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 March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Revenues: | ||||||||||||||
Software licenses and royalties | $ | $ | ||||||||||||
Subscriptions | ||||||||||||||
Software services | ||||||||||||||
Maintenance | ||||||||||||||
Appraisal services | ||||||||||||||
Hardware and other | ||||||||||||||
Total revenues | ||||||||||||||
Cost of revenues: | ||||||||||||||
Software licenses and royalties | ||||||||||||||
Amortization of 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 | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Other income, net | ||||||||||||||
Income before income taxes | ||||||||||||||
Income tax provision | ||||||||||||||
Net income | $ | $ | ||||||||||||
Earnings per common share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive loss, net of tax: | ||||||||||||||
Securities available-for-sale and transferred securities: | ||||||||||||||
Change in net unrealized holding losses on available-for-sale securities during the period | ( | |||||||||||||
Reclassification adjustment of unrealized losses on securities transferred from held-to-maturity | ( | |||||||||||||
Reclassification adjustment for net gain on sale of available-for-sale securities, included in net income | ( | |||||||||||||
Other comprehensive loss, net of tax | ( | |||||||||||||
Comprehensive income |
March 31, 2022 (unaudited) | December 31, 2021 | ||||||||||
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 | |||||||||||
$ | $ | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Current income tax payable | |||||||||||
Deferred revenue | |||||||||||
Current portion of term loans | |||||||||||
Total current liabilities | |||||||||||
Revolving credit facility | |||||||||||
Term loans | |||||||||||
Convertible senior notes due 2026, net | |||||||||||
Deferred revenue, long-term | |||||||||||
Deferred income taxes | |||||||||||
Operating lease liabilities, long-term | |||||||||||
Other long-term liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Total liabilities | |||||||||||
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 | |||||||||||
$ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Gains from sale of investments | ( | |||||||||||||
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 and maturities from marketable security investments | ||||||||||||||
Investment in software | ( | ( | ||||||||||||
Cost of acquisitions, net of cash acquired | ( | ( | ||||||||||||
Other | ( | |||||||||||||
Net cash used by investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Net borrowings on revolving credit facility | ||||||||||||||
Payment on term loans | ( | |||||||||||||
Proceeds from issuance of convertible senior notes | ||||||||||||||
Payment of debt issuance costs | ( | |||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Contributions from employee stock purchase plan | ||||||||||||||
Net cash (used) 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 December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Unrealized loss on available-for-sale securities, net of tax | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
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 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
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 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Unrealized loss on available-for-sale securities, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
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 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Cash | $ | |||||||
Accounts receivable | ||||||||
Other current assets | ||||||||
Other noncurrent assets | ||||||||
Goodwill and identifiable intangible assets | ||||||||
Accounts payable | ( | |||||||
Accrued expenses | ( | |||||||
Other noncurrent liabilities | ( | |||||||
Deferred revenue | ( | |||||||
Deferred tax liabilities, net | ( | |||||||
Total consideration | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Revenues | $ | $ | ||||||||||||
Net income | ||||||||||||||
Basic earnings per share | $ | $ | ||||||||||||
Diluted earnings per share | $ | $ |
Rate | Maturity Date | March 31, 2022 | December 31, 2021 | ||||||||||||||||||||
2021 Credit Agreement | |||||||||||||||||||||||
Revolving credit facility | L + | April 2026 | $ | $ | |||||||||||||||||||
Term Loan A-1 | L + | April 2026 | |||||||||||||||||||||
Term Loan A-2 | L + | April 2024 | |||||||||||||||||||||
Convertible Senior Notes due 2026 | March 2026 | ||||||||||||||||||||||
Total borrowings | |||||||||||||||||||||||
Less: unamortized debt discount and debt issuance costs | ( | ( | |||||||||||||||||||||
Total borrowings, net | |||||||||||||||||||||||
Less: current portion of debt | ( | ( | |||||||||||||||||||||
Carrying value as of March 31, 2022 | $ | $ |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Contractual interest expense - Revolving Credit Facility | $ | ( | $ | ||||||||
Contractual interest expense - Term Loans | ( | ||||||||||
Contractual interest expense - Convertible Senior Notes | ( | ( | |||||||||
Amortization of debt discount and debt issuance costs | ( | ( | |||||||||
Total | $ | ( | $ | ( |
March 31, 2022 | December 31, 2021 | |||||||||||||
Cash and equivalents | $ | $ | ||||||||||||
Held-to-maturity investments | ||||||||||||||
Available-for-sale investments | ||||||||||||||
Equity investments | ||||||||||||||
Total | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||
Amortized cost | $ | $ | |||||||||
Unrealized gains | |||||||||||
Unrealized losses | ( | ||||||||||
Estimated fair value | $ | $ |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Proceeds from sales and maturities | $ | $ | |||||||||
Realized gains on sales, net of tax |
Unrealized Loss On Available-For-Sales Securities | Other | Accumulated Other Comprehensive Loss | |||||||||||||||
Balance as of December 31, 2021 | $ | ( | $ | $ | ( | ||||||||||||
Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||
Reclassification adjustment of unrealized losses on securities transferred from held-to-maturity | ( | ( | |||||||||||||||
Reclassification adjustment for net gain on sale of available-for-sale securities, included in net income | ( | ( | |||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||
Balance as of March 31, 2022 | $ | ( | $ | $ | ( |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Available-for-sale investments | $ | $ | $ | $ | |||||||||||||||||||
Equity investments | |||||||||||||||||||||||
2021 Credit Agreement | |||||||||||||||||||||||
Revolving Credit Facility | |||||||||||||||||||||||
Term Loan A-1 | |||||||||||||||||||||||
Term Loan A-2 | |||||||||||||||||||||||
Convertible Senior Notes due 2026 |
Fair Value at | Carrying Value at | ||||||||||||||||||||||
March 31, 2022 | December 31, 2021 | March 31, 2022 | December 31, 2021 | ||||||||||||||||||||
2021 Credit Agreement | |||||||||||||||||||||||
Revolving Credit Facility | $ | $ | $ | $ | |||||||||||||||||||
Term Loan A-1 | |||||||||||||||||||||||
Term Loan A-2 | |||||||||||||||||||||||
Convertible Notes due 2026 | |||||||||||||||||||||||
$ | $ | $ | $ |
Three Months Ended March 31, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
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 | ( | ( |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Subscriptions, software services and maintenance | $ | $ | ||||||||||||
Selling, general and administrative expenses | ||||||||||||||
Total share-based compensation expense | $ | $ |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
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 | Three Months Ended March 31, | |||||||||||||
2022 | 2021 | |||||||||||||
Operating lease cost | $ | $ | ||||||||||||
Short-term lease cost | ||||||||||||||
Variable lease cost | ||||||||||||||
Net lease cost | $ | $ |
Other Information | Three Months Ended March 31, | |||||||||||||
2022 | 2021 | |||||||||||||
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 | |||||||
2022 (Remaining) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
Total | $ |
For the three months ended March 31, 2022 | Enterprise Software | Platform Technologies | Corporate | Totals | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | ||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||
Total revenues | $ | $ | $ | ( | $ | |||||||||||||||||||||
Segment operating income (loss) | $ | $ | $ | ( | $ |
For the three months ended March 31, 2021 | Enterprise Software | Platform Technologies | Corporate | Totals | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Software licenses and royalties | $ | $ | $ | $ | ||||||||||||||||||||||
Subscriptions | ||||||||||||||||||||||||||
Software services | ||||||||||||||||||||||||||
Maintenance | ||||||||||||||||||||||||||
Appraisal services | ||||||||||||||||||||||||||
Hardware and other | ||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||
Total revenues | $ | $ | $ | ( | $ | |||||||||||||||||||||
Segment operating income (loss) | $ | $ | $ | ( | $ |
Three Months Ended March 31, | ||||||||||||||
Reconciliation of reportable segment operating income to the Company's consolidated totals: | 2022 | 2021 | ||||||||||||
Total segment operating income | $ | $ | ||||||||||||
Amortization of acquired software | ( | ( | ||||||||||||
Amortization of customer and trade name intangibles | ( | ( | ||||||||||||
Interest expense | ( | ( | ||||||||||||
Other income, net | ||||||||||||||
Income before income taxes | $ | $ |
For the three months ended March 31, 2022 | 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 March 31, 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 March 31, 2022 | Enterprise Software | Platform Technologies | Corporate | Totals | ||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||
Total revenues | $ | $ | $ | ( | $ |
For the three months ended March 31, 2021 | Enterprise Software | Platform Technologies | Corporate | Totals | ||||||||||||||||||||||
Recurring revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Non-recurring revenues | ||||||||||||||||||||||||||
Intercompany | ( | — | ||||||||||||||||||||||||
Total revenues | $ | $ | $ | ( | $ |
March 31, 2022 | December 31, 2021 | |||||||||||||
Enterprise Software | $ | $ | ||||||||||||
Platform Technologies | ||||||||||||||
Corporate | ||||||||||||||
Totals | $ | $ |
Three months ended March 31, 2022 | ||||||||
Balance as of December 31, 2021 | $ | |||||||
Deferral of revenue | ||||||||
Recognition of deferred revenue | ( | |||||||
Balance as of March 31, 2022 | $ |
Percent of Total Revenues | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Revenues: | ||||||||||||||
Software licenses and royalties | 3.6 | % | 5.1 | % | ||||||||||
Subscriptions | 53.8 | 34.7 | ||||||||||||
Software services | 13.5 | 16.2 | ||||||||||||
Maintenance | 25.7 | 40.4 | ||||||||||||
Appraisal services | 1.9 | 2.2 | ||||||||||||
Hardware and other | 1.5 | 1.4 | ||||||||||||
Total revenues | 100.0 | 100.0 | ||||||||||||
Cost of revenues: | ||||||||||||||
Software licenses, royalties and acquired software | 3.5 | 3.1 | ||||||||||||
Subscriptions, software services and maintenance | 51.9 | 45.6 | ||||||||||||
Appraisal services | 1.3 | 1.6 | ||||||||||||
Hardware and other | 1.2 | 0.8 | ||||||||||||
Selling, general and administrative expenses | 21.5 | 26.7 | ||||||||||||
Research and development expense | 5.2 | 7.4 | ||||||||||||
Amortization of customer and trade name intangibles | 3.2 | 1.8 | ||||||||||||
Operating income | 12.2 | 13.0 | ||||||||||||
Interest expense | (1.1) | (0.2) | ||||||||||||
Other income, net | 0.1 | 0.2 | ||||||||||||
Income before income taxes | 11.2 | 13.0 | ||||||||||||
Income tax provision (benefit) | 2.4 | 0.4 | ||||||||||||
Net income | 8.8 | % | 12.6 | % |
Three Months Ended March 31, | ||||||||
2022 | ||||||||
Revenues: | ||||||||
Software licenses and royalties | $ | — | ||||||
Subscriptions | 121,382 | |||||||
