QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
(Address of principal executive offices) | (City) | (State) | (Zip code) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | ||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||
Software licenses and royalties | ||||||||||||||||||||||||||
Acquired software | ||||||||||||||||||||||||||
Subscriptions, software services and maintenance | ||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||
Total cost of revenues | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Research and development expense | ||||||||||||||||||||||||||
Amortization of other intangibles | ||||||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||
Other (expense) income including interest expense, net | ( | ( | ||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Income tax provision (benefit) | ( | ( | ||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted | $ | $ | $ | $ |
June 30, 2021 (unaudited) | December 31, 2020 | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable (less allowance for losses and sales adjustments of $ | ||||||||||||||
Short-term investments | ||||||||||||||
Prepaid expenses | ||||||||||||||
Income tax receivable | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Accounts receivable, long-term | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Property and equipment, net | ||||||||||||||
Other assets: | ||||||||||||||
Software development costs, net | ||||||||||||||
Goodwill | ||||||||||||||
Other intangibles, net | ||||||||||||||
Non-current investments | ||||||||||||||
Other non-current assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued liabilities | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Deferred revenue | ||||||||||||||
Current portion of term loans | ||||||||||||||
Total current liabilities | ||||||||||||||
Revolving credit facility | ||||||||||||||
Term loans | ||||||||||||||
Convertible senior notes, net | ||||||||||||||
Deferred revenue, long-term | ||||||||||||||
Deferred income taxes | ||||||||||||||
Operating lease liabilities, long-term | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Commitments and contingencies | ||||||||||||||
Shareholders' equity: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive loss, net of tax | ( | ( | ||||||||||||
Retained earnings | ||||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||
Total shareholders' equity | ||||||||||||||
Total liabilities and shareholders' equity | $ | $ |
Six Months Ended June 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Share-based compensation expense | ||||||||||||||
Operating lease right-of-use assets expense | ||||||||||||||
Deferred income tax benefit | ( | ( | ||||||||||||
Changes in operating assets and liabilities, exclusive of effects of acquired companies: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Income tax receivable | ( | |||||||||||||
Prepaid expenses and other current assets | ( | ( | ||||||||||||
Accounts payable | ( | ( | ||||||||||||
Operating lease liabilities | ( | ( | ||||||||||||
Accrued liabilities | ( | ( | ||||||||||||
Deferred revenue | ||||||||||||||
Increase in other long term liabilities | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Additions to property and equipment | ( | ( | ||||||||||||
Purchase of marketable security investments | ( | ( | ||||||||||||
Proceeds from marketable security investments | ||||||||||||||
Purchase of investment in common shares | ( | |||||||||||||
Proceeds from the sale of investment in preferred shares | ||||||||||||||
Investment in software | ( | ( | ||||||||||||
Cost of acquisitions, net of cash acquired | ( | ( | ||||||||||||
Decrease (increase) in other | ( | |||||||||||||
Net cash used by investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Increase in net borrowings on revolving credit facility | ||||||||||||||
Proceeds from term loans | ||||||||||||||
Proceeds from issuance of convertible senior notes | ||||||||||||||
Payment of debt issuance costs | ( | |||||||||||||
Purchase of treasury shares | ( | ( | ||||||||||||
Payment of contingent consideration | ( | |||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Contributions from employee stock purchase plan | ||||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net (decrease) increase in cash and cash equivalents | ( | |||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and vesting of restricted stock units | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Employee taxes paid for withheld shares upon equity award settlement | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of shares pursuant to employee stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Purchase consideration for conversion of unvested restricted stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and vesting of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Employee taxes paid for withheld shares upon equity award settlement | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of shares pursuant to employee stock purchase plan | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and vesting of restricted stock units | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Employee taxes paid for withheld shares for taxes upon equity award settlement | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of shares pursuant to employee stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Purchase consideration for conversion of unvested restricted stock awards | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and vesting of restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Employee taxes paid for withheld shares for taxes upon equity award settlement | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of shares pursuant to employee stock purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
(In thousands) | ||||||||
Cash | $ | |||||||
Accounts receivable | ||||||||
Other current assets | ||||||||
Other noncurrent assets | ||||||||
Identifiable intangible assets | ||||||||
Goodwill | ||||||||
Accounts payable | ( | |||||||
Accrued expenses | ( | |||||||
Other noncurrent liabilities | ( | |||||||
Deferred revenue | ( | |||||||
Deferred tax liabilities, net | ( | |||||||
Total consideration | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury shares | ( | $ | ( | $ | ( | $ | ( | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Stock option exercises | ||||||||||||||||||||||||||||||||||||||||||||||||||
Employee stock plan purchases | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock units vested, net of withheld shares upon award settlement | $ | ( | $ | ( | $ | ( | $ | ( |
June 30, 2021 | Maturity Date | |||||||||||||
Revolving Credit Facility | $ | April 20, 2026 | ||||||||||||
Term Loan A-1 | April 20, 2026 | |||||||||||||
Term Loan A-2 | April 20, 2024 | |||||||||||||
Total borrowings under the 2021 Credit Agreement | ||||||||||||||
Less: unamortized debt discount and debt issuance costs related term loans | ( | |||||||||||||
Total borrowings, net | $ | |||||||||||||
Less: current portion of debt | $ | ( | ||||||||||||
Carrying value of long-term debt as of June 30, 2021 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2021 | 2021 | |||||||||||||
Contractual interest expense - Revolving Credit Facility | $ | ( | $ | ( | ||||||||||
Contractual interest expense - Term Loans | ( | ( | ||||||||||||
Amortization of debt discount and debt issuance costs | ( | ( | ||||||||||||
Total | $ | ( | $ | ( |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2021 | 2021 | |||||||||||||
Contractual interest expense - 2019 Credit Agreement | $ | ( | $ | ( | ||||||||||
Unsecured bridge loan facility commitment fee | ( | ( | ||||||||||||
Amortization of debt issuance costs | ( | ( | ||||||||||||
Total | $ | ( | $ | ( |
June 30, 2021 | ||||||||
Convertible Senior Notes due 2026 | $ | |||||||
Less: unamortized debt discount and debt issuance costs | ( | |||||||
Carrying value as of June 30, 2021 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2021 | 2021 | |||||||||||||
Contractual interest expense | $ | ( | $ | ( | ||||||||||
Amortization of debt discount and debt issuance costs | ( | ( | ||||||||||||
Total | $ | ( | $ | ( |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Interest expense, including amortization of debt discounts and debt issuance costs | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Other | ( | ( | ( | ( | ||||||||||||||||||||||
Total other (expense) income including interest expense, net | $ | ( | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Numerator for basic and diluted earnings per share: | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted-average basic common shares outstanding | ||||||||||||||||||||||||||
Assumed conversion of dilutive securities: | ||||||||||||||||||||||||||
Stock awards | ||||||||||||||||||||||||||
Convertible Senior Notes | ||||||||||||||||||||||||||
Denominator for diluted earnings per share - Adjusted weighted-average shares | ||||||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted | $ | $ | $ | $ |
Lease Costs | Financial Statement Classification | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
Operating lease cost | Selling, general and administrative expenses | $ | $ | $ | $ | ||||||||||||||||||||||||
Short-term lease cost | Selling, general and administrative expenses | ||||||||||||||||||||||||||||
Variable lease cost | Selling, general and administrative expenses | ||||||||||||||||||||||||||||
Net lease cost | $ | $ | $ | $ |
June 30, 2021 | December 31, 2020 | |||||||||||||
Assets: | ||||||||||||||
Operating lease right-of-use assets | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||
Operating leases, short-term | ||||||||||||||
Operating leases, long-term | ||||||||||||||
Total lease liabilities | $ | $ |
Other Information | Six Months Ended June 30, | |||||||||||||
2021 | 2020 | |||||||||||||
Cash flows: | ||||||||||||||
Cash amounts paid included in the measurement of lease liabilities: | ||||||||||||||
Operating cash outflows from operating leases | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for lease obligations (non-cash): | ||||||||||||||
Operating leases | $ | $ | ||||||||||||
Lease term and discount rate: | ||||||||||||||
Weighted average remaining lease term (years) | ||||||||||||||
Weighted average discount rate | % | % |
Year ending December 31, | Amount | |||||||
2021 (Remaining 2021) | $ | |||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
Total lease payments | ||||||||
Less: Interest | ( | |||||||
Present value of operating lease liabilities | $ |
Year ending December 31, | Amount | |||||||
2021 (Remaining 2021) | $ | |||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
Total | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Cost of subscriptions, software services and maintenance | $ | $ | $ | $ | ||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Total share-based compensation expense | $ | $ | $ | $ |
For the three months ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Segment operating income | $ | $ | $ | $ | ( | $ |
For the three months ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Segment operating income | $ | $ | $ | $ | ( | $ |
For the six months ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Segment operating income | $ | $ | $ | $ | ( | $ |
For the six months ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Segment operating income | $ | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
Reconciliation of reportable segment operating income to the Company's consolidated totals: | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Total segment operating income | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of acquired software | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of customer and trade name intangibles | ( | ( | ( | ( | ||||||||||||||||||||||
Other (expense) income including interest expense, net | ( | ( | ||||||||||||||||||||||||
Income before income taxes | $ | $ | $ | $ |
For the three months ended June 30, 2021 | ||||||||||||||||||||
Products and services transferred at a point in time | Products and services transferred over time | Total | ||||||||||||||||||
Revenues | ||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | |||||||||||||||||
Subscriptions | ||||||||||||||||||||
Software services | ||||||||||||||||||||
Maintenance | ||||||||||||||||||||
Appraisal services | ||||||||||||||||||||
Hardware and other | ||||||||||||||||||||
Total | $ | $ | $ |
For the three months ended June 30, 2020 | ||||||||||||||||||||
Products and services transferred at a point in time | Products and services transferred over time | Total | ||||||||||||||||||
Revenues | ||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | |||||||||||||||||
Subscriptions | ||||||||||||||||||||
Software services | ||||||||||||||||||||
Maintenance | ||||||||||||||||||||
Appraisal services | ||||||||||||||||||||
Hardware and other | ||||||||||||||||||||
Total | $ | $ | $ |
For the six months ended June 30, 2021 | ||||||||||||||||||||
Products and services transferred at a point in time | Products and services transferred over time | Total | ||||||||||||||||||
Revenues | ||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | |||||||||||||||||
Subscriptions | ||||||||||||||||||||
Software services | ||||||||||||||||||||
Maintenance | ||||||||||||||||||||
Appraisal services | ||||||||||||||||||||
Hardware and other | ||||||||||||||||||||
Total | $ | $ | $ |
For the six months ended June 30, 2020 | ||||||||||||||||||||
Products and services transferred at a point in time | Products and services transferred over time | Total | ||||||||||||||||||
Revenues | ||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | |||||||||||||||||
Subscriptions | ||||||||||||||||||||
Software services | ||||||||||||||||||||
Maintenance | ||||||||||||||||||||
Appraisal services | ||||||||||||||||||||
Hardware and other | ||||||||||||||||||||
Total | $ | $ | $ |
For the three months ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ |
For the three months ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ |
For the six months ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ |
For the six months ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Enterprise Software | Appraisal and Tax | NIC | Corporate | Totals | ||||||||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ( | $ |
June 30, 2021 | December 31, 2020 | |||||||||||||
Enterprise Software | $ | $ | ||||||||||||
Appraisal and Tax | ||||||||||||||
NIC | ||||||||||||||
Corporate | ||||||||||||||
Totals | $ | $ |
Six months ended June 30, 2021 | ||||||||
Balance as of December 31, 2020 | $ | |||||||
Deferral of revenue | ||||||||
Recognition of deferred revenue | ( | |||||||
Balance as of June 30, 2021 | $ |
Percent of Total Revenues | ||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Software licenses and royalties | 4.4 | % | 6.3 | % | 4.7 | % | 6.5 | % | ||||||||||||||||||
Subscriptions | 49.4 | 31.6 | 43.2 | 30.6 | ||||||||||||||||||||||
Software services | 13.1 | 16.1 | 14.4 | 17.5 | ||||||||||||||||||||||
Maintenance | 29.6 | 43.1 | 34.2 | 42.2 | ||||||||||||||||||||||
Appraisal services | 1.6 | 1.7 | 1.8 | 1.9 | ||||||||||||||||||||||
Hardware and other | 1.9 | 1.2 | 1.7 | 1.3 | ||||||||||||||||||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||
Software licenses, royalties and acquired software | 3.3 | 3.4 | 3.2 | 3.3 | ||||||||||||||||||||||
Subscriptions, software services and maintenance | 49.4 | 45.8 | 47.8 | 46.8 | ||||||||||||||||||||||
Appraisal services | 1.1 | 1.5 | 1.3 | 1.5 | ||||||||||||||||||||||
Hardware and other | 1.1 | 0.9 | 1.0 | 0.9 | ||||||||||||||||||||||
Selling, general and administrative expenses | 27.0 | 23.1 | 26.9 | 23.7 | ||||||||||||||||||||||
Research and development expense | 5.8 | 8.1 | 6.5 | 8.1 | ||||||||||||||||||||||
Amortization of customer and trade name intangibles | 2.8 | 2.0 | 2.4 | 2.0 | ||||||||||||||||||||||
Operating income | 9.5 | 15.2 | 10.9 | 13.7 | ||||||||||||||||||||||
Other (expense) income including interest expense, net | (3.0) | 0.2 | (1.7) | 0.3 | ||||||||||||||||||||||
Income before income taxes | 6.5 | 15.4 | 9.2 | 14.0 | ||||||||||||||||||||||
Income tax provision (benefit) | 0.1 | (4.5) | 0.3 | (4.5) | ||||||||||||||||||||||
Net income | 6.4 | % | 19.9 | % | 8.9 | % | 18.5 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2021 | 2021 | |||||||||||||
Revenues: | ||||||||||||||
Software licenses and royalties | $ | — | $ | — | ||||||||||
Subscriptions | 93,281 | 93,281 | ||||||||||||
Software services | 5,643 | 5,643 | ||||||||||||
Maintenance | 155 | 155 | ||||||||||||
Appraisal services | — | — | ||||||||||||
Hardware and other | — | — | ||||||||||||
Total revenues | $ | 99,079 | $ | 99,079 |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
ES | $ | 15,779 | $ | 14,683 | $ | 1,096 | 7 | % | $ | 28,826 | $ | 30,634 | $ | (1,808) | (6) | % | ||||||||||||||||||||||||||||||||||
A&T | 1,825 | 2,342 | (517) | (22) | 3,711 | 5,128 | (1,417) | (28) | ||||||||||||||||||||||||||||||||||||||||||
NIC | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total software licenses and royalties revenue | $ | 17,604 | $ | 17,025 | $ | 579 | 3 | % | $ | 32,537 | $ | 35,762 | $ | (3,225) | (9) | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
ES | $ | 98,407 | $ | 79,128 | $ | 19,279 | 24 | % | $ | 193,238 | $ | 155,772 | $ | 37,466 | 24 | % | ||||||||||||||||||||||||||||||||||
A&T | 7,870 | 6,510 | 1,360 | 21 | 15,518 | 11,589 | 3,929 | 34 | ||||||||||||||||||||||||||||||||||||||||||
NIC | 93,281 | — | 93,281 | 100 | 93,281 | — | 93,281 | 100 | ||||||||||||||||||||||||||||||||||||||||||
Total subscriptions revenue | $ | 199,558 | $ | 85,638 | $ | 113,920 | 133 | % | $ | 302,037 | $ | 167,361 | $ | 134,676 | 80 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
ES | $ | 42,972 | $ | 38,899 | $ | 4,073 | 10 | % | $ | 85,532 | $ | 83,848 | $ | 1,684 | 2 | % | ||||||||||||||||||||||||||||||||||
A&T | 4,722 | 4,755 | (33) | (1) | 9,802 | 11,939 | (2,137) | (18) | ||||||||||||||||||||||||||||||||||||||||||
NIC | 5,643 | — | 5,643 | 100 | 5,643 | — | 5,643 | 100 | ||||||||||||||||||||||||||||||||||||||||||
Total software services revenue | $ | 53,337 | $ | 43,654 | $ | 9,683 | 22 | % | $ | 100,977 | $ | 95,787 | $ | 5,190 | 5 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
ES | $ | 110,010 | $ | 107,336 | $ | 2,674 | 2 | % | $ | 219,793 | $ | 212,177 | $ | 7,616 | 4 | % | ||||||||||||||||||||||||||||||||||
A&T | 9,456 | 9,424 | 32 | — | 18,785 | 18,948 | (163) | (0.9) | ||||||||||||||||||||||||||||||||||||||||||
NIC | 155 | — | 155 | 100 | 155 | — | 155 | 100 | ||||||||||||||||||||||||||||||||||||||||||
Total maintenance revenue | $ | 119,621 | $ | 116,760 | $ | 2,861 | 2 | % | $ | 238,733 | $ | 231,125 | $ | 7,608 | 3 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
ES | $ | — | $ | — | $ | — | — | % | $ | — | $ | — | $ | — | — | % | ||||||||||||||||||||||||||||||||||
A&T | 6,265 | 4,696 | 1,569 | 33 | 12,730 | 10,459 | 2,271 | 22 | ||||||||||||||||||||||||||||||||||||||||||
NIC | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total appraisal services revenue | $ | 6,265 | $ | 4,696 | $ | 1,569 | 33 | % | $ | 12,730 | $ | 10,459 | $ | 2,271 | 22 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Software licenses and royalties | $ | 1,368 | $ | 1,130 | $ | 238 | 21 | % | $ | 2,604 | $ | 1,870 | $ | 734 | 39 | % | ||||||||||||||||||||||||||||||||||
Acquired software | 11,823 | 8,006 | 3,817 | 48 | 19,787 | 16,033 | 3,754 | 23 | ||||||||||||||||||||||||||||||||||||||||||
Subscriptions, software services and maintenance | 199,771 | 124,287 | 75,484 | 61 | 334,091 | 256,066 | 78,025 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Appraisal services | 4,429 | 3,976 | 453 | 11 | 9,046 | 8,361 | 685 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Hardware and other | 4,623 | 2,489 | 2,134 | 86 | 7,081 | 4,968 | 2,113 | 43 | ||||||||||||||||||||||||||||||||||||||||||
Total cost of revenues | $ | 222,014 | $ | 139,888 | $ | 82,126 | 59 | % | $ | 372,609 | $ | 287,298 | $ | 85,311 | 30 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||||||||||||||||||
Software licenses, royalties and acquired software | 25.1 | % | 46.3 | % | (21.2) | % | 31.2 | % | 49.9 | % | (18.7) | % | ||||||||||||||||||||||||||
Subscriptions, software services and maintenance | 46.4 | 49.5 | (3.1) | 47.9 | 48.2 | (0.3) | ||||||||||||||||||||||||||||||||
Appraisal services | 29.3 | 15.3 | 14.0 | 28.9 | 20.1 | 8.8 | ||||||||||||||||||||||||||||||||
Hardware and other | 39.9 | 25.0 | 14.9 | 40.3 | 30.4 | 9.9 | ||||||||||||||||||||||||||||||||
Overall gross margin | 45.1 | % | 48.4 | % | (3.3) | % | 46.7 | % | 47.5 | % | (0.8) | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 108,922 | $ | 62,521 | $ | 46,401 | 74 | % | $ | 187,696 | $ | 130,006 | $ | 57,690 | 44 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Research and development expense | $ | 23,428 | $ | 21,949 | $ | 1,479 | 7 | % | $ | 45,241 | $ | 44,310 | $ | 931 | 2 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Amortization of other intangibles | $ | 11,420 | $ | 5,392 | $ | 6,028 | 112 | % | $ | 16,832 | $ | 10,784 | $ | 6,048 | 56 | % |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Other (expense) income including interest expense, net | $ | (12,199) | $ | 470 | $ | (12,669) | NM | $ | (12,111) | $ | 1,460 | $ | (13,571) | NM |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Interest expense, including amortization of debt discounts and debt issuance costs | $ | (12,438) | $ | (251) | $ | (12,915) | $ | (502) | ||||||||||||||||||
Interest income | 492 | 752 | 1,202 | 2,244 | ||||||||||||||||||||||
Other | (253) | (31) | (398) | (282) | ||||||||||||||||||||||
Total other (expense) income including interest expense, net | $ | (12,199) | $ | 470 | $ | (12,111) | $ | 1,460 |
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Income tax provision (benefit) | $ | 562 | $ | (12,081) | $ | 12,643 | NM | $ | 1,882 | $ | (24,748) | $ | 26,630 | NM | ||||||||||||||||||||||||||||||||||||
Effective income tax rate | 2.2 | % | (28.9) | % | 2.9 | % | (32.3) | % |
2021 | 2020 | |||||||||||||
Cash flows provided (used) by: | ||||||||||||||
Operating activities | $ | 51,356 | $ | 96,520 | ||||||||||
Investing activities | (1,998,692) | (54,279) | ||||||||||||
Financing activities | 1,560,486 | 76,413 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | $ | (386,850) | $ | 118,654 |
Exhibit 101.INS | Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags, including Cover Page XBRL tags, are embedded within the Inline XBRL Document. | ||||||||||
Exhibit 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | ||||||||||
Exhibit 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||
Exhibit 101.LAB | Inline XBRL Extension Labels Linkbase Document. | ||||||||||
Exhibit 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||
Exhibit 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||
Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
TYLER TECHNOLOGIES, INC. | |||||
By: | /s/ Brian K. Miller | ||||
Brian K. Miller | |||||
Executive Vice President and Chief Financial Officer | |||||
(principal financial officer and an authorized signatory) |
Date: August 3, 2021 | By: | /s/ H. Lynn Moore, Jr. | ||||||||||||
H. Lynn Moore, Jr. | ||||||||||||||
President and Chief Executive Officer |
Date: August 3, 2021 | By: | /s/ Brian K. Miller | ||||||||||||
Brian K. Miller | ||||||||||||||
Executive Vice President and Chief Financial Officer |
Date: August 3, 2021 | By: | /s/ H. Lynn Moore, Jr. | ||||||||||||
H. Lynn Moore, Jr. | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
Date: August 3, 2021 | By: | /s/ Brian K. Miller | ||||||||||||
Brian K. Miller | ||||||||||||||
Executive Vice President and Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Revenues: | ||||
Total revenues | $ 404,075 | $ 271,091 | $ 698,877 | $ 547,632 |
Cost of revenues: | ||||
Total cost of revenues | 222,014 | 139,888 | 372,609 | 287,298 |
Gross profit | 182,061 | 131,203 | 326,268 | 260,334 |
Selling, general and administrative expenses | 108,922 | 62,521 | 187,696 | 130,006 |
Research and development expense | 23,428 | 21,949 | 45,241 | 44,310 |
Amortization of other intangibles | 11,420 | 5,392 | 16,832 | 10,784 |
Operating income | 38,291 | 41,341 | 76,499 | 75,234 |
Other (expense) income including interest expense, net | (12,199) | 470 | (12,111) | 1,460 |
Income before income taxes | 26,092 | 41,811 | 64,388 | 76,694 |
Income tax provision (benefit) | 562 | (12,081) | 1,882 | (24,748) |
Net income | $ 25,530 | $ 53,892 | $ 62,506 | $ 101,442 |
Earnings per common share: | ||||
Basic (usd per share) | $ 0.63 | $ 1.35 | $ 1.53 | $ 2.54 |
Diluted (usd per share) | $ 0.61 | $ 1.30 | $ 1.48 | $ 2.44 |
Software licenses and royalties | ||||
Revenues: | ||||
Total revenues | $ 17,604 | $ 17,025 | $ 32,537 | $ 35,762 |
Cost of revenues: | ||||
Total cost of revenues | 1,368 | 1,130 | 2,604 | 1,870 |
Subscriptions | ||||
Revenues: | ||||
Total revenues | 199,558 | 85,638 | 302,037 | 167,361 |
Software services | ||||
Revenues: | ||||
Total revenues | 53,337 | 43,654 | 100,977 | 95,787 |
Maintenance | ||||
Revenues: | ||||
Total revenues | 119,621 | 116,760 | 238,733 | 231,125 |
Appraisal services | ||||
Revenues: | ||||
Total revenues | 6,265 | 4,696 | 12,730 | 10,459 |
Cost of revenues: | ||||
Total cost of revenues | 4,429 | 3,976 | 9,046 | 8,361 |
Hardware and other | ||||
Revenues: | ||||
Total revenues | 7,690 | 3,318 | 11,863 | 7,138 |
Cost of revenues: | ||||
Total cost of revenues | 4,623 | 2,489 | 7,081 | 4,968 |
Acquired software | ||||
Cost of revenues: | ||||
Total cost of revenues | 11,823 | 8,006 | 19,787 | 16,033 |
Subscriptions, software services and maintenance | ||||
Cost of revenues: | ||||
Total cost of revenues | $ 199,771 | $ 124,287 | $ 334,091 | $ 256,066 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 8,087 | $ 9,255 |
Preferred stock, par value (usd per share) | $ 10.00 | $ 10.00 |
Preferred stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 48,147,969 | 48,147,969 |
Common stock, shares outstanding (shares) | 48,147,969 | 48,147,969 |
Treasury stock (shares) | 7,315,159 | 7,608,627 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation We prepared the accompanying condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States, or GAAP, for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of June 30, 2021, and December 31, 2020, and operating result amounts are for the three and six months ended June 30, 2021, and 2020, respectively, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, 2020. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. Certain amounts for the previous year have been reclassified to conform to the current year presentation. Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources and includes all components of net income (loss) and other comprehensive income (loss). We had no items of other comprehensive income (loss) for the three and six months ended June 30, 2021, and 2020 On April 21, 2021, the Company acquired NIC, Inc. (“NIC”) as contemplated by the Agreement and Plan of Merger dated February 9, 2021. The results of NIC are include in condensed consolidated financial statements since the date of acquisition. See Note 3, Acquisitions for further information.
|
Accounting Standards and Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Accounting Standards and Significant Accounting Policies | Accounting Standards and Significant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Except for the January 1, 2021, adoption of ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 19, 2021, that have had a material impact on our condensed consolidated financial statements and related notes. See recently adopted accounting pronouncements below. Impacts of the COVID-19 Pandemic The pandemic continues to delay some government procurement processes and is expected to impact our ability to complete certain implementations, negatively impacting our revenue. Because an increasing portion of our revenues are recurring, the effect of COVID-19 on our results of operations may also not be fully reflected for some time. It could also negatively impact the timing of client payments to us. We continue to monitor these trends in order to respond to the ever-changing impact of COVID-19 on our clients and Tyler’s operations. For the six months ended June 30, 2021, excluding the impact of recent acquisitions, the impact of the COVID-19 pandemic resulted in lower revenues from software licenses and software services. Lower software licenses compared to prior periods are in part attributed to slower sales cycles as government procurement processes are delayed and contract signings have been pushed to future periods. The software services revenue decline is attributed to delays in implementations caused by travel restrictions in effect during the period. Lower revenues compared to prior periods were partially offset by cost savings attributed to lower spend on travel, user conferences and trade show expenses, health claims and other employee-related expenses. As travel restrictions are relaxed, we expect software services and appraisal services revenues to increase as the limited number of our clients who require that all or a portion of their services be delivered onsite will be able to receive those services. Also, we are adapting the way we do business by encouraging web and video conferencing, conducting virtual sales demonstrations and delivering professional services remotely, which result in increases in staff utilization rates and billable time. Recurring revenues from subscriptions and maintenance comprised 77% of our total consolidated revenue for the six months ended June 30, 2021, and include transaction-based revenue streams such as e-filing and online payments. On March 9, 2021, we issued 0.25% Convertible Senior Notes due 2026 (the “Convertible Senior Notes”) in the aggregate principal amount of $600 million. As of June 30, 2021, we had $347.1 million in cash and investments and $965 million principal outstanding borrowings under our 2021 Credit Agreement executed on April 21, 2021. As of June 30, 2021, we had available borrowing capacity of $435 million under our 2021 Credit Agreement. We have recorded no impairment to goodwill or other assets as of the balance sheet date. Due to significant uncertainty surrounding the pandemic and market conditions, management’s judgment regarding this could change in the future. USE OF ESTIMATES The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price (“SSP”) of performance obligations, variable consideration, and other obligations such as returns and refunds; loss contingencies; the estimated useful life of deferred commissions; the carrying amount of goodwill; the carrying amount and estimated useful lives of intangible assets; the carrying amount of operating lease right-of-use assets and operating lease liabilities; determining share-based compensation expense; the valuation allowance for receivables; and determining the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from estimates. REVENUE RECOGNITION Nature of Products and Services: We earn revenue from software licenses, royalties, subscription-based services, software services, post-contract customer support (“PCS” or “maintenance”), hardware, and appraisal services. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps: •Identification of the contract, or contracts with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract •Recognition of revenue when, or as, we satisfy a performance obligation Most of our software arrangements with customers contain multiple performance obligations that range from software licenses, installation, training, and consulting to software modification and customization to meet specific customer needs (services), hosting, and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include software services, such as training or installation, are evaluated to determine whether the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are separately identifiable from other promises in the contract. The transaction price is allocated to the distinct performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. Revenue is recognized net of allowances for sales adjustments and any taxes collected from customers, which are subsequently remitted to governmental authorities. Significant Judgments: Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement (license or subscription) includes both software licenses and software services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the software services and recognized over time. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine SSP using the expected cost-plus margin approach. For arrangements that involve significant production, modification or customization of the software, or where software services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the customer over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred, or value added. The progress-to-completion method generally results in the recognition of reasonably consistent profit margins over the life of a contract because we can provide reasonably dependable estimates of contract billings and contract costs. We use the level of profit margin that is most likely to occur on a contract. If the most likely profit margin cannot be precisely determined, the lowest probable level of profit margin in the range of estimates is used until the results can be estimated more precisely. These arrangements are often implemented over an extended time period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent. For e-filing transaction fees and other transaction-based revenues, we have the right to charge the customer an amount that directly corresponds with the value to the customer of our performance to date. Therefore, we recognize revenue for these services over time based on the amount billable to the customer in accordance with the 'as invoiced' practical expedient in ASC 606-10-55-18. In some cases, we are paid on a fixed fee basis and recognize the revenue ratably over the contractual period. Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances whereby variable consideration exists, we include in our estimates, additional revenue for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably and its realization is probable. Refer to Note 13 - “Disaggregation of Revenue” for further information, including the economic factors that affect the nature, amount, timing, and uncertainty of revenue and cash flows of our various revenue categories. Contract Balances: Accounts receivable and allowance for losses and sales adjustments Timing of revenue recognition may differ from the timing of invoicing to customers. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We record an unbilled receivable related to revenue recognized for on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses. At June 30, 2021, and December 31, 2020, total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $599.9 million and $403.7 million, respectively. We have recorded unbilled receivables of $156.0 million and $140.8 million at June 30, 2021, and December 31, 2020, respectively. Included in unbilled receivables are retention receivables of $11.0 million and $13.1 million at June 30, 2021, and December 31, 2020, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings. Unbilled receivables expected to be collected within one year have been included with accounts receivable, current portion in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with accounts receivable, long-term portion in the accompanying condensed consolidated balance sheets. We maintain allowances for losses and sales adjustments, which losses are recorded against revenue at the time the loss is incurred. Since most of our clients are domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payments. Events or changes in circumstances that indicate the carrying amount for the allowances for losses and sales adjustments may require revision, include, but are not limited to, managing our client’s expectations regarding the scope of the services to be delivered and defects or errors in new versions or enhancements of our software products. Our allowance for losses and sales adjustments of $8.1 million and $9.3 million at June 30, 2021, and December 31, 2020, respectively, does not include provisions for credit losses. As of January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses, and primarily evaluated our historical experience with credit losses related to trade and other receivables. Because we have not experienced any historical credit losses with the majority of our clients, we have no basis to record a reserve for credit losses as defined by the standard. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill We assess goodwill for impairment annually, or more frequently whenever events or changes in circumstances indicate its carrying value may not be recoverable. We begin with the qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the quantitative assessment described below. If it is determined through the evaluation of events or circumstances that the carrying value may not be recoverable, we perform a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the estimated fair value of that reporting unit, the carrying value of the reporting unit's goodwill is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge. The fair values calculated in our impairment tests are determined using discounted cash flow models involving several assumptions. The assumptions that are used are based upon what we believe a hypothetical marketplace participant would use in estimating fair value. We evaluate the reasonableness of the fair value calculations of our reporting units by comparing the total of the fair value of all of our reporting units to our total market capitalization. We have historically evaluated goodwill for impairment annually as of April 1, or more frequently if impairment indicators arose. During the second quarter 2021, we voluntarily changed the date of our annual assessment of goodwill to October 1 for all reporting units. The change in testing date for goodwill impairment is a change in accounting principle, which management believes is preferable as the new date of the assessment better aligns with our annual planning process. The change in the assessment date does not delay or avoid a potential impairment charge. This change in the date for the annual impairment assessment for goodwill noted no change in our requirements to assess goodwill on an interim date between scheduled annual testing dates if triggering events are present. To ensure that no lapse in an assessment occurring since the prior period, we performed qualitative assessments for all reporting units except for the data and insights and platform technologies reporting units. As a result of these qualitative assessments, we determined that it was more likely than not that an impairment existed; therefore, we did not perform Step 1 quantitative impairment test. We did perform a quantitative assessment for goodwill of $75.7 million and $78.4 million associated with our data and insights reporting unit and platform technologies unit, respectively. For most of our reporting units, goodwill relates to a combination of legacy and acquired businesses, and as a result, those units have fair values that substantially exceed their underlying carrying values. For other reporting units, in particular our data and insights and platform technologies units, goodwill entirely relates to recently acquired businesses and as a result those units do not have significant excess fair values over carrying values. As a result of our interim qualitative and quantitative assessments, we concluded no impairment existed as of June 30, 2021. Determining the fair value of our reporting units involves the use of significant estimates and assumptions and considerable management judgment. We base our fair value estimates on assumptions we believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Changes in market conditions or other factors outside of our control, such as the COVID-19 pandemic, could cause us to change key assumptions and our judgment about a reporting unit’s prospects. Similarly, in a specific period, a reporting unit could significantly underperform relative to its historical or projected future operating results. Either situation could result in a meaningfully different estimate of the fair value of our reporting units and a consequent future impairment charge. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. This standard will be effective for the Company’s fiscal years beginning in the first quarter of 2022, with early adoption permitted. The Company has elected to early adopt this standard as of January 1, 2021. Our accounting and disclosures related to our convertible senior notes issued on March 9, 2021, reflect the requirements of this standard. For further information, please refer to Note 7, Debt. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, (“ASU 2019-12”) which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020. We adopted ASU 2019-12 as of January 1, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements.
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Acquisitions |
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Acquisitions | Acquisitions On April 21, 2021, (“Closing Date”), the Company acquired NIC as contemplated by the Agreement and Plan of Merger dated February 9, 2021, (the “Merger Agreement”). As result of the merger, NIC became a direct subsidiary of the Company and NIC’s subsidiaries became indirect subsidiaries of the Company. NIC is a leading digital government solutions and payment company that serves federal, state and local government agencies. The total purchase price, net of cash acquired of $331.8 million, was approximately $2.0 billion consisting of cash paid of $2.3 billion and $1.9 million of purchase consideration related to the conversion of unvested restricted stock awards. We have performed a preliminary valuation analysis of the fair market value of NIC’s assets and liabilities. The following table summarizes the preliminary allocation of the purchase price as of the acquisition date:
In connection with this transaction, we acquired total tangible assets of $515.4 million and assumed liabilities of approximately $226.9 million. We recorded goodwill of approximately $1.5 billion, none of which is expected to be deductible for tax purposes, and other identifiable intangible assets of approximately $754.0 million. The $754.0 million of intangible assets are attributable to customer relationships, acquired software, trade name and will be amortized over a weighted average period of approximately 17 years. We recorded net deferred tax liabilities of $186.0 million related to estimated fair value allocations. NIC delivers user-friendly digital services that make it easier and more efficient for citizens and businesses to interact with government - providing valuable conveniences like applying for unemployment insurance, submitting business filings, renewing licenses, accessing information and making secure payments without visiting a government office. In addition, NIC has extensive expertise and scale in the government payments arena which will accelerate the Company’s strategic payments initiatives. Therefore, the goodwill of approximately $1.5 billion arising from this acquisition is primarily attributed to our ability to generate increased revenues, earnings and cash flow by expanding our addressable market and client base. The following unaudited pro forma consolidated operating results information has been prepared as if the acquisition of NIC had occurred on January 1, 2020, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs and tax effects.
The pro forma information above does not include acquisitions that are not considered material to our results of operations. The pro forma information does not purport to represent what our results of operations actually would have been had such transaction occurred on the date specified or to project our results of operations for any future period. On March 31, 2021, we acquired all the equity interest of Glass Arc, Inc. (dba ReadySub). ReadySub is a cloud-based platform that assists school districts with absence tracking, filling substitute teacher assignments, and automating essential payroll processes. The total purchase price of approximately $6.2 million, net of cash acquired, was paid in cash. On March 31, 2021, we acquired substantially all assets of DataSpec, Inc. (“DataSpec”), a provider of a SaaS solution that allows for secure electronic claims submission to the federal Department of Veterans Affairs (“VA”) and reporting capabilities, in addition to scheduling, calendaring, and payments. The total purchase price of approximately $5.8 million was paid in cash. The operating results of DataSpec and ReadySub are included with the operating results of the Enterprise Software segment since their date of acquisition. The impact of the DataSpec and ReadySub acquisitions, individually and in the aggregate, on our operating results, assets and liabilities is not material. The operating results of NIC are disclosed separately as a reportable segment. Revenues from NIC included in Tyler's results of operations totaled approximately $99.1 million and the net income loss was approximately $9.7 million from the date of acquisition through June 30, 2021. In 2021, we incurred fees of approximately $18.3 million for financial advisory, legal, accounting, due diligence, valuation and other various services necessary to complete these acquisitions. The Company also incurred $1.6 million of expense related to a separation agreement with NIC's former Chief Executive Officer. These costs were expensed in 2021 and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. As of June 30, 2021, the purchase price allocations for DataSpec, ReadySub and NIC are not yet complete; therefore, the preliminary valuation estimates of fair value assumed at the acquisition date for intangible assets, receivables and deferred revenue and related deferred taxes are subject to change as valuations are finalized. Our balance sheet as of June 30, 2021, reflects the allocation of the purchase price to the net assets acquired based on their estimated fair value at the date of each acquisition. The fair value of the assets and liabilities acquired are based on valuations using Level III, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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Shareholders' Equity |
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Shareholders' Equity | Shareholders’ Equity The following table details activity in our common stock:
As of June 30, 2021, we have authorization from our board of directors to repurchase up to 2.4 million additional shares of our common stock.
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Commissions | Deferred CommissionsSales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be Timing of Revenue Recognition Timing of revenue recognition by revenue category during the period is as follows:
Recurring Revenue The majority of our revenue is comprised of revenues from maintenance and subscriptions, which we consider to be recurring revenue. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from to 10 years but are typically contracted for initial periods of to five years, providing a significant source of recurring revenues on an annual basis. We consider all other revenue categories to be non-recurring revenues. Recurring revenues and non-recurring revenues recognized during the period are as follows:
Total deferred revenue, including long-term, by segment is as follows:
Changes in total deferred revenue, including long-term, were as follows:
Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized (“backlog”), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of June 30, 2021, was $1.63 billion, of which we expect to recognize approximately 47% as revenue over the next 12 months and the remainder thereafter.
