Tyler Technologies, Inc. (TYL) | Investment Case

1. Company Snapshot

1.a. Company Description

Tyler Technologies, Inc.provides integrated information management solutions and services for the public sector.The company operates in three segments: Enterprise Software; Appraisal and Tax; and NIC.

It offers financial management solutions, including modular fund accounting systems for government agencies or not-for-profit entities; utility billing systems for the billing and collection of metered and non-metered services; products to automate city and county functions, such as municipal courts, parking tickets, equipment and project costing, animal and business licenses, permits and inspections, code enforcement, citizen complaint tracking, ambulance billing, fleet maintenance, and cemetery records management; and student information and transportation solutions for K-12 schools.The company also provides a suite of judicial solutions comprising court case management, court and law enforcement, prosecutor, and supervision systems to handle multi-jurisdictional county or statewide implementations, and single county systems; public safety software solutions; systems and software to automate the appraisal and assessment of real and personal property, as well as tax applications for agencies that bill and collect taxes; planning, regulatory, and maintenance software solutions for public sector agencies; software applications to enhance and automate operations involving records and document management; and data and insights solutions.In addition, it offers software as a service arrangements and electronic document filing solutions for courts and law offices; software and hardware installation, data conversion, training, product modification, and maintenance and support services; and property appraisal outsourcing services for taxing jurisdictions.

The company has a strategic collaboration agreement with Amazon Web Services for cloud hosting services.Tyler Technologies, Inc.was founded in 1966 and is headquartered in Plano, Texas.

Show Full description

1.b. Last Insights on TYL

Tyler Technologies' recent performance was negatively impacted by its Q4 earnings miss, with EPS and revenue coming in below estimates. Despite a 10.9% recurring revenue growth and an upbeat 2026 revenue outlook, the company's earnings miss likely affected its performance. Additionally, some institutional investors, such as Artisan Partners Limited Partnership, reduced their stakes in the company. However, others like Assetmark Inc. and Goodman Advisory Group LLC increased their positions. The company's SaaS revenue grew over 20% and free cash flow reached a record high. (Source: Q4 2025 Earnings Call Highlights)

1.c. Company Highlights

Last Price	374.59
Change Percentage	2.38%
Open	367.29
Previous Close	365.87
Market Cap ( Millions)	16102
Volume	422834
Year High	621.34
Year Low	283.72
M A 50	393.46
M A 200	498.03

FCF Yield	3.96%
Dividend Yield	0.00%
ROE	8.73%
Debt / Equity	18.26%
Net Debt / EBIDTA	-64.68%
Price To Book	4.36
Price Earnings Ratio	51.1
Price To FCF	25.26
Price To sales	6.9
EV / EBITDA	30.04

2. Tyler Technologies' Q4 Results Exceed Expectations with Strong Recurring Revenue Growth

Tyler Technologies reported total revenues of $575.2 million for Q4, up 6.3% year-over-year, with recurring revenues growing 11% and free cash flow reaching a record high, up nearly 10% with a free cash flow margin of 41%. The company's non-GAAP operating margin was 24.1%, down 30 basis points from last year. Actual EPS came out at $2.64, slightly below estimates of $2.71. Subscriptions revenue increased 16.1%, driven by SaaS revenues growing 20.2% to over $200 million. Transaction revenues also grew 12.1% to $196.7 million.

Publication Date: Feb -16

                                    📋 Highlights
                                    Strong Q4 Financial Performance:
                                                Recurring revenue grew 11%, free cash flow hit record high with 10% growth and 41% margin, while SaaS revenue surpassed $200M for the first time.
Public Sector Momentum:
                                                Elevated RFP/sales demo activity, with 2026 SaaS bookings guided at 21.5% growth, driven by 13% from prior bookings and 3-4% from client flips.
AI Integration & Product Innovation:
                                                Tyler resident AI assistant launched in 6 states; partnerships with Anthropic, AWS, and OpenAI to embed AI into enterprise platforms, automating workflows and improving client ROI.
Healthy Balance Sheet & Capital Returns:
                                                $200M share repurchase authorization, $14.5M in cash balance, and FTR acquisition (not in 2026 guidance) signal disciplined M&A and capital allocation flexibility.
Transaction & Payment Growth:
                                                Transaction revenue rose 12.1% to $196.7M in Q4, with 2026 growth projected at 10-12% from expanded payment services and software integration.

                                

Guidance and Outlook

The company provided guidance for 2026, expecting total revenues to be between $2.5 billion and $2.55 billion, with the midpoint implying growth of approximately 8.3%. Non-GAAP diluted EPS is expected to be between $12.40 and $12.65. The company expects SaaS bookings to grow in 2026, with a midpoint guidance of 21.5% for SaaS revenue growth. According to H. Lynn Moore, "We are seeing real adoption of our AI solutions, with the Tyler resident AI assistant going live in six states."

Valuation and Growth Prospects

With a P/E Ratio of 41.47 and an EV/EBITDA of 26.03, the market appears to be pricing in significant growth prospects. The company's ROE is 7.7%, and ROIC is 7.43%. The balance sheet and free cash flow are the strongest they've ever been, with a significant share repurchase authorization. Analysts estimate next year's revenue growth at 9.7%, indicating a relatively stable outlook. The company's focus on AI solutions and its partnerships with major AI players are expected to drive growth.

Segment Performance and Future Initiatives

The payments and transaction segment is expected to grow 10-12% next year, driven by expanding transaction business within the existing software customer base. The company is also focusing on adding disbursements to the portfolio and providing software products under transaction-based arrangements. The decline in services and other bookings is primarily due to a $10 million contract reserve. The company is intentionally limiting the growth of low-margin professional services and focusing on higher-growth, more valuable revenue lines in SaaS and transactions.

AI and Innovation

The company is embedding AI into its flagship products, automating repetitive workflows, and creating measurable savings for clients. The trust and relationships with clients are significant barriers to entry for competitors. R&D expense is guided higher, driven by investments in AI, product innovation, and the migration of development expense from cost of sales to R&D. The company expects to settle in around 8.8% to 9% of revenue, with a significant amount invested in AI.

3. NewsRoom

Tyler Technologies, Inc. (TYL) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Mar -05

Source: seekingalpha.com

Tyler Technologies, Inc. (TYL) Presents at Citizens JMP Technology Conference 2026 Transcript

Mar -03

Source: seekingalpha.com

2 AI Stocks to Buy on This Pullback

Mar -01

Source: investorplace.com

Tyler Technologies, Inc. $TYL Shares Sold by Artisan Partners Limited Partnership

Feb -27

Source: defenseworld.net

Artisan Global Discovery Fund Q4 2025 Winners, Laggards, Buys & Sells

Feb -26

Source: seekingalpha.com

Tyler Technologies to Participate in March Investor Conferences

Feb -24

Source: businesswire.com

Fiera Capital Corp Sells 2,404 Shares of Tyler Technologies, Inc. $TYL

Feb -20

Source: defenseworld.net

NTES or TYL: Which Is the Better Value Stock Right Now?

Feb -17

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.38%)

6. Segments

Enterprise Software

Expected Growth: 10%

Tyler Technologies' 10% growth in Enterprise Software is driven by increasing demand for digital transformation in the public sector, expansion into new markets, and strategic acquisitions. The company's cloud-based solutions, such as Odyssey and EnerGov, are experiencing high adoption rates, while its data analytics and artificial intelligence capabilities are enhancing customer engagement and retention.

Platform Technologies

Expected Growth: 8%

Tyler Technologies' Platform Technologies segment growth is driven by increasing demand for cloud-based software solutions, expansion into new markets, and strategic acquisitions. The segment benefits from the growing need for digital transformation in the public sector, driving adoption of its civic services, courts, and justice solutions. Additionally, the company's focus on innovation and R&D investments in emerging technologies such as AI and blockchain further supports growth.

