Earnings call transcript: Tyler Technologies beats Q3 2025 forecasts, stock gains

Tyler Technologies reported stronger-than-expected earnings for the third quarter of 2025, with earnings per share (EPS) of $2.97, surpassing the forecast of $2.86. Revenue also exceeded expectations, coming in at $595.9 million compared to the anticipated $594.32 million. Following the earnings announcement, Tyler Technologies’ stock price rose by 1.26% to close at $479.03.

Key Takeaways

• Tyler Technologies beat both EPS and revenue forecasts for Q3 2025.
• The company’s stock price increased by 1.26% following the earnings release.
• Subscription and SaaS revenues saw significant growth, with increases of 15.5% and 20%, respectively.

Company Performance

Tyler Technologies demonstrated robust performance in the third quarter of 2025, with total revenues reaching $595.9 million, marking a 9.7% year-over-year increase. The company continues to benefit from strong demand in the public sector technology market, particularly in cloud and AI-driven solutions. Tyler Technologies’ strategic focus on transitioning to cloud-based services and enhancing AI capabilities has positioned it favorably in the industry.

Financial Highlights

• Revenue: $595.9 million, up 9.7% year-over-year
• Earnings per share: $2.97, exceeding forecast by $0.11
• SaaS revenues: $199.8 million, up 20%
• Transaction revenues: $201.3 million, up 11.5%
• Non-GAAP operating margin: 26.6%, an increase of 120 basis points

Earnings vs. Forecast

Tyler Technologies reported EPS of $2.97, beating the forecast of $2.86 by 3.85%. Revenue also exceeded expectations, with a slight surprise of 0.27%. This marks a consistent trend of the company outperforming market expectations, highlighting its strong operational execution and strategic initiatives.

Market Reaction

Following the earnings release, Tyler Technologies’ stock price increased by 1.26%, closing at $479.03. This movement reflects positive investor sentiment, driven by the company’s ability to surpass earnings expectations and its continued growth in key revenue streams. The stock remains below its 52-week high of $661.31 but is comfortably above the 52-week low of $455.07, indicating a stable market position.

Outlook & Guidance

Looking ahead, Tyler Technologies has set a total revenue guidance for 2025 between $2.335 billion and $2.360 billion. The company anticipates a 20% growth in SaaS revenues for 2026, with total recurring revenue expected to grow by 10-12%. Tyler Technologies remains focused on its cloud transition and AI innovation strategies, which are expected to drive future growth.

Executive Commentary

Lynn Moore, President and CEO of Tyler Technologies, emphasized the company’s leadership in public sector digital transformation, stating, "We are going to lead the public sector through this next cycle of transformation, which is AI." Moore also highlighted the importance of combining technology with deep domain expertise, adding, "Technology alone never wins in the public sector. Durable outcomes come from deep domain expertise, trusted client partnerships, and disciplined execution."

Risks and Challenges

• Market Saturation: As the market for public sector technology solutions grows, increased competition could impact Tyler Technologies’ market share.
• Macroeconomic Pressures: Economic downturns or budget constraints in the public sector could affect spending on technology solutions.
• Technological Advancements: Rapid changes in technology may require continuous investment in R&D to maintain a competitive edge.

Q&A

During the earnings call, analysts inquired about Tyler Technologies’ AI implementation strategies and the process of converting clients from on-premises to cloud solutions. Executives also addressed cross-sell opportunities and provided insights on research and development investments, emphasizing the company’s commitment to innovation and client success initiatives.

Full transcript - Tyler Technologies Inc (TYL) Q3 2025:

Conference Call Operator: Hello and welcome to today’s Tyler Technologies third quarter 2025 conference call. Your host for today’s call is Lynn Moore, President and CEO of Tyler Technologies. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time in order to address your questions and stay within the allotted time. Please limit your question to one question per person. You may get back into the queue.

Lynn Moore, President and CEO, Tyler Technologies: For a follow-up.

Conference Call Operator: As a reminder, this conference is being recorded today, October 30, 2025. I would like to turn the call over to Hala Elsherbini, Tyler’s Senior Director of Investor Relations.

Lynn Moore, President and CEO, Tyler Technologies: Please go ahead.

Hala Elsherbini, Senior Director of Investor Relations, Tyler Technologies: Thank you and welcome to our call. With me today is Lynn Moore, our President and Chief Executive Officer, and Brian Miller, our Chief Financial Officer. After I give the Safe Harbor statement, Lynn will have some initial comments on our quarter and then Brian will review the details of our results and update our annual guidance for 2025. Lynn will end with some additional comments and then we’ll take your questions. During this call, management may make statements that provide information other than historical information and may include projections concerning the company’s future prospects, revenues, expenses, and profits. Such statements are considered forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainty which could cause actual results to differ materially from these projections.

We would refer you to our Form 10-K and other SEC filings for more information on those risks. Also, in our earnings release, we have included non-GAAP measures that we believe facilitate understanding of our results and comparisons with peers in the software industry. A reconciliation of GAAP to non-GAAP measures is provided in our earnings release. We have also posted on the Investor Relations section of our website under the Financials tab a schedule with supplemental information, including information about quarterly recurring revenues and bookings. On the Events and Presentations tab, we posted an Earnings Summary slide deck to supplement our prepared remarks. Please note that all growth comparisons we make on the call today will relate to the corresponding period of last year unless we specify otherwise.

Lynn Moore, President and CEO, Tyler Technologies: Lynn, thanks. Hala. Third quarter results once again exceeded expectations across our key revenue and profitability measures. Continuing the momentum we saw in the first half of the year, total revenues grew by almost 10%, led by 20% SaaS revenue growth and 11.5% transaction revenue growth. We’re also pleased to report solid bookings in Q3 as total SaaS bookings grew 5% sequentially and rose 5.8% year over year to reach a new all-time high. Our results reflect a high level of execution across our team as we advance our cloud strategy to lead the public sector’s digital transformation. Our leading sales indicators, including RFP and demo activity, remain steady, reflecting a healthy new business pipeline. Throughout the year, we have not seen any fundamental change in public sector demand, nor have we seen any material impact on demand from DOGE or related initiatives or, more recently, the federal government shutdown.

As we’ve discussed previously, we view efficiency mandates as a long-term tailwind for our software and services across a large replacement market of aging mission-critical systems. We continue to operate in a resilient budget environment with allocations increasingly directed towards technology investments as a key lever for maximizing efficiency and productivity. We are executing our strategic priorities from a position of strength, grounded in durable fundamentals that reinforce our leadership position and competitive differentiators. Our four key growth pillars remain central to this strategy: completing our cloud transition, leveraging our large client base, growing our payments business, and expanding into new markets. Operationalizing our cloud-first strategy is fully embedded as the cornerstone of how we deliver, innovate, and scale. Our cloud-living approach will bring together technology and talent to drive agility and continuous improvement, ensuring consistency across releases and improved time to value for clients.

