AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Essential systems of record require implementation, data conversion, training and modifications. Actual client migrations within Tyler's products support an embedded switching-cost advantage; its replacement cost is not quantified.
durability · 2/4 · Continued SaaS migration and recurring revenue growth support persistence, but actual contract exits and limited longitudinal customer evidence prevent a strong durability grade.
customer dependency · 3/4 · Core government workflows, implementation services and existing-client purchases support meaningful operational dependency. This is inferred from disclosed business activity rather than a measured renewal rate.
erosion resilience · 2/4 · Recurring demand and continued migration coexist with realized contract losses and a payment-processing wind-down. Competitive and technology risks are possibilities, while those contract outcomes are demonstrated weaknesses.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Maintenance price increases contributed positively in both 2025 and first-half 2026, demonstrating realized pricing ability. Magnitude and customer response are missing; processing-partner increases are not attributed to Tyler's own pricing discretion.
retention · 3/4 · The 488 client conversions in 2025, continued conversions in 2026 and additional purchases by existing clients demonstrate repeat demand indirectly. Recurring revenue growth corroborates activity but is not a retention rate; the state contract wind-down limits the conclusion.
margin resilience · 2/4 · First-half 2026 gross margin rose from 46.5% to 47.9%, primarily through SaaS mix. Higher hosting and merchant costs, contract reserves and nearly flat second-quarter operating income show mixed resilience. These margins do not independently prove a moat or price-driven improvement.
contractual freedom · 1/4 · Competitive procurement constrains favorable terms, and an actual termination-for-convenience notice demonstrates customer exit rights in at least one contract. Maintenance increases show some flexibility, but broad unilateral repricing authority is not disclosed.
Predictability98
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.87
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 4.08
Financial strength81
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 24.03
- Debt / FCF (x)
- 0.94
- Net debt / operating income (x)
- -1.16
- Interest coverage (x)
- 71.61
- Current ratio (x)
- 1.05
Capital allocation72
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 8.78
- 3-year average dilution (%)
- 1.23
- 3-year average SBC / revenue (%)
- 5.93
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 repurchases of $761.2 million including excise taxes accompanied a lower diluted share count, but borrowings increased from $600 million to $1.4375 billion and capped calls consumed additional capital. Undrawn credit provides flexibility. These are mixed allocation outcomes; buyback value creation and acquisition returns cannot be established.
incentive alignment · 3/4 · Actual compensation includes substantial performance equity tied to recurring revenue and operating margin, with approved vesting of earlier awards based on achieved results. Ownership requirements, recovery provisions and anti-hedging policies support alignment. Actual executive holdings and exceptional long-term outcomes are not established.
execution · 2/4 · SaaS growth exceeded the stated 2025 target, recurring revenues grew and first-half 2026 revenue and operating income increased. Contract loss reserves, a processing-contract wind-down and flat second-quarter operating income temper those achievements. Execution is assessed from operating outcomes rather than management reputation.
governance · 3/4 · The disclosed 2025 board had six independent directors out of eight, independent key committees, annual elections, majority voting for uncontested elections and shareholder meeting and consent rights. Recovery and anti-hedging policies add safeguards. Blank-check preferred authority remains a counterweight; proposed 2026 changes are not assumed adopted.
Evidence
Our solutions deliver mission-critical technology to support the essential functions of government, including public safety, justice, public health, taxation and budgeting, infrastructure and land use, outdoor recreation, utility and civic services, regulation, K-12 education, and social services.
Business: essential government functions supported · Filed 18/02/2026
We provide both the back-office systems-of-record that serve the operational needs of specific government agencies, as well as platform technology solutions that are designed to integrate with our back-office solutions and be deployed and connected across many agencies.
Business: systems of record and integration platforms · Filed 18/02/2026
In addition, we provide professional IT services to our clients, including software and hardware installation, data conversion, training, and for certain clients, product modifications, along with continuing maintenance and support for clients using our systems.
General: installation, conversion, training, modifications and support · Filed 29/07/2026
Maintenance revenue decreased 4% compared to the prior period primarily due to the impact of 488 clients converting from on-premises license arrangements to SaaS, partially offset by maintenance price increases.
2025 maintenance revenue: SaaS conversions and price increases · Filed 18/02/2026
Maintenance revenue decreased 6% and 5%, respectively, for the three and six months ended June 30, 2026, compared to the prior period primarily due to the impact of clients converting from on-premises license arrangements to SaaS since June 30, 2025, partially offset by maintenance price increases.
2026 maintenance revenue: SaaS conversions and price increases · Filed 29/07/2026
Existing clients also periodically purchase additional training, consulting and minor programming services.
Professional services: additional purchases by existing clients · Filed 29/07/2026
Recurring revenues were 2.032 billion, up 12.5%, and comprised 87.1% of 2025 revenues, up from 84.5%.
2025 executive summary: recurring revenue growth and share · Filed 23/03/2026
We also compete with national firms, some of which have greater financial and technical resources than we do, including Oracle Corporation, Infor, SAP AG, Workday, Inc., CentralSquare Technologies, Thomson Reuters Corporation, Motorola Solutions, Inc., Axon Enterprise, Inc., and Constellation Software, Inc.
Competition: named national competitors · Filed 18/02/2026
Many of these competitors are smaller companies that may offer less expensive solutions than ours.
Competition: lower-priced smaller competitors · Filed 18/02/2026
We cannot guarantee that we will win any bids in the future through the request for proposal process, or that any winning bids will ultimately result in contracts on favorable terms.
Risk factors: competitive bidding and contract terms · Filed 18/02/2026
The increase is partially offset by lower revenues of $34.0 million compared to prior period from software licenses, maintenance, and professional services, including a loss reserve of approximately $9.7 million of remaining exposure related to a contract dispute previously disclosed.
2025 ES operating income: contract-dispute loss reserve · Filed 18/02/2026
The decrease of 9% in the PT segment operating income in 2025 is primarily due to loss reserves of approximately $10.7 million for two state contracts, primarily impacting lower revenue from professional services, as well as higher merchant fees.
2025 PT operating income: state-contract loss reserves and merchant fees · Filed 18/02/2026
Also contributing to the decrease is a decline of approximately $24.8 million in transaction-based revenues, partially offset by a corresponding $21.5 million reduction in merchant fees, following the wind-down in the fourth quarter of 2025 of a state payment processing contract.
2026 PT operating income: state payment-processing contract wind-down · Filed 29/07/2026
We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal government agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, evolving use of artificial intelligence (“AI”), security vulnerabilities and software updates, or changes in our ability to access third-party software and services; (3) our ability to protect client information from security breaches or misuse through AI and to provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to actively monitor developments in AI regulation and ethical standards as we expect that future changes in the regulatory landscape may affect our product development timelines, compliance costs, and market opportunities related to AI; (7) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (8) general economic, political and market conditions, including inflation and changes in interest rates; (9) technological and market risks associated with the development of new technologies, products or services or of new versions of existing or acquired products or services; (10) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (11) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (12) costs of compliance and any failure to comply with government and stock exchange regulations.
Forward-looking risks: AI, security, renewals, competition and costs · Filed 29/07/2026
Transaction-based fees The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the listed years ended December 31 ($ in thousands): Change 2025 2024 $ % ES $ 318,143 $ 234,633 $ 83,510 36 % PT 490,291 463,519 26,772 6 % Total transaction-based fees revenue $ 808,434 $ 698,152 $ 110,282 16 % For the twelve months ended December 31, 2025, contributing to the growth in transaction-based fees compared to prior period are the new transaction clients, volume increases from online payments and e-filing services, and price increases by certain third-party processing partners from whom we receive a share of revenues.
2025 transaction fees: growth drivers and third-party price increases · Filed 18/02/2026
The following table sets forth a comparison of gross profit and overall gross margin for the periods presented as of June 30 ($ in thousands): Three Months Ended Six Months Ended 2026 2025 Change 2026 2025 Change Total gross profit $ 307,057 $ 273,184 $ 33,873 $ 603,491 $ 540,265 $ 63,226 Overall gross margin 47.6 % 45.8 % 1.8 % 47.9 % 46.5 % 1.4 % Overall gross margin.
2026 gross profit and gross margin comparison · Filed 29/07/2026
For the three and six months ended June 30, 2026, the increase in overall gross margin compared to the prior period is primarily attributable to a shift in our revenue mix toward higher-margin SaaS revenues.
2026 gross margin: SaaS revenue mix contribution · Filed 29/07/2026
That increase in the overall gross margin is partially offset by declines in software licenses and maintenance revenues and increases in merchant fees, hosting costs, and software development amortization expense.