Software services | 13,109 | |||||||
Maintenance | 202 | |||||||
Appraisal services | — | |||||||
Hardware and other | — | |||||||
Total revenues | $ | 134,693 |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
ES | $ | 16,105 | $ | 14,372 | $ | 1,733 | 12 | % | ||||||||||||||||||
PT | 401 | 561 | (160) | (29) | ||||||||||||||||||||||
Total software licenses and royalties revenue | $ | 16,506 | $ | 14,933 | $ | 1,573 | 11 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
ES | $ | 120,316 | $ | 99,329 | $ | 20,987 | 21 | % | ||||||||||||||||||
PT | 125,127 | 3,150 | 121,977 | 3,872 | ||||||||||||||||||||||
Total subscriptions revenue | $ | 245,443 | $ | 102,479 | $ | 142,964 | 140 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
ES | $ | 42,649 | $ | 42,417 | $ | 232 | 1 | % | ||||||||||||||||||
PT | 18,848 | 5,223 | 13,625 | 261 | ||||||||||||||||||||||
Total software services revenue | $ | 61,497 | $ | 47,640 | $ | 13,857 | 29 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
ES | $ | 110,695 | $ | 109,469 | $ | 1,226 | 1 | % | ||||||||||||||||||
PT | 6,334 | 9,643 | (3,309) | (34) | ||||||||||||||||||||||
Total maintenance revenue | $ | 117,029 | $ | 119,112 | $ | (2,083) | (2) | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
ES | $ | 8,518 | $ | 6,465 | $ | 2,053 | 32 | % | ||||||||||||||||||
PT | — | — | — | — | ||||||||||||||||||||||
Total appraisal services revenue | $ | 8,518 | $ | 6,465 | $ | 2,053 | 32 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Software licenses and royalties | $ | 2,609 | $ | 1,236 | $ | 1,373 | 111 | % | ||||||||||||||||||
Acquired software | 13,221 | 7,964 | 5,257 | 66 | ||||||||||||||||||||||
Subscriptions, software services, and maintenance | 236,896 | 134,320 | 102,576 | 76 | ||||||||||||||||||||||
Appraisal services | 5,936 | 4,617 | 1,319 | 29 | ||||||||||||||||||||||
Hardware and other | 5,028 | 2,458 | 2,570 | 105 | ||||||||||||||||||||||
Total cost of revenues | $ | 263,690 | $ | 150,595 | $ | 113,095 | 75 | % |
Three Months Ended | ||||||||||||||||||||
2022 | 2021 | Change | ||||||||||||||||||
Software licenses, royalties and acquired software | 4.1 | % | 38.4 | % | (34.3) | % | ||||||||||||||
Subscriptions, software services and maintenance | 44.1 | 50.1 | (6.0) | |||||||||||||||||
Appraisal services | 30.3 | 28.6 | 1.7 | |||||||||||||||||
Hardware and other | 29.3 | 41.1 | (11.8) | |||||||||||||||||
Overall gross margin | 42.2 | % | 48.9 | % | (6.7) | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Selling, general and administrative expenses | $ | 97,895 | $ | 78,774 | $ | 19,121 | 24 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Research and development expense | $ | 23,941 | $ | 21,813 | $ | 2,128 | 10 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Amortization of other intangibles | $ | 14,714 | $ | 5,412 | $ | 9,302 | 172 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Interest expense | $ | (4,804) | $ | (478) | $ | (4,326) | 905 | % |
Three Months Ended | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Other income, net | $ | 364 | $ | 566 | $ | (202) | (36) | % |
Three Months Ended | Change | ||||||||||||||||||||||
2022 | 2021 | $ | % | ||||||||||||||||||||
Income tax provision | $ | 11,444 | $ | 1,320 | $ | 10,124 | 767% | ||||||||||||||||
Effective income tax rate | 22.3 | % | 3.4 | % |
2022 | 2021 | |||||||||||||
Cash flows provided (used) by: | ||||||||||||||
Operating activities | $ | 53,541 | $ | 71,703 | ||||||||||
Investing activities | (111,173) | (39,694) | ||||||||||||
Financing activities | (8,277) | 615,120 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | $ | (65,909) | $ | 647,129 |
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: April 27, 2022 | By: | /s/ H. Lynn Moore, Jr. | ||||||||||||
H. Lynn Moore, Jr. | ||||||||||||||
President and Chief Executive Officer |
Date: April 27, 2022 | By: | /s/ Brian K. Miller | ||||||||||||
Brian K. Miller | ||||||||||||||
Executive Vice President and Chief Financial Officer |
Date: April 27, 2022 | By: | /s/ H. Lynn Moore, Jr. | ||||||||||||
H. Lynn Moore, Jr. | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
Date: April 27, 2022 | By: | /s/ Brian K. Miller | ||||||||||||
Brian K. Miller | ||||||||||||||
Executive Vice President and Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 39,984,000 | $ 36,976,000 |
Securities available-for-sale and transferred securities: | ||
Change in net unrealized holding losses on available-for-sale securities during the period | (629,000) | 0 |
Reclassification adjustment of unrealized losses on securities transferred from held-to-maturity | (27,000) | 0 |
Reclassification adjustment for net gain on sale of available-for-sale securities, included in net income | (41,000) | 0 |
Other comprehensive income (loss) | (697,000) | 0 |
Comprehensive income | $ 39,287,000 | $ 36,976,000 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
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Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 13,965 | $ 12,086 |
Preferred stock, par value (in usd per share) | $ 10.00 | $ 10.00 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 48,147,969 | 48,147,969 |
Common stock, shares outstanding (in shares) | 48,147,969 | 48,147,969 |
Treasury stock (in shares) | 6,696,638 | 6,832,640 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2022 | |
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 March 31, 2022, and December 31, 2021, and operating result amounts are for the three months ended March 31, 2022, and 2021, 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, 2021. 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). During the three months ended March 31, 2022, we had approximately $697,000 of other comprehensive loss, net of taxes, from our available-for-sale investment holdings and no items of other comprehensive income (loss) during the three months ended March 31, 2021.
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Accounting Standards and Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2022 | |
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, 2022, adoption of ASU 2021-08 - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASC 805)(“ASU 2021-08”), 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, 2021, filed with the SEC on February 23, 2022, that have had a material impact on our condensed consolidated financial statements and related notes. See Recently Adopted Accounting Pronouncements below. 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 those services are highly interdependent or interrelated to the product’s functionality. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price (“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 transaction-based revenues from digital government services and online payments, 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 15 - “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 March 31, 2022, and December 31, 2021, total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $515.9 million and $535.0 million, respectively. We have recorded unbilled receivables of $129.5 million and $140.3 million at March 31, 2022 and December 31, 2021, respectively. Included in unbilled receivables are retention receivables of $8.0 million and $7.7 million at March 31, 2022 and December 31, 2021, 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 $14.0 million and $12.1 million at March 31, 2022, and December 31, 2021, 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 rarely experience credit losses with our clients, we have not recorded a material reserve for credit losses. 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. When testing goodwill for impairment quantitatively, we first compare the fair value of each reporting unit with its carrying amount. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. The fair values calculated in our impairment tests are determined using discounted cash flow models involving several assumptions (Level 3 inputs). The assumptions that are used are based upon what we believe a hypothetical marketplace participant would use in estimating fair value. We base our fair value estimates on assumptions we believe to be reasonable but are inherently uncertain. 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. 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 a worsening of expected impact of COVID-19, 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. We performed our annual assessment during the fourth quarter 2021, in which our impairment analysis did not result in an impairment charge. Since our assessment and through March 31, 2022, we have had no triggering events or change in circumstances indicating any potential impairment. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTSIn October 2021, the FASB issued ASU 2021-08 - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASC 805)(“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. Under this "Topic 606 approach," the acquirer applies the revenue model as if it had originated the contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at fair value. ASU 2021-08 is effective for all public business entities in annual and interim periods starting after December 15, 2022, and early adoption is permitted. An entity that early adopts should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. We early adopted as of January 1, 2022. The adoption of ASU 2021-08 resulted in no adjustments to the fair value of the deferred revenue balances assumed in our US eDirect acquisition, completed on February 8, 2022. See Note 3, “Acquisitions,” for further discussion.
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Acquisitions |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions On February 8, 2022, we acquired US eDirect Inc. (US eDirect), a market-leading provider of technology solutions for campground and outdoor recreation management. The total purchase price, net of cash acquired of $6.4 million, was approximately $116.7 million, consisting of $117.6 million paid in cash, and approximately $5.5 million related to indemnity holdbacks, subject to certain post-closing adjustments. We have performed a preliminary valuation analysis of the fair market value of US eDirect's assets and liabilities. The following table summarized the preliminary allocation of the purchase price as of the acquisition date:
In connection with this transaction, we acquired total tangible assets of $9.5 million and assumed liabilities of approximately $3.7 million. We recorded goodwill of approximately $81.2 million, none of which is expected to be deductible for tax purposes, and other identifiable intangible assets of approximately $48.0 million. The identifiable intangible assets are attributable to customer relationships, acquired software, trade name and will be amortized over a weighted average period of approximately 16 years. We recorded net deferred tax liabilities of $11.9 million related to the tax effect of our estimated fair value allocations. The goodwill of approximately $81.2 million 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 operating results of US eDirect are included with the operating results of the Platform Technologies segment since its date of acquisition. The impact of the US eDirect acquisition on our operating results, assets and liabilities is not material. For the three months ended March 31, 2022, we incurred fees of approximately $1.0 million for financial advisory, legal, accounting, due diligence, valuation, and other various services necessary to complete acquisitions. These costs were expensed in 2022 and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. As of March 31, 2022, the purchase price allocation for US eDirect is not final; therefore, certain preliminary valuation estimates of fair value assumed at the acquisition date for intangible assets, receivables, and related deferred taxes are subject to change as valuations are finalized. Our balance sheet as of March 31, 2022, reflects the allocation of the purchase price to the net assets acquired based on their estimated fair value at the date of the acquisition. The fair value of the assets and liabilities acquired are based on valuations using Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following unaudited pro forma consolidated operating results information has been prepared as if the acquisition of US eDirect had occurred on January 1, 2021, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs, and tax effects.
The pro forma information above 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.
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Debt | Debt The following table summarizes our total outstanding borrowings related to the 2021 Credit Agreement and Convertible Senior Notes:
2021 Credit Agreement In connection with the completion of the acquisition of NIC on April 21, 2021, we, 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 1.5%. 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 0.3% based upon the Company’s total net leverage ratio. 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 March 31, 2022, we were in compliance with those covenants. As of March 31, 2022, we had no outstanding borrowings under the 2021 Revolving Credit Facility, and our available borrowing capacity was $500.0 million. In addition, as of March 31, 2022, we had one outstanding standalone letter of credit totaling $2.0 million. The letter of credit, which guarantees our performance under a client contract, renews automatically annually unless canceled in writing, and expires in the third quarter of 2026. Convertible Senior Notes due 2026 On March 9, 2021, we issued 0.25% Convertible Senior Notes due 2026 in the aggregate principal amount of $600.0 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); •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 March 31, 2022, 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. Effective Interest The effective interest rate for the borrowings under the 2021 Credit Agreement and the Convertible Senior Notes is 1.95% and 0.54%, respectively, as of March 31, 2022. The following sets forth the interest expense recognized related to the borrowings under the 2021 Credit Agreement and Convertible Senior Notes and is included in interest expense in the accompanying condensed consolidated statements of income:
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Financial Instruments |
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Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments The following table presents our financial instruments:
Cash and cash equivalents consist primarily of money market funds with original maturity dates of three months or less, for which we determine fair value through quoted market prices. Our available-for-sale securities were historically classified as held-to-maturity. During the fourth quarter of 2021, management determined that our investment portfolio would be transferred from held-to-maturity to available-for-sale, in order to have the flexibility to buy and sell investments and maximize cash liquidity for potential acquisitions or for debt repayments. Subsequently, our investment portfolio is now classified as available-for-sale as of March 31, 2022. Our available-for-sale investments primarily consist of investment grade corporate bonds, municipal bonds, and asset-backed securities with maturity dates through 2027. These investments are presented at fair value and are included in short-term investments and non-current investments in the accompanying condensed consolidated balance sheets. Unrealized gains or losses associated with the investments are included in accumulated other comprehensive loss, net of tax in the accompanying condensed consolidated balance sheets and statements of comprehensive income. For our available-for-sale investments, we do not have the intent to sell, nor is it more likely than not that we would be required to sell before recovery of their cost basis. As of March 31, 2022, we have an accrued interest receivable balance of approximately $511,000 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 or at the time of sale 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 months ended March 31, 2022, we have recorded no credit losses for accrued interest receivables. Interest income and amortization of discounts and premiums are included in other income, net in the accompanying condensed consolidated statements of income. The following table presents the components of our available-for-sale investments:
As of March 31, 2022, we have $50.2 million of available-for-sale debt securities with contractual maturities of one year or less and $29.1 million with contractual maturities great than one year. The following table presents the activity on our available-for-sale investments:
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Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income | Other Comprehensive Income The following table presents the changes in the balances of accumulated other comprehensive loss, net of tax by component:
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Fair Value |
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Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability. Guidance on fair value measurements and disclosures establishes a valuation hierarchy for disclosure of inputs used in measuring fair value defined as follows: •Level 1—Inputs are unadjusted quoted prices that are available in active markets for identical assets or liabilities. •Level 2—Inputs include quoted prices for similar assets and liabilities in active markets and quoted prices in non-active markets, inputs other than quoted prices that are observable, and inputs that are not directly observable, but are corroborated by observable market data. •Level 3—Inputs that are unobservable and are supported by little or no market activity and reflect the use of significant management judgment. The classification of a financial asset or liability within the hierarchy is determined based on the least reliable level of input that is significant to the fair value measurement. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We also consider the counterparty and our own non-performance risk in our assessment of fair value. The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of March 31, 2022:
Assets that are Measured at Fair Value on a Recurring Basis Cash and cash equivalents, accounts receivable, accounts payable, short-term obligations, and certain other assets at cost approximate fair value because of the short maturity of these instruments. As of March 31, 2022, we have $79.3 million in available-for-sale investment grade corporate bonds, municipal bonds and asset-backed securities with maturity dates through 2027. The fair values of these securities are considered Level 2 as they are based on inputs from quoted prices in markets that are not active or other observable market data. Assets that are Measured at Fair Value on a Nonrecurring Basis As of March 31, 2022, we have an 18% interest in BFTR, LLC. Periodically, our equity method investments are assessed for impairment. We do not reassess the fair value of equity 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 in circumstances have occurred during the period that require reassessment. There has been no impairment of our cost method investment for the periods presented. This investment is included in non-current investments and other assets in the accompanying consolidated balance sheets. We assess goodwill for impairment annually on October 1. In addition, we review goodwill, property and equipment, and other intangibles for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During the fourth quarter of 2021, we completed our annual assessment of goodwill which did not result in an impairment charge. Further, we identified no indicators of impairment to long-lived and other assets and therefore, no impairment was recorded as of and for the period ended March 31, 2022. Financial instruments measured at fair value only for disclosure purposes The fair value of our borrowing under our 2021 Credit Agreement would approximate book value as of March 31, 2022, because our interest rates reset approximately every 30 days or less. The carrying amount of the Revolving Credit Facility and Term Loans is the par value less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the terms of the Term Loans. Interest expense is included in the accompanying condensed consolidated statements of income. The fair value of our Convertible Senior Notes due 2026 is determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input. See Note 4, “Debt,” for further discussion. The carrying amount of the Convertible Senior Notes is the par value 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 the accompanying condensed consolidated statements of income. The following table presents the fair value and carrying value, net, of the 2021 Credit Agreement and our Convertible Notes due 2026):
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Income Tax Provision |
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Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax Provision | Income Tax Provision We had an effective income tax rate of 22.3% for the three months ended March 31, 2022, compared to 3.4% for the three months ended March 31, 2021. The increase in the effective tax rate for the three months ended March 31, 2022, as compared to the same period in 2021, was principally driven by a decrease in the excess tax benefits related to stock incentive awards and an increase in reserves for state income tax benefits which are no longer more likely than not to be realized. 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, non-deductible business expenses, and reserves for unrecognized state income tax benefits. The excess tax benefits related to stock incentive awards realized were $3.0 million for the three months ended March 31, 2022, as compared to $8.8 million for the three months ended March 31, 2021. Excluding the excess tax benefits, the effective tax rate was 28.1% for the three months ended March 31, 2022, compared to 26.4% for the three months ended March 31, 2021. We made tax payments of $393,000 and $59,000 in the three months ended March 31, 2022, and 2021, respectively.
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity The following table details activity in our common stock ($ in thousands):
As of March 31, 2022, 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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Share-Based Compensation |
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Share-Based Compensation | Share-Based Compensation 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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Earnings Per Share |
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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 months ended March 31, 2022, and 2021, stock awards, representing the right to purchase common stock of approximately 215,000 shares and 141,000 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 not added back to the numerator, only in the periods in which such effect is dilutive. The approximately 1.2 million remaining resulting common shares related to the Notes are not included in the dilutive weighted-average common shares outstanding calculation for the three months ended March 31, 2022, as their effect would be anti-dilutive given none of the conversion features have been triggered. See Note 4, "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 10 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 March 31, 2022. Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets. The components of operating lease expense were as follows:
Supplemental information related to leases is 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 2022 and 2027, and some have options to extend the lease for up to 10 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 months ended March 31, 2022 totaled $305,000 and for the three months ended March 31, 2021 totaled $294,000. Rental income is included in hardware and other revenue in the condensed consolidated statements of income. As of March 31, 2022, future minimum operating rental income based on contractual agreements is as follows:
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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 10 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 March 31, 2022. Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets. The components of operating lease expense were as follows:
Supplemental information related to leases is 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 2022 and 2027, and some have options to extend the lease for up to 10 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 months ended March 31, 2022 totaled $305,000 and for the three months ended March 31, 2021 totaled $294,000. Rental income is included in hardware and other revenue in the condensed consolidated statements of income. As of March 31, 2022, future minimum operating rental income based on contractual agreements is as follows:
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Commitments and Contingencies |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation 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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Segment and Related Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Related Information | Segment and Related Information We provide integrated information management solutions and services for the public sector. 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; •appraisal and tax software solutions, land and vital records management software solutions, and property appraisal services; •development platform solutions including case management and business management processing; and •NIC digital government and payments solutions. In accordance with ASC 280-10, Segment Reporting, we report our results in two reportable segments. The Enterprise Software ("ES") reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions. The business units presented in the ES reportable segment are the following: 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; and appraisal and tax software solutions, land and vital records management software solutions, and property appraisal services. The Platform Technologies ("PT") reportable segment provides public sector entities with software solutions to perform transaction processing, streamline data processing, and improve operations and workflows. The business units presented in the PT reportable segment are the following: NIC digital government and payments solutions and development platform solutions. 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 loss primarily consists of compensation costs for the executive management team, certain shared services 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, 2022, the appraisal and tax software solutions, land and vital records management software solutions, and property appraisal service business unit, which was previously reported in the Appraisal & Tax ("A&T") reportable segment, was moved to the ES reportable segment and the NIC digital government and payments solutions and development platform solutions moved to the PT reportable segment to reflect changes in the way in which management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. As the result of the changes in our reportable segments, the former A&T and NIC reportable segments are no longer considered separate segments. Prior year amounts for the ES and PT reportable segments have been adjusted to reflect the segment change.
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Disaggregation of Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Disaggregation of Revenue The 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. 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 March 31, 2022, was $1.76 billion, of which we expect to recognize approximately 46% as revenue over the next 12 months and the remainder thereafter. 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 generally to seven years. Deferred commissions were $37.8 million and $38.1 million as of March 31, 2022, and December 31, 2021, respectively. Amortization expense was $3.5 million and $3.0 million for the three months ended March 31, 2022 and 2021, 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.
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Deferred Revenue and Performance Obligations |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue and Performance Obligations | Disaggregation of Revenue The 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. 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 March 31, 2022, was $1.76 billion, of which we expect to recognize approximately 46% as revenue over the next 12 months and the remainder thereafter. 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 generally to seven years. Deferred commissions were $37.8 million and $38.1 million as of March 31, 2022, and December 31, 2021, respectively. Amortization expense was $3.5 million and $3.0 million for the three months ended March 31, 2022 and 2021, 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.
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Deferred Commissions |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Commissions | Disaggregation of Revenue The 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. 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 March 31, 2022, was $1.76 billion, of which we expect to recognize approximately 46% as revenue over the next 12 months and the remainder thereafter. 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 generally to seven years. Deferred commissions were $37.8 million and $38.1 million as of March 31, 2022, and December 31, 2021, respectively. Amortization expense was $3.5 million and $3.0 million for the three months ended March 31, 2022 and 2021, 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.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThere have been no material events or transactions that occurred subsequent to March 31, 2022. |
Accounting Standards and Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
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 those services are highly interdependent or interrelated to the product’s functionality. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price (“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 transaction-based revenues from digital government services and online payments, 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 March 31, 2022, and December 31, 2021, total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $515.9 million and $535.0 million, respectively. We have recorded unbilled receivables of $129.5 million and $140.3 million at March 31, 2022 and December 31, 2021, respectively. Included in unbilled receivables are retention receivables of $8.0 million and $7.7 million at March 31, 2022 and December 31, 2021, 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 $14.0 million and $12.1 million at March 31, 2022, and December 31, 2021, respectively, does not include provisions for credit losses.
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Goodwill | 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. When testing goodwill for impairment quantitatively, we first compare the fair value of each reporting unit with its carrying amount. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. The fair values calculated in our impairment tests are determined using discounted cash flow models involving several assumptions (Level 3 inputs). The assumptions that are used are based upon what we believe a hypothetical marketplace participant would use in estimating fair value. We base our fair value estimates on assumptions we believe to be reasonable but are inherently uncertain. 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. 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 a worsening of expected impact of COVID-19, 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. We performed our annual assessment during the fourth quarter 2021, in which our impairment analysis did not result in an impairment charge. Since our assessment and through March 31, 2022, we have had no triggering events or change in circumstances indicating any potential impairment.
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Recently Adopted/Issued Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTSIn October 2021, the FASB issued ASU 2021-08 - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASC 805)(“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. Under this "Topic 606 approach," the acquirer applies the revenue model as if it had originated the contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at fair value. ASU 2021-08 is effective for all public business entities in annual and interim periods starting after December 15, 2022, and early adoption is permitted. An entity that early adopts should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. We early adopted as of January 1, 2022. The adoption of ASU 2021-08 resulted in no adjustments to the fair value of the deferred revenue balances assumed in our US eDirect acquisition, completed on February 8, 2022. See Note 3, “Acquisitions,” for further discussion. |
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 summarized 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 US eDirect had occurred on January 1, 2021, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs, and tax effects.
