It has been about a month since the last earnings report for Tyler Technologies (
TYL Quick Quote TYL - Free Report) . Shares have lost about 2.3% in that time frame, outperforming 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 Q4 Earnings Miss, Revenues Beat Estimates
Tyler Technologies 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’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.
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.
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.
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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
Currently, Tyler Technologies has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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.
Tyler Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.