Slides
Page 1
2026 Third Quarter Earnings Review 2026 Annual Guidance October 28, 2026
Page 2
Statement Regarding Use of Non-GAAP Measures 2 Tyler Technologies has provided in this press release financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share, EBITDA, adjusted EBITDA, free cash flow, and free cash flow margin. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating Tyler’s ongoing operational performance because they provide additional insight in comparing results from period to period while isolating the effects of some items that vary from period to period without correlation to core operating performance. Tyler believes the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. EBITDA is net income before interest expense, other income, income taxes, depreciation, and amortization. Non-GAAP and adjusted financial measures discussed above exclude share-based compensation expense, employer portion of payroll taxes on employee stock transactions, expenses associated with amortization of intangibles arising from business combinations, acquisition-related expenses, restructuring costs and other, gain on remeasurement of equity investment, and other non-recurring items in other income. Annualized recurring revenue (ARR) is calculated by annualizing the current quarter's recurring revenues from subscriptions and maintenance. Tyler currently uses a non-GAAP tax rate of 23.0%. This rate is based on T yler's estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating Tyler's non-GAAP income, as well as significant non-recurring tax adjustments. The non-GAAP tax rate used in future periods will be reviewed periodically to determine whether it remains appropriate in consideration of factors including Tyler's periodic annual effective tax rate calculated in accordance with GAAP , changes resulting from tax legislation, changes in the geographic mix of revenues and expenses, and other factors deemed significant. Due to differences in tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to T yler's estimated annual tax rate as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from Tyler's actual tax liabilities. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP . The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial statement tables included below in this press release.
Page 3
Forward-Looking Statements 3 This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial cond ition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “contin ues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals als o are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ m aterially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially fr om our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal government agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, evolving use of artificial intelligence (“AI”), security vulnerabilities and software updates, or changes in our ability to access third-party software and services; (3) our ability to protect client information from security breaches or misuse through AI and to provide uninterrup ted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing oper ations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to actively monitor developments in AI regulation and ethical standa rds as we expect that future changes in the regulatory landscape may affect our product development timelines, compliance costs, and market opportunities related to AI; (7) Our ability to succes sfully research, develop, integrate, and commercialize AI capabilities into our solutions, to achieve client adoption of those capabilities, and to effectively monetize them is subject to significant r isks, including the continued need for substantial investment, competition from new and existing market participants offering alternative AI solutions, and the possibility that clients may not adopt or pay for AI features at the levels we expect, any of which could result in disruption to our business, adversely affect our revenue and margins, and harm our competitive position; (8) our ability to achieve our fin ancial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in o ur renewal rates for service agreements; (9) general economic, political and market conditions, including inflation and changes in interest rates; (10) technological and market risks associated with the development of new technologies, products or services or of new versions of existing or acquired products or services; (11) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (12) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirem ent of key members of management or other key personnel; and (13) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in our filings with the Securities and Exchange Commissi on, including the detailed “Risk Factors” contained in our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.