Corporate

Expected Growth: 7%

Tyler Technologies' 7% corporate growth is driven by increasing demand for cloud-based software solutions, strategic acquisitions, and expansion into new markets. The company's focus on digital transformation, cybersecurity, and data analytics also contributes to its growth. Additionally, Tyler's strong brand reputation, high customer retention rates, and cross-selling opportunities further support its corporate growth.

7. Detailed Products

Munis

A comprehensive ERP system designed for local governments, providing a range of modules for financial management, human resources, and utility billing.

Incode

A suite of software solutions for courts and justice agencies, offering case management, court administration, and probation management capabilities.

EnerGov

A permitting, licensing, and regulatory management solution for governments, enabling efficient permitting, inspections, and code enforcement.

New World ERP

A comprehensive ERP system designed for local governments, providing financial management, human resources, and community development capabilities.

Tyler Public Safety

A suite of software solutions for public safety agencies, offering computer-aided dispatch, records management, and mobile data access.

Socrata

A data-as-a-service platform for governments, providing data sharing, analytics, and visualization capabilities.

8. Tyler Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Tyler Technologies, Inc. operates in a niche market, providing software solutions to the public sector. While there are some substitutes available, they are not as comprehensive as Tyler's offerings, reducing the threat of substitutes.

Bargaining Power Of Customers

Tyler Technologies, Inc.'s customers are primarily government agencies, which have limited bargaining power due to their reliance on Tyler's specialized software solutions.

Bargaining Power Of Suppliers

Tyler Technologies, Inc. has a diversified supplier base, reducing its dependence on any single supplier. Additionally, the company's software-centric business model reduces its reliance on physical components, further minimizing the bargaining power of suppliers.

Threat Of New Entrants

The public sector software market has high barriers to entry, including significant investment requirements and complex regulatory hurdles. This limits the threat of new entrants and provides a competitive advantage to established players like Tyler Technologies, Inc.

Intensity Of Rivalry

The public sector software market is moderately competitive, with a few established players competing for market share. While there is some rivalry, the market is not overly saturated, and Tyler Technologies, Inc. has a strong market position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	18.28%
Debt Cost	4.05%
Equity Weight	81.72%
Equity Cost	7.71%
WACC	7.04%
Leverage	22.36%

11. Quality Control: Tyler Technologies, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Paylocity

A-Score: 4.7/10

Value: 2.0

Growth: 9.2

Quality: 8.0

Yield: 0.0

Momentum: 1.5

Volatility: 7.3

1-Year Total Return ->

Aspen Technology

A-Score: 4.6/10

Value: 3.3

Growth: 5.1

Quality: 5.9

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

Duolingo

A-Score: 4.5/10

Value: 1.9

Growth: 9.9

Quality: 9.0

Yield: 0.0

Momentum: 4.5

Volatility: 2.0

1-Year Total Return ->

Tyler Technologies

A-Score: 4.4/10

Value: 0.7

Growth: 7.2

Quality: 7.6

Yield: 0.0

Momentum: 2.5

Volatility: 8.3

1-Year Total Return ->

Manhattan Associates

A-Score: 4.1/10

Value: 0.8

Growth: 7.9

Quality: 8.7

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

Clearwater Analytics

A-Score: 4.0/10

Value: 1.8

Growth: 8.7

Quality: 6.7

Yield: 0.0

Momentum: 1.5

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.65%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.04%

Tyler Technologies, Inc. - US9022521051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TYL

1.c. Company Highlights

Less Volatile

Expensive

Better Quality

Earnings Beats

Revenues Miss

Strong Momentum

Revenues Beats

2. Tyler Technologies' Q4 Results Exceed Expectations with Strong Recurring Revenue Growth

Guidance and Outlook

Valuation and Growth Prospects

Segment Performance and Future Initiatives

AI and Innovation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.38%)

6. Segments

Enterprise Software

Expected Growth: 10%

Platform Technologies

Expected Growth: 8%

Corporate

Expected Growth: 7%

7. Detailed Products

Munis

Incode

EnerGov

New World ERP

Tyler Public Safety

Socrata

8. Tyler Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Tyler Technologies, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

374.59$

Current Price

374.59$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA