TYL changes

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View the full Oct 31, 2026 version

Price: $360.87 → $394.30(+9.3%)
Next earnings: Oct 28, 2026 → Jan 28, 2027
Next earnings is estimate: No → Yes
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 removed: Q2 added: Q3 2026, recurring revenue was removed: $559.5 added: $568.8 million, or removed: 86.7% added: 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 removed: transaction added: total revenue grew only removed: 3.5% added: 8.7% in removed: Q2 2026, and total revenue grew 8.2%. added: 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 removed: 21.7% added: 21.2% in removed: Q2 2026, the 22nd quarter in a row above 20%. added: 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 removed: comparisons. added: 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 removed: contracts. added: contracts; Tyler said that it sold about 300 deals with AI products to October 2026. The removed: first check is the Q3 2026 report on October 28, removed: 2026. added: 2026 passed the first check. The added: next check is the full-year 2026 report with the 2027 guidance in removed: February added: early 2027, because 2027 is the removed: second check, because it 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.
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 added: 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. added: 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 removed: 5.6% added: about 8.5% of its shares by removed: July. added: 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: removed: $970M added: $879M Debt: $1.4B Net debt: removed: $468M added: $559M Interest cover: removed: 48× added: 40× Undrawn credit line: $1.0B, to May 2031 Debt due within 12 months: $0.0M Last debt due: 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 removed: $1.409 added: $1.410 billion at removed: June added: September 30, 2026. Capped call trades lower the dilution from conversion up to a share price of $655.77. In March 2026, Tyler repaid its $600 million of 0.25% convertible notes at maturity. Cash is cash and cash equivalents of removed: $895 added: $788 million and short-term investments of removed: $75 added: $91 million at removed: June added: September 30, 2026. Interest cover is GAAP operating income divided by interest expense for the first removed: half added: nine months of 2026. The $1.0 billion unsecured revolving credit facility, signed on May 28, 2026, runs to May 2031 and had no removed: borrowings. added: borrowings at September 30, 2026. Tyler uses its cash and this facility for buybacks and acquisitions. In the first removed: half added: nine months of 2026, it paid removed: about $212.7 added: $239 million for added: acquisitions, including For The Record and removed: bought back 5.6% of added: CODY Systems, and $1.124 billion for its added: own shares. Free cash flow was removed: $118.5 added: a record $277.0 million in removed: Q2 added: Q3 2026, and the 2026 guidance is added: still a free cash flow margin of 26% to 28%. added: About $1.37 billion of buyback authorization was left on October 28, 2026. As of removed: Jun added: Sep 30, 2026.
Checkpoints: Oct 28, 2026: Q3 2026 results: SaaS growth and bookings. removed: Pending. added: Passed. Watch: SaaS revenue growth near 20% or more and bookings that keep growing pass; slower SaaS growth or weaker bookings with no clear cause fail. removed: Feb added: 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 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: 2027 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 (estimate): Cloud moves and AI revenue. Pending. Watch: Rising 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.
Recent events: Oct added: 28, 2026: Tyler 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. Oct 13, 2026: Tyler 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. Oct 12, 2026: Wells Fargo raised its rating on Tyler to Overweight from Equal Weight, with a $400 price target. It said that recent execution problems look temporary and that the fear of AI disruption may be too high. The stock rose 3.2% that day. Sep 15, 2026: Tyler 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. Jul added: 30, 2026: Tyler completed its purchase of CODY Systems, a public safety software company, for about $27.7 million in cash. Jul 29, 2026: Tyler reported Q2 2026 results. Revenue was $645.1 million, up 8.2%, and slightly below analyst estimates. 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. Jun 9, 2026: At 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, 2026: Tyler 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, 2026: Tyler 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. Apr 29, 2026: Tyler 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.