2026 gross margin: merchant fees, hosting and amortization pressures · Filed 29/07/2026
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues: Subscriptions $ 453,724 $ 405,075 $ 883,469 $ 780,064 Maintenance 105,810 112,123 214,684 224,924 Professional services 63,166 58,612 123,973 122,662 Other 22,396 20,307 36,473 33,632 Total revenues 645,096 596,117 1,258,599 1,161,282 Cost of revenues: Subscriptions, maintenance, and professional services 306,783 292,595 600,330 570,648 Amortization of software development 5,579 5,505 11,203 10,884 Amortization of acquired software 8,532 9,319 17,516 18,613 Other 17,145 15,514 26,059 20,872 Total cost of revenues 338,039 322,933 655,108 621,017 Gross profit 307,057 273,184 603,491 540,265 Sales and marketing expense 39,851 36,312 78,648 72,785 General and administrative expense 93,733 76,601 177,698 156,053 Research and development expense 62,832 50,842 122,559 98,686 Amortization of other intangibles 15,546 13,833 29,679 27,972 Operating income 95,095 95,596 194,907 184,769 Interest expense (2,974) (1,262) (4,040) (2,508) Gain on remeasurement of equity investment 25,048 — 25,048 — Other income, net 3,462 8,179 11,138 15,542 Income before income taxes 120,631 102,513 227,053 197,803 Income tax provision 27,119 17,886 52,361 32,124 Net income $ 93,512 $ 84,627 $ 174,692 $ 165,679 Earnings per common share: Basic $ 2.25 $ 1.96 $ 4.20 $ 3.84 Diluted $ 2.23 $ 1.93 $ 4.17 $ 3.76 See accompanying notes.
Unaudited income statements: first-half and second-quarter 2026 results · Filed 29/07/2026
(19) COMMITMENTS AND CONTINGENCIES Litigation During the first quarter of 2022, we received a notice of termination for convenience under a contractual arrangement with a state government client.
Commitments and contingencies: actual termination for convenience · Filed 18/02/2026
(8) Debt The following table summarizes our total outstanding borrowings: Rate Maturity Date June 30, 2026 December 31, 2025 Convertible Senior Notes due 2031 0.50% July 2031 $ 1,437,500 $ — Convertible Senior Notes due 2026 0.25% March 2026 — 600,000 Credit Agreement - Revolving credit facility S + 1.125% May 2031 — — Total borrowings 1,437,500 600,000 Less: unamortized debt discount and debt issuance costs (28,809) (337) Total borrowings, net 1,408,691 599,663 Current portion of convertible senior notes due 2026, net — 599,663 Long Term - convertible senior notes due 2031, net 1,408,691 — Total Debt $ 1,408,691 $ 599,663 20 Convertible Senior Notes due 2031 On May 14, 2026, we issued 0.50% Convertible Senior Notes due in 2031 for the aggregate principal amount of $1.44 billion (the “2031 Notes”).
Debt: outstanding borrowings and 2031 convertible issuance · Filed 29/07/2026
(12) Shareholders’ Equity The following table details activity in our common stock: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Shares Amount Shares Amount Shares Amount Shares Amount Purchase of treasury shares, including excise taxes (1,623) $ (511,169) (3) $ (1,605) (2,423) $ (761,232) (3) $ (1,605) Exercise of stock options and vesting of restricted stock units 117 3,241 163 13,327 286 5,857 328 29,771 Issuance of shares pursuant to employee stock purchase plan 19 5,377 11 5,352 29 9,178 19 9,322 Employee taxes paid for withheld shares upon equity award settlement (29) (9,010) (32) (18,008) (82) (27,991) (56) (32,926) Purchase of Capped Call transactions, net of tax — (140,501) — — — (140,501) — — On February 3, 2026, our Board of Directors authorized the repurchase of $1.0 billion, excluding excise taxes, of our common stock, which replaced and superseded all previous share repurchase authorizations.
Shareholders' equity: repurchases, equity issuance and capped calls · Filed 29/07/2026
(13) Share-Based Compensation The following table summarizes share-based compensation expense related to share-based awards, which is recorded in the condensed consolidated statements of income: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenues $ 9,504 $ 8,891 $ 18,978 $ 17,605 Operating expenses 34,158 29,411 61,843 58,357 Total share-based compensation expense $ 43,662 $ 38,302 $ 80,821 $ 75,962 26 (14) Earnings Per Share The following table details the reconciliation of basic earnings per share to diluted earnings per share: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Numerator for basic and diluted earnings per share: Net income $ 93,512 $ 84,627 $ 174,692 $ 165,679 Denominator: Weighted-average basic common shares outstanding 41,619 43,163 41,564 43,174 Assumed conversion of dilutive securities: Stock awards 235 609 289 661 Convertible Senior Notes due 2031 — — — — Convertible Senior Notes due 2026 — 157 — 181 Denominator for diluted earnings per share - Adjusted weighted-average shares 41,854 43,929 41,853 44,016 Earnings per common share: Basic $ 2.25 $ 1.96 $ 4.20 $ 3.84 Diluted $ 2.23 $ 1.93 $ 4.17 $ 3.76 Convertible Senior Notes due 2031 On May 14, 2026, we issued 0.50% Convertible Senior Notes due 2031 (the “2031 Notes”) in the aggregate principal amount of $1.44 billion.
