Tyler Technologies, Inc. TYL reported fourth-quarter 2024 non-GAAP earnings of $2.43 per share, which beat the Zacks Consensus Estimate by 0.8%. The bottom line was higher than the year-ago quarter’s earnings of $1.89.

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Non-GAAP revenues increased 12.5% year over year to $541.1 million. The top line beat the Zacks Consensus Estimate of $539.74 million by 0.3%.

The year-over-year improvement in the top line was primarily due to a rise in subscription revenues. During the fourth quarter, software subscription arrangements comprised approximately 97% of the total new software contract value as the company continued to transform into a software-as-a-service model from its on-premise license-based model.

Buoyed by strong bottom-line performance, Tyler initiated a strong earnings guidance for 2025. The better-than-expected fourth-quarter performance, along with upbeat guidance, can give a fresh boost to Tyler’s share price. In the past year, TYL shares have soared 41.4%, outperforming the Zacks Business – Software Services industry’s return of 23.8%.

Quarterly Details of Tyler

Tyler’s recurring revenues from maintenance and subscriptions increased 14.9% year over year to $463.85 million and accounted for 85.7% of the total quarterly revenues.

TYL reported annualized recurring revenues on a non-GAAP basis of $1.86 billion, up 14.9% year over year.

Segment-wise, Maintenance revenues (accounting for 21.3% of total revenues) were $115 million, down from $117.5 million reported in the year-ago quarter. Our model estimate for Maintenance revenues was pegged at $110.3 million.

Subscription revenues (64.5% of total revenues) grew 21.9% year over year to $348.84 million, while our model estimate for the same was pinned at $347.7 million.

Software licenses and royalties (1.1% of total revenues) of $6.1 million fell year over year by 20%. Our model predicted Software licenses and royalties’ sales to decrease 7.1% to $7.1 million.

Professional Services revenues (11.6% of total revenues) amounted to $62.8 million, up 2.1% from the year-ago quarter. Our model estimate for the same was pegged at $64 million.

Hardware and other revenues (1.5% of total revenues) were up 1.8% from the year-ago quarter to $8.4 million. Our model estimate for Hardware and other revenues was pegged at $7.7 million.

Tyler’s Operating Details

Tyler Technologies’ non-GAAP gross profit increased 11% year over year to $254.4 million. The non-GAAP gross margin declined 60 basis points (bps) to 47%.

Adjusted EBITDA increased 21% year over year to $142.77 million.

Non-GAAP operating income for the quarter totaled $131.8 million and jumped 22.7% year over year. The non-GAAP operating margin expanded 210 bps to 24.4%.

TYL’s Balance Sheet & Other Details

As of Dec. 31, 2024, TYL’s cash and cash equivalents were $744.7 million compared with $538.3 million as of Sept. 30, 2024.

The company generated an operating cash flow of $224.8 million and a free cash flow of $216 million in the fourth quarter of 2024.

Tyler’s Revised FY24 Guidance

Tyler Technologies initiated guidance for 2025. The company expects revenues in the range of $2.30-$2.34 billion. The Zacks Consensus Estimate for 2025 revenues is pegged at $2.36 billion, indicating year-over-year growth of 10.14%.

TYL projects its adjusted earnings per share in the range of $10.90-$11.15, which is much higher than the Zacks Consensus Estimate of $10.89.

Zacks Rank and Stocks to Consider

Currently, Tyler carries a Zacks Rank #4 (Sell).

Celestica CLS, CrowdStrike CRWD and Akamai Technology AKAM are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While CLS sports Zacks Rank #1 (Strong Buy), CRWD and AKAM carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for CLS’ 2025 earnings has been revised upward by 31 cents to $4.75 per share over the past 30 days, indicating a 22.4% year-over-year increase. CLS shares have risen 244.8% in the past year.

The consensus mark for CRWD’s 2025 earnings has been revised upward by a penny to $3.74 per share over the past 60 days, indicating a 21% year-over-year increase. CRWD shares have gained 35.3% in the past year.

The consensus mark for AKAM’s 2025 earnings has been revised upward by 3 cents to $6.76 per share over the past 60 days, indicating a 6.78% year-over-year decline. AKAM shares have declined 11.9% in the past year.

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