8-K
TYLER TECHNOLOGIES INC (TYL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 8-K
_____________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
June 7, 2021 (June 7, 2021)
Date of Report (Date of earliest event reported)
_____________________________________________
TYLER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
| Delaware | 1-10485 | 75-2303920 | |||||
|---|---|---|---|---|---|---|---|
| (State or other jurisdiction of incorporation organization) | (Commission <br>File Number) | (I.R.S. Employer Identification No.) | 5101 TENNYSON PARKWAY | PLANO | Texas | 75024 | |
| --- | --- | --- | --- | ||||
| (Address of principal executive offices) | (City) | (State) | (Zip code) |
(972) 713-3700
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
| Title of each class | Trading symbol | Name of each exchange<br><br>on which registered |
|---|---|---|
| COMMON STOCK, $0.01 PAR VALUE | TYL | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On June 7, 2021, Tyler Technologies, Inc. announced updated annual guidance for 2021 and made available an investor presentation ( "Investor Presentation"), which includes the results of NIC Inc. from the date of its acquisition, April 21, 2021. Copies of the press release and Investor Presentation are furnished as Exhibit 99.1 and Exhibit 99.2 hereto, respectively, and are incorporated herein by reference.
| Exhibit number | Exhibit description |
|---|---|
| 99.1 | News Release issued by Tyler Technologies, Inc. dated June 7, 2021 |
| 99.2 | Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded in the Inline XBRL document) |
| SIGNATURES | |
| --- |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TYLER TECHNOLOGIES, INC. | ||
|---|---|---|
| /s/ Brian K. Miller | ||
| June 7, 2021 | By: | Brian K. Miller<br>Executive Vice President and Chief Financial<br>Officer (principal financial officer) |
Document
Tyler Technologies Updates 2021 Annual Guidance
Guidance Includes Impact of NIC Acquisition
PLANO, Texas – June 7, 2021 – Tyler Technologies, Inc. (NYSE: TYL) today announced updated annual guidance for 2021, which includes the results of NIC Inc. from the date of its acquisition, April 21, 2021.
As of June 7, 2021, Tyler Technologies is providing the following guidance for the full year 2021:
•GAAP total revenues are expected to be in the range of $1.507 billion to $1.537 billion.
•Non-GAAP total revenues are expected to be in the range of $1.510 billion to $1.540 billion.
•NIC is expected to contribute non-GAAP revenues from the date of acquisition of $310 million to $315 million, which includes approximately $21 million of COVID-related revenues from TourHealth and pandemic unemployment services that are not expected to recur in future years.
•NIC's full year pro-forma non-GAAP revenues are expected to be approximately $475 million to $480 million, which includes approximately $57 million of COVID-related revenues.
•GAAP diluted earnings per share are expected to be in the range of $3.58 to $3.74 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 $6.65 to $6.77.
•Interest expense is expected to be approximately $24 million.
•Pretax non-cash, share-based compensation expense is expected to be approximately $100 million.
•Research and development expense is expected to be in the range of $98 million to $100 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 3.5% after discrete tax items, including approximately $39 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 $40 million to $42 million, including approximately $6 million related to real estate and approximately $15 million of capitalized software development costs. Total depreciation and amortization expense is expected to be approximately $126 million, including approximately $88 million from amortization of acquisition intangibles.
Tyler Technologies Updates
2021 Annual Guidance
June 7, 2021
Page 2
"Our guidance reflects the strong year-to-date performance and improving market activity for Tyler, including NIC," said Lynn Moore, Tyler's president and chief executive officer. "As we noted previously, the NIC acquisition is expected to be significantly accretive to non-GAAP earnings per share and EBITDA. As we continue to work together with the NIC leadership team to identify and prioritize opportunities, we are emboldened by the potential to accelerate long-term growth in both of our businesses and expand our platform for connected communities. With the addition of NIC's highly complementary, industry-leading digital government solutions and payment services to Tyler's broad portfolio of essential public sector software solutions and extensive client base, the combined company is well equipped to address the tremendous demand at the federal, state, and local levels for innovative platform solutions. Together, Tyler and NIC will connect data and processes across disparate systems and deliver essential products and services to all public sector stakeholders."
