PLANO, Texas--(BUSINESS WIRE)--Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights:

• Total revenues were $283.3 million, down 1.9% from $288.8 million for the fourth quarter of 2019. On an organic basis, revenues declined 2.1%. Non-GAAP total revenues were $283.4 million, down 1.4% from $287.4 million for the fourth quarter of 2019. On an organic basis, non-GAAP revenues declined 1.5%.
• Recurring revenues from maintenance and subscriptions were $212.4 million, up 9.5% from $194.0 million for the fourth quarter of 2019, and comprised 75.0% of fourth quarter 2020 revenues.
• Operating income was $48.0 million, up 6.4% from $45.2 million for the fourth quarter of 2019. Non-GAAP operating income was $76.4 million, up 3.3% from $73.9 million for the fourth quarter of 2019.
• Net income was $54.1 million, or $1.29 per diluted share, up 15.6% from $46.8 million, or $1.15 per diluted share, for the fourth quarter of 2019. Non-GAAP net income was $58.3 million, or $1.39 per diluted share, up 0.3% from $58.2 million, or $1.43 per diluted share, for the fourth quarter of 2019.
• Cash flows from operations were $88.8 million, up 16.5% from $76.2 million for the fourth quarter of 2019. Free cash flow was $83.7 million, up 25.8% from $66.5 million in the fourth quarter of 2019. Cash and investments totaled $758.5 million at December 31, 2020.
• Adjusted EBITDA was $83.2 million, up 1.3% from $82.2 million for the fourth quarter of 2019.
• Software subscription arrangements comprised approximately 73% of total new software contract value in the fourth quarter, compared to approximately 54% in the fourth quarter of 2019.
• Subscription bookings in the fourth quarter added $11.0 million in annual recurring revenue.
• Annualized non-GAAP recurring revenues were $849.8 million, up 10.4% from $769.9 million for the fourth quarter of 2019.

Full Year 2020 Financial Highlights:

• Total revenues were $1.117 billion, up 2.8% from $1.086 billion in 2019. On an organic basis, revenues grew 1.3%. Non-GAAP total revenues were $1.117 billion, up 2.4% from $1.091 billion in 2019. On an organic basis, non-GAAP revenues grew 0.9%.
• Recurring revenues from maintenance and subscriptions were $818.2 million, up 12.6% from $726.7 million in 2019, and comprised 73.3% of 2020 revenues.
• Operating income was $172.9 million, up 10.6% from $156.4 million in 2019. Non-GAAP operating income was $299.5 million, up 8.4% from $276.2 million in 2019.
• Net income was $194.8 million, or $4.69 per diluted share, up 33.0% from $146.5 million, or $3.65 per diluted share in 2019. Non-GAAP net income was $229.3 million, or $5.52 per diluted share, up 7.8% from $212.6 million, or $5.30 per diluted share in 2019.
• Cash flows from operations were $355.1 million, up 39.4% from $254.7 million in 2019. Free cash flow was $326.6 million, up 53.6% from $212.7 million in 2019.
• Adjusted EBITDA was $326.0 million, up 7.5% from $303.4 million in 2019.
• Software subscription arrangements comprised approximately 62% of total new software contract value in 2020, compared to approximately 63% in 2019.
• Subscription bookings in 2020 added $42.8 million in annual recurring revenue.
• Total backlog was a new high of $1.59 billion, up 9.4% from $1.46 billion at December 31, 2019. Software-related backlog (excluding appraisal services) was $1.55 billion, up 8.7% from $1.43 billion at December 31, 2019.
• Effective January 1, 2020, Tyler adopted the requirements of ASU No. 2016-13, Financial Instruments-Credit Losses, with no material impact to our consolidated financial statements.

“Tyler's team executed well in a challenging environment during the fourth quarter, concluding 2020 with strong earnings and record cash flows,” said Lynn Moore, Tyler’s president and chief executive officer. “Software license and service revenues continued to be pressured by longer sales cycles, delays in projects, and the near elimination of billable travel as a result of the COVID-19 pandemic. However, recurring revenues were strong, and subscriptions revenues grew 17%, marking our 60th consecutive quarter of double-digit subscription revenue growth. Our revenue mix and cost efficiencies contributed to a 120 basis point improvement in the non-GAAP operating margin to 26.9%.

"Bookings in the fourth quarter of approximately $333 million were relatively flat with last year, as the pandemic impacted the timing of some client decisions and pushed some deals out of the quarter. Our new business pipeline remains stable, but in some cases the timing of new contract executions is less predictable. Our largest contract signed in the fourth quarter, and the largest contract in our history, was an agreement with the Texas Office of Court Administration to extend our existing statewide electronic filing arrangement through at least 2027. Although the total value of the contract is approximately $98 million, very little of the value is included in backlog and bookings because of certain contract provisions. If the entire amount of the contract had been included, bookings growth for the quarter would have been approximately 28%.

"We are excited about our opportunities to accelerate revenue growth and achieve our margin objectives in 2021, as our elevated investments in product development and acquisitions in recent years have broadened our addressable market and strengthened our competitive position. We've learned a lot from the challenges of 2020. While 2021 will also be an unusual year, we are confident in our ability to continue to execute on our long-term initiatives in a manner that provides value for our shareholders, clients, and employees. Our plans for 2021 include increasing our investments to accelerate our move to the cloud, including significant additional development resources dedicated to optimizing our products for the cloud," added Moore.

Guidance for 2021

As of February 10, 2021, Tyler Technologies is providing the following guidance for the full year 2021, which excludes the impact of any acquisitions which may be completed during the year:

• GAAP and non-GAAP total revenues are both expected to be in the range of $1.190 billion to $1.220 billion.
• GAAP diluted earnings per share are expected to be in the range of $4.03 to $4.21 and may vary significantly due to the impact of stock incentive awards on the GAAP effective tax rate.
• Non-GAAP diluted earnings per share are expected to be in the range of $5.65 to $5.77.
• Pretax non-cash, share-based compensation expense is expected to be approximately $116 million.
• Research and development expense is expected to be in the range of $88 million to $90 million.
• Fully diluted shares for the year are expected to be in the range of 42.5 million to 43.0 million shares.
• GAAP earnings per share assumes an estimated annual effective tax rate of approximately negative 16% after discrete tax items including approximately $67 million of discrete tax benefits related to share-based compensation.
• The non-GAAP annual effective tax rate is expected to be 24%.
• Capital expenditures are expected to be in the range of $39 million to $40 million, including approximately $3 million related to real estate and approximately $17 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $81 million, including approximately $53 million from amortization of acquisition intangibles.

GAAP to non-GAAP guidance reconciliation

Non-GAAP diluted earnings per share excludes 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 $116 million, and amortization of acquired software and intangible assets of approximately $53 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $67 million of estimated discrete tax benefits that are included in the GAAP estimated annual effective tax rate.

About Tyler Technologies, Inc.

Tyler Technologies (NYSE: TYL) provides integrated software and technology services to the public sector. Tyler's end-to-end solutions empower local, state, and federal government entities to operate more efficiently and connect more transparently with their constituents and with each other. By connecting data and processes across disparate systems, Tyler's solutions are transforming how clients gain actionable insights that solve problems in their communities. Tyler has more than 27,000 successful installations across more than 11,000 sites, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. Tyler has been named to Government Technology's GovTech 100 list five times and has been recognized three times on Forbes' "Most Innovative Growth Companies" list. More information about Tyler Technologies, an S&P 500 company headquartered in Plano, Texas, can be found at tylertech.com.