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Tyler Rises 39.6% Year to Date: Should Investors Buy the Stock?
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Tyler Technologies (TYL - Free Report) shares have gained 39.6% in the year-to-date period, outperforming the Zacks Business - Software Services industry, Zacks Computer and Technology Sector and S&P 500 index’s return of 15.7%, 24.2% and 21.1%, respectively. TYL’s outperformance can be attributed to its steady flow of customer wins and robust financials.
So far this year, Tyler has gained numerous clients from the government, healthcare and education end markets. TYL enabled Lewis County with its Enterprise Assessment & Tax solution. The State of New Jersey extended its agreement with Tyler for its Digital Government solutions. Idaho Supreme Court transitioned to TYL’s Court Case Management Solution from on-premises to cloud deployment.
North Dakota Parks subscribed to Tyler’s cloud-based reservation software. The city of Philadelphia Sheriff’s office implemented Tyler’s Civil Process solution. Florida Department of Corrections adopted Tyler’s payment and deposit solutions. Evanston Police Department in Illinois, Arizona Supreme Court and Guam Department of Corrections implemented and expanded the use of TYL’s enterprise supervision solution.
Jackson Public Schools implemented the Enterprise Resource Planning solution. Collier County, FL, went live with Budgeting Solution from Tyler. Rhode Island Department of Business Regulation implemented the State Regulatory Platform suite. The city of Edina implemented TYL’s permitting and inspection processes software. With all these major wins, Tyler is expanding its footprint in the federal and public service solutions space.
Tyler Positions Strongly Against Competitors
Although Tyler competes against Oracle (ORCL - Free Report) , Workday (WDAY - Free Report) and SAP (SAP - Free Report) across various product segments, it exclusively specializes in providing technology solutions for local, state and federal governments. The specialization in the government sector gives Tyler its deep expertise in serving federal clients and public agencies. Companies, including Oracle, Workday and SAP, serve a broader range of industries and do not specifically specialize in the government segment.
Oracle provides Public Sector Cloud, PeopleSoft ERP solution and JD Edwards. Workday's Human Capital Management, Enterprise Accounting and Finance and Adaptive Planning solutions compete with Tyler’s solutions. SAP provides comparable products like S/4HANA, SuccessFactors, Ariba, Analytics Cloud and Integrated Business Planning.
Tyler YTD Performance
Image Source: Zacks Investment Research
Tyler also specializes in handling some unique challenges that occur with government contracts. The long sales cycles exclusive to federal government contracts come with challenges like delayed revenue recognition and extended time in closing deals, resulting in increased costs. Since Tyler exclusively serves government clients, the organization is structured in a way to successfully deal with these setbacks.
The public sector market in which Tyler operates is one of the largest in the United States, spanning approximately 3,000 counties, various public departments across 36,000 towns and cities, and over a thousand dozen schools across the country. The public sector’s ongoing transition from on-premise and outdated systems to scalable cloud-based systems gives Tyler ample scope to expand its business.
Promising Outlook for Tyler
Tyler has shown a remarkable financial performance over the past several quarters. The company has consistently exceeded earnings expectations, with its non-GAAP earnings surpassing the Zacks Consensus Estimate in each of the last four quarters. The average earnings surprise is 5.3%, highlighting Tyler’s impressive performance.
In the last reported financial results for the second quarter of 2024, revenues increased 7.3% year over year to $541 million and beat the Zacks Consensus Estimate of $537.3 million. Its non-GAAP earnings jumped 19.4% year over year to $2.40 per share and surpassed the consensus mark of $2.34.
Looking ahead, the Zacks Consensus Estimate for Tyler’s top and bottom lines for 2024 and 2025 shows continued growth. Its revenues are expected to increase 9.4% in 2024 and 10.6% in 2025. Similarly, non-GAAP earnings are projected to soar 20% this year and 14% next year.
What Should Investors Do?
Tyler is benefiting from the transition of public sector organizations from on-premise to cloud-based solutions. TYL’s strong position against its competitors attributable to its business model is an upside for the company. The repeated customer wins throughout 2024 and gains from annual recurring revenues generated from previous deals make Tyler a strong investment choice.
Image: Bigstock
Tyler Rises 39.6% Year to Date: Should Investors Buy the Stock?