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 of approximately $3 million. 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 $100 million, amortization of acquired software and intangible assets of approximately $88 million, and acquisition-related costs of approximately $24 million. Additionally, the non-GAAP tax rate of 24% is estimated periodically as described below under "Non-GAAP Financial Measures" and excludes approximately $39 million of estimated discrete tax benefits that are included in the GAAP estimated annual effective tax rate.
Conference Call
Tyler Technologies will hold a conference call on Monday, June 7, 2021 at 10:00 a.m. ET to discuss the company’s financial guidance and provide an update on the NIC acquisition. Participants can pre-register for the conference through the following link: http://dpregister.com/sreg/10157097/e8f3ed7c31. Registered participants will receive an email with a calendar reminder and dial-in number and PIN that allows immediate access to the call on Monday, June 7.
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 one hour after the call ends through June 14, 2021. 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 10157097.
The live webcast and archived replay can also be accessed at https://tylertech.irpass.com/Presentations, where presentation charts will also be available before the conference call.
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
Tyler Technologies Updates
2021 Annual Guidance
June 7, 2021
Page 3
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.
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) the effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; (2) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology spending; (3) disruption to our business and harm to our competitive position resulting from cyber-attacks and security vulnerabilities; (4) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (5) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (6) material portions of our business require the Internet infrastructure to be adequately maintained; (7) 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; (8) general economic, political and market conditions; (9) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (10) 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; (11) 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 (12) costs of compliance and any failure to comply with government and stock exchange regulations. 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 and quarterly report on Form 10-Q. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.
Contact: Brian K. Miller
Executive Vice President & CFO
Tyler Technologies, Inc.
972-713-3720
brian.miller@tylertech.com
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Realizing the value of NIC and Tyler together June 7, 2021 &
2 1 3 The acquisition of NIC further positions Tyler to deliver on our vision Leader in COTS local government department systems Socrata acquisition adds leading public sector data & analytics platform Launched Connected Communities Vision Tyler’s vision for the public sector C O N N E C T E D C O M M U N I T I E S 2
4 5 NIC adds proven partner with state agencies, leader in public sector payments MicroPact acquisition adds state presence & low-code platform The NIC acquisition extends Tyler value increases C O N N E C T E D C O M M U N I T I E S
First Priorities M A K E T H E P L A N G E T S A L E S T E A M W O R K I N G T O G E T H E R D O N ’ T M E S S I T U P 4
Delivering Solutions Delivers Tyler solutions through NIC contracts Combining Strengths Combines the strengths of MicroPact and NIC Connecting Communities Establishes the data and analytics platform for connecting communities Engaging Citizens Engages citizens across all government agencies Leading the Industry Creates the industry leader for public sector payment + I M P A C T O F T H E A C Q U I S I T I O N F O R T Y L E R A N D O U R C L I E N T S 5
Creates the industry leader for public sector payment solutions L E A D I N G T H E I N D U S T R Y 6
