EX-99.0 2 a991earningsrelease12312018.htm EXHIBIT 99.0 Exhibit

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Tyler Technologies Reports Earnings for Fourth Quarter 2018

Company achieves double-digit revenue growth for the 29th consecutive quarter

PLANO, Texas – February 20, 2019 – Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter and year ended December 31, 2018.

Fourth Quarter 2018 Financial Highlights:

•
Total revenues were $242.0 million, up 11.2 percent from $217.7 million for the fourth quarter of 2017. Non-GAAP total revenues were $243.0 million, up 11.5 percent from $217.9 million for the fourth quarter of 2017. GAAP organic revenue growth was 7.4 percent and non-GAAP organic revenue growth was 7.3 percent.
•
Recurring revenue from maintenance and subscriptions was $158.1 million, up 13.1 percent compared to the fourth quarter of 2017, and comprised 65.4 percent of fourth quarter 2018 revenue.
•
Operating income was $38.9 million, down 12.2 percent from $44.3 million for the fourth quarter of 2017. Non-GAAP operating income was $65.2 million, up 2.2 percent from $63.8 million for the fourth quarter of 2017.
•
Net income was $31.6 million, or $0.79 per diluted share, down 52.3 percent compared to $66.2 million, or $1.68 per diluted share, for the fourth quarter of 2017. The decline was primarily due to the one-time tax benefit associated with the Tax Cuts and Jobs Act that was recognized in the fourth quarter of 2017. Non-GAAP net income was $50.5 million, or $1.26 per diluted share, up 20.0 percent compared to $42.1 million, or $1.06 per diluted share, for the fourth quarter of 2017.
•
Cash flows from operations were $70.9 million, up 32.7 percent compared to $53.4 million for the fourth quarter of 2017.
•
Adjusted EBITDA was $72.1 million, up 4.1 percent compared to $69.3 million for the fourth quarter of 2017.
•
Tyler repurchased 780,842 shares of its common stock during the quarter at an average price of $192.16. Tyler also announced that its board of directors has increased the company's common stock repurchase authorization by 1.5 million shares. Tyler may repurchase up to an additional 2.7 million shares under the current authorization.
•
Software license arrangements comprised approximately 60 percent and subscription arrangements comprised approximately 40 percent of the total new software contract value in the fourth quarter.
•
Software subscription bookings in the fourth quarter added $7.9 million in new annual recurring revenue.
•
On December 7, 2018, Tyler acquired SceneDoc, Inc. Its results, which are immaterial, are included in Tyler's consolidated results from the date of acquisition.
•
Subsequent to the end of the year, Tyler announced the signing of a definitive agreement to acquire MicroPact, Inc., for $185 million in cash. The transaction is expected to close in the first quarter of 2019.
•
Effective January 1, 2018, Tyler adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the full retrospective method of transition. Prior



Tyler Technologies Reports Earnings
For Fourth Quarter 2018
Feb. 20, 2019
Page 2

year amounts have been restated from previously reported amounts to reflect the impact of the full retrospective adoption of Topic 606.

Full Year 2018 Financial Highlights:

•
Total revenues were $935.3 million, up 11.2 percent from $840.9 million in 2017. Non-GAAP total revenues were $939.7 million, up 11.6 percent from $842.0 million in 2017. Both GAAP and non-GAAP organic revenue growth were 8.9 percent.
•
Recurring revenue from maintenance and subscriptions was $605.1 million, up 13.8 percent compared to 2017, and comprised 64.7 percent of 2018 revenue.
•
Operating income was $152.5 million, down 6.3 percent from $162.8 million in 2017. Non-GAAP operating income was $250.3 million, up 5.4 percent from $237.4 million in 2017.
•
Net income was $147.5 million, or $3.68 per diluted share, down 13.0 percent compared to $169.6 million, or $4.32 per diluted share, in 2017. Non-GAAP net income was $192.8 million, or $4.80 per diluted share, up 24.6 percent compared to $154.8 million, or $3.94 per diluted share, in 2017.
•
Cash flows from operations were $250.2 million, up 27.8 percent compared to $195.8 million in 2017.
•
Adjusted EBITDA was $274.6 million, up 7.4 percent compared to $255.6 million in 2017.
•
Software license arrangements comprised approximately 59 percent and subscription arrangements comprised approximately 41 percent of the total new software contract value for the year.
•
Software subscription bookings in 2018 added $26.5 million in new annual recurring revenue.
•
Total backlog at year-end was $1.25 billion, up 1.7 percent from $1.23 billion at December 31, 2017. Software-related backlog (excluding appraisal services) was $1.21 billion, up 1.9 percent from $1.19 billion at December 31, 2017.

“Our fourth quarter performance provided a solid finish to 2018,” said Lynn Moore Jr., Tyler’s president and chief executive officer. “We achieved double-digit total revenue growth for the 29th consecutive quarter and both total and organic growth improved over the third quarter levels. Subscription revenues led the way with growth of 26 percent. In addition, software license and royalties revenues grew 15 percent and reached a new quarterly high, surpassing $25 million for the first time. Together, our core software licenses and subscription revenues grew 23 percent, with 15 percent organic growth.

“Our new business pipeline remains strong and backlog at the end of the quarter reached a new high of $1.25 billion. Bookings declined 13 percent on a difficult comparison with fourth quarter 2017, which included the $21 million Odyssey courts software contract with the State of Kansas Judicial Branch. In addition, the intentional reduction in our standard initial term for new software subscription contracts continues to negatively impact bookings. The average new subscription contract term was 4.1 years in the fourth quarter, compared to 5.4 years in fourth quarter of 2017.

"Cash flow was once again very strong, as cash flows from operations in the fourth quarter grew 33 percent over last year, and free cash flow grew 39 percent. For the full year, cash flows from operations increased 28 percent, and free cash flow rose 46 percent.




Tyler Technologies Reports Earnings
For Fourth Quarter 2018
Feb. 20, 2019
Page 3

"2018 was certainly a year of investment for Tyler, and we used our strong cash flow and balance sheet to make a number of investments that further our growth objectives and create long-term shareholder value. In December, we completed our fifth acquisition of the year with the purchase of SceneDoc, which provides mobile-first, software-as-a-service field reporting for law enforcement agencies. In total, we used approximately $178 million in cash for acquisitions in 2018. While these acquisitions represent important additions to our product offerings, we're also making significant investments in the acquired businesses to strengthen their organizations and integrate their solutions with existing Tyler products. As a result, the 2018 acquisitions were in the aggregate dilutive to earnings.

"We are excited about the pending acquisition of MicroPact, a leading provider of specialized, vertically-oriented case management and business process management applications for government. This acquisition is expected to close in the first quarter and will be the second largest in our history. MicroPact complements our current product offerings and will significantly expand our total addressable market through its strong presence in the federal space.

"As we noted at the beginning of 2018, we significantly increased our research and development spend for the year. R&D expense increased 34 percent from 2017, with a wide range of product development projects across our product suites, including accelerated R&D at Socrata, which we acquired in April. While R&D growth will slow somewhat in 2019, investment in product development will remain at an elevated level in the coming year.

"We were also very active with our stock repurchase program in the fourth quarter of 2018, reflecting our confidence in the company's long-term outlook. We repurchased more than 780,000 shares of our common stock during the quarter, and the $150 million used on stock repurchases this quarter exceeded the total used on stock repurchases in the previous six years combined. With our board's recent 1.5 million share increase to our stock repurchase authorization, we expect to continue to opportunistically return cash to shareholders through future buybacks.

"Looking to 2019, our guidance reflects the ongoing investment in our 2018 acquisitions, which will collectively remain dilutive in 2019, along with a continued elevated level of investment in research and development. Our guidance also includes the estimated impact of the pending acquisition of MicroPact, which is expected to be completed in the first quarter," said Moore.

