Document

"Second quarter revenues, earnings, and cash flow again surpassed expectations as we continue to execute at a high level against each of the key pillars of our growth strategy," said Lynn Moore, Tyler's president and chief executive officer. "SaaS revenues grew 21.5%, marking our 18th consecutive quarter of SaaS growth of 20% or more. New transaction-based services and higher volumes drove transaction revenue growth of 21.3%. In addition, both gross and operating margins continue to expand, reflecting a positive shift in revenue mix, efficiency gains across our cloud operations, and favorable operating expense trends.

"As anticipated, we saw solid sequential improvement in SaaS bookings for the second quarter. Public sector market conditions and our sales pipeline remain strong, supported by generally healthy budgets and a growing focus on technology investments that drive efficiency through digital modernization. And recently, Tyler was recognized as both a Leader and Visionary in the first-ever Gartner Magic QuadrantTM for Cloud-Based ERP for U.S. Local Government. We believe this represents a clear testament to the strength of our competitive position, innovation, and the differentiated value of our uniquely integrated suite of public sector solutions," concluded Moore.


GAAP to non-GAAP guidance reconciliation			2025
GAAP diluted earnings per share (1)			$7.40 - $7.70
Plus:
Share-based compensation expense			3.47
Amortization of acquired software and other intangibles			2.08


Less:
Income tax impact (1)			(1.75)
Non-GAAP diluted earnings per share			$11.20 - $11.50
Shares used in computing diluted earnings per share (millions)			44.1
GAAP estimated annual effective tax rate used in computing GAAP diluted earnings per share (1)			17.0%
Non-GAAP estimated annual effective tax rate used in computing non-GAAP diluted earnings per share (2)			22.5%

(1) GAAP diluted earnings per share may fluctuate due to the impact on our annual effective tax rate of discrete tax items, such as stock incentive awards, future acquisitions, changes in tax legislation, and other transactions.
(2) The non-GAAP estimated annual effective tax rate is expected to be 22.5%, up from 22.0% in 2024.

Tyler Technologies (NYSE: TYL) is a leading provider of integrated software and technology services for the public sector. Tyler’s end-to-end solutions empower local, state, and federal government entities to operate efficiently and transparently with residents and each other. By connecting data and processes across disparate systems, Tyler’s solutions transform how clients turn actionable insights into opportunities and solutions for their communities. Tyler has more than 45,000 successful installations across 13,000 locations, with clients in all 50 states, Canada, the Caribbean, Australia, and other international locations. Tyler has been recognized numerous times for growth and innovation, including on Government Technology’s GovTech 100 list. More information about Tyler Technologies, an S&P 500 company headquartered in Plano, Texas, can be found at tylertech.com.

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, and lease restructuring costs and other. 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 22.5%. This rate is based on Tyler'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 Tyler'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.

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 condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “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 also 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 materially 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 from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal governments agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, security vulnerabilities and software updates; (3) our ability

to protect client information from security breaches and provide uninterrupted 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 operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to achieve our financial 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 our renewal rates for service agreements; (7) general economic, political and market conditions, including inflation and rising interest rates; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) 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; (10) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (11) 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 Commission, 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.


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Revenues:
Subscriptions	$	405,075	$	333,682	$	780,064	$	646,925
Maintenance	112,123		115,309		224,924		232,527
Professional services	58,612		71,928		122,662		136,734
Software licenses and royalties	3,663		5,329		10,657		14,063
Hardware and other	16,644		14,728		22,975		23,086
Total revenues	596,117		540,976		1,161,282		1,053,335

Cost of revenues:
Subscriptions, maintenance, and professional services	292,595		277,145		570,648		546,015
Software licenses and royalties	1,839		1,560		3,749		3,125
Amortization of software development	5,505		4,484		10,884		8,847
Amortization of acquired software	9,319		9,240		18,613		18,479
Hardware and other	13,675		10,731		17,123		15,387
Total cost of revenues	322,933		303,160		621,017		591,853

Gross profit	273,184		237,816		540,265		461,482

Sales and marketing expense	36,312		41,565		72,785		77,992
General and administrative expense	76,601		75,420		156,053		148,130
Research and development expense	50,842		28,951		98,686		58,384
Amortization of other intangibles	13,833		13,845		27,972		31,963

Operating income	95,596		78,035		184,769		145,013

Interest expense	(1,262)		(1,253)		(2,508)		(3,437)
Other income, net	8,179		1,883		15,542		3,728
Income before income taxes	102,513		78,665		197,803		145,304
Income tax provision	17,886		10,927		32,124		23,396
Net income	$	84,627	$	67,738	$	165,679	$	121,908

Earnings per common share:
Basic	$	1.96	$	1.59	$	3.84	$	2.87
Diluted	$	1.93	$	1.57	$	3.76	$	2.82

Weighted average common shares outstanding:
Basic	43,163		42,527		43,174		42,528
Diluted	43,929		43,275		44,016		43,286


	Three months ended June 30,						Six months ended June 30,
Reconciliation of non-GAAP gross profit and margin	2025			2024			2025			2024
GAAP gross profit	$	273,184		$	237,816		$	540,265		$	461,482
Non-GAAP adjustments:

Add: Share-based compensation expense included in cost of revenues	8,891			7,620			17,605			15,010
Add: Amortization of acquired software	9,319			9,240			18,613			18,479
Non-GAAP gross profit	$	291,394		$	254,676		$	576,483		$	494,971
GAAP gross margin	45.8		%	44.0		%	46.5		%	43.8		%
Non-GAAP gross margin	48.9		%	47.1		%	49.6		%	47.0		%


	Three months ended June 30,						Six months ended June 30,
Reconciliation of non-GAAP operating income and margin	2025			2024			2025			2024
GAAP operating income	$	95,596		$	78,035		$	184,769		$	145,013
Non-GAAP adjustments:

Add: Share-based compensation expense	38,302			30,407			75,962			57,273
Add: Employer portion of payroll tax related to employee stock transactions	1,055			873			2,119			1,678
Add: Acquisition-related costs	—			2			33			29
Add: Lease restructuring costs and other	24			167			48			(159)
Add: Amortization of acquired software	9,319			9,240			18,613			18,479
Add: Amortization of other intangibles	13,833			13,845			27,972			31,963
Non-GAAP adjustments subtotal	62,533			54,534			124,747			109,263
Non-GAAP operating income	$	158,129		$	132,569		$	309,516		$	254,276
GAAP operating margin	16.0		%	14.4		%	15.9		%	13.8		%
Non-GAAP operating margin	26.5		%	24.5		%	26.7		%	24.1		%


	Three months ended June 30,				Six months ended June 30,
Reconciliation of non-GAAP net income and earnings per share	2025		2024		2025		2024
GAAP net income	$	84,627	$	67,738	$	165,679	$	121,908
Non-GAAP adjustments:
Add: Total non-GAAP adjustments to operating income	62,533		54,534		124,747		109,263

Less: Income tax impact	(19,249)		(18,377)		(40,450)		(32,609)
Non-GAAP net income	$	127,911	$	103,895	$	249,976	$	198,562
GAAP earnings per diluted share	$	1.93	$	1.57	$	3.76	$	2.82
Non-GAAP earnings per diluted share	$	2.91	$	2.40	$	5.68	$	4.59


	Three months ended June 30,				Six months ended June 30,
Reconciliation of EBITDA and adjusted EBITDA	2025		2024		2025		2024
GAAP net income	$	84,627	$	67,738	$	165,679	$	121,908
Amortization of other intangibles	13,833		13,845		27,972		31,963
Depreciation and amortization included in cost of revenues, sales and marketing expense, general and administrative expense, and research and development expense	20,322		19,620		40,531		40,721
Interest expense	1,262		1,253		2,508		3,437
Other income, net	(8,179)		(1,883)		(15,542)		(3,728)
Income tax provision	17,886		10,927		32,124		23,396
EBITDA	$	129,751	$	111,500	$	253,272	$	217,697

Share-based compensation expense	38,302		30,407		75,962		57,273
Acquisition-related costs	—		2		33		29
Employer portion of payroll tax related to employee stock transactions	1,055		873		2,119		1,678
Lease restructuring costs and other	24		167		48		(159)
Adjusted EBITDA	$	169,132	$	142,949	$	331,434	$	276,518


	Three months ended June 30,						Six months ended June 30,
Reconciliation of free cash flow	2025			2024			2025			2024
Net cash provided by operating activities	$	98,311		$	64,304		$	154,469		$	136,143
Less: additions to property and equipment	(5,487)			(6,568)			(7,822)			(13,850)
Less: investment in software development	(4,850)			(9,107)			(10,400)			(16,493)
Free cash flow	$	87,974		$	48,629		$	136,247		$	105,800
Free cash flow margin	14.8		%	9.0		%	11.7		%	10.0		%


	June 30, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	787,447	$	744,721
Accounts receivable, net	714,413		587,634
Short-term investments	104,899		23,257
Prepaid expenses and other current assets	99,332		73,192
Income tax receivable	17,601		11,975
Total current assets	1,723,692		1,440,779

Accounts receivable, long-term portion	7,015		7,153
Operating lease right-of-use assets	34,723		31,433
Property and equipment, net	161,293		163,775

Other assets:
Software development costs, net	74,719		76,117
Goodwill	2,542,019		2,531,653
Other intangibles, net	793,725		831,966
Non-current investments	2,994		10,758
Other non-current assets	85,575		86,381
Total assets	$	5,425,755	$	5,180,015

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	344,192	$	354,526
Operating lease liabilities	8,998		9,643

Deferred revenue	720,497		701,438
Current portion of convertible senior notes due 2026, net	598,798		—
Total current liabilities	1,672,485		1,065,607



Convertible senior notes due 2026, net	—		597,934
Deferred revenue, long-term	22,878		22,376
Deferred income taxes	36,437		47,503
Operating lease liabilities, long-term	33,922		30,791
Other long-term liabilities	25,366		27,382
Total liabilities	1,791,088		1,791,593

Shareholders' equity	$	3,634,667	$	3,388,422
Total liabilities and shareholders' equity	$	5,425,755	$	5,180,015


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Cash flows from operating activities:
Net income	$	84,627	$	67,738	$	165,679	$	121,908
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	34,322		34,139		68,943		74,236
Losses from sale of investments	(1)		(1)		—		(1)
Share-based compensation expense	38,302		30,407		75,962		57,273


Operating lease right-of-use assets expense	2,572		2,343		4,860		4,865
Deferred income tax benefit	—		(12,473)		(11,080)		(36,807)
Other	39		225		39		190
Changes in operating assets and liabilities, exclusive of effects of acquired companies	(61,550)		(58,074)		(149,934)		(85,521)
Net cash provided by operating activities	98,311		64,304		154,469		136,143

Cash flows from investing activities:
Additions to property and equipment	(5,487)		(6,568)		(7,822)		(13,850)
Purchase of marketable security investments	(35,293)		—		(107,286)		—
Proceeds and maturities from marketable security investments	32,528		3,080		34,284		6,351


Investment in software development	(4,850)		(9,107)		(10,400)		(16,493)
Cost of acquisitions, net of cash acquired	(206)		—		(18,230)		(1,302)
Other	549		3		526		21
Net cash used by investing activities	(12,759)		(12,592)		(108,928)		(25,273)

Cash flows from financing activities:

Payment on term loans	—		—		—		(50,000)



Purchase of treasury shares	(1,605)		—		(1,605)		—
Proceeds from exercise of stock options, net of withheld shares for taxes upon equity award settlement	(4,681)		5,852		(3,155)		15,885

Contributions from employee stock purchase plan	5,352		4,921		9,322		8,474
Other	(2,900)		—		(7,377)		—
Net cash (used) provided by financing activities	(3,834)		10,773		(2,815)		(25,641)

Net increase in cash and cash equivalents	81,718		62,485		42,726		85,229
Cash and cash equivalents at beginning of period	705,729		188,237		744,721		165,493

Cash and cash equivalents at end of period	$	787,447	$	250,722	$	787,447	$	250,722


	Three months ended June 30,				Six months ended June 30,
Detail of share-based compensation expense	2025		2024		2025		2024
Cost of revenues	$	8,891	$	7,620	$	17,605	$	15,010
Operating expