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Tyler Technologies Inc TYL

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Tyler Technologies: Lingering COVID-19-Related Pressures While Delivering Good Results; Raising FVE

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Wide-moat Tyler Technologies continues to show improving fundamentals, as its third quarter was ahead of our top- and bottom-line expectations. The company experienced a ransomware incident involving its internal systems that did not involve hosted or cloud software for clients. While the situation is being investigated and remediated, the firm notes the attack resulted in $1.5 million in lost revenue in its services segment. Full-year guidance was mixed, with slightly lower revenue and slightly higher EPS, which we do not see as problematic. The company continues to see some COVID-driven pressure. Much as it did coming out of the 2008 financial crisis, we expect Tyler will emerge in an even stronger position to capture market share, as its portfolio is broader and it is increasingly exposed to multiple solution sales. Recurring accounts for 70% of total revenue compared with about 50% in 2008, and the balance sheet is much stronger today than it was then. We are now assuming higher profitability in our forecast, which results in an increase in our fair value estimate to $340 per share from $322.

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Company Profile

Business Description

Tyler Technologies provides a full suite of software solutions and services that address the needs of cities, counties, schools, courts, and other local government entities. The company’s two core products are Munis, which is the core enterprise resource planning system, and Odyssey, which is the court management system. The company also provides a variety of add-on modules and offers outsourced property tax assessment services.

5101 Tennyson Parkway
Plano, TX, 75024
T +1 972 713-3700
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 5,511