Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 08, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | TYL | |
Entity Registrant Name | TYLER TECHNOLOGIES INC | |
Entity Central Index Key | 860,731 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 38,287,263 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Software licenses and royalties | $ 22,776 | $ 21,758 |
Subscriptions | 49,028 | 39,862 |
Software services | 45,939 | 42,496 |
Maintenance | 93,897 | 86,307 |
Appraisal services | 5,394 | 6,612 |
Hardware and other | 4,140 | 2,694 |
Total revenues | 221,174 | 199,729 |
Cost of revenues: | ||
Software licenses and royalties | 778 | 731 |
Acquired software | 5,382 | 5,410 |
Software services, maintenance and subscriptions | 106,085 | 93,540 |
Appraisal services | 3,781 | 4,197 |
Hardware and other | 2,343 | 1,316 |
Total cost of revenues | 118,369 | 105,194 |
Gross profit | 102,805 | 94,535 |
Selling, general and administrative expenses | 47,604 | 42,780 |
Research and development expense | 13,048 | 11,599 |
Amortization of customer and trade name intangibles | 3,315 | 3,325 |
Operating income | 38,838 | 36,831 |
Other income (expense), net | 599 | (190) |
Income before income taxes | 39,437 | 36,641 |
Income tax provision | 1,612 | 3,872 |
Net income | $ 37,825 | $ 32,769 |
Earnings per common share: | ||
Basic (USD per share) | $ 1 | $ 0.89 |
Diluted (USD per share) | $ 0.95 | $ 0.84 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 210,616 | $ 185,926 |
Accounts receivable (less allowance for losses of $4,780 in 2018 and $5,427 in 2017) | 216,516 | 246,188 |
Short-term investments | 65,858 | 43,159 |
Prepaid expenses | 30,262 | 32,206 |
Income tax receivable | 7,286 | 11,339 |
Other current assets | 2,098 | 1,997 |
Total current assets | 532,636 | 520,815 |
Accounts receivable, long-term | 11,550 | 12,107 |
Property and equipment, net | 154,254 | 152,315 |
Other assets: | ||
Goodwill | 657,727 | 657,987 |
Other intangibles, net | 221,069 | 229,617 |
Non-current investments and other assets | 48,388 | 38,510 |
Total assets | 1,625,624 | 1,611,351 |
Current liabilities: | ||
Accounts payable | 6,421 | 8,174 |
Accrued liabilities | 44,996 | 64,675 |
Deferred revenue | 268,132 | 298,613 |
Total current liabilities | 319,549 | 371,462 |
Deferred revenue, long-term | 641 | 1,274 |
Deferred income taxes | 44,220 | 46,879 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock, $10.00 par value; 1,000,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value; 100,000,000 shares authorized; 48,147,969 shares issued and outstanding as of March 31, 2018 and December 31, 2017 | 481 | 481 |
Additional paid-in capital | 652,909 | 626,867 |
Accumulated other comprehensive loss, net of tax | (46) | (46) |
Retained earnings | 662,288 | 624,463 |
Treasury stock, at cost; 9,900,041 and 10,262,182 shares in 2018 and 2017, respectively | (54,418) | (60,029) |
Total shareholders' equity | 1,261,214 | 1,191,736 |
Total liabilities and shareholders' equity | $ 1,625,624 | $ 1,611,351 |
CONDENSED CONSOLIDATED BALANCE4
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for losses | $ 4,780 | $ 5,427 |
Preferred stock, par value (usd per share) | $ 10 | $ 10 |
Preferred stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 48,147,969 | 48,147,969 |
Common stock, shares outstanding (shares) | 48,147,969 | 48,147,969 |
Treasury stock, shares (shares) | 9,900,041 | 10,262,182 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 37,825 | $ 32,769 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 14,112 | 12,967 |
Share-based compensation expense | 10,557 | 8,676 |
Deferred income tax (benefit) | (2,658) | (3,870) |
Changes in operating assets and liabilities, exclusive of effects of acquired companies: | ||
Accounts receivable | 30,227 | 37,542 |
Income taxes | 4,053 | 7,576 |
Prepaid expenses and other current assets | 1,333 | (919) |
Accounts payable | (1,752) | (1,166) |
Accrued liabilities | (17,952) | (15,939) |
Deferred revenue | (31,114) | (29,457) |
Net cash provided by operating activities | 44,631 | 48,179 |
Cash flows from investing activities: | ||
Additions to property and equipment | (8,895) | (19,820) |
Purchase of marketable security investments | (43,962) | (7,128) |
Proceeds from marketable security investments | 11,077 | 6,896 |
Decrease (increase) in other | 743 | (16) |
Net cash used by investing activities | (41,037) | (20,068) |
Cash flows from financing activities: | ||
Decrease in net borrowings on revolving line of credit | 0 | (10,000) |
Purchase of treasury shares | 0 | (7,032) |
Proceeds from exercise of stock options | 19,298 | 14,851 |
Contributions from employee stock purchase plan | 1,798 | 1,650 |
Net cash provided (used) by financing activities | 21,096 | (531) |
Net increase in cash and cash equivalents | 24,690 | 27,580 |
Cash and cash equivalents at beginning of period | 185,926 | 36,151 |
Cash and cash equivalents at end of period | $ 210,616 | $ 63,731 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 , and December 31, 2017 , and operating result amounts are for the three months ended March 31, 2018 , and 2017 , 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, 2017 . 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. 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). We had no items of other comprehensive income (loss) for the three months ended March 31, 2018 and 2017 . Effective January 1, 2018, we adopted the requirements of Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, utilizing the full retrospective approach as discussed in Note 2 - Accounting Standards and Significant Accounting Policies. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standard, as indicated by the "as adjusted" footnote. |
Accounting Standards and Signif
Accounting Standards and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Accounting Standards and Significant Accounting Policies | Accounting Standards and Significant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Except for the accounting policies for revenue recognition and deferred commissions that were adjusted as a result of adopting ASU No. 2014-09, 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, 2017, filed with the SEC on February 22, 2018, that have had a material impact on our condensed consolidated financial statements and related notes. USE OF ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“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, and 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 and estimated useful lives of intangible assets; 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 provide integrated software systems and related services for the public sector, with a focus on local governments. We develop and market a broad line of software solutions and services to address the information technology (“IT”) needs of cities, counties, schools and other local government entities. In addition, we provide professional IT services, including software and hardware installation, data conversion, training, and for certain customers, product modifications, along with continuing maintenance and support for customers using our systems. We also provide subscription-based services such as software as a service (“SaaS”) arrangements, which utilize the Tyler private cloud, and electronic document filing solutions (“e-filing”). In addition, we provide property appraisal outsourcing services for taxing jurisdictions. 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) and post-contract support (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 essential 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. Software Arrangements: Software Licenses and Royalties Many of our software arrangements involve “off-the-shelf” software. We recognize the revenue allocable to "off the shelf" software licenses and specified upgrades at a point in time when control of the software license transfers to the customer, unless the software is not considered distinct. We consider off-the-shelf software to be distinct when it can be added to an arrangement with minor changes in the underlying code, it can be used by the customer for the customer’s purpose upon installation and remaining services such as training are not considered essential to the product's functionality. For arrangements that involve significant production, modification or customization of the software, or where software services are otherwise not considered distinct, we recognize revenue over time by measuring progress-to-completion. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended 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. Software license fees are billed in accordance with the contract terms. Typically a majority of the fee is due when access to the software license is made available to the customer and the remainder of the fee due over a passage of time stipulated by the contract. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. We recognize royalty revenue when earned under the terms of our third-party royalty arrangements. Currently, our third-party royalties are recognized at a point in time based on an estimated basis and trued up when we receive notice of amounts earned. Typically, we receive notice of royalty revenues earned and billed on a quarterly basis in the quarter immediately following the royalty reporting period. Software Services As noted above, some of our software arrangements include services considered essential or require significant customization to meet the customer's desired functionality. For these software arrangements, both the software licenses and related software services revenue are not distinct and are recognized over time using the progress-to-completion method. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. When software services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material basis. Post-Contract Customer Support Our customers generally enter into PCS agreements when they purchase our software licenses. PCS includes telephone support, bug fixes, and rights to upgrades on a when-and-if available basis. PCS is considered distinct when purchased with our software licenses. Our PCS agreements are typically renewable annually. PCS is recognized over time on a straight-line basis over the period the PCS is provided. All significant costs and expenses associated with PCS are expensed as incurred. Computer Hardware Equipment Revenue allocable to computer hardware equipment is recognized at a point in time when control of the equipment is transferred to the customer. Subscription-Based Services: Subscription-based services consist of revenues derived from SaaS arrangements, which utilize the Tyler private cloud, and electronic filing transactions. Revenue from subscription-based services is generally recognized over time on a ratable basis over the contract term, beginning on the date that our service is made available to the customer. Our subscription contracts are generally three to five years or longer in length, billed annually in advance, and non-cancelable. For SaaS arrangements, we evaluate whether the customer has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the customer can feasibly maintain the software on the customer’s hardware or enter into another arrangement with a third-party to host the software. We allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated SSP. When it is determined that software is distinct and the customer has the ability to take control of the software, we recognize revenue allocable to the software license fee when access to the software license is made available to the customer. We recognize hosting services ratably over the term of the arrangement, which range from one to ten years but are typically for a period of three to five years. For software and software services associated with SaaS arrangements that are not distinct or are contingent on the transfer of other performance obligations, we recognize the revenue ratably over the remaining contractual period once we have provided the customer access to the software. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. Electronic filing transaction fees primarily pertain to documents filed with the courts by attorneys and other third-parties via our e-filing services and retrieval of filed documents via our access services. For each document filed with a court, the filer generally pays a transaction fee and a court filing fee to us and we remit a portion of the transaction fee and the filing fee to the court. We record as revenue the transaction fee, while the portion of the transaction fee remitted to the courts is recorded as cost of sales as we are acting as a principal in the arrangement. Court filing fees collected on behalf of the courts and remitted to the courts are recorded on a net basis and thus do not affect the statement of comprehensive income. For e-filing transaction fees, we have the right to charge the customer in 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. Costs of performing services under subscription-based arrangements are expensed as incurred, except for certain direct and incremental contract origination and set-up costs associated with SaaS arrangements. Such direct and incremental costs are capitalized and amortized ratably over the useful life. Appraisal Services: For our property appraisal projects, we recognize revenue using the progress-to-completion method of revenue recognition since many of these projects are implemented over one to three -year periods and consist of various unique activities. Appraisal services require a significant level of integration and interdependency with various individual service components; therefore the service components are not considered distinct. Appraisal services are recognized over time by measuring progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended 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. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. Significant Judgments: Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement (traditional 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 service 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 to recognize revenue from these arrangements. 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. 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 11 - 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 doubtful accounts 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 a 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. We maintain allowances for doubtful accounts, which are provided at the time the revenue is recognized. Since most of our customers are domestic governmental entities, we rarely incur a loss resulting from the inability of a customer to make required payments. Events or changes in circumstances that indicate that the carrying amount for the allowances for doubtful accounts may require revision, include, but are not limited to, deterioration of a customer’s financial condition, failure to manage our customer’s expectations regarding the scope of the services to be delivered, and defects or errors in new versions or enhancements of our software products. The following table summarizes the changes in the allowances for doubtful accounts: March 31, 2018 Balance, beginning of period December 31, 2017 $ 5,427 Provisions for losses - accounts receivable 320 Deductions for accounts charged off or credits issued (967 ) Balance, end of period $ 4,780 The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. In connection with our appraisal service contracts and certain software service contracts, we may perform work prior to when the software and services are billable and/or payable pursuant to the contract. Unbilled revenue is not billable at the balance sheet date but is recoverable over the remaining life of the contract through billings made in accordance with contractual agreements. The termination clauses in most of our contracts provide for the payment for the value of products delivered or services performed in the event of early termination. We have historically recorded such unbilled receivables (costs and estimated profit in excess of billings) in connection with (1) property appraisal services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing normally occurs subsequently and may span another accounting period; (2) software services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing for the software element of the arrangement may be based upon the specific phase of the implementation; (3) software revenue for which we have recognized revenue at the point in time when the software is made available to the customer but the billing has not yet been submitted to the customer; (4) some of our contracts which provide for an amount to be withheld from a progress billing (generally between 5% and 20% retention) until final and satisfactory project completion is achieved; and (5) in a limited number of cases, extended payment terms, which may be granted to customers with whom we generally have a long-term relationship and favorable collection history. The opening balance of current and long-term accounts receivable, net of allowance for doubtful accounts, was $226.8 million (as adjusted) as of January 1, 2017. As of March 31, 2018 , and December 31, 2017 , total current and long-term accounts receivable, net of allowance for doubtful accounts, was $228.1 million and $258.3 million (as adjusted), respectively. We have recorded unbilled receivables of $77.1 million and $64.6 million (as adjusted) at March 31, 2018 , and December 31, 2017 , respectively. Included in unbilled receivables are retention receivables of $7.9 million and $7.2 million at March 31, 2018 , and December 31, 2017 , 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. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises term licenses that are invoiced annually with revenue recognized upfront. Deferred Revenue The majority of deferred revenue consists of deferred maintenance revenue that has been billed based on contractual terms in the underlying arrangement, with the remaining balance consisting of payments received in advance of revenue being earned under software licensing, subscription-based services, software and appraisal services and hardware installation. Refer to Note 12 - Deferred Revenue and Performance Obligations for further information, including deferred revenue by segment and changes in deferred revenue during the period. Deferred Commissions Sales 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 on a straight-line basis over a period of benefit that we have determined to be three to seven years. We utilized the 'portfolio approach' practical expedient in ASC 606-10-10-4, which allows entities to apply the guidance to a portfolio of contracts with similar characteristics because the effects on the financial statements of this approach would not differ materially from applying the guidance to individual contracts. Using the 'portfolio approach', we determined the period of benefit by taking into consideration our customer contracts, our technology life-cycle and other factors. Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the remaining period of benefit. Deferred commissions have been included with prepaid expenses 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. Refer to Note 4 - Deferred Commissions for further information. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Revenue from Contracts with Customers . In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers . ASU No. 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("Topic 605") , and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. Topic 606 also includes Subtopic 340-40 Other Assets and Deferred Costs - Contracts with Customers , which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, we refer to ASU No. 2014-09 and Subtopic 340-40 as the "new standard." We adopted the requirements of the new standard as of January 1, 2018, utilizing the full retrospective method of transition. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, trade and other receivables, and deferred commissions as detailed below. We applied the new standard using a practical expedient where the consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed. The impact of adopting ASU 2014-09 on our total revenues for 2017 and 2016 was not material. The impact of adopting the new standard on our retained earnings and deferred commissions is material. The most significant impact of the standard relates to our accounting for software license revenue. Specifically, under the new standard, software license fees under perpetual agreements are no longer subject to 100% discount allocations from other performance obligations in the contract. Discounts in arrangements are allocated across all performance obligations increasing license revenues and decreasing revenues allocated to other performance obligations. In addition, in most cases, net license fees (total license fees less any allocated discounts) are recognized at the point in time when control of the software license transfers to the customer versus our legacy policy of recognizing revenue upon delivery and only to the extent billable per the contractual terms. Under the new standard, time-based license fees are no longer recognized over the contractual period of the license and are instead recognized at the point in time when the control of the software license transfers to the customer. Revenues related to our PCS renewals, SaaS offerings and appraisal services remain substantially unchanged. Due to the complexity of certain contracts, the actual revenue recognition treatment required under the new standard is dependent on contract-specific terms and may vary in some instances from recognition at the time of billing. Adoption of the new standard requires that incremental costs directly related to obtaining a contract (typically sales commissions plus any associated fringe benefits) must be recognized as an asset and expensed on a systematic basis that is consistent with the transfer to the customer of the goods and services to which the asset relates, unless that life is less than one year. Prior to adoption of the new standard, we deferred sales commissions and recognized expense over the relevant initial contractual term, which was generally one to two years. Under the new standard, we amortize these costs over a period of benefit that we have determined to be three to seven years. We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of the new standard. Select unaudited condensed consolidated statement of income line items, which reflect the adoption of the new standard, are as follows (in thousands, except per share data): Three Months Ended March 31, 2017 As Reported Adjustments As Adjusted Statement of Income: Revenues: Software licenses and royalties $ 18,223 $ 3,535 $ 21,758 Subscriptions 40,102 (240 ) 39,862 Software services 45,018 (2,522 ) 42,496 Maintenance 86,859 (552 ) 86,307 Appraisal services 6,612 — 6,612 Hardware and other 2,728 (34 ) 2,694 Total revenues $ 199,542 $ 187 $ 199,729 Costs and expenses: Selling, general and administrative expenses $ 43,142 $ (362 ) $ 42,780 Amortization of customer and trade name intangibles 3,458 (133 ) 3,325 Operating income 36,149 682 36,831 Income tax provision 3,653 219 3,872 Net income $ 32,306 $ 463 $ 32,769 Earnings per common share: Basic $ 0.88 $ 0.89 Diluted $ 0.83 $ 0.84 Select condensed consolidated balance sheet line items, which reflect the adoption of the new standard, are as follows (in thousands): December 31, 2017 As Reported Adjustments As Adjusted Balance Sheet: Assets Accounts receivable $ 227,127 $ 19,061 $ 246,188 Prepaid expenses 27,252 4,954 32,206 Accounts receivable, long-term 7,536 4,571 12,107 Other intangibles, net 236,444 (6,827 ) 229,617 Total assets $ 1,589,592 $ 21,759 $ 1,611,351 Liabilities Deferred revenue 309,461 (10,848 ) 298,613 Deferred income taxes 38,914 7,965 46,879 Retained earnings $ 599,821 $ 24,642 $ 624,463 Total liabilities and shareholders' equity $ 1,589,592 $ 21,759 $ 1,611,351 Our adoption of ASU 2014-09 had no impact on our net cash provided by or used in operating, investing or financing activities for any of the periods reported. Recent tax legislation . On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted into law. The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions for businesses and individuals. For businesses, the Tax Act reduces the U.S. corporate federal tax rate from a maximum of 35% to a flat 21% rate and transitions from a worldwide tax system to a territorial tax system. The Tax Act also adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and a tax on global intangible low-taxed income (GILTI). The most significant impact of the Tax Act to us is the reduction in the U.S. federal corporate income tax rate from 35% to 21% in 2017. Refer to Note 7 - Income Tax Provision for further information. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Leases. On February 25, 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases ("Topic 842"). Under the new guidance, lessees will be required to recognize the following for all leases (except for short-term leases) at the commencement date: • A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and • A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Topic 842 is effective for fiscal years beginning after December 15, 2018, including interim periods therein. Early application is permitted for all business entities upon issuance. We are assessing the financial impact of adopting the new standard, however; we are currently unable to provide a reasonable estimate regarding the financial impact. We expect to adopt the new standard in fiscal year 2019. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity The following table details activity in our common stock: Three Months Ended March 31, 2018 2017 Shares Amount Shares Amount Purchases of treasury shares — $ — (42 ) $ (6,171 ) Stock option exercises 350 19,298 324 14,851 Employee stock plan purchases 12 1,798 14 1,650 As of March 31, 2018 , we had authorization from our board of directors to repurchase up to 2.0 million additional shares of Tyler common stock. |
Deferred Commission
Deferred Commission | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Commission | Deferred Commissions Sales 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 on a straight-line basis over a period of benefit that we have determined to be three to seven years. Deferred commissions were $20.2 million and $19.3 million as of March 31, 2018 , and December 31, 2017 , respectively. Amortization expense was $3.5 million and $2.6 million for the three months ended March 31, 2018 , and 2017 , respectively. There was no impairment loss in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses 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. 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: For the three months ended March 31, 2018 Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 19,063 $ 3,713 $ 22,776 Subscriptions — 49,028 49,028 Software services — 45,939 45,939 Maintenance — 93,897 93,897 Appraisal services — 5,394 5,394 Hardware and other 4,140 — 4,140 Total $ 23,203 $ 197,971 $ 221,174 For the three months ended March 31, 2017 As Adjusted Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 17,115 $ 4,643 $ 21,758 Subscriptions — 39,862 39,862 Software services — 42,496 42,496 Maintenance — 86,307 86,307 Appraisal services — 6,612 6,612 Hardware and other 2,694 — 2,694 Total $ 19,809 $ 179,920 $ 199,729 Recurring Revenue The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. 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 one to 10 years, but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories. Recurring revenues and non-recurring revenues recognized during the period are as follows: For the three months ended March 31, 2018 Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 134,496 $ 8,429 $ — $ 142,925 Non-recurring revenues 64,775 13,134 340 78,249 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 119,687 $ 6,482 $ — $ 126,169 Non-recurring revenues 60,949 12,611 — 73,560 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 Deferred Revenue and Performance Obligations Total deferred revenue, including long-term, by segment is as follows: March 31, 2018 December 31, 2017 (As Adjusted) Enterprise Software $ 249,104 $ 277,198 Appraisal and Tax 17,497 20,387 Corporate $ 2,172 $ 2,302 Totals 268,773 299,887 The opening balance of total deferred revenue, including long-term, was $290.1 million (as adjusted) as of January 1, 2017. Changes in total deferred revenue, including long-term, were as follows: March 31, 2018 Balance, beginning of period December 31, 2017 (As Adjusted). $ 299,887 Deferral of revenue 160,881 Recognition of deferred revenue (191,995 ) Balance, end of period $ 268,773 Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represent 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, 2018 was $1.2 billion , of which we expect to recognize approximately 50% as revenue over the next 12 months and the remainder thereafter. |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Cash and cash equivalents consist of cash on deposit with several domestic banks and money market funds. As of March 31, 2018 , we have $96.5 million in investment grade corporate and municipal bonds with maturity dates ranging from 2017 through early 2020 . We intend to hold these bonds to maturity and have classified them as such. We believe cost approximates fair value because of the relatively short duration of these investments. The fair values of these securities are considered Level II as they are based on inputs from quoted prices in markets that are not active or other observable market data. These investments are included in short-term investments and non-current investments and other assets. We have a $15.0 million investment in convertible preferred stock representing a 20% interest in Record Holdings Pty Limited, a privately held Australian company specializing in digitizing the spoken word in court and legal proceedings. The investment in convertible preferred stock is accounted under the cost method because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values. Our investment is carried at cost less any impairment write-downs. Annually, our cost method investments are assessed for impairment. We do not reassess the fair value of cost 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. This investment is included in non-current investments and other assets. |
Revolving Line of Credit
Revolving Line of Credit | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Revolving Line of Credit | Revolving Line of Credit On November 16, 2015, we entered into a $300.0 million credit agreement with various lender parties and Wells Fargo Bank, National Association, as Administrative Agent (the “Credit Facility”). The Credit Facility provides for a revolving credit line up to $300.0 million , including a $10.0 million sublimit for letters of credit. The Credit Facility matures on November 16, 2020 . Borrowings under the Credit Facility may be used for general corporate purposes, including working capital requirements, acquisitions and share repurchases. Borrowings under the Credit Facility bear interest at a rate of either (1) Wells Fargo Bank’s prime rate (subject to certain higher rate determinations) plus a margin of 0.25% to 1.00% or (2) the 30, 60, 90 or 180 day LIBOR rate plus a margin of 1.25% to 2.00% . As of March 31, 2018 , the interest rates were 5.00% under the Wells Fargo Bank's prime rate and 2.50% under a 30-day LIBOR contract. The Credit Facility is secured by substantially all of our assets. The Credit Facility 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, 2018 , we were in compliance with those covenants. As of March 31, 2018 , we had no outstanding borrowings and one outstanding letter of credit totaling $500,000 . Available borrowing capacity under the Credit Facility was $299.5 million . |
Income Tax Provision
Income Tax Provision | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Provision | Income Tax Provision For the three months ended March 31, 2018 , we had an effective income tax rate, as adjusted, of 4.1% compared to 10.6% for the three months ended March 31, 2017 . The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 21% and 35% , respectively, principally due to excess tax benefits related to stock option exercises. The excess tax benefits related to stock option exercises realized was $9.1 million for the three months ended March 31, 2018 , compared to $10.1 million for the three months ended March 31, 2017 . Excluding the excess tax benefits, the effective rate was 27.2% for the three months ended March 31, 2018 , compared to 38.2% (as adjusted) for the three months ended March 31, 2017 . Other differences from our federal statutory income tax rate included state income taxes, non-deductible business expenses, the tax benefit of research tax credits, and in 2017, the tax benefit of the domestic production activities deduction. The decrease in effective tax rate for the three months ended March 31, 2018 as compared to the same period in 2017 was due primarily to the reduction of the U.S. corporate tax rate from 35% to 21% as a result of the Tax Act and the increase in the research tax credit benefit, offset by the elimination of the domestic production activities deduction and the increased limitations on the deduction for executive compensation. In the fourth quarter of 2017, we recorded a $26.0 million (as adjusted under Topic 606) tax benefit due to the remeasurement of deferred tax assets and liabilities at a lower tax rate. As of March 31, 2018 , we have not reported any adjustments to the provisional amounts for the income tax effects of the Tax Act recorded in 2017. However, based on a continued analysis of the estimates and further guidance on the application of the law, it is anticipated that additional revisions may occur throughout the allowable measurement period. Overall, the changes due to the Tax Act will favorably affect income tax expense and future U.S. earnings. We made tax payments of $218,000 and $161,000 in the three months ended March 31, 2018 and 2017 , respectively. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table details the reconciliation of basic earnings per share to diluted earnings per share: Three Months Ended March 31, 2018 2017 As Adjusted Numerator for basic and diluted earnings per share: Net income $ 37,825 $ 32,769 Denominator: Weighted-average basic common shares outstanding 38,002 36,845 Assumed conversion of dilutive securities: Stock options 1,834 2,087 Denominator for diluted earnings per share - Adjusted weighted-average shares 39,836 38,932 Earnings per common share: Basic $ 1.00 $ 0.89 Diluted $ 0.95 $ 0.84 For the three months ended March 31, 2018 , and 2017 , stock options representing the right to purchase common stock of approximately 1,111,000 and 1,160,000 shares were not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The following table summarizes share-based compensation expense related to share-based awards recorded in the statements of income, pursuant to ASC 718, Stock Compensation: Three Months Ended March 31, 2018 2017 Cost of software services, maintenance and subscriptions $ 2,776 $ 2,097 Selling, general and administrative expenses 7,781 6,579 Total share-based compensation expense $ 10,557 $ 8,676 |
Segment and Related Information
Segment and Related Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Related Information | Segment and Related Information We provide integrated information management solutions and services for the public sector, with a focus on local governments. We provide our software systems and services and appraisal services through four 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, and land and vital records management software solutions; • courts and justice and public safety software solutions; and • appraisal and tax software solutions and property appraisal services. In accordance with ASC 280-10, Segment Reporting, the financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions unit; and the courts and justice and public safety software solutions unit meet the criteria for aggregation and are presented in one reportable segment, the Enterprise Software (“ES”) segment. The ES segment provides municipal and county governments and schools with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as financial management and courts and justice processes; public safety; planning, regulatory and maintenance; and land and vital records management. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction. 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. Segment operating income for corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative 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. For the three months ended March 31, 2018 Enterprise Appraisal and Tax Corporate Totals Revenues Software licenses and royalties $ 20,689 $ 2,087 $ — $ 22,776 Subscriptions 46,683 2,345 — 49,028 Software services 40,286 5,653 — 45,939 Maintenance 87,813 6,084 — 93,897 Appraisal services — 5,394 — 5,394 Hardware and other 3,800 — 340 4,140 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 Segment operating income $ 56,615 $ 4,647 $ (13,727 ) $ 47,535 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Revenues Software licenses and royalties $ 20,109 $ 1,649 $ — $ 21,758 Subscriptions 38,073 1,789 — 39,862 Software services 38,146 4,350 — 42,496 Maintenance 81,614 4,693 — 86,307 Appraisal services — 6,612 — 6,612 Hardware and other 2,694 — — 2,694 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 Segment operating income $ 52,488 $ 4,326 $ (11,248 ) $ 45,566 Three months ended March 31, Reconciliation of reportable segment operating income to the Company's consolidated totals: 2018 2017 As Adjusted Total segment operating income $ 47,535 $ 45,566 Amortization of acquired software (5,382 ) (5,410 ) Amortization of customer and trade name intangibles (3,315 ) (3,325 ) Other income (expense), net 599 (190 ) Income before income taxes $ 39,437 $ 36,641 |
Disaggregation of Revenue
Disaggregation of Revenue | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue/Deferred Revenue and Performance Obligations | Deferred Commissions Sales 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 on a straight-line basis over a period of benefit that we have determined to be three to seven years. Deferred commissions were $20.2 million and $19.3 million as of March 31, 2018 , and December 31, 2017 , respectively. Amortization expense was $3.5 million and $2.6 million for the three months ended March 31, 2018 , and 2017 , respectively. There was no impairment loss in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses 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. 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: For the three months ended March 31, 2018 Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 19,063 $ 3,713 $ 22,776 Subscriptions — 49,028 49,028 Software services — 45,939 45,939 Maintenance — 93,897 93,897 Appraisal services — 5,394 5,394 Hardware and other 4,140 — 4,140 Total $ 23,203 $ 197,971 $ 221,174 For the three months ended March 31, 2017 As Adjusted Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 17,115 $ 4,643 $ 21,758 Subscriptions — 39,862 39,862 Software services — 42,496 42,496 Maintenance — 86,307 86,307 Appraisal services — 6,612 6,612 Hardware and other 2,694 — 2,694 Total $ 19,809 $ 179,920 $ 199,729 Recurring Revenue The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. 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 one to 10 years, but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories. Recurring revenues and non-recurring revenues recognized during the period are as follows: For the three months ended March 31, 2018 Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 134,496 $ 8,429 $ — $ 142,925 Non-recurring revenues 64,775 13,134 340 78,249 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 119,687 $ 6,482 $ — $ 126,169 Non-recurring revenues 60,949 12,611 — 73,560 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 Deferred Revenue and Performance Obligations Total deferred revenue, including long-term, by segment is as follows: March 31, 2018 December 31, 2017 (As Adjusted) Enterprise Software $ 249,104 $ 277,198 Appraisal and Tax 17,497 20,387 Corporate $ 2,172 $ 2,302 Totals 268,773 299,887 The opening balance of total deferred revenue, including long-term, was $290.1 million (as adjusted) as of January 1, 2017. Changes in total deferred revenue, including long-term, were as follows: March 31, 2018 Balance, beginning of period December 31, 2017 (As Adjusted). $ 299,887 Deferral of revenue 160,881 Recognition of deferred revenue (191,995 ) Balance, end of period $ 268,773 Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represent 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, 2018 was $1.2 billion , of which we expect to recognize approximately 50% as revenue over the next 12 months and the remainder thereafter. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue/Deferred Revenue and Performance Obligations | Deferred Commissions Sales 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 on a straight-line basis over a period of benefit that we have determined to be three to seven years. Deferred commissions were $20.2 million and $19.3 million as of March 31, 2018 , and December 31, 2017 , respectively. Amortization expense was $3.5 million and $2.6 million for the three months ended March 31, 2018 , and 2017 , respectively. There was no impairment loss in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses 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. 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: For the three months ended March 31, 2018 Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 19,063 $ 3,713 $ 22,776 Subscriptions — 49,028 49,028 Software services — 45,939 45,939 Maintenance — 93,897 93,897 Appraisal services — 5,394 5,394 Hardware and other 4,140 — 4,140 Total $ 23,203 $ 197,971 $ 221,174 For the three months ended March 31, 2017 As Adjusted Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 17,115 $ 4,643 $ 21,758 Subscriptions — 39,862 39,862 Software services — 42,496 42,496 Maintenance — 86,307 86,307 Appraisal services — 6,612 6,612 Hardware and other 2,694 — 2,694 Total $ 19,809 $ 179,920 $ 199,729 Recurring Revenue The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. 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 one to 10 years, but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories. Recurring revenues and non-recurring revenues recognized during the period are as follows: For the three months ended March 31, 2018 Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 134,496 $ 8,429 $ — $ 142,925 Non-recurring revenues 64,775 13,134 340 78,249 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 119,687 $ 6,482 $ — $ 126,169 Non-recurring revenues 60,949 12,611 — 73,560 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 Deferred Revenue and Performance Obligations Total deferred revenue, including long-term, by segment is as follows: March 31, 2018 December 31, 2017 (As Adjusted) Enterprise Software $ 249,104 $ 277,198 Appraisal and Tax 17,497 20,387 Corporate $ 2,172 $ 2,302 Totals 268,773 299,887 The opening balance of total deferred revenue, including long-term, was $290.1 million (as adjusted) as of January 1, 2017. Changes in total deferred revenue, including long-term, were as follows: March 31, 2018 Balance, beginning of period December 31, 2017 (As Adjusted). $ 299,887 Deferral of revenue 160,881 Recognition of deferred revenue (191,995 ) Balance, end of period $ 268,773 Transaction Price Allocated to the Remaining Performance Obligations The aggregate amount of transaction price allocated to the remaining performance obligations represent 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, 2018 was $1.2 billion , of which we expect to recognize approximately 50% as revenue over the next 12 months and the remainder thereafter. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Other than routine litigation incidental to our business, there are no material legal proceedings pending to which we are party or to which any of our properties are subject. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The following events and transactions occurred subsequent to March 31, 2018 : On April 30, 2018, we acquired all of the capital stock of Socrata, Inc. , a company that provides open data and data-as-a-service solutions for state local and government agencies including cloud-based data integration, visualization, analysis, and reporting solutions. The total purchase price was approximately $150.0 million in cash, subject to certain post-closing adjustments. Also on April 30, 2018, we acquired all of the equity interests of Sage Data Security, LLC , a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle, including program development, education and training, technical testing, advisory services, and digital forensics. The total purchase price was approximately $ 11.5 million in cash, subject to post-closing adjustments. |
Accounting Standards and Sign20
Accounting Standards and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | USE OF ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“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, and 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 and estimated useful lives of intangible assets; 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 | REVENUE RECOGNITION Nature of Products and Services We provide integrated software systems and related services for the public sector, with a focus on local governments. We develop and market a broad line of software solutions and services to address the information technology (“IT”) needs of cities, counties, schools and other local government entities. In addition, we provide professional IT services, including software and hardware installation, data conversion, training, and for certain customers, product modifications, along with continuing maintenance and support for customers using our systems. We also provide subscription-based services such as software as a service (“SaaS”) arrangements, which utilize the Tyler private cloud, and electronic document filing solutions (“e-filing”). In addition, we provide property appraisal outsourcing services for taxing jurisdictions. 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) and post-contract support (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 essential 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. Software Arrangements: Software Licenses and Royalties Many of our software arrangements involve “off-the-shelf” software. We recognize the revenue allocable to "off the shelf" software licenses and specified upgrades at a point in time when control of the software license transfers to the customer, unless the software is not considered distinct. We consider off-the-shelf software to be distinct when it can be added to an arrangement with minor changes in the underlying code, it can be used by the customer for the customer’s purpose upon installation and remaining services such as training are not considered essential to the product's functionality. For arrangements that involve significant production, modification or customization of the software, or where software services are otherwise not considered distinct, we recognize revenue over time by measuring progress-to-completion. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended 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. Software license fees are billed in accordance with the contract terms. Typically a majority of the fee is due when access to the software license is made available to the customer and the remainder of the fee due over a passage of time stipulated by the contract. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. We recognize royalty revenue when earned under the terms of our third-party royalty arrangements. Currently, our third-party royalties are recognized at a point in time based on an estimated basis and trued up when we receive notice of amounts earned. Typically, we receive notice of royalty revenues earned and billed on a quarterly basis in the quarter immediately following the royalty reporting period. Software Services As noted above, some of our software arrangements include services considered essential or require significant customization to meet the customer's desired functionality. For these software arrangements, both the software licenses and related software services revenue are not distinct and are recognized over time using the progress-to-completion method. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. When software services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material basis. Post-Contract Customer Support Our customers generally enter into PCS agreements when they purchase our software licenses. PCS includes telephone support, bug fixes, and rights to upgrades on a when-and-if available basis. PCS is considered distinct when purchased with our software licenses. Our PCS agreements are typically renewable annually. PCS is recognized over time on a straight-line basis over the period the PCS is provided. All significant costs and expenses associated with PCS are expensed as incurred. Computer Hardware Equipment Revenue allocable to computer hardware equipment is recognized at a point in time when control of the equipment is transferred to the customer. Subscription-Based Services: Subscription-based services consist of revenues derived from SaaS arrangements, which utilize the Tyler private cloud, and electronic filing transactions. Revenue from subscription-based services is generally recognized over time on a ratable basis over the contract term, beginning on the date that our service is made available to the customer. Our subscription contracts are generally three to five years or longer in length, billed annually in advance, and non-cancelable. For SaaS arrangements, we evaluate whether the customer has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the customer can feasibly maintain the software on the customer’s hardware or enter into another arrangement with a third-party to host the software. We allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated SSP. When it is determined that software is distinct and the customer has the ability to take control of the software, we recognize revenue allocable to the software license fee when access to the software license is made available to the customer. We recognize hosting services ratably over the term of the arrangement, which range from one to ten years but are typically for a period of three to five years. For software and software services associated with SaaS arrangements that are not distinct or are contingent on the transfer of other performance obligations, we recognize the revenue ratably over the remaining contractual period once we have provided the customer access to the software. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. Electronic filing transaction fees primarily pertain to documents filed with the courts by attorneys and other third-parties via our e-filing services and retrieval of filed documents via our access services. For each document filed with a court, the filer generally pays a transaction fee and a court filing fee to us and we remit a portion of the transaction fee and the filing fee to the court. We record as revenue the transaction fee, while the portion of the transaction fee remitted to the courts is recorded as cost of sales as we are acting as a principal in the arrangement. Court filing fees collected on behalf of the courts and remitted to the courts are recorded on a net basis and thus do not affect the statement of comprehensive income. For e-filing transaction fees, we have the right to charge the customer in 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. Costs of performing services under subscription-based arrangements are expensed as incurred, except for certain direct and incremental contract origination and set-up costs associated with SaaS arrangements. Such direct and incremental costs are capitalized and amortized ratably over the useful life. Appraisal Services: For our property appraisal projects, we recognize revenue using the progress-to-completion method of revenue recognition since many of these projects are implemented over one to three -year periods and consist of various unique activities. Appraisal services require a significant level of integration and interdependency with various individual service components; therefore the service components are not considered distinct. Appraisal services are recognized over time by measuring progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended 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. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. Significant Judgments: Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement (traditional 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 service 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 to recognize revenue from these arrangements. 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. 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 11 - 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 doubtful accounts 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 a 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. We maintain allowances for doubtful accounts, which are provided at the time the revenue is recognized. Since most of our customers are domestic governmental entities, we rarely incur a loss resulting from the inability of a customer to make required payments. Events or changes in circumstances that indicate that the carrying amount for the allowances for doubtful accounts may require revision, include, but are not limited to, deterioration of a customer’s financial condition, failure to manage our customer’s expectations regarding the scope of the services to be delivered, and defects or errors in new versions or enhancements of our software products. The following table summarizes the changes in the allowances for doubtful accounts: March 31, 2018 Balance, beginning of period December 31, 2017 $ 5,427 Provisions for losses - accounts receivable 320 Deductions for accounts charged off or credits issued (967 ) Balance, end of period $ 4,780 The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. In connection with our appraisal service contracts and certain software service contracts, we may perform work prior to when the software and services are billable and/or payable pursuant to the contract. Unbilled revenue is not billable at the balance sheet date but is recoverable over the remaining life of the contract through billings made in accordance with contractual agreements. The termination clauses in most of our contracts provide for the payment for the value of products delivered or services performed in the event of early termination. We have historically recorded such unbilled receivables (costs and estimated profit in excess of billings) in connection with (1) property appraisal services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing normally occurs subsequently and may span another accounting period; (2) software services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing for the software element of the arrangement may be based upon the specific phase of the implementation; (3) software revenue for which we have recognized revenue at the point in time when the software is made available to the customer but the billing has not yet been submitted to the customer; (4) some of our contracts which provide for an amount to be withheld from a progress billing (generally between 5% and 20% retention) until final and satisfactory project completion is achieved; and (5) in a limited number of cases, extended payment terms, which may be granted to customers with whom we generally have a long-term relationship and favorable collection history. The opening balance of current and long-term accounts receivable, net of allowance for doubtful accounts, was $226.8 million (as adjusted) as of January 1, 2017. As of March 31, 2018 , and December 31, 2017 , total current and long-term accounts receivable, net of allowance for doubtful accounts, was $228.1 million and $258.3 million (as adjusted), respectively. We have recorded unbilled receivables of $77.1 million and $64.6 million (as adjusted) at March 31, 2018 , and December 31, 2017 , respectively. Included in unbilled receivables are retention receivables of $7.9 million and $7.2 million at March 31, 2018 , and December 31, 2017 , 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. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises term licenses that are invoiced annually with revenue recognized upfront. Deferred Revenue The majority of deferred revenue consists of deferred maintenance revenue that has been billed based on contractual terms in the underlying arrangement, with the remaining balance consisting of payments received in advance of revenue being earned under software licensing, subscription-based services, software and appraisal services and hardware installation. Refer to Note 12 - Deferred Revenue and Performance Obligations for further information, including deferred revenue by segment and changes in deferred revenue during the period. Deferred Commissions Sales 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 on a straight-line basis over a period of benefit that we have determined to be three to seven years. We utilized the 'portfolio approach' practical expedient in ASC 606-10-10-4, which allows entities to apply the guidance to a portfolio of contracts with similar characteristics because the effects on the financial statements of this approach would not differ materially from applying the guidance to individual contracts. Using the 'portfolio approach', we determined the period of benefit by taking into consideration our customer contracts, our technology life-cycle and other factors. Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the remaining period of benefit. Deferred commissions have been included with prepaid expenses 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. Refer to Note 4 - Deferred Commissions for further information. |
New Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Revenue from Contracts with Customers . In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers . ASU No. 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("Topic 605") , and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. Topic 606 also includes Subtopic 340-40 Other Assets and Deferred Costs - Contracts with Customers , which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, we refer to ASU No. 2014-09 and Subtopic 340-40 as the "new standard." We adopted the requirements of the new standard as of January 1, 2018, utilizing the full retrospective method of transition. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, trade and other receivables, and deferred commissions as detailed below. We applied the new standard using a practical expedient where the consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed. The impact of adopting ASU 2014-09 on our total revenues for 2017 and 2016 was not material. The impact of adopting the new standard on our retained earnings and deferred commissions is material. The most significant impact of the standard relates to our accounting for software license revenue. Specifically, under the new standard, software license fees under perpetual agreements are no longer subject to 100% discount allocations from other performance obligations in the contract. Discounts in arrangements are allocated across all performance obligations increasing license revenues and decreasing revenues allocated to other performance obligations. In addition, in most cases, net license fees (total license fees less any allocated discounts) are recognized at the point in time when control of the software license transfers to the customer versus our legacy policy of recognizing revenue upon delivery and only to the extent billable per the contractual terms. Under the new standard, time-based license fees are no longer recognized over the contractual period of the license and are instead recognized at the point in time when the control of the software license transfers to the customer. Revenues related to our PCS renewals, SaaS offerings and appraisal services remain substantially unchanged. Due to the complexity of certain contracts, the actual revenue recognition treatment required under the new standard is dependent on contract-specific terms and may vary in some instances from recognition at the time of billing. Adoption of the new standard requires that incremental costs directly related to obtaining a contract (typically sales commissions plus any associated fringe benefits) must be recognized as an asset and expensed on a systematic basis that is consistent with the transfer to the customer of the goods and services to which the asset relates, unless that life is less than one year. Prior to adoption of the new standard, we deferred sales commissions and recognized expense over the relevant initial contractual term, which was generally one to two years. Under the new standard, we amortize these costs over a period of benefit that we have determined to be three to seven years. We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of the new standard. Select unaudited condensed consolidated statement of income line items, which reflect the adoption of the new standard, are as follows (in thousands, except per share data): Three Months Ended March 31, 2017 As Reported Adjustments As Adjusted Statement of Income: Revenues: Software licenses and royalties $ 18,223 $ 3,535 $ 21,758 Subscriptions 40,102 (240 ) 39,862 Software services 45,018 (2,522 ) 42,496 Maintenance 86,859 (552 ) 86,307 Appraisal services 6,612 — 6,612 Hardware and other 2,728 (34 ) 2,694 Total revenues $ 199,542 $ 187 $ 199,729 Costs and expenses: Selling, general and administrative expenses $ 43,142 $ (362 ) $ 42,780 Amortization of customer and trade name intangibles 3,458 (133 ) 3,325 Operating income 36,149 682 36,831 Income tax provision 3,653 219 3,872 Net income $ 32,306 $ 463 $ 32,769 Earnings per common share: Basic $ 0.88 $ 0.89 Diluted $ 0.83 $ 0.84 Select condensed consolidated balance sheet line items, which reflect the adoption of the new standard, are as follows (in thousands): December 31, 2017 As Reported Adjustments As Adjusted Balance Sheet: Assets Accounts receivable $ 227,127 $ 19,061 $ 246,188 Prepaid expenses 27,252 4,954 32,206 Accounts receivable, long-term 7,536 4,571 12,107 Other intangibles, net 236,444 (6,827 ) 229,617 Total assets $ 1,589,592 $ 21,759 $ 1,611,351 Liabilities Deferred revenue 309,461 (10,848 ) 298,613 Deferred income taxes 38,914 7,965 46,879 Retained earnings $ 599,821 $ 24,642 $ 624,463 Total liabilities and shareholders' equity $ 1,589,592 $ 21,759 $ 1,611,351 Our adoption of ASU 2014-09 had no impact on our net cash provided by or used in operating, investing or financing activities for any of the periods reported. Recent tax legislation . On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted into law. The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions for businesses and individuals. For businesses, the Tax Act reduces the U.S. corporate federal tax rate from a maximum of 35% to a flat 21% rate and transitions from a worldwide tax system to a territorial tax system. The Tax Act also adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and a tax on global intangible low-taxed income (GILTI). The most significant impact of the Tax Act to us is the reduction in the U.S. federal corporate income tax rate from 35% to 21% in 2017. Refer to Note 7 - Income Tax Provision for further information. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Leases. On February 25, 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases ("Topic 842"). Under the new guidance, lessees will be required to recognize the following for all leases (except for short-term leases) at the commencement date: • A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and • A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Topic 842 is effective for fiscal years beginning after December 15, 2018, including interim periods therein. Early application is permitted for all business entities upon issuance. We are assessing the financial impact of adopting the new standard, however; we are currently unable to provide a reasonable estimate regarding the financial impact. We expect to adopt the new standard in fiscal year 2019. |
Accounting Standards and Sign21
Accounting Standards and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of summary the changes in the allowances for doubtful accounts and sales adjustments | The following table summarizes the changes in the allowances for doubtful accounts: March 31, 2018 Balance, beginning of period December 31, 2017 $ 5,427 Provisions for losses - accounts receivable 320 Deductions for accounts charged off or credits issued (967 ) Balance, end of period $ 4,780 |
Schedule of adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASU No. 2014-09 | We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of the new standard. Select unaudited condensed consolidated statement of income line items, which reflect the adoption of the new standard, are as follows (in thousands, except per share data): Three Months Ended March 31, 2017 As Reported Adjustments As Adjusted Statement of Income: Revenues: Software licenses and royalties $ 18,223 $ 3,535 $ 21,758 Subscriptions 40,102 (240 ) 39,862 Software services 45,018 (2,522 ) 42,496 Maintenance 86,859 (552 ) 86,307 Appraisal services 6,612 — 6,612 Hardware and other 2,728 (34 ) 2,694 Total revenues $ 199,542 $ 187 $ 199,729 Costs and expenses: Selling, general and administrative expenses $ 43,142 $ (362 ) $ 42,780 Amortization of customer and trade name intangibles 3,458 (133 ) 3,325 Operating income 36,149 682 36,831 Income tax provision 3,653 219 3,872 Net income $ 32,306 $ 463 $ 32,769 Earnings per common share: Basic $ 0.88 $ 0.89 Diluted $ 0.83 $ 0.84 Select condensed consolidated balance sheet line items, which reflect the adoption of the new standard, are as follows (in thousands): December 31, 2017 As Reported Adjustments As Adjusted Balance Sheet: Assets Accounts receivable $ 227,127 $ 19,061 $ 246,188 Prepaid expenses 27,252 4,954 32,206 Accounts receivable, long-term 7,536 4,571 12,107 Other intangibles, net 236,444 (6,827 ) 229,617 Total assets $ 1,589,592 $ 21,759 $ 1,611,351 Liabilities Deferred revenue 309,461 (10,848 ) 298,613 Deferred income taxes 38,914 7,965 46,879 Retained earnings $ 599,821 $ 24,642 $ 624,463 Total liabilities and shareholders' equity $ 1,589,592 $ 21,759 $ 1,611,351 Our adoption of ASU 2014-09 had no impact on our net cash provided by or used in operating, investing or financing activities for any of the periods reported. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Summary of details activity in our common stock | The following table details activity in our common stock: Three Months Ended March 31, 2018 2017 Shares Amount Shares Amount Purchases of treasury shares — $ — (42 ) $ (6,171 ) Stock option exercises 350 19,298 324 14,851 Employee stock plan purchases 12 1,798 14 1,650 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
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: Three Months Ended March 31, 2018 2017 As Adjusted Numerator for basic and diluted earnings per share: Net income $ 37,825 $ 32,769 Denominator: Weighted-average basic common shares outstanding 38,002 36,845 Assumed conversion of dilutive securities: Stock options 1,834 2,087 Denominator for diluted earnings per share - Adjusted weighted-average shares 39,836 38,932 Earnings per common share: Basic $ 1.00 $ 0.89 Diluted $ 0.95 $ 0.84 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of share-based compensation expense related to share-based awards recorded in the statements of income | The following table summarizes share-based compensation expense related to share-based awards recorded in the statements of income, pursuant to ASC 718, Stock Compensation: Three Months Ended March 31, 2018 2017 Cost of software services, maintenance and subscriptions $ 2,776 $ 2,097 Selling, general and administrative expenses 7,781 6,579 Total share-based compensation expense $ 10,557 $ 8,676 |
Segment and Related Informati25
Segment and Related Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment revenues and operations | For the three months ended March 31, 2018 Enterprise Appraisal and Tax Corporate Totals Revenues Software licenses and royalties $ 20,689 $ 2,087 $ — $ 22,776 Subscriptions 46,683 2,345 — 49,028 Software services 40,286 5,653 — 45,939 Maintenance 87,813 6,084 — 93,897 Appraisal services — 5,394 — 5,394 Hardware and other 3,800 — 340 4,140 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 Segment operating income $ 56,615 $ 4,647 $ (13,727 ) $ 47,535 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Revenues Software licenses and royalties $ 20,109 $ 1,649 $ — $ 21,758 Subscriptions 38,073 1,789 — 39,862 Software services 38,146 4,350 — 42,496 Maintenance 81,614 4,693 — 86,307 Appraisal services — 6,612 — 6,612 Hardware and other 2,694 — — 2,694 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 Segment operating income $ 52,488 $ 4,326 $ (11,248 ) $ 45,566 |
Reconciliation of operating income from segments to consolidated | Three months ended March 31, Reconciliation of reportable segment operating income to the Company's consolidated totals: 2018 2017 As Adjusted Total segment operating income $ 47,535 $ 45,566 Amortization of acquired software (5,382 ) (5,410 ) Amortization of customer and trade name intangibles (3,315 ) (3,325 ) Other income (expense), net 599 (190 ) Income before income taxes $ 39,437 $ 36,641 |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of 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: For the three months ended March 31, 2018 Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 19,063 $ 3,713 $ 22,776 Subscriptions — 49,028 49,028 Software services — 45,939 45,939 Maintenance — 93,897 93,897 Appraisal services — 5,394 5,394 Hardware and other 4,140 — 4,140 Total $ 23,203 $ 197,971 $ 221,174 For the three months ended March 31, 2017 As Adjusted Products and services transferred at a point in time Products and services transferred over time Total Revenues Software licenses and royalties $ 17,115 $ 4,643 $ 21,758 Subscriptions — 39,862 39,862 Software services — 42,496 42,496 Maintenance — 86,307 86,307 Appraisal services — 6,612 6,612 Hardware and other 2,694 — 2,694 Total $ 19,809 $ 179,920 $ 199,729 Recurring Revenue The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. 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 one to 10 years, but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories. Recurring revenues and non-recurring revenues recognized during the period are as follows: For the three months ended March 31, 2018 Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 134,496 $ 8,429 $ — $ 142,925 Non-recurring revenues 64,775 13,134 340 78,249 Intercompany 3,237 — (3,237 ) — Total revenues $ 202,508 $ 21,563 $ (2,897 ) $ 221,174 For the three months ended March 31, 2017 As Adjusted Enterprise Software Appraisal and Tax Corporate Totals Recurring revenues $ 119,687 $ 6,482 $ — $ 126,169 Non-recurring revenues 60,949 12,611 — 73,560 Intercompany 2,163 — (2,163 ) — Total revenues $ 182,799 $ 19,093 $ (2,163 ) $ 199,729 |
Deferred Revenue and Performa27
Deferred Revenue and Performance Obligations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Changes in deferred revenue | Total deferred revenue, including long-term, by segment is as follows: March 31, 2018 December 31, 2017 (As Adjusted) Enterprise Software $ 249,104 $ 277,198 Appraisal and Tax 17,497 20,387 Corporate $ 2,172 $ 2,302 Totals 268,773 299,887 Changes in total deferred revenue, including long-term, were as follows: March 31, 2018 Balance, beginning of period December 31, 2017 (As Adjusted). $ 299,887 Deferral of revenue 160,881 Recognition of deferred revenue (191,995 ) Balance, end of period $ 268,773 |
Accounting Standards and Sign28
Accounting Standards and Significant Accounting Policies - Account Receivable (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |
Balance, beginning of period December 31, 2017 | $ 5,427 |
Provisions for losses - accounts receivable | 320 |
Deductions for accounts charged off or credits issued | (967) |
Balance, end of period | $ 4,780 |
Accounting Standards and Sign29
Accounting Standards and Significant Accounting Policies - Adoption of New Accounting Standard (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Statement of Income | |||
Software licenses and royalties | $ 22,776 | $ 21,758 | |
Subscriptions | 49,028 | 39,862 | |
Software services | 45,939 | 42,496 | |
Maintenance | 93,897 | 86,307 | |
Appraisal services | 5,394 | 6,612 | |
Hardware and other | 4,140 | 2,694 | |
Total revenues | 221,174 | 199,729 | |
Selling, general and administrative expenses | 47,604 | 42,780 | |
Amortization of customer and trade name intangibles | 3,315 | 3,325 | |
Operating income | 38,838 | 36,831 | |
Income tax provision | 1,612 | 3,872 | |
Net income | $ 37,825 | $ 32,769 | |
Earnings per common share: | |||
Basic (USD per share) | $ 1 | $ 0.89 | |
Diluted (USD per share) | $ 0.95 | $ 0.84 | |
Assets | |||
Accounts receivable | $ 216,516 | $ 246,188 | |
Prepaid expenses | 30,262 | 32,206 | |
Accounts receivable, long-term | 11,550 | 12,107 | |
Other intangibles, net | 221,069 | 229,617 | |
Total assets | 1,625,624 | 1,611,351 | |
Liabilities | |||
Deferred revenue | 268,132 | 298,613 | |
Deferred income taxes | 44,220 | 46,879 | |
Retained earnings | 662,288 | 624,463 | |
Total liabilities and shareholders' equity | $ 1,625,624 | 1,611,351 | |
As Reported | |||
Statement of Income | |||
Software licenses and royalties | $ 18,223 | ||
Subscriptions | 40,102 | ||
Software services | 45,018 | ||
Maintenance | 86,859 | ||
Appraisal services | 6,612 | ||
Hardware and other | 2,728 | ||
Total revenues | 199,542 | ||
Selling, general and administrative expenses | 43,142 | ||
Amortization of customer and trade name intangibles | 3,458 | ||
Operating income | 36,149 | ||
Income tax provision | 3,653 | ||
Net income | $ 32,306 | ||
Earnings per common share: | |||
Basic (USD per share) | $ 0.88 | ||
Diluted (USD per share) | $ 0.83 | ||
Assets | |||
Accounts receivable | 227,127 | ||
Prepaid expenses | 27,252 | ||
Accounts receivable, long-term | 7,536 | ||
Other intangibles, net | 236,444 | ||
Total assets | 1,589,592 | ||
Liabilities | |||
Deferred revenue | 309,461 | ||
Deferred income taxes | 38,914 | ||
Retained earnings | 599,821 | ||
Total liabilities and shareholders' equity | 1,589,592 | ||
Accounting Standards Update 2014-09 | Adjustments | |||
Statement of Income | |||
Software licenses and royalties | $ 3,535 | ||
Subscriptions | (240) | ||
Software services | (2,522) | ||
Maintenance | (552) | ||
Appraisal services | 0 | ||
Hardware and other | (34) | ||
Total revenues | 187 | ||
Selling, general and administrative expenses | (362) | ||
Amortization of customer and trade name intangibles | (133) | ||
Operating income | 682 | ||
Income tax provision | 219 | ||
Net income | $ 463 | ||
Assets | |||
Accounts receivable | 19,061 | ||
Prepaid expenses | 4,954 | ||
Accounts receivable, long-term | 4,571 | ||
Other intangibles, net | (6,827) | ||
Total assets | 21,759 | ||
Liabilities | |||
Deferred revenue | (10,848) | ||
Deferred income taxes | 7,965 | ||
Retained earnings | 24,642 | ||
Total liabilities and shareholders' equity | $ 21,759 |
Accounting Standards and Sign30
Accounting Standards and Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accounts receivable, net | $ 228.1 | $ 258.3 | $ 226.8 |
Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Typical contract term | 3 years | ||
Contract term | 1 year | ||
Percentage withheld from progress billings | 5.00% | ||
Accounts receivable payment term | 30 days | ||
Sales commissions amortization period | 3 years | 1 year | |
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Typical contract term | 5 years | ||
Contract term | 10 years | ||
Percentage withheld from progress billings | 20.00% | ||
Accounts receivable payment term | 60 days | ||
Sales commissions amortization period | 7 years | 2 years | |
Subscription - Hosting Services | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract term | 1 year | ||
Subscription - Hosting Services | Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract term | 10 years | ||
Appraisal services | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract term | 1 year | ||
Appraisal services | Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract term | 3 years | ||
Unbilled Revenues | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accounts receivable, net | $ 77.1 | $ 64.6 | |
Retention Receivable | Unbilled Revenues | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accounts receivable, net | $ 7.9 | $ 7.2 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Activities in Common Stock (Detail) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Equity [Abstract] | ||
Purchases of common stock, Shares | 0 | (42) |
Stock option exercises, Shares | 350 | 324 |
Employee stock plan purchases, Shares | 12 | 14 |
Purchases of common stock, Amount | $ 0 | $ (6,171) |
Stock option exercises, Amount | 19,298 | 14,851 |
Employee stock plan purchases, Amount | $ 1,798 | $ 1,650 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) | Mar. 31, 2018shares |
Equity [Abstract] | |
Number of shares authorized to be repurchased | 1,976,160 |
Deferred Commission (Details)
Deferred Commission (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Capitalized Contract Cost [Line Items] | |||
Deferred commissions | $ 20,200,000 | $ 19,300,000 | |
Deferred commissions amortization | 3,500,000 | $ 2,600,000 | |
Deferred commissions impairment | $ 0 | $ 0 | |
Minimum | |||
Capitalized Contract Cost [Line Items] | |||
Sales commissions amortization period | 3 years | 1 year | |
Maximum | |||
Capitalized Contract Cost [Line Items] | |||
Sales commissions amortization period | 7 years | 2 years |
Other Assets - Additional Infor
Other Assets - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Schedule Of Other Assets [Line Items] | |
Purchase of held to maturity securities | $ 96.5 |
Grade corporate and municipal bonds, maturity date | 2017 through early 2020 |
Convertible Preferred Stock | Record Holdings Pty Limited | |
Schedule Of Other Assets [Line Items] | |
Cost method investment | $ 15 |
Investment percentage | 20.00% |
Revolving Line of Credit - Addi
Revolving Line of Credit - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2018USD ($)letters_of_credit | Nov. 16, 2015USD ($) | |
Line Of Credit Facility [Line Items] | ||
Number of letters of credit | letters_of_credit | 1 | |
Revolving Credit Facility | Credit Agreement | ||
Line Of Credit Facility [Line Items] | ||
Revolving credit facility, maximum borrowing capacity | $ 300,000,000 | |
Revolving line of credit maturity date | Nov. 16, 2020 | |
Debt instrument, description of variable rate basis | Borrowings under the Credit Facility bear interest at a rate of either (1) Wells Fargo Bank’s prime rate (subject to certain higher rate determinations) plus a margin of 0.25% to 1.00% or (2) the 30, 60, 90 or 180 day LIBOR rate plus a margin of 1.25% to 2.00%. | |
Outstanding borrowings | $ 0 | |
Line of credit facility, unused borrowing capacity | $ 299,500,000 | |
Revolving Credit Facility | Credit Agreement | Prime Commercial Lending Rate | ||
Line Of Credit Facility [Line Items] | ||
Effective percentage interest rate | 5.00% | |
Revolving Credit Facility | Credit Agreement | Libor Rate | ||
Line Of Credit Facility [Line Items] | ||
Effective percentage interest rate | 2.50% | |
Revolving Credit Facility | Credit Agreement | Minimum | Prime Commercial Lending Rate | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility interest rate | 0.25% | |
Revolving Credit Facility | Credit Agreement | Minimum | Libor Rate | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility interest rate | 1.25% | |
Revolving Credit Facility | Credit Agreement | Maximum | Prime Commercial Lending Rate | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility interest rate | 1.00% | |
Revolving Credit Facility | Credit Agreement | Maximum | Libor Rate | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility interest rate | 2.00% | |
Letter of Credit | Credit Agreement | ||
Line Of Credit Facility [Line Items] | ||
Letters of credit, outstanding | $ 500,000 | |
Letter of Credit | Revolving Credit Facility | Credit Agreement | ||
Line Of Credit Facility [Line Items] | ||
Revolving credit facility, maximum borrowing capacity | $ 10,000,000 |
Income Tax Provision - Addition
Income Tax Provision - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rates | 4.10% | 10.60% |
Federal income tax rate | 21.00% | 35.00% |
Excess tax benefit | $ 9,100 | $ 10,100 |
Effective income tax rate excluding excess tax benefit | 27.20% | 38.20% |
