泰勒科技 (TYL) 2013 Q1 法說會逐字稿

Hello, and welcome to today's Tyler Technologies First Quarter 2013 Conference Call. Your host for today's call is John Marr, President and CEO of Tyler Technologies. (Operator Instructions) As a reminder, this conference is being recorded today, April 25, 2013. I would like to turn the call over to Mr. Marr. Please go ahead.

Thank you, Sue, and welcome to our first quarter 2013 earnings call. With me on the call today is Brian Miller, our Chief Financial Officer.

First, I'd like for Brian to give the Safe Harbor statement. Next, I'll have some preliminary comments. Brian will review the details of our operating results. Then I'll have some final comments and we'll take your questions.

Brian?

Thanks, 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 refer you to our Form 10-K and other SEC filings for more information on those risks.

Please note also that all growth comparisons we make on the call today will relate to the corresponding period of last year, unless we specify otherwise.

John?

Our first quarter financial performance builds upon improved performance in 2012 and was our 9th consecutive quarter of year-over-year revenue growth as well as our 48th consecutive profitable quarter. We had organic growth of almost 12% and total growth of nearly 16%. Our recurring revenues from subscriptions and maintenance continued to be the primary driver of our growth, as together they grew almost 20% and represented approximately 62% of total revenue for the quarter. Software license and royalty revenues were up almost 17% over last year, primarily because we recorded $891,000 of royalties from Microsoft Dynamics AX sales. We are encouraged by the increase in royalty revenues this quarter, which exceeded the amount recorded for the entire year of 2012.

Leveraging our recurring revenues led to an increase in gross margins of 60 basis points and our non-GAAP operating margins grew 350 basis points to 19.5% as we held the increases in SG&A expenses and R&D expenses below our overall revenue growth rate.

Bookings in the first quarter grew 36% over last year. New contract signings were solid across all our software product suites while the appraisal services market was somewhat slow. The growth in bookings reflects a continued gradual improvement in the broader marketplace. But we believe it is more attributable to the strength of Tyler's competitive position including our cloud-based offerings.

During the quarter, we signed an agreement with the state of Rhode Island Judiciary for our Odyssey integrated courts and justice solution. The agreement is valued at approximately $6 million and will generate attractive recurring revenues from both maintenance and e-filing. Rhode Island represents our ninth statewide client for Odyssey.

Our ERP solution had a number of meaningful wins across the country ranging from the city of Paso Robles, California, to Key Biscayne, Florida.

Our Energov planning, permitting and licensing solution, which we acquired late last year, also has an active pipeline in Q1 contracts where our newest additions include the cities of Jupiter, Florida, and Temecula, California.

Now, I'd like for Brian to provide more detail on the results for the quarter.

Yesterday, Tyler Technologies reported its results for the first quarter ended March 31, 2013. You've seen the press release and our 10-Q has been filed so I'm going to comment on some of the key metrics for the quarter.

Beginning last quarter, we added additional non-GAAP measures that we believe facilitate understanding of our results and comparisons with peers in the software industry. Our non-GAAP earnings exclude shared-based compensation expense and amortization of acquired intangibles. A reconciliation of GAAP to non-GAAP measures is provided in our earnings release. Also beginning this quarter we've included the Dynamics royalty revenues in the software licenses and royalties line. These were previously included in hardware and other revenue and prior-year amounts have also been reclassified for comparability.

Total revenues for the first quarter were $95.8 million, a new quarterly high, up 15.8%. Organic revenue growth was 11.5%, led by increases in our recurring revenues from maintenance and subscriptions as well as growth in our software services revenue. Our acquisitions accounted for revenues of $3.5 million or 4.3 percentage points of growth. Software license and royalty revenues increased 16.8%. Excluding the impact of acquisitions, software licenses grew 10.3%, most of which is attributable to the increase in Microsoft Dynamics royalties.