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to seven years. Deferred commissions were $33.6 million and $32.3 million as of June 30, 2021, and December 31, 2020, respectively. Amortization expense was $3.1 million and $6.1 million for the three and six months ended June 30, 2021, respectively, and $2.9 million and $5.9 million for the three and six ended June 30, 2020, respectively. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.Disaggregation of RevenueThe tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets As of June 30, 2021, we have $130.3 million in investment grade corporate and municipal bonds with varying maturity dates through 2026. We intend to hold these bonds to maturity and have classified them as such. It is not more likely than not that we will be required to sell these bonds before recovery of their amortized costs. We believe cost approximates fair value given the portfolio consists of fixed income and high credit investments. The fair values of these securities are considered Level II as they are based on inputs from quoted prices in markets that are not active or other observable market data. These investments are presented at amortized cost and are included in short-term investments and non-current investments in the accompanying condensed consolidated balance sheets. As of June 30, 2021, we have an accrued interest receivable balance of approximately $663,000 which is included in accounts receivable, net. We do not measure an allowance for credit losses for accrued interest receivables. We record any losses within the maturity period of the investment and any write-offs to accrued interest receivables are recorded as a reduction to interest income in the period of the loss. During the three and six months ended June 30, 2021, we have recorded no credit losses for accrued interest receivables. Interest income and amortization of discounts and premiums are included in other (expense) income, net in the accompanying condensed consolidated statements of income. In 2020, we purchased $10 million in common stock representing an 18% interest in BFTR, LLC., a wholly owned subsidiary of Bison Capital Partners V L.P. BFTR, LLC, a privately held Australian company specializing in digitizing the spoken word in court and legal proceedings. The investment in common stock is accounted under the cost method because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values. Our investment is carried at cost less any impairment write-downs. Annually, our cost method investments are assessed for impairment. We do not reassess the fair value of cost method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments. No events or changes have occurred during the period that require reassessment. This investment is included in other non-current assets in the accompanying condensed consolidated balance sheets.
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Debt | Debt 2021 Credit Agreement In connection with the completion of the acquisition of NIC on the Closing Date, the Company, as borrower, entered into a new $1.4 billion Credit Agreement (the “2021 Credit Agreement”) with the various lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender. The 2021 Credit Agreement provides for (1) a senior unsecured revolving credit facility in an aggregate principal amount of up to $500 million, including sub-facilities for standby letters of credit and swingline loans (the “Revolving Credit Facility”), (2) an amortizing five-year term loan in the aggregate amount of $600 million (the “Term Loan A-1”), and (3) a non-amortizing three-year term loan in the aggregate amount of $300 million (the “Term Loan A-2”) and, together (the “Term Loans”). The 2021 Credit Agreement matures on April 20, 2026, and the loans may be prepaid at any time, without premium or penalty, subject to certain minimum amounts and payment of any LIBOR breakage costs. In addition to the required amortization payments on the Term Loan A-1 of 5% annually, certain mandatory quarterly prepayments of the Term Loans and the Revolving Credit Facility will be required (i) upon the issuance or incurrence of additional debt not otherwise permitted under the 2021 Credit Agreement and (ii) upon the occurrence of certain asset sales and insurance and condemnation recoveries, subject to certain thresholds, baskets, and reinvestment provisions as provided in the 2021 Credit Agreement. Borrowings under the Revolving Credit Facility and the Term Loan A-1 bear interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) (the “Base Rate”) plus a margin of 0.125% to 0.75% or (2) the one-, three-, six-, or, subject to approval by all lenders, twelve-month LIBOR rate plus a margin of 1.125% to 1.75%. The Term Loan A-2 bears interest, at the Company’s option, at a per annum rate of either (1) the Base Rate plus a margin of 0% to 0.5% or (2) the one-, three-, or six-, or, subject to approval by all lenders, twelve-month LIBOR rate plus a margin of 0.875% to 1.50%. The margin in each case is based upon the Company’s total net leverage ratio, as determined pursuant to the 2021 Credit Agreement. The 2021 Credit Agreement has customary benchmark replacement language with respect to the replacement of LIBOR once LIBOR becomes unavailable. In addition to paying interest on the outstanding principal of loans under the Revolving Credit Facility, the Company is required to pay a commitment fee on the average daily unused portion of the Revolving Credit Facility, initially 0.25% per annum, ranging from 0.15% to 0.30% based upon the Company’s total net leverage ratio. The net proceeds from the borrowings under the 2021 Credit Agreement were $1.1 billion, net of debt discounts of $7.2 million and debt issuance costs of $4.9 million and $6.4 million of commitment fees paid related to the terminated $1.6 billion unsecured bridge loan facility. On the Closing Date, the Company paid approximately $2.3 billion in cash for the purchase of NIC. The Term Loans of $900 million and a portion of the proceeds of the Revolving Credit Facility, in the amount of $250 million, together with cash available to the Company of $609 million and the net proceeds of its Convertible Senior Notes of $594 million, were used to complete the acquisition and pay fees and expenses in connection with the acquisition and the 2021 Credit Agreement. The remaining portion of the Revolving Credit Facility may be used for working capital requirements, acquisitions, and capital expenditures of the Company and its subsidiaries. The 2021 Credit Agreement requires us to maintain certain financial ratios and other financial conditions and prohibits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens. As of June 30, 2021, we were in compliance with those covenants. The following table summarizes the Company's total outstanding borrowings related to the 2021 Credit Agreement (in thousands):
The carrying amount is the par value of the Revolving Credit Facility and Term Loans less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the term of the Term Loans. Interest expense is included in other (expense) income, net in the accompanying condensed consolidated statements of income. The effective interest rate for the borrowings under the 2021 Credit Agreement is 1.79% as of June 30, 2021. The following sets forth the interest expense recognized related to the borrowings under the 2021 Credit Agreement included in other (expense) income, net in the accompanying condensed consolidated statements of income (in thousands):
As of June 30, 2021, we had $65.0 million in outstanding borrowings under the 2021 Revolving Credit Facility, and our available borrowing capacity was $435.0 million. In addition, as of June 30, 2021, we had one outstanding standalone letter of credit totaling $2.0 million. The letter of credit guarantees our performance under a client contract and expires in the third quarter of 2021. Terminated Debt Agreements The 2021 Credit Agreement replaces and terminates the Company’s previous $400 million credit facility pursuant to the Credit Agreement dated as of September 30, 2019 (the “2019 Credit Agreement”). The Company’s previously announced commitment from Goldman Sachs Bank USA for a $1.6 billion 364-day senior unsecured bridge loan facility also terminated on the Closing Date. Below summarizes the interest expense and related amortization of debt issuance costs associated with the terminated debt agreements incurred through the Closing Date, included in other (expense) income, net in the accompanying condensed consolidated statements of income (in thousands).
Convertible Senior Notes due 2026 On March 9, 2021, we issued 0.25% Convertible Senior Notes due 2026 in the aggregate principal amount of $600 million (“the Convertible Senior Notes” or “the Notes”). The Convertible Senior Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of March 9, 2021, with U.S. Bank National Association, as trustee. The net proceeds from the issuance of the Convertible Senior Notes were $591.4 million, net of initial purchasers’ discounts of $6.0 million and debt issuance costs of $2.6 million. The Convertible Senior Notes are senior, unsecured obligations and are (i) equal in right of payment with our future senior, unsecured indebtedness; (ii) senior in right of payment to our future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Convertible Senior Notes accrue interest at a rate of 0.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021. The Convertible Senior Notes mature on March 15, 2026, unless earlier repurchased, redeemed or converted. Before September 15, 2025, holders of the Convertible Senior Notes have the right to convert their Convertible Senior Notes only upon the occurrence of certain events. Under the terms of indenture, the Convertible Senior Notes are convertible into common stock of Tyler Technologies, Inc. (referred to as “our common stock” herein) at the following times or circumstances: •during any calendar quarter commencing after the calendar quarter ended June 30, 2021, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; •during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “Measurement Period”) if the trading price per $1,000 principal amount of Convertible Senior Notes, as determined following a request by their holder in accordance with the procedures in the indenture, for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; •upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the indenture governing the Notes); •upon the occurrence of specified corporate events; or •on or after September 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, March 15, 2026. With certain exceptions, upon a change of control or other fundamental change (both as defined in the indenture governing the Convertible Senior Notes), the holders of the Convertible Senior Notes may require us to repurchase all or part of the principal amount of the Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes, plus any accrued and unpaid interest to, but excluding, the redemption date. As of June 30, 2021, none of the conditions allowing holders of the Convertible Senior Notes to convert have been met. From and including September 15, 2025, holders of the Convertible Senior Notes may convert their Convertible Senior Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle any conversions of the Convertible Senior Notes either entirely in cash or in a combination of cash and shares of common stock, at our election. However, upon conversion of any Convertible Senior Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 2.0266 shares of common stock per $1,000 principal amount of Convertible Senior Notes, which represents an initial conversion price of approximately $493.44 per share of common stock. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The Convertible Senior Notes are redeemable, in whole or in part, at our option at any time, and from time to time, on or after March 15, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price of the Notes on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. In addition, calling any Note for redemption constitutes a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. The net carrying value of the Convertible Senior Notes, net of unamortized debt discount and unamortized debt issuance costs were as follows (in thousands):
The carrying amount is the par value of the Convertible Senior Notes less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the term of the Convertible Senior Notes. Interest expense is included in other (expense) income, net in the accompanying condensed consolidated statements of income. As of June 30, 2021, the effective interest rate as for the Convertible Senior Notes is 0.54%. The following sets forth the interest expense recognized related to the Convertible Senior Notes (in thousands):
Below are the components of other (expense) income, net included in the accompanying condensed consolidated statements of income:
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Tax Provision | Income Tax Provision We had an effective income tax rate of 2.2% and 2.9% for the three and six months ended June 30, 2021, respectively, compared to negative 28.9% and negative 32.3% for the three and six months ended June 30, 2020, respectively. The higher effective tax rate for the three and six months ended June 30, 2021, as compared to the same periods in 2020, was principally driven by a decrease in the excess tax benefits related to stock incentive awards. The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 21% primarily due to excess tax benefits related to stock incentive awards and the tax benefit of research tax credits offset by state income taxes and non-deductible business expenses. The excess tax benefits related to stock incentive awards realized were $6.4 million and $15.2 million for the three and six months ended June 30, 2021, respectively, compared to $23.4 million and $45.5 million for the three and six months ended June 30, 2020, respectively. Excluding the excess tax benefits, the effective tax rate was 26.7% and 26.5% for the three and six months ended June 30, 2021, respectively, compared to 27.2% and 27.1% for the three and six months ended June 30, 2020, respectively. We made tax payments of $967,000 and $422,000 in the six months ended June 30, 2021, and 2020, respectively.
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Earnings Per Share |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table details the reconciliation of basic earnings per share to diluted earnings per share:
For the three and six months ended June 30, 2021 and 2020, stock awards, representing the right to purchase common stock of approximately 191,000 shares and 166,000 shares and 124,000 shares and 102,000 shares, respectively, were not included in the computation of diluted earnings per share because their inclusion would have had an antidilutive effect. We have used the if-converted method for calculating any potential dilutive effect of the Convertible Senior Notes on our diluted net income per share. Under the if-converted method, the Notes are assumed to be converted at the beginning of the period and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period being presented and interest expense, net of tax, recorded in connection with the Convertible Senior Notes is added back to the numerator, only in the periods in which such effect is dilutive. The approximately 1.2 million resulting common shares related to the Notes are not included in the dilutive weighted-average common shares outstanding calculation for the three and six months ended June 30, 2021, respectively, as their effect would be anti-dilutive given none of the conversion features have been triggered. See Note 7, Debt for discussion on the conversion features related to the Convertible Senior Notes.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements with original maturities between to seven years from the execution date. Some of these leases include options to extend for up to 10 years. We have no finance leases and no related party lease agreements as of June 30, 2021. Operating lease costs were approximately $5.6 million and $8.2 million for the three and six months ended June 30, 2021, respectively, and $2.5 million and $5.1 million for the three and six months ended June 30, 2020, respectively. The components of operating lease expense were as follows:
Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:
Supplemental information related to leases is as follows:
As of June 30, 2021, maturities of lease liabilities were as follows:
Rental Income from third parties We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2021 and 2025, and some have options to extend the lease for up to seven years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset. Rental income from third-party tenants for the three and six months ended June 30, 2021, totaled $296,000 and $590,000 respectively, and for the three and six months ended June 30, 2020, totaled $292,000 and $566,000, respectively. Rental income is included in hardware and other revenue in the condensed consolidated statements of income. As of June 30, 2021, future minimum operating rental income based on contractual agreements is as follows:
As of June 30, 2021, we had no additional significant operating or finance leases that had not yet commenced.
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Leases | Leases We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements with original maturities between to seven years from the execution date. Some of these leases include options to extend for up to 10 years. We have no finance leases and no related party lease agreements as of June 30, 2021. Operating lease costs were approximately $5.6 million and $8.2 million for the three and six months ended June 30, 2021, respectively, and $2.5 million and $5.1 million for the three and six months ended June 30, 2020, respectively. The components of operating lease expense were as follows:
Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:
Supplemental information related to leases is as follows:
As of June 30, 2021, maturities of lease liabilities were as follows:
Rental Income from third parties We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2021 and 2025, and some have options to extend the lease for up to seven years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset. Rental income from third-party tenants for the three and six months ended June 30, 2021, totaled $296,000 and $590,000 respectively, and for the three and six months ended June 30, 2020, totaled $292,000 and $566,000, respectively. Rental income is included in hardware and other revenue in the condensed consolidated statements of income. As of June 30, 2021, future minimum operating rental income based on contractual agreements is as follows:
As of June 30, 2021, we had no additional significant operating or finance leases that had not yet commenced.
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Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based CompensationThe following table summarizes share-based compensation expense related to share-based awards recorded in the condensed consolidated statements of income, pursuant to ASC 718, Stock Compensation:
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Segment and Related Information |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Related Information | Segment and Related Information We provide integrated information management solutions and services for the public sector, with a focus on local governments. We provide our software systems and services and appraisal services through seven business units, which focus on the following products: •financial management, education and planning, regulatory and maintenance software solutions; •financial management, municipal courts, planning, regulatory and maintenance software solutions; •courts and justice and public safety software solutions; •data and insights solutions; •platform technologies solutions including case management and business management processing; •NIC digital government and payments solutions; and •appraisal and tax software solutions, land and vital records management software solutions, and property appraisal services. In accordance with ASC 280-10, Segment Reporting, we report our results in three segments. The financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts, planning, regulatory and maintenance software solutions unit; courts and justice and public safety software solutions unit; data and insights solutions; and platform technologies solutions meet the criteria for aggregation and are presented in the Enterprise Software (“ES”) reportable segment. The ES segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: financial management and education, courts and justice, public safety, planning, regulatory and maintenance, data and insights, and platform technologies processes. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property, land and vital records management as well as provides property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction. On April 21, 2021, the Company acquired NIC resulting in a new reportable segment, as its operating results meet the criteria of a reportable segment. The operating results of NIC are included with the operating results of the NIC segment from the date of acquisition. We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income for our business units as income before non-cash amortization of intangible assets associated with their acquisitions, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Corporate segment operating income primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Corporate segment operating income also includes revenues and expenses related to a company-wide user conference. As of January 1, 2021, certain administrative costs related to information technology, which were previously allocated and reported in the ES and A&T segments, were moved to the Corporate segment to reflect changes in the way in which management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. Prior year amounts for all segments have been adjusted to reflect the segment change.
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Disaggregation of Revenue |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Deferred CommissionsSales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be Timing of Revenue Recognition Timing of revenue recognition by revenue category during the period is as follows:
Recurring Revenue The majority of our revenue is comprised of revenues from maintenance and subscriptions, which we consider to be recurring revenue. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from to 10 years but are typically contracted for initial periods of to five years, providing a significant source of recurring revenues on an annual basis. We consider all other revenue categories to be non-recurring revenues. Recurring revenues and non-recurring revenues recognized during the period are as follows:
Total deferred revenue, including long-term, by segment is as follows:
Changes in total deferred revenue, including long-term, were as follows:
Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized (“backlog”), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of June 30, 2021, was $1.63 billion, of which we expect to recognize approximately 47% as revenue over the next 12 months and the remainder thereafter.
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to seven years. Deferred commissions were $33.6 million and $32.3 million as of June 30, 2021, and December 31, 2020, respectively. Amortization expense was $3.1 million and $6.1 million for the three and six months ended June 30, 2021, respectively, and $2.9 million and $5.9 million for the three and six ended June 30, 2020, respectively. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.Disaggregation of RevenueThe tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.
Deferred Revenue and Performance Obligations |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue and Performance Obligations | Deferred CommissionsSales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be Timing of Revenue Recognition Timing of revenue recognition by revenue category during the period is as follows:
Recurring Revenue The majority of our revenue is comprised of revenues from maintenance and subscriptions, which we consider to be recurring revenue. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from to 10 years but are typically contracted for initial periods of to five years, providing a significant source of recurring revenues on an annual basis. We consider all other revenue categories to be non-recurring revenues. Recurring revenues and non-recurring revenues recognized during the period are as follows:
Total deferred revenue, including long-term, by segment is as follows:
Changes in total deferred revenue, including long-term, were as follows:
Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized (“backlog”), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of June 30, 2021, was $1.63 billion, of which we expect to recognize approximately 47% as revenue over the next 12 months and the remainder thereafter.
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to seven years. Deferred commissions were $33.6 million and $32.3 million as of June 30, 2021, and December 31, 2020, respectively. Amortization expense was $3.1 million and $6.1 million for the three and six months ended June 30, 2021, respectively, and $2.9 million and $5.9 million for the three and six ended June 30, 2020, respectively. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.Disaggregation of RevenueThe tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Security Incident As previously disclosed, we experienced a security incident in September 2020 (the “Incident”) involving ransomware disrupting access to some of our internal information technology (IT) systems and telephone systems. Although we believe we have contained and recovered from the Incident, and that we have taken and will continue to take appropriate remediation steps, we are subject to risk and uncertainties as a result of the Incident. We have completed our investigation and remediation efforts related to the Incident. For the six months period ended June 30, 2021, we have recorded $336,000 of expenses and recorded approximately $637,000 of accrued insurance recoveries. The recorded costs consist primarily of payments to third-party service providers and consultants, including legal fees, and enhancements to our cybersecurity measures. We maintain cybersecurity insurance coverage in an amount that we believe is adequate. Litigation Other than routine litigation incidental to our business, there are no material legal proceedings pending to which we are party or to which any of our properties are subject.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On June 3, 2021, the Company announced that it signed an agreement to acquire VendEngine, Inc., a privately-held cloud-based software provider focused on financial technology for the corrections market. The purchase price is approximately $84 million in cash, subject to certain customary adjustments at closing, which is expected in late third quarter of 2021. There have been no material events or transactions that occurred subsequent to June 30, 2021. |
Accounting Standards and Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Use of Estimates | USE OF ESTIMATES The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price (“SSP”) of performance obligations, variable consideration, and other obligations such as returns and refunds; loss contingencies; the estimated useful life of deferred commissions; the carrying amount of goodwill; the carrying amount and estimated useful lives of intangible assets; the carrying amount of operating lease right-of-use assets and operating lease liabilities; determining share-based compensation expense; the valuation allowance for receivables; and determining the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from estimates.
