Quarterly net income rises 28 percent as revenues grow 18 percent
Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights:
- Total revenue was $146.3 million, up 17.6 percent from $124.4 million for the second quarter of 2014. Organic growth was 16.8 percent.
- Recurring revenue from maintenance and subscriptions was $86.4 million, an increase of 18.6 percent compared to the second quarter of 2014, and comprised 59.1 percent of second quarter 2015 revenue.
- Royalty revenue from Microsoft Dynamics® AX, which is included in software licenses and royalties, was $1.2 million, up 111.3 percent compared to $576,000 for the second quarter of 2014.
- Operating income was $29.6 million, an increase of 25.3 percent from $23.6 million for the second quarter of 2014.
- Net income was $18.8 million, or $0.52 per diluted share, up 27.8 percent compared to $14.7 million, or $0.42 per diluted share, for the second quarter of 2014.
- Cash flow from operations was $16.9 million, up 37.8 percent compared to $12.3 million for the second quarter of 2014.
- Non-GAAP operating income was $36.0 million, up 25.3 percent from $28.7 million for the second quarter of 2014.
- Adjusted EBITDA was $38.2 million, up 24.2 percent compared to $30.7 million for the second quarter of 2014.
- Non-GAAP net income was $23.3 million, or $0.65 per diluted share, up 26.8 percent compared to $18.4 million, or $0.52 per diluted share, for the second quarter of 2014.
- Total backlog was $723.0 million, up 10.4 percent from $654.7 million at June 30, 2014. Software-related backlog (excluding appraisal services) was $672.4 million, an increase of 8.6 percent compared to $619.1 million at June 30, 2014.
“Tyler Technologies again achieved outstanding results in the second quarter, exceeding our expectations for both revenues and earnings,” said John S. Marr Jr., Tyler’s president and chief executive officer. “All of our major revenue lines grew by more than 14 percent, with software licenses and royalties, subscriptions, and appraisal services revenues each growing more than 20 percent. As expected, we experienced pressure on gross margins associated with onboarding of new professional services and development staff to support our growing backlog, including an increase in total headcount of 212 in the first half of 2015. Nonetheless, we expanded our operating margin and non-GAAP operating margin by 120 and 150 basis points, respectively, as we continue to gain leverage in our SG&A and R&D expenses.
“As we’ve previously discussed, this quarter presented a very difficult bookings comparison, as the second quarter of 2014 included approximately $64 million of new contracts in California for our Odyssey® court case management solution. Lumpy bookings, especially with respect to large contracts, are simply a characteristic of our business. However, excluding the California Odyssey signings in last year’s second quarter, bookings rose 3 percent this quarter and 12 percent on a trailing 12 month basis.
“Tyler’s backlog reached a new high of $723 million at June 30. The new business pipeline remains active and our competitive position in the marketplace continues to be very strong. With our robust performance for the first half of the year and current outlook for the remainder of 2015, we have again raised our earnings guidance for the full year.”
Guidance for 2015
As of July 22, 2015, Tyler Technologies is providing the following guidance for the full year 2015:
- Total revenues are expected to be in the range of $575 million to $581 million.
- Diluted earnings per share are expected to be approximately $1.97 to $2.05.
- Non-GAAP diluted earnings per share are expected to be approximately $2.50 to $2.58.
- Pretax non-cash, share-based compensation expense is expected to be approximately $20.0 million to $20.5 million.
- The effective tax rate is expected to be between approximately 37.0 percent and 38.0 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 $16.0 million, including approximately $6.7 million of amortization of acquisition intangibles.
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