Change in tax rate, income tax benefit | $ 26,000 | |
Income tax payments | $ 218 | $ 161 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic Earnings and Diluted Earnings Per Share Data (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net income | $ 37,825 | $ 32,769 |
Weighted-average basic common shares outstanding (in shares) | 38,002 | 36,845 |
Stock options (in shares) | 1,834 | 2,087 |
Denominator for diluted earnings per share - Adjusted weighted-average shares (in shares) | 39,836 | 38,932 |
Basic (USD per share) | $ 1 | $ 0.89 |
Diluted (USD per share) | $ 0.95 | $ 0.84 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per shares (in shares) | 1,111 | 1,160 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Share-Based Compensation Expense Related to Share-Based Awards (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 10,557 | $ 8,676 |
Cost of software services, maintenance and subscriptions | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 2,776 | 2,097 |
Selling, general and administrative expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 7,781 | $ 6,579 |
Segment and Related Informati40
Segment and Related Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2018Business_UnitSegment | |
Segment Reporting Information [Line Items] | |
Number of business units | Business_Unit | 4 |
Enterprise Software | |
Segment Reporting Information [Line Items] | |
Number of reportable segment | Segment | 1 |
Segment and Related Informati41
Segment and Related Information - Schedule of Segment Revenues and Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Total revenues | $ 221,174 | $ 199,729 |
Operating Income | 38,838 | 36,831 |
Intercompany | ||
Segment Reporting Information [Line Items] | ||
Total revenues | (3,237) | (2,163) |
Intercompany | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | (3,237) | (2,163) |
Intercompany | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Corporate and Elimination | ||
Segment Reporting Information [Line Items] | ||
Total revenues | (2,897) | (2,163) |
Operating segment and corporate non-segment | ||
Segment Reporting Information [Line Items] | ||
Operating Income | 47,535 | 45,566 |
Operating segments | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 202,508 | 182,799 |
Operating Income | 56,615 | 52,488 |
Operating segments | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 21,563 | 19,093 |
Operating Income | 4,647 | 4,326 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Operating Income | (13,727) | (11,248) |
Software licenses and royalties | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 22,776 | 21,758 |
Software licenses and royalties | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 20,689 | 20,109 |
Software licenses and royalties | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 2,087 | 1,649 |
Software licenses and royalties | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Subscriptions | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 49,028 | 39,862 |
Subscriptions | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 46,683 | 38,073 |
Subscriptions | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 2,345 | 1,789 |
Subscriptions | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Software services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 45,939 | 42,496 |
Software services | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 40,286 | 38,146 |
Software services | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 5,653 | 4,350 |
Software services | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Maintenance | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 93,897 | 86,307 |
Maintenance | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 87,813 | 81,614 |
Maintenance | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 6,084 | 4,693 |
Maintenance | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Appraisal services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 5,394 | 6,612 |
Appraisal services | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Appraisal services | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 5,394 | 6,612 |
Appraisal services | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Hardware and other | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 4,140 | 2,694 |
Hardware and other | Enterprise Software | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 3,800 | 2,694 |
Hardware and other | Appraisal and Tax | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Hardware and other | Corporate | ||
Segment Reporting Information [Line Items] | ||
Total revenues | $ 340 | $ 0 |
Segment and Related Informati42
Segment and Related Information - Reconciliation of Operating Income from Segments to Consolidated (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Operating Income | $ 38,838 | $ 36,831 |
Amortization of acquired software | (5,382) | (5,410) |
Amortization of customer and trade name intangibles | (3,315) | (3,325) |
Other income (expense), net | 599 | (190) |
Income before income taxes | 39,437 | 36,641 |
Operating segment and corporate non-segment | ||
Segment Reporting Information [Line Items] | ||
Operating Income | 47,535 | 45,566 |
Segment reconciling items | ||
Segment Reporting Information [Line Items] | ||
Amortization of acquired software | (5,382) | (5,410) |
Amortization of customer and trade name intangibles | (3,315) | (3,325) |
Other income (expense), net | $ 599 | $ (190) |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 221,174 | $ 199,729 |
Operating segments | Enterprise Software | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 202,508 | 182,799 |
Operating segments | Appraisal and Tax | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 21,563 | 19,093 |
Intercompany | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | (3,237) | (2,163) |
Intercompany | Enterprise Software | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | (3,237) | (2,163) |
Intercompany | Appraisal and Tax | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Corporate and Elimination | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | (2,897) | (2,163) |
Recurring revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 142,925 | 126,169 |
Recurring revenues | Enterprise Software | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 134,496 | 119,687 |
Recurring revenues | Appraisal and Tax | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 8,429 | 6,482 |
Recurring revenues | Corporate | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Non-recurring revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 78,249 | 73,560 |
Non-recurring revenues | Enterprise Software | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 64,775 | 60,949 |
Non-recurring revenues | Appraisal and Tax | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 13,134 | 12,611 |
Non-recurring revenues | Corporate | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 340 | 0 |
Software licenses and royalties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 22,776 | 21,758 |
Subscriptions | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 49,028 | 39,862 |
Software services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 45,939 | 42,496 |
Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 93,897 | 86,307 |
Appraisal services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 5,394 | 6,612 |
Hardware and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 4,140 | 2,694 |
Products and services transferred at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 23,203 | 19,809 |
Products and services transferred at a point in time | Software licenses and royalties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 19,063 | 17,115 |
Products and services transferred at a point in time | Subscriptions | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Products and services transferred at a point in time | Software services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Products and services transferred at a point in time | Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Products and services transferred at a point in time | Appraisal services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 0 | 0 |
Products and services transferred at a point in time | Hardware and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 4,140 | 2,694 |
Products and services transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 197,971 | 179,920 |
Products and services transferred over time | Software licenses and royalties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3,713 | 4,643 |
Products and services transferred over time | Subscriptions | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 49,028 | 39,862 |
Products and services transferred over time | Software services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 45,939 | 42,496 |
Products and services transferred over time | Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 93,897 | 86,307 |
Products and services transferred over time | Appraisal services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 5,394 | 6,612 |
Products and services transferred over time | Hardware and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 0 | $ 0 |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term | 1 year | |
Typical contract term | 3 years | |
Minimum | Appraisal services | ||
Disaggregation of Revenue [Line Items] | ||
Contract term | 1 year | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Contract term | 10 years | |
Typical contract term | 5 years | |
Maximum | Appraisal services | ||
Disaggregation of Revenue [Line Items] | ||
Contract term | 3 years |
Deferred Revenue and Performa44
Deferred Revenue and Performance Obligations (Deferred Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Jan. 01, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | $ 299,887 | $ 290,100 |
Contract With Customer Liability [Roll Forward] | ||
Balance, beginning of period December 31, 2017 (As Adjusted). | 299,887 | |
Deferral of revenue | 160,881 | |
Recognition of deferred revenue | (191,995) | |
Balance, end of period | 268,773 | |
Operating segments | Enterprise Software | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | 277,198 | |
Contract With Customer Liability [Roll Forward] | ||
Balance, beginning of period December 31, 2017 (As Adjusted). | 277,198 | |
Balance, end of period | 249,104 | |
Operating segments | Appraisal and Tax | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | 20,387 | |
Contract With Customer Liability [Roll Forward] | ||
Balance, beginning of period December 31, 2017 (As Adjusted). | 20,387 | |
Balance, end of period | 17,497 | |
Corporate | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | 2,302 | |
Contract With Customer Liability [Roll Forward] | ||
Balance, beginning of period December 31, 2017 (As Adjusted). | 2,302 | |
Balance, end of period | $ 2,172 |
Deferred Revenue and Performa45
Deferred Revenue and Performance Obligations (Narrative) (Details) $ in Billions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 50.00% |
Remaining performance obligations | $ 1.2 |
Expected timing of satisfaction period | 1 year |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Mar. 31, 2018LegalMatter |
Commitments and Contingencies Disclosure [Abstract] | |
Number of material legal proceedings pending | 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | Apr. 30, 2018USD ($) |
Socrata, Inc. | |
Subsequent Event [Line Items] | |
Acquisition consideration transferred | $ 150 |
Sage Data Security, LLC | |
Subsequent Event [Line Items] | |
Acquisition consideration transferred | $ 11.5 |