TYLER TECHNOLOGIES INC earnings calls

why SaaS flips not faster

Q (Matt VanVliet · Cantor): Analyst asked if seasonality limits SaaS flips and whether Cloud Living will speed customer moves to SaaS.

A: There is not seasonality; the company changed approach over years, is now more proactive with outreach, pricing strategies, and some 'sticks' like end-of-life notices to accelerate flips, and client receptiveness has been strong.

"We are going to continue to do those things in the coming quarters, which will, I think, continue to accelerate our flip to the cloud." — Lynn Moore (CEO·CHAIR)

timing of SaaS revenue this year

Q (Terry Tillman · Truist): Analyst asked about timing/cadence changes in SaaS bookings and the expected small contribution from CODY in 4Q.

A: Management said total SaaS sales outlook is similar to prior quarters, but timing shifted later in the year so revenue recognition is a bit lower this year; they noted large deals signed in October already.

"As a result of that shift in the timing into a little bit later in the year, the revenue that we are able to recognize under those new deals, and flips included in that, has come down a bit." — Lynn Moore (CEO·CHAIR)

what's driving transaction revenue

Q (Tamjid Chowdhury · Guggenheim): Analyst asked why transaction revenue grew and whether transaction-funded deals pipeline will continue next 12 months.

A: Management said growth comes from integrating payments into software and from new deals funded by user fees (not SaaS fees); these transaction-funded deals (digital motor vehicle titling, regulatory, outdoor recreation) are in the pipeline and attractive to state clients.

"So these are funded not through SaaS fees, but user fees that are associated with the transactions or route that are managed by that software." — Brian Miller (CFO)

bookings vs ACV and contract length

Q (Saket Kalia · Barclays): Analyst asked why ACV from new deals is up much more than SaaS bookings growth and whether duration is affecting bookings.

A: Management said transaction-funded deals are excluded from bookings and that contract duration dropped from about three years last year to just over two years this quarter; the shorter duration explains much of the difference between ACV growth and TCV growth.

"So that 30% difference in the duration really accounts for that difference between the ACV growth and the TCV growth, that 14% versus the 30%+." — Brian Miller (CFO)

AI attach uplift on deals

Q (Ken Wong · Oppenheimer and Co.): Analyst asked how embedding AI across 300 deals has affected TCV, ACV or ARPU uplift.

A: Management said AI is being attached to broader solutions (AP automation, fraud, compliance) and that the uplift seen so far is real but 'probably still in the single digits' for those solutions.

"I think in each of those, the kind of attach, the uplift that we are seeing there is probably still in the single digits with some of those solutions." — Franklin Williams

do customers want AI with flips

Q (Kirk Materne · Evercore): Analyst asked whether clients want AI included when flipping to cloud or prefer a like-for-like flip then add AI later.

A: Management said AI features will be cloud-only and used as incentives; client interest varies—some adopt early, others are cautious—and clients want AI embedded in trusted systems rather than bolt-ons.

"I think the AI piece of this, as it relates to flips, will be part of, we talk about that bucket of incentives, so that as we move forward, AI features will only be in our cloud release and not on our on-prem release." — Lynn Moore (CEO·CHAIR)

why large deals sign late

Q (Parker Lane · Stifel): Analyst asked if later-in-quarter signings are market-wide or customer-specific.

A: Management said this is customer-specific and normal for large deals, which are lumpy and can move slowly through the pipeline; recent SaaS growth was driven by many mid- and smaller-size deals, not large ones.

"It's been a part of our business for a really long time, that large deals can be lumpy and the timing can be unpredictable." — Brian Miller (CFO)

cybersecurity and SaaS timing impacts

Q (Alex Zukin · Wolfe): Analyst asked if cybersecurity speeds flips or cloud/AI adoption and for more detail on timing affecting SaaS revenue deceleration and path back to targets.

A: Management said cybersecurity is a driver for cloud adoption and they prioritize security in AI; timing of deal signings and the lag to revenue recognition pushed current-year SaaS growth below target, but they remain confident in long-term 20%+ target and expect flips to contribute more going forward.

"There also can be some variance around how long that lag is from when we sign a deal, whether it's a flip or a new SaaS deal, to when we start to recognize revenues." — Brian Miller (CFO)

why EPS guide unchanged

Q (Allan Verkhovski · BTIG): Analyst asked why full-year EPS guide was unchanged despite buybacks and previous Q3 raises.

A: Management said timing shift in SaaS revenues has a small EPS impact; buybacks are accretive but also reduce interest income, and overall they left the EPS range unchanged and expect to remain within it.

"A little bit of that shift in timing and SaaS revenues has a small EPS impact." — Brian Miller (CFO)

customer receptiveness to cloud push

Q (Rob Oliver · Baird): Analyst asked how customers reacted to the summer letter push and readiness issues for accelerating flips into 2027 and confidence on 2030 85% target.

A: Management said the outreach and pricing strategies were well received and the receptiveness increases confidence in the 2030 target; they will also use disincentives (end of life for on-prem support) to nudge customers toward cloud in 2027.

"However, the receptiveness that we've seen gives me even more confidence in our target for 2030." — Lynn Moore (CEO·CHAIR)

public safety spending and vendor choice

Q (Joshua Reilly · Needham): Analyst asked about public safety spending trends and whether buyers prefer one vendor or diversification after industry PR issues.

A: Management said public safety funding remains strong and they saw many more leads at the conference; they feel competitive and are not seeing a material shift toward multi-vendor deals right now.

"The feedback that I've received is that the funding environment in public safety remains very strong." — Lynn Moore (CEO·CHAIR)

state and federal deal strength

Q (Andrew Sherman · TD Cowen): Analyst asked what drove strength in state and federal deals, how they tracked to expectations, and pipeline into next year.

A: Management said state execution is strong due to cross-sell and a dedicated state sales team generating opportunities; federal was strong this quarter, with the third quarter aligning with the federal budget cycle driving new business.

"The third quarter, coinciding with the federal budget cycle, is typically one of the stronger quarters there for new business." — Brian Miller (CFO)

expect growth acceleration in 2027?

Q (Alexei Gogolev · JPMorgan): Analyst asked if 2027 should see accelerated SaaS organic growth given stronger demand, deal timing, transactional revenue recovery, and AI visibility next year.

A: Management would not give 2027 guidance but said trends are positive: flips should be a bigger contributor next year, agentic AI meaningful contributions expected in second half of 2027, and timing will affect when revenues appear.

"Certainly, flip we expect to be a bigger contributor next year in terms of signings." — Brian Miller (CFO)

risk of transaction-funded revenue

Q (Trevor Walsh · Citizens JMP): Analyst asked whether transaction-funded deals add variability and whether contracts include minimums or floors.

A: Management said many such deals include a floor and have fairly predictable volumes, but they can be seasonal and affected by external factors; pricing reflects the extra uncertainty and they expect profitability similar to SaaS deals while avoiding budget-appropriation risk.

"But our pricing also reflects to some extent that additional uncertainty or risk that we take on." — Brian Miller (CFO)

agent adoption vs commercialization

Q (Camden Levy · Wells Fargo): Analyst asked what metrics distinguish proliferation from commercialization of agents and where uptake is highest today.

A: Management said they track client value metrics: ROI, time returned, and budget impact; uptake is broad but they focus on proving predictability, trust, and ROI in private previews to drive wider adoption across the portfolio.

"So really what we are looking at right now is how do we drive more adoption across that portfolio?" — Franklin Williams

AI finds security bugs — response

Q (Sownthar Periathambi · D.A. Davidson): Analyst asked how company responds when AI finds critical vulnerabilities and specifically about recent vpatch/PHP issues.

A: Management said they have a robust security program that discovers and patches vulnerabilities quickly and that they are starting to leverage AI and work with frontier partners and the U.S. government–approved capabilities to further secure solutions.

"That security program is also starting to leverage AI to fight these vulnerabilities as well." — Franklin Williams

no substantive question

Q (Mark Schappel · Loop): Analyst only said hello and did not ask a substantive question.

A: No management response in the transcript for this exchange.

which product areas grow fastest

Q (Mark Schappel · Loop): Analyst asked which business areas show strongest growth (ERP, Courts & Justice) and which are more modest.

A: Management said there's not wide dispersion: ERP is having a strong year with improved win rates, Courts & Justice is strong with many flip opportunities (helped by FTR), and public safety growth prospects are expanding, aided by the CODY acquisition at the lower market end.

"We're seeing a nice improvement in win rates and more activity, especially at the upper end of the market." — Brian Miller (CFO)

midterm elections effect on spending

Q (Saket Kalia · Barclays): Analyst asked whether midterm elections affect state/local spending and what they've seen historically.

A: Management said midterms can create short-term uncertainty when new administrations set agendas, but over the long term elections often create opportunities because candidates run on priorities (efficiency, public safety) that align with the company's offerings.

"There could be a little bit of disruption as they try to get their agenda set, particularly if it's a little bit of a different agenda." — Lynn Moore (CEO·CHAIR)

which customers adopt AI first

Q (Billy Fitzsimmons · Piper Sandler): Analyst asked what differentiates customers adopting AI now versus those waiting and what hurdles remain.

A: Management said adopters move when ROI is clear (example: court document automation compresses weeks to days); they run tight private previews to prove ROI so other customers can trust the solutions, while some public-sector clients remain cautious for political or perception reasons.

federal deal size and competition

Q (Terry Tillman · Truist): Analyst asked whether federal selling efforts are paying off, who they compete with, and scope of big agency deals.

A: Management said federal deals are typically six-figure ARR using the MicroPact-derived application/low-code platform; federal is still under 5% of revenue, competition is other platform providers, and partners/systems integrators drive much of the work.

"Federal is still a market that is less than 5% of our total revenues." — Brian Miller (CFO)

client reaction to cloud letter and inorganic revenue

Q (Allan Verkhovski · BTIG): Analyst asked what stood out in client reactions to the cloud outreach and how much inorganic revenue is assumed in Q4 SaaS.

A: Management said the letter plus follow-up contacts were well received, with over 1,500 clients contacted directly by reps (letter sent to 2,500); separately, they estimated $8 million-$9 million of Q4 revenue from recent acquisitions, mostly FTR.

"We've had contact with, I think, over 1,500 clients directly through our sales reps." — Lynn Moore (CEO·CHAIR)

customers worry about AI costs

Q (Tamjid Chowdhury · Guggenheim): Analyst asked whether customers worry about agentic AI variable costs and how the company addresses those concerns.

A: Management said clients value agentic AI for staff augmentation and savings (examples: budgeting and grant finding), but they raised cost concerns; Tyler hears that variable metered frontier pricing doesn't work for public sector and is focusing on predictable, governed pricing to give clients budget certainty.

"One of the things we heard loud and clear from them was that the current variable metered pricing that many of the frontier providers are doing simply does not work in the public sector." — Franklin Williams

buyback cadence vs tuck-in M&A

Q (Alex Zukin · Wolfe): Analyst asked about continued strong buyback cadence for the rest of the year and how the company balances tuck-in M&A vs buybacks.

A: Management said they will keep evaluating tuck-in M&A weekly but buybacks remain a high priority; activity may vary with cash flow and M&A opportunities, but they remain confident in Tyler 2030 and expect to continue buying back shares while also offsetting dilution over time.

"I think you will see us continue to buy back stock and use the phrase term "reduce and maintain."" — Lynn Moore (CEO·CHAIR)