TYL changes
Pick any two versions below to diff them.
- Price
- $360.41 → $375.76(+4.3%)
- Discount
- 15% to 38% → 12% to 35%(−3.0 pts)
- Next earnings
- 2026-10-29 → 2026-10-28
- Next earnings is estimate
- Yes → No
- Thesis
- The market fears that AI will reduce the value of Tyler's software. The belief is that governments can use large language models to build their own tools, or buy cheaper AI tools, in place of Tyler's court, tax and finance systems. This fear hit most software stocks from 2025, and Tyler's price fell by about half from its February 2025 high. Slower reported growth adds to the doubt. Tyler lost the Texas payments contract in Q4 2025, so transaction revenue grew only 3.5% in Q2 2026, and total revenue grew 8.2%. For the gap to close, four things must be true. SaaS revenue must keep growing about 20% or more a year; it grew 21.7% in Q2 2026, the 22nd quarter in a row above 20%. Clients must keep moving to the cloud at the planned pace, with peak volumes in 2027 to 2029. Transaction revenue must return to growth near 10% after the Texas contract leaves the comparisons. The new AI products, such as document automation and the resident AI assistant, must add revenue to existing contracts. The first check is the Q3 2026 report, expected at the end of on October 28, 2026. The 2027 guidance in February 2027 is the second check, because it is the first full year without the Texas contract in the base. Tyler set 2030 targets of $3.35 billion of recurring revenue and $1.15 billion of free cash flow, so the full evidence comes over several years. If SaaS growth holds and clients do not leave for AI tools, the gap can close slowly through 2027 and 2028.
- Checkpoints
- Oct 2928, 2026 (estimate): Q3 2026 results: SaaS growth and bookings. Pending. Watch: SaaS revenue growth near 20% or more and bookings that keep growing pass; slower SaaS growth or weaker bookings with no clear cause fail. Feb 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: 2027 guidance with transaction revenue growth near 10% and higher margins on the path to the 2030 targets passes; guidance below the pace of those targets fails. 2027 (estimate): Cloud moves and AI revenue. Pending. Watch: Rising cloud moves into the 2027 peak and AI add-ons sold to existing clients pass; lost clients or price cuts linked to AI tools fail.
- Recent events
- 2026-10-13: Tyler said that it will report Q3 2026 results after the market closes on October 28, 2026, with a call at 8:30 a.m. ET on October 29. 2026-10-12: Wells Fargo raised its rating on Tyler to Overweight from Equal Weight, with a $400 price target. It said that recent execution problems look temporary and that the fear of AI disruption may be too high. The stock rose 3.2% that day. 2026-09-15: Tyler started a trading plan to buy back up to $260 million of its stock from September 16 to October 29, 2026. It had $1.416 billion of buyback authorization left. 2026-07-29: Tyler reported Q2 2026 results. Revenue was $645.1 million, up 8.2%, and slightly below analyst estimates. SaaS revenue grew 21.7%, and SaaS and total bookings reached quarterly records. Transaction revenue grew 3.5%, or 9.9% without the ended Texas payments contract. Non-GAAP EPS was $3.08, and free cash flow was $118.5 million, up 34.7%. Tyler kept its 2026 revenue guidance of $2.535 billion to $2.575 billion and added a $1.5 billion buyback authorization. 2026-06-09: At its Investor Day, Tyler raised its 2030 targets to $3.35 billion of annual recurring revenue and $1.15 billion of free cash flow. It plans to move 85% of its on-premises clients to the cloud by 2030. 2026-05-28: Tyler signed a new five-year $1.0 billion unsecured revolving credit facility, to May 2031. It replaced the $700 million facility. Tyler had no borrowings under either facility. 2026-05-14: Tyler issued $1.4375 billion of 0.50% convertible senior notes due 2031. It used about $320.7 million of the proceeds to buy back 1,026,900 of its shares. Capped call trades raised the effective conversion price to $655.77. 2026-04-29: Tyler reported Q1 2026 results. Revenue was $613.5 million, up 8.6%, and SaaS revenue grew 23.5%. Free cash flow was $102.8 million, more than double a year earlier. On April 14, it completed the purchase of For The Record, an AI speech-to-text company for courts, for about $212.7 million in cash.