Guidance for 2019

As of February 20, 2019, Tyler Technologies is providing the guidance below for the full year 2019, including the estimated impact of the pending acquisition of MicroPact.

•
GAAP total revenues are expected to be in the range of $1.08 billion to $1.10 billion.
•
Non-GAAP total revenues are expected to be in the range of $1.09 billion to $1.11 billion.
•
GAAP diluted earnings per share are expected to be in the range of $3.54 to $3.69 and may vary significantly due to the impact of stock option exercises on the GAAP effective tax rate, as well as the final valuations of acquired intangibles.
•
Non-GAAP diluted earnings per share are expected to be in the range of $5.20 to $5.35.
•
Pretax non-cash, share-based compensation expense is expected to be approximately $62 million.



Tyler Technologies Reports Earnings
For Fourth Quarter 2018
Feb. 20, 2019
Page 4

•
Research and development expense is expected to be in the range of $82 million to $84 million.
•
Fully diluted shares for the year are expected to be in the range of 40 million to 41 million shares.
•
GAAP earnings per share assumes an estimated annual effective tax rate of approximately 10 percent after discrete tax items and includes approximately $27 million of estimated discrete tax benefits related to share-based compensation.
•
The non-GAAP annual effective tax rate is expected to be 24 percent.
•
Capital expenditures are expected to be in the range of $54 million to $56 million, including approximately $16 million related to real estate and approximately $6 million of capitalized software development. Total depreciation and amortization expense is expected to be approximately $75 million, including approximately $47 million of amortization of acquisition intangibles.

GAAP to non-GAAP guidance reconciliation
Non-GAAP total revenues is derived from adding back the estimated full year impact of write-downs of acquisition-related deferred revenue and amortization of acquired leases of approximately $10 million. Non-GAAP diluted earnings per share is derived by adding back the estimated full year impact of non-cash share-based compensation expense and employer portion of payroll tax related to employee stock transactions of approximately $62 million, and amortization of acquired software and intangible assets of approximately $47 million. Additionally, the non-GAAP tax rate of 24 percent is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $27 million of estimated discrete tax benefits related to share-based compensation that are included in the GAAP estimated annual effective tax rate.

Conference Call

Tyler Technologies will hold a conference call on Thursday, February 21, 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/10128442. 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 21.

Participants who do not wish to pre-register for the call may dial in using 844-861-5506 (U.S. callers) or 412-317-6587 (international callers) or 866-450-4696 (Canada callers) and ask for the “Tyler Technologies” call. A replay will be available two hours after completion of the call through February 28, 2019. 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 10128442.

The live webcast and archived replay can also be accessed at http://investors.tylertech.com/Presentations.

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 their constituents. Tyler's client base includes more than 15,000 local government offices in all 50 states, Canada, the Caribbean, Australia, and other international locations. Forbes has included Tyler on its



Tyler Technologies Reports Earnings
For Fourth Quarter 2018
Feb. 20, 2019
Page 5

"Best Small Companies" list eight times and ranked Tyler on its "Best Midsize Employers" list in 2018. More information about Tyler Technologies, headquartered in Plano, Texas, 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 revenues, 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 because they provide additional insight in comparing results from period to period. 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 write-downs of acquisition-related deferred revenue and acquired leases, share-based compensation expense, employer portion of payroll taxes on employee stock transactions, acquisition-related costs, and expenses associated with amortization of intangibles arising from business combinations.

Tyler currently uses a non-GAAP tax rate of 24 percent. This rate is based on Tyler's estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating Tyler's non-GAAP income, as well as significant non-recurring tax adjustments. The non-GAAP tax rate used in future periods will be reviewed periodically to determine whether it remains appropriate in consideration of factors including Tyler's periodic effective tax rate calculated in accordance with GAAP, changes resulting from tax legislation, changes in the geographic mix of revenues and expenses, and other factors deemed significant. Due to differences in tax treatment of items excluded from non-GAAP earnings, as wells as the methodology applied to Tyler's estimated annual tax rate as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from Tyler's actual tax liabilities.

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



Tyler Technologies Reports Earnings
For Fourth Quarter 2018
Feb. 20, 2019
Page 6

factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, 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) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (4) material portions of our business require the Internet infrastructure to be adequately maintained; (5) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (6) general economic, political and market conditions; (7) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (8) competition in the industry in which we conduct business and the impact of competition on pricing, client 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.
###
(Comparative results follow)

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

19-14




TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)


 


 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
As Adjusted
 
 
 
As Adjusted
Revenues:
 
 
 
 
 
 
 
 
  Software licenses and royalties
 
$
25,821

 
$
22,416

 
$
93,441

 
$
86,242

  Subscriptions
 
59,811

 
47,445

 
220,547

 
172,176

  Software services
 
46,457

 
46,059

 
191,269

 
180,460

  Maintenance
 
98,333

 
92,354

 
384,521

 
359,319

  Appraisal services
 
5,376

 
5,755

 
21,846

 
25,023

  Hardware and other
 
6,183

 
3,672

 
23,658

 
17,679

    Total revenues
 
241,981

 
217,701

 
935,282

 
840,899

 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
  Software licenses and royalties
 
863

 
1,117

 
3,802

 
3,321

  Acquired software
 
5,969

 
5,443

 
22,972

 
21,686

  Software services, maintenance and subscriptions
 
111,843

 
99,886

 
438,923

 
387,634

  Appraisal services
 
3,445

 
3,718

 
14,299

 
16,286

  Hardware and other
 
3,990

 
2,187

 
15,708

 
12,595

    Total cost of revenues
 
126,110

 
112,351

 
495,704

 
441,522

 
 
 
 
 
 
 
 
 
  Gross profit
 
115,871

 
105,350

 
439,578

 
399,377

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
55,134

 
45,621

 
207,605

 
175,914

Research and development expense
 
17,335

 
12,017

 
63,264

 
47,324

Amortization of customer and trade name intangibles
 
4,475

 
3,365

 
16,217

 
13,381

  Operating income
 
38,927

 
44,347

 
152,492

 
162,758

Other income, net
 
1,180

 
914

 
3,378

 
698

Income before income taxes
 
40,107

 
45,261

 
155,870

 
163,456

Income tax provision (benefit)
 
8,555

 
(20,935
)
 
8,408

 
(6,115
)
Net income
 
$
31,552

 
$
66,196

 
$
147,462

 
$
169,571

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
   Basic
 
$
0.82

 
$
1.76

 
$
3.84

 
$
4.55

   Diluted
 
$
0.79

 
$
1.68

 
$
3.68

 
$
4.32

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
   Basic
 
38,614

 
37,694

 
38,445

 
37,273

   Diluted
 
39,891

 
39,499

 
40,123

 
39,246






TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
As Adjusted
 
 
 
As Adjusted
Reconciliation of non-GAAP total revenues
 
 
 
 
 
 
 
 
GAAP total revenues
 
$
241,981

 
$
217,701

 
$
935,282

 
$
840,899

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
  Add: Write-downs of acquisition-related deferred revenue
 
952

 
124

 
4,000

 
663

  Add: Amortization of acquired leases
 
100

 
111

 
426

 
444

Non-GAAP total revenues
 
$
243,033

 
$
217,936

 
$
939,708

 
$
842,006

 
 
 
 
 
 
 
 
 
Reconciliation of non-GAAP gross profit and margin
 
 
 
 
 
 
 
 
GAAP gross profit
 
$
115,871

 
$
105,350

 
$
439,578

 
$
399,377

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
  Add: Write-downs of acquisition-related deferred revenue
 
952

 
124

 
4,000

 
663

  Add: Amortization of acquired leases
 
100

 
111

 
426

 
444

  Add: Share-based compensation expense included in cost of revenues
3,948

 
2,541

 
13,588

 
9,415

  Add: Amortization of acquired software
 
5,969

 
5,443

 
22,972

 
21,686

Non-GAAP gross profit
 
$
126,840

 
$
113,569

 
$
480,564

 
$
431,585

GAAP gross margin
 
47.9
%
 
48.4
%
 
47.0
%
 
47.5
%
Non-GAAP gross margin
 
52.2
%
 
52.1
%
 
51.1
%
 
51.3
%
 
 
 
 
 
 
 
 
 
Reconciliation of non-GAAP operating income and margin
 
 
 
 
 
 
 
 
GAAP operating income
 
$
38,927

 
$
44,347

 
$
152,492

 
$
162,758

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
  Add: Write-downs of acquisition-related deferred revenue
 
952

 
124

 
4,000

 
663

  Add: Amortization of acquired leases
 
100

 
111

 
426

 
444

  Add: Share-based compensation expense
 
14,774

 
9,980

 
52,740

 
37,348

  Add: Employer portion of payroll tax related to employee stock transactions
4

 
418

 
1,412

 
1,102

  Add: Amortization of acquired software
 
5,969

 
5,443

 
22,972

 
21,686

  Add: Amortization of customer and trade name intangibles
 
4,475

 
3,365

 
16,217

 
13,381

Non-GAAP adjustments subtotal
 
26,274

 
19,441

 
97,767

 
74,624

Non-GAAP operating income
 
$
65,201

 
$
63,788

 
$
250,259

 
$
237,382

GAAP operating margin
 
16.1
%
 
20.4
%
 
16.3
%
 
19.4
%
Non-GAAP operating margin
 
26.8
%
 
29.3
%
 
26.6
%
 
28.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
As Adjusted
 
 
 
As Adjusted
Reconciliation of non-GAAP net income and earnings per share
 
 
 
 
 
 
 
 
GAAP net income
 
$
31,552

 
$
66,196

 
$
147,462

 
$
169,571

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
  Add: Total non-GAAP adjustments to operating income
 
26,274

 
19,441

 
97,767

 
74,624

  Less: Tax impact related to non-GAAP adjustments
 
(7,376
)
 
(43,581
)
 
(52,464
)
 
(89,440
)
Non-GAAP net income
 
$
50,450

 
$
42,056

 
$
192,765

 
$
154,755

GAAP earnings per diluted share
 
$
0.79

 
$
1.68

 
$
3.68

 
$
4.32

Non-GAAP earnings per diluted share
 
$
1.26

 
$
1.06

 
$
4.80

 
$
3.94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Detail of share-based compensation expense
 
 
 
 
 
 
 
 
Cost of software services, maintenance and subscriptions
 
$
3,948

 
$
2,541

 
$
13,588

 
$
9,415

Selling, general and administrative expenses
 
10,826

 
7,439

 
39,152

 
27,933

Total share-based compensation expense
 
$
14,774

 
$
9,980

 
$
52,740

 
$
37,348

Reconciliation of EBITDA and adjusted EBITDA
 
 
 
 
 
 
 
 
GAAP net income
 
$
31,552

 
$
66,196

 
$
147,462

 
$
169,571

Amortization of customer and trade name intangibles
 
4,475

 
3,365

 
16,217

 
13,381

Depreciation and other amortization included in
 
 
 
 
 
 
 
 
    cost of revenues, SG&A and other expenses
 
11,580

 
10,330

 
45,052

 
40,013

Interest expense included in other expense, net
 
193

 
191

 
763

 
762

Income tax provision (benefit)
 
8,555

 
(20,935
)
 
8,408

 
(6,115
)
EBITDA
 
$
56,355

 
$
59,147

 
$
217,902

 
$
217,612

Write-downs of acquisition-related deferred revenue
 
952

 
124

 
4,000

 
663

Share-based compensation expense
 
14,774

 
9,980

 
52,740

 
37,348

Adjusted EBITDA
 
$
72,081

 
$
69,251

 
$
274,642

 
$
255,623

Adjusted EBITDA margin
 
29.7
%
 
31.8
%
 
29.2
%
 
30.4
%




TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 (Unaudited)


 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
As Adjusted
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
     Cash and cash equivalents
 
$
134,279

 
$
185,926

     Accounts receivable, net
 
298,912

 
246,188

     Current investments and other assets
 
80,970

 
77,362

     Income tax receivable
 
4,697

 
11,339

           Total current assets
 
518,858

 
520,815

 
 
 
 
 
Accounts receivable, long-term portion
 
16,020

 
12,107

Property and equipment, net
 
155,177

 
152,315

 
 
 
 
 
Other assets:
 
 
 
 
     Goodwill
 
753,718

 
657,987

     Other intangibles, net
 
276,852

 
229,617

     Non-current investments and other assets
 
70,338

 
38,510

 
 
 
 
 
Total assets
 
$
1,790,963

 
$
1,611,351

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
     Accounts payable and accrued liabilities
 
$
73,390

 
$
72,849

     Deferred revenue
 
350,512

 
298,613

           Total current liabilities
 
423,902

 
371,462

 
 
 
 
 
Revolving line of credit
 
—

 
—

Deferred revenue, long-term
 
424

 
1,274

Deferred income taxes
 
41,791

 
46,879

Shareholders' equity
 
1,324,846

 
1,191,736

 
 
 
 
 
Total liabilities and shareholders' equity
 
$
1,790,963

 
$
1,611,351

 
 
 
 
 




 
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
As Adjusted
 
 
 
As Adjusted
Cash flows from operating activities:
 
 
 
 
 
 
 
 
    Net income
 
$
31,552

 
$
66,196

 
$
147,462

 
$
169,571

    Adjustments to reconcile net income to cash
 
 
 
 
 
 
 
 
      provided by operations:
 
 
 
 
 
 
 
 
      Depreciation and amortization
 
16,132

 
13,695

 
61,759

 
53,395

      Share-based compensation expense
 
14,774

 
9,980

 
52,740

 
37,348

      Provision for losses - accounts receivable
 
2,286

 
4,110

 
2,286

 
4,110

      Deferred income tax benefit
 
(35
)
 
(19,959
)
 
(5,069
)
 
(33,664
)
      Changes in operating assets and liabilities,
 
 
 
 
 
 
 
 
      exclusive of effects of acquired companies
 
6,141

 
(20,648
)
 
(8,975
)
 
(35,005
)
                Net cash provided by operating activities
 
70,850

 
53,374

 
250,203

 
195,755

 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Cost of acquisitions, net of cash acquired
 
(10,785
)
 
(1,583
)
 
(178,093
)
 
(11,344
)
Purchase of marketable security investments
 
(22,987
)
 
(9,874
)
 
(115,625
)
 
(59,779
)
Proceeds from marketable security investments
 
20,997

 
7,611

 
81,205

 
28,786

Additions to property and equipment
 
(3,964
)
 
(5,323
)
 
(27,424
)
 
(43,057
)
Decrease (increase) in other
 
825

 
(419
)
 
1,682

 
(1
)
                Net cash used by investing activities
 
(15,914
)
 
(9,588
)
 
(238,255
)
 
(85,395
)
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Decrease in net borrowings on revolving line of credit
 
—

 
—

 
—

 
(10,000
)
Purchase of treasury shares
 
(146,553
)
 
(442
)
 
(146,553
)
 
(7,474
)
Contributions from employee stock purchase plan
 
2,073

 
1,702

 
8,051

 
7,044

Proceeds from exercise of stock options
 
4,371

 
16,277

 
74,907

 
49,845

                Net cash (used) provided by financing activities
 
(140,109
)
 
17,537

 
(63,595
)
 
39,415

 
 
 
 
 
 
 
 
 
Net (decrease) increase in net cash and cash equivalents
 
(85,173
)
 
61,323

 
(51,647
)
 
149,775

Cash and cash equivalents at beginning of period
 
219,452

 
124,603

 
185,926

 
36,151

 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
 
$
134,279

 
$
185,926

 
$
134,279

 
$
185,926