Share-based compensation and diluted share-count reconciliation · Filed 29/07/2026
As of June 30, 2026, we had no outstanding borrowings under our 2026 Credit Agreement that has available borrowing capacity of $1.0 billion.
Liquidity: undrawn revolving credit capacity · Filed 29/07/2026
Type Element Form of Compensation Purpose 2025 Metric Service-Based Compensation Generally 20% of Total Target Compensation Annual Salary Cash Provides competitive, fixed compensation to attract and retain executive talent with the specific skills and experience to drive continued growth Fixed component of compensation; changes, when made, are driven by individual performance, peer and market comparisons and retention needs Annual Stock Grant Restricted stock units (RSUs) Supports retention and provides competitive annual compensation level to attract and retain executive talent Used as needed to maintain a level of service-based compensation at or around 20% Performance-Based Compensation Generally 80% of Total Target Compensation Annual Incentive Compensation Performance-based restricted stock units (PSUs) Provides reward for achieving or exceeding annual financial performance goals Achievement of adjusted earnings per share goals (Non-GAAP), which are recommended by the CEO and approved by the Compensation Committee Long-term incentive compensation Performance- based restricted stock units (PSUs) Create a strong financial incentive for responsible shareholder value creation with significant Company equity stake linked to long-term, future Company performance Most significant element of executive compensation; based on two metrics: •Achievement of 3-year Cumulative Recurring Revenue Growth (50% of PSUs) •Achievement of 3-year Operating Margin (50% of PSUs) As reflected above, we believe that sustained achievement of measurable financial objectives leads to increased shareholder value.
Executive compensation: actual 2025 pay structure and performance metrics · Filed 23/03/2026
2026 Proxy Statement 43 Executive Summary Table of Contents ◦Based on goals established for the PSUs granted in 2023 and tied to the achievement of 3-year cumulative recurring revenue growth, determined that target was achieved and approved vesting of 3,512; 25,382; 11,927; and 7,417 long-term PSUs for Mr.
Executive compensation: approved vesting of 2023 performance awards · Filed 23/03/2026
2025 Board and Committee Overview •Board size: 8 •Number of independent directors: 6 •Board committees consisting entirely of independent directors: Audit; Nominating and Governance; and Compensation •All directors in the 2025-2026 term attended at least 75% of meetings held •All directors elected annually •Majority voting standard for directors in uncontested elections •Plurality carveout for contested elections •Director resignation policy •Lead Independent Director appointed •Independent directors meet in executive sessions 2 2026 Proxy Statement Table of Contents General Information •Board and committees conduct annual self-evaluations •Stock anti-hedging and pledging policy in effect •Risk oversight by full board and as allocated to committees •Annual advisory vote on executive compensation since 2017 •Stock ownership requirements for directors and executive officers •Executive compensation recovery policy and incentive compensation recovery policy Shareholder Rights Snapshot •Tyler is not a controlled company •Board is not a classified board •No cumulative voting •Board has ability to issue blank-check preferred stock •Shareholders approved majority vote requirement for mergers, share exchanges, and certain other transactions at May 2025 annual meeting; Amended and Restated Certificate of Incorporation dated July 29, 2025 effected those changes.
Governance: 2025 board practices, shareholder rights and enacted changes · Filed 23/03/2026
To achieve these objectives, elements of our compensation program include, but are not limited to: •A mix of fixed compensation, short-term incentives, and long-term incentives in alignment with performance goals •Target compensation to Named Executive Officers provided as 20% service-based (salary and time-based restricted stock units) and 80% performance-based (annual and long-term performance-based restricted stock units) •No material non-cash benefits, deferred compensation benefits, other executive perquisites, or unique health and welfare benefits •Executive requirements to hold a meaningful ownership stake in the Company, consistent with our stock ownership guidelines, with minimum one-year vesting periods •Caps and appropriate controls to ensure excessive risk is not incentivized •Prohibition on stock option exchanges or repricing without shareholder approval •Enforcement of an executive compensation recovery policy and a stock anti-hedging and pledging policy •An annual shareholder advisory vote on Named Executive Officer compensation since 2017 •Engagement with shareholders on executive compensation perspectives •Annual compensation-related risk assessment •No excise tax payments or “gross ups” on future post-employment compensation to our Named Executive Officers Our Compensation Committee, comprised entirely of independent directors, is responsible for overseeing our executive compensation program.
Compensation: ownership requirements, recovery and anti-hedging policies · Filed 23/03/2026
Software-as-a-service (SaaS) revenues rose 20.6%, exceeding our targeted 20% CAGR through 2025.
2025 results: reported SaaS growth versus target · Filed 23/03/2026
