Tyler Technologies (NYSE:TYL) executives struck an upbeat tone on the company’s fourth-quarter 2025 earnings call, pointing to continued strength in public sector demand, accelerating cloud transitions among existing customers, and expanding adoption of transaction-based services. Management also outlined 2026 guidance that calls for revenue growth at the midpoint of roughly 8%, while noting that results will lap the roll-off of a low-margin Texas payments contract.
Fourth-quarter results and one-time contract reserve
For the fourth quarter, Tyler reported total revenue of $575.2 million, up 6.3% year over year. Chief Financial Officer Brian Miller said results included a one-time, non-cash loss reserve tied to a contract dispute with a state government client. The reserve reversed approximately $8.8 million of license revenue and $900,000 of professional services revenue, with no impact on recurring revenue or cash.
Recurring revenue was highlighted as a key company metric. President and CEO Lynn Moore said recurring revenues grew 11% in the quarter, driven by SaaS revenue growth of just over 20% and transaction-based revenue growth of 12%. Miller added that SaaS revenue increased 20.2% and exceeded $200 million in a quarter for the first time, while subscription revenue overall rose 16.1%.
Bookings, flips to cloud, and demand indicators
Total bookings in the quarter were $601 million, essentially flat year over year against what management described as a “very difficult” comparison. For the full year, total bookings increased 1.4%. SaaS bookings in the fourth quarter grew 9.6%, supported by “strength in flips, expansions, and renewals,” according to Miller. Full-year SaaS bookings rose 4%.
Moore emphasized strong momentum in “flips” of on-premises customers to Tyler’s cloud offerings, saying both the number and value of flips signed in the quarter reached new highs. Miller said annual contract value from flips signed in Q4 was $28.1 million, up 64.5% from the prior year and 54.8% sequentially.
In the Q&A, management said it expects flips to continue to grow from current levels, though it does not provide quarterly flip guidance. Executives reiterated earlier commentary that peak flip activity for large clients is expected in the 2027–2029 timeframe.
Moore also pointed to public-sector demand signals, including elevated RFP and sales demo activity. In response to questions about potential pull-forward effects from federal ARPA funds, Moore said Tyler is not seeing current deal delays and cited leading indicators such as the company’s Public Administration group recording the highest number of RFPs in five years during 2025.
Transactions business and the Texas contract roll-off
Transaction revenue grew 12.1% to $196.7 million in the quarter, driven by higher volumes from new and existing customers, increased adoption of transaction-based services, and higher revenue from third-party payment processing partners. Moore said Tyler consolidated its payments operations under payments leader Ryan O’Connor in 2025, aiming to execute a unified payment strategy across use cases such as utility billing, courts, licensing and permitting, property taxes, and parks and recreation.
Management also addressed the end of the State of Texas payments contract, which concluded in Q4 2025 and reduced reported transaction growth expectations. Miller said Texas transaction revenue totaled about $36 million in 2025, and Q4 revenue from the contract was about $3 million, almost $4 million less than the company anticipated entering the quarter. He described the contract as “very low-margin” and said it wound down throughout 2025 rather than ending abruptly.
For 2026, Tyler guided to transaction revenue growth of 5% to 7%, but Miller said that excluding the Texas roll-off, underlying transaction growth would be 10% to 12%, consistent with the company’s previously discussed midterm range.
2026 outlook and financial position
For full-year 2026, Tyler expects:
- Total revenue of $2.5 billion to $2.55 billion (midpoint growth of about 8.3%)
- GAAP diluted EPS of $8.36 to $8.61
- Non-GAAP diluted EPS of $12.40 to $12.65
- Free cash flow margin of 26% to 28%
- R&D expense of $242 million to $247 million
Miller provided additional detail on expectations by revenue category, including subscription revenue growth of 12% to 15%, SaaS revenue growth of 20.5% to 22.5%, and maintenance revenue declining 5% to 7%. He said professional services revenue is expected to grow 3% to 5%, and hardware and other revenue is expected to decline 17% to 19%.
Executives also discussed the company’s cash generation and balance sheet. Cash flow from operations and free cash flow were fourth-quarter records at $243.9 million and $236.9 million, respectively, while full-year free cash flow totaled $620.8 million (a 26.6% margin). Tyler ended the quarter with approximately $1.16 billion in cash and investments and $600 million of convertible debt outstanding, which it expects to repay at maturity in March.
AI initiatives, M&A, and buyback authorization
Moore said Tyler is seeing “real adoption” of its AI offerings, citing the Tyler Resident AI Assistant going live in six states over the past year: Alabama, Hawaii, Indiana, Mississippi, Nebraska, and South Carolina. He highlighted Indiana as a usage example, with about 17,000 residents using the assistant each month and generating nearly 50,000 questions to government services.
Moore said Tyler plans to initiate early access for agentic AI capabilities in the first quarter, integrating them into enterprise permitting and licensing and supervision platforms, with phased expansion through 2026 and beyond. On partnerships, management said it works with Anthropic and AWS as well as Microsoft and OpenAI in connection with AI development efforts.
On capital allocation, Moore said the board authorized a new $1 billion share repurchase program, replacing the prior authorization. He also discussed Tyler’s pending acquisition of For The Record, which management expects to close late in the first quarter, subject to regulatory approval. Miller said the transaction is not included in the company’s 2026 guidance, and in the Q&A, management characterized For The Record’s annualized revenue as “somewhere” in the $45 million to $50 million range, while cautioning that it is undergoing its own SaaS transition.
Tyler said it will provide more insight into progress toward its 2030 objectives and its AI strategy at an Investor Day on June 9 in Frisco, Texas.
About Tyler Technologies (NYSE:TYL)
Tyler Technologies, Inc is a provider of software and technology services for the public sector, delivering integrated systems that help government and public agencies manage operations, finances and citizen services. Headquartered in Plano, Texas, the company focuses on developing and implementing solutions for local and state governments, school districts, courts and public safety organizations. Its offerings are aimed at modernizing administrative workflows, improving transparency and enabling digital interactions between governments and the communities they serve.
Tyler’s product portfolio spans enterprise resource planning and financial management, tax and billing systems, court case and records management, public safety solutions (including computer-aided dispatch and records management), land and property management, permitting and licensing, and enterprise asset management.
