Market Optimism Apparent After Tyler (TYL) Issues Results

Tyler Technologies, Inc. (NYSE: TYL) has reported its financial results for the fourth quarter ended December 31, 2023, showing an increase in total revenues and recurring revenues. The company's total revenues were $480.9 million, up 6.3% from the same period in the previous year. Recurring revenues for the same quarter were $403.6 million, up 7.9%, and comprised 83.9% of the total revenues, up from 82.7%. The company's subscription revenues grew by 11.4%, with software as a service (SaaS) revenues increasing by 21.7% to $141.0 million.

Lynn Moore, President and CEO of Tyler Technologies, commented on the results, stating, "Our fourth quarter results reflected a strong finish to a pivotal year in our cloud transition and a return to year-over-year operating margin expansion. We achieved our key objectives for the year and both earnings and cash flow surpassed our expectations."

Moore further highlighted the company's performance, stating, "Recurring revenue growth for the quarter was solid, highlighted by SaaS revenue growth of 21.7%, marking our 12th consecutive quarter of SaaS revenue growth of 20% or more. Free cash flow reached a new high for a fourth quarter and our SaaS mix expanded to 89% of new software contract value."

The company also provided guidance for the full year 2024, with total revenues expected to be in the range of $2.095 billion to $2.135 billion. Additionally, Tyler Technologies anticipates its annual non-GAAP diluted earnings per share to be in the range of $8.90 to $9.10.

Looking ahead, Moore expressed optimism about the company's prospects, stating, "We enter 2024 with tremendous optimism and confidence in the year ahead and beyond as we execute our strategy supporting our Tyler 2030 vision."

On the market, Tyler Technologies' shares have moved 2.0%, and are now trading at a price of $440.13.

The company's full 8-K submission is available here.

2018 2019 2020 2021 2022 2023
Revenue (MM) $935 $1,086 $1,117 $1,592 $1,850 $1,923
Revenue Growth n/a 16.16% 2.78% 42.59% 16.2% 3.94%
Gross Margins 47% 48% 49% 45% 42% 44%
Operating Margins 16% 14% 15% 11% 12% 11%
Net Margins 16% 13% 17% 10% 9% 8%
Net Income (MM) $147 $147 $195 $161 $164 $158
Net Interest Expense (MM) $3 $5 $3 -$23 -$28 -$28
Depreciation & Amort. (MM) $62 $77 $82 $136 $159 $156
Earnings Per Share $3.68 $3.65 $4.69 $3.82 $3.87 $3.71
EPS Growth n/a -0.82% 28.49% -18.55% 1.31% -4.13%
Diluted Shares (MM) 40 41 42 42 42 43
Capital Expenditures (MM) $27 $37 $23 $34 $23 $18
Current Ratio 1.22 1.34 1.97 1.16 0.95 0.93

Tyler Technologies has rapidly growing revenues and decreasing reinvestment in the business and positive EPS growth. Additionally, the company's financial statements display positive cash flows and healthy leverage levels. However, Tyler Technologies has slimmer gross margins than its peers, weak operating margins with a negative growth trend, and not enough current assets to cover current liabilities because its current ratio is 0.93.

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