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt and related interest | The following table summarizes our total outstanding borrowings related to the 2021 Credit Agreement and Convertible Senior Notes:
The effective interest rate for the borrowings under the 2021 Credit Agreement and the Convertible Senior Notes is 1.95% and 0.54%, respectively, as of March 31, 2022. The following sets forth the interest expense recognized related to the borrowings under the 2021 Credit Agreement and Convertible Senior Notes and is included in interest expense in the accompanying condensed consolidated statements of income:
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Financial Instruments (Tables) |
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Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments | The following table presents our financial instruments:
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Schedule of Unrealized Loss on Investments | The following table presents the components of our available-for-sale investments:
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Schedule of Available-for-sale Activity | The following table presents the activity on our available-for-sale investments:
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Other Comprehensive Income (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive loss | The following table presents the changes in the balances of accumulated other comprehensive loss, net of tax by component:
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Fair Value (Tables) |
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Schedule of fair value, assets and liabilities measured on recurring basis | The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of March 31, 2022:
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Schedule of fair value, by balance sheet grouping | The following table presents the fair value and carrying value, net, of the 2021 Credit Agreement and our Convertible Notes due 2026):
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Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of details activity in our common stock | The following table details activity in our common stock ($ in thousands):
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Share-Based Compensation (Tables) |
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Schedule of share-based compensation expense related to share-based awards | 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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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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Schedule of lease cost | The components of operating lease expense were as follows:
Supplemental information related to leases is 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 future minimum operating rental income | As of March 31, 2022, future minimum operating rental income based on contractual agreements is as follows:
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Segment and Related Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment revenues and operations | As of January 1, 2022, the appraisal and tax software solutions, land and vital records management software solutions, and property appraisal service business unit, which was previously reported in the Appraisal & Tax ("A&T") reportable segment, was moved to the ES reportable segment and the NIC digital government and payments solutions and development platform solutions moved to the PT reportable segment to reflect changes in the way in which management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. As the result of the changes in our reportable segments, the former A&T and NIC reportable segments are no longer considered separate segments. Prior year amounts for the ES and PT reportable 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) |
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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:
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Deferred Revenue and Performance Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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:
|
Basis of Presentation (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Other comprehensive income (loss) | $ (697,000) | $ 0 |
Accounting Standards and Significant Accounting Policies (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle | ||
Accounts receivable, net | $ 515.9 | $ 535.0 |
Allowance for losses | 14.0 | 12.1 |
Unbilled Revenues | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Accounts receivable, net | 129.5 | 140.3 |
Unbilled Revenues | Retention Receivable | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Accounts receivable, net | $ 8.0 | $ 7.7 |
Acquisitions - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Feb. 08, 2022 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Business Acquisition | ||||
Payments to acquire businesses, net of cash | $ 116,698 | $ 12,049 | ||
Goodwill | 2,440,843 | $ 2,359,674 | ||
US eDirect Inc | ||||
Business Acquisition | ||||
Cash acquired from acquisition | $ 6,400 | |||
Business acquisition consideration | 116,700 | |||
Payments to acquire businesses, net of cash | 117,600 | |||
Contingent consideration | 5,500 | |||
Total tangible assets | 9,500 | |||
Liabilities assumed | 3,700 | |||
Goodwill | 81,200 | |||
Identifiable intangible assets acquired | $ 48,000 | |||
Finite-lived intangible asset, useful life (in years) | 16 years | |||
Deferred tax liabilities | $ 11,884 | |||
Financial advisory and legal fees | $ 1,000 |
Acquisitions - Assets and Liabilities Acquired (Details) - US eDirect Inc $ in Thousands |
Feb. 08, 2022
USD ($)
|
---|---|
Business Acquisition | |
Cash | $ 6,361 |
Accounts receivable | 1,584 |
Other current assets | 864 |
Other noncurrent assets | 711 |
Goodwill and identifiable intangible assets | 129,169 |
Accounts payable | (2,003) |
Accrued expenses | (338) |
Other noncurrent liabilities | (742) |
Deferred revenue | (662) |
Deferred tax liabilities, net | (11,884) |
Total consideration | $ 123,059 |
Acquisitions - Pro-forma Information (Details) - US eDirect Inc - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Business Acquisition | ||
Revenues | $ 457,329 | $ 298,412 |
Net income | $ 28,207 | $ 36,019 |
Basic earnings per share (in usd per share) | $ 0.68 | $ 0.89 |
Diluted earnings per share (in usd per share) | $ 0.66 | $ 0.86 |
Debt - Interest expense recognized (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Debt Instrument | ||
Amortization of debt discount and debt issuance costs | $ (1,122) | $ (95) |
Convertible Senior Notes due 2026 | Senior Notes | ||
Debt Instrument | ||
Contractual interest expense | (375) | (83) |
Revolving Credit Facility | ||
Debt Instrument | ||
Total | (4,804) | (178) |
Revolving Credit Facility | Revolving credit facility | ||
Debt Instrument | ||
Contractual interest expense | (313) | 0 |
Revolving Credit Facility | Contractual interest expense - Term Loans | ||
Debt Instrument | ||
Contractual interest expense | $ (2,994) | $ 0 |
Financial Instruments - Financial Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, All Other Investments [Abstract] | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 243,262 | $ 309,171 |
Held-to-maturity investments | 0 | 98,653 |
Available-for-sale investments | 79,315 | 0 |
Equity investments | 10,000 | 10,000 |
Total | $ 332,577 | $ 417,824 |
Financial Instruments - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Investments, All Other Investments [Abstract] | |
Interest receivable | $ 511,000 |
Allowance for credit loss | 0 |