Software license and royalty revenue included $891,000 of royalties on public sector sales of Microsoft Dynamics AX by other Microsoft partners compared to $121,000 in last year's first quarter. These royalties are recorded one quarter in arrears as the royalty reports we receive in a given quarter pertain to sales made in the previous quarter. In addition, we had approximately $272,000 of revenues related to Tyler's direct sales of Dynamics, which are included in software licenses and software services. In general, license revenue growth continues to be pressured by the increasing percentage of new customers selecting a subscription-based arrangement.

Subscriptions continue to be our fastest-growing revenue line and grew 35.2%. Organic growth was 33.7%, and the impact of acquisitions added 1.5%. We added 22 new subscription-based arrangements and converted 19 existing installed clients compared to a total of 11 new arrangements and 17 conversions in the first quarter of 2012. Approximately 36% of our new software clients opted for one of our cloud-based solutions compared to 22% of new clients in the first quarter of 2012.

The subscriptions line also includes a growing revenue stream from transaction-based revenues such as e-filing for courts and online payments. These revenues rose 34.4% to $3 million from $2.2 million last year. We expect to continue to see solid growth in these revenues as both current and new clients adopt our Odyssey File & Serve solution and more of them move towards mandatory e-filing.

Software services revenues increased 10.4% with 5.9% organic and 4.5% from acquisitions. Organic growth was primarily driven by the higher level of bookings in the recent quarters. Maintenance revenue growth was 15.6%, of which 10.5% was organic. Our maintenance revenue growth rate continues to be reduced somewhat by the effect of existing installed clients converting to our hosted offerings, which results in a loss of maintenance revenue offset by a larger increase in subscription revenue. Together, our recurring revenues from maintenance and subscriptions comprise 62.1% of our total revenues and grew 19.5%. Appraisal services revenue declined 1.6%.

Our blended gross margin for the quarter was 45.8% compared to 45.2% last year. The software license and royalty margin increased 190 basis points, primarily due to higher royalty revenues. And the blended software services, maintenance and subscriptions margin increased 30 basis points, reflecting our operating leverage in incremental recurring revenues. However, these increases were offset somewhat by a decline in the appraisal margins.

SG&A expense increased 6.1% in the quarter and represented 23.6% of total revenues, a decrease of 220 basis points from last year's first quarter. Non-cash share compensation expense was $2.6 million, compared to $1.8 million a year ago. $336,000 was included in cost of revenues and $2.2 million was included in SG&A expense.

Net research and development expense was $5.6 million compared to $5.1 million last year. We did not receive any R&D expense reimbursements under our agreement with Microsoft in the first quarter of 2013 or 2012 and we do not expect to receive any further reimbursements under the agreement.

Operating income was $14.5 million compared to $10.0 million, an increase of 44.1%. Non-GAAP operating income was $18.7 million, up 41.5% from $13.2 million. The non-GAAP operating margin was 19.5%, up 350 basis points from 16% last year. Net income was $8.5 million or $0.25 per diluted share compared to $5.7 million or $0.17 per diluted share. The fully-diluted share count increased by approximately 1.4 million shares. Our effective tax rate was 39.9%. Non-GAAP net income was $11.5 million or $0.34 per diluted share compared to $7.9 million or $0.24 per diluted share in the first quarter of 2012.

Adjusted EBITDA, which is EBITDA plus non-cash share-based compensation expense, was $20.2 million or $0.60 per diluted share, an increase of 37% compared to $14.8 million or $0.45 per diluted share in the first quarter of 2012. Free cash flow was $12.0 million compared to $17 million. Excluding real estate CapEx, our free cash flow was $14.9 million versus $17.1 million.

Days sales outstanding in accounts receivable was 72 days at March 31, 2013 compared to 64 days at March 31, 2012. DSOs decreased sequentially from 95 days at December 31, a normal seasonal pattern as maintenance billings and associated receivables spike in the December and June quarters.

Our backlog at the end of the quarter reached a new high at $386.6 million, up 16.4%. Backlog related to our software business, which excludes backlog from appraisal services contracts, was $360.9 million, a 17.3% increase. Backlog included $111.9 million of maintenance, compared to $98.5 million a year ago. Subscription backlog was $97.3 million compared to $67 million a year ago.

Our bookings for the quarter, which are calculated from the change in backlog plus revenues, were up 36% to $102 million. For the 12 months ended March 31, bookings were up approximately 10.8% over the prior 12-month period. We signed 11 new contracts in the first quarter that included software licenses greater than $100,000. Those contracts had an average license of $418,000, compared to 12 new contracts with an average license value of $503,000 in the first quarter of 2012.

Our total headcount grew by 18 to 2,406 employees at the end of the first quarter compared to 2,388 at the end of the fourth quarter 2012. We currently expect to add approximately 180 additional employees before the end of this year.

Now, I would like to turn the call back over to John for his further comments.

Thanks, Brian. This was a solid quarter. Overall results were generally in line with our expectations. The local government market environment is good, although not robust. It appears to be continuing a trend of gradual recovery. As I noted earlier, our competitive position is very strong across our major products and we are very focused on maintaining that market leadership.

Next week, over 2,000 Tyler clients will join us in Boston for Tyler Connect 2013, our annual user conference. We expect that this will be our best attended conference to date. Over three days, our clients will learn more about Tyler and our products including our current offerings and our future plans. The conference includes over 500 classes and product demonstrations that allow our clients to improve their skills as well as many opportunities to interact with other clients as well as Tyler staff and business partners. At Connect, we will host a session for investors and analysts from 10.30 am Eastern Time to 1.30 pm on Monday, April 29. A live and recorded webcast of this session will be available on the Investor Relations section of our website at www.tylertech.com. If you're interested in attending in person, please contact Brian Miller to register.

While our existing and in most cases more mature products are performing very well and are responsible for the majority of the growth we're currently experiencing, there was obviously a great deal of interest among our investors in some of the longer-term growth opportunities. I'd like to provide an update on some of those opportunities then update our guidance for 2013.

As we mentioned earlier on the call as well as on our year-end earnings call in February, our royalty revenues from Microsoft increased substantially this quarter. Royalties totaled $891,000, up from $238,000 recorded in the fourth quarter. These royalties were generated by approximately 27 public sector sales of Dynamics AX in 19 different countries. Almost half of the royalties were from one large sale to a federal agency in Indonesia. Yields of this size may not occur every quarter. Our history is still relatively short as we only have been receiving royalties for five quarters. But we are encouraged by the increase in the number of customers as well as the geographical reach of Dynamics. Success in larger deals is something we and Microsoft expect will continue to build.

Our pipeline of Dynamics opportunities through our direct channel also remains active. We have two additional awards that are not yet signed including one of the more significant deals that was one of our early Dynamics proposals.

Our courts and justice business also had some long-term opportunities. We continued to build on our leadership position in case management software with Odyssey and the new statewide contract with Rhode Island signed this quarter. We now have 9 statewide court clients and have won every statewide decision since 2010. We also have an active pipeline of opportunities with counties in states that do not have statewide systems.

As we've discussed in some length on prior calls, California has emerged as a market that presents a significant long-term opportunity for us. Its courts in many of the state's 58 counties are expected to replace aging systems following the termination last year of a project to develop a custom statewide case management system. We are now underway with the implementation of our first California client, San Luis Obispo County. Since the end of Q1, we have signed a contract with our second Californian client, Kings County, which will be a SaaS implementation under a 5-year agreement and also includes transaction-based e-filing. In addition, we were one of three vendors selected to enter into a master service agreement under which courts in the state can purchase systems without going through the RFP process. We expect our MSA to be signed in the very near future and are actively engaged with a number of prospects that we expect to purchase systems under the MSA.

We are encouraged by our initial success in California but we continue to view this as a long-term opportunity that will likely be realized over a number of years. These processes, especially the larger ones, can be lengthy and complicated and we are investing this year in development efforts related to the California market as well as incurring costs related to increased sales efforts in the state.

Our electronic filing business for courts known as Odyssey File & Serve is another area in which we are making significant investments this year. We are very actively working on the TexFile project, which is the contract we signed last year to provide a statewide e-filing system for Texas courts. By order of the Texas Supreme Court, e-filing will be mandatory in civil cases beginning with the largest counties in January 2014 and then phased in to other counties over a 2.5 year period. As with most of our new e-filing arrangements, these will be transaction-based revenues with users paying a per-filing fee to us. We expect to expense more than $3 million this year on TexFile implementation with very limited revenues expected in 2013. However, we expect that this contract will provide a long-term revenue stream with more than $15 million annually when fully implemented.

We are also pursuing a number of additional e-filing opportunities with current Odyssey clients as well as with courts that do not use Odyssey. With each new e-filing contract, we will incur costs ahead of revenues, which may put short-term pressure on margins as is the case this year. We believe that these recurring transaction-based revenue streams will contribute significantly to revenue and margin expansion in coming years.

Our guidance for 2013 is generally consistent with our initial guidance for the year provided in February. We currently expect 2013 revenues to be between $409 million and $418 million. We expect 2013 diluted earnings per share to be approximately $1.06 to $1.14 and fully diluted shares for the year are expected to be approximately 34 million to 34.5 million. We expect 2013 non-GAAP diluted earnings per share to be approximately $1.42 to $1.50. For the year, estimated non-cash share-based compensation expense is expected to be approximately $11.5 million. We estimate an effective tax rate for 2013 of approximately 40%. We expect that total capital expenditures will be approximately $24 million to $25 million for the year. Capital expenditures for the year include approximately $15.5 million related to real estate and office facilities under construction. Total depreciation and amortization is expected to be between approximately $14.2 million and $14.7 million, including approximately $6.5 million of amortization of acquired intangibles.

Now we'll take your questions.

We will now begin the question and answer session. (Operator Instructions) Nathan Schneiderman of Roth Capital.

Let me just ask a couple of quick ones. John, you said that you feel your competitive position has improved. What specifically can you share with us to make you say that? I'm just curious if, for example, there's been a change in win rates and if so, to what magnitude or if you're looking at other data. So what can you share with us there?

Yes, sure. This really goes back to and we've kind of characterized this before that 2010, 2011 were pretty tough years in the marketplace based on the environment. A lot of companies cut back significantly on their R&D and their investment. Some companies literally probably moved from an active new business company to maybe more of a legacy company. A number of companies went through combinations and companies that were acquired or merged into other companies and aren't the same in the new business market. So while we had very limited growth one year that was actual -- very -- was pretty much flat and one year with low growth in that period of time. We continued to invest and the competitive position in these products reflects that now. We don't want to necessarily publish our own competitive data internally but to answer your question, yes. Pretty much across the board our win rates directly against specific competitors that we track and more broadly across the marketplace have improved since then.

Then just one follow-up, you had mentioned with respect to the California opportunity in the 58 counties that are out there, you've won 2 but you mentioned that you're actively engaged with others that are considering systems. I was wondering if you could share with us maybe the number of these counties you're currently engaged with. I guess the same question more broadly about the e-filing opportunity. How many e-filing prospects just overall California and otherwise are you engaged with? That does it for me with questions.

Sure. Well I don't know. I can't give you a specific number. Obviously there's people you've had phone calls with and people you've done three demonstrations for. They're all prospects but at different stages obviously. There's 58 counties. There certainly aren't tens of them that are ready to make choices. It would be mid to high single digit kind of thing that maybe people, obviously San Luis Obispo and Kings ran their own processes and are purchasing systems ahead of that. There's maybe one or two others that are engaged in processes ahead of the MSA. Again, whatever, five to eight that maybe are sitting on the sidelines and waiting for that to get in place so they can utilize that to purchase a system. So there may be again, 8, 10, 12 that are active processes at this point in time. Obviously a good number beyond that that are taking longer to get well into the process that we'd expect in future years.

Then on e-filing it's only -- it's a few. These are all pretty good sized deals. All of them individually at least to that division within Tyler move the needle a little bit. But there may be three, four, or five meaningful opportunities. I don't think any of them are the TexFile size. That's a kind of outsized deal for us, but all reasonably meaningful on their own.

Tim Quillin of Stephens Inc.

If you could talk about the Texas e-filing a little bit more. I guess first of all just in terms of the $3 million in spend, is that weighted towards any quarter? Then when you start the first revenue in January, how and you mentioned it kind of phases in over 2.5 years, how exactly does -- is it a little bit front-end loaded and then a gradual ramp-up or kind of how exactly does it phase in?

Yes, no question the investment in building out the infrastructure and the team that will support that project, it's happening -- it has clearly started but heads and capital investments will continue. So it will build somewhat throughout the year. It's in the plan and pretty much is expected. Maybe we've made that a little more robust since the beginning of the year in terms of just the reality that we really see this coming at us pretty quickly, so -- but again mostly in the plan and nothing really new there.

There are some revenues in the plan as we mentioned January. We don't expect that law offices come to work on January 2nd and just all of a sudden start filing things. So there will be some ramp up later this year. That's a little uncertain just how much of that will occur. But we have some revenues in our plan anticipating that obviously people will start using the system and easing into it in the latter part of this year.

As I mentioned on the call, it's the larger counties that were mandated first. So, yes, it'll kind of spike up significantly beginning next year. Maybe in a ball park way, maybe two-thirds-ish of what the project ultimately will produce. That run rate should be pretty much on, only a few months into next year that we should be at again maybe a run rate of around two-thirds of what they will ultimately produce. Then the rest of those smaller counties will build out the balance over a period of 2.5 years.

Just want to confirm then in terms of numbers that at peak it would be more than $20 million or $20 million plus, so to two-thirds that you could get in 2014 would be $14 million plus and then if you could talk about the Microsoft royalties. Even excluding your largest sale, obviously you had a big jump up in the levels of royalties, so an encouraging sign obviously. So do you -- would you still expect perhaps it could drop down to the 4Q levels or are -- do you feel like you're at a new run rate and feeling relatively good about continued growth from here?

I think the $20 million would be on the high end of the range that we'd estimate this would eventually perform at. So you might want to be cautious with that. You might want to use $16 million or $18 million and back into it from there. I think, again, $20 million being the high end of the range.

In terms of the Microsoft deals, yes, we obviously we liked that quarter. It's certainly not a game changer. We haven't expected that we'd have an explosion. I think we've been cautious to guide people that way. We'd like to see a nice gradual building of that, some quarters will jump up as that did and it could slide back a little bit. I think it'd probably be very disappointing -- not to say you won't have a bad quarter here or there and I wouldn't read too much into it, but I think it probably shouldn't fall back to that level. You're building a customer base too, right. So there's recurring revenue now being realized through that. So we should start to see a base of even recurring revenue with a baseline of new license sales that I think should be consistently above what we saw in Q4. So again, if you see a quarter like that, I wouldn't overreact to it but that would be on the very low end of an ongoing run rate range, if you want to look at it that way.

Yes, we're happy with the quarter cause it really included the things we're looking for. The number of customers was significant. The geographical reach was significant, which means they've got partners in their own channels engaged around the world really involved in that. Having a single big deal you could say doesn't reoccur necessarily so I wouldn't necessarily embrace that number as a run rate but it is also good to see that this is what we want. Tyler has its own directiveness, its own proprietary products, its own channel with Dynamics here and domestically that winning a significant tier one deal, if you will, against tier one players in geographies that we have absolutely no exposure on our own is part of what we were trying to accomplish with the Dynamics opportunity. So I think that was a good quarter. It's probably a little hot to think of it as a new run rate, but I would not expect it to fall all the way back to where it was in Q4.

Brian Kinstlinger of Sidoti & Company.

The first question I had is related to Kings County in California in general. First of all, is there a mandate at all in Kings County or anywhere in California that we should look at? Do most of the counties there have viable e-filing software or will most also eventually need e-filing software in your opinion?

Yes, there is not a statewide or a heavily adopted e-filing system. It is not broadly mandated throughout California and it's not in this first cut of every deal we're looking at. I think a lot of these people have very old systems. They were waiting on the state system. Now that that's not going to occur, I think there's going to be a kind of a process with priorities here that they need to get their case management systems replaced. Obviously these arrangements with these clients change dramatically when e-file is involved. So we'll advocate that and encourage it. I think -- just have to think that really all major courts in the country will have e-filing solutions in years to come. But I think we'll see an order there where some included initially but some will put it off simply because they have to make it a priority to replace their case management system.