Page 4
TYLER AT A GLANCE The Leader in Software Solutions to the Public Sector 4 MARKET POSITION#1 RECURRING REVENUES 202587% GROSS CLIENT RETENTION 98% FREE CASH FLOW MARGIN 2025 27% State & Federal 27% Public Safety 7% Courts & Justice 15% K-12 Schools 7% ERP / Financial 33% Civic Services 5% Other 2% Appraisal & Tax 4% Diversified Revenue StreamsKey Metrics 2025 REVENUE BREAKDOWN Revenue $2.33B ~
Page 5
• Flips / Upsell • Cross-s ell • AI adoption Leveraging Installed Base Consistent Strategy with AI-Enhanced Growth Pillars 5 • Truly differentiated offering• Cloud-first drives long-term ARR growth + expanded FCF • Expanded AI market • Leverage M&A to grow in new and existing markets GOAL ARR Growth + Improved Margins = Expanded Free Cash Flow Driving Transactions GrowthCompleting Cloud TransitionExpanding TAM
Page 6
Q3 2026 Summary
Page 7
Third Quarter Results Revenues* Free Cash Flow1 Non-GAAP Operating Margin1 Total Revenues $647.6M, up 8.7% Up 10.2% excluding the impact of the Texas payments contract SaaS Revenues $242.2M, up 21.2% Transaction Revenues $220.4M, up 9.5% Up 14.2% excluding the impact of the Texas payments contract ARR $2.28B, up 11% $277.0M, up 11.9% FCF margin expanded to 42.8% 28.1%, up 150 bps DOUBLE - DIGIT ARR GROWTH RECORD QUARTERLY FREE CASH FLOW 1 See the reconciliation of GAAP to Non-GAAP measures included in this presentation and in our earnings release. 7
Page 8
Third Quarter Results SOLID EXECUTION, AI MOMENTUM, AND STRATEGIC CAPITAL DEPLOYMENT Healthy public sector demand Elevated sales activity indicators RFP pipeline and demo trends Stable public sector market and generally healthy budgets; high volume of RFP and demo trends reflecting sustained modernization priorities and continued tech investment to drive efficiencies and augment workforce capacity Strong balance sheet provides financial flexibility to invest organically, pursue strategic M&A, and return capital to shareholders 8 SaaS revenue growth of 21.2% with SaaS bookings up 14.0% and total bookings up 7.3% Robust bookings growth with new SaaS ACV up 75% and continued progress with cloud migrations, with flips ACV bookings growth of 2% Expanding AI adoption initiatives, addressing practical use cases purpose-built for the public sector with ~300 deals containing AI closed YTD and ~130 sold in Q3 Strategic capital deployment: o Completed CODY Systems acquisition for $27.7M o Executed $379M in share repurchases, r epresenting 1.1M shares o YTD repurchased 3.6 million shares, representing 8 .5% of outstanding shares o ~$1.4 billion remaining on our authorization
Page 9
Strong Recurring Revenue Growth 9 • Recurring revenues up 11.0% • Excluding the impact of the Texas payments contract, recurring revenues grew 12.8% • Subscriptions rose 15.3% • SaaS revenues grew 21.2% • Transaction revenues increased 9.5% o Excluding the impact of the Texas payments contract, transaction revenues grew 14.2%, subscription revenues grew 17.8%, and total revenues grew 10.2%. o Maintenance revenues declined 4.6%, reflecting the ongoing migration of on-premises clients to SaaS Total Revenues $647.6M % of Total Revenues 87.8% 12.2% $106.2M (4.6)% $220.4M +9.5% $242.2M +21.2% Recurring Non-recurring Maintenance Revenues Transaction Revenues SaaS Revenues Recurring Revenues $568.8M YoY Growth Q3 2026
Page 10
• City of Gallup, NM • Enterprise ERP • City of Vero Beach, FL • Enterprise ERP • Tarrant County, TX • Records Management • Florida Dept of Environmental Protection • Recreation Management • County of Riverside, CA • Enterprise Corrections • Baker County Sheriff, FL • Enterprise Public Safety • City of Azusa, CA • Enterprise Public Safety Notable Q3 Wins CONTINUING SAAS MOMENTUM • City of Buffalo, NY • Enterprise ERP • Nova Scotia, Canada • Enterprise Assessment & Tax • City and County of Honolulu, HI • Enterprise Assessment & Tax • Cameron County, TX • Enterprise Justice • Superior Court of California, County of S hasta • Enterprise Justice • Sangamon County, IL • Enterprise Public Safety • City of Roseville, CA • Enterprise Public Safety • City of Providence, RI • Enterprise Public Safety New SaaS Software deals • Harris County, TX • Priority Based Budgeting • St. Louis County, MO • Priority Based Budgeting • Polk County, IA • Priority Based Budgeting • City of Corpus Christi, TX • Priority Based Budgeting • City of National City, CA • Priority-Ba sed Budgeting • State of Nebraska • Resident AI Assistant • Document Automation, expanded use for VIN v alidation • Colorado Department of Human Services • Resident AI Assistant • State of North Dakota • Document Automation • Denton County, TX • Document Automation SaaS flips 10 AI-Driven deals
