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 has been negatively impacted by decelerating top-line growth, stagnating bookings, and a decline in Annual Recurring Revenue (ARR). Despite beating Q3 earnings and revenue estimates, concerns surrounding the company's growth prospects persist. Additionally, its high valuation, trading at 8.6x EV/FY25 revenue and 42x FY25 P/E, raises concerns. Weak fundamentals and an unjustifiably high valuation have led to a "sell" rating. The company's Q3 earnings call highlighted strong subscription gains and margin expansion.

1.c. Company Highlights

Last Price	469.33
Change Percentage	0.58%
Open	466.75
Previous Close	466.63
Market Cap ( Millions)	20194
Volume	229371
Year High	661.31
Year Low	450
M A 50	487.24
M A 200	549.0

FCF Yield	3.06%
Dividend Yield	0.00%
ROE	8.92%
Debt / Equity	17.86%
Net Debt / EBIDTA	-36.15%
Price To Book	5.61
Price Earnings Ratio	64.09
Price To FCF	32.63
Price To sales	8.79
EV / EBITDA	37.93

2. Tyler Technologies' Q3 2025 Earnings: Strong Growth and Margin Expansion

Tyler Technologies reported a strong third quarter 2025, with total revenues growing 9.7% to $595.9 million, exceeding expectations. SaaS revenue increased 20% to $199.8 million, and transaction revenues grew 11.5% to $201.3 million. The company's annualized recurring revenue was approximately $2.05 billion, up 10.7%. Non-GAAP operating margin expanded to 26.6%, and cash flows from operations and free cash flow were $255.2 million and $247.6 million, respectively. Actual EPS came out at $2.97, beating estimates of $2.88.

Publication Date: Nov -02

                                    📋 Highlights
                                    Recurring Revenue Growth::
                                                Annualized recurring revenue rose 10.7% to $2.05 billion, driven by 20% SaaS revenue growth to $199.8M and 11.5% transaction revenue to $201.3M.
Strong Cash Flow::
                                                Generated $255.2M in operating cash flow and $247.6M in free cash flow, reflecting operational efficiency and financial strength.
2026 SaaS Outlook::
                                                Targets 20% SaaS revenue growth, with total recurring revenue expected to grow 10-12%, supported by add-on sales and cloud transitions.
Cloud Adoption Momentum::
                                                93% YoY growth in public safety SaaS revenue; 50% of customers now in the cloud, with a goal of 8-10 products per client.
AI Strategic Focus::
                                                Positioning to lead public sector AI transformation through value-driven solutions, with investments in document automation and budgeting tools.

                                

Revenue Growth and Composition

The company's SaaS bookings reached a new quarterly high, up 5% sequentially and 5.8% year-over-year. Total bookings were up 2.6% year-over-year. The company's guidance for 2025 includes total revenues between $2.335 billion and $2.360 billion, with GAAP diluted EPS between $7.28 and $7.48, and non-GAAP diluted EPS between $11.30 and $11.50. For 2026, the company expects SaaS revenues to grow approximately 20%, with total recurring revenue growth within the long-term target range of 10% to 12%.

Margin Expansion and Cash Flow

The company's non-GAAP operating margin expanded to 26.6%, driven by operational efficiency and growth in high-margin SaaS revenue. Cash flows from operations and free cash flow were $255.2 million and $247.6 million, respectively, demonstrating the company's ability to generate strong cash flows.

Valuation and Outlook

With a P/E Ratio of 64.77 and an EV/EBITDA of 41.97, the market is pricing in high expectations for Tyler Technologies' future growth. Analysts estimate next year's revenue growth at 8.9%. The company's strong track record of growth, margin expansion, and cash flow generation supports its long-term targets, including its 2030 goals. As Lynn Moore, President and CEO, stated, the company is "executing well on its strategic priorities and remains on track to achieve its 2030 targets."

AI and Growth Opportunities

The company is well-positioned to capitalize on the AI transformation, with a focus on delivering value to clients rather than chasing hype. The company's newer products, such as emergency response and prison transactions, have significant growth opportunities and potential cross-sell synergies. With a robust pipeline of business and a high level of market activity, RFPs, and demos, the company is poised for continued growth.

3. NewsRoom

Tyler Technologies, Inc. (TYL) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

Tyler Technologies Acquires Edulink

Dec -02

Source: businesswire.com

NTES vs. TYL: Which Stock Is the Better Value Option?

Nov -28

Source: zacks.com

City of Homestead, Florida, Launches Integrated Online Permitting, Licensing, and Code Enforcement Cloud Suite from Tyler Technologies

Nov -25

Source: businesswire.com

Bank Julius Baer & Co. Ltd Zurich Sells 3,096 Shares of Tyler Technologies, Inc. $TYL

Nov -22

Source: defenseworld.net

Financial Review: Tyler Technologies (NYSE:TYL) & Donnelley Financial Solutions (NYSE:DFIN)

Nov -21

Source: defenseworld.net

Artisan Global Discovery Fund: Q3 Delivers Strong Results Amid Trimming And Exits

Nov -20

Source: seekingalpha.com

Tyler Technologies Acquires CloudGavel

Nov -19

Source: businesswire.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: 4.9/10

Value: 2.0

Growth: 9.2

Quality: 7.8

Yield: 0.0

Momentum: 3.0

Volatility: 7.3

1-Year Total Return ->

Aspen Technology

A-Score: 4.5/10

Value: 3.2

Growth: 5.2

Quality: 5.6

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

Duolingo

A-Score: 4.4/10

Value: 0.3

Growth: 9.9

Quality: 8.0

Yield: 0.0

Momentum: 6.0

Volatility: 2.3

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 ->

Clearwater Analytics

A-Score: 4.1/10

Value: 2.4

Growth: 8.7

Quality: 6.5

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

Manhattan Associates

A-Score: 4.0/10

Value: 0.6

Growth: 7.9

Quality: 8.6

Yield: 0.0

Momentum: 1.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

8.09%

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' Q3 2025 Earnings: Strong Growth and Margin Expansion

Revenue Growth and Composition

Margin Expansion and Cash Flow

Valuation and Outlook

AI and Growth Opportunities

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

469.33$

Current Price

469.33$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA