It has been about a month since the last earnings report for Tyler Technologies (TYL Quick QuoteTYL - Free Report) . Shares have lost about 4.3% 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 drivers.

Tyler Q1 Earnings & Revenues Beat Estimates

Tyler Technologies reported first-quarter 2021 non-GAAP earnings of $1.43 per share, which beat the Zacks Consensus Estimate by 9.2%. Moreover, the bottom line increased 16.5% from the year-ago reported figure.

Revenues on a non-GAAP basis increased 6.5% year on year to $294.8 million, beating the consensus mark by 2.3%.

Notably, recurring revenues from maintenance and subscriptions increased 13% year over year to $221.6 million and accounted for 75.2% of total revenues.

During the quarter, Tyler completed the acquisitions of electronic management of veterans' claims provider, DataSpec, and cloud-based school scheduling platform, ReadySub.

Q1 Results in Detail

Segment-wise, Maintenance revenues (accounting for 40.4% of total revenues) came in at $119.1 million, up 4.1% year over year.

Subscription revenues (34.8% of total revenues) climbed 25.5% year over year to $102.5 million.

Software licenses and royalties (5.1% of total revenues) of $14.9 million slid 20.3% on a year-over-year basis.

Software Services revenues (16.1% of total revenues) of $47.6 million dropped 8.6% from the year-ago quarter.

Appraisal services revenues (2.2% of total revenues) rose 12% from the prior-year quarter to $6.5 million.

Hardware and other revenues (1.4% of total revenues) rose 10.5% from the year-ago quarter to $4.2 million.

Backlog at quarter-end was $1.55 billion, up 3% year over year. Of this, software-related backlog (excluding appraisal services) increased 2.9% from a year ago to $1.50 billion.

Bookings declined 22.8% year on year to $247 million because of more than usual large contracts signed in the prior-year quarter, including two SaaS contracts with the North Carolina Administrative Office of the Courts.

Operating Details

Tyler’s non-GAAP gross profit decreased to $157.2 million from the year-earlier quarter’s $141.6 million. However, non-GAAP gross margin expanded 210 basis points (bps) to 53.3%.

Adjusted EBITDA was $85.7 million, up 17.1% year over year.

The company’s non-GAAP operating income increased 18% year over year to $78.9 million. Its operating margin advanced 270 bps to 26.8%.

Balance Sheet and Cash Flow

As of Mar 31, 2021, cash and cash equivalents were $1.25 billion compared with $603.6 million on Dec 31, 2020.

The company generated an operating cash flow of $71.7 million during the first quarter, up 26.4% year over year.

Free cash flow was $61.7 million for the first quarter.

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Tyler reiterated its full-year revenue guidance in the range of $1.119-$1.22 billion. Moreover, non-GAAP earnings guidance is projected within $5.65-$5.77 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Tyler Technologies has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Tyler Technologies has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.