Tyler Technologies, Inc.

Tyler Technologies, Inc. is an American provider of integrated software and technology services purpose-built for the public sector, generating $2.33 billion in revenue in fiscal 2025 from subscriptions, maintenance, professional services, and software licenses sold to city, county, state, and federal government agencies. Its roughly 7,800 employees serve more than 44,000 client installations across all 50 states and a handful of international markets, with approximately 87% of revenue recurring and client attrition running at roughly 2% annually.

This is a story about a company that owns one of the most durable moats in enterprise software — deep, sticky relationships with government agencies that face high switching costs and depend on Tyler's systems to run courts, collect taxes, manage property records, process payments, and operate schools — but that is valued as if that durability is in question. The stock's decline from over $600 to the mid-$300s over the past year reflects a market that has soured on software multiples broadly and appears uncertain about whether Tyler's cloud transition will unlock the margin expansion management promises or simply replace one revenue stream with another. The file turns on a single question: whether the shift from on-premises licenses to cloud subscriptions is an economic upgrade — higher lifetime value, better margins, a bigger addressable market — or a defensive trade that preserves the client relationship at the cost of near-term economics.

Tyler occupies an unusual position: it is the largest pure-play public sector software company in the United States, with a product portfolio that spans courts, public safety, tax and appraisal, ERP, K-12 education, payments, data and insights, and digital citizen engagement. No competitor matches that breadth. Yet the very fragmentation that protects it — thousands of small procurement decisions made county by county, agency by agency — also means that growth is incremental and hard to accelerate. The company's 2030 plan targets $1 billion in free cash flow, roughly 60% above the FY2025 level, and the path from here depends on execution that is only partly within management's control: converting on-premises clients to the cloud, expanding transaction-based revenue, and deploying disciplined M&A without overpaying.