Benzinga | Feb 10, 2021 09:48AM EST

Tyler Misses On Q4 Earnings, Sets To Acquire NIC For $2.3B In Cash

* Tyler Technologies, Inc. (NYSE: TYL) will acquire digital government solutions and payments company NIC Inc. (NASDAQ: EGOV) for $2.3 billion in cash. The purchase price of $34 per share represents a 14% premium to NIC's last closing price.

* Tyler intends to utilize a combination of $700 million of cash and new debt to finance the acquisition. It has a $1.6 billion bridge facility with Goldman Sachs Bank USA and intends to replace it with permanent financing before closing.

* The acquisition is estimated to be accretive to Tyler's earnings, EBITDA, recurring revenue mix, and free cash flow per share in 2021.

* The transaction is expected to close in the second quarter of 2021.

* NIC's fourth-quarter revenue rose 62% year-on-year to $141.2 million, supported by its COVID-19 testing solution TourHealth with Impact Health, NEXT Marketing, and pandemic unemployment services provided to the Commonwealth of Virginia.

* Net income and EPS rose 79% and 73% to $17.8 million and $0.26, respectively.

* Tyler's fourth-quarter revenue declined 1.9% to $283.3 million as organic revenue declined 2.1%, missing the consensus estimate of $291.48 million.

* Recurring revenues from maintenance and subscriptions rose 9.5% to $212.4 million, constituting 75% of the total revenue.

* EBITDA rose 1.3% to $83.2 million.

* Net income and EPS rose 0.3% each to $58.3 million and $1.39, respectively, missing analyst EPS estimate of $1.42.

* Operating cash flow rose 16.5% to $88.8 million, and cash and investments stood at $758.5 million as of December 31, 2020.

* Software subscription arrangements constituted 73% of the new software contract value than 54% in the year-ago period.

* Subscription bookings generated $11 million in annual recurring revenue.

* "Software license and service revenues continued to be pressured by longer sales cycles, delays in projects, and the near elimination of billable travel as a result of the COVID-19 pandemic. However, recurring revenues were strong, and subscription revenues grew 17%, marking our 60th consecutive quarter of double-digit subscription revenue growth," said Tyler CEO Lynn Moore.

* Tyler expects revenue between $1.19 billion and $1.22 billion, close to the analyst estimate of $1.2 billion, EPS between $5.65 and $5.77, slightly lower than the consensus estimate of $5.87, R&D expense between $88 million and $90 million, CAPEX between $39 million and $40 million, D&A expense of $81 million for FY21.

* Price action: TYL shares are trading higher by 5.89% at $448.05; EGOV shares rose 15.5% at $34.4 on the last check Wednesday.