泰勒科技 (TYL) 2006 Q2 法說會逐字稿

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  • Operator

  • Hello and welcome to today's Tyler Technologies second quarter fiscal 2006 earnings release conference call. Your host for today's call is John Marr, President and CEO of Tyler Technologies. Mr. Marr, please begin your call.

  • - President & CEO

  • Thank you, and welcome to our second quarter 2006 earnings call.

  • Joining me from our management team is Brian Miller, our Chief Financial Officer. First I'd like for Brian to give the Safe Harbor statement, then I will have some preliminary comments. Brian will review the details of our operating results. Then I will have some final comments and we will take your questions.

  • Brian?

  • - CFO

  • Thank you, John.

  • During the course of this conference call, management may make statements that provide information other than historical information and may include projections concerning the Company's future prospects, revenues, expenses and profits.

  • Such statements are considered forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties which could cause actual results to differ materially from these projections. We would refer you to our Form 10K and other SEC filings for more information on those risks.

  • John?

  • - President & CEO

  • Thanks, Brian.

  • During the second quarter, Tyler continued the positive trend that began in the second half of 2005. We experienced year-over-year growth as well as sequential growth in virtually every revenue category as well as across all major product lines and divisions.

  • The second quarter extends our streak of profitable quarters to 21. During the second quarter, our overall business grew in excess of our expectations while demonstrating the leverage inherent to our business model.

  • Revenues grew 14% as we saw our gross profit expand 24%, operating income up 75% and finally net income growth of 86%. Our growth was led by new licenses with year-over-year growth of 25% and sequential growth of just under 30%.

  • Combined with a 36% jump in year-over-year software-related backlog, Tyler is experiencing growth well in excess of the industry, demonstrating increased capacity and our sales and service channels as well as clear evidence that our investment in our products continue to pay dividends competitively.

  • For the 12 months ended June 30th, Tyler had revenues of $180 million, earnings per share of $0.27 and free cash flow of $21 million.

  • Now I'll ask Brian to review the results and then I will have some final comments.

  • - CFO

  • Thank you, John.

  • Yesterday Tyler Technologies reported its results for the second quarter ended June 30, 2006. For the second quarter of 2006, Tyler had revenues of $49.2 million, up 13.8% from the second quarter of 2005.

  • Operating income was $5.6 million, an increase of $2.4 million from the second quarter of 2005 operating income of $3.2 million. This was Tyler's highest quarterly operating income since transitioning to the software business in 1998.

  • Net income for the quarter was $3.8 million or $0.09 per diluted share, compared to net income of $2.0 million or $0.05 per diluted share in the second quarter of 2005. Results for the second quarter of 2006 include a total of $504,000 of non-cash expenses due to our adoption of SFAS 123R associated with our share-based compensation plan, of which $42,000 is included in cost of revenues and $462,000 is included in SG&A expense.

  • The second quarter of 2005 included a restructuring charge related to our appraisal services business of $1.3 million pre-tax or $0.02 per share after tax. Cash flow from operations was $625,000 for the second quarter compared to a negative $269,000 a year ago.

  • Free cash flow was a negative $780,000 in the current quarter compared to negative free cash flow of $828,000 for the second quarter of last year. Last year's cash flow included $1.1 million of cash expenditures for restructuring costs.

  • Free cash flow for the second quarter of 2006 included a $13.5 million increase in accounts receivable compared to the first quarter primarily associated with mid-year renewals of maintenance and support agreements. For the first six months of 2006, free cash flow was $8.2 million, compared to $5.5 million for the first half of 2005.

  • EBITDA for the second quarter of 2006 increased 36.9% to $8 million from EBITDA of $5.8 million in the second quarter of 2005. Our software-related revenues, which includes software licenses, software services and maintenance increased in the aggregate of 15% over the second quarter of 2005.

