Plano, Texas-based Tyler Technologies, Inc. (TYL) provides integrated software and technology management solutions. Valued at a market cap of $13.6 billion, the company designs, develops, markets, and supports a range of software solutions to serve mission-critical back-office functions. This tech company has significantly underperformed the broader market over the past 52 weeks. Shares of TYL have declined 49% over this time frame, while the broader S&P 500 Index ($SPX) has soared 13%. Moreover, on a YTD ...

Cybersecurity and IT Risks - The company faces significant risks from cyber-attacks and evolving IT security threats, which could disrupt operations and harm competitive position [54] - Disclosure of personally identifiable information could lead to liability and damage the company's reputation, especially in light of increasing data breaches [55] - The company relies on third-party vendors for critical services, and any failure by these vendors could adversely affect operating results and business prospects [56] - The company engages third parties for deliverables and services, and any deficiencies in their performance could jeopardize client contracts and financial condition [57] - The company depends on third-party hosting services, such as AWS, and disruptions in these services could lead to client dissatisfaction and revenue loss [59] - The company utilizes third-party licensed software, and any inability to maintain these licenses could limit product functionality and increase costs [62] - The company’s solutions include open source software, and failure to comply with open source licenses could adversely affect business operations [64] Technological Adaptation and Innovation - The company must adapt to rapid technological changes and evolving client requirements to remain competitive, which poses risks if new products are not developed timely [66] - Incorporating AI technologies presents challenges, including the risk of delays in innovation that could render offerings less competitive [67] - Errors or defects in new products or enhancements could result in revenue loss and delay market acceptance, impacting future operating results [65] Financial Condition and Debt Management - The company has entered into a $700.0 million credit agreement, providing an unsecured revolving credit facility [83] - As of December 31, 2025, the company had $600 million of Convertible Senior Notes outstanding and none under the 2024 Credit Agreement [84] - The company’s ability to service its indebtedness is contingent on future performance, which is subject to various external factors [87] - Covenant restrictions under the company's indebtedness may limit operational flexibility and adversely affect financial condition [88] - The company may incur additional indebtedness, which could increase risks related to its business operations [89] - The company is exposed to interest rate risk due to variable rate indebtedness under the 2024 Credit Agreement, which could increase debt service obligations if interest rates rise [90] - As of December 31, 2025, the company had no outstanding borrowings under the 2024 Credit Agreement, with an available borrowing capacity of $700.0 million [231] - The interest rates on loans under the revolving credit facility can range from 0.125% to 0.75% above the prime commercial lending rate or from 1.125% to 1.75% above the SOFR rate [232] - Increased inflation and interest rates could negatively impact the company's financial condition and access to capital [91] Market and Competitive Risks - The company faces risks related to public sector sales, which account for substantially all of its revenues [70] - A prolonged economic slowdown could reduce demand for the company's software products and services, negatively impacting growth and profitability [73] - The company may face increased competition from established and emerging companies in the public sector software market, which could lead to pricing pressure and reduced market share [79] - Fixed-price contracts may expose the company to cost overruns and penalties, potentially harming financial performance [80] - The company may be unable to secure performance bonds on favorable terms, impacting its ability to win large contracts [81] Operational Challenges and Strategic Focus - A significant investment in research and development may decrease overall margins, but is essential for maintaining competitive position [93] - The company may face challenges in executing its acquisition strategy, which is crucial for growth, due to integration difficulties and unforeseen liabilities [97] - Labor costs are subject to external factors and may increase due to a tightening labor market, potentially affecting profitability [100] - The company does not foresee paying dividends on its common stock in the foreseeable future, as it intends to retain earnings for business expansion [105] - Compliance with evolving corporate governance regulations may result in increased expenses and divert management's focus from revenue-generating activities [103]

There’s no doubt that in 2026, the worst-performing sector in the stock market is the software sector. Investors have sold off virtually all software stocks on rising fears that AI will unseat long-established subscriptions.With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on See ...

Core Viewpoint - The comparison between NetEase (NTES) and Tyler Technologies (TYL) indicates that NTES currently offers better value for investors based on various financial metrics and rankings [1]. Group 1: Zacks Rank and Earnings Estimates - NetEase has a Zacks Rank of 2 (Buy), while Tyler Technologies has a Zacks Rank of 3 (Hold), suggesting that NTES is likely experiencing a more favorable earnings outlook [3]. - The Zacks Rank system emphasizes stocks with positive earnings estimate revisions, which is a key factor for value investors [2]. Group 2: Valuation Metrics - NTES has a forward P/E ratio of 13.29, significantly lower than TYL's forward P/E of 24.11, indicating that NTES may be undervalued relative to TYL [5]. - The PEG ratio for NTES is 1.41, while TYL's PEG ratio is 1.61, suggesting that NTES has a better balance between its price and expected earnings growth [5]. - NTES has a P/B ratio of 3.24 compared to TYL's P/B of 3.53, further supporting the argument that NTES is a more attractive investment based on traditional valuation metrics [6]. Group 3: Overall Value Grades - Based on the analysis of various financial metrics, NTES holds a Value grade of B, while TYL has a Value grade of D, reinforcing the conclusion that NTES is the superior choice for value investors at this time [6].

PLANO, Texas--(BUSINESS WIRE)---- $TYL #TylerTech--Tyler Technologies has been recognized as aGovTech 100company for 2026. ...

Core Viewpoint - Barclays believes that the current market panic regarding generative AI (GenAI) is based on a "worst-case scenario" assumption, predicting the extinction of traditional software companies, which mirrors the panic seen a decade ago with the rise of Amazon AWS [1][2] Historical Context - The current investor sentiment in the software sector is extremely negative, with a simplistic investment logic of buying AI newcomers and shorting traditional software [2] - This situation is reminiscent of the panic surrounding AWS's growth, where established software companies faced similar doomsday predictions, yet none went bankrupt due to AWS competition [4][5] Market Dynamics - Historical data shows that while AWS gained significant market share, it did not lead to the extinction of mature software companies; instead, these companies evolved and thrived [4][5] - The market's current indiscriminate sell-off of software stocks, with the IGV (software ETF) down approximately 24% year-to-date, is viewed as irrational [6] Mispricing Opportunities - Barclays identifies significant mispricing opportunities in the current market, particularly for companies with strong core record systems and specific domain moats that are being undervalued [1][6] - The panic selling creates an opportunity for investors to identify industry leaders that have been unfairly punished [7] Defensive Sectors - Two defensive sectors highlighted are: 1. Owners of record systems, such as Salesforce and SAP, which hold core enterprise data and are difficult to replace [9] 2. Vertical SaaS companies, like Veeva Systems and Tyler Technologies, which possess deep domain-specific data moats [9] Company Performance - Notable company performances include: - CyberArk's market cap surged from $885 million to $22.516 billion, a 2443% increase [8] - Microsoft and Google also saw significant market cap growth, with increases of 1048% and 871%, respectively [8] - Traditional companies like Teradata experienced a 73% decline, while others like Tableau and Splunk were acquired at high premiums [8]

Core Insights - The company demonstrated resilience in 2025, achieving strong recurring revenue growth and free cash flow, with recurring revenues increasing by 11% and free cash flow reaching a record high with a margin of 41% in Q4 [1][16]. Financial Performance - Total revenues for Q4 were $575.2 million, up 6.3% year-over-year, with subscription revenue growing 16.1% and SaaS revenues surpassing $200 million for the first time [10][12]. - Transaction revenues increased by 12.1% to $1.967 billion, driven by higher transaction volumes and new service deployments [13]. - Annualized recurring revenue reached approximately $2.06 billion, up 10.9% [14]. Strategic Initiatives - The company is focused on four key growth pillars: completing the cloud transition, leveraging the client base, growing the transactions business, and expanding into new markets [5]. - SaaS bookings grew by 9.6% year-over-year, with significant momentum from converting on-premises clients to cloud solutions, resulting in a 645% increase in annual contract value from flips signed in Q4 [4][14]. Market Position and Opportunities - The public sector market fundamentals remain strong, with healthy budgets supporting an active pipeline and elevated levels of RFP and sales demo activity [4]. - The company is well-positioned to capitalize on opportunities in AI and digital transformation, with successful implementations of AI solutions in multiple states [21][22]. Guidance and Future Outlook - For 2026, the company expects total revenues between $2.5 billion and $2.55 billion, implying growth of approximately 8.3%, with GAAP diluted EPS projected between $8.30 and $8.61 [17]. - SaaS revenue growth is expected to be between 20.5% and 22.5%, while transaction revenues are projected to grow between 5% and 7% [18][19]. Capital Allocation - The company announced a new share repurchase program of up to $1 billion, reflecting confidence in its business trajectory and the attractiveness of its shares at current levels [28]. - The balance sheet remains strong, enabling the company to pursue strategic acquisitions while returning capital to shareholders [29][62].

Shares of leading public sector software company Tyler Technologies (NYSE: TYL) are down 15% as of noon ET on Thursday after the company reported fourth-quarter earnings. Sales and adjusted net income grew 6% and 8% during Q4, but fell well short of Wall Street's consensus. Management guided for 8% sales growth in 2026 -- a far cry from its 15% annualized growth rate over the last five years. On top of these underwhelming results, the software industry remains in turmoil as the market weighs which SaaS com ...

Core Insights - Tyler Technologies (TYL) reported Q4 2025 earnings of $2.64 per share, missing the Zacks Consensus Estimate of $2.71, but showing an increase from $2.43 per share a year ago [1] - The company generated revenues of $575.2 million for the quarter, which was 2.45% below the Zacks Consensus Estimate, compared to $541.13 million in the same quarter last year [2] Revenue Performance - Recurring revenues from maintenance and subscriptions rose by 10.9% year over year to $514.4 million, making up 89.4% of total revenues [3] - Annualized recurring revenues (ARR) reached $2.1 billion, also reflecting a 10.9% year-over-year increase [3] - Maintenance revenues accounted for 19.0% of total revenues at $109.4 million, down 4.9% year over year, while subscription revenues grew by 16.1% to $405.0 million, driven by a 20.2% increase in SaaS revenues and a 12.1% increase in transaction-based revenues [3] Operating Performance - Non-GAAP gross profit increased to $280.6 million, with a non-GAAP gross margin of 48.8%, up 180 basis points [5] - Adjusted EBITDA rose to $149 million from $142.8 million in the previous year [5] - Non-GAAP operating income was $138.5 million, a 5.1% increase year over year, with a non-GAAP operating margin of 24.1%, down 30 basis points [5] Balance Sheet and Cash Flow - As of December 31, 2025, cash and cash equivalents were $1.015 billion, up from $834.1 million in the previous quarter [6] - The company generated operating cash flow of $243.9 million and free cash flow of $236.9 million in Q4 2025 [6] - For the full year 2025, operating and free cash flows were $653.5 million and $620.8 million, respectively [6] 2026 Guidance - Tyler Technologies projects 2026 revenues between $2.50 billion and $2.55 billion, with the Zacks Consensus Estimate at $2.35 billion, indicating a 9.8% year-over-year increase [9] - Expected GAAP diluted EPS is in the range of $8.36-$8.61, while non-GAAP diluted EPS is projected between $12.40-$12.65 [9] - The free cash flow margin is anticipated to be between 26% and 28% [9]

Tyler Technologies (NYSE:TYL) Q4 2025 Earnings call February 12, 2026 10:00 AM ET Company ParticipantsBrian K. Miller - CFOHala Elsherbini - Senior Director of Investor RelationsLynn Moore - President and CEOConference Call ParticipantsAdam Hotchkiss - Equity Research AnalystAlex Zukin - Equity Research AnalystAlexei Gogolev - Equity Research AnalystAndrew Sherman - Equity Research AnalystCharlie Strauzer - Equity Research AnalystClarke Jeffries - Equity Research AnalystJonathan Ho - Equity Research Analyst ...