News Details

Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter and year ended December 31, 2014.

Fourth Quarter 2014 Financial Highlights:

• Total revenue was $127.4 million, up 15.1 percent from $110.7 million for the fourth quarter of 2013. Organic growth was 14.5 percent.
• Recurring software revenue from maintenance and subscriptions was $79.5 million, an increase of 15.1 percent compared to the fourth quarter of 2013, and comprised 62.4 percent of fourth quarter 2014 revenue.
• Royalty revenue from Microsoft Dynamics^® AX, which is included in software licenses and royalties, was $881,000 compared to $473,000 for the fourth quarter of 2013.
• Operating income was $24.6 million, an increase of 26.4 percent from $19.5 million for the fourth quarter of 2013.
• Net income was $15.3 million, or $0.43 per diluted share, up 45.7 percent compared to $10.5 million, or $0.30 per diluted share, for the fourth quarter of 2013.
• Cash flow from operations was $28.3 million, compared to $7.4 million for the fourth quarter of 2013.
• Non-GAAP operating income was $30.5 million, up 23.7 percent from $24.7 million for the fourth quarter of 2013.
• Adjusted EBITDA was $32.4 million, up 24.4 percent compared to $26.0 million for the fourth quarter of 2013.
• Non-GAAP net income was $19.3 million, or $0.54 per diluted share, up 38.1 percent compared to $14.0 million, or $0.39 per diluted share, for the fourth quarter of 2013.
• Total backlog reached a new high of $702.0 million at December 31, 2014, up 27.2 percent from $551.7 million at December 31, 2013. Software-related backlog (excluding appraisal services) was $657.3 million, an increase of 23.6 percent compared to $531.8 million at December 31, 2013.

Full Year 2014 Financial Highlights:

• Total revenue was $493.1 million, up 18.4 percent from $416.6 million in 2013.
• Recurring software revenue from maintenance and subscriptions was $300.5 million, an increase of 18.5 percent compared to 2013, and comprised 60.9 percent of 2014 revenue.
• Royalty revenue from Microsoft Dynamics AX was $3.0 million compared to $3.1 million in 2013.
• Operating income was $94.8 million, an increase of 41.3 percent from $67.1 million in 2013.
• Net income was $58.9 million, or $1.66 per diluted share, up 50.7 percent compared to $39.1 million, or $1.13 per diluted share, in 2013.
• Cash flow from operations was $123.4 million, compared to $66.1 million in 2013.
• Non-GAAP operating income was $116.6 million, up 35.0 percent from $86.4 million in 2013.
• Adjusted EBITDA was $124.3 million, up 35.2 percent compared to $91.9 million in 2013.
• Non-GAAP net income was $74.0 million, or $2.09 per diluted share, up 41.5 percent compared to $52.3 million, or $1.51 per diluted share, in 2013.

Tyler also announced that its contractual research and development (R&D) commitment to develop public sector functionality for Microsoft Dynamics AX expires with the release of Dynamics AX 7. Tyler does not anticipate continuing its R&D commitment, although it will continue to provide sustained engineering and technical support for the public sector functionality within Dynamics AX. Tyler further expects that license and maintenance royalties for all applicable domestic and international sales of Dynamics AX to public sector entities will continue under the terms of the contract.

"Our fourth-quarter results provided a strong finish to a year of exceptional performance for Tyler," said John S. Marr Jr., Tyler's president and chief executive officer. "Revenues for the quarter grew by more than 15 percent, and despite onboarding expenses associated with significant additions to our headcount during the year, we still expanded our non-GAAP operating margin by 160 basis points for the fourth quarter, and almost 300 basis points for the full year.

"Our team of professionals continues to execute at a high level and our competitive position and win rates remain very strong. This was reflected in our fourth-quarter bookings and backlog, which each grew more than 27 percent year-over-year. SaaS bookings were robust in the fourth quarter, as total new SaaS contract values achieved a new quarterly high of $31.0 million, including our largest single SaaS contract to date. For the full year, SaaS bookings rose 37 percent to $72.7 million.

