Tyler Technologies reported higher third-quarter revenue and earnings, led by continued growth in recurring revenue and a 21.2% increase in software-as-a-service sales. The company also generated a quarterly record in free cash flow and said it continued investing in growth while returning capital to shareholders.
For the quarter ended Sept. 30, revenue was $647.6 million, up 8.7% from a year earlier. Tyler cited strong bookings and demand for public-sector digital modernization, and said it has sold about 300 deals involving AI across its client base to date.
Key details
- Recurring revenue remained the core of the business. Recurring revenue rose 11.0% to $568.8 million, or 87.8% of total revenue. Annualized recurring revenue increased 11.0% to $2.28 billion.
- Subscription revenue grew 15.3% to $462.6 million. Within that, SaaS revenue rose 21.2% to $242.2 million, while transaction revenue grew 9.5% to $220.4 million. Tyler said transaction revenue growth would have been 14.2% excluding the impact of winding down a Texas payments contract.
- Operating profit and earnings increased. GAAP operating income rose 19.5% to $117.0 million; non-GAAP operating income increased 14.8% to $182.1 million. GAAP net income was $95.1 million, or $2.33 per diluted share, up 12.7%. Non-GAAP net income rose 10.0% to $143.4 million, or $3.52 per diluted share.
- Free cash flow reached a quarterly record. Cash flow from operations was $282.5 million, up 10.7%, and free cash flow rose 11.9% to $277.0 million. Tyler attributed the improvement to earnings growth and better working-capital performance.
- The company continued both investing and repurchasing shares. Tyler said it acquired CODY Systems during the quarter and bought back 1.1 million shares. It also said share repurchases had reduced outstanding shares by approximately 8.5% year to date.
- Management pointed to demand and AI as growth drivers. Executive Chair, President and CEO Lynn Moore cited strong SaaS bookings and a growing sales pipeline. The company said its government-focused AI strategy had produced about 300 deals across its client base to date.
The results show recurring revenue accounting for most of Tyler’s sales, with SaaS growth outpacing overall revenue growth. The quarter also combined investment in an acquisition with substantial share repurchases, while record free cash flow provided cash-generation support for both.