Tyler Technologies TYL on Wednesday announced that it has completed the proposed acquisition of NIC Inc., a leading digital government solutions and payments company. The move reflects the company’s strategy to bank on the pandemic-induced shift to online services and electronic payments by governments.
Notably, in February, the company had announced entering into a definitive agreement to acquire NIC in an all-cash transaction worth $2.3 billion. Tyler has funded the acquisition with a combination of approximately $700 million of cash on its balance sheet and a public offering of $1.6-billion aggregate principal amount of convertible senior notes.
The acquisition is anticipated to be accretive to Tyler’s non-GAAP earnings, EBITDA, recurring revenue mix and free cash flow per share in 2021.
Tyler’s growth trajectory in recent years has been driven by acquisitions. Earlier this month, the company announced the acquisition of cloud-based school scheduling platform, ReadySub, to expand and strengthen its school portfolio. The acquisition will help the company bring more comprehensive schooling solutions to its school district clients, by helping them implement all-in-one workflows.
Tyler Technologies, Inc. Price and Consensus
In late March, it acquired DataSpec, a veterans’ claim management software firm, for an undisclosed amount. The acquisition will help Tyler enhance its capabilities and strengthen the firm’s position in the veterans’ benefits management solutions market.
Tyler has a solid balance sheet with ample liquidity position and fewer debt obligations that provide it with the flexibility to pursue growth initiatives, including acquisitions. As of Dec 31, 2020, cash and cash equivalents were $603.7 million compared with $519 million as of Sep 30, 2020. Further, cash flow from operations was $88.8 million. Markedly, the company has been able to regularly increase its cash flow from operations in the last five years.
Tyler is anticipated to pursue more acquisitions that will strategically fit to its current offerings. Along with investments in research & development (R&D), acquisitions are likely to fortify its product offerings and clientele over the long run.
In 2019, the company acquired certain assets of Courthouse Technologies, MicroPact and Civic. The buyouts expanded the company’s footprint in the SaaS-based jury-management system, case management and business process management. MicroPact contributed $63 million to revenues in 2019.
Tyler currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are NVIDIA NVDA, Micron Technology MU and Texas Instruments Incorporated TXN. While NVIDIA and Micron sport a Zacks Rank #1 (Strong Buy), Dropbox carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for NVIDIA, Micron and Texas Instruments is currently pegged at 15% 15.7% and 9.3%, respectively.
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