TYLGovernment software

Tyler Technologies

Not investment advice. Kevin may own this stock. How we value stocks

By Kevin Amado

Updated yesterday · Nov 12

Price: $425.52
Analysts view: Bullish
Discount category: Close to intrinsic value
Pick status: Top pick
Next earnings: Earnings Jan 28 · in 2 months · estimated

AI disruption risk

History

Market cap: $17B; Shares of Oct 26, 2026
P/E (trailing): 53.1; Price of Nov 12, 2026
EPS (trailing): $8.01; 12 months to Sep 30, 2026
52-week range: $270.71 – $481.57; To Nov 12, 2026
Beta: 0.74; Vs S&P 500, 5 years monthly, to Oct 30, 2026
Average volume: 839K; 3 months, to Nov 12, 2026

Check the numbers:ExchangeGoogle FinanceYahoo FinanceSEC filings

In short

Thesis: Investors fear that AI tools will replace Tyler's government software, and only steady SaaS growth and cloud moves through 2027 and 2028 can close the gap slowly.
Gap: Slow. Proof that AI does not replace Tyler's software comes from cloud moves and SaaS growth over several years, with peak volumes in 2027 to 2029.

Company guidance: Non-GAAP diluted EPS of $12.95 to $13.20 and revenues of $2.535 billion to $2.565 billion for 2026 (October 28, 2026, Q3 2026 earnings release (8-K))

Price history

Weekly closes, adjusted for splits. Log scale: the same distance is the same percent move.40-week avg (≈200-day) $334.70

About

Tyler Technologies sells software only to the public sector: cities, counties, schools, courts and state and federal agencies. Its products run court cases, public safety and 911 centers, tax and property records, permits, budgets and accounting. It has more than 50,000 installations across about 16,000 client locations in all 50 US states and some other countries.

Most revenue is recurring: SaaS subscriptions, transaction fees for online government payments and filings, and maintenance of software that clients run on their own servers. In Q3 2026, recurring revenue was $568.8 million, or 87.8% of total revenue. Tyler wants to move about 85% of its on-premises clients to its cloud by 2030, because a client that moves pays about 1.7 times more.

Thesis

The market fears that AI will reduce the value of Tyler's software. The belief is that governments can use large language models to build their own tools, or buy cheaper AI tools, in place of Tyler's court, tax and finance systems. This fear hit most software stocks from 2025, and Tyler's price fell by about half from its February 2025 high. Slower reported growth adds to the doubt.

Tyler lost the Texas payments contract in Q4 2025, so total revenue grew only 8.7% in Q3 2026. For the gap to close, four things must be true. SaaS revenue must keep growing about 20% or more a year; it grew 21.2% in Q3 2026. Clients must keep moving to the cloud at the planned pace, with peak volumes in 2027 to 2029.

Transaction revenue must return to growth near 10% after the Texas contract leaves the comparisons; it grew 9.5% in Q3 2026, or 14.2% without the Texas contract. The new AI products, such as document automation and the resident AI assistant, must add revenue to existing contracts; Tyler said that it sold about 300 deals with AI products to October 2026. The Q3 2026 report on October 28, 2026 passed the first check. The next check is the full-year 2026 report with the 2027 guidance in early 2027, because 2027 is the first full year without the Texas contract in the base.

Tyler set 2030 targets of $3.35 billion of recurring revenue and $1.15 billion of free cash flow, so the full evidence comes over several years. If SaaS growth holds and clients do not leave for AI tools, the gap can close slowly through 2027 and 2028.

Second opinion (AI estimate): intrinsic value of at least $289.

How the AI estimate was made

The intrinsic value for Tyler Technologies is an AI estimate from October 28, 2026. It is not an analyst's value. An AI research agent calculated it from Tyler Technologies's filings. The method is a ten-year discounted cash flow model. The model uses free cash flow after stock-based compensation. The third quarter 2026 release (8-K, October 28, 2026) guides 2026 revenue of $2.535 billion to $2.565 billion, non-GAAP diluted EPS of $12.95 to $13.20 and a free cash flow margin of 26% to 28%. Non-GAAP EPS excludes stock-based compensation, so the estimate does not use it. Stock-based compensation was $120.0 million in the first nine months of 2026. The estimate assumes 2026 free cash flow of $689 million, which is 27% of $2,550 million, less stock-based compensation of $160 million, for $529 million. The Form 10-Q for the quarter ended September 30, 2026 gives cash of $788 million, investments of $116 million, convertible notes due 2031 with a principal of $1,437.5 million and lease liabilities of $45 million. Net debt with leases is $578 million. The estimate treats the notes as debt, because the conversion price is far above the share price. The 10-Q cover gives 39,759,524 shares outstanding on October 26, 2026. The low case assumes growth that falls from 6% to 3%, a 9% discount rate and 2.5% terminal growth. It gives $232.20 per share. The base case assumes growth that falls from 10% to 4%, an 8.5% discount rate and 3% terminal growth. It gives $331.72 per share. The high case assumes growth that falls from 12% to 5%, an 8% discount rate and 3.5% terminal growth. It gives $449.94 per share. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is $336.39 per share. Since the last estimate, buybacks cut the share count by about 2.9%, which raised the value per share. The buybacks also raised net debt by $109 million. The 2026 free cash flow after stock-based compensation rose to $529 million from $525 million. The growth cases did not change, because SaaS revenue grew 21.2% and transaction revenue grew 9.5% in Q3 2026, in line with the assumptions. Switching costs are the main source. Courts, cities, counties and schools run their core records and finances on Tyler systems for many years, and a change is slow and risky for them. Recurring revenue was 87.8% of revenue in the third quarter of 2026, and SaaS revenue grew 21.2%. Efficient scale also helps, because each public-sector niche is small and supports few vendors. Network effects and cost advantage are weak. The GAAP operating margin was only 18.1% in the third quarter of 2026. The move of clients from on-premises software to SaaS is a time when clients can compare vendors again. AI tools can also lower the cost to replace old systems.

AI estimate of October 28, 2026. AI estimate: produced by an AI model from the company's filings and checked by Kevin. It is not an analyst's view.

Checkpoints

Oct 28, 2026Passed
Q3 2026 results: SaaS growth and bookingsSaaS revenue growth near 20% or more and bookings that keep growing pass; slower SaaS growth or weaker bookings with no clear cause fail.Outcome: SaaS revenue grew 21.2%, Tyler called its SaaS bookings strong, and free cash flow reached a quarterly record of $277.0 million.
Jan 28, 2027 · est.Pending
Full-year 2026 results and 2027 guidance2027 guidance with transaction revenue growth near 10% and higher margins on the path to the 2030 targets passes; guidance below the pace of those targets fails.
2027 · est.Pending
Cloud moves and AI revenueRising cloud moves into the 2027 peak and AI add-ons sold to existing clients pass; lost clients or price cuts linked to AI tools fail.

Every passed and failed checkpoint across all picks

Recent events

October 28, 2026Tyler reported Q3 2026 results. Revenue was $647.6 million, up 8.7%. SaaS revenue grew 21.2% to $242.2 million. Transaction revenue grew 9.5%, or 14.2% without the ended Texas payments contract. Free cash flow was a quarterly record of $277.0 million, and non-GAAP EPS was $3.52. Tyler bought back 1,148,389 shares for about $379 million in the quarter. It narrowed its 2026 revenue guidance to $2.535 billion to $2.565 billion and kept its EPS and free cash flow margin guidance. It said that it sold about 300 deals with AI products to date.
October 13, 2026Tyler said that it will report Q3 2026 results after the market closes on October 28, 2026, with a call at 8:30 a.m. ET on October 29.
September 15, 2026Tyler started a trading plan to buy back up to $260 million of its stock from September 16 to October 29, 2026. It had $1.416 billion of buyback authorization left.

Show 6 older events

July 30, 2026Tyler completed its purchase of CODY Systems, a public safety software company, for about $27.7 million in cash.
July 29, 2026Tyler reported Q2 2026 results. Revenue was $645.1 million, up 8.2%. SaaS revenue grew 21.7%, and SaaS and total bookings reached quarterly records. Transaction revenue grew 3.5%, or 9.9% without the ended Texas payments contract. Non-GAAP EPS was $3.08, and free cash flow was $118.5 million, up 34.7%. Tyler kept its 2026 revenue guidance of $2.535 billion to $2.575 billion and added a $1.5 billion buyback authorization.
June 9, 2026At its Investor Day, Tyler raised its 2030 targets to $3.35 billion of annual recurring revenue and $1.15 billion of free cash flow. It plans to move 85% of its on-premises clients to the cloud by 2030.
May 28, 2026Tyler signed a new five-year $1.0 billion unsecured revolving credit facility, to May 2031. It replaced the $700 million facility. Tyler had no borrowings under either facility.
May 14, 2026Tyler issued $1.4375 billion of 0.50% convertible senior notes due 2031. It used about $320.7 million of the proceeds to buy back 1,026,900 of its shares. Capped call trades raised the effective conversion price to $655.77.
April 29, 2026Tyler reported Q1 2026 results. Revenue was $613.5 million, up 8.6%, and SaaS revenue grew 23.5%. Free cash flow was $102.8 million, more than double a year earlier. On April 14, it completed the purchase of For The Record, an AI speech-to-text company for courts, for about $212.7 million in cash.

Latest news and filings

Last earnings: October 28, 2026 (8-K on sec.gov)
Next earnings: Expected about January 28, 2027. The company has not confirmed the date.

10-QQuarterly report for the period ended Sep 30, 2026Filed October 28, 2026 · tyl-20260930
8-KEarnings releaseFiled October 28, 2026 · Press release and exhibits
8-KOther company newsFiled September 15, 2026 · tyl-20260915
10-QQuarterly report for the period ended Jun 30, 2026Filed July 29, 2026 · tyl-20260630
8-KEarnings release and Other company newsFiled July 29, 2026 · Press release and exhibits
8-KOther company newsFiled June 12, 2026 · tyl-20260612
8-KNew material agreement and End of a material agreementFiled May 29, 2026 · tyl-20260529
8-KNew material agreement and New debt or financial obligationFiled May 14, 2026 · tyl-20260514
8-KOther company newsFiled May 12, 2026 · tyl-20260512
8-KOther company newsFiled May 11, 2026 · tyl-20260511

Every filing on SEC EDGAR (CIK 860731)

Risks

AI tools can lower the value of Tyler's software. If governments build their own tools with large language models, or buy cheaper AI products, Tyler can lose new deals, renewals or pricing power. Tyler's stock fell by about half from its February 2025 high because of this fear.
The cloud plan must work on a large scale. Tyler wants to move 85% of about 16,000 client locations to the cloud by 2030, with peak volumes in 2027 to 2029. Delays, cost overruns or client losses during the move can lower revenue and margins. Maintenance revenue fell 5.6% in Q2 2026 and 5% in Q3 2026 as clients moved.
Transaction revenue depends on large state contracts and on volumes of online payments and filings. The end of the Texas payments contract in Q4 2025 cut reported transaction growth to 3.5% in Q2 2026. Growth recovered to 9.5% in Q3 2026. The loss of another large contract can slow growth again.
Public sector budgets can tighten when tax revenue falls or federal funds stop. Government buying is slow, so a weaker budget can delay new deals for several quarters.
Tyler uses debt and cash for buybacks. In 2026 it issued $1.4375 billion of convertible notes and bought back about 8.5% of its shares by October 28. If the stock price rises above the capped call price of $655.77, conversion of the notes can dilute shareholders.

Balance sheet

Cash: $879M
Debt: $1.4B
Net debt: $559M
Interest cover: 40×; times profit pays interest
Credit line: $1.0B; undrawn, to May 2031

Cash against debt

Cash$879M

Debt$1.4B

debt covered by cashnet debt $559M

When the debt is due

12 months$0.0M

Later$1.4B

The last debt is due in 2031.

Tyler has one debt issue: $1.4375 billion of 0.50% convertible senior notes due July 2031, issued on May 14, 2026. The notes are unsecured, and their carrying value was $1.410 billion at September 30, 2026.

As of September 30, 2026

Show 4 sources

Dividends

Tyler Technologies does not pay a dividend.

Source: company filings and market data, read on November 13, 2026.

Questions about Tyler Technologies

What does Tyler Technologies do?

Tyler Technologies sells software only to the public sector: cities, counties, schools, courts and state and federal agencies. Its products run court cases, public safety and 911 centers, tax and property records, permits, budgets and accounting. Its market cap is $17B at the current price of $425.52.

When does Tyler Technologies report earnings next?

This is an estimate: Tyler Technologies may report on January 28, 2027. It last reported results on October 28, 2026.

Is Tyler Technologies stock below its intrinsic value?

Tyler Technologies stock is close to intrinsic value. This is general information, not advice.

What changed recently at Tyler Technologies?

The latest update is from October 28, 2026. Tyler reported Q3 2026 results.

What are the main risks for Tyler Technologies?

AI tools can lower the value of Tyler's software. The cloud plan must work on a large scale. Transaction revenue depends on large state contracts and on volumes of online payments and filings.

How much debt and cash does Tyler Technologies have?

At September 30, 2026, Tyler Technologies had $1.4B of debt and $879M of cash.

Does Tyler Technologies pay a dividend?

No. Tyler Technologies does not pay a dividend.

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