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Tyler (TYL) Expands Production With Kingston Springs Facility

Zacks Equity Research
·3-min read

Tyler TYL shares have climbed 16.7% year to date against the Zacks Business - Software Services industry’s decline of 1.3%. TYL is gaining from the adoption of digital technologies by public sector bodies and governments throughout the United States.

To support its ongoing projects of bringing digital transformation in the public sector and governance, Tyler recently launched a new manufacturing facility in Kingston Springs, TN, to support the growth of its Enterprise Corrections software.

In its Kingston Springs facility, TYL will produce correctional-grade kiosks, tablets, charging solutions, handheld mobile devices and mobile carts that support its Enterprise Corrections software.

The new production facility will contribute to Tyler’s growing need to support its operations in more than 500 correctional facilities across 32 states. Moreover, this new manufacturing unit will also aid TYL in maintaining more than 19,000 floor and mobile kiosks, handheld mobile devices, kiosks, tablets, routers and servers that are already there in various correctional facilities.

Tyler Technologies, Inc. Price and Consensus

Tyler Technologies, Inc. price-consensus-chart | Tyler Technologies, Inc. Quote

Tyler Benefits From Expanding Clientele

So far in 2024, Tyler has gained two major correctional facilities as its clients. It has strengthened the U.S. legal system by working with the Florida Department of Corrections (“FDC”) and the Guam Department of Corrections.

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Tyler helped FDC by modernizing many of its paper-based processes and deploying the entire ecosystem in Amazon’s AMZN Amazon Web Services. The Guam Department of Correction, on the other hand, deployed TYL’s Enterprise Supervision solution.

The company has deployed most of the solutions through the Amazon cloud ecosystem to future-proof these facilities. The two companies recently signed an extended collaboration agreement to accelerate the migration of their clients from on-premise to the cloud ecosystem.

Economic Volatility and Competition Affect TYL

Tyler faces near-term challenges, including delayed procurement processes and lengthening sales cycles, caused by the ongoing macroeconomic volatility.

Many of its customers are wary of a probable economic slowdown that shows in their low budget allocation for digital transformation.

Tyler competes with the industry leaders like Oracle ORCL and SAP SAP globally across various markets. 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

Although Tyler faces near-term macroeconomic headwinds and consistent competitive pressure from its peers, the company is continuously rolling out innovative solutions to grow its public sector customer base. It has also successfully expanded its customer base.

Moreover, its partnership with big companies like Amazon is also an upside that gives investors confidence in its future prospects. The Zacks Consensus Estimate of Tyler’s current quarter’s earnings has been revised upward from $2.33 to $2.34 in the past 60 days. The Zacks Consensus Estimate for TYL’s fiscal 2024 earnings has been revised upward from $9.15 to $9.19 in the past 60 days.

For fiscal 2024, TYL expects revenues in the range of $2.110-$2.140 billion. The Zacks Consensus Estimate for the same is pegged at $2.12 billion, indicating year-over-year growth of 8.8%.

At present, Tyler carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

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Zacks Investment Research