Building on this foundation, our purpose-built AI innovation is amplifying the power of the cloud, creating more seamless, connected client experiences, deepening relationships, and expanding cross-sell and upsell opportunities across our portfolio. I’d like to highlight a few third quarter wins that illustrate progress against our growth objectives, with a broader list of key deals included in our quarterly earnings deck. We continue to gain traction with our AI-driven solutions. Significant deals this quarter include the contract with Hillsborough County, Florida, the state’s third largest county, for document automation, adding $953,000 in ARR, and a contract with the State of Arizona for our priority-based budgeting solution. We also signed a contract with the South Carolina Department of Administration for our Resident Engagement solution, adding to our growing roster of state clients unlocking streamlined government services access through our AI-powered Resident Assistant.

We continue to build momentum in the public safety market with competitive wins that demonstrate the breadth of our integrated offering and market strength. Public safety deals this quarter included contracts with Coweta County, Georgia, in the metropolitan area of Atlanta for our full enterprise public safety suite and a cross-sell win with the City of Columbia, Missouri, an existing enterprise ERP client. We’re also pleased to see market success from our recent acquisition, Emergency Networking, with the first statewide win for our National Emergency Response Information System with the State of Pennsylvania, serving more than 2,000 fire agencies across the state. Finally, we signed a statewide contract with the Colorado Department of Corrections for our Inmate Services Financial Suite, which is expected to generate approximately $2 million in transaction-based ARR.

Now I’d like Brian to provide more detail on the results for the quarter and our updated annual guidance for 2025. Thanks, Lynn.

Brian Miller, Chief Financial Officer, Tyler Technologies: Total revenues for the quarter were $595.9 million, up 9.7%. Subscriptions revenue increased 15.5%. Within subscriptions, SaaS revenues grew 20% to $199.8 million. As we’ve discussed previously, there’s often a lag from the signing of a new SaaS deal or flip to the start of revenue recognition that can vary from one to several quarters. Because of this, as well as the timing of SaaS renewals and related price increases, SaaS revenue growth and SaaS bookings both year over year and sequentially may fluctuate from quarter to quarter. Transaction revenues grew 11.5% to $201.3 million, driven by higher transaction volumes from both new and existing clients, increased adoption and deployment of new transaction-based services, and higher revenues from third-party payment processing partners. Total bookings for Q3 were up 2.6% year over year.

Total SaaS bookings, including new SaaS deals, flips of on-premises clients, expansions, and renewals, reached a new quarterly high, up 5% sequentially from Q2 and up 5.8% year over year. This bookings growth was driven by higher flips as well as expansions and renewals from our installed base. Total annualized recurring revenue from new SaaS deals and flips signed this quarter was approximately $30.8 million, up 8.5% sequentially from Q2 and down 3.3% from last year. Annualized recurring revenue from flips rose 64% while new SaaS arrived 39% against a difficult comparison from the exceptional number of large deals last year. As a reminder, the lumpiness of large deal timing was also evident in last year’s fourth quarter new SaaS bookings, which also included several large deals. Our total annualized recurring revenue was approximately $2 billion, up 10.7%.

Our non-GAAP operating margin expanded to 26.6%, up 120 basis points from last year, reflecting a continued positive shift in revenue mix towards higher margin SaaS and transaction revenues and efficiency gains across our cloud operations. Cash flows from operations and free cash flow were solid at $255.2 million and $247.6 million, respectively, down slightly year over year, mainly due to the timing of working capital changes. We ended the quarter with $600 million of convertible debt outstanding and cash and investments of approximately $973 million. Our annual guidance for 2025 is as follows. We expect total revenues will be between $2.335 billion and $2.360 billion. The midpoint of our guidance implies growth of approximately 10%. We expect GAAP diluted EPS will be between $7.28 and $7.48 and may vary significantly due to the impact of discrete tax items on the GAAP effective tax rate.

We expect non-GAAP diluted EPS will be between $11.30 and $11.50. Our estimated non-GAAP tax rate for 2025 is expected to be 22.5%. We expect our free cash flow margin will be between 25% and 27%. We expect research and development expense will be in the range of $202 million to $205 million. Other details of our guidance are included in our earnings release and in the Q3 earnings deck posted on our website. In addition, while we are currently in the middle of our 2026 planning process, I want to share an early view of our revenue outlook for next year while we continue to evaluate our investment priorities for 2026. We currently expect SaaS revenues to grow approximately 20% and we anticipate total recurring revenue growth will be within our long-term target range of 10% to 12% excluding the impact of the wind-down of the Texas payments contract.

Our 2025 guidance and 2026 revenue outlook reflect solid progress towards our 2030 goals, although long-term growth and margin expansion will not be linear. Now I’d like to turn the call back to Lynn.

Lynn Moore, President and CEO, Tyler Technologies: Thanks, Brian. We’re pleased that our third quarter performance again surpassed expectations, and I remain confident in our ability to deliver sustained growth through our unique competitive strengths that position us to lead our clients’ digital transformation through enhanced cloud capabilities, improved client experience, and the next wave of AI modernization. We remain on track to achieve our 2030 targets, executing well and delivering across all key priorities. Importantly, our 2030 plan did not contemplate potential additive growth from M&A or AI, but we expect upside potential from both of those growth opportunities. Our balance sheet remains healthy, and we currently have more than $1 billion in cash and short-term investments. Our $600 million convertible debt matures in March of 2026.

Based on our internal modeling and interest rate movement since we issued the convert, it has proven to be an efficient component of the financing of the NIC Acquisition as we grow free cash flow. Our historical capital allocation priorities remain unchanged and include internal investments, M&A, and opportunistic share repurchases. We repurchased approximately 300,000 shares in Q3, in part to offset potential dilution from our convertible debt. Following our repurchases, the stock saw further weakness to levels we believe represent an attractive long-term value proposition, but most of the decline took place after our blackout period commenced. On the M&A front, we have closed two acquisitions this year, MyGov and Emergency Networking, and our M&A pipeline is active. We continue to follow our proven playbook, adding competitive products or functionality that are adjacent to or complementary with our existing core business.

We expect to leverage our established sales channels and client base to grow acquired businesses faster than Tyler’s overall growth rate. Looking ahead to 2026 and beyond, you’ll see us take a more proactive, intentional approach to M&A within our general guidelines while staying disciplined on valuation. Over recent years, we’ve discussed a higher bar for M&A. Yet since the NIC Acquisition, we’ve closed 11 transactions of varying sizes for a total purchase price of nearly $400 million. The higher bar reflected both management bandwidth and balance sheet considerations. Going forward, we’ll continue our disciplined valuation approach and consider management bandwidth, but I’d expect to use our significant free cash flow and, if circumstances warrant, reasonable levels of debt to drive future growth through M&A and, when appropriate, fund opportunistic share repurchases. Now I’d like to make a few comments addressing some of the market noise around AI.

For more than 25 years, Tyler Technologies has successfully navigated the public sector through successive waves of technological transformation, from the emergence of web browsers in the dot-com revolution, to mobile computing, cloud migration, and now artificial intelligence. Each shift brought similar promises. New entrants with new technology would disrupt established players. Each time, we learned the same fundamental lesson: technology alone never wins in the public sector. Durable outcomes come from deep domain expertise, trusted client partnerships, and disciplined execution. That’s been our edge, and it still is today. We are building on those same principles and expect to guide the public sector into the next era, one that’s driven by AI. We are confident that no company is better positioned than Tyler Technologies to lead this transformation. AI’s effectiveness depends on quality data.

Our 15,000+ clients generate vast amounts of data daily through our systems, and they trust us to govern it responsibly. Through well-structured data partnerships and governance frameworks, we can leverage this client data with appropriate permissions and safeguards to build AI solutions that truly understand government operations and complex workflows. Our clients are ready, and they’re seeing results. Early deployments of products like document automation and priority-based budgeting are delivering 10% to 30% productivity gains and 2 to 3 times ROI on targeted processes while maintaining the level of reliability and trust that our clients demand. Looking ahead, I view our AI opportunities in three categories. First, internal efficiencies where we’ll invest and set specific ROI targets.

For example, we’re currently scaling our investments in AI tooling for all 2,000 of our product development team members, rolling out the tooling, training, and enablement required to innovate and deliver at the speed of AI. Second, competitive differentiation with existing products to win more business and provide more meaningful upsell opportunities, and finally, new products through M&A or internal development that drive revenue growth. AgentIQ AI, operating as a digital extension of the workforce, has a natural path to monetization because it delivers clear, obvious, and measurable outcomes such as hours saved, backlogs reduced, or revenue recovered. When that value is proven, we believe Tyler can capture a fair share of the ROI price simply as a predictable annual SaaS fee tied to the value.

It’s also interesting to note that some of our forward-thinking clients are starting to blend their software and labor budgets, allocating more of the latter towards their digital workforce. As digital labor shows impact, agencies can reallocate portions of labor spend to software. If this trend continues, we believe it will further expand Tyler’s opportunity. In summary, and in my opinion, some of the noise around AI and vertical software has been a bit overblown. I’ve quipped that AI itself is fueling displacement fears, and there’s still significant hype reminiscent of the dot-com era. With every technology cycle or transformation, there are shifts that redefine markets and leadership positions. Yet Tyler continues to endure, thrive, and lead. To me, the question people should ask is who is best positioned to lead the public sector through this next transformative cycle? I contend it’s Tyler.

Now we’d like to open the line for Q&A.

Conference Call Operator: We will now begin the question and answer session. To enter a question into the question queue, please press star 1 on your touchtone phone. If you’re using a speakerphone, please pick up your handset and then press the star key and the number one. To withdraw your question, press the star key, then the number one. As a reminder, please limit your question to one question so we stay within the allotted time. We will pause momentarily to assemble our roster. Your first question comes from the line of Alex Zukin of Wolfe Research. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Hey guys, maybe just the first. I’ll go with a tactical question first around some of the numbers and then maybe a high level one. Maybe Brian, for you, just understanding and helping us bridge the decline and kind of net new annual SaaS bookings.

Brian Miller, Chief Financial Officer, Tyler Technologies: Year to date in the quarter.

Lynn Moore, President and CEO, Tyler Technologies: Tough comps from last year. The confidence in SaaS revenue growth for next year at 20%—maybe just help give us a little bit of context for when the implementations, when those conversions need to happen from that prior book business to hit that number. How much visibility do you have on that relative to previous years? Maybe some guardrails on those estimates for next year. Why pull some of the segmented guidance for this year? Maybe just help on those two points. I’ve got a big picture one.

Brian Miller, Chief Financial Officer, Tyler Technologies: Yeah, as we look, and as we said, this is a preliminary look at 2026 as we’re building out our plans, but we expect that SaaS revenues growth will be in that 20% range. It’s really built up from all of the factors and our visibility into those that drives SaaS revenue growth. Part of that is new SaaS bookings, both those that will happen next year and those that have already happened. As we’ve talked about, there can be a lag from one to multiple quarters. Sometimes these deals are phased in as they hit revenue. Some of that growth is coming out of the bookings that we saw this year and the bookings that some of them even that we saw last year as those are phased in.

Conference Call Operator: So.

Brian Miller, Chief Financial Officer, Tyler Technologies: Effectively out of our backlog. There’s also the impact of flips. We’ve talked about the trajectory of flips continuing to be on the uphill side. Those are still growing both in terms of number and in terms of size. Our expectations around flips next year are layered into that. There’s the renewals, the price, the sales to new customers, which actually reflect the majority of new SaaS bookings are coming from add-on sales to existing customers, not the new name deals that we also disclose. There’s the pricing impact of our annual increases that we see on renewals. As we look at all those, how we build up all of those, we have, I’d say, at least as good a visibility as we have in any normal year. That is what drives that confidence around that 20% range for growth next year.

On your question about segmented guidance, I assume you’re asking about breaking out revenue guidance by line item. We’ve given that early in the year to help with modeling in general. Now that we’re down to the fourth quarter, we really don’t have any significant changes around what we’ve given in the past. We’ve tried to simplify things a bit and just go with overall revenue guidance.

Lynn Moore, President and CEO, Tyler Technologies: Got it.

Brian Miller, Chief Financial Officer, Tyler Technologies: Lynn, maybe for you, maybe.

Lynn Moore, President and CEO, Tyler Technologies: You talked about not really seeing an impact from budgets and budget cycles and doge, which makes a lot of sense when I guess you it felt like the commentary around M&A was maybe a little bit more pointed. Maybe I’ll just ask the question around how much should we anticipate from an organic, from a total top line contribution maybe for fiscal 2026 and beyond? Is this a change in terms of the point or so from M&A that we’ve kind of come to expect? Are you thinking maybe more can come because the opportunity set is so much broader than it’s been before because of AI or what’s the signal that you want us to take away from that comment? I think really the signal is one, we’ve done two deals this year. They were relatively small. We do have an active pipeline. They’re not necessarily large deals.

