

 

(75,684

)

Proceeds and maturities from marketable security investments

 

 

14,457

 

 

 

23,168

 

 

 

55,052

 

 

 

114,563

 

Investment in software

 

 

(9,094

)

 

 

(6,019

)

 

 

(25,557

)

 

 

(14,966

)

Cost of acquisitions, net of cash acquired

 

 

(393

)

 

 

(89,492

)

 

 

(117,706

)

 

 

(2,088,394

)

Other

 

 

174

 

 

 

424

 

 

 

326

 

 

 

463

 

Net cash provided (used) by investing activities

 

 

(15,376

)

 

 

(86,096

)

 

 

(125,754

)

 

 

(2,084,788

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Decrease in net borrowings on revolving line of credit

 

 

 

 

 

(65,000

)

 

 

 

 

 

 

Payment on term loans

 

 

(190,000

)

 

 

(57,500

)

 

 

(270,000

)

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

(12,975

)

Proceeds from exercise of stock options, net of withheld shares for taxes upon equity award

 

 

4,405

 

 

 

17,045

 

 

 

298

 

 

 

46,433

 

Contributions from employee stock purchase plan

 

 

4,458

 

 

 

3,557

 

 

 

12,614

 

 

 

9,757

 

Net cash (used) provided by financing activities

 

 

(181,137

)

 

 

(101,936

)

 

 

(257,088

)

 

 

1,458,550

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(67,135

)

 

 

17,355

 

 

 

(123,244

)

 

 

(369,495

)

Cash and cash equivalents at beginning of period

 

 

253,062

 

 

 

216,773

 

 

 

309,171

 

 

 

603,623

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

185,927

 

 

$

234,128

 

 

$

185,927

 

 

$

234,128

 

#TYL_Financial

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