  • Software license revenues increased 25% over last year's second quarter. Software services were up 12% from last year's second quarter and maintenance revenues also grew 12%. Appraisal services revenues for the second quarter increased 10% from the second quarter of 2005 to $5.1 million.

  • The revenue mix for the second quarter of 2006 was as follows. Software licenses, 20%, software services, 31%, maintenance, 36%, appraisal services, 10% and hardware another 3%. The revenue mix for the second quarter of 2005 was software licenses, 18%, software services, 31%, maintenance, 37%, appraisal services, 11%, and hardware another 3%.

  • Overall 87% of our revenue mix was software-related for the second quarter compared to 86% for the second quarter of 2005. For the second quarter of 2006, our overall gross margin was 38.5% compared to 37.2% in last year's second quarter.

  • Sequentially gross margins increased from 34.5% in the first quarter of 2006. Our gross margin continues to improve driven primarily by a continuing positive shift in our revenue mix towards software-related revenues and, in particular, higher software licenses, and improved results following the restructuring of our appraisal services business in last year's second quarter.

  • Software license margins for the quarter increased from last year at 71.8% versus 68.6% last year. The increase in software license gross margin is primarily driven by increased license revenue offsetting fixed software amortization costs included in the cost of sales.

  • The blended margin for software services and maintenance decreased slightly to 30.0% from 31.8% from the same quarter of last year. An increase from 29.3% in the first quarter of this year. The gross margin for appraisal services was 32.4%, compared to 20.0% in last year's second quarter.

  • SG&A expenses were $13.0 million for the second quarter of 2006 and $11.3 million for the same period in 2005. Second quarter 2006 SG&A expenses were 26.4% of revenues and 26.1% for the same period in 2005.

  • SG&A expenses for the second quarter of 2006 included $504,000 of share-based compensation expense resulting from the adoption of FAS 123R. Excluding this effect, SG&A expenses as a percentage of revenue for the second quarter of '06 were 25.4%.

  • Our effective income tax rate was 35.5% for the second quarter. Our effective rate declined compared to prior years, mainly due to a credit resulting from changes in the Texas franchise tax law and rates enacted in the second quarter of 2006 and from lower state income taxes as a result of a change in our corporate structure implemented in early 2005.

  • The effective income tax rate for the full year of 2006, excluding the credits, is expected to be 39.9% and the effective tax rate for the second half of 2006 is also estimated to be 39.9%. Our backlog at June 30, 2006 reached a new high of $195.5 million compared to $148.5 million at June 30, 2005 and $186.8 million at March 31, 2006.

  • Backlog related to our software business, which excludes backlog from appraisal services contracts was $162.4 million at June 30th, an increase of $5.9 million or 3.8% from the first quarter of this year and an increase of $42.6 million or 35.5% from June of last year.

  • Appraisal services backlog was $33.1 million at June 30, 2006 compared to $30.4 million at March 31, 2006. During the second quarter, we repurchased 582,600 shares of our common stock on the open market at an average cost of approximately $10.42 per share.

  • For the first half of 2006, we've repurchased a total of 833,000 shares of our stock at an average cost of $9.92 per share. Our remaining authorization of shares that may be repurchased currently totals 1.2 million shares.

  • Our capital expenditures during the second quarter were $1.4 million, primarily related to new internal IT systems and that includes $40,000 of capitalized software development. CapEx for the second quarter of last year was $559,000 and included $295,000 of capitalized software development costs.

  • Although we continue to spend significant amounts on product development, we expect that capitalized software development will remain at relatively low levels for the foreseeable future and that virtually all of our development costs in 2006 will be expensed.

  • Amortization of post-acquisition software development costs was $1.2 million in the second quarter. Day sales outstanding and accounts receivable at June 30, 2006 were 96 days compared to 101 days at December 31st of '05 and 97 days at June 30th of 2005. Our stockholders equity at June 30, 2006, was $115.3 million. We continue to have no debt outstanding and $30 million of available credit under our revolving credit facility.

  • Now I'd like to turn the call back over to John for his comments on the quarter.

