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Why Is Tyler Technologies (TYL) Up 7.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Tyler Technologies (TYL - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tyler Technologies due for a pullback? 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 Technologies reported first-quarter 2024 non-GAAP earnings of $2.20 per share, which beat the Zacks Consensus Estimate of $2.03. The bottom line was higher than the year-ago quarter’s earnings of $1.76.
Non-GAAP revenues increased 8.6% year over year to $512.4 million. Moreover, the top line beat the Zacks Consensus Estimate of $507.8 million.
Year-over-year top-line growth was primarily driven by a rise in subscription revenues. During the first quarter, software subscription arrangements comprised approximately 93% 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.
Quarterly Details
Tyler Technologies’ recurring revenues from maintenance and subscriptions increased 8.8% year over year to $430.5 million and accounted for 84% of the total quarterly revenues.
TYL reported annualized recurring revenues on a non-GAAP basis of $1.72 billion, up 8.8% year over year.
Segment-wise, Maintenance revenues (accounting for 22.87% of total revenues) were $117.2 million, up from $115.1 million reported in the year-ago quarter. Our model estimate for Maintenance revenues was pegged at $116.4 million.
Subscription revenues (61% of total revenues) grew 11.7% year over year to $313.2 million, while our model estimate for the same was pinned at $309.8 million. On an organic basis, Subscription revenues soared 11.4% year over year.
Software licenses and royalties (1.7% of total revenues) of $8.7 million fell year over year by 13.8%. Our model predicted Software licenses and royalties’ sales to increase 24.7% to $12.6 million.
Professional Services revenues (12.64% of total revenues) amounted to $64.8 million, down 6.4% from the year-ago quarter. Our model estimate for the same was pegged at $61 million.
Hardware and other revenues (1.6% of total revenues) surged 60.8% from the year-ago quarter to $8.36 million. Our model estimate for Hardware and other revenues was pegged at $5.9 million.
The backlog at the quarter-end was $2.02 billion, up 9.5% year over year. Bookings increased 16.7% year over year to $503 million.
Operating Details
Tyler Technologies’ non-GAAP gross profit increased 11.7% year over year to $240.3 million. The non-GAAP gross margin expanded 130 basis points (bps) to 46.9%.
Adjusted EBITDA increased 19.6% year over year to $134.6 million.
Non-GAAP operating income for the quarter totaled $121.7 million and went up 19% year over year. However, the non-GAAP operating margin expanded 210 bps to 23.8%.
Balance Sheet & Other Details
As of Mar 31, 2024, TYL’s cash and cash equivalents were $188.2 million compared with $165.5 million as of Dec 31, 2024.
The company generated an operating cash flow of $71.8 million and free cash flow of $57.2 million in the first quarter of fiscal 2024. With its robust free cash flow, TYL is focusing on reducing debt. In the first quarter of 2024, Tyler Technologies repaid the final $50 million of its term debt.
Revised FY24 Guidance
Tyler Technologies revised its guidance for 2024. The company now expects revenues in the range of $2.110-$2.140 billion compared with the previous guidance of $2.095-$2.135 billion. TYL projects its adjusted earnings per share in the range of $9.10-$9.30 compared with the previous guidance of $8.90-$9.10.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Tyler Technologies has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Tyler Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Tyler Technologies belongs to the Zacks Business - Software Services industry. Another stock from the same industry, MSCI (MSCI - Free Report) , has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
MSCI reported revenues of $679.97 million in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $3.52 for the same period compares with $3.14 a year ago.
MSCI is expected to post earnings of $3.55 per share for the current quarter, representing a year-over-year change of +8.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.
MSCI has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Tyler Technologies (TYL) Up 7.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Tyler Technologies (TYL - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tyler Technologies due for a pullback? 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 Technologies Q1 Earnings & Revenues Beat Estimates
Tyler Technologies reported first-quarter 2024 non-GAAP earnings of $2.20 per share, which beat the Zacks Consensus Estimate of $2.03. The bottom line was higher than the year-ago quarter’s earnings of $1.76.
Non-GAAP revenues increased 8.6% year over year to $512.4 million. Moreover, the top line beat the Zacks Consensus Estimate of $507.8 million.
Year-over-year top-line growth was primarily driven by a rise in subscription revenues. During the first quarter, software subscription arrangements comprised approximately 93% 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.
Quarterly Details
Tyler Technologies’ recurring revenues from maintenance and subscriptions increased 8.8% year over year to $430.5 million and accounted for 84% of the total quarterly revenues.
TYL reported annualized recurring revenues on a non-GAAP basis of $1.72 billion, up 8.8% year over year.
Segment-wise, Maintenance revenues (accounting for 22.87% of total revenues) were $117.2 million, up from $115.1 million reported in the year-ago quarter. Our model estimate for Maintenance revenues was pegged at $116.4 million.
Subscription revenues (61% of total revenues) grew 11.7% year over year to $313.2 million, while our model estimate for the same was pinned at $309.8 million. On an organic basis, Subscription revenues soared 11.4% year over year.
Software licenses and royalties (1.7% of total revenues) of $8.7 million fell year over year by 13.8%. Our model predicted Software licenses and royalties’ sales to increase 24.7% to $12.6 million.
Professional Services revenues (12.64% of total revenues) amounted to $64.8 million, down 6.4% from the year-ago quarter. Our model estimate for the same was pegged at $61 million.
Hardware and other revenues (1.6% of total revenues) surged 60.8% from the year-ago quarter to $8.36 million. Our model estimate for Hardware and other revenues was pegged at $5.9 million.
The backlog at the quarter-end was $2.02 billion, up 9.5% year over year. Bookings increased 16.7% year over year to $503 million.
Operating Details
Tyler Technologies’ non-GAAP gross profit increased 11.7% year over year to $240.3 million. The non-GAAP gross margin expanded 130 basis points (bps) to 46.9%.
Adjusted EBITDA increased 19.6% year over year to $134.6 million.
Non-GAAP operating income for the quarter totaled $121.7 million and went up 19% year over year. However, the non-GAAP operating margin expanded 210 bps to 23.8%.
Balance Sheet & Other Details
As of Mar 31, 2024, TYL’s cash and cash equivalents were $188.2 million compared with $165.5 million as of Dec 31, 2024.
The company generated an operating cash flow of $71.8 million and free cash flow of $57.2 million in the first quarter of fiscal 2024. With its robust free cash flow, TYL is focusing on reducing debt. In the first quarter of 2024, Tyler Technologies repaid the final $50 million of its term debt.
Revised FY24 Guidance
Tyler Technologies revised its guidance for 2024. The company now expects revenues in the range of $2.110-$2.140 billion compared with the previous guidance of $2.095-$2.135 billion. TYL projects its adjusted earnings per share in the range of $9.10-$9.30 compared with the previous guidance of $8.90-$9.10.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Tyler Technologies has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Tyler Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Tyler Technologies belongs to the Zacks Business - Software Services industry. Another stock from the same industry, MSCI (MSCI - Free Report) , has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
MSCI reported revenues of $679.97 million in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $3.52 for the same period compares with $3.14 a year ago.
MSCI is expected to post earnings of $3.55 per share for the current quarter, representing a year-over-year change of +8.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.
MSCI has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.