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Why Is Tyler Technologies (TYL) Down 2.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Tyler Technologies (TYL - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tyler Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Tyler's Q2 Earnings Beat, Revenues Miss Estimates
Tyler Technologies reported second-quarter 2020 non-GAAP earnings of $1.38 per share, which surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 6.2% from the year-ago quarter.
Revenues on a non-GAAP basis declined 2.4% year over year to $271.3 million, missing the consensus mark of $280.2 million. Tyler recorded a 1.9% year-over-year decline in organic revenues.
Recurring revenues increased 12.3% year over year to $202.4 million and accounted for 74.7% of total revenues.
Q2 Results in Detail
Segment wise, Maintenance revenues (43.1% of total revenues) were $116.8 million, up 9.4% year over year.
Subscription revenues (31.6% of total revenues) climbed 16.6% year over year to $85.6 million.
Software subscription arrangements comprised roughly 43% of the total new software contract value in the reported quarter compared with the year-ago quarter’s 80%.
Software licenses and royalties (6.3% of total revenues) of $17 million slid 17.7% on a year-over-year basis.
Software Services revenues (16.1% of total revenues) of $43.7 million dropped 23.9% from the year-ago quarter.
Appraisal services revenues (1.7% of total revenues) slipped 24.7% to $4.7 million.
Hardware and other revenues (1.2% of total revenues) plummeted 68.8% to $3.3 million.
Backlog at the end of the quarter was $1.54 billion, up 7.4% year over year. Of this, software-related backlog increased 8% to $1.51 billion.
Bookings plunged 31.6% year over year to $309 million. Subscription bookings added $9.2 million in annual recurring revenues.
Operating Details
Tyler’s non-GAAP gross profit increased to $143.8 million from the year-earlier quarter’s $142.5 million. Non-GAAP gross margin also expanded180 basis points (bps) to 53%.
Adjusted EBITDA was $80.7 million, up 8.2% year over year.
Selling, general and administrative (SG&A) expenses, as percentage of revenues, shrunk 80 bps year over year to 23.1%. However, research and development (R&D) expenses, as percentage of revenues, expanded 80 bps to 8.1%.
The company’s non-GAAP operating income increased 9.1% year over year to $74.6 million. Its operating margin expended 290 bps to 27.5%.
Balance Sheet and Cash Flow
As of Mar 31, 2020, cash and cash equivalents were $351.3 million compared with $302 million as of Mar 31, 2020.
Cash flow from operations was $39.8 million, up 62.5% year over year.
Guidance
Tyler expects the pandemic to adversely impact its business during second-half of 2020. The company continues to see delays in procurement processes and lengthening sales cycles, as public sector entities focus on issues related to the pandemic.
For 2020, the company projects revenues between $1.125 billion and $1.145 billion. The company anticipates non-GAAP earnings in the range of $5.30-$5.50 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Tyler Technologies has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tyler Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Tyler Technologies (TYL) Down 2.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Tyler Technologies (TYL - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tyler Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Tyler's Q2 Earnings Beat, Revenues Miss Estimates
Tyler Technologies reported second-quarter 2020 non-GAAP earnings of $1.38 per share, which surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 6.2% from the year-ago quarter.
Revenues on a non-GAAP basis declined 2.4% year over year to $271.3 million, missing the consensus mark of $280.2 million. Tyler recorded a 1.9% year-over-year decline in organic revenues.
Recurring revenues increased 12.3% year over year to $202.4 million and accounted for 74.7% of total revenues.
Q2 Results in Detail
Segment wise, Maintenance revenues (43.1% of total revenues) were $116.8 million, up 9.4% year over year.
Subscription revenues (31.6% of total revenues) climbed 16.6% year over year to $85.6 million.
Software subscription arrangements comprised roughly 43% of the total new software contract value in the reported quarter compared with the year-ago quarter’s 80%.
Software licenses and royalties (6.3% of total revenues) of $17 million slid 17.7% on a year-over-year basis.
Software Services revenues (16.1% of total revenues) of $43.7 million dropped 23.9% from the year-ago quarter.
Appraisal services revenues (1.7% of total revenues) slipped 24.7% to $4.7 million.
Hardware and other revenues (1.2% of total revenues) plummeted 68.8% to $3.3 million.
Backlog at the end of the quarter was $1.54 billion, up 7.4% year over year. Of this, software-related backlog increased 8% to $1.51 billion.
Bookings plunged 31.6% year over year to $309 million. Subscription bookings added $9.2 million in annual recurring revenues.
Operating Details
Tyler’s non-GAAP gross profit increased to $143.8 million from the year-earlier quarter’s $142.5 million. Non-GAAP gross margin also expanded180 basis points (bps) to 53%.
Adjusted EBITDA was $80.7 million, up 8.2% year over year.
Selling, general and administrative (SG&A) expenses, as percentage of revenues, shrunk 80 bps year over year to 23.1%. However, research and development (R&D) expenses, as percentage of revenues, expanded 80 bps to 8.1%.
The company’s non-GAAP operating income increased 9.1% year over year to $74.6 million. Its operating margin expended 290 bps to 27.5%.
Balance Sheet and Cash Flow
As of Mar 31, 2020, cash and cash equivalents were $351.3 million compared with $302 million as of Mar 31, 2020.
Cash flow from operations was $39.8 million, up 62.5% year over year.
Guidance
Tyler expects the pandemic to adversely impact its business during second-half of 2020. The company continues to see delays in procurement processes and lengthening sales cycles, as public sector entities focus on issues related to the pandemic.
For 2020, the company projects revenues between $1.125 billion and $1.145 billion. The company anticipates non-GAAP earnings in the range of $5.30-$5.50 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Tyler Technologies has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tyler Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.