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Tyler's (TYL) Earnings and Revenues Beat Estimates in Q3

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Tyler Technologies (TYL - Free Report) reported third-quarter 2022 non-GAAP earnings of $2.06 per share, which beat the Zacks Consensus Estimate of $1.86 per share and improved 2.8% from the year-ago quarter.

GAAP and non-GAAP revenues increased 2.9% year over year to $473.2 million. The top line outpaced the Zacks Consensus Estimate of $466.5 million.

The robust year-over-year top-line growth was primarily driven by growth in subscription revenues. During the third quarter, software subscription arrangements comprised approximately 91% 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 8.8%.

 

Tyler Technologies, Inc. Price, Consensus and EPS Surprise 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 0.2% year over year to $371.7 million and accounted for 78.5% of the total quarterly revenues.

TYL reported annualized recurring revenues on a non-GAAP basis of $1.49 billion, which remained flat year over year. Subscription bookings in the third quarter added $28.1 million to annual recurring revenues.

Segment-wise, Maintenance revenues (accounting for 24.8% of total revenues) were $117.3 million, down from $117.8 million in the year-ago quarter.

Subscription revenues (53.7% of total revenues) grew 0.6% year over year to $254.3 million.

Software licenses and royalties (4.3% of total revenues) of $20.3 million decreased 10.6% on a year-over-year basis.

Professional Services revenues (13.4% of total revenues) amounted to $63.2 million, up 15.8% from the year-ago quarter.

Appraisal services revenues (1.8% of total revenues) rose 21.1% from the prior-year quarter to $8.6 million.

Hardware and other revenues (2% of total revenues) jumped 102.4% from the year-ago quarter to $9.4 million.

The backlog at the quarter-end was $1.88 billion, up 6.3% year over year.

Bookings dropped 17% year over year to $499. However, in the trailing 12 months, bookings increased 18.8% year over year to $1.9 billion.

Operating Details

Tyler’s non-GAAP gross profit increased 4.3% year over year to $225.5 million. Non-GAAP gross margin expanded 70 basis points (bps) to 47.6%.

Adjusted EBITDA increased 1.5% year over year to $126.9 million.

Non-GAAP operating income for the quarter totaled $117.8 million, up 0.9% year over year. However, the non-GAAP operating margin contracted 40 bps to 24.9%.

Balance Sheet & Other Details

As of Sep 30, 2022, Tyler’s cash and cash equivalents were $185.9 million compared with $253.1 million as of Jun 30, 2022.

The company generated $129.4 million in cash from operational activities and $115.6 million of free cash flow. With the rising interest rates, Tyler is focusing on utilizing its excess cash for debt reduction.

During the first nine months of 2022, the company generated $259.6 million and $216.6 million in operating and free cash flow, respectively.

Guidance

For 2022, Tyler now expects GAAP and non-GAAP revenues in the range of $1.837-$1.857 billion compared with the previous estimate of $1.835-$1.870 billion.

Further, TYL raised its adjusted earnings guidance range from the previously projected $7.36-$7.52 per share to the $7.51-$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 & Stocks to Consider

Tyler currently has a Zacks Rank of 4 (Sell). Shares of TYL have plunged 34.6% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Zscaler (ZS - Free Report) , Digi International (DGII - Free Report) and Baidu (BIDU - Free Report) . While Zscaler and Digi International sport a Zacks Rank #1 (Strong Buy), Baidu carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved a penny north to $1.18 per share in the past 30 days.

Zscaler’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 51.3% in the past year.

The Zacks Consensus Estimate for Digi’s fourth-quarter fiscal 2022 earnings has increased by 2 cents to 42 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved 3.2% up to $1.61 per share in the past 30 days.

DGII's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 28.6%. Shares of the company have increased 87.6% in the past year.

The Zacks Consensus Estimate for Baidu's third-quarter 2022 earnings has been revised 46 cents southward to $2.51 per share over the past 60 days. For 2022, earnings estimates have moved 16.2% north to $9.16 per share in the past 60 days.

Baidu's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 58.1%. Shares of BIDU have slumped 49.8% in the past year.

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