Summary
Tyler Technologies reported total revenues of $456.1 million for the quarter ended March 31, 2022, up 54.7% from $294.8 million a year earlier. Organic revenue growth was 12.8%, which management called the highest in 20 quarters. The headline number leans heavily on acquisition math. NIC, acquired in April 2021, contributed $134.7 million of revenue in the quarter, and US eDirect was purchased in February 2022 for approximately $116.7 million net of cash acquired. Excluding 2021 and 2022 acquisitions, revenue rose 7.3%. Subscriptions revenue climbed 139.5% in total and 16.7% excluding acquisitions.
Profitability grew, but slower than the top line. Gross profit was $192.4 million, up 33.4% from $144.2 million. Gross margin fell to 42.2% from 48.9%, a drop of 6.7 percentage points. Operating income was $55.9 million, up 46.2% from $38.2 million, while the operating margin slipped to 12.2% from 13.0%. Management tied the compression to NIC's historically lower margins and to costs tied to the accelerated cloud transition, including bubble costs from moving proprietary data centers to AWS. Non-GAAP operating income was $110.8 million, up 40.5% from $78.9 million.
Net income was $40.0 million, or $0.94 per diluted share, up 8.1% from $37.0 million, or $0.88 per diluted share. Non-GAAP net income was $80.9 million, or $1.90 per diluted share, up 34.7% from $60.0 million, or $1.43 per diluted share. Adjusted EBITDA was $119.2 million, up 39.2%. Cash generation softened. Operating cash flow was $53.5 million, down 25.3% from $71.7 million, and free cash flow was $41.0 million, down 33.5% from $61.7 million. Capital expenditures were $4.6 million, down 30.2% from $6.6 million. The company flagged a decline of roughly $52.9 million in working capital, excluding cash, tied to lower deferred revenue balances, bonus and payroll tax timing, and stock option activity.
Recurring revenue from maintenance and subscriptions was $362.5 million, up 63.6%, and made up 79.5% of total revenue, up from 75.2%. Annualized non-GAAP recurring revenue reached $1.45 billion, up 63.6% from $886.4 million. Subscription arrangements represented about 80% of new software contract value, up from about 66%. Bookings were approximately $419 million, up 70.1%, or 14.7% excluding NIC. Backlog was $1.76 billion at March 31, 2022, up 13.8% from $1.55 billion a year earlier. Remaining performance obligations were $1.76 billion, up 13.5% from $1.55 billion. Deferred revenue was $454.7 million, up 8.1% from $420.6 million a year earlier. Headcount reached 6,959, including 1,103 employees from 2021 acquisitions, compared with 5,579 a year earlier.
Guidance for full year 2022 puts GAAP and non-GAAP revenue at $1.835 billion to $1.870 billion, including roughly $40 million of COVID-related revenue from NIC's TourHealth and rent relief services. TourHealth revenue is expected to run through the second quarter of 2022, and rent relief through the third. GAAP diluted EPS is guided to $3.92 to $4.08, and non-GAAP diluted EPS to $7.48 to $7.64. Interest expense is expected near $23 million, an increase of about $3.4 million with a $0.06 hit to non-GAAP EPS, reflecting expected rate hikes. Capital expenditures are guided to $62 million to $67 million, including about $36 million of capitalized software development, and R&D to $98 million to $101 million.
The quarter had visible soft spots. Subscription and software services revenue included $20.6 million from NIC's TourHealth and COVID-related initiatives, most of which is expected to wind down by the third quarter of 2022. Maintenance revenue fell 2%, hurt by attrition in a legacy case management solution and by clients converting to SaaS. The effective income tax rate rose sharply, largely on lower excess tax benefits tied to stock incentive awards. The standing risk list covers pressure on government IT budgets, cyber attacks and security breaches, integration of acquisitions, reliance on internet infrastructure, competition, and retention of key personnel.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $456.1M | $433.5M | +5.2% | $294.8M | +54.7% |
| Gross profit | $192.4M | $187.2M | +2.8% | $144.2M | +33.4% |
| Gross margin | 42.2% | 43.2% | -1.0 pp | 48.9% | -6.7 pp |
| Sales & marketing | $97.9M | $101.0M | -3.1% | $78.8M | +24.3% |
| Operating income (loss) | $55.9M | $48.1M | +16.3% | $38.2M | +46.2% |
| Operating margin | 12.3% | 11.1% | +1.2 pp | 13.0% | -0.7 pp |
| Net income (loss) | $40.0M | $54.8M | -27.0% | $37.0M | +8.1% |
| Net margin | 8.8% | 12.6% | -3.9 pp | 12.5% | -3.8 pp |
| Diluted EPS | $0.94 | $1.30 | -$0.36 | $0.88 | +$0.06 |
Risks
Overall gross margin decreased 6.7 percentage points in the quarter ended March 31, 2022 versus the prior year period, driven largely by the inclusion of NIC revenues, which historically carry lower margins than Tyler, and by acquisition-related amortization. Excluding 2021 and 2022 acquisitions, overall gross margin was 46.9% in the quarter, and subscriptions, software services and maintenance gross margin still declined 6.0 percentage points.
Management states it expects software license growth to slow in the short term and begin to decline longer term as clients shift to SaaS and the Company transitions to cloud-based only offerings. New client mix was approximately 77% subscription-based and 23% perpetual in the quarter ended March 31, 2022, versus 55% and 45% respectively in the prior year period, and maintenance revenue decreased 2% in the quarter partly on clients converting from on-premises arrangements.
Reported revenue rose 54.7% in the quarter ended March 31, 2022, but only 7.3% excluding 2021 and 2022 acquisitions, with acquisitions accounting for 47.4% of the revenue increase. Integration of NIC and the February 8, 2022 US eDirect acquisition (approximately $116.7 million, net of cash acquired) carries execution and unanticipated cost risk, and future deals may require debt or dilutive securities.
Interest expense increased 905% in the quarter ended March 31, 2022 versus the prior year period, attributed to higher borrowings under the 2021 Credit Agreement and Convertible Senior Notes plus an increase in interest rates. Cash and cash equivalents fell to $243.3 million at March 31, 2022 from $309.2 million at December 31, 2021, and investing activities used $111.2 million of cash in the quarter.
The forward-looking statement factors identify changes in the budgets or regulatory environments of clients, primarily local and state governments, as a risk that could negatively impact information technology spending, alongside project delays by clients, reductions in transaction size, fewer transactions, and declines in renewal rates for service agreements.
Operating cash flow decreased 25.3% to $53.5 million in the quarter ended March 31, 2022, with working capital excluding cash decreasing approximately $52.9 million mainly due to declining deferred revenue balances, bonus payment timing, payroll-related tax payment timing, and decreases in operating lease liabilities and deferred taxes tied to stock option activity.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Adjusted EBITDA
New SaaS Clients Added
Existing On-Premises Clients Converted to SaaS
Recurring Revenue
Total backlog
Bookings
Recurring Revenue % of Total Revenue
Summary, forecast, risks and KPIs are extracted from TYLER TECHNOLOGIES INC's SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.