Page 11
• Louisiana LP Gas Commission • Regulatory Licensing • Texas Health & Human Services • Food Truck Licensing • U.S. Department of Veterans Affairs • Workforce Case Management, Reasonable A ccommodations • Largest Workforce deal to date • U.S. Department of Justice • Workforce Case Management, Employee & L abor Relations • National Institutes of Health • Data & Insights • U.S. Department of Agriculture • Workforce Case Management, Employee & L abor Relations Notable Q3 Wins • New Jersey St ate Police • Regulatory Licensing - F irearm Vendors & Instructors • Second transaction-f unded contract for Regulatory suite • Estimated ~$600K in ARR • Louisiana State Parks • Yuba County, CA • Outdoor Recreation • Estimated ~ $500K in ARR • Arkansas Supreme Court • Engagement Builder State & Federal deals • City of Lufkin, TX • Enterprise ERP • Enterprise Permitting and Licensing • Enterprise Asset Management • Terrebonne Parish, LA • Enterprise ERP + Tyler P ayments • City of Mobile, AL • Enterprise ERP and Enterprise Public Safety • Alabama Department of Corrections • Warehouse Management • Enterprise Justice / State & Federal Teams • Colorado Office of Administrative Courts • Enterprise Justice, including e File and multiple Justice solutions • First Enterprise Justice client in Colorado • Enterprise Justice / State & Federal Teams • Lake County, FL • Enterprise Permitting & Licensing + Tyler P ayments • EP&L / EERP Teams Transaction-Funded deals 11 Multi-Product / Cross-Sell Synergies Transaction-funded deals are not included in SaaS bookings or revenues
Page 12
2026 Annual Guidance
Page 13
2026 Annual Guidance EXECUTING LONG - TERM GROWTH AND CLOUD - FIRST STRATEGY Most recent 2026 guidance provided on 10/28/2613 2025 2026 GUIDANCE TOTAL REVENUES $2.332B $2.535B - $2.565BGuidance midpoint implies growth of approx. 9.3% • Excluding impact of Texas payments contract, midpoint implies 11.0% growth Revenue percentage growth expectations: • Subscriptions growth of 13 - 16% • SaaS growth of 21.5 – 22.5% • Transaction growth of 6 - 8% • Excluding impact of Texas payments contract, growth of 11 – 13% • Maintenance decline of 3 - 5% • Professional services growth of 0 - 2% • Other revenue growth of 15 - 17% REVENUE DRIVERS
Page 14
2025 2026 Guidance Free Cash Flow Margin 26.6% 2026 Annual Guidance 14 26% -28% 2025 2026 Guidance Diluted EPS - Non-GAAP $12.95 - $13.20 $11.31 Most recent 2026 guidance provided on 10/28/26 Tyler Technologies has not reconciled forward-looking full-year non-GAAP financial measures to their most directly comparable GAAP measures, as permitted by item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to stock-based compensation, acquisition transactions, tax items or others that may arise during the year. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non- GAAP counterparts. 2025 2026 Guidance $245M - $250M $204.6M R&D Expense
Page 15
Positioned to Scale Purpose-Built AI for Government
Page 16
AI Makes Tyler More Valuable 6 RECURRING SOFTWARE REVENUE TODAY $2.0B Protected recurring base + AI WORLD New TAM The labor augmentation budget AI strengthens it. A new TAM we have the right to win.
Page 17
Scale: Scaling AI Across the Market on Tyler’s Advantages 17 INSTALLED BASE Enabled as a feature in the cloud — no waiting for an install, nothing separate for clients to manage. SALES FORCE An established national sales force with 16,000 client relationships. PROCUREMENT An amendment to a trusted vendor's existing contract — not a 12-month start- from-scratch. TRUSTED DELIVERY Clients trust our delivery methodology with their mission-critical systems. Zero new installs 16,000+ relationships Weeks, not years Mission-critical proven
Page 18
Tyler’s Government-Grade AI Has the Foundational Elements to Succeed WHY WE WIN + + Data Produced daily by over 16,000 clients Expertise From decades of public sector experience managing complex workflows Tyler AI Internal & partnerships with Microsoft + OpenAI + AWS + Anthropic Trust Clients trust us to lead +
Page 19
Appendix
Page 20
Non-GAAP Measures THE TABLE RECONCILES THE NON - GAAP MEASURES USED IN THIS PRESENTATION GAAP 20
Page 21
GAAP 21 Non-GAAP Measures THE TABLE RECONCILES THE NON - GAAP MEASURES USED IN THIS PRESENTATION
Page 22
tylertech.com