  • - President & CEO

  • Thank you, Brian. Cash flow for the quarter was a negative $780,000. This is expected and consistent with our previous years. Our CapEx was up over last year as a result of investing in a new companywide CRM system as well as a number of internal IT projects.

  • However, generally over the long-term, Tyler will have relatively low requirements for capital expenses. As emphasized before, while CapEx is low, we continue to invest heavily in our products. Since virtually all of our products are in general release, nearly all of our resources are currently expensed.

  • Tyler currently has 395 employees related to product development representing nearly 30% of our total employees. Free cash flow improved from last year but was impacted by a large increase in accounts receivable associated with mid-year, maintenance and support renewals. We expect free cash flow to be strong for the remainder of the year, particularly in the third quarter as we collect the June renewal billings.

  • Consistent with previously provided guidance, free cash flow is expected to be $21 to $24 million for the full year. As we have indicated, the quarter had the highest license revenues in our history. 25% higher than the second quarter of 2005.

  • This combined with a 36% increase in software-related backlog was the best evidence we can provide to clearly demonstrate to a more efficient sales and service channel and significantly improved products competitively. We also experienced double digit growth in maintenance and support revenues, demonstrating our excellent customer retention and satisfaction as well as our ability to execute on new contracts, expanding our customer base.

  • Tyler's financial systems division continues to perform well with year-over-year revenue growth of 15% accounting for 61% of total revenues. During the quarter, Tyler added 36 new financial clients in 17 different states, reinforcing our position as a clear market leader.

  • Our courts and justice division continues to see improving results as we begin to recognize revenue from Odyssey deals announced in recent months. We are very pleased with the results from the changes we made in our appraisal and tax division during the first half of last year. The new structure and management team has performed exceptionally well.

  • Having completed our operating review meetings this week, we have improved visibility for the balance of the year and beyond. This, combined with our very strong backlog reinforces that we are on the right path, and I believe outperforming the industry and the competition. Based on this, we are increasingly confident in our original guidance for the year.

  • Tyler expects for 2006 revenues of $192 to $196 million with a lower end up $1 million from original guidance. We now expect appraisal service revenues to be--to grow in the mid-single digit range and software-related revenues to grow between 13% and 17%.

  • We expect earnings per share of $0.29 to $0.32 while earnings per share for the quarter was somewhat ahead of expectations, some of that is due to the timing of revenues and earnings so we have not changed our full year guidance. But we are increasingly confident with respect to that guidance.

  • We will have an estimated pre-tax expense of $1.9 million related to stock option and employee stock purchase plans as a result of the implementation of FAS 123R. We anticipate our effective tax rate will be 39.9% for the full year. Cash from operations for 2006 will be $24 to $28 million and free cash flow between $21 and $24 million.

  • Total CapEx for the year will be $3.5 to $4 million and total depreciation and amortization of about $10 to $10.5 million, including the amortization related to the acquisitions we did in January of 2006.

  • Now we will take questions.

  • Operator

  • Certainly, sir.

  • [ OPERATOR INSTRUCTIONS ]

  • Our first question comes from the line of David Yuschak with Sanders Morris Harris. Mr. Yuschak?

  • - Analyst

  • Great quarter, guys, I think that certainly speaks to some confidence in the second half for you as well.

  • My two questions, off the bat here, would be first on the appraisal services, is that turning out to be a pleasant surprise for you guys as this quarter unfolded? And as far as profitability is concerned, to, that you've seen that kind of snap back? Or do you think that that's where it should be more on a normalized basis?

  • - President & CEO

  • Well, obviously until it actually occurs, given our experience early last year, you withhold some judgment, but, no, it's--I would say that performance is modestly above what their plan was for the year.

  • Clearly, as the year goes on we become increasingly confident in their original plan and there has been some upside performance but not all that significantly. We're very pleased with the organization and the leadership as well as the execution of the entire staff.

  • We think the size of the Company and the organization is going to be able to scale with the cycles in their business and that the exposure that--that we encountered in the first half of second year is largely behind us.

  • It may remain a little cyclical, but, again, I think they're organized in a way to identify those cycles and to anticipate and respond to them.

  • - Analyst

  • So, you've had some awards there. I think it's speaking to the ability for this group to --

  • - President & CEO

  • Yeah the appraisal service revenues maybe are 10% higher than we had in plan, but not dramatically different.

  • - Analyst

  • Okay, and then the second question would be, on the performance on your software licensing in the quarter, was there anything that was in the quarter that you may have thought could have showed up in the subsequent quarters? Or the backlog that we're seeing in software reflecting on the continued traction you're gaining there? That this is more just a--that than it is a contract that may have been in this quarter versus subsequent quarters?

  • - President & CEO

  • No question we're pleased. The market is normal. I don't think it's explosive. I don't think it's weak. It's just a good solid, normal market.

  • We're very pleased with our competitive positions and--and across the product lines and the wins that we've had and obviously in the long run that's what will determine your license revenues.

  • In terms of timing, I really don't think there's much pulled into the second quarter that was originally slated for the second half. I think the first quarter was a little light and there were some deals that we originally thought would fall in the first quarter that slid into the second quarter.

  • So, I think if you look at Q1 and 2 and combine them, they are generally what we expected for the first half, but it fell a little more heavy in the second quarter than the first. But again, we really don't think there's much business in Q2 that was expected to be in the second half of the year.

  • - Analyst

  • Okay, great, I will get back in queue.

  • Operator

  • Our next question comes from the line of Charles Strauzer with CJS Securities. Charles?

  • - Analyst

  • Good day. Two quick questions if I can.

  • The first is margin expectations in the software licenses, that you had very strong performance there in the quarter, obviously that was probably due to more mix on some of those contracts falling in the quarter, but can we extrapolate something from that on a go-forward basis for the second half of the year?

  • - President & CEO

  • Well, a large component of our cost of software licenses is basically fixed in terms of the amortization of our capitalized software development costs.

  • So, as the revenues grow and particularly as they grow nicely, as they did this quarter, a big portion of the costs stay fixed and the margins will expand from that. So, how--how those revenues change will determine what the margins ultimately are, but as they grow, we would expect margins to continue to expand and move higher.

  • - Analyst

  • Got it. And then just also just a minor question. The other income line, the interest rate seems a little low given the rising interest rate environment. Can you talk about what you're doing on the cash management side?

  • - CFO

  • Well, we're invested--we have seen interest rates rise. We are invested in institutional money market funds, municipal auction rates, municipal securities, but one thing that's in that other income line is a non-cash expense related to a foreign currency hedge, we have in Canadian dollars.

  • And that hedge--that we have a contract that denominated in Canadian dollars and we hedged our revenue exposure and that has resulted in--the Canadian dollars moved higher in a book non-cash loss that has impacted that line. I think it was about $120,000 this quarter.

  • - Analyst

  • Got it, so it would have been higher, got it. Okay, thank you very much, good quarter, thanks.

  • Operator

  • Our next question comes from the line of Tom Meagher with Friedman Billings Ramsey. Tom?

  • - Analyst

  • Yes, thank you very much. Once again, congratulations on the quarter. Brian, could you talk a little bit about the 8K that you [ Loss of audio ]

  • - CFO

  • Hello?

  • Operator

  • One moment, sir. While we wait for Mr. Meagher, we will go ahead and take a question from Mr. Kinstlinger. Brian, your line is open.

  • - Analyst

  • Good afternoon, guys. Just a couple of questions. First, in a follow-up, that hedge, is that going to continue for the rest of the year, per quarter, Brian?

  • - CFO

  • Well, it's mark-to-market, so, the hedge will be in place. Depends on what the Canadian dollar does.

  • - Analyst

  • Yes, in terms of also the share account, I'm curious, you bought--you guys are always buying back stock and it's great. I'm interested to hear whether that--you expect that share count to start coming down or is it basically to offset options?

  • - CFO

  • Well, we bought certainly more than--than we have issued in terms of options. The biggest thing that's affected the diluted share count is that our stock price has risen. And let me see what the number is. In the first quarter--in the first half, we had total shares--

  • - Analyst

  • 41.9 --

  • - CFO

  • Well, we purchased for treasury stock--let me see, the shares that we bought back were significantly in excess of the shares. We had about a $1 million of proceeds from shares--from option exercises and then $8.2 million on stock repurchases.

  • - Analyst

  • Okay.

  • - CFO

  • But the stock price has been the major cause of the--our diluted shares have been basically flat, even though we've reduced the primary number of shares outstanding.

  • - Analyst

  • Okay, and John maybe you could address the macro environment? As I look at, God, two-two, three years ago where you were, and two years ago really, and things weren't going as well, now it seems things are going better.

  • You're in some different geographic areas. Can you talk about any of those areas that you're capitalizing on because the budgets are better? Or is it just--is something else causing this excess demand? Or increased demand?

  • - President & CEO

  • I think you have to go all the way back to 2000 to really have a significantly different market that affected us, but if you're talking about two years ago, no, we don't see any significant changes in the market.

  • Obviously we've done a lot in the last two or three years to expand the reach of the sales force and to get products ready to be competitive in other regions of the country. So, as you do that, you can perform a lot more consistently.

  • As I indicated in financials, I think it was 36 new customers from 17, I believe, different states. A number of years ago, a lot of those products that--that individual products that might have had sales in 10 or 12, 15 different states, maybe were only primarily marketed in three, four, five states.

  • So, really we have broadened the product offering but as we took regional products and took them national, we've got a bigger footprint and they just can perform a lot more consistently.

  • - Analyst

  • I guess in late '02 or early '03, which I guess is more like three years ago, you guys introduced Odyssey and over the course of the beginning it was tough going. You guys have now adopted a lot of new clients, and I don't think that the software has changed that much so I'm interested, other than being in the market longer, what's changed?

  • - CFO

  • I guess my earlier remarks--the financials, the existing products that were out there and competitive in certain regions that are now more national. If you talk about Odyssey specifically, obviously we want a really meaningful deal kind of right out of the blocks with Minnesota, but as you're indicating in that timeline, the sales weren't very regular.

  • And I think what we were running into was a great demo, a product that got credit for being state-of-the-art and exciting but the competition was able to use the fact that we were--we're not very broadly distributed and the product was not very mature while it's really never had any quality issues it was a new product, not widely used and we had those challenges.

  • As we've been very successful implementing that system in Minnesota, in the early counties in Florida, specifically, those references have served us well, I think we're well over the hurdle of having the other decision criteria be a challenge for us while we have always had I think an advantage with a product.

  • So, now we have successful installations, good references, we've got good deployment resources, although they need to be expanded. And really a complete solution. And our--our competitive position is very strong with that application.

  • Operator

  • Our next question comes from the line of Tom Meagher with Friedman Billings Ramsey.

  • - Analyst

  • Yeah, good morning. Can you guys hear me?

  • - CFO

  • Sure.

  • - Analyst

  • Okay. Great. Hey, Brian, maybe we can start with the 8K that you guys put out--I think it was yesterday, relative to the SEC. What exactly were they questioning about the appraisal accounting? And where does that stand right now?

  • - CFO

  • I don't believe--I'm not familiar with what you're talking about.

  • - Analyst

  • I thought--I thought I had read something where you had written a letter to the SEC, explaining your methodology behind how you accounted for appraisals and what not in response to a request they put out? Or maybe I'm missing something?

  • - CFO

  • Yeah, I'm not familiar with that. We haven't filed any 8Ks other than to file our press release yesterday.

  • - Analyst

  • Okay, all right.

  • - CFO

  • --with the SEC about our appraisal account

  • - Analyst

  • Maybe I saw something else, I thought I saw your name on it. Anyway, could you talk a little bit about the competitive environment specifically as it relates to the--to the SunGard transaction?

  • Obviously they bought a lot of your competitors here in the last few years and I'm just wondering, are you still seeing those guys in the marketplace? Or is it your sense that those operations aren't considered core by the new owners? And there might be an opportunity for you to pick up some of that work, given the amount of debt that they have to pay down associated with the buyout there?

  • - CFO

  • Well, those acquisitions go back a few years now. And it is our experience that whether it's a conscious decision on their part or not, that generally those--those products are not as prevalent in the new business market as they were before. That's our experience.

  • I think maybe a couple of years before the acquisitions, if you'd kind of queried our sales channel, they would have identified a number of those assets as pretty serious competitors and that you'd hear those names less frequently today. I don't think there's any question about that.

  • But I--I certainly don't think it's weakened to the point where a significant number of those will come back on the marketplace. I think there's a pretty good delta between a product or an offering being very competitive in the new business market and being weak enough that it's going to force existing clients back in the marketplace to make a significant investment. So, they're kind of in that range from our experience.

  • - Analyst

  • Okay. Thanks very much, I appreciate it.

  • - CFO

  • Sure.

  • Operator

  • Our next question is a follow-up question from David Yuschak with Sanders Morris Harris.

  • - Analyst

  • Hey, on the--just talk a little bit about the maintenance and professional services gross margin. 30% this quarter. What do you think you can get that to?

  • Is there--I mean I think you guys are adding a lot of--as you mentioned, John, earlier, you got 35--395 people in that space developing--or working on product enhancements and all of that.

  • Is that primarily where that will show up in the way of support for maintenance and professional services and I'm just wondering if there's a way to maybe move those margins up higher, but--or is, in fact, because of the success you've had with products and customer support and everything, that this 30% may be more a realistic number for the time being because of the need to expand your capacity there?

  • - CFO

  • We have bounced around that range in recent quarters. You're correct that virtually all of our development expenses are expensed as cost of maintenance revenues. So, you will see most of those expenses in there.

  • And we have added staff--well, we've done two things, one is we've moved away from capitalizing software. That expense has risen, same number of--generally the same number of developers, but more than of that cost--almost all of that cost is being expensed. So, it's showing up in the gross margin line.

  • And secondly, we have added resources in development and in customer service installation functions to deliver the backlog. And I think the margins are also somewhat being affected by some of our newer products, particularly on the tax side, where we're working through the initial implementations and the costs are somewhat higher there than we would have with more mature products.

  • - Analyst

  • And--well, that's always a good sign to hear that you're doing things to support future growth as well as the implementation is there. So, it does suggest there could be potential lift. The longer term on that particular category.

  • - CFO

  • We think in the long-term there is certainly leverage in that line, as well as our other cost lines and that over time we should also continue to see improvement in those margins.

  • - Analyst

  • On the head count, you said 395--what was that a year ago?

  • - President & CEO

  • Probably 320 or 330. Probably 20 that came with the school acquisition and we've grown that staff maybe 15 and we'll continue to leverage that development facility.

  • - Analyst

  • Okay. Which gets me to the next question on the progress you're making on those acquisitions. Was there much of a contribution in the first--first--second quarter here? And given some of the issues you've done there, what kind of prospects do you think that that could add to your potential here? And this year or next?

  • - President & CEO

  • Definitely not a contribution to earnings in the second quarter. I think as you indicated there earlier, I mean there are certain areas where we're investing to sustain this growth further out.

  • So, since acquiring, especially the school company, we've expanded development staff, we're building service resources, we have hired and transitioned other sales and marketing resources to it, so, we're investing in that division and it would not be contributing to earnings currently.

  • Very enthusiastic about the product and how it plays in the marketplace. Personally been to significant demonstrations and satisfied we've gotten the product that we thought we were getting and very enthusiastic about it.

