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Tyler Technologies (TYL)
NYSE:TYL

Tyler Technologies (TYL) AI Stock Analysis

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Tyler Technologies

(NYSE:TYL)

Rating:79Outperform
Price Target:
$648.00
▲( 14.32% Upside)
Tyler Technologies' strong financial performance and positive earnings call are the primary drivers of its stock score. The company's strategic shift towards SaaS and cloud-based solutions has enhanced profitability and efficiency. However, high valuation metrics and mixed technical signals, along with concerns about decreased bookings, temper the overall score.
Positive Factors
Financial Performance
The budget environment for customers is expected to be favorable, with strong funding from property and sales tax receipts.
Growth and Market Potential
The roadmap for AI products is a key topic that suggests future growth potential for Tyler Technologies.
Service and Management Improvements
The appointment of Andrew Kahl as Chief Client Officer is seen as a positive change and improvement in service delivery.
Negative Factors
ARR and Booking Concerns
There is some worry among investors over the slower pace of ARR and new software bookings.
Economic Uncertainty
Sales cycles are now elongating as economic uncertainty is pervasive not just in the private, but also public sector as well.
Revenue and Margin Challenges
Free cash flow, however, declined 16% year-over-year and came in below Street expectations by 4%.

Tyler Technologies (TYL) vs. SPDR S&P 500 ETF (SPY)

Tyler Technologies Business Overview & Revenue Model

Company DescriptionTyler 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.
How the Company Makes MoneyTyler Technologies generates revenue primarily through the sale of software licenses, subscriptions, and related services. The company's revenue model includes a mix of recurring and non-recurring revenue streams. Recurring revenues are derived from software subscriptions, maintenance, and support services, which provide a steady income stream. Non-recurring revenues come from the sale of perpetual licenses and implementation services that include installation, configuration, and training. Tyler also earns money through professional services such as consulting and custom software development. The company's growth is supported by strategic partnerships and alliances with other technology firms, allowing them to expand their product offerings and reach. Additionally, Tyler leverages government contracts and long-term agreements with public sector clients to secure a stable and growing revenue base.

Tyler Technologies Financial Statement Overview

Summary
Tyler Technologies is in a strong financial position, driven by robust revenue growth and solid profitability. The company maintains financial stability with low leverage and effective cash flow management. While there are minor fluctuations in margins and cash flow, the overall financial health remains sound, positioning the company well for future growth opportunities in the software application industry.
Income Statement
85
Very Positive
Tyler Technologies demonstrates strong and consistent revenue growth, with a remarkable increase from $1.59 billion in 2021 to $2.19 billion in TTM, indicating a robust growth trajectory. The gross profit margin remains consistently high at around 44% in TTM, reflecting efficiency in cost management. The net profit margin also improved to approximately 13.23% in TTM, showing solid profitability. However, the EBITDA margin slightly declined in TTM compared to 2023, which might indicate rising operational costs.
Balance Sheet
78
Positive
The company maintains a healthy equity ratio of 69.9% in TTM, highlighting strong financial stability with substantial equity relative to total assets. The debt-to-equity ratio improved to 0.18 in TTM, indicating effective debt management. Return on Equity (ROE) stands at 8.25% in TTM, suggesting good returns for shareholders, although there is room for improvement. Overall, the balance sheet reflects a stable financial position with low leverage.
Cash Flow
82
Very Positive
Tyler Technologies shows a strong free cash flow growth rate, with free cash flow increasing from $327.43 million in 2023 to $576.34 million in TTM, indicating robust cash generation capabilities. The operating cash flow to net income ratio is 2.1 in TTM, demonstrating efficient cash conversion. However, the slight decline in operating cash flow compared to 2024 suggests a need to monitor cash flow sustainability.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
2.19B2.14B1.95B1.85B1.59B1.12B
Gross Profit
965.33M935.76M861.10M783.86M709.64M542.51M
EBIT
321.72M299.53M218.54M214.25M180.74M172.93M
EBITDA
486.59M466.47M392.63M388.01M328.12M254.58M
Net Income Common Stockholders
289.91M263.03M165.92M164.24M161.46M194.82M
Balance SheetCash, Cash Equivalents and Short-Term Investments
196.94M767.98M175.88M210.89M361.47M709.15M
Total Assets
4.61B5.18B4.68B4.69B4.73B2.61B
Total Debt
645.42M638.37M696.89M1.05B1.39B22.18M
Net Debt
457.18M-106.35M531.40M872.32M1.08B-581.44M
Total Liabilities
1.59B1.79B1.74B2.06B2.41B621.16M
Stockholders Equity
3.02B3.39B2.94B2.62B2.32B1.99B
Cash FlowFree Cash Flow
576.34M604.10M327.43M331.30M316.14M326.62M
Operating Cash Flow
608.95M624.63M380.44M381.45M371.75M355.09M
Investing Cash Flow
-151.10M-67.61M-76.96M-172.53M-2.09B-98.32M
Financing Cash Flow
59.64M22.21M-311.84M-344.24M1.42B114.17M

Tyler Technologies Technical Analysis

Technical Analysis Sentiment
Negative
Last Price566.82
Price Trends
50DMA
562.13
Positive
100DMA
580.54
Negative
200DMA
588.04
Negative
Market Momentum
MACD
3.28
Negative
RSI
52.45
Neutral
STOCH
69.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TYL, the sentiment is Negative. The current price of 566.82 is above the 20-day moving average (MA) of 554.32, above the 50-day MA of 562.13, and below the 200-day MA of 588.04, indicating a neutral trend. The MACD of 3.28 indicates Negative momentum. The RSI at 52.45 is Neutral, neither overbought nor oversold. The STOCH value of 69.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TYL.

Tyler Technologies Risk Analysis

Tyler Technologies disclosed 36 risk factors in its most recent earnings report. Tyler Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Evolving legal and regulatory landscape over artificial intelligence technologies creates uncertainties. Q4, 2024
2.
Fluctuation in inflation and interest rate could adversely affect our financial condition and results of operations. Q4, 2024

Tyler Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$15.07B37.2124.99%0.57%9.86%-14.34%
TYTYL
79
Outperform
$24.76B85.478.87%9.96%50.93%
78
Outperform
$11.08B49.0119.70%14.63%17.15%
75
Outperform
$19.83B25.0312.34%1.23%6.92%28.43%
70
Neutral
$33.84B7,452.21-1.34%19.17%83.20%
67
Neutral
$18.06B528.94-1.34%17.16%67.81%
60
Neutral
$11.56B10.24-7.04%2.94%7.46%-10.54%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TYL
Tyler Technologies
566.82
75.69
15.41%
GWRE
Guidewire
210.84
89.49
73.75%
SSNC
SS&C Technologies Holdings
78.53
17.39
28.44%
PAYC
Paycom
257.25
84.17
48.63%
PCTY
Paylocity
196.54
32.35
19.70%
HUBS
HubSpot
621.25
26.39
4.44%

Tyler Technologies Earnings Call Summary

Earnings Call Date:Apr 23, 2025
(Q1-2025)
|
% Change Since: -0.43%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong start to the fiscal year with significant growth in revenues and profitability, driven by the company's strategic initiatives and cloud transition. However, there were some concerns regarding the decline in bookings and the potential impacts of macroeconomic conditions. Despite these challenges, the overall outlook remains positive with revised annual guidance reflecting continued growth.
Q1-2025 Updates
Positive Updates
Strong Start to Fiscal Year 2025
Tyler Technologies exceeded expectations across key revenue and profitability metrics, achieving a 10.3% increase in total revenues to $565.2 million and a 21% growth in SaaS revenues.
Expansion of Non-GAAP Operating Margin
The non-GAAP operating margin expanded to 26.8%, up 300 basis points from the previous year, driven by efficiencies in cloud operations and a shift to higher-margin SaaS revenues.
Cloud Transition Driving Efficiency
The company's cloud transition is enhancing scalability and driving efficiency gains, supported by version consolidation and cloud-optimized releases.
Significant First-Quarter Wins
First-quarter wins included a full enterprise justice cloud migration valued at $800,000 in ARR and a $31 million ARR payment processing contract extension with the state of Florida.
Positive Guidance for 2025
Revised annual guidance reflects positive outlook with expected total revenues between $2.31 billion and $2.35 billion, and non-GAAP diluted EPS between $11.05 and $11.35.
Negative Updates
Decrease in Total Bookings
Total bookings for Q1 were down 1.9% year over year, attributed to deals being pulled forward into Q4 and longer sales processes.
SaaS Bookings Decline
SaaS bookings declined from last year's Q1, influenced by the pull-forward effect of deals into Q4 and extended sales cycles.
Potential Impacts from Macro Conditions
Caution around spending due to uncertain macroeconomic conditions and potential tariffs on hardware are noted, though currently only minimal impacts are observed.
Company Guidance
In the first quarter of fiscal year 2025, Tyler Technologies reported a robust performance, with total revenue growing by 10.3% to $565.2 million and subscription revenue increasing by 19.7%. SaaS revenues rose by 21% to $180.1 million, marking the seventeenth consecutive quarter of over 20% growth in this segment. Transaction-based revenues also grew significantly by 18.5%, driven by higher transaction volumes and new service deployments. Additionally, the non-GAAP operating margin expanded to 26.8%, benefiting from a shift towards higher-margin SaaS revenues. Free cash flow reached $48 million, exceeding expectations. The company updated its annual guidance for 2025, projecting total revenues between $2.31 billion and $2.35 billion, with an organic growth rate of approximately 9%. Tyler Technologies expects GAAP diluted EPS to range from $7.50 to $7.80 and non-GAAP diluted EPS between $11.05 and $11.35. The company also anticipates a free cash flow margin of 24% to 26%, with R&D expenses projected to be between $193 million and $198 million.

Tyler Technologies Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Tyler Technologies Streamlines Governance at Annual Meeting
Neutral
May 6, 2025

On May 6, 2025, Tyler Technologies, Inc. held its annual meeting of stockholders, where several key issues were voted on. The election of directors saw all nominees receive significant support, while an advisory resolution on executive compensation and the ratification of Ernst & Young LLP as independent auditors were also approved. Notably, amendments to the Restated Certificate of Incorporation to remove supermajority voting standards and to incorporate existing provisions in the Company’s Bylaws were passed, reflecting a shift towards more streamlined governance practices.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.