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Tyler (TYL) & Texas Extend Payment Services Deal for 3 Years

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Tyler Technologies (TYL - Free Report) recently announced that Texas signed a three-year contract extension for its payment processing services. The deal can be attributed to the Texas-based company’s acquisition of NIC in April 2021.

The relationship between Texas and NIC is 13-year long. The newly signed agreement reflects a further extension of their relationship.

Tyler’s subsidiary, NIC, currently provides its payment procession solutions for 235 Texas.gov applications. This enables 306 state government agencies to process online payments and over-the-counter debit, credit and Automated Clearing House payments. Per the company, NIC has processed more than 73.5 million transactions equivalent to $5.69 billion for Texas since Sep 1, 2018.

As part of the new deal, TYL will integrate its Data & Insights platform into NIC’s payment processing and settlement services. This will bring in advanced analytics to the solution, thereby allowing clients to better understand customers’ transactions and information.

Pandemic Boosts Tyler’s Product Demand

The COVID-19 outbreak disrupted almost every area of the federal government through mandated shutdowns, which led to the growing demand for contactless, digital interaction and transactions with the government among citizens and businesses. With markets rebounding to pre-pandemic levels as evident from an upsurge in market trends, high-level areas in state governments are focusing on transforming their operations digitally.

Tyler has been benefiting from the public sector’s ongoing transition from on-premise and outdated systems to scalable cloud-based systems. It has been continuously advancing its core software applications and expanding complementary product and service portfolios to fulfill the changing needs of customers and respond to technological advancements.

The company has been extensively focusing on extending its major state enterprise contracts as well. Last month, Mississippi signed a two-year contract for Tyler’s award-winning digital government and payments services, which further extended the 11-year long relationship between the state and the company.

In the same month, TYL announced that it successfully provided its Economic Intelligence solution for New Jersey’s Office of Information Technology. Leveraging third-party data from two of its official partners, SafeGraph and Affinity Solutions, and integrating them into its Data & Insights platform, Tyler aided the New Jersey office to analyze and understand local economic trends.

In the fourth quarter of 2021, the company added 135 new subscription-based arrangements and converted 71 existing on-premises clients, accounting for approximately $56 million in the total contract value.

The company has been pursuing strategic takeovers to broaden its product and service offerings, enter new markets related to local governments, attract clients and expand geographically. However, it faces significant integration risks due to frequent acquisitions.

Furthermore, Tyler’s near-term growth prospect is likely to be negatively impacted by delays in procurement processes and lengthening sales cycles as public entities focus on issues related to the pandemic. Also, many of its customers are likely to face budget pressures in the near term.

Zacks Rank & Stocks to Consider

Currently, Tyler carries a Zacks Rank #4 (Sell). Shares of TYL have declined 6.9% in the trailing 12 months.

Some better-ranked stocks from the broader technology sector include Jabil (JBL - Free Report) , Broadcom (AVGO - Free Report) and Apple (AAPL - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Broadcom and Apple each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Jabil’s third-quarter fiscal 2022 earnings has been revised upward to $1.62 per share from $1.46 30 days ago. For fiscal 2022, earnings estimates have been revised upward by 67 cents to $7.25 per share in the past 30 days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.5%. Shares of JBL have rallied 8.5% in the trailing 12 months.

The Zacks Consensus Estimate for Broadcom’s second-quarter fiscal 2022 earnings has been revised upward by eight cents to $8.72 per share over the past seven days. For fiscal 2022, earnings estimates have moved upward by 18 cents to $35.67 per share over the past seven days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.9%. Shares of AVGO have rallied 23.5% over the past year.

The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by seven cents to $1.43 per share over the past 90 days. For fiscal 2022, earnings estimates have moved upward by a penny to $6.16 per share in the past 60 days.

Apple’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while meeting the same on one occasion, the average surprise being 20.3%. AAPL stock has soared 26.7% in the past 12 months.


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