  • However, it's very difficult to judge, as we saw with Odyssey, whether that contribution comes one or two quarters from now or four or six, but we will make the right investments. It's built into our plan and we believe it will be a significant contributor down the road.

  • - Analyst

  • Now, is that--but I meant more as revenue, not as far as earnings?

  • - President & CEO

  • Revenues are very marginal at this point.

  • - Analyst

  • Okay.

  • - President & CEO

  • They have literally six or eight clients and there was no new license revenue in the quarter. So, it's very marginal at this point.

  • - Analyst

  • Okay, so, that's still in the development stage and it's showing up in your expenses?

  • - President & CEO

  • It's really as if the last three or four years we built a great product that we're now launching and that, instead of building it and taking three or four years to do it, we found one in the marketplace and acquired it. The customer base and the revenues are something we need to deliver.

  • - Analyst

  • And you had commented earlier about the business being kind of more normalized, there's nothing extraordinary going on in this space yet. You're showing good growth in your backlog, new wins and so forth and so on. Let me just ask you, is becoming a $200 million sales organization here, you're putting a lot of good resources together, you're supporting it with, as you mentioned here, with new product development and all that.

  • Is the size of your company now getting to the point where--because of the visibility you have in the marketplace, increasingly so, that that gives you the shot at winning more business than--than maybe you would have had a year ago or two years ago because of the size that you're taking this company to? Is that a fair statement? Just because of --

  • - President & CEO

  • Maybe in--maybe in some of the very large deals, but I've always been kind of amazed, even when this was an advantage for us and at times in our history when it wasn't, that there is not nearly as much consideration given to that as you'd expect or probably experience in the commercial world.

  • We've been in situations where we've competed with what we'd consider to be weak companies that weren't significantly handicapped by it and we've been successful against much larger companies at times. So, probably, David, that has less of an impact than you'd expect it to have.

  • Operator

  • [OPERATOR INSTRUCTIONS ]

  • Our next question comes from the line of Brian Kintslinger with Sidoti and Company. Brian?

  • - Analyst

  • Just one question more, thanks. As I look to that contract you had won with the--the Dallas--I'm sorry, the Texas counties, give us a sense on--because there's a lot of potential there it sounded like, the penetration you've been able to have, either on the bookings side--really on the booking side, not on the revenue side.

  • - CFO

  • I think we've still just signed the one contract with a county but there isn't any change in our expectation. There are a number of other counties that we're talking to that--that we expect to move forward relatively soon.

  • The contract has gone forward as--as anticipated or we discussed a quarter ago. Received our first license payment. There was some recognition in the quarter but certainly the vast majority of it still--still in backlog. So, that's performing as expected and really no change since last time.

  • - Analyst

  • Did you put the entire amount of the contract in backlog or only as you sign the counties will you put that in backlog?

  • - CFO

  • We put the full license. A little over $12 million licenses in backlog, and then as we sign contracts for the implementation with individual counties, there's a services component with each of those that will go in the backlog as each of those individual implementation contracts are signed.

  • - Analyst

  • Great, thanks, guys.

  • - CFO

  • And Brian, with respect to your earlier question about the--the shares, for the first half of the year, we've repurchased 833,000 shares, we've issued about 295,000 for stock option exercises. Issued about 53,000 for the stock purchase plan and about 325,000 in connection with the acquisitions earlier in the year.

  • - Analyst

  • Great, thanks.

  • Operator

  • At this time, there appear to be no further questions. Mr. Marr, I will now turn the conference back over to you for any closing remarks.

  • - President & CEO

  • Thank you, and thank all of you for joining us on the call today. If there are any further questions, feel free to call Brian or myself. Thank you.

  • Operator

  • Ladies and gentlemen, thank you for your participation in today's Tyler Technologies second quarter fiscal 2006 earnings release conference call. This concludes today's call. You may now disconnect.