Then just wanted to follow up on California. When the MSA gets signed, do you think that's going to trigger a handful of counties to hurry up and make decisions? Are they waiting for that? Then my final question I'll get back in the queue is the 180 people you're hiring, is that weighted at any specific time in the year?

I think -- yes, I think the MSA I don't want to say gets signed and we take four orders the next day. But yes I think there are a number of places that we're talking to that have not run a process because they anticipate ordering off the MSA. So I think there will be a few of those. Now, so far you've seen the first two deals are not real big counties or real big deals. It seems to be the case, the bigger counties and some of the counties in California obviously are as big as some of the statewide deals we've done. Those are going along at a slower pace.

Go ahead, Brian, if you want to comment on heads.

Yes, the staffing ramp up, most of that is in Q2 and Q3, probably fairly evenly split between those two, probably a little bit more weighted towards Q2. A lot of that's -- a lot of the TexFile hiring will take place or is planned for Q2. Typically we don't necessarily get it all done exactly as it's planned, but it would be pretty heavily weighted towards two and three.

Scott Berg of Northland Capital Markets.

Congratulations on a strong bookings quarter. One question for John and then a follow-up for Brian. John, on the deal flow in the quarter, you had made the comment that 36% of your customers chose subscription contract versus only 22% in the first quarter of '12. It's obviously a pretty steep jump and even a larger jump in what the second half of '12 saw. In your guidance, are you assuming a same type of customer percentage choosing the subscription revenues or is that going to vary from that 35%, 36% level throughout the rest of the year?

I think the adoption of SaaS and cloud-based solutions has moved. After a lot of years, we've been offering these systems for over 10 years and really hung out in the 10%, 15% adoption range for a number of years as you said moving, we were 20-ish last year and now this particular quarter around 30. It's clearly moving along. Now whether it stays at 30 or drops back, it's gradually -- or not so gradually building and we'd expect that to happen.

I would say while we didn't change guidance cause we're comfortable, very comfortable within the brackets we have that that adoption is higher than was in our plan. So the license numbers are a little lower than what we might have expected but still significantly above last year. In the total revenue, that's a big part of the reason it was only marginally off expectations. But obviously marginally lower overall revenues, somewhat lower license revenues in favor of the adoption of SaaS. Again, it's running a little ahead of plan. We'd certainly be happy if it continues to grow from there. But if it slides back a little bit, I think we are seeing more sustained adoption of that. The public sector is slow to move and embrace these things. But I think we're seeing it, although behind the commercial rate. It's clearly happening.

One thing I would point out too is when we talked about that 36% of the new customers, that's the number of new named customers. On average, the SaaS deals tend to be a little more towards the smaller size. So if you look at the split in the dollar value of the new contracts, it's more like 26% of the total dollar value is subscription versus about 20% last year. So, it's not quite as heavily weighted on the dollars as it is on the names.

Thank you for the additional comments there. Then Brian on my follow-up, SG&A came in a little bit lower than what I was estimating at least in the quarter and as a percentage of revenues lower than your last four or five quarters kind of in general. Is that kind of the new run rate for the rest of the year or does the spike in the Texas or the additional hiring kind of drive that up to a higher run rate starting in Q2?

In terms of -- obviously we expect revenues to be ramping through the year as well. So in terms of absolute dollars, we do expect SG&A to ramp during the year. But in terms of percentage of revenues, we don't. We expect it to be at a lower rate than last year's as we generate some of the -- recognize some of the leverage there. Relative to Q4, there were -- it actually was down a bit. We had a higher incentive comp sort of catch up in Q4 of last year that's not there in the first quarter of this year. Also some of the marketing expenses are more heavily weighted towards out of the first quarter and into the last three quarters. So you'll see a little bit of ramp up in the absolute dollars as well. Commissions were actually lower in Q1 as a result of kind of the mix of revenues and people hitting their quotas in Q4 spikes commissions up a bit in Q4. So as a result, Q1 is probably a little bit lower than we'd expect in terms of absolute dollars over the year. But we do expect to see a nice decrease in SG&A as a percentage of revenues.

Dan Cummins of B. Riley.

A couple of questions please. First I don't know if I heard an organic estimate on the growth rate for bookings?

We didn't break out the --

Just rough numbers or range perhaps.

I'll get back to you on that in just a second.

Okay. With respect to the maintenance revenue base right now, how much is related to your court business and how much strength does the maintenance base perhaps get from your momentum in courts? As you said, there's about a five point difference between the reported and the organic on the maintenance line. When does that settle down towards the 10% to 11% level?

Court historically has a lower maintenance as a percentage of their total revenue. That is improving as we add these new customers and they come on line. We're seeing a significant increase in maintenance in the courts and justice business. Also the acquisitions we've done -- that we did back in 2000 -- at the end of 2011 with Windsor and then the follow-on acquisitions at the beginning of 2012 were more heavily weighted towards maintenance. Their revenue mix was more heavily in the maintenance field than in the new business market. So we're still seeing that in the mix of growth there.

The new acquisitions in terms of the backlog or the bookings this quarter didn't really add a lot. There again I've had a couple of deals that were pretty meaningful but the other -- I said the mix of the new bookings was more organic than the revenue. So I'd say we're -- it's more heavily weighted towards organic growth there.

Mark Schappel of Benchmark.

John, in the past I believe Tyler was winning somewhere between 80% to 85% of your competitive court deals. I was wondering if that trend held up in the quarter?

Yes, in fact, as we mentioned on the call, the statewide deals we've been on a run since 2010. So haven't lost a statewide deal and really haven't lost major county type deals over the last few years. So it's definitely at least at that run rate now. There could be some smaller deals that we don't scale down into or generally the deals we're not winning are not really in our sweet spot.

With respect to your courts business, what is that running with -- as a percent of total revenue?

About, right at about 15%.

About 15% of total revenue?

Right.

Jonathan Ho of William Blair.

Just wanted to start out with the California deals. In terms of the MSA, did the larger counties tend to use something like an MSA or would they potentially do their own process? Just wanted to get a sense of whether we should look at the MSA as more sort of the smaller counties or whether it's unrelated to county size?

I would say the larger counties may use it but yes they would be more likely to run their own process and have specific needs that they want to address outside of that. The smaller counties are more likely to utilize it. They're watching closely the decisions that have been made and how those projects are going. In some cases, they may even coordinate with one another to more regionally do things. California has got huge differences in the counties. I think Kings County is 150,000 people and obviously they have counties that have many million people in them. So, the smaller end is more likely to leverage the MSA as well as potentially form some groups that do some regional things.

Just in terms of trying to model some of the expenses, just wondering for Brian whether Tyler Connect is going to add any additional costs this quarter or whether we should be looking at any sort of unusual spending related to events this year that might shift from last year?

No, it would be similar to last year. Connect falls in the hardware and other, both the revenues and the expenses. So you saw that spike last year of a couple million dollars from Q1 to Q2 in the cost of hardware and others. I think you'd see something similar this year.

Raghavan Sarathy of Dougherty and Company.

Couple questions. Brian, when I looked at the maybe what you call significant sized deals more than 100,000. You signed 11 in this quarter which was 12 last year. Even the average size is down year on year yet your new bookings are up 36% year on year. Can you talk about some of the dynamics that drove a strong bookings growth this year compared to last year?

Yes, the biggest deal this quarter, there weren't -- neither quarter had a really large like an Oregon or Maryland size deal in it. But the biggest deal this quarter was the Rhode Island statewide courts deal which was around $6 million. Otherwise it was just really a lot of strengths in I guess what I'd call midsize deals, primarily, deals anywhere from a few hundred thousand to a couple million. So it was more volume related than size related.

Then as we said, we doubled the number of subscription-based deals so 22 cloud deals went in as well. Then also in the bookings number we're seeing a growing number that don't actually show up as new clients, but of renewals of SaaS deals. So as we have deals that have been there, finished up their initial three-year, five-year arrangement, we're seeing renewals of those into additional terms. Those go into bookings as well but don't fall into that -- either of those client count numbers of new clients.