Available for sales debt securities, current | 50,200,000 |
Available for sales debt securities, non-current | $ 29,100,000 |
Financial Instruments - Available-for-sale Investments (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, All Other Investments [Abstract] | ||
Amortized cost | $ 80,250 | $ 0 |
Unrealized gains | 58 | 0 |
Unrealized losses | (993) | 0 |
Available-for-sale investments | $ 79,315 | $ 0 |
Financial Instruments - Net Realized Gains (Losses) on Sales of Our Financial Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Investments, All Other Investments [Abstract] | ||
Proceeds from sales and maturities | $ 22,672 | $ 35,031 |
Realized gains on sales, net of tax | $ 41 | $ 0 |
Fair Value - Narratives (Details) |
Dec. 31, 2020 |
---|---|
BFTR, LLC | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Investment percentage (as a percent) | 18.00% |
Income Tax Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rates (as a percent) | 22.30% | 3.40% |
Excess tax benefit | $ 3,000 | $ 8,800 |
Effective income tax rate excluding excess tax benefit (as a percent) | 28.10% | 26.40% |
Income tax payments | $ 393 | $ 59 |
Shareholders' Equity - Summary of Activities in Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Equity [Abstract] | ||
Purchases of treasury (in shares) | 0 | 0 |
Purchases of treasury shares | $ 0 | $ 0 |
Stock option exercises (in shares) | 50 | 120 |
Stock option exercises | $ 8,045 | $ 18,102 |
Employee stock plan purchases (in shares) | 8 | 8 |
Employee stock plan purchases | $ 3,678 | $ 3,038 |
Restricted stock units vested, net of withheld shares upon award settlement (in shares) | 78 | 56 |
Restricted stock units vested, net of withheld shares upon award settlement | $ (12,587) | $ (8,958) |
Shareholders' Equity - Additional Information (Details) shares in Millions |
Mar. 31, 2022
shares
|
---|---|
Equity [Abstract] | |
Number of shares authorized to be repurchased (in shares) | 2.4 |
Share-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Share-based compensation expense | $ 25,279 | $ 25,724 |
Subscriptions, software services and maintenance | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Share-based compensation expense | 6,772 | 5,000 |
Selling, general and administrative expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ||
Share-based compensation expense | $ 18,507 | $ 20,724 |
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 | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Numerator for basic and diluted earnings per share: | ||
Net income | $ 39,984 | $ 36,976 |
Net income | $ 39,984 | $ 36,976 |
Denominator: | ||
Weighted-average basic common shares outstanding (in shares) | 41,364 | 40,611 |
Assumed conversion of dilutive securities: | ||
Stock awards (in shares) | 1,079 | 1,445 |
Convertible Senior Notes (in shares) | 0 | 0 |
Denominator for diluted earnings per share- Adjusted weighted-average shares (in shares) | 42,443 | 42,056 |
Earnings per common share: | ||
Basic (in usd per share) | $ 0.97 | $ 0.91 |
Diluted (in usd per share) | $ 0.94 | $ 0.88 |
Earnings Per Share - Additional Information (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Stock awards | ||
Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per shares (in shares) | 215 | 141 |
Convertible debt securities | ||
Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per shares (in shares) | 1,200 |
Leases - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Lessee, Lease, Description | ||
Operating lease, cost | $ 4,298 | $ 2,634 |
Lessor, operating lease renewal term (in years) | 10 years | |
Rental income | $ 305 | $ 294 |
Minimum | ||
Lessee, Lease, Description | ||
Operating lease term (in years) | 1 year | |
Maximum | ||
Lessee, Lease, Description | ||
Operating lease term (in years) | 10 years |
Leases - Schedule of lease cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Leases [Abstract] | ||
Operating lease cost | $ 3,422 | $ 1,722 |
Short-term lease cost | 506 | 481 |
Variable lease cost | 370 | 431 |
Net lease cost | $ 4,298 | $ 2,634 |
Leases - Schedule of other information related to leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 3,613 | $ 1,829 |
Operating leases | $ 4,980 | $ 2,005 |
Weighted average remaining lease term (years) | 5 years 4 months 24 days | 4 years 7 months 6 days |
Weighted average discount rate | 1.72% | 2.69% |
Leases - Schedule of future minimum operating rental income (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Future Operating Rental Income | |
2022 | $ 1,332 |
2023 | 1,858 |
2024 | 1,898 |
2025 | 1,363 |
2026 | 408 |
Thereafter | 130 |
Total | $ 6,989 |
Commitments and Contingencies (Details) |
Mar. 31, 2022
legalMatter
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Number of material legal proceedings pending | 0 |
Segment and Related Information - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022
business
segment
| |
Segment Reporting [Abstract] | |
Number of business units | business | 7 |
Number of reportable segment | segment | 2 |
Segment and Related Information - Reconciliation of Operating Income from Segments to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Segment Reporting Information | ||
Total segment operating income | $ 55,868 | $ 38,208 |
Amortization of acquired software | (263,690) | (150,595) |
Amortization of customer and trade name intangibles | (14,714) | (5,412) |
Interest expense | (4,804) | (478) |
Other income, net | 364 | 566 |
Income before income taxes | 51,428 | 38,296 |
Amortization of acquired software | ||
Segment Reporting Information | ||
Amortization of acquired software | (13,221) | (7,964) |
Operating segment and corporate non-segment | ||
Segment Reporting Information | ||
Total segment operating income | $ 83,803 | $ 51,584 |
Disaggregation of Revenue - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Minimum | |
Disaggregation of Revenue | |
Contract term (in years) | 1 year |
Typical contract term (in years) | 3 years |
Maximum | |
Disaggregation of Revenue | |
Contract term (in years) | 10 years |
Typical contract term (in years) | 5 years |
Deferred Revenue and Performance Obligations - Deferred Revenue (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Disaggregation of Revenue | |
Deferred revenue | $ 454,678 |
Contract With Customer Liability | |
Beginning balance | 510,567 |
Deferral of revenue | 240,335 |
Recognition of deferred revenue | (296,224) |
Ending balance | 454,678 |
Corporate | |
Disaggregation of Revenue | |
Deferred revenue | 5,794 |
Contract With Customer Liability | |
Beginning balance | 1,814 |
Ending balance | 5,794 |
Enterprise Software | Operating segments | |
Disaggregation of Revenue | |
Deferred revenue | 420,830 |
Contract With Customer Liability | |
Beginning balance | 479,048 |
Ending balance | 420,830 |
Platform Technologies | Operating segments | |
Disaggregation of Revenue | |
Deferred revenue | 28,054 |
Contract With Customer Liability | |
Beginning balance | 29,705 |
Ending balance | $ 28,054 |
Deferred Revenue and Performance Obligations - Additional Information (Details) $ in Millions |
Mar. 31, 2022
USD ($)
|
---|---|
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligations | $ 1,760 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, remaining performance obligation (as a percent) | 46.00% |
Expected timing of satisfaction period (in years) | 12 months |
Deferred Commissions (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Capitalized Contract Cost | |||
Deferred commissions | $ 37,800,000 | $ 38,100,000 | |
Deferred commissions amortization | 3,500,000 | $ 3,000,000 | |
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 |
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