I wouldn’t expect 2026 to have a meaningful impact more than that sort of 1% range, assuming other deals may or may not go. Really the comment is based around the fact that, hey, you know, the last several years we’ve talked about the need to strengthen our balance sheet and we’ve talked about management bandwidth not just because of M&A deals, but also we have a lot of strategic initiatives going on. Throughout this year, as you know, we’ve gotten the point where we have the cash on the balance sheet to pay off the convert. We are getting past some major hurdles on some of these internal investments and strategic initiatives even as more are spinning up. I just feel like we’re more in a place now where we can actually be a little more proactive.

Over the last few years I think we’ve been a little more reactive, more responding to brokers instead of other types of deals. To be fair, the Emergency Networking deal that we did this year, that was something we proactively went after. They were a partner of ours. That’s a proven model for us. We get to know them out in the market. Our ability to close on deals when we knock on doors or we establish a relationship versus a broker bringing it to us is much higher. I think we’re just in a position where I feel like we have more of the ability both again from a balance sheet perspective, a management perspective, everything to sort of go back to more of our traditional approach pre NIC.

Conference Call Operator: Your next question comes from the line of Terry Tillman of Truist. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Yeah. Hey Lynn, Brian and Hala, it’s good to see this flag in the ground on the 20% SaaS growth. I had a bunch of questions but I’ll keep it to one. You know there’s a maniacal focus on your supplemental information on your IR section of the website and it is often on that new SaaS and flips SaaS bookings. I love how you brought up the idea of add-on sales. Could you maybe double click on, you know, kind of approaches you all been taking to be much more programmatic to drive those add-on sales and expansions and just where are you in kind of getting the benefits of that focused effort? Thank you. Yeah, Terry, it’s been a focus of ours for some time. Our inside sales teams have been outperforming generally against their quotas for the last couple years.

We’re still, I would say, in the very early stages. I think 20, 30 targets we talked about having at that time two to three products per client and our goal is to get to 10 to 12 or even more. Particularly if we do more M&A, it’s more opportunity. We’re still pretty early in that. It is a big factor of how we approach the business. I think the other thing I want to talk about, going back to Alex’s question about the markets, is what we’re seeing now is we’ve said for the last several quarters, RFP activity is steady, demo activity is steadied up. For whatever reason, and we’ve talked with our sales guys in Q1 and Q2, for whatever reason, some procurements were put on pause and we’re starting to see that be released and we feel good about our Q4 sales outlook.

For example, in Enterprise ERP Solutions, Q2 and Q3 had the highest number of RFPs that we’ve seen in the last two years. That demand, just like historically, doesn’t go away. We’re there to capture it. I think that was, for whatever reason, it was a post-ARPA hangover. It was a short blip. We’ve seen that before in larger cases. Whether it was post-9/11, Great Recession, Covid, whenever there was, for whatever reason, a pause, we were there. This obviously was never anything to that extent. That’s part of our confidence as we move forward. Thank you.

Conference Call Operator: Your next question comes from the line of Joshua Riley of Needham. Your line is open.

Brian Miller, Chief Financial Officer, Tyler Technologies: Great.

Lynn Moore, President and CEO, Tyler Technologies: Thanks for taking my question. Can you just remind us the moving parts of how the Texas payments contract wind-down is going to impact transaction revenue for the balance of the year, and then offsetting that is the ramping of the California state parks deal. Is that at a full run right now? Are there any other notable payments deals ramping and transactions disrupting the normal seasonality for decline into Q4?

Conference Call Operator: Thank you.

Lynn Moore, President and CEO, Tyler Technologies: Yeah.

Brian Miller, Chief Financial Officer, Tyler Technologies: The Texas contract continues to move towards wind-down. I think we currently expect revenues from Texas for the full year to be kind of in the $39 to $40 million range, which is maybe down just a tick from I think last quarter we said $41 million. As we get more clarity as it transitions out, that’s the level we expect to be. There’s probably a little bit that carries over into next year, maybe $4 or $5 million. That delta between the $39 to $40 million this year and $4 or $5 million next year is what will come out of next year with the California parks, which was a big, basically software and services, but mostly software paid for as transactions. That contract started last August, so we lapped it during this quarter.

Going forward, although the revenues from that contract will continue to grow, I’d say it’s not fully ramped, but most of that growth, most of the incremental revenues from that are now built into our base. I don’t think there’s anything that fundamentally changes the seasonality. We did call out Lynn mentioned one large transaction-based deal we signed this quarter with the Colorado Department of Corrections for our Inmate Services Financial Suite. Again, that’s software that’s being provided under a transaction-based arrangement that’ll add a couple million dollars a year of revenue. No individual deal that’s on the scale of something like California.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, Josh, we also in this quarter we signed a payments deal with Chesterfield County, Virginia that fully ramped up. We think it’ll be about a $1.5 million deal. There’s some other payments transactions that are in the queue right now that, as you know, we don’t announce awards or where we sit, but we like the trajectory right now of our payments transaction business.

Conference Call Operator: Thank you. Your next question comes from the line of Saket Kalia of Barclays. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Okay, great. Hey guys, thanks for taking.

Brian Miller, Chief Financial Officer, Tyler Technologies: My question here.

Lynn Moore, President and CEO, Tyler Technologies: Great to hear the 20% SaaS growth for next year as well maybe. For my one question, Lynn, it’s really for you. Really appreciated your points on AI in your prepared comments and I want to marry that with kind of Tyler’s move to SaaS, you know, as more of the base moves to SaaS. What is, and without getting too specific, what do you sort of see on Tyler’s roadmap that’s going to maybe grow that revenue opportunity in terms of AI in the public sector? Maybe relatedly, have you seen any changes from competitors as perhaps AI becomes more of an offering in public sector? That’s been a question that I’ve gotten as well.

Brian Miller, Chief Financial Officer, Tyler Technologies: Curious if you could comment.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, I think I haven’t seen anything material out of competitors. I do think your analogy with SaaS is a good one. It’s one I’ve used internally, which was, as you recall, we historically had an on-premises license business. We had a SaaS offering. We were cloud agnostic. In 2019, we made the strategic shift and we said, look, we’re the leader in this space. We’re going to lead the public sector to cloud. We’re not just going to be reactive. That’s the mindset that we have right now internally. We’re going to lead the public sector through this next cycle of transformation, which is AI. You know, we’re best positioned to do it. I mentioned some of those things in my prepared remarks: our access to data, our deep domain expertise, our know-how, both internal resources, we’ve got partnerships with AWS, OpenAI, Anthropic. A big one also is trust.

Our clients trust us. This is a journey that they’re ready to take. They really want someone, a trusted partner, to be moving forward with them. That was a big theme at our Connect conference last year, and it’s something that really resonates with our clients. It’s really capitalizing on our position. We’re making investments in AI. We’ve got products right now that are clearly AI driven. We’ve got plans for next year to ramp up more investments on AI. One thing I want to be clear is I’m not going to jump on the AI hype train. We’ve got those products. It’s part of our strategy. I’m not going to go out and put out big numbers that a lot of people are doing. We’re going to continue to be like we’ve always been.

We’re going to tell you what we’re going to do and then we’re going to go do it. That’s going to be our approach. We are excited about where we are. We’re excited that our clients are ready. This stuff doesn’t happen overnight, as you know. It’s going to take time. Super helpful, Lynn. Thank you.

Conference Call Operator: Your next question comes from Kirk Matern of Evercore. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, thanks very much. Lynn, interesting to hear about how some clients are starting to marry their software and labor budgets together. My question’s pretty similar, or at least a follow on to what Socket asked on the AI front. How are you, I guess I realize this is early, but how are you envisioning discussing sort of pricing for AI functionality with your clients? You guys have had a long partnership with your clients where I think there’s been some sort of value exchange between you and your customers. Does that change at all in an AI world, meaning, or is it just sort of we’re delivering more, we can take price as a result? Do you price per agent?

I was trying to get a sense and I realize it’s early, but I was thinking more specifically around some, as you bring in more AI functionality to the ERP suite, some of your core offerings. Thanks. Yeah, thanks for the question, Kirk. On the first part, yes, we’ve had a small, a very small sampling of clients who actually moved and took money out of a labor budget to help fund that. I mentioned Hillsborough County, Florida, and I think what that does is it actually produces another way for us to approach it. Your comment about agentic AI and replacing the digital workforce is something where we can show a proven ROI return and I think it’s something that you can price.

I also spoke about there will be areas of AI that I think are really going to be about improving our competitiveness and perhaps elevating a bundle of or suite of products as opposed to maybe necessarily a separate module. You’re right. Needing our ability to sell the value on the ROI is what’s going to be critical in terms of a separate monetization lane. Thanks.

Conference Call Operator: Your next question comes from the line of Rob Oliver of Baird. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Great, thank you.

Brian Miller, Chief Financial Officer, Tyler Technologies: Good morning.

Lynn Moore, President and CEO, Tyler Technologies: My question is on the customer conversions or pace of flips. Two part question. One, Lynn, have the drivers of flips changed at all?

Brian Miller, Chief Financial Officer, Tyler Technologies: I know you guys have cited security.

Lynn Moore, President and CEO, Tyler Technologies: Certain customers being ready to modernize in the past.

Brian Miller, Chief Financial Officer, Tyler Technologies: Are there additional factors that could?

Lynn Moore, President and CEO, Tyler Technologies: Offset that like AI readiness or concern on AI? For Brian, just around the conversion math.

Brian Miller, Chief Financial Officer, Tyler Technologies: If you could just remind us how that’s looking today and any color around.

Lynn Moore, President and CEO, Tyler Technologies: Cross-sell on top of would be helpful.

Brian Miller, Chief Financial Officer, Tyler Technologies: Thank you very much.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, Rob, I think actually security has historically been a foundational selling point. I think it’s shifting now to the value that you’re getting in the cloud and the value of the enhancements, the upgrades. We have not yet. We are in the process of formulating a consistent one Tyler approach to how we’re going to our clients as to our messaging around the cloud. We’re still doing more of a carrot versus stick approach, but that’s evolving. The carrot is the value prop that you’re going to get by being in the cloud versus not being in the cloud, and that will include too.

Brian Miller, Chief Financial Officer, Tyler Technologies: Your comment.

Lynn Moore, President and CEO, Tyler Technologies: AI features and functionality.

Brian Miller, Chief Financial Officer, Tyler Technologies: I’ll also add that one sort of gating item around the pace of flips and the readiness of clients to flip goes hand in hand with our version consolidation. As we’ve continued to eliminate older versions of products and move more and more customers onto the current version of products, that puts them in a position to be able to migrate to the cloud where we ultimately have one cloud version of each product. We’ve made a lot of progress with that, especially with our core key products over the last couple of years and we continue to do work on that. That has put more and more customers in a position which also supports an increase in the pace of flips over these next couple of years.

The math around the flip still sort of on a like-for-like basis, still holding pretty steady at that 1.7 to 1.8x uplift from their maintenance revenues. It’s a bit anecdotal at this point, but I think we are seeing an increase in add-on sales, upsells. Whether it’s additional services or additional modules or products as customers move to the cloud, that provides that opportunity to have a conversation with them about other products that they could get from Tyler and deploy in the cloud at the same time. I think we’re more intentional about that today than we may have been in the past.

Lynn Moore, President and CEO, Tyler Technologies: Thank you.

Conference Call Operator: Your next question comes from Matt Van Vuyet of Cantor. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Good morning.

Brian Miller, Chief Financial Officer, Tyler Technologies: Thanks for taking the question.

Lynn Moore, President and CEO, Tyler Technologies: I guess when you look at the.

Brian Miller, Chief Financial Officer, Tyler Technologies: Number of sort of sub-verticals that you play in, it sounds like some of the courts and justice and then the ERP financial side have been particularly strong the last few quarters.

Lynn Moore, President and CEO, Tyler Technologies: Curious if there have been any areas.

Brian Miller, Chief Financial Officer, Tyler Technologies: Where you’ve seen some weakness and maybe any reasons you’ve identified there. Maybe any areas that have shown a little bit more of that ARPA hangover even on the K through 12 side. Maybe the ESSER funds in addition to ARPA just help us understand kind of where in the business is seeing some positives, maybe where some negatives are.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, I would say, Matt, generally in the first quarter or two we talked about decisions being delayed, not canceled, but just sort of being delayed. We attribute a lot of that to post-ARPA that filtered across product suites. It filtered across our ERP, enterprise ERP suite. It did filter across some of our justice solutions. Public safety is having a really great sales year. Seeing our courts and justice solutions, I think the softness that they saw in the first half really caused by sort of delay of deals is starting to ramp back up. As I mentioned, that’s the case also with our enterprise ERP. Federal obviously has been impacted by a lot of the noise that’s out there. As a reminder, it’s a pretty immaterial part of our business. Thank you.

Conference Call Operator: Your next question comes from the line of Ken Wong of Oppenheimer. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Fantastic. Thanks for taking my question, Brian. I wanted to maybe dig in a little deeper on Alex’s question about 2026 SaaS revenue. You touched on some of the components, the stuff coming off backlog, stuff coming in from new at this stage in the planning cycle. Any sense whether or not 2026 might have a larger backlog component that gives you guys the confidence, how should we think about that relative to 2025 or past years?

Brian Miller, Chief Financial Officer, Tyler Technologies: I’d say structurally there’s not a big difference. Probably again, given the number of big deals we did last year that are still filtering in, there’s probably a little bit more that comes from that backlog just because like you saw quarters last year where SaaS ARR bookings growth was 60% and 50%. Obviously our revenues didn’t grow by that level. Those bookings, some of those still have not fully hit revenues. There’s just this continued increase in sales to our customer base, which is where the vast majority of those SaaS revenue growth comes from. It’s both pricing and it’s add-on sales and selling other modules or other suites of products to existing customers. As Lynn pointed out, as we make more acquisitions and as we invest in more product development, we have more things to sell to those customers.

We’ve made structural changes around our sales organizations, for example, adding the new state sales organization that are also helping position us to drive more of those sales into the existing customer base. We talked about the trajectory of flips. Probably a minor more amount coming from backlog, but also just our general outlook around cross-sells, upsells, new sales next year, how we gauge the pipeline. We’ve talked about for several quarters the market activity, the number of RFPs, the number of demos we’re doing being kind of steady at this sort of historically elevated level. A very robust pipeline of business exists. We have long sales cycles that can typically be a year, 18 months in large deals, sometimes even longer than that. That pipeline activity continues to support a really solid sales outlook as well.

Lynn Moore, President and CEO, Tyler Technologies: You know, Ken, just to jump on that a little bit, 2024 was a record sales year and we experienced a little bit of softness in Q1 that carried over a little to Q2. As we said at the time, this was not something systemic. This was not a sustained issue. What we’ve seen is, what we expected is that as the year has gone on, our sales continue to ramp up and we expect it to continue to ramp up in Q4. It was just a temporary blip, but it was no fundamental change in either the markets or our offerings or, you know, our competitiveness. We’ve seen it before in bigger situations. From my perspective, there’s nothing that’s fundamentally changed about our trajectory and our 2030 targets. Fantastic. Thanks for the color, guys.

Conference Call Operator: Your next question comes from the line of Jonathan Ho of William Blair. Your line is open.

Lynn Moore, President and CEO, Tyler Technologies: Hi. Good afternoon or good morning. Can you hear me okay? Yes.

Brian Miller, Chief Financial Officer, Tyler Technologies: Yes.

Lynn Moore, President and CEO, Tyler Technologies: Oh, yeah, sorry. You just wanted to understand when it comes to some of your newer products like emergency response and prison transactions, can you help us understand the growth opportunity here and potential cross-sell synergies with some of your other systems? Yeah, you know those. Both of those product lines, you know, our corrections resident services has a big TAM. I don’t have it in front of me. I remember when we did the acquisition, I believe we thought it was north of $100 million. It actually represented a cross-sell opportunity. We utilized the relationships in Colorado from the NIC acquisition, married with our salespeople on the justice side to create that opportunity. That’s pretty big. The Emergency Networking acquisition, small acquisition but important one because they had their fire incident reporting system, is one that is current and meets 26 compliance. That’s a big deal.

It’s going to drive growth. They’re smaller deals, but it’s something that we’re excited about. It’s something that we can take and leverage. Pennsylvania, where we got the statewide, it’s the state with the highest number of fire agencies in the country. For us to win that deal and actually the initial deal was kind of small, but it has expansion opportunities which we’re already seeing and get that success and then take that and transport it across the country will also help drive our public safety sales.

Brian Miller, Chief Financial Officer, Tyler Technologies: That’s really a key characteristic that we look at in a lot of the acquisitions. We do these tuck-in types that even if they’re relatively small at the time we acquire them, we expect them to grow at a rate that’s significantly in excess of Tyler’s core growth rate. As we leverage our sales organization, put that product in the bags of many more sales reps than that business had on its own, and sell it both to existing Tyler customers in related products and bundle it in new sales, which is what we’re doing with Emergency Networking. We’ve seen that playbook work extremely well over the years. A lot of examples like our enterprise supervision product have proven that. That really is a common characteristic of a lot of our acquisitions.

Lynn Moore, President and CEO, Tyler Technologies: Thank you.

Conference Call Operator: Your next question comes from the line of Gabriella Borg of Goldman Sachs. Your line is open.

Hala Elsherbini, Senior Director of Investor Relations, Tyler Technologies: Hey, good morning. Thank you, Lynn. I wanted to follow up on your comments on AI because there’s been some frustration in the software ecosystem this year on just how long it’s taking to see real productivity gains in knowledge workers and at the application layer. My question to you is there’s this perception that government typically moves slower than enterprise. Based on your conversations, what are you seeing in terms of the Zeitgeist, customers being willing to engage? Are there some products that they’re more willing to engage in than others for AI use cases specifically, and to the extent there are limiting factors, what are you, the company, doing to address those limiting factors directly? Thank you.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, thanks, Gabriel. I mean, you know, clearly our sector typically moves slower than the private sector. That probably was part of our approach when we used to talk about it probably about a year ago that we were taking a disciplined approach. We’re seeing clients being more receptive today than others. A lot of it has to do with things around their workforce, as their workforce continues to age and reach retirement. They’re not replacing it. They’re starting to see the need and the demand for that. That’s the whole, you know, the whole agentic AI and the digital worker. We’ve seen places in our business where I think it’s been, it’s more receptive today than other places in our business, certainly in the court space. I talked about the document automation, which was our CSI acquisition a year ago.

We’re seeing a little more receptiveness in our ERP space for things like our priority-based budgeting and some other modules, AP automation and things like that. It’s not, I wouldn’t say that, you know, it’s, you know, the dam’s been broken, so to speak. There is receptiveness to it. We will continue to push it because we will lay out that ROI value to our clients.

Brian Miller, Chief Financial Officer, Tyler Technologies: I think some of that receptiveness is tied to the trust they have with Tyler Technologies. We have these deep, long-term, often decades-long relationships where we brought them through different stages of technology, and they trust us to do that with AI as well, to show them the way and show them the value proposition, protect their data, and provide the transparency where they may be less trusting of a point solution or a startup that just comes in with an AI solution on top of other products. They really trust us to understand their needs and to marry that with the way we manage their complex workflows. That trust factor is important in their receptiveness to AI.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, I’d be remiss to not also mention our products in the state space. Resident Engagement, automated field ops. We did a deal this quarter with the South Carolina Department of Administration for Resident Engagement product and it was about $1 million in ARR. The solutions that we’re able to provide to help citizens navigate the complex web of government operations to find their needs and to find what they’re looking for and meet their needs is also somewhat compelling.

Hala Elsherbini, Senior Director of Investor Relations, Tyler Technologies: Thank you for the thoughts.

Conference Call Operator: Your next question comes from the line of Mark Schappel of Loop Capital Markets. Your line is open. Hi.

Lynn Moore, President and CEO, Tyler Technologies: Thank you for taking my question, Lynn. It sounds like it was a strong quarter for your public safety business.

Brian Miller, Chief Financial Officer, Tyler Technologies: Q4 also tends to be strong.

Lynn Moore, President and CEO, Tyler Technologies: Period for public safety. I was wondering if you could just.

Brian Miller, Chief Financial Officer, Tyler Technologies: Provide some additional color on maybe your public safety pipeline and a setup for Q4, if you could.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, Mark, you’re right. We had a good quarter in sales in public safety. We’ve got a lot of momentum in public safety, and I’m expecting some good sales in Q4 as well. We closed a few good deals. We don’t talk necessarily about the competitors we beat, but I’m certainly happy with some of the wins that we had because of the competitive people that we beat, and there’s momentum there. It’s something that’s got excitement up in our Troy division. You know, we’re still the leader in the public safety space as it relates to cloud. I think this quarter or through this year we’re about 93% year over year ahead in subscription versus last year, and that’s a good place to be now.

We’re not going to sit on our laurels. There are going to be more competitive investments we’re going to make just like we do across the board. I like our position there.

Brian Miller, Chief Financial Officer, Tyler Technologies: Great, thanks.

Lynn Moore, President and CEO, Tyler Technologies: Brian, just building on an earlier question around flips, I believe flips.

Brian Miller, Chief Financial Officer, Tyler Technologies: We’re growing about 25% this year.

Lynn Moore, President and CEO, Tyler Technologies: Just wondering if you could comment.

Brian Miller, Chief Financial Officer, Tyler Technologies: On growth expectations for flips next year and also if you could maybe just provide an update on maybe what % of the install base has moved to SaaS.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, we.

Brian Miller, Chief Financial Officer, Tyler Technologies: Don’t guide actually to a flip number, but we have said that the trajectory both into next year and really for the next two or three years, we’ve talked about a peak in the 2027-2028 timeframe. That trajectory, both in terms of the number of flips and the size of flips. The average size of flips is increasing. If you look at the cohort of customers that are still on-premises, it’s more heavily weighted towards large customers, statewide court systems, large counties. There is more revenue in that base that’s still on-prem. We do expect that trend to continue to be upward and to the right, but are not giving a specific number for how we expect that to grow. Just like with new sales, there’s lumpiness around large flips and those are a little less predictable about exactly what quarter or even what year they’re going to fall in.

Although we’re certainly in conversations with virtually every customer about their long-term plans to move to the cloud. That’s kind of where we stand on that. The second part of your question, what was that? It was around the growth expectations, I think, for flips next year. Oh, I’m sorry. What percentage of the install base has moved to SaaS from a revenue standpoint? If you take the maintenance revenue that we have today and multiply it by 1.75 to make a SaaS equivalent and compare that to our SaaS revenues, from an equivalent revenue basis, it’s about 50/50 right now. About half of our customer base by revenue is still on-prem and about half is in the cloud.

Lynn Moore, President and CEO, Tyler Technologies: Thank you.

Conference Call Operator: Your next question comes from the line of Michael Turin of Wells Fargo. Your line is open. Hey, this is Bronin on for Michael.

Lynn Moore, President and CEO, Tyler Technologies: Just wanted to ask about the cross-sell opportunity. You talked about that 8 to 10.

Conference Call Operator: Product goal for a few months now.

Lynn Moore, President and CEO, Tyler Technologies: I just wanted to know, like, what are the key drivers to bridge that.

Conference Call Operator: Gap from the current two to three products that customers kind of have right now?

Lynn Moore, President and CEO, Tyler Technologies: Is this going to require some?

Conference Call Operator: M&A or new product development?

Lynn Moore, President and CEO, Tyler Technologies: Yeah, Michael, there’s a number of factors that drive that. One factor is we’re still in the process of getting all our products to a single cloud version, which will help our approach to sales. We’re taking a hard look right now at our overall approach to sales holistically and not really in a position to go into details on that right now, but if I say that that’s a significant R is how we look at how we view a client, how we look at territories, how we view their bag of products. There are other things about it too, these other initiatives that we’ve got going on. I talked about getting down to a cloud version. That’s our cloud living initiative, our client sat initiative. Making sure all our clients are extremely happy is a huge, huge component of cross-sells and upsells.

If our clients aren’t happy, they’re not going to buy more of our products. We’ve unleashed a lot of it. As you know, we hired Andrew Teed, our new Chief Client Officer. We started some One Tyler initiatives around client experience, standing up and getting a better One Tyler approach to client success and things like that. There are a lot of motions in the background. It’s not one specific thing and some of these are bigger motions than others. It still remains to be a significant opportunity for us over the next five, ten years.

Conference Call Operator: Next question. Your next question comes from the line of Pete Heckman of D.A. Davidson. Your line is open.

Brian Miller, Chief Financial Officer, Tyler Technologies: Hey, good morning.

Lynn Moore, President and CEO, Tyler Technologies: A lot of my questions have been.

Brian Miller, Chief Financial Officer, Tyler Technologies: Just a couple follow ups. Remind me, this was a big year for R&D catch up. What are we thinking? As you know, I think in the longer term framework that you had provided, you were thinking that R&D would approximate maybe 5% of revenue in 2030. It looks to me like it’s certainly above that now. Should we expect it to plateau and then come down as a percentage as revenue grows, or would we expect it to continue to maybe grow at an accelerated rate in 2026? I think in general, as we look at a long term, over multiple years, we expect R&D would grow in line with or slightly below our overall revenue growth. As a percentage of revenue, it would be stable or come down as we’ve talked about in the past.

This year and on into the next couple of years, there’s an impact on R&D from sort of a geography change. As we continue to evolve in our cloud transition, resources that were formerly classified in cost of sales are being redeployed in R&D. There is a move of expense that’s part of the reason for that growth. As we look at this year and on into next year, I’d say we are expecting an elevated level of R&D. We’re seeing actual increases above our revenue increase as we invest in various initiatives, some of which Lynn talked about, including incremental investments around AI. That’s helpful and good reminder on the reallocation.

Lynn Moore, President and CEO, Tyler Technologies: In terms of with.

Brian Miller, Chief Financial Officer, Tyler Technologies: The Texas payments deal, deconversion, really the majority of that happening for next year, that creates a bit of a drag. If we’re thinking of SaaS growth at 20%, I guess what’s the underlying growth rate of payments that we should be thinking about to get to kind of thinking about where subscriptions growth ends up next year in terms of thinking about like is the right way to think about transaction revenue growth, excluding the Texas payments, something in the mid to high teens? I’d say yes. Excluding the impact of Texas, low double digit. Okay. Low double digit. Okay. Certainly on a combined basis, just because of Texas, we will see subscription revenue growth fall kind of more towards the mid teens next year versus what.

Lynn Moore, President and CEO, Tyler Technologies: Looks like it’s going to be 18% this year.

Brian Miller, Chief Financial Officer, Tyler Technologies: Is that the right way to think about it? I think that’s generally the way to frame it. Again, the only guidance or directional guidance we’ve talked about today is really around the total SaaS growth and that subscription growth in the recurring revenue growth in the 10% to 12% range. The recurring revenue growth being the SaaS, maintenance, and transactions combined. You can kind of back into what that leaves for transactions. If you apply the 20% to the SaaS, that recurring revenue growth excludes the impact of the Texas transition. Okay, that’s helpful. I appreciate it. I’ll get back in queue.

Conference Call Operator: Your next question comes from the line of Trevor Walsh of Citizens JMP. Your line is open. Great. Hi team.

Lynn Moore, President and CEO, Tyler Technologies: Thanks for taking my question, Brian, maybe.

Conference Call Operator: For you, but Lynn, feel free to.

Lynn Moore, President and CEO, Tyler Technologies: Appreciate all the color around kind of 2026 and kind of top line type of outlook.

Conference Call Operator: Can you maybe just give us.

Lynn Moore, President and CEO, Tyler Technologies: A sense of how from a profitability.

Conference Call Operator: Standpoint, kind of where some of the.

Lynn Moore, President and CEO, Tyler Technologies: Levers you think going into 2026 that might be pulled. Also, on that front, could you give us an update on the data center? I think there was one targeted for the end of this year, and if my memory serves, that was going to have implications kind of in the early.

Conference Call Operator: Part of next year.

Lynn Moore, President and CEO, Tyler Technologies: If we could just get an update on that process as part of your answer, that’d be terrific.

Conference Call Operator: Thanks.

Lynn Moore, President and CEO, Tyler Technologies: Sure.

Brian Miller, Chief Financial Officer, Tyler Technologies: The margins. We’ve said, you know, not giving guidance on margins for next year. We have said that that progression to margins will not be linear over the next several years. It’s been at a bit of an elevated level for the last couple of years. We’re a little bit ahead of plan as we’ve seen ahead of our long term trajectory as we’ve seen some of the benefits of the cloud transition earlier. We’ve also seen more OpEx benefits earlier. I would expect that margin expansion next year will not reach the same level of margin expansion that we’re seeing this year, but certainly on track to achieve or exceed the trajectory the targets that we’ve already established for 2030.

Lynn Moore, President and CEO, Tyler Technologies: Yeah, I’d say, Trevor, that’s right. We’re too early in the process to talk about margins. I will say we have approved and greenlighted some investments that were not in this year’s budget that are coming online now. Investments in our products, both competitive and AI investments. I would expect some of that additional elevated investment next year on the data center closure. You’re right, we have exited the Yarmouth Data Center. Huge milestone. Huge congratulations to our teams. We did that a little bit a couple months early. You know, we talked about this in 2023 about exiting the Dallas Data Center on time and now we’ve done it with the Yarmouth Data Center. One thing I want to caution about that exit is that does not necessarily equate to immediate cost savings. There are some transitional headwind costs that are short term.

I’m not prepared to give you a window of that, but clearly over the long term, it’s a tailwind to margins.

Conference Call Operator: Your next question comes from the line of Clark Jeffries of Piper Sandler. Your line is open. Hello.

Lynn Moore, President and CEO, Tyler Technologies: Thank you for taking the question. I just wanted to do a follow up on some of the commentary on flips. Lynn, Brian, how much is version consolidation still a limiting factor across the product base? I think it was framed at the beginning of the year. You were ahead of schedule with ERP at a 95% level, justice at 75%. I just wanted to wonder, you know, just wanted to ask about, you know, 2026 going into next year. Where are you at in that version consolidation? What limiting factors really are left just to frame the ability to really have capacity for greater flips next year. Thank you. Yeah, so there’s, take ERP, for example. There’s two motions that are going on. One is we had multiple versions out in the field, which you consolidate those.

We also have our cloud version of the software, which we will flip them at. Those are two different functions that are going on. You need one to get to the other. We’ve made significant progress there.

Conference Call Operator: Your last question comes from the line of Charles Strauser of CJS Securities. Your line is open.

Brian Miller, Chief Financial Officer, Tyler Technologies: Hi, good morning.

Lynn Moore, President and CEO, Tyler Technologies: Just on the flip conversation, just looking at the time it takes customers to go live in the cloud once they’ve signed on to flip, are you seeing noticeable improved efficiencies allowing you to convert the customers at a faster clip?

Brian Miller, Chief Financial Officer, Tyler Technologies: I think in general, our experience has been pretty good. I’d say we’ve probably gotten better at it. It varies from client to client. There’s typically a lot of planning done well in advance, often months and weeks, in some cases multiple quarters before they actually sign a flip. We’ve seen pretty good experience in terms of the time from when they sign to when they actually go live in the cloud. State of Idaho court system, for example, I think was in a matter of just a few months we’ve seen. I’d say our experience probably is really good. It’s more around the client doing a lot of planning in advance and working it into their overall IT roadmap.

We’ve certainly seen situations where, often because of a ransomware attack, the decisions are made very quickly and we’re able to bring customers up in the cloud sometimes in a matter of days. That doesn’t have to be a really long lead time. It varies from client to client.

Lynn Moore, President and CEO, Tyler Technologies: Each client’s got different levels of complexity, and we have been able to do things pretty quickly. Maybe not full functionality, but I would say that as we continue to move forward, yes, I think we’re getting better and more efficient. I couldn’t quantify what that is at this point.

Conference Call Operator: With no further questions, I’d like to turn the call back over to Lynn Moore for closing remarks.

Lynn Moore, President and CEO, Tyler Technologies: Thanks, JL, and thanks everybody for joining us today. If you have any further questions, please feel free to contact Brian Miller or myself. Thanks again and have a great day.

Conference Call Operator: This concludes today’s conference call. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.