Combining the strengths of Tyler and NIC’s payment platforms creates the public sector market leader R E P O R T I N G & R E C O N C I L I A T I O N I N V O I C I N G & B I L L I N G A D M I N I S T R A T I O N & M A N A G E M E N T Tyler/NIC NICTyler NIC P A Y M E N T P O R T A L S P A Y M E N T C A P T U R E N I C P A Y M E N T P L A T F O R M P A Y O U T C O M B I N I N G T H E S T R E N G T H O F T Y L E R A N D N I C 7
2022 2023 2024 2025 50M 69M 90M $116M 2023 2024 2025 47M 54M $68M Tyler’s payment opportunity, not including NIC, is now larger and accelerated due to the acquisition 70% I N C R E A S E P A Y M E N T M A R K E T R E V E N U E E S T I M A T E - P O S T - A C Q U I S I T I O N NIC (CC rev/share) Enterprise Schools Tyler Portals pre-acquisition 8 2021 $41M
State of Florida O P P O R T U N I T Y S C E N A R I O S Enterprise Payment Contract with State of Florida $5.5M in ARR Upside represented by current locals on the Contract $2.5 – 4M in ARR Additional upside from Tyler’s presence in agencies across the State $12.5 – 20M ARR 9
Delivers Tyler solutions through NIC contracts D E L I V E R I N G S O L U T I O N S 10
NIC’s 28 State Enterprise Master Contracts Enterprise states and localities (including payment services) Enterprise payment services 11
NIC’s strategy pre-acquisition was to acquire or develop solutions and sell them through their contracts NIC 28 State Contracts P a ym e n ts L ic e n si n g H e a lth c a re O u td o o r R e c re a tio n NIC Growth Same-state & existing contract Acquisitions Platform expansion State & Agency SOLUTIONS & PLATFORMS G O V E R N M E N T C O N T R A C T S & A G E N C IE S NIC SOURCES OF GROWTH 12
Tyler’s solutions are now available to NIC’s teams, dramatically expanding the portfolio available to states NIC 28 State Contracts P a ym e n ts L ic e n si n g H e a lth c a re O u td o o r R e c re a tio n A p p ra is a l & T a x C iv ic S e rv ic e s E R P L a n d & O ffi c ia l R e c o rd s R e g u la to ry Public Administration C o rr e c tio n s C o u rt s & J u st ic e P u b lic S a fe ty C o m m u n ity H e a lth D is a b ili ty & B e n e fit s Justice HHS S c h o o l E R P S tu d e n t In fo rm a tio n S tu d e n t T ra n sp o rt a tio n K-12 C yb e r S e c u ri ty D a ta & In si g h ts Transformative TechnologiesNIC Growth Same-state & existing contract Acquisitions Platform expansion State & Agency SOLUTIONS & PLATFORMS G O V E R N M E N T C O N T R A C T S & A G E N C IE S NIC SOURCES OF GROWTH 13
T Y L E R S O L U T I O N S T H R O U G H N I C C O N T R A C T S Public Administration A northeastern region state – $250K ARR EnerGov solution K–12 Schools A western region state – $1.2M license, $200K ARR Tyler Student Transportation solution (Traversa) Courts A northeastern region state – $1.2M services, $212K ARR States’ Attorney & Sheriff Case management system
Combining the strengths of MicroPact and NIC C O M B I N I N G S T R E N G T H S
MicroPact’s Entellitrak platform is widely used by providers building solutions for state and federal agencies Entellitrak Platform Modules Components Application Accelerators Applications Analytics Mobile eScan Public Portal Reports Custom Help Time Keeping Documents 16
NIC’s state and federal development teams will leverage the Entellitrak platform for low-code/no-code development I M P R O V E D M A R G I N S | F A S T E R T I M E - T O - M A R K E T | M O R E R E U S E NIC state GMs and staff will migrate to Entellitrak through MicroPact’s existing Partner Alliance program NIC state teams have developed thousands of award-winning applications meeting the needs of state agencies 19,424 NIC’s future development for states will be on the combined Entellitrak/AppEngine low-code platform 17
MicroPact also has proven state government solutions now available through NIC’s state partnerships Assisting Americans with Disabilities Vocation Rehabilitation Long-Term Care Program Integrity Eligibility Appeals Medicaid Management Assisting American Veterans with Claims & Benefits Veterans Benefits Banking and Finance Public Utilities Occupational & Professionals Licensing & Regulation Patient & Caregiver Registry Cannabis Regulation 18
C O M B I N I N G T H E S T R E N G T H O F M I C R O P A C T A N D N I C Western State $466K ARR ETK Regulatory, SceneDoc, NIC Payment Processing Joint Proposal between Tyler Federal and NIC state team represents best combined value proposition for state Western State $46K license, $410K ARR ETK Regulatory, SceneDoc, Socrata, NIC Payment Processing Professional and Occupational Licensing Eastern Region A Mid-Atlantic territory – license sold; negotiating payment ETK Regulatory, NIC Payment Processing Professional and Occupational Licensing
Establishes the data and analytics platform for connecting communities C O N N E C T I N G C O M M U N I T I E S 20
Vertical-Specific, Insights Solutions New growth trajectory (+18% YoY) General purpose platform Flat ARR growth (+1% YoY) Platform for Connected Communities Accelerated growth (+30% 3-yr CAGR) Socrata since Tyler’s acquisition 20212018 2024 Siloed, inaccessible data Data as the connective tissue of Tyler’s AssetsEnriched, accessible data 21
The Platform for Connected Communities A P P S & D A S H B O A R D S D A T A I N P U T P L A T F O R M E N G I N E Data Flow Infrastructure COURTS PRE-TRIAL & PROBATION eFILE FUTURE SOURCES C O N N E C T E D J U S T I C E E X A M P L E 22
A P P S & D A S H B O A R D S D A T A I N P U T P L A T F O R M E N G I N E The Platform for Connected Communities C O N N E C T E D J U S T I C E E X A M P L E State Office of Court Administration Platform Search & Browse VisualizationsDashboards Ad-Hoc Reporting APIs Enterprise Data Management Data Storytelling Secure SharingDaaS Queried Data STATE JUDICIARY 23
A P P S & D A S H B O A R D S D A T A I N P U T P L A T F O R M E N G I N E The Platform for Connected Communities C O N N E C T E D J U S T I C E E X A M P L E Turnkey Apps, Reports, & Dashboards Dashboards ReportsDATA INSIGHTS 24
Midwestern state opportunity D A T A & A N A L Y T I C S P L A T F O R M F O R C O N N E C T I N G C O M M U N I T I E S Connected Enterprise Justice Platform Current proposal to state judiciary $2.25M ARR Insights solution for courts, pre-trial probation and e-filing Can now be delivered through NIC contracts and state GMs 25
Engages citizens across all government agencies E N G A G I N G C I T I Z E N S 26
D I S P A R A T E P O R T A L S & A P P S The need for a one-stop-shop citizen portal Multiple apps and portals with individual logins leave citizens frustrated, and most of the time, not knowing where to find what they need Federal Local G O V E R N M E N T State 27
Creating the one-stop-shop citizen portal One portal with one login makes it easy for citizens to interact with government G O V E R N M E N T
Together NIC and Tyler can now provide the most expansive set of capabilities for citizens Local Information Active Citizenry Safety Licensing, Tax, and Regulatory Find information about city, people, and places View calendars & events Search for nearby businesses Walk through interactive maps & transit guides Request patrol Register alarm Daily police bulletin Report missing persons Report incidents Provide feedback and suggestions Request services Book & reserve facilities Send bill payments Overnight parking exemption Driver's license renewals Property tax Park passes Outdoor recreation licenses, permits Unemployment application and weekly filing 29
With transactions resolving through Tyler’s payment platform Ultimately handling all Tyler and non-Tyler transactions through Tyler’s payment platform 30
Delivering Solutions NIC’s clients gain immediate access to Tyler’s solutions through existing state master contracts Combining Strengths NIC’s development teams leverage MicroPact’s low-code platform to build state agency solutions faster with more reuse Connecting Communities NIC’s clients can connect state agencies with their communities through the Socrata data and analytics platform Engaging Citizens Citizens can access federal, state and local government services all from one solution Leading the Industry Combining the strengths of TYL and NIC creates the leader in public sector payments + I M P A C T O F T H E A C Q U I S I T I O N F O R T Y L E R A N D O U R C L I E N T S 31
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