PART I. FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Tyler Technologies' unaudited condensed consolidated financial statements, including income, balance sheets, and cash flows, with detailed notes on accounting policies and acquisitions [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Tyler Technologies reported significant revenue and net income growth for the six months ended June 30, 2022, with increased assets and positive operating cash flow Condensed Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $924,792 | $698,877 | +32.3% | | **Gross Profit** | $385,866 | $326,268 | +18.3% | | **Operating Income** | $112,625 | $76,499 | +47.2% | | **Net Income** | $79,930 | $62,506 | +27.9% | | **Diluted EPS** | $1.88 | $1.48 | +27.0% | Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $253,062 | $309,171 | | Goodwill | $2,449,638 | $2,359,674 | | Total Assets | $4,787,046 | $4,732,161 | | Total Liabilities | $2,328,719 | $2,408,129 | | Total Shareholders' Equity | $2,458,327 | $2,324,032 | Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $130,220 | $51,356 | | Net cash used by investing activities | ($110,378) | ($1,998,692) | | Net cash (used) provided by financing activities | ($75,951) | $1,560,486 | | Net decrease in cash and cash equivalents | ($56,109) | ($386,850) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the US eDirect acquisition, debt structure, segment reorganization, and significant recurring revenue and backlog figures - Acquired US eDirect Inc., a provider of campground and outdoor recreation management solutions, on February **8**, **2022**, for a net purchase price of approximately **$116.7 million**. The acquisition resulted in goodwill of approximately **$91.7 million**[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - Effective January **1**, **2022**, the company realigned its reportable segments into two: Enterprise Software (ES) and Platform Technologies (PT). The former Appraisal & Tax (A&T) segment was moved into ES, and NIC solutions were moved to PT. Prior year figures were adjusted to reflect this change[99](index=99&type=chunk)[114](index=114&type=chunk) Total Outstanding Debt (June 30, 2022) | Debt Instrument | Amount (in thousands) | | :--- | :--- | | Term Loan A-1 | $570,000 | | Term Loan A-2 | $105,000 | | Convertible Senior Notes due 2026 | $600,000 | | **Total Borrowings** | **$1,275,000** | | Less: unamortized costs | ($11,912) | | **Total borrowings, net** | **$1,263,088** | - Total backlog, representing contracted revenue not yet recognized, was **$1.85 billion** as of June **30**, **2022**. Approximately **47%** of this is expected to be recognized as revenue over the next **12** months[107](index=107&type=chunk) - Recurring revenues (subscriptions and maintenance) for the six months ended June **30**, **2022**, totaled **$735.1 million**, accounting for **79.5%** of total revenues[104](index=104&type=chunk)[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting revenue growth driven by acquisitions and SaaS, gross margin impacts, and the company's strong liquidity position - Total revenues for the six months ended June **30**, **2022**, increased **32.3%** year-over-year. Excluding the impact of acquisitions from **2021** and **2022**, organic revenue growth was **6.5%**[117](index=117&type=chunk) - Subscription revenues grew **66.0%** for the first six months of **2022**, driven by the NIC acquisition and the ongoing strategic shift to SaaS arrangements. Organic subscription revenue growth was **12.3%**[118](index=118&type=chunk)[131](index=131&type=chunk) - The company's backlog increased by **13.9%** year-over-year to **$1.85 billion** as of June **30**, **2022**[119](index=119&type=chunk) [Results of Operations](index=29&type=section&id=Analysis%20of%20Results%20of%20Operations) Subscription revenue surged due to acquisitions and SaaS adoption, while overall gross margin declined due to lower-margin business and cloud transition costs Revenue by Type (Six Months Ended June 30) | Revenue Type | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Subscriptions | $501,259 | $302,037 | +66% | | Maintenance | $233,844 | $238,733 | -2% | | Software services | $124,622 | $100,977 | +23% | | Software licenses and royalties | $31,515 | $32,537 | -3% | - The shift to SaaS continues, with subscription-based arrangements making up approximately **78%** of the new client mix in H**1** **2022**, compared to **64%** in H**1** **2021**. This trend reduces upfront license revenue but is expected to generate higher overall revenue over the contract term[127](index=127&type=chunk)[128](index=128&type=chunk) - Overall gross margin for H**1** **2022** decreased by **5.0** percentage points to **41.7%**, primarily due to the inclusion of NIC's revenues which have historically lower margins, and increased costs related to the transition to AWS cloud services[135](index=135&type=chunk)[138](index=138&type=chunk) - The effective tax rate for H**1** **2022** was **21.8%**, up significantly from **2.9%** in H**1** **2021**. The increase was driven by a substantial decrease in excess tax benefits from stock incentive awards, which were **$4.7 million** in H**1** **2022** versus **$15.2 million** in H**1** **2021**[83](index=83&type=chunk)[145](index=145&type=chunk) [Financial Condition and Liquidity](index=35&type=section&id=Financial%20Condition%20and%20Liquidity) The company maintains a strong liquidity position with substantial cash and credit availability, supported by operating cash flow and strategic debt repayments Summary of Cash Flows (Six Months Ended June 30, 2022) | Activity | Cash Flow (in thousands) | | :--- | :--- | | Operating Activities | $130,220 | | Investing Activities | ($110,378) | | Financing Activities | ($75,951) | - Days Sales Outstanding (DSO) improved to **115** days at June **30**, **2022**, compared to **131** days at June **30**, **2021**, attributed to better collection efforts[149](index=149&type=chunk) - The company repaid **$80.0 million** of its unsecured term loans during the first six months of **2022** and an additional **$100 million** in July **2022**[151](index=151&type=chunk)[109](index=109&type=chunk) - Anticipated capital spending for the full year **2022** is projected to be between **$58 million** and **$62 million**, including about **$34 million** for capitalized software development[158](index=158&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk involves exposure to interest rate fluctuations on its variable-rate debt under the 2021 Credit Agreement - The company is exposed to interest rate risk on its **$675.0 million** of outstanding variable-rate borrowings under the **2021** Credit Agreement[160](index=160&type=chunk) - A hypothetical **0.25%** change in interest rates would impact annual interest expense by approximately **$1.7 million**[162](index=162&type=chunk) [Controls and Procedures](index=37&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June **30**, **2022**[163](index=163&type=chunk) - No material changes to internal control over financial reporting occurred during the second quarter of **2022**[164](index=164&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) No material legal proceedings are pending against the company, beyond routine litigation incidental to its business - There are no material legal proceedings pending against the company[166](index=166&type=chunk) [Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes were reported in the company's risk factors compared to the prior annual report - No material changes were reported in the company's risk factors during the three months ended June **30**, **2022**[167](index=167&type=chunk) [Other Items (2, 3, 4, 5, 6)](index=38&type=section&id=Other%20Items) This section confirms no unregistered equity sales, defaults, or shareholder votes, and lists exhibits filed with the 10-Q report - Items **2**, **3**, **4**, and **5**, covering unregistered sales of equity, defaults, and shareholder votes, are all reported as "None"[168](index=168&type=chunk)

Tyler Technologies, Inc. (NYSE:TYL) Q1 2022 Results Conference Call April 28, 2022 11:00 AM ET Company Participants Lynn Moore - President, CEO Brian Miller - CFO Conference Call Participants Jonathan Ho - William Blair Pete Heckmann - D.A. Davidson Josh Reilly - Needham Terry Tillman - Truist Securities Matt VanVliet - BTIG Saket Kalia - Barclays Charles Strauzer - CJS Securities Kirk Materne - Evercore ISI Alex Zukin - Wolfe Research Keith Housum - Northcoast Research Brent Bracelin - Piper Sandler Operat ...

PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=2&type=section&id=ITEM%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements and notes for Q1 2022 and 2021 are presented [Condensed Consolidated Statements of Income](index=2&type=section&id=TYLER%20TECHNOLOGIES%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The company reported significant revenue growth for the three months ended March 31, 2022, primarily driven by subscriptions, leading to an increase in net income and earnings per share compared to the prior year period Condensed Consolidated Statements of Income | Metric | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total Revenues | $456,108 | $294,802 | | Gross Profit | $192,418 | $144,207 | | Operating Income | $55,868 | $38,208 | | Net Income | $39,984 | $36,976 | | Basic EPS | $0.97 | $0.91 | | Diluted EPS | $0.94 | $0.88 | - Subscriptions revenue increased by **139.5%** from **$102.48 million** in 2021 to **$245.44 million** in 2022[8](index=8&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=TYLER%20TECHNOLOGIES%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The company's comprehensive income for the three months ended March 31, 2022, was **$39.3 million**, including a net unrealized holding loss on available-for-sale securities, which resulted in an other comprehensive loss Condensed Consolidated Statements of Comprehensive Income | Metric | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :------------------------------------------------------------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net income | $39,984 | $36,976 | | Other comprehensive loss, net of tax | $(697) | — | | Comprehensive income | $39,287 | $36,976 | - The other comprehensive loss in Q1 2022 was primarily due to net unrealized holding losses on available-for-sale securities[9](index=9&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=TYLER%20TECHNOLOGIES%2C%20INC.%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2022, total assets and liabilities slightly decreased, while shareholders' equity increased, reflecting changes in current assets and goodwill from acquisitions Condensed Consolidated Balance Sheets | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Current Assets | $859,899 | $964,331 | | Total Assets | $4,723,806 | $4,732,161 | | Total Current Liabilities | $766,460 | $829,501 | | Total Liabilities | $2,336,072 | $2,408,129 | | Total Shareholders' Equity | $2,387,734 | $2,324,032 | - Goodwill increased from **$2.36 billion** at December 31, 2021, to **$2.44 billion** at March 31, 2022, reflecting recent acquisitions[12](index=12&type=chunk) - Cash and cash equivalents decreased from **$309.17 million** to **$243.26 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=TYLER%20TECHNOLOGIES%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For Q1 2022, the company experienced a net decrease in cash and cash equivalents, primarily due to significant cash used in investing activities for acquisitions Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $53,541 | $71,703 | | Net cash used by investing activities | $(111,173) | $(39,694) | | Net cash (used) provided by financing activities | $(8,277) | $615,120 | | Net (decrease) increase in cash and cash equivalents | $(65,909) | $647,129 | | Cash and cash equivalents at end of period | $243,262 | $1,250,752 | - Investing activities included approximately **$116.70 million** for acquisitions, net of cash acquired, in Q1 2022[14](index=14&type=chunk) [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=TYLER%20TECHNOLOGIES%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Shareholders' equity increased for Q1 2022, driven by net income and stock compensation, partially offset by unrealized losses on available-for-sale securities Total Shareholders' Equity | Metric | Balance at Dec 31, 2021 (in thousands) | Net Income (in thousands) | Unrealized Loss (in thousands) | Balance at Mar 31, 2022 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------ | :----------------------------- | :------------------------------------- | | Total Shareholders' Equity | $2,324,032 | $39,984 | $(697) | $2,387,734 | - Stock compensation contributed **$25.28 million** to additional paid-in capital in Q1 2022[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes provide context for financial statements, detailing accounting policies, acquisitions, debt, financial instruments, and segment reporting [(1) Basis of Presentation](index=7&type=section&id=(1)%20Basis%20of%20Presentation) Financial statements are prepared under SEC and GAAP for interim reporting, with a **$697 thousand** other comprehensive loss in Q1 2022 - Interim financial statements are prepared under GAAP and SEC rules, with certain footnotes condensed or omitted[17](index=17&type=chunk) - Other comprehensive loss of approximately **($697)** (net of taxes) was recorded in Q1 2022, primarily from available-for-sale investment holdings[18](index=18&type=chunk) [(2) Accounting Standards and Significant Accounting Policies](index=7&type=section&id=(2)%20Accounting%20Standards%20and%20Significant%20Accounting%20Policies) This section outlines key accounting policies, including ASU 2021-08 adoption, use of estimates, revenue recognition, goodwill, and intangible assets [Summary of Significant Accounting Policies](index=7&type=section&id=SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) No material changes to significant accounting policies occurred, except for the adoption of ASU 2021-08 on January 1, 2022 - No material changes to significant accounting policies except for the adoption of ASU 2021-08 on January 1, 2022[19](index=19&type=chunk) [Use of Estimates](index=7&type=section&id=USE%20OF%20ESTIMATES) Financial statements require estimates and assumptions for revenue recognition, loss contingencies, goodwill, intangible assets, and share-based compensation - Financial statements require estimates and assumptions for revenue recognition, loss contingencies, goodwill, intangible assets, lease assets/liabilities, share-based compensation, and tax consequences[20](index=20&type=chunk) [Revenue Recognition](index=7&type=section&id=REVENUE%20RECOGNITION) Revenue is earned from software licenses, subscriptions, services, maintenance, hardware, and appraisal services, recognized based on standalone selling price or over time - Revenue is earned from software licenses, royalties, subscription-based services, software services, post-contract customer support (maintenance), hardware, and appraisal services[21](index=21&type=chunk) - For contracts with multiple performance obligations, revenue is allocated based on relative standalone selling price (SSP) and recognized upon transfer of control[22](index=22&type=chunk)[24](index=24&type=chunk) - For arrangements involving significant customization or non-distinct services, revenue is recognized over time using progress-to-completion methods (e.g., labor hours incurred or value added)[25](index=25&type=chunk) - Transaction-based revenues (e-filing, online payments) are recognized over time based on the amount billable to the customer[26](index=26&type=chunk) [Contract Balances](index=10&type=section&id=Contract%20Balances) Contract balances include accounts receivable, unbilled receivables, and allowances for losses, with minimal credit losses due to the client base Contract Balances | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Accounts Receivable (net) | $515,900 | $535,000 | | Unbilled Receivables | $129,500 | $140,300 | | Allowance for losses and sales adjustments | $14,000 | $12,100 | - Unbilled receivables are recorded when revenue is recognized prior to invoicing, and deferred revenue when recognized subsequent to invoicing[28](index=28&type=chunk) - The company rarely incurs credit losses due to its client base of domestic governmental entities[30](index=30&type=chunk) [Goodwill and Other Intangible Assets](index=10&type=section&id=GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill is assessed for impairment annually or more frequently, with no impairment charge in Q4 2021 and no triggering events through March 31, 2022 - Goodwill is assessed for impairment annually (in Q4) or more frequently if circumstances indicate[31](index=31&type=chunk) - The annual assessment in Q4 2021 did not result in an impairment charge, and no triggering events occurred through March 31, 2022[33](index=33&type=chunk) [Recently Adopted Accounting Pronouncements](index=11&type=section&id=RECENTLY%20ADOPTED%20ACCOUNTING%20PRONOUNCEMENTS) ASU 2021-08 was early adopted on January 1, 2022, with no adjustments to deferred revenue balances from the US eDirect acquisition - Early adopted ASU 2021-08 (Accounting for Contract Assets and Contract Liabilities from Contracts with Customers) on January 1, 2022[34](index=34&type=chunk) - The adoption of ASU 2021-08 resulted in no adjustments to the fair value of deferred revenue balances assumed in the US eDirect acquisition[34](index=34&type=chunk) [(3) Acquisitions](index=11&type=section&id=(3)%20Acquisitions) US eDirect Inc. was acquired for **$116.7 million** on February 8, 2022, impacting goodwill and intangible assets - Acquired US eDirect Inc. on February 8, 2022, for approximately **$116.70 million** (net of cash acquired)[35](index=35&type=chunk) - Recorded approximately **$81.20 million** in goodwill and **$48.00 million** in other identifiable intangible assets (customer relationships, acquired software, trade name) from the US eDirect acquisition[37](index=37&type=chunk) - Acquisition costs of approximately **$1.00 million** were expensed in Q1 2022[39](index=39&type=chunk) Pro Forma Consolidated Operating Results (as if US eDirect acquired Jan 1, 2021) | Metric | 3 Months Ended March 31, 2022 (Pro Forma, in thousands) | 3 Months Ended March 31, 2021 (Pro Forma, in thousands) | | :----------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Revenues | $457,329 | $298,412 | | Net income | $28,207 | $36,019 | | Basic earnings per share | $0.68 | $0.89 | | Diluted earnings per share | $0.66 | $0.86 | [(4) Debt](index=12&type=section&id=(4)%20Debt) Outstanding borrowings, including the 2021 Credit Agreement and Convertible Senior Notes, totaled **$1.34 billion** as of March 31, 2022 Total Outstanding Borrowings | Debt Instrument | Rate | Maturity Date | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revolving credit facility | L + 1.50% | April 2026 | $0 | $0 | | Term Loan A-1 | L + 1.50% | April 2026 | $577,500 | $585,000 | | Term Loan A-2 | L + 1.25% | April 2024 | $157,500 | $170,000 | | Convertible Senior Notes due 2026 | 0.25% | March 2026 | $600,000 | $600,000 | | Total borrowings | | | $1,335,000 | $1,355,000 | - The 2021 Credit Agreement includes a **$500 million** Revolving Credit Facility (unused as of March 31, 2022), a **$600 million** Term Loan A-1, and a **$300 million** Term Loan A-2[45](index=45&type=chunk)[48](index=48&type=chunk) - Convertible Senior Notes due 2026 have an aggregate principal amount of **$600.00 million**, accrue interest at **0.25%** per annum, and are convertible under certain events[49](index=49&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) Interest Expense | Interest Expense Component | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Contractual interest expense - Term Loans | $(2,994) | $0 | | Contractual interest expense - Convertible Senior Notes | $(375) | $(83) | | Amortization of debt discount and debt issuance costs | $(1,122) | $(95) | | Total Interest Expense | $(4,804) | $(178) | [(5) Financial Instruments](index=15&type=section&id=(5)%20Financial%20Instruments) Financial instruments include cash, equivalents, and investments, with the portfolio reclassified to available-for-sale in Q4 2021 for enhanced liquidity and flexibility Financial Instruments | Instrument | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $243,262 | $309,171 | | Held-to-maturity investments | $0 | $98,653 | | Available-for-sale investments | $79,315 | $0 | | Equity investments | $10,000 | $10,000 | | Total | $332,577 | $417,824 | - The investment portfolio was reclassified from held-to-maturity to available-for-sale in Q4 2021 for increased flexibility and liquidity[60](index=60&type=chunk) - Available-for-sale investments primarily consist of investment grade corporate bonds, municipal bonds, and asset-backed securities[60](index=60&type=chunk) [(6) Other Comprehensive Income](index=16&type=section&id=(6)%20Other%20Comprehensive%20Income) This section details changes in accumulated other comprehensive loss, net of tax, primarily showing an increase in unrealized losses on available-for-sale securities during Q1 2022 Changes in Accumulated Other Comprehensive Loss | Component | Balance as of Dec 31, 2021 (in thousands) | Other comprehensive loss before reclassifications (in thousands) | Reclassification adjustments (in thousands) | Balance as of Mar 31, 2022 (in thousands) | | :------------------------------------------------------------------------------------------------ | :------------------------------------------ | :------------------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Unrealized Loss On Available-For-Sales Securities | $(46) | $(629) | $(68) | $(743) | | Total Accumulated Other Comprehensive Loss | $(46) | $(629) | $(68) | $(743) | [(7) Fair Value](index=16&type=section&id=(7)%20Fair%20Value) Financial instruments are categorized by fair value hierarchy (Level 1, 2, 3 inputs), with most available-for-sale investments and debt instruments classified as Level 2 - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable market data), and Level 3 (unobservable inputs)[68](index=68&type=chunk) Fair Values of Financial and Debt Instruments (March 31, 2022) | Instrument | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Available-for-sale investments | $0 | $79,315 | $0 | $79,315 | | Equity investments | $0 | $0 | $10,000 | $10,000 | | Term Loan A-1 | $0 | $573,274 | $0 | $573,274 | | Term Loan A-2 | $0 | $155,714 | $0 | $155,714 | | Convertible Senior Notes due 2026 | $0 | $662,148 | $0 | $662,148 | - The fair value of the 2021 Credit Agreement approximates book value due to frequent interest rate resets[71](index=71&type=chunk) [(8) Income Tax Provision](index=17&type=section&id=(8)%20Income%20Tax%20Provision) The effective income tax rate significantly increased to **22.3%** in Q1 2022 from **3.4%** in Q1 2021, primarily due to decreased excess tax benefits and increased state income tax reserves Income Tax Provision | Metric | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Income tax provision | $11,444 | $1,320 | | Effective income tax rate | 22.3% | 3.4% | - The increase in effective tax rate was driven by a decrease in excess tax benefits from stock incentive awards (**$3.00 million** in 2022 vs. **$8.80 million** in 2021) and increased state income tax reserves[75](index=75&type=chunk)[76](index=76&type=chunk) [(9) Shareholders' Equity](index=18&type=section&id=(9)%20Shareholders%27%20Equity) This section summarizes common stock activity for Q1 2022 and 2021, including stock option exercises, employee stock plan purchases, and restricted stock unit vesting, and notes the remaining share repurchase authorization Common Stock Activity | Activity | 3 Months Ended March 31, 2022 (Shares) | 3 Months Ended March 31, 2022 (Amount, in thousands) | 3 Months Ended March 31, 2021 (Shares) | 3 Months Ended March 31, 2021 (Amount, in thousands) | | :------------------------------------------------ | :--------------------------------------- | :------------------------------------------- | :--------------------------------------- | :------------------------------------------- | | Stock option exercises | 50 | $8,045 | 120 | $18,102 | | Employee stock plan purchases | 8 | $3,678 | 8 | $3,038 | | Restricted stock units vested, net of withheld shares | 78 | $(12,587) | 56 | $(8,958) | - The company has authorization from its board of directors to repurchase up to **2.40 million** additional shares of common stock[78](index=78&type=chunk) [(10) Share-Based Compensation](index=18&type=section&id=(10)%20Share-Based%20Compensation) Share-based compensation expense totaled **$25.3 million** in Q1 2022, slightly down from **$25.7 million** in Q1 2021, primarily allocated to selling, general and administrative expenses Share-Based Compensation Expense | Expense Category | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Subscriptions, software services and maintenance | $6,772 | $5,000 | | Selling, general and administrative expenses | $18,507 | $20,724 | | Total share-based compensation expense | $25,279 | $25,724 | [(11) Earnings Per Share](index=18&type=section&id=(11)%20Earnings%20Per%20Share) This section reconciles basic to diluted earnings per share, detailing weighted-average shares outstanding and the impact of dilutive securities, noting that Convertible Senior Notes were anti-dilutive in Q1 2022 Earnings Per Common Share Reconciliation | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (Numerator) | $39,984 | $36,976 | | Weighted-average basic common shares outstanding | 41,364 | 40,611 | | Assumed conversion of dilutive securities: Stock awards | 1,079 | 1,445 | | Assumed conversion of dilutive securities: Convertible Senior Notes | 0 | 0 | | Denominator for diluted EPS - Adjusted weighted-average shares | 42,443 | 42,056 | | Basic EPS | $0.97 | $0.91 | | Diluted EPS | $0.94 | $0.88 | - Convertible Senior Notes were not included in the diluted EPS calculation for Q1 2022 as their effect would be anti-dilutive[81](index=81&type=chunk) [(12) Leases](index=19&type=section&id=(12)%20Leases) The company leases office facilities and equipment under non-cancelable operating lease agreements, with total net lease costs of **$4.3 million** in Q1 2022 - The company primarily uses non-cancelable operating lease agreements for office facilities and equipment, with maturities between one to ten years[82](index=82&type=chunk) Lease Costs | Lease Costs | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Operating lease cost | $3,422 | $1,722 | | Short-term lease cost | $506 | $481 | | Variable lease cost | $370 | $431 | | Net lease cost | $4,298 | $2,634 | - Weighted average remaining lease term was **5.4 years** and weighted average discount rate was **1.72%** as of March 31, 2022[83](index=83&type=chunk) - Rental income from third-party tenants was **$305 thousand** in Q1 2022, with future minimum operating rental income of **$6.99 million**[85](index=85&type=chunk) [(13) Commitments and Contingencies](index=20&type=section&id=(13)%20Commitments%20and%20Contingencies) No material legal proceedings are pending against the company, beyond routine litigation incidental to its business - No material legal proceedings are pending against the company[86](index=86&type=chunk) [(14) Segment and Related Information](index=20&type=section&id=(14)%20Segment%20and%20Related%20Information) The company operates in two reorganized segments, Enterprise Software (ES) and Platform Technologies (PT), providing public sector solutions - The company operates in two reportable segments: Enterprise Software (ES) and Platform Technologies (PT)[86](index=86&type=chunk) - Effective January 1, 2022, the Appraisal & Tax business unit moved to ES, and NIC digital government and payments solutions moved to PT, reflecting changes in management's operating decisions[88](index=88&type=chunk) Segment Revenues (3 Months Ended March 31, 2022) | Revenue Category | Enterprise Software (in thousands) | Platform Technologies (in thousands) | Corporate (in thousands) | Totals (in thousands) | | :-------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------- | :-------------------- | | Software licenses and royalties | $16,105 | $401 | $0 | $16,506 | | Subscriptions | $120,316 | $125,127 | $0 | $245,443 | | Software services | $42,649 | $18,848 | $0 | $61,497 | | Maintenance | $110,695 | $6,334 | $0 | $117,029 | | Appraisal services | $8,518 | $0 | $0 | $8,518 | | Hardware and other | $7,115 | $0 | $0 | $7,115 | | Total revenues | $310,987 | $150,710 | $(5,589) | $456,108 | Segment Operating Income (Loss) | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Enterprise Software | $106,529 | $98,854 | | Platform Technologies | $30,733 | $3,223 | | Corporate | $(53,459) | $(50,493) | | Total segment operating income | $83,803 | $51,584 | [(15) Disaggregation of Revenue](index=22&type=section&id=(15)%20Disaggregation%20of%20Revenue) Revenue is disaggregated by timing of recognition and recurring vs. non-recurring categories, with the majority being recurring from maintenance and subscriptions [Timing of Revenue Recognition](index=22&type=section&id=Timing%20of%20Revenue%20Recognition) Revenue is disaggregated by timing of recognition: point in time versus over time Revenue by Timing of Recognition (3 Months Ended March 31, 2022) | Revenue Category | Products and services transferred at a point in time (in thousands) | Products and services transferred over time (in thousands) | Total (in thousands) | | :-------------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------- | :-------------------- | | Software licenses and royalties | $14,069 | $2,437 | $16,506 | | Subscriptions | $0 | $245,443 | $245,443 | | Software services | $0 | $61,497 | $61,497 | | Maintenance | $0 | $117,029 | $117,029 | | Appraisal services | $0 | $8,518 | $8,518 | | Hardware and other | $7,115 | $0 | $7,115 | | Total | $21,184 | $434,924 | $456,108 | [Recurring Revenue](index=22&type=section&id=Recurring%20Revenue) Recurring versus non-recurring revenues are detailed, with maintenance and subscriptions forming the majority - The majority of revenue is comprised of maintenance and subscriptions, which are considered recurring revenue[92](index=92&type=chunk) Recurring vs. Non-Recurring Revenues (3 Months Ended March 31, 2022) | Revenue Type | Enterprise Software (in thousands) | Platform Technologies (in thousands) | Corporate (in thousands) | Totals (in thousands) | | :-------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------- | :-------------------- | | Recurring revenues | $231,011 | $131,461 | $0 | $362,472 | | Non-recurring revenues | $74,387 | $19,249 | $0 | $93,636 | | Total revenues | $310,987 | $150,710 | $(5,589) | $456,108 | [(16) Deferred Revenue and Performance Obligations](index=23&type=section&id=(16)%20Deferred%20Revenue%20and%20Performance%20Obligations) Deferred revenue balances and **$1.76 billion** backlog are detailed, with **46%** expected within 12 months Total Deferred Revenue by Segment | Segment | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Enterprise Software | $420,830 | $479,048 | | Platform Technologies | $28,054 | $29,705 | | Corporate | $5,794 | $1,814 | | Totals | $454,678 | $510,567 | - Backlog as of March 31, 2022, was **$1.76 billion**, with approximately **46%** expected to be recognized as revenue over the next 12 months[95](index=95&type=chunk) [(17) Deferred Commissions](index=23&type=section&id=(17)%20Deferred%20Commissions) Sales commissions are deferred and amortized over three to seven years, totaling **$37.8 million** as of March 31, 2022 Deferred Commissions | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Deferred commissions | $37,800 | $38,100 | | Amortization expense (3 months ended Mar 31) | $3,500 | $3,000 | - Sales commissions for initial contracts are deferred and amortized over a period of benefit of generally three to seven years[96](index=96&type=chunk) [(18) Subsequent Events](index=23&type=section&id=(18)%20Subsequent%20Events) No material events or transactions occurred subsequent to March 31, 2022 - No material subsequent events occurred after March 31, 2022[97](index=97&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial performance, liquidity, revenue drivers, cost trends, acquisitions, and SaaS transition [Cautionary Note Concerning Forward-Looking Statements](index=24&type=section&id=CAUTIONARY%20NOTE%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) The document contains forward-looking statements subject to risks and uncertainties, including COVID-19, client budgets, cyber-attacks, and integration of acquired businesses - The document contains forward-looking statements that are inherently subject to risks and uncertainties, and actual results could differ materially from expectations[99](index=99&type=chunk) - Key risk factors include the effects of the COVID-19 pandemic, changes in client budgets, cyber-attacks, and the ability to integrate acquired businesses[99](index=99&type=chunk) [General](index=24&type=section&id=GENERAL) Tyler Technologies provides integrated information management solutions for the public sector, with increased employee count and significant revenue growth in Q1 2022 - Tyler Technologies provides integrated information management solutions and services for the public sector, covering nine major functional areas[100](index=100&type=chunk)[101](index=101&type=chunk) - Employee count increased to **6,959** at March 31, 2022, including **1,103** employees from 2021 acquisitions, up from **5,579** at March 31, 2021[103](index=103&type=chunk) - Total revenues increased **54.7%** year-over-year for Q1 2022; excluding the impact of 2021 and 2022 acquisitions, revenue increased **7.3%**[105](index=105&type=chunk) - Subscriptions revenue grew **139.5%** year-over-year, primarily due to the NIC acquisition and an ongoing shift toward SaaS arrangements[106](index=106&type=chunk) - Backlog as of March 31, 2022, was **$1.76 billion**, a **13.8%** increase from the prior year[107](index=107&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) No material changes to critical accounting policies and estimates from the 2021 Form 10-K, except for business combinations due to ASU 2021-08 adoption - No material changes to critical accounting policies and estimates from the 2021 Form 10-K, except for the accounting policies for business combinations as a result of adopting ASU 2021-08[108](index=108&type=chunk) [Analysis of Results of Operations](index=26&type=section&id=ANALYSIS%20OF%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's revenues, cost of revenues, gross margins, and operating expenses for the period, highlighting key drivers and changes Percent of Total Revenues and Expenses | Metric | 3 Months Ended March 31, 2022 (%) | 3 Months Ended March 31, 2021 (%) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | | Revenues: Software licenses and royalties | 3.6% | 5.1% | | Revenues: Subscriptions | 53.8% | 34.7% | | Revenues: Software services | 13.5% | 16.2% | | Revenues: Maintenance | 25.7% | 40.4% | | Operating income | 12.2% | 13.0% | | Net income | 8.8% | 12.6% | [Revenues](index=26&type=section&id=Revenues) Revenue growth was significantly impacted by the US eDirect and NIC acquisitions, with detailed breakdowns by software licenses, subscriptions, and