Yahoo Finance Tyler (TYL) Expands Partnership With Arizona Supreme Court
Tyler’s TYL shares jumped 21.7% in the year-to-date period against the Zacks Business - Software Services industry’s decline of 0.6% in the same time frame. This indicates the confidence of investors in the company’s persistent client wins and strong financials.
Recently, Tyler and the Arizona Supreme Court have signed an agreement on extending the use of TYL’s Enterprise Supervision solution for juvenile probation. This agreement builds on the previous collaboration in which these two entities are working on streamlining adult probation. The new agreement will enable the Arizona Supreme Court to expand the use of this solution across all 15 counties.
Through this deal, the Arizona Supreme Court will replace its existing legacy case management system (CMS) with Tyler’s commercial CMS, which uses the latest cloud technology of Amazon’s AMZN Amazon Web Services (“AWS”).
The Enterprises Supervision solution is deployed to streamline the probation process by simplifying coordination, enabling better communication and implementing tracking. The solution will track cases, monitor finances, automate client check-ins and create detailed reports.
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Positive Industry Trends
The public sector's growing dependence on technology to enhance efficiency and service delivery bodes well for Tyler. Public sector agencies and government bodies at all levels are investing in digital transformation initiatives, which include improving cybersecurity modernizing legacy systems, and adopting cloud-based solutions. Tyler is well positioned to benefit from these industry trends as a trusted partner to the public sector.
TYL is also leveraging its partnership with Microsoft MSFT and Amazon’s AWS and implementing their offerings to deliver its solutions.
TYL has collaborated with Microsoft to develop core public sector functionality in MSFT’s Dynamics 365 for finance and operations. The company recently signed an extended collaboration agreement with its long-standing partner, Amazon’s AWS, to accelerate the migration of its clients from on-premise to the cloud ecosystem.
A robust demand environment, along with its sustained focus on expanding its market presence and enhancing partnerships, is driving Tyler’s financial performance. In the first quarter of 2024, its revenues and non-GAAP EPS jumped 8.6% and 25%, respectively, on a year-over-year basis.
The Zacks Consensus Estimate for TYL’s 2024 earnings has been revised upward by 4 cents to $9.19 per share, indicating growth of 17.8% year over year. The consensus mark for revenues is pegged at $2.12 billion, indicating 8.8% year-over-year growth.
The long-term expected earnings growth rate is 15%, significantly higher than the industry average of 10.2%. Tyler’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 6.7%.
Near-Term Headwinds
Tyler faces near-term challenges, such as delayed procurement processes and lengthening sales cycles, caused by ongoing macroeconomic uncertainties. Many of its customers are wary of a probable economic slowdown which is evident from their low budget allocation for digital transformation.
TYL faces tough competition from industry leaders like Oracle ORCL and SAP across various market spaces. These include Public Sector Cloud, PeopleSoft ERP solution, JD Edwards by Oracle and S/4HANA, SuccessFactors, Ariba, Analytics Cloud and Integrated Business Planning by SAP.
The competition from Oracle and SAP forces TYL to continuously invest in research and development. Moreover, the rising competition keeps Tyler’s product pricing under pressure, affecting its gross margin.
Conclusion
The new agreement with the Arizona Supreme Court adds to the continuous flow of this Zacks Rank #2 (Buy) company’s growing client base, adding to its top line. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Despite near-term macroeconomic headwinds and consistent competitive pressure, Tyler is continuously expanding its market presence and rolling out innovative solutions to grow its public sector customer base. Moreover, its partnership with big companies like Microsoft and Amazon is an upside that gives investors confidence in its prospects.
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