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Tyler Technologies Inc TYL

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Tyler Setting up for Upside Throughout the Year with Thoughtful Guidance; FVE Still $475

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Wide-moat Tyler Technologies has digested the NIC acquisition enough to provide a guidance update, as it indicated it would do on its April earnings call. The $2.3 billion deal closed on April 21, and management said on its quarterly update a week later that it was too soon to provide a meaningful outlook. We have generally raised our near-term revenue outlook while lowering our profitability assumptions to account for this guidance, and we suspect there is some level of conservatism built in. Management is bullish on cross selling opportunities and believes there is still room to squeeze some synergies out the combined entity, which we concur with. We also agree with Tyler’s assessment that it has created a powerful leadership position in public payments. We expect cash flow to focus on debt reduction over the next couple years. Much as it did coming out of the 2008 financial crisis, we expect Tyler will emerge in an even stronger position to capture market share, as its portfolio is broader and it is increasingly exposed to multiple solution sales. Indeed, management is already positive on the building pipeline. We are maintaining our fair value estimate of $475 per share and view shares as undervalued.

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Company Profile

Business Description

Tyler Technologies provides a full suite of software solutions and services that address the needs of cities, counties, schools, courts, and other local government entities. The company’s two core products are Munis, which is the core enterprise resource planning system, and Odyssey, which is the court management system. The company also provides a variety of add-on modules and offers outsourced property tax assessment services.

Contact
5101 Tennyson Parkway
Plano, TX, 75024
T +1 972 713-3700
Sector Technology
Industry Software - Application
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 5,579

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