services - The US eDirect acquisition (February 8, 2022) and NIC acquisition (April 21, 2021) significantly impacted revenue growth[112](index=112&type=chunk)[113](index=113&type=chunk) NIC Revenue (3 Months Ended March 31, 2022) | Revenue Category | NIC Revenue (in thousands) | | :-------------------------------- | :------------------------- | | Subscriptions | $121,382 | | Software services | $13,109 | | Maintenance | $202 | | Total revenues | $134,693 | [Software licenses and royalties](index=27&type=section&id=Software%20licenses%20and%20royalties) Software licenses and royalties revenue increased **11%**, driven by large on-premise sales but partially offset by a shift towards SaaS offerings Software Licenses and Royalties Revenue | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | ES | $16,105 | $14,372 | $1,733 | 12% | | PT | $401 | $561 | $(160) | (29)% | | Total | $16,506 | $14,933 | $1,573 | 11% | - The **11%** increase was attributed to several large on-premise sales, partially offset by more clients choosing SaaS offerings. New client mix shifted from approximately **45%** perpetual/**55%** subscription in Q1 2021 to **23%** perpetual/**77%** subscription in Q1 2022[118](index=118&type=chunk) [Subscriptions](index=27&type=section&id=Subscriptions) Subscriptions revenue grew **140%**, primarily due to the NIC acquisition and new SaaS clients, with a **16.7%** increase excluding acquisitions Subscriptions Revenue | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | ES | $120,316 | $99,329 | $20,987 | 21% | | PT | $125,127 | $3,150 | $121,977 | 3,872% | | Total | $245,443 | $102,479 | $142,964 | 140% | - Subscriptions revenue grew **140%**, primarily due to the inclusion of NIC's revenues. Excluding acquisitions, subscriptions revenue increased **16.7%** due to **149** new SaaS clients and **88** existing on-premises client conversions[122](index=122&type=chunk) [Software services](index=28&type=section&id=Software%20services) Software services revenue increased **29%**, with a **1.2%** increase excluding acquisitions, driven by improved professional services staff utilization Software Services Revenue | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | ES | $42,649 | $42,417 | $232 | 1% | | PT | $18,848 | $5,223 | $13,625 | 261% | | Total | $61,497 | $47,640 | $13,857 | 29% | - Software services revenue increased **29%**, with a **1.2%** increase excluding acquisitions, attributed to improved utilization of professional services staff due to virtual delivery, partially offset by clients selecting cloud solutions[124](index=124&type=chunk) [Maintenance](index=28&type=section&id=Maintenance) Maintenance revenue decreased **2%** due to attrition from a legacy solution and client conversions to SaaS, partially offset by rate increases and new sales Maintenance Revenue | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | ES | $110,695 | $109,469 | $1,226 | 1% | | PT | $6,334 | $9,643 | $(3,309) | (34)% | | Total | $117,029 | $119,112 | $(2,083) | (2)% | - Maintenance revenue decreased **2%** due to attrition related to a legacy case management solution and client conversions to SaaS, partially offset by annual maintenance rate increases and new software license sales[126](index=126&type=chunk) [Appraisal services](index=29&type=section&id=Appraisal%20services) Appraisal services revenue increased **32%** due to the ramp-up of services for several new revaluation contracts Appraisal Services Revenue | Segment | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | ES | $8,518 | $6,465 | $2,053 | 32% | | PT | $0 | $0 | $0 | 0% | | Total | $8,518 | $6,465 | $2,053 | 32% | - Appraisal services revenue increased **32%** due to the ramp-up of services for several new revaluation contracts[128](index=128&type=chunk) [Cost of Revenues and Gross Margins](index=29&type=section&id=Cost%20of%20Revenues%20and%20Gross%20Margins) Overall gross margin decreased **6.7%** primarily due to NIC's lower margins and increased amortization expense related to acquired software Cost of Revenues | Cost Component | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Software licenses and royalties | $2,609 | $1,236 | $1,373 | 111% | | Acquired software | $13,221 | $7,964 | $5,257 | 66% | | Subscriptions, software services, and maintenance | $236,896 | $134,320 | $102,576 | 76% | | Appraisal services | $5,936 | $4,617 | $1,319 | 29% | | Hardware and other | $5,028 | $2,458 | $2,570 | 105% | | Total cost of revenues | $263,690 | $150,595 | $113,095 | 75% | Gross Margin Percentage by Revenue Type | Revenue Type | 3 Months Ended March 31, 2022 (%) | 3 Months Ended March 31, 2021 (%) | Change (%) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Software licenses, royalties and acquired software | 4.1% | 38.4% | (34.3)% | | Subscriptions, software services and maintenance | 44.1% | 50.1% | (6.0)% | | Appraisal services | 30.3% | 28.6% | 1.7% | | Hardware and other | 29.3% | 41.1% | (11.8)% | | Overall gross margin | 42.2% | 48.9% | (6.7)% | - Overall gross margin decreased **6.7%** primarily due to the inclusion of NIC's revenues, which historically have lower margins than Tyler, and increased amortization expense related to acquired software[130](index=130&type=chunk)[133](index=133&type=chunk) - Subscriptions, software services, and maintenance gross margin decreased **6.0%** due to NIC's lower margins, lower maintenance revenue, higher employee headcount, and cloud transition costs[131](index=131&type=chunk) [Selling, General and Administrative Expenses](index=30&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses increased **24%** but decreased as a percentage of revenues to **21.5%**, with a **1.8%** increase excluding acquisitions SG&A Expenses | Expense | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Selling, general and administrative expenses | $97,895 | $78,774 | $19,121 | 24% | - SG&A as a percentage of revenues decreased to **21.5%** from **26.7%**. Excluding acquisitions, SG&A increased **1.8%** due to higher commission expense, partially offset by lower stock compensation and travel expenses[134](index=134&type=chunk) [Research and Development Expense](index=30&type=section&id=Research%20and%20Development%20Expense) R&D expense increased **10%**, or **5.7%** excluding acquisitions, driven by new product development initiatives R&D Expense | Expense | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Research and development expense | $23,941 | $21,813 | $2,128 | 10% | - R&D expense increased **10%**, or **5.7%** excluding acquisitions, due to new product development initiatives, partially offset by a shift of some development resources to capitalized projects[136](index=136&type=chunk) [Amortization of Other Intangibles](index=31&type=section&id=Amortization%20of%20Other%20Intangibles) Amortization expense for other intangibles increased **172%** due to acquisitions completed in 2021 and 2022 Amortization of Other Intangibles | Expense | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Amortization of other intangibles | $14,714 | $5,412 | $9,302 | 172% | - Amortization expense increased **172%** due to acquisitions completed in 2021 and 2022[138](index=138&type=chunk) [Interest Expense](index=31&type=section&id=Interest%20Expense) Interest expense increased significantly by **905%** due to higher borrowing levels from the 2021 Credit Agreement and Convertible Senior Notes, and increased interest rates Interest Expense | Expense | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Interest expense | $(4,804) | $(478) | $(4,326) | 905% | - Interest expense increased significantly (**905%**) due to higher borrowing levels from the 2021 Credit Agreement and Convertible Senior Notes, and increased interest rates[140](index=140&type=chunk) [Other Income, Net](index=31&type=section&id=Other%20Income%2C%20Net) Other income, net, decreased by **36%** due to lower levels of invested cash Other Income, Net | Income | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | :--------- | | Other income, net | $364 | $566 | $(202) | (36)% | - Other income, net, decreased due to lower levels of invested cash[142](index=142&type=chunk) [Income Tax Provision](index=31&type=section&id=Income%20Tax%20Provision) The effective income tax rate increased from **3.4%** to **22.3%** primarily due to decreased excess tax benefits from stock incentive awards and increased state income tax reserves Income Tax Provision | Metric | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Income tax provision | $11,444 | $1,320 | | Effective income tax rate | 22.3% | 3.4% | - The effective tax rate increased from **3.4%** to **22.3%** primarily due to decreased excess tax benefits from stock incentive awards and increased state income tax reserves[144](index=144&type=chunk) [Financial Condition and Liquidity](index=32&type=section&id=FINANCIAL%20CONDITION%20AND%20LIQUIDITY) Cash and cash equivalents decreased to **$243.3 million** at March 31, 2022, with investing activities for acquisitions being the primary cash outflow - Cash and cash equivalents were **$243.30 million** at March 31, 2022, down from **$309.20 million** at December 31, 2021[145](index=145&type=chunk) - The company believes its cash from operating activities, revolving credit facility, cash on hand, and access to capital markets provide sufficient long-term financial flexibility[145](index=145&type=chunk) Summary of Cash Flows | Cash Flow Activity | 3 Months Ended March 31, 2022 (in thousands) | 3 Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Operating activities | $53,541 | $71,703 | | Investing activities | $(111,173) | $(39,694) | | Financing activities | $(8,277) | $615,120 | | Net (decrease) increase in cash and cash equivalents | $(65,909) | $647,129 | - Investing activities used **$111.20 million**, primarily for the US eDirect acquisition (**$116.70 million** net of cash acquired) and capitalized software development (**$7.90 million**)[149](index=149&type=chunk) - Anticipated 2022 capital spending is between **$62 million** and **$67 million**, including approximately **$36 million** of capitalized software development[154](index=154&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on variable-rate debt, impacting annual interest expense by **$1.8 million** per quarter-point change - Market risk primarily relates to interest rate changes on variable-rate debt under the 2021 Credit Agreement[156](index=156&type=chunk)[157](index=157&type=chunk) - As of March 31, 2022, with **$735.00 million** outstanding under the 2021 Credit Agreement, each quarter-point change in interest rates would result in a **$1.80 million** change in annual interest expense[158](index=158&type=chunk) [ITEM 4. Controls and Procedures](index=34&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=34&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022 - Management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022[160](index=160&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the three months ended March 31, 2022 - There were no material changes in internal control over financial reporting during the three months ended March 31, 2022[161](index=161&type=chunk) Part II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=35&type=section&id=ITEM%201.%20Legal%20Proceedings) No material legal proceedings are pending against the company, beyond routine litigation incidental to its business - No material legal proceedings are pending to which the company is a party or to which any of its properties are subject, other than routine litigation incidental to its business[163](index=163&type=chunk) [ITEM 1A. Risk Factors](index=35&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes in risk factors occurred during Q1 2022, referring to the 2021 Form 10-K for detailed discussion - No material changes in risk factors were identified during the three months ended March 31, 2022, referring to the 2021 Annual Report on Form 10-K for detailed discussion[164](index=164&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - None to report[165](index=165&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=35&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None to report[165](index=165&type=chunk) [ITEM 4. Submission of Matters to a Vote of Security Holders](index=35&type=section&id=ITEM%204.%20Submission%20of%20Matters%20to%20a%20Vote%20of%20Security%20Holders) No matters were submitted to a vote of security holders during the period - None to report[165](index=165&type=chunk) [ITEM 5. Other Information](index=35&type=section&id=ITEM%205.%20Other%20Information) No other information was disclosed for the period - None to report[165](index=165&type=chunk) [ITEM 6. Exhibits](index=35&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including certifications pursuant to the Sarbanes-Oxley Act and Inline XBRL documents - Exhibits include certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and Inline XBRL documents[165](index=165&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is signed by Brian K. Miller, Executive Vice President and Chief Financial Officer, for Tyler Technologies, Inc. - The report was signed by Brian K. Miller, Executive Vice President and Chief Financial Officer, on April 27, 2022[168](index=168&type=chunk)

Investor Presentation March 2022 2 | Forward-Looking Statements Tyler has included in this presentation "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," ...