"We move into 2015 with a very positive outlook, supported by the visibility provided by our recurring revenues, high backlog level and an active new business pipeline. We look forward to expanding our market-leading position and building on Tyler's 2014 successes in the coming year," continued Mr. Marr.

Guidance for 2015

As of February 4, 2015, Tyler Technologies is providing the following guidance for the full year 2015:

• Total revenues are expected to be in the range of $567 million to $575 million.
• Diluted earnings per share are expected to be approximately $1.91 to $1.99.
• Non-GAAP diluted earnings per share are expected to be approximately $2.44 to $2.52.
• Pretax non-cash, share-based compensation expense is expected to be approximately $19.5 million to $20.0 million.
• The effective tax rate is expected to be between approximately 37.5 percent and 38.5 percent.
• Capital expenditures are expected to be between $13.5 million and $14.5 million, and total depreciation and amortization expense is expected to be between $15.5 million and $16.5 million, including approximately $6.5 million of amortization of acquisition intangibles.

Conference Call

Tyler Technologies will hold a conference call on Thursday, February 5, at 10:00 a.m. EST to discuss the company's results. The company is offering participants the opportunity to register in advance for the conference through the following link: http://dpregister.com/10058748. Registered participants will receive an email with a calendar reminder and a dial-in number and PIN that will allow them immediate access to the call on February 5, 2015.

Participants who do not wish to pre-register for the call may dial in using 877-270-2148 (U.S. callers) or 412-902-6510 (international callers), and ask for the "Tyler Technologies" call. A replay will be available two hours after completion of the call through February 12, 2015. To access the replay, please dial 877-344-7529 (U.S. callers), 412-317-0088 (international callers) and 855-669-9658 (Canada callers) and reference passcode 10058748.

The live webcast and archived replay can also be accessed at www.tylertech.com.

About Tyler Technologies, Inc.

Tyler Technologies (NYSE: TYL) is a leading provider of end-to-end information management solutions and services for local governments. Tyler partners with clients to empower the public sector - cities, counties, schools and other government entities - to become more efficient, more accessible and more responsive to the needs of citizens. Tyler's client base includes more than 11,000 local government offices in all 50 states, Canada, the Caribbean, the United Kingdom and other international locations. Forbes named Tyler one of "America's Best Small Companies" eight times and the company has been included four times on the Barron's 400 Index, a measure of the most promising companies in America. More information about Plano-based Tyler Technologies can be found at www.tylertech.com.

Non-GAAP Financial Measures

Tyler Technologies has provided in this press release financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share, EBITDA and adjusted EBITDA. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating Tyler's ongoing operational performance. Tyler believes the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures discussed above exclude share-based compensation expense, employer portion of payroll taxes on employee stock transactions, and expenses associated with amortization of intangibles arising from business combinations. We use these measures and believe they are useful to investors because they provide additional insight in comparing results from period to period.

Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP. The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial statement tables included below in this press release.

Forward-looking Statements

This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as "believes," "expects," "anticipates," "foresees," "forecasts," "estimates," "plans," "intends," "continues," "may," "will," "should," "projects," "might," "could" or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our customers, primarily local and state governments, that could negatively impact information technology spending; (2) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (3) material portions of our business require the Internet infrastructure to be adequately maintained; (4) our ability to achieve our financial forecasts due to various factors, including project delays by our customers, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (5) general economic, political and market conditions; (6) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (7) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (8) competition in the industry in which we conduct business and the impact of competition on pricing, customer retention and pressure for new products or services; (9) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (10) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed "Risk Factors" contained in our most recent annual report on Form 10-K. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

Tyler Technologies, Inc.
Brian K. Miller, 972-713-3720
Executive Vice President - CFO
brian.miller@tylertech.com