Then in terms of accounts receivable, looks like AR remains elevated. I was wondering what was driving AR growth faster than revenue growth?

AR actually went up a few days compared to the same quarter last year. It's really mostly related to -- primarily related to the acquisitions. We have a higher level of maintenance billings that that happened this quarter. So when you have elevated management billings you get the receivable but you don't have the corresponding revenues that go with that. So it bumps your DSOs up a bit but we'll see those collections next quarter.

We also had a couple of larger deals where we had more significant upfront cash collections where we had -- I'm sorry cash billings where we were able to bill larger deposits up front because of the terms of the contracts. Those weren't collected yet but were billed during the quarter. Again would -- be expected to be collected next quarter but there's a billing without a corresponding revenue component. So it's not really an aging issue. It's more the nature of the billings that we saw this quarter.

(Operator Instructions) Brian Kinstlinger of Sidoti & Company.

Brian can you remind us last year what e-filing's total transactional revenue is -- was and maybe what you estimate will be this year based on your guidance?

For the full year, last year we finished the quarter e-filing was at a run rate of a little over $6 million. The fourth quarter was around $1.5 million. This year Q1 e-filing was about $1.7 million. So we're on a run rate of a little less than $7 million. We do expect it to grow during the year. I don't have -- it's a little uncertain in terms of how the timing of these things kick in, particularly with some of the ones that are moving towards becoming mandatory. I mentioned we have a little bit of Texas in there, but it's certainly a number that's less than $10 million that's in our plan for this year.

Can you explain, do you have a dedicated sales force or is it just an extension now of your Odyssey or any courts team? Then separately, John, if you can comment in the many years I've followed you guys, buybacks have been very aggressive for the Company and we haven't seen them in a little bit. So maybe talk about if that's something the board is evaluating right now? Will you get more aggressive do you think this year?

No e-file was done with the regular courts channel. So courts is an independent channel for us but the case management, Odyssey people as well as Odyssey File & Serve is done pretty much with the same people. The acquisition we did a couple years ago, which was WizNet, they brought with them what we'd call a product specialist. So they do -- different people do the demonstrations and when you drill into the details, but the channel and the sales management are the same people.

Buybacks, obviously we're thrilled that we were as aggressive as we were when the stock was at a lower value. Fortunately we did enough of it, actually went into debt a little bit. Done a number of acquisitions over the last couple of years as well. Purchased and built some real estate. So deployed a lot of capital, got a little bit in debt, which was fine. Obviously not highly levered in relation to our numbers. Now we're out of debt and starting to accumulate some cash, but certainly not at a point where we have to have more urgency in terms of deploying capital. So I think while we certainly appreciate the reasons why our stock has gone up significantly and agree that those [catalysts] have significant value, I think where we are right now we won't be very aggressive at these levels.

Raghavan Sarathy of Dougherty and Company.

You might have mentioned this, when do you expect to sign this MSA with the state of California or the Sacramento Managers Association, whatever it's called?

Well we simply said very soon. We don't control the process but in the coming weeks we'd expect that that would be executed.

Then one to also Brian. Brian, can you give us some sense and I know you kind of classified this segment a little differently, but give us some sense for the growth rates of different segments of the business within the enterprise software business or segment, like (inaudible) courts and justice, with ERP, maybe I guess schools?

We really don't get into breaking out the segment into sub-segments too much. We have said that we would expect that courts and justice over the next couple of years would be faster growing. If the other business units, the ERP side is much more mature. It has a lot more scale now. It's harder to move the needle as quickly. Particularly with the e-filing opportunities and some of the things we've talked about with respect to courts, we expect that to grow faster. But it's not explosive kind of growth. The schools business continues to be -- so the school specific products continues to be a bit more challenging market in terms of the competitive landscape. So that business is growing a bit slower. The ERP business is growing I'd say generally in line with our overall growth rates.

At this time, there appears to be no more questions. Mr. Marr, I'll turn the call back to you for closing remarks.

Okay, thank you, Sue, and thank you all for joining us on the call today. If there are any further questions, feel free to contact Brian or myself. Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.