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Revenue Recognition | REVENUE RECOGNITION Nature of Products and Services: We earn revenue from software licenses, royalties, subscription-based services, software services, post-contract customer support (“PCS” or “maintenance”), hardware, and appraisal services. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps: •Identification of the contract, or contracts with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract •Recognition of revenue when, or as, we satisfy a performance obligation Most of our software arrangements with customers contain multiple performance obligations that range from software licenses, installation, training, and consulting to software modification and customization to meet specific customer needs (services), hosting, and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include software services, such as training or installation, are evaluated to determine whether the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are separately identifiable from other promises in the contract. The transaction price is allocated to the distinct performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. Revenue is recognized net of allowances for sales adjustments and any taxes collected from customers, which are subsequently remitted to governmental authorities. Significant Judgments: Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement (license or subscription) includes both software licenses and software services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the software services and recognized over time. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine SSP using the expected cost-plus margin approach. For arrangements that involve significant production, modification or customization of the software, or where software services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the customer over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred, or value added. The progress-to-completion method generally results in the recognition of reasonably consistent profit margins over the life of a contract because we can provide reasonably dependable estimates of contract billings and contract costs. We use the level of profit margin that is most likely to occur on a contract. If the most likely profit margin cannot be precisely determined, the lowest probable level of profit margin in the range of estimates is used until the results can be estimated more precisely. These arrangements are often implemented over an extended time period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent. For e-filing transaction fees and other transaction-based revenues, we have the right to charge the customer an amount that directly corresponds with the value to the customer of our performance to date. Therefore, we recognize revenue for these services over time based on the amount billable to the customer in accordance with the 'as invoiced' practical expedient in ASC 606-10-55-18. In some cases, we are paid on a fixed fee basis and recognize the revenue ratably over the contractual period. Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances whereby variable consideration exists, we include in our estimates, additional revenue for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably and its realization is probable. Contract Balances: Accounts receivable and allowance for losses and sales adjustments Timing of revenue recognition may differ from the timing of invoicing to customers. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We record an unbilled receivable related to revenue recognized for on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses. At June 30, 2021, and December 31, 2020, total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $599.9 million and $403.7 million, respectively. We have recorded unbilled receivables of $156.0 million and $140.8 million at June 30, 2021, and December 31, 2020, respectively. Included in unbilled receivables are retention receivables of $11.0 million and $13.1 million at June 30, 2021, and December 31, 2020, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings. Unbilled receivables expected to be collected within one year have been included with accounts receivable, current portion in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with accounts receivable, long-term portion in the accompanying condensed consolidated balance sheets. We maintain allowances for losses and sales adjustments, which losses are recorded against revenue at the time the loss is incurred. Since most of our clients are domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payments. Events or changes in circumstances that indicate the carrying amount for the allowances for losses and sales adjustments may require revision, include, but are not limited to, managing our client’s expectations regarding the scope of the services to be delivered and defects or errors in new versions or enhancements of our software products. Our allowance for losses and sales adjustments of $8.1 million and $9.3 million at June 30, 2021, and December 31, 2020, respectively, does not include provisions for credit losses.
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Goodwill | GoodwillWe assess goodwill for impairment annually, or more frequently whenever events or changes in circumstances indicate its carrying value may not be recoverable. We begin with the qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the quantitative assessment described below. If it is determined through the evaluation of events or circumstances that the carrying value may not be recoverable, we perform a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the estimated fair value of that reporting unit, the carrying value of the reporting unit's goodwill is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge. The fair values calculated in our impairment tests are determined using discounted cash flow models involving several assumptions. The assumptions that are used are based upon what we believe a hypothetical marketplace participant would use in estimating fair value. We evaluate the reasonableness of the fair value calculations of our reporting units by comparing the total of the fair value of all of our reporting units to our total market capitalization. |
Recently Adopted/Issued Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. This standard will be effective for the Company’s fiscal years beginning in the first quarter of 2022, with early adoption permitted. The Company has elected to early adopt this standard as of January 1, 2021. Our accounting and disclosures related to our convertible senior notes issued on March 9, 2021, reflect the requirements of this standard. For further information, please refer to Note 7, Debt. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, (“ASU 2019-12”) which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020. We adopted ASU 2019-12 as of January 1, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements.
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Acquisitions (Tables) |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the allocation of the preliminary purchase price as of the acquisition date | The following table summarizes the preliminary allocation of the purchase price as of the acquisition date:
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Schedule of pro forma information | The following unaudited pro forma consolidated operating results information has been prepared as if the acquisition of NIC had occurred on January 1, 2020, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs and tax effects.
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Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of details activity in our common stock | The following table details activity in our common stock:
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Debt (Tables) |
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Summary of debt and related interest | The following table summarizes the Company's total outstanding borrowings related to the 2021 Credit Agreement (in thousands):
The effective interest rate for the borrowings under the 2021 Credit Agreement is 1.79% as of June 30, 2021. The following sets forth the interest expense recognized related to the borrowings under the 2021 Credit Agreement included in other (expense) income, net in the accompanying condensed consolidated statements of income (in thousands):
The carrying amount is the par value of the Convertible Senior Notes less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the term of the Convertible Senior Notes. Interest expense is included in other (expense) income, net in the accompanying condensed consolidated statements of income. As of June 30, 2021, the effective interest rate as for the Convertible Senior Notes is 0.54%. The following sets forth the interest expense recognized related to the Convertible Senior Notes (in thousands):
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Schedule of interest income (expense) | Below are the components of other (expense) income, net included in the accompanying condensed consolidated statements of income:
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Earnings Per Share (Tables) |
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Computation of reconciliation of basic earnings per share to diluted earnings per share | The following table details the reconciliation of basic earnings per share to diluted earnings per share:
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Leases (Tables) |
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lease cost | The components of operating lease expense were as follows:
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Schedule of leases assets and liabilities | Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:
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Schedule of supplemental information related to leases | Supplemental information related to leases is as follows:
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Schedule of operating lease maturity | As of June 30, 2021, maturities of lease liabilities were as follows:
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Schedule of future minimum operating rental income | As of June 30, 2021, future minimum operating rental income based on contractual agreements is as follows:
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Share-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of share-based compensation expense related to share-based awards recorded in the statements of income | The following table summarizes share-based compensation expense related to share-based awards recorded in the condensed consolidated statements of income, pursuant to ASC 718, Stock Compensation:
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Segment and Related Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment revenues and operations | As of January 1, 2021, certain administrative costs related to information technology, which were previously allocated and reported in the ES and A&T segments, were moved to the Corporate segment to reflect changes in the way in which management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. Prior year amounts for all segments have been adjusted to reflect the segment change.
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Reconciliation of operating income from segments to consolidated |
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Disaggregation of Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue | Timing of revenue recognition by revenue category during the period is as follows:
Recurring revenues and non-recurring revenues recognized during the period are as follows:
|
Deferred Revenue and Performance Obligations (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in deferred revenue | Total deferred revenue, including long-term, by segment is as follows:
Changes in total deferred revenue, including long-term, were as follows:
|
Acquisitions (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Apr. 21, 2021 |
Mar. 31, 2021 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Business Acquisition | |||||
Payments to acquire businesses, net of cash | $ 1,998,902 | $ 261 | |||
Goodwill | 2,309,434 | $ 838,428 | |||
NIC | |||||
Business Acquisition | |||||
Cash | $ 331,783 | ||||
Payments to acquire business | 2,300,000 | ||||
Payments to acquire businesses, net of cash | 2,000,000 | ||||
Contingent consideration | 1,900 | ||||
Total tangible assets | 515,400 | ||||
Liabilities assumed | (226,900) | ||||
Goodwill | 1,464,084 | ||||
Identifiable intangible assets acquired | $ 754,000 | ||||
Finite-lived intangible asset, useful life (in years) | 17 years | ||||
Deferred tax liabilities | $ 186,046 | ||||
