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Tyler's (TYL) Q4 Earnings Miss, Revenues Beat Estimates

Tyler Technologies TYL reported fourth-quarter 2022 non-GAAP earnings of $1.66 per share, which missed the Zacks Consensus Estimate of $1.74  and declined 5.1% from the year-ago quarter’s $1.75.

Non-GAAP revenues increased 4.2% year over year to $452.2 million. The top line narrowly outpaced the Zacks Consensus Estimate of $452.1 million.

The robust year-over-year top-line growth was primarily driven by rise in subscription revenues. During the fourth quarter, software subscription arrangements comprised approximately 86% of the total new software contract value as the company continued to transform into a software-as-a-service model from its on-premise license-based model. On an organic basis, non-GAAP revenues increased 5.8%.

 

Tyler Technologies, Inc. Price, Consensus and EPS Surprise

Tyler Technologies, Inc. price-consensus-eps-surprise-chart | Tyler Technologies, Inc. Quote

Quarterly Details

Tyler’s recurring revenues from maintenance and subscriptions increased 7.7% year over year to $374 million and accounted for 82.7% of the total quarterly revenues.

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TYL reported annualized recurring revenues on a non-GAAP basis of $1.50 billion, up 7.5% year over year. Subscription bookings in the fourth quarter added $21.4 million to annual recurring revenues.

Segment-wise, Maintenance revenues (accounting for 25.9% of total revenues) were $117.3 million, down from $117.7 million in the year-ago quarter.

Subscription revenues (56.8% of total revenues) grew 11.9% year over year to $256.7 million.

Software licenses and royalties (1.7% of total revenues) of $7.6 million decreased 60.4% on a year-over-year basis.

Professional Services revenues (12.2% of total revenues) amounted to $55.3 million, up 2.8% from the year-ago quarter.

Appraisal services revenues (1.9% of total revenues) rose 7.9% from the prior-year quarter to $8.5 million.

Hardware and other revenues (1.5% of total revenues) jumped 25% from the year-ago quarter to $6.8 million.

The backlog at the quarter-end was $1.89 billion, up 5.2% year over year.

Bookings remained flat year over year at $464 million. Moreover, in the trailing 12 months, bookings increased 9.5% year over year to $1.9 billion.

Operating Details

Tyler’s non-GAAP gross profit increased 2% year over year to $211.3 million. Non-GAAP gross margin expanded 100 basis points (bps) to 46.7%.

Adjusted EBITDA decreased 0.4% year over year to $109.8 million.

Non-GAAP operating income for the quarter totaled $97.9 million, down 4.5% year over year. However, the non-GAAP operating margin contracted 200 bps to 21.6%.

Balance Sheet & Other Details

As of Dec 31, 2022, Tyler’s cash and cash equivalents were $173.9 million compared with $185.9 million as of Sep 30, 2022.

The company generated $121.9 million in cash from operational activities and $114.7 million of free cash flow. With the rising interest rates, Tyler is focusing on utilizing its excess cash for debt reduction.

During full-year 2022, the company generated $381.5 million and $331.3 million in operating and free cash flow, respectively.

Full-Year Highlights

For full-year 2022, Tyler reported non-GAAP revenues of $1.85 billion, up 16% year over year. On an organic basis, non-GAAP revenues increased 8%.

The company reported non-GAAP earnings of $7.50 per share, reflecting a year-over-year surge of 6.8%.

Non-GAAP operating income climbed 7.8% to $437.1 million. Adjusted EBITDA was $475 million compared with $435.7 million reported in 2021.

Bookings were $1.9 billion for full-year 2022, indicating 9.5% growth.

Guidance

For 2023, Tyler expects GAAP and non-GAAP revenues in the range of $1.935-$1.970 billion.

TYL estimates adjusted earnings in the $7.50-$7.65 per share range. The company anticipates interest rate hikes, accelerated non-cash amortization of debt discounts and issuance costs associated with debt repayments.

Zacks Rank & Key Picks

Currently, Tyler carries a Zacks Rank #4 (Sell). Shares of TYL have lost 29.2% over the past year.

Some top-ranked stocks from the broader Computer and Technology sector are Baidu BIDU, Fabrinet FN and Bandwidth BAND. While Baidu and Fabrinet sport a Zacks Rank #1 (Strong Buy), Bandwidth carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Baidu’s fourth-quarter 2022 earnings has been revised 49 cents southward to $2.14 per share over the past 30 days. For 2022, earnings estimates have dropped by 3.4% to $8.64 per share over the past 30 days.

BIDU’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 50.2%. Shares of the company have lost 9.2% in the past year.

The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past seven days. For fiscal 2023, earnings estimates have moved north by 24 cents to $7.71 per share in the past seven days.

FN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 5.1%. Shares of the company have jumped 19.3% in the past year.

The Zacks Consensus Estimate for Bandwidth’s fourth-quarter 2022 earnings has been revised by a penny to 4 cents per share over the past 90 days. For 2022, earnings estimates have moved north by 5 cents to 37 cents per share in the past 90 days.

BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 55.5% in the past year.

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