FORM10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10485 TYLER TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 75-2303920 (State or o ...

Financial Data and Key Metrics Changes - Total revenues for Q4 2021 were $433.5 million, up 53% year-over-year, with non-GAAP revenues at $434.2 million, also up 53.2% [21] - Organic growth for both GAAP and non-GAAP revenues was 9.2% [21] - Subscription revenues rose 144.1%, with a robust growth of 28.1% excluding NIC contributions [22] - Non-GAAP operating margin declined 330 basis points to 23.6% due to various factors including the shift to SaaS and lower margin revenues [10][28] Business Line Data and Key Metrics Changes - Recurring revenues comprised over 80% of quarterly revenues, with subscription revenues leading the growth [8] - NIC's core revenue growth was 7.5% excluding COVID-related revenues, with total COVID-related revenues at $16.6 million [6][7] - Transaction-based revenues, including NIC portal and payment processing, reached $137.1 million, up almost fivefold from last year [24] Market Data and Key Metrics Changes - The backlog at the end of Q4 was $1.8 billion, up 12.6%, with Tyler's backlog growing 11.1% excluding NIC [26] - Bookings for the quarter were $464 million, up 39.3%, with organic bookings at approximately $347 million, up 4.2% [27] Company Strategy and Development Direction - The company is focusing on a cloud-first strategy, with expectations that 80% of new software contract mix in 2022 will be SaaS [52] - The acquisition of USC Direct is expected to enhance the company's offerings in the outdoor recreation management market [36] - The company anticipates a decline in license revenues in the mid-single digits for 2022, while subscription revenues are expected to grow 25% to 30% [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong recovery of the public sector market, with RFP and demo activity at or above pre-COVID levels [34] - The company expects to see margin pressures in 2022 due to the transition to SaaS, but anticipates a return to margin expansion starting in 2024 [58] - Management highlighted the importance of cross-selling opportunities and the existing client base of over 37,000 installations as key growth drivers [62] Other Important Information - The company repaid $87.5 million of term debt in Q4 and has repaid $395 million since the NIC acquisition, ending the quarter with total outstanding debt of $1.34 billion [28] - The company is transitioning its hosting to AWS, which is expected to improve margins in the long term [51] Q&A Session Summary Question: Growth in government budgets and federal stimulus impact - Management noted that while property values remain strong, the majority of federal stimulus money has not yet been spent or committed [66][68] Question: Impact of SaaS mix on top line and margins - The shift towards SaaS is expected to impact revenue by approximately $28 million to $30 million, with a margin impact of about half a point for the year [70][72] Question: Deals above $5 million in total contract value - No deals above $5 million were reported in the quarter, with the largest deal being just under $4.5 million [76] Question: ERP demand outlook - Demand for ERP solutions is robust, with RFPs and demos at all-time highs, indicating strong growth potential [87] Question: AWS progress and new SaaS customers - New customers for ERP are being placed on AWS, but the full margin benefits will not be realized until products are optimized for the cloud [89] Question: NIC revenues and margin pressure - NIC's revenues are expected to be consistent with Tyler's overall margin for the year, with some improvement as COVID-related revenues decline [96][98] Question: Subscription revenue growth sustainability - Subscription revenue growth is expected to remain strong, with a mid-20% organic growth rate anticipated [114]

[Corporate Information](index=1&type=section&id=Corporate%20Information) Provides essential registration details for Tyler Technologies, Inc., including its incorporation, stock listing, and filing status [Registrant Details](index=1&type=section&id=Registrant%20Details) Tyler Technologies, Inc., a Delaware-incorporated large accelerated filer, lists its common stock (TYL) on the NYSE - **TYLER TECHNOLOGIES, INC.** is a Delaware-incorporated registrant with Commission File Number **1-10485**, headquartered in Plano, Texas[3](index=3&type=chunk) Stock Listing Information | Title of each class | Trading symbol | Name of each exchange on which registered | |---|---|---| | COMMON STOCK, $0.01 PAR VALUE | TYL | New York Stock Exchange | - Filing Status: **Large accelerated filer**, not a shell company[4](index=4&type=chunk)[5](index=5&type=chunk) - **40,976,329** common shares outstanding as of October 29, 2021[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents Tyler Technologies, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. Financial Statements](index=2&type=section&id=ITEM%201.%20Financial%20Statements) Presents Tyler Technologies, Inc.'s unaudited condensed consolidated financial statements, including income, balance sheets, cash flows, and equity [Condensed Consolidated Statements of Income](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Revenue grew significantly, but nine-month net income and diluted EPS declined due to increased costs and interest expenses Condensed Consolidated Statements of Income (Three Months Ended September 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | |---|---|---| | Total revenues | $459,873 | $285,746 | | Gross profit | $196,216 | $143,509 | | Operating income | $56,184 | $49,656 | | Net income | $44,170 | $39,284 | | Diluted EPS | $1.04 | $0.94 | Condensed Consolidated Statements of Income (Nine Months Ended September 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | |---|---|---| | Total revenues | $1,158,750 | $833,378 | | Gross profit | $522,484 | $403,843 | | Operating income | $132,683 | $124,890 | | Net income | $106,676 | $140,726 | | Diluted EPS | $2.53 | $3.39 | - Total revenues increased by **60.9%** for the three months and **39.0%** for the nine months ended September 30, 2021[8](index=8&type=chunk) - Net income increased by **12.4%** for the three months but decreased by **24.2%** for the nine months ended September 30, 2021[8](index=8&type=chunk) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities surged due to acquisitions, with goodwill and intangibles increasing, and cash decreasing Condensed Consolidated Balance Sheets (September 30, 2021 vs. December 31, 2020) | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Total assets | $4,682,938 | $2,607,274 | | Cash and cash equivalents | $234,128 | $603,623 | | Accounts receivable (net) | $538,119 | $382,319 | | Goodwill | $2,355,144 | $838,428 | | Other intangibles, net | $1,086,457 | $322,068 | | Total liabilities | $2,482,165 | $621,163 | | Term loans | $805,535 | — | | Convertible senior notes due 2026, net | $592,335 | — | | Total shareholders' equity | $2,200,773 | $1,986,111 | - Total assets increased by **79.6%** from December 31, 2020, to September 30, 2021, largely due to acquisitions[11](index=11&type=chunk) - Goodwill increased by **180.9%** and other intangibles by **237.3%**, reflecting significant acquisition activity[11](index=11&type=chunk) - Cash and cash equivalents decreased by **61.2%** from December 31, 2020, to September 30, 2021[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow slightly decreased, investing used $2.1 billion for acquisitions, funded by $1.5 billion in new debt Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Cash Flow Activity (in thousands) | 2021 | 2020 | |---|---|---| | Net cash provided by operating activities | $256,743 | $266,328 | | Net cash used by investing activities | $(2,084,788) | $(68,163) | | Net cash provided by financing activities | $1,458,550 | $87,838 | | Net (decrease) increase in cash and cash equivalents | $(369,495) | $286,003 | | Cash and cash equivalents at end of period | $234,128 | $518,685 | - Net cash used by investing activities increased dramatically from **$68.2 million** in 2020 to **$2.08 billion** in 2021, primarily due to the NIC acquisition[13](index=13&type=chunk)[161](index=161&type=chunk) - Net cash provided by financing activities surged from **$87.8 million** in 2020 to **$1.46 billion** in 2021, driven by new debt to fund acquisitions[13](index=13&type=chunk)[162](index=162&type=chunk) - Cash and cash equivalents decreased by **$369.5 million** in 2021, ending at **$234.1 million**[13](index=13&type=chunk) [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased to **$2.2 billion**, driven by net income, share-based compensation, and stock options Consolidated Shareholders' Equity (September 30, 2021 vs. December 31, 2020) | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Total Shareholders' Equity | $2,200,773 | $1,986,111 | | Additional Paid-in Capital | $1,010,212 | $905,332 | | Retained Earnings | $1,218,832 | $1,112,156 | | Treasury Stock (Amount) | $(28,706) | $(31,812) | - Total shareholders' equity increased by **$214.7 million (10.8%)** from December 31, 2020, to September 30, 2021[18](index=18&type=chunk) - Key contributors include **$106.7 million** in net income and **$80.4 million** in stock compensation[18](index=18&type=chunk) - Treasury stock purchases amounted to **$13.0 million** for the nine months ended September 30, 2021[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain financial reporting, accounting policies, and the impact of acquisitions on revenue, goodwill, debt, and segments [(1) Basis of Presentation](index=7&type=section&id=(1)%20Basis%20of%20Presentation) Financial statements follow SEC and GAAP for interim reporting, including NIC, Inc. acquisition results from April 21, 2021 - Financial statements prepared under **SEC** and **GAAP** for interim reporting, with condensed footnotes[19](index=19&type=chunk) - **NIC, Inc.** acquired on **April 21, 2021**, with results included from the acquisition date[21](index=21&type=chunk) - No items of other comprehensive income (loss) for the three and nine months ended September 30, 2021, and 2020[20](index=20&type=chunk) [(2) Accounting Standards and Significant Accounting Policies](index=7&type=section&id=(2)%20Accounting%20Standards%20and%20Significant%20Accounting%20Policies) Adopted new ASUs for convertible instruments and income taxes; COVID-19 impacts revenue, but recurring revenues remain strong - Adopted **ASU 2020-06** (Convertible Instruments) and **ASU 2019-12** (Income Taxes) as of January 1, 2021[22](index=22&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - **COVID-19** continues to delay government procurement, impacting software licenses and services, but recurring revenues (subscriptions and maintenance) remain strong, comprising **79%** of total consolidated revenue for the nine months ended September 30, 2021[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - Revenue recognition involves identifying distinct performance obligations, determining transaction price, allocating it based on standalone selling price (SSP), and recognizing revenue upon transfer of control[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Goodwill is assessed for impairment annually (changed to October 1 in 2021) or more frequently if indicators arise; **no impairment recorded** as of September 30, 2021[39](index=39&type=chunk)[40](index=40&type=chunk) [(3) Acquisitions](index=11&type=section&id=(3)%20Acquisitions) Tyler Technologies completed several acquisitions in 2021, notably **NIC, Inc.** for **$2.0 billion**, expanding digital government solutions - Acquired **NIC, Inc.** on **April 21, 2021**, for approximately **$2.0 billion** (net of cash acquired), adding digital government solutions and payment expertise; NIC's results are now a separate reportable segment[49](index=49&type=chunk)[51](index=51&type=chunk)[56](index=56&type=chunk) Preliminary Purchase Price Allocation for NIC Acquisition (in thousands) | Asset/Liability | Amount | |---|---| | Cash | $331,783 | | Identifiable intangible assets | $790,000 | | Goodwill | $1,438,603 | | Deferred tax liabilities, net | $(194,676) | | Total consideration | $2,320,492 | - Other 2021 acquisitions include **Arx ($12.8 million)**, **VendEngine ($83.1 million)**, **ReadySub ($6.2 million)**, and **DataSpec ($5.8 million)**[45](index=45&type=chunk)[46](index=46&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) Unaudited Pro Forma Consolidated Operating Results (Nine Months Ended September 30) | Metric | 2021 (Pro Forma) | 2020 (Pro Forma) | |---|---|---| | Revenues | $1,322,055 | $1,152,675 | | Net income | $103,330 | $130,555 | | Basic earnings per share | $2.53 | $3.26 | | Diluted earnings per share | $2.45 | $3.15 | [(4) Shareholders' Equity](index=13&type=section&id=(4)%20Shareholders'%20Equity) Shareholders' equity activity included stock option exercises, employee stock plan purchases, and treasury share repurchases Shareholders' Equity Activity (Nine Months Ended September 30) | Activity | 2021 (Shares) | 2021 (Amount $) | 2020 (Shares) | 2020 (Amount $) | |---|---|---|---|---| | Purchases of treasury shares | (32) | $(12,975) | (59) | $(15,484) | | Stock option exercises | 313 | $46,433 | 989 | $100,732 | | Employee stock plan purchases | 26 | $9,757 | 31 | $8,209 | - As of September 30, 2021, the company is authorized to repurchase up to **2.4 million** additional shares of common stock[58](index=58&type=chunk) [(5) Deferred Commissions](index=13&type=section&id=(5)%20Deferred%20Commissions) Deferred sales commissions, totaling **$36.2 million**, are amortized over three to seven years, with **$9.6 million** expense Deferred Commissions (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Deferred commissions | $36,200 | $32,300 | Amortization Expense Related to Deferred Commissions (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three months ended Sep 30 | $3,500 | $3,000 | | Nine months ended Sep 30 | $9,600 | $8,900 | - Deferred commissions are amortized over a period of **three to seven years**, commensurate with associated revenue recognition[59](index=59&type=chunk) [(6) Other Assets](index=14&type=section&id=(6)%20Other%20Assets) The company holds **$114.3 million** in held-to-maturity bonds and a **$10 million** equity method investment in BFTR, LLC - As of September 30, 2021, **$114.3 million** in investment grade corporate and municipal bonds are held to maturity, with varying maturity dates through 2027[61](index=61&type=chunk) - An investment of **$10 million** (18% interest) in **BFTR, LLC** is accounted for under the equity method, specializing in digitizing spoken word in court and legal proceedings[62](index=62&type=chunk) - No credit losses recorded for accrued interest receivables during the three and nine months ended September 30, 2021[61](index=61&type=chunk) [(7) Debt](index=14&type=section&id=(7)%20Debt) Tyler Technologies entered a **$1.4 billion** Credit Agreement and issued **$600 million** Convertible Senior Notes in 2021 to fund the NIC acquisition - Entered into a new **$1.4 billion** Credit Agreement on **April 21, 2021**, including a **$500 million** revolving credit facility and **$900 million** in term loans[63](index=63&type=chunk) Outstanding Borrowings under 2021 Credit Agreement (in thousands) | Loan Type | Sep 30, 2021 | Maturity Date | |---|---|---| | Revolving Credit Facility | $0 | April 20, 2026 | | Term Loan A-1 | $592,500 | April 20, 2026 | | Term Loan A-2 | $250,000 | April 20, 2024 | | Total borrowings, net | $835,535 | | - Issued **$600 million** aggregate principal amount of **0.25% Convertible Senior Notes due 2026** on March 9, 2021, with net proceeds of **$591.4 million**[70](index=70&type=chunk) Convertible Senior Notes Carrying Value (in thousands) | Metric | Sep 30, 2021 | |---|---| | Convertible Senior Notes due 2026 | $600,000 | | Less: unamortized debt discount and debt issuance costs | $(7,665) | | Carrying value | $592,335 | - The effective interest rate for the 2021 Credit Agreement borrowings was **3.25%** as of September 30, 2021, and for the Convertible Senior Notes was **1.19%**[67](index=67&type=chunk)[79](index=79&type=chunk) [(8) Income Tax Provision](index=18&type=section&id=(8)%20Income%20Tax%20Provision) Effective income tax rates fluctuated to **13.8%** (three months) and **7.7%** (nine months), driven by excess tax benefits from stock awards Effective Income Tax Rate | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | 13.8% | 21.3% | | Nine Months Ended Sep 30 | 7.7% | (11.1)% | - Decrease in effective tax rate for three months due to increased excess tax benefits from stock incentive awards; increase for nine months due to decreased excess tax benefits[80](index=80&type=chunk) Excess Tax Benefits Related to Stock Incentive Awards (in millions) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $6.3 | $2.5 | | Nine Months Ended Sep 30 | $21.5 | $48.0 | [(9) Earnings Per Share](index=18&type=section&id=(9)%20Earnings%20Per%20Share) Diluted EPS increased to **$1.04** for three months but decreased to **$2.53** for nine months, with Convertible Senior Notes anti-dilutive Earnings Per Common Share | Period | 2021 (Basic) | 2021 (Diluted) | 2020 (Basic) | 2020 (Diluted) | |---|---|---|---|---| | Three Months Ended Sep 30 | $1.08 | $1.04 | $0.98 | $0.94 | | Nine Months Ended Sep 30 | $2.61 | $2.53 | $3.52 | $3.39 | - Approximately **1.2 million** common shares related to Convertible Senior Notes were not included in diluted EPS calculation as their effect would be anti-dilutive[84](index=84&type=chunk) [(10) Leases](index=19&type=section&id=(10)%20Leases) Operating lease costs significantly increased, with a weighted-average remaining lease term of **6 years** and a **1.91%** discount rate Operating Lease Costs (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $5,269 | $2,506 | | Nine Months Ended Sep 30 | $13,518 | $7,647 | Operating Lease Liabilities (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Operating lease right-of-use assets | $40,449 | $18,734 | | Total lease liabilities | $47,473 | $22,183 | - Weighted average remaining lease term is **6 years**, and weighted average discount rate is **1.91%** as of September 30, 2021[86](index=86&type=chunk) Rental Income from Third Parties (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $301 | $284 | | Nine Months Ended Sep 30 | $891 | $850 | [(11) Share-Based Compensation](index=20&type=section&id=(11)%20Share-Based%20Compensation) Total share-based compensation expense increased significantly due to higher awards and an increased stock price Total Share-Based Compensation Expense (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $29,461 | $18,424 | | Nine Months Ended Sep 30 | $80,360 | $54,112 | - Share-based compensation expense increased by **59.9%** for the three months and **48.5%** for the nine months ended September 30, 2021[90](index=90&type=chunk) [(12) Segment and Related Information](index=21&type=section&id=(12)%20Segment%20and%20Related%20Information) Tyler Technologies operates in three segments: Enterprise Software (ES), Appraisal and Tax (A&T), and the new NIC segment - Three reportable segments: **Enterprise Software (ES)**, **Appraisal and Tax (A&T)**, and **NIC** (newly formed after April 2021 acquisition)[91](index=91&type=chunk) - ES segment includes financial management, education, courts and justice, public safety, planning, regulatory, maintenance, data and insights, and platform technologies solutions[91](index=91&type=chunk)[95](index=95&type=chunk) - A&T segment provides systems for property appraisal and assessment, land and vital records management, and appraisal outsourcing services[91](index=91&type=chunk)[95](index=95&type=chunk) Total Revenues by Segment (Three Months Ended September 30, 2021, in thousands) | Segment | Total Revenues | |---|---| | Enterprise Software | $285,420 | | Appraisal and Tax | $28,923 | | NIC | $150,585 | | Corporate | $(5,055) | | **Totals** | **$459,873** | Total Revenues by Segment (Nine Months Ended September 30, 2021, in thousands) | Segment | Total Revenues | |---|---| | Enterprise Software | $832,529 | | Appraisal and Tax | $89,570 | | NIC | $249,664 | | Corporate | $(13,013) | | **Totals** | **$1,158,750** | [(13) Disaggregation of Revenue](index=23&type=section&id=(13)%20Disaggregation%20of%20Revenue) Majority of revenue is recurring (**79%** for nine months), primarily from subscriptions and maintenance, driven by acquisitions and SaaS adoption Revenue by Timing of Recognition (Three Months Ended September 30, 2021, in thousands) | Category | Products/Services Transferred at a Point in Time | Products/Services Transferred Over Time | Total | |---|---|---|---| | Software licenses and royalties | $19,170 | $3,503 | $22,673 | | Subscriptions | — | $252,942 | $252,942 | | Software services | — | $54,624 | $54,624 | | Maintenance | — | $117,833 | $117,833 | | Appraisal services | — | $7,146 | $7,146 | | Hardware and other | $4,655 | — | $4,655 | | **Total** | **$23,825** | **$436,048** | **$459,873** | Revenue by Timing of Recognition (Nine Months Ended September 30, 2021, in thousands) | Category | Products/Services Transferred at a Point in Time | Products/Services Transferred Over Time | Total | |---|---|---|---| | Software licenses and royalties | $45,983 | $9,227 | $55,210 | | Subscriptions | — | $554,979 | $554,979 | | Software services | — | $155,601 | $155,601 | | Maintenance | — | $356,566 | $356,566 | | Appraisal services | — | $19,876 | $19,876 | | Hardware and other | $16,518 | — | $16,518 | | **Total** | **$62,501** | **$1,096,249** | **$1,158,750** | - Recurring revenues (subscriptions and maintenance) comprised **79%** of total consolidated revenue for the nine months ended September 30, 2021[102](index=102&type=chunk) Recurring vs. Non-Recurring Revenue (Nine Months Ended September 30, 2021, in thousands) | Revenue Type | Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | |---|---|---|---|---|---| | Recurring revenues | $625,548 | $50,012 | $235,985 | — | $911,545 | | Non-recurring revenues | $190,992 | $39,507 | $13,679 | $3,027 | $247,205 | | **Total Revenues** | **$832,529** | **$89,570** | **$249,664** | **$(13,013)** | **$1,158,750** | [(14) Deferred Revenue and Performance Obligations](index=25&type=section&id=(14)%20Deferred%20Revenue%20and%20Performance%20Obligations) Total deferred revenue increased to **$495.3 million**, with a backlog of **$1.77 billion** in performance obligations Total Deferred Revenue by Segment (in thousands) | Segment | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Enterprise Software | $452,435 | $422,742 | | Appraisal and Tax | $31,300 | $36,945 | | NIC | $9,525 | — | | Corporate | $2,043 | $1,691 | | **Totals** | **$495,303** | **$461,378** | - Backlog (transaction price allocated to remaining performance obligations) was **$1.77 billion** as of September 30, 2021, a **14.3%** increase from the prior year[105](index=105&type=chunk)[122](index=122&type=chunk) - Approximately **47%** of the backlog is expected to be recognized as revenue over the next 12 months[105](index=105&type=chunk) [(15) Commitments and Contingencies](index=26&type=section&id=(15)%20Commitments%20and%20Contingencies) A September 2020 ransomware incident was remediated, incurring **$410,000** in costs, partially offset by insurance - A security incident (ransomware) in September 2020 has been contained and remediated[106](index=106&type=chunk) - Costs for the security incident were **$410,000** for the nine months ended September 30, 2021, with **$755,000** in insurance recoveries received[106](index=106&type=chunk) - No material legal proceedings pending other than routine litigation[107](index=107&type=chunk) [(16) Subsequent Events](index=26&type=section&id=(16)%20Subsequent%20Events) No material subsequent events or transactions occurred after September 30, 2021 - No material subsequent events or transactions after September 30, 2021[108](index=108&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A reviews financial performance, revenue growth from acquisitions and SaaS, COVID-19 impacts, and liquidity, emphasizing increased debt [Cautionary Note Concerning Forward-Looking Statements](index=27&type=section&id=CAUTIONARY%20NOTE%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) Warns that forward-looking statements are subject to risks, including COVID-19 impacts, client budgets, cybersecurity, and integration challenges - Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially[110](index=110&type=chunk) - Key risk factors include **COVID-19** impacts, changes in client budgets/regulations, cyber-attacks, integration of acquired businesses, and market competition[110](index=110&type=chunk) [General Business Overview](index=27&type=section&id=GENERAL) Tyler Technologies provides integrated information management solutions for the public sector across three segments - Provides integrated information management solutions and services for the public sector, including software, professional IT services, and subscription-based services[111](index=111&type=chunk) - Products automate nine major functional areas: financial management, courts and justice, public safety, property appraisal and tax, and NIC digital government and payments[112](index=112&type=chunk) - Operates in three segments: **Enterprise Software (ES)**, **Appraisal and Tax (A&T)**, and **NIC** (newly formed after April 2021 acquisition)[112](index=112&type=chunk) - Total employee count increased to **6,718** at September 30, 2021, including **1,046** employees from 2021 acquisitions[115](index=115&type=chunk) [Impacts of the COVID-19 Pandemic](index=29&type=section&id=Impacts%20of%20the%20COVID-19%20Pandemic) COVID-19 delays government procurement and impacts software licenses and services, but cost savings and virtual delivery partially offset effects - **COVID-19** continues to delay government procurement processes, negatively impacting software licenses and services revenue[123](index=123&type=chunk)[124](index=124&type=chunk) - Software services revenue affected by decline in billable travel, with most services now delivered virtually[124](index=124&type=chunk) - Cost savings from reduced travel, user conferences, and trade show expenses partially offset lower revenues[124](index=124&type=chunk) - **COVID-related revenues** from NIC's TourHealth and pandemic unemployment services totaled **$43.3 million** (three months) and **$58.4 million** (nine months) for 2021, but are expected to decrease significantly in Q4 2021 and wind down in H1 2022[125](index=125&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Financial statements rely on estimates for revenue recognition, intangible asset impairment, and share-based compensation - Significant estimates and judgments are made for revenue recognition, amortization and potential impairment of intangible assets and goodwill, and share-based compensation expense[128](index=128&type=chunk) - Accounting policies for convertible senior notes were updated due to the adoption of **ASU 2020-06**[128](index=128&type=chunk) [Analysis of Results of Operations](index=30&type=section&id=ANALYSIS%20OF%20RESULTS%20OF%20OPERATIONS) Operations show substantial revenue growth from acquisitions and SaaS, but gross margins declined, with rising SG&A, R&D, and interest expenses Key Financial Metrics as % of Total Revenues | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | Total revenues | 100.0% | 100.0% | 100.0% | 100.0% | | Subscriptions | 55.0% | 31.2% | 47.9% | 30.8% | | Maintenance | 25.6% | 41.3% | 30.8% | 41.9% | | Operating income | 12.2% | 17.4% | 11.5% | 15.0% | | Net income | 9.6% | 13.8% | 9.2% | 16.9% | - Total revenues increased **60.9%** (three months) and **39.0%** (nine months) compared to prior year, with 2021 acquisitions contributing **53.4%** and **30.7%** respectively[120](index=120&type=chunk) - Subscriptions revenue grew **183.3%** (three months) and **116.2%** (nine months), primarily due to the NIC acquisition and a shift to SaaS[121](index=121&type=chunk) - Overall gross margin decreased by **7.5%** (three months) and **3.4%** (nine months) primarily due to NIC's lower margins and increased amortization of acquired software[147](index=147&type=chunk) - SG&A expenses increased **52%** (three months) and **47%** (nine months), driven by acquisition costs, higher stock compensation, and increased staff levels[149](index=149&type=chunk) - Interest expense increased significantly due to higher borrowings from the 2021 Credit Agreement and Convertible Senior Notes[153](index=153&type=chunk) [Revenues](index=31&type=section&id=Revenues_MD%26A) Total revenues increased significantly due to the NIC acquisition and SaaS shift, with subscriptions surging NIC Revenue Contribution (in thousands) | Revenue Type | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | |---|---|---| | Subscriptions | $142,346 | $235,627 | | Software services | $8,035 | $13,679 | | Maintenance | $202 | $358 | | **Total revenues** | **$150,583** | **$249,664** | Software Licenses and Royalties Revenue (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | ES | $21,238 | $17,798 | $50,064 | $48,432 | | A&T | $1,435 | $2,139 | $5,146 | $7,267 | | NIC | — | — | — | — | | **Total** | **$22,673** | **$19,937** | **$55,210** | **$55,699** | - Software licenses and royalties revenue increased **14%** for three months but decreased **1%** for nine months, reflecting a shift from on-premise licenses to SaaS offerings[136](index=136&type=chunk) Subscriptions Revenue (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | ES | $102,285 | $82,972 | $295,523 | $238,744 | | A&T | $8,311 | $6,318 | $23,829 | $17,907 | | NIC | $142,346 | — | $235,627 | — | | **Total** | **$252,942** | **$89,290** | **$554,979** | **$256,651** | - Subscriptions revenue grew **183%** (three months) and **116%** (nine months), primarily due to NIC acquisition and new SaaS clients[139](index=139&type=chunk) Software Services Revenue (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | ES | $41,985 | $42,640 | $127,517 | $126,488 | | A&T | $4,603 | $5,306 | $14,405 | $17,245 | | NIC | $8,036 | — | $13,679 | — | | **Total** | **$54,624** | **$47,946** | **$155,601** | **$143,733** | - Software services revenue increased **14%** (three months) and **8%** (nine months), but declined organically due to reduced billable travel[140](index=140&type=chunk) Maintenance Revenue (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | ES | $110,231 | $108,270 | $330,024 | $320,447 | | A&T | $7,399 | $9,709 | $26,184 | $28,657 | | NIC | $203 | — | $358 | — | | **Total** | **$117,833** | **$117,979** | **$356,566** | **$349,104** | - Maintenance revenue was essentially flat (three months) and grew **2%** (nine months), driven by annual rate increases and growth in installed customer base[141](index=141&type=chunk) Appraisal Services Revenue (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | A&T | $7,146 | $5,394 | $19,876 | $15,853 | | **Total** | **$7,146** | **$5,394** | **$19,876** | **$15,853** | - Appraisal services revenue increased **32%** (three months) and **25%** (nine months) due to relaxed travel restrictions and new revaluation contracts[142](index=142&type=chunk) [Cost of Revenues and Gross Margins](index=33&type=section&id=Cost%20of%20Revenues%20and%20Gross%20Margins) Total cost of revenues increased significantly, leading to a decrease in overall gross margin due to NIC and increased amortization Total Cost of Revenues (in thousands) | Cost Category | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | Software licenses and royalties | $1,547 | $1,177 | $4,151 | $3,047 | | Acquired software | $12,896 | $7,965 | $32,683 | $23,998 | | Subscriptions, software services and maintenance | $241,944 | $125,881 | $576,035 | $381,947 | | Appraisal services | $4,506 | $3,434 | $13,552 | $11,795 | | Hardware and other | $2,764 | $3,780 | $9,845 | $8,748 | | **Total cost of revenues** | **$263,657** | **$142,237** | **$636,266** | **$429,535** | Gross Margin Percentage by Revenue Type | Revenue Type | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | |---|---|---|---|---| | Software licenses, royalties and acquired software | 36.3% | 54.1% | 33.3% | 51.4% | | Subscriptions, software services and maintenance | 43.1% | 50.7% | 46.0% | 49.0% | | Appraisal services | 36.9% | 36.3% | 31.8% | 25.6% | | Hardware and other | 40.6% | 27.3% | 40.4% | 29.1% | | **Overall gross margin** | **42.7%** | **50.2%** | **45.1%** | **48.5%** | - Overall gross margin decreased by **7.5%** (three months) and **3.4%** (nine months) primarily due to NIC's lower margins and increased amortization expense from acquired software[147](index=147&type=chunk) [Selling, General and Administrative Expenses](index=34&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) SG&A expenses increased by **52%** (three months) and **47%** (nine months), driven by acquisition costs, stock compensation, and staff increases Selling, General and Administrative Expenses (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $101,847 | $66,819 | | Nine Months Ended Sep 30 | $289,543 | $196,825 | - SG&A as a percentage of revenues was **22.1%** (three months) and **25.0%** (nine months) in 2021[149](index=149&type=chunk) - Increases attributed to acquisition costs (**$2.9 million** for three months, **$22.7 million** for nine months), higher stock compensation (**$9.3 million** for three months, **$22.2 million** for nine months), and **$1.6 million** for NIC CEO separation agreement[149](index=149&type=chunk) [Research and Development Expense](index=35&type=section&id=Research%20and%20Development%20Expense) R&D expense increased by **11%** (three months) and **5%** (nine months), driven by new product development initiatives Research and Development Expense (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $24,002 | $21,642 | | Nine Months Ended Sep 30 | $69,243 | $65,952 | - R&D expense increased **11%** (three months) and **5%** (nine months), driven by new product development initiatives[150](index=150&type=chunk) [Amortization of Other Intangibles](index=35&type=section&id=Amortization%20of%20Other%20Intangibles) Amortization expense for customer and trade name intangibles significantly increased by **163%** (three months) and **92%** (nine months) Amortization of Customer and Trade Name Intangibles (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $14,183 | $5,392 | | Nine Months Ended Sep 30 | $31,015 | $16,176 | - Amortization expense increased significantly due to acquisitions completed in fiscal year 2021[151](index=151&type=chunk) [Interest Expense](index=36&type=section&id=Interest%20Expense_MD%26A) Interest expense dramatically increased due to higher borrowings from the 2021 Credit Agreement and Convertible Senior Notes Interest Expense (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $(5,396) | $(254) | | Nine Months Ended Sep 30 | $(18,311) | $(757) | - Interest expense increased significantly due to higher borrowings related to the 2021 Credit Agreement and Convertible Senior Notes[153](index=153&type=chunk) [Other Income, Net](index=36&type=section&id=Other%20Income,%20Net_MD%26A) Other income, net, decreased for both periods due to lower invested cash and reduced interest rates Other Income, Net (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $445 | $534 | | Nine Months Ended Sep 30 | $1,249 | $2,497 | - Decrease in other income, net, attributed to lower invested cash and lower interest rates[154](index=154&type=chunk) [Income Tax Provision](index=36&type=section&id=Income%20Tax%20Provision_MD%26A) Income tax provision was **$7.1 million** (13.8% effective rate) for three months and **$8.9 million** (7.7% effective rate) for nine months Income Tax Provision (in thousands) | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | $7,063 | $10,652 | | Nine Months Ended Sep 30 | $8,945 | $(14,096) | Effective Income Tax Rate | Period | 2021 | 2020 | |---|---|---| | Three Months Ended Sep 30 | 13.8% | 21.3% | | Nine Months Ended Sep 30 | 7.7% | (11.1)% | - Changes in effective tax rate primarily driven by excess tax benefits related to stock incentive awards[155](index=155&type=chunk) [Financial Condition and Liquidity](index=37&type=section&id=FINANCIAL%20CONDITION%20AND%20LIQUIDITY) Cash and cash equivalents decreased to **$234.1 million** due to acquisitions funded by new debt, while operating activities provided **$256.7 million** Cash and Cash Equivalents (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | |---|---|---| | Cash and cash equivalents | $234.1 | $603.6 | - Operating activities provided **$256.7 million** in cash for the nine months ended September 30, 2021[159](index=159&type=chunk) - Investing activities used **$2.1 billion**, primarily for acquisitions (NIC, Arx, VendEngine, ReadySub, DataSpec)[161](index=161&type=chunk) - Financing activities provided **$1.5 billion**, mainly from **$600 million** Convertible Senior Notes and **$1.1 billion** from the 2021 Credit Agreement[162](index=162&type=chunk) - Days Sales Outstanding (DSO) improved to **105 days** at September 30, 2021, from **121 days** at December 31, 2020[160](index=160&type=chunk) - Anticipated 2021 capital spending: **$47 million to $49 million**, including **$21 million** capitalized software development[166](index=166&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on **$842.5 million** variable-rate debt; a quarter-point change impacts annual interest by **$2.1 million** - Primary market risk is interest rate risk on variable-rate indebtedness[167](index=167&type=chunk)[180](index=180&type=chunk) - As of September 30, 2021, **$842.5 million** principal outstanding borrowings under the 2021 Credit Agreement[168](index=168&type=chunk) - Effective average interest rate for borrowings was **3.25%** for the nine months ended September 30, 2021[170](index=170&type=chunk) - Each quarter point change in interest rates would result in a **$2.1 million** change in annual interest expense[170](index=170&type=chunk)[180](index=180&type=chunk) [ITEM 4. Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of September 30, 2021[171](index=171&type=chunk) - No material changes in internal control over financial reporting during the three months ended September 30, 2021[172](index=172&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents other required information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [ITEM 1. Legal Proceedings](index=39&type=section&id=ITEM%201.%20Legal%20Proceedings) Tyler Technologies is not involved in any material legal proceedings, other than routine litigation - No material legal proceedings pending, other than routine litigation incidental to the business[173](index=173&type=chunk) [ITEM 1A. Risk Factors](index=39&type=section&id=ITEM%201A.%20Risk%20Factors) Risk factors include increased indebtedness, covenant restrictions, interest rate risk, and potential dilution from Convertible Senior Notes - Material changes in risk factors during the quarter relate to increased indebtedness[174](index=174&type=chunk)[175](index=175&type=chunk) - Servicing **$600 million** Convertible Senior Notes and **$842.5 million** under the 2021 Credit Agreement requires significant cash flow, with potential for additional debt up to **$1.4 billion**[175](index=175&type=chunk)[176](index=176&type=chunk) - Covenant restrictions under the 2021 Credit Agreement and Indenture may limit ability to incur additional debt, permit liens, make investments/acquisitions, or make restricted payments[179](index=179&type=chunk) - Variable rate indebtedness exposes the company to interest rate risk; a quarter-point change in interest rates would result in a **$2.1 million** change in annual interest expense[180](index=180&type=chunk) - Conditional conversion feature of Convertible Senior Notes, if triggered, could require cash payments, affecting liquidity, or lead to reclassification as a current liability[181](index=181&type=chunk) - Conversion of Convertible Senior Notes could result in significant dilution to existing shareholders[182](index=182&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report for the period - None[183](index=183&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=41&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report for the period - None[183](index=183&type=chunk) [ITEM 4. Submission of Matters to a Vote of Security Holders](index=41&type=section&id=ITEM%204.%20Submission%20of%20Matters%20to%20a%20Vote%20of%20Security%20Holders) No matters submitted to a vote of security holders during the period - None[183](index=183&type=chunk) [ITEM 5. Other Information](index=41&type=section&id=ITEM%205.%20Other%20Information) No other information to report for the period - None[183](index=183&type=chunk) [ITEM 6. Exhibits](index=42&type=section&id=ITEM%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including Sarbanes-Oxley certifications, the 2021 Credit Agreement, and XBRL documents - Includes Certifications Pursuant to Section 302 and 906 of the **Sarbanes-Oxley Act of 2002** (Exhibits 31.1, 31.2, 32.1)[184](index=184&type=chunk) - Credit Agreement dated **April 21, 2021**, filed as Exhibit 4.1[184](index=184&type=chunk) - Various Inline XBRL documents (Instance, Schema, Calculation, Labels, Definition, Presentation Linkbase Documents) are included[184](index=184&type=chunk) [Signatures](index=42&type=section&id=SIGNATURES) The report is signed by Brian K. Miller, EVP and CFO, on November 1, 2021 - Signed by **Brian K. Miller**, Executive Vice President and Chief Financial Officer, on **November 1, 2021**[185](index=185&type=chunk)

Tyler Technologies, Inc. (NYSE:TYL) Q3 2021 Earnings Conference Call October 28, 2021 10:00 AM ET Company Participants Lynn Moore - President and CEO Brian Miller - Chief Financial Officer Conference Call Participants Matt VanVliet - BTIG Scott Berg - Needham & Company Alex Zukin - Wolfe Research Charlie Strauzer - CJS Securities Rob Oliver - Baird Kirk Materne - Evercore ISI Keith Housum - Northcoast Research Jonathan Ho - William Blair & Company Peter Heckmann - D.A. Davidson Operator Hello. And welcome t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File Number 1-10485 TYLER TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) | Delaware | | 75-2303920 | | | --- | --- | --- | --- | | (State or other jurisdiction of | | (I.R ...

Tyler Technologies, Inc. (NYSE:TYL) Q2 2021 Results Conference Call July 29, 2021 10:00 AM ET Company Participants Lynn Moore - President & Chief Executive Officer Brian Miller - Chief Financial Officer Conference Call Participants Matt VanVliet - BTIG Scott Berg - Needham & Co. Robert Oliver - Robert W. Baird & Co. Keith Housum - Northcoast Research Kirk Materne - Evercore ISI Jonathan Ho - William Blair & Company Charles Strauzer - CJS Securities, Inc. Peter Heckmann - D. A. Davidson & Co. Joe Goodwin - J ...