Revenues | 99,100 | ||||
Net income | 9,700 | ||||
Financial advisory and legal fees | 18,300 | ||||
Severance expense | $ 1,600 | ||||
Readysub | |||||
Business Acquisition | |||||
Payments to acquire businesses, net of cash | $ 6,200 | ||||
DataSpec | |||||
Business Acquisition | |||||
Payments to acquire business | $ 5,800 |
Acquisitions - Assets and Liabilities Acquired (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Apr. 21, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Business Acquisition | |||
Goodwill | $ 2,309,434 | $ 838,428 | |
NIC | |||
Business Acquisition | |||
Cash | $ 331,783 | ||
Accounts receivable | 149,632 | ||
Other current assets | 12,988 | ||
Other noncurrent assets | 20,974 | ||
Identifiable intangible assets | 754,000 | ||
Goodwill | 1,464,084 | ||
Accounts payable | (150,099) | ||
Accrued expenses | (63,809) | ||
Other noncurrent liabilities | (11,493) | ||
Deferred revenue | (1,522) | ||
Deferred tax liabilities, net | (186,046) | ||
Total consideration | $ 2,320,492 |
Acquisitions - Pro-forma Information (Details) - MicroPact - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Business Acquisition | ||||
Revenues | $ 433,739 | $ 364,680 | $ 862,181 | $ 732,340 |
Net income | $ 19,934 | $ 53,567 | $ 59,160 | $ 80,299 |
Basic earnings per share (usd per share) | $ 0.49 | $ 1.34 | $ 1.45 | $ 2.01 |
Diluted earnings per share (usd per share) | $ 0.47 | $ 1.29 | $ 1.40 | $ 1.93 |
Shareholders' Equity - Summary of Activities in Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Equity [Abstract] | ||||
Purchases of treasury shares | $ (12,975) | $ 0 | $ (12,975) | $ (15,482) |
Purchases of treasury (in shares) | (32) | 0 | (32) | (59) |
Exercise of stock options and vesting of restricted stock units | $ 11,286 | $ 46,101 | $ 29,388 | $ 92,337 |
Stock option exercises (in shares) | 89 | 436 | 210 | 917 |
Employee stock plan purchases | $ 3,162 | $ 2,708 | $ 6,200 | $ 5,177 |
Employee stock plan purchases (in shares) | 9 | 10 | 17 | 20 |
Restricted stock units vested, net of withheld shares upon award settlement | $ (7,052) | $ (4,591) | $ (16,010) | $ (6,892) |
Restricted stock units vested, net of withheld shares upon award settlement (in shares) | 43 | 33 | 99 | 43 |
Shareholders' Equity - Additional Information (Details) shares in Millions |
Jun. 30, 2021
shares
|
---|---|
Equity [Abstract] | |
Number of shares authorized to be repurchased (in shares) | 2.4 |
Deferred Commissions (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Capitalized Contract Cost | |||||
Deferred commissions | $ 33,600,000 | $ 33,600,000 | $ 32,300,000 | ||
Deferred commissions amortization | $ 3,100,000 | $ 2,900,000 | 6,100,000 | $ 5,900,000 | |
Deferred commissions impairment | $ 0 | $ 0 | |||
Minimum | |||||
Capitalized Contract Cost | |||||
Sales commissions amortization period (in years) | 3 years | ||||
Maximum | |||||
Capitalized Contract Cost | |||||
Sales commissions amortization period (in years) | 7 years |
Other Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Schedule of Equity Method Investments | ||||
Investment grade corporate and municipal bond held to maturity | $ 130,300,000 | $ 130,300,000 | ||
Interest receivable | 663,000 | 663,000 | ||
Allowance for credit loss | $ 0 | 0 | ||
Purchase of equity investment common shares | $ 0 | $ 10,000,000 | ||
Record Holdings | ||||
Schedule of Equity Method Investments | ||||
Purchase of equity investment common shares | $ 10,000,000 | |||
Ownership percentage (percent) | 18.00% |
Debt - Total outstanding borrowings (Details) |
Jun. 30, 2021
USD ($)
|
---|---|
Line Of Credit Facility | |
Less: unamortized debt discount and debt issuance costs related term loans | $ (7,441,000) |
Total borrowings, net | 957,559,000 |
Less: current portion of debt | (30,000,000) |
Carrying value of long-term debt as of June 30, 2021 | 927,559,000 |
Revolving Credit Facility | 2021 Credit Agreement | |
Line Of Credit Facility | |
Long term debt, gross | 965,000,000 |
Revolving Credit Facility | Senior Unsecured Revolving Credit Facility | |
Line Of Credit Facility | |
Long term debt, gross | 65,000,000 |
Revolving Credit Facility | Term Loan A-1 | |
Line Of Credit Facility | |
Long term debt, gross | 600,000,000 |
Revolving Credit Facility | Term Loan A-2 | |
Line Of Credit Facility | |
Long term debt, gross | $ 300,000,000 |
Debt - Changes to the notes (Details) - USD ($) |
Jun. 30, 2021 |
Mar. 09, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Line Of Credit Facility | |||
Less: unamortized debt discount and debt issuance costs | $ (7,441,000) | ||
Convertible senior notes, net | 591,906,000 | $ 0 | |
Convertible Senior Notes Due 2026 | Senior Notes | |||
Line Of Credit Facility | |||
Convertible Senior Notes | 600,000,000 | $ 600,000,000 | |
Less: unamortized debt discount and debt issuance costs | (8,094,000) | ||
Convertible senior notes, net | $ 591,906,000 |
Debt (Details) - Other (expense) income, net - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Debt Disclosure [Abstract] | ||||
Interest expense, including amortization of debt discounts and debt issuance costs | $ (12,438) | $ (251) | $ (12,915) | $ (502) |
Interest income | 492 | 752 | 1,202 | 2,244 |
Other | (253) | (31) | (398) | (282) |
Other (expense) income including interest expense, net | $ (12,199) | $ 470 | $ (12,111) | $ 1,460 |
Income Tax Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rates (percent) | 2.20% | (28.90%) | 2.90% | (32.30%) |
Excess tax benefit | $ 6,400 | $ 23,400 | $ 15,200 | $ 45,500 |
Effective income tax rate excluding excess tax benefit (percent) | 26.70% | 27.20% | 26.50% | 27.10% |
Income tax payments | $ 967 | $ 422 |
Earnings Per Share - Computation of Basic Earnings and Diluted Earnings Per Share Data (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Numerator for basic and diluted earnings per share: | ||||
Net income | $ 25,530 | $ 53,892 | $ 62,506 | $ 101,442 |
Denominator: | ||||
Weighted-average basic common shares outstanding (in shares) | 40,765 | 39,963 | 40,761 | 39,984 |
Assumed conversion of dilutive securities: | ||||
Stock awards (in shares) | 1,329 | 1,453 | 1,387 | 1,548 |
Convertible senior notes (in shares) | 0 | 0 | 0 | 0 |
Denominator for diluted earnings per share - Adjusted weighted-average shares (in shares) | 42,094 | 41,416 | 42,148 | 41,532 |
Earnings per common share: | ||||
Basic (usd per share) | $ 0.63 | $ 1.35 | $ 1.53 | $ 2.54 |
Diluted (usd per share) | $ 0.61 | $ 1.30 | $ 1.48 | $ 2.44 |
Earnings Per Share - Additional Information (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Stock awards | ||||
Earnings Per Share | ||||
Antidilutive securities excluded from computation of earnings per shares (in shares) | 191 | 124 | 166 | 102 |
Convertible Debt Securities | ||||
Earnings Per Share | ||||
Antidilutive securities excluded from computation of earnings per shares (in shares) | 1,200 | 1,200 |
Leases - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Lessee, Lease, Description | ||||
Operating lease renewal term (up to) | 10 years | 10 years | ||
Operating lease, cost | $ 5,615 | $ 2,507 | $ 8,249 | $ 5,141 |
Lessor, operating lease renewal term (years) | 7 years | 7 years | ||
Rental income | $ 296 | $ 292 | $ 590 | $ 566 |
Minimum | ||||
Lessee, Lease, Description | ||||
Operating lease term (years) | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description | ||||
Operating lease term (years) | 7 years | 7 years |
Leases - Schedule of lease cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Leases [Abstract] | ||||
Operating lease cost | $ 4,388 | $ 1,606 | $ 6,110 | $ 3,272 |
Short-term lease cost | 731 | 447 | 1,212 | 1,021 |
Variable lease cost | 496 | 454 | 927 | 848 |
Net lease cost | $ 5,615 | $ 2,507 | $ 8,249 | $ 5,141 |
Leases - Schedule of leases assets and liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Assets: | ||
Operating lease right-of-use assets | $ 28,230 | $ 18,734 |
Liabilities: | ||
Operating leases, short-term | 9,666 | 5,904 |
Operating leases, long-term | 22,118 | 16,279 |
Total lease liabilities | $ 31,784 | $ 22,183 |
Leases - Schedule of other information related to leases (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 6,203 | $ 3,379 |
Operating leases | $ 2,961 | $ 510 |
Weighted average remaining lease term (years) | 3 years 10 months 6 days | 4 years |
Weighted average discount rate | 2.51% | 4.00% |
Leases - Maturity of lease liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating Leases | ||
2021 (Remaining 2021) | $ 6,060 | |
2022 | 9,161 | |
2023 | 6,570 | |
2024 | 5,225 | |
2025 | 3,410 | |
Thereafter | 2,849 | |
Total lease payments | 33,275 | |
Less: Interest | (1,491) | |
Present value of operating lease liabilities | $ 31,784 | $ 22,183 |
Leases - Schedule of future minimum operating rental income (Details) $ in Thousands |
Jun. 30, 2021
USD ($)
|
---|---|
Leases [Abstract] | |
2021 (Remaining 2021) | $ 713 |
2022 | 1,449 |
2023 | 1,479 |
2024 | 1,510 |
2025 | 966 |
Thereafter | 0 |
Total | $ 6,117 |
Share-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||||
Share-based compensation expense | $ 25,175 | $ 18,386 | $ 50,899 | $ 35,688 |
Cost of subscriptions, software services and maintenance | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||||
Share-based compensation expense | 5,909 | 4,369 | 10,909 | 8,621 |
Selling, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||||
Share-based compensation expense | $ 19,266 | $ 14,017 | $ 39,990 | $ 27,067 |
Segment and Related Information - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2021
business_unit
segment
| |
Segment Reporting [Abstract] | |
Number of business units | business_unit | 7 |
Number of reportable segment | segment | 3 |
Segment and Related Information - Reconciliation of Operating Income from Segments to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Segment Reporting Information | ||||
Total segment operating income | $ 38,291 | $ 41,341 | $ 76,499 | $ 75,234 |
Amortization of acquired software | (222,014) | (139,888) | (372,609) | (287,298) |
Amortization of customer and trade name intangibles | (11,420) | (5,392) | (16,832) | (10,784) |
Other (expense) income including interest expense, net | (12,199) | 470 | (12,111) | 1,460 |
Income before income taxes | 26,092 | 41,811 | 64,388 | 76,694 |
Acquired software | ||||
Segment Reporting Information | ||||
Amortization of acquired software | (11,823) | (8,006) | (19,787) | (16,033) |
Operating segment and corporate non-segment | ||||
Segment Reporting Information | ||||
Total segment operating income | $ 61,534 | $ 54,739 | $ 113,118 | $ 102,051 |
Disaggregation of Revenue - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Minimum | |
Disaggregation of Revenue | |
Contract term (years) | 1 year |
Typical contract term (years) | 3 years |
Maximum | |
Disaggregation of Revenue | |
Contract term (years) | 10 years |
Typical contract term (years) | 5 years |
Deferred Revenue and Performance Obligations - Deferred Revenue (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Disaggregation of Revenue | |
Deferred revenue | $ 484,550 |
Contract With Customer Liability | |
Beginning balance | 461,378 |
Deferral of revenue | 569,106 |
Recognition of deferred revenue | (545,934) |
Ending balance | 484,550 |
Operating segments | Enterprise Software | |
Disaggregation of Revenue | |
Deferred revenue | 442,822 |
Contract With Customer Liability | |
Beginning balance | 422,742 |
Ending balance | 442,822 |
Operating segments | Appraisal and Tax | |
Disaggregation of Revenue | |
Deferred revenue | 37,419 |
Contract With Customer Liability | |
Beginning balance | 36,945 |
Ending balance | 37,419 |
Operating segments | NIC | |
Disaggregation of Revenue | |
Deferred revenue | 2,719 |
Contract With Customer Liability | |
Beginning balance | 0 |
Ending balance | 2,719 |
Corporate | |
Disaggregation of Revenue | |
Deferred revenue | 1,590 |
Contract With Customer Liability | |
Beginning balance | 1,691 |
Ending balance | $ 1,590 |
Deferred Revenue and Performance Obligations - Additional Information (Details) $ in Millions |
Jun. 30, 2021
USD ($)
|
---|---|
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligations | $ 1,630 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, remaining performance obligation, percentage | 47.00% |
Expected timing of satisfaction period | 12 months |
Commitments and Contingencies (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
legalMatter
| |
Commitments and Contingencies Disclosure [Abstract] | |
Accrued insurance | $ 336 |
Insurance recoveries | $ 637 |
Number of material legal proceedings pending | legalMatter | 0 |
Subsequent Events (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2021
USD ($)
| |
VendEngine, Inc., | Subsequent Event | Forecast | |
Subsequent Event | |
Payments to acquire business | $ 84 |
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