Tyler Technologies (TYL - Free Report) shares have gained 39.6% in the year-to-date period, outperforming the Zacks Business - Software Services industry, Zacks Computer and Technology Sector and S&P 500 index’s return of 15.7%, 24.2% and 21.1%, respectively. TYL’s outperformance can be attributed to its steady flow of customer wins and robust financials.
So far this year, Tyler has gained numerous clients from the government, healthcare and education end markets. TYL enabled Lewis County with its Enterprise Assessment & Tax solution. The State of New Jersey extended its agreement with Tyler for its Digital Government solutions. Idaho Supreme Court transitioned to TYL’s Court Case Management Solution from on-premises to cloud deployment.
North Dakota Parks subscribed to Tyler’s cloud-based reservation software. The city of Philadelphia Sheriff’s office implemented Tyler’s Civil Process solution. Florida Department of Corrections adopted Tyler’s payment and deposit solutions. Evanston Police Department in Illinois, Arizona Supreme Court and Guam Department of Corrections implemented and expanded the use of TYL’s enterprise supervision solution.
Jackson Public Schools implemented the Enterprise Resource Planning solution. Collier County, FL, went live with Budgeting Solution from Tyler. Rhode Island Department of Business Regulation implemented the State Regulatory Platform suite. The city of Edina implemented TYL’s permitting and inspection processes software. With all these major wins, Tyler is expanding its footprint in the federal and public service solutions space.
Tyler Positions Strongly Against Competitors
Although Tyler competes against Oracle (ORCL - Free Report) , Workday (WDAY - Free Report) and SAP (SAP - Free Report) across various product segments, it exclusively specializes in providing technology solutions for local, state and federal governments. The specialization in the government sector gives Tyler its deep expertise in serving federal clients and public agencies. Companies, including Oracle, Workday and SAP, serve a broader range of industries and do not specifically specialize in the government segment.
Oracle provides Public Sector Cloud, PeopleSoft ERP solution and JD Edwards. Workday's Human Capital Management, Enterprise Accounting and Finance and Adaptive Planning solutions compete with Tyler’s solutions. SAP provides comparable products like S/4HANA, SuccessFactors, Ariba, Analytics Cloud and Integrated Business Planning.
Tyler YTD Performance
Image Source: Zacks Investment Research
Tyler also specializes in handling some unique challenges that occur with government contracts. The long sales cycles exclusive to federal government contracts come with challenges like delayed revenue recognition and extended time in closing deals, resulting in increased costs. Since Tyler exclusively serves government clients, the organization is structured in a way to successfully deal with these setbacks.
The public sector market in which Tyler operates is one of the largest in the United States, spanning approximately 3,000 counties, various public departments across 36,000 towns and cities, and over a thousand dozen schools across the country. The public sector’s ongoing transition from on-premise and outdated systems to scalable cloud-based systems gives Tyler ample scope to expand its business.
Promising Outlook for Tyler
Tyler has shown a remarkable financial performance over the past several quarters. The company has consistently exceeded earnings expectations, with its non-GAAP earnings surpassing the Zacks Consensus Estimate in each of the last four quarters. The average earnings surprise is 5.3%, highlighting Tyler’s impressive performance.
In the last reported financial results for the second quarter of 2024, revenues increased 7.3% year over year to $541 million and beat the Zacks Consensus Estimate of $537.3 million. Its non-GAAP earnings jumped 19.4% year over year to $2.40 per share and surpassed the consensus mark of $2.34.
Looking ahead, the Zacks Consensus Estimate for Tyler’s top and bottom lines for 2024 and 2025 shows continued growth. Its revenues are expected to increase 9.4% in 2024 and 10.6% in 2025. Similarly, non-GAAP earnings are projected to soar 20% this year and 14% next year.
What Should Investors Do?
Tyler is benefiting from the transition of public sector organizations from on-premise to cloud-based solutions. TYL’s strong position against its competitors attributable to its business model is an upside for the company. The repeated customer wins throughout 2024 and gains from annual recurring revenues generated from previous deals make Tyler a strong investment choice.
Considering these factors, it is prudent for investors to invest in this Zacks Rank #2 (Buy) stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.