Tyler Misses On Q4 Earnings, Sets To Acquire NIC For $2.3B In Cash - Tyler Technologies (NYSE:TYL)

Tyler Technologies, Inc. (NYSE: TYL) will acquire digital government solutions and payments company NIC Inc. (NASDAQ: EGOV) for $2.3 billion in cash. The purchase price of $34 per share represents a 14% premium to NIC’s last closing price.
Tyler intends to utilize a combination of $700 million of cash and new debt to finance the acquisition. It has a $1.6 billion bridge facility with Goldman Sachs Bank USA and intends to replace it with permanent financing before closing.
The acquisition is estimated to be accretive to Tyler’s earnings, EBITDA, recurring revenue mix, and free cash flow per share in 2021.
The transaction is expected to close in the second quarter of 2021.
NIC’s fourth-quarter revenue rose 62% year-on-year to $141.2 million, supported by its COVID-19 testing solution TourHealth with Impact Health, NEXT Marketing, and pandemic unemployment services provided to the Commonwealth of Virginia.
Net income and EPS rose 79% and 73% to $17.8 million and $0.26, respectively.
Tyler’s fourth-quarter revenue declined 1.9% to $283.3 million as organic revenue declined 2.1%, missing the consensus estimate of $291.48 million.
Recurring revenues from maintenance and subscriptions rose 9.5% to $212.4 million, constituting 75% of the total revenue.
EBITDA rose 1.3% to $83.2 million.
Net income and EPS rose 0.3% each to $58.3 million and $1.39, respectively, missing analyst EPS estimate of $1.42.
Operating cash flow rose 16.5% to $88.8 million, and cash and investments stood at $758.5 million as of December 31, 2020.
Software subscription arrangements constituted 73% of the new software contract value than 54% in the year-ago period.
Subscription bookings generated $11 million in annual recurring revenue.
“Software license and service revenues continued to be pressured by longer sales cycles, delays in projects, and the near elimination of billable travel as a result of the COVID-19 pandemic. However, recurring revenues were strong, and subscription revenues grew 17%, marking our 60th consecutive quarter of double-digit subscription revenue growth,” said Tyler CEO Lynn Moore.
Tyler expects revenue between $1.19 billion and $1.22 billion, close to the analyst estimate of $1.2 billion, EPS between $5.65 and $5.77, slightly lower than the consensus estimate of $5.87, R&D expense between $88 million and $90 million, CAPEX between $39 million and $40 million, D&A expense of $81 million for FY21.
Price action: TYL shares are trading higher by 5.89% at $448.05; EGOV shares rose 15.5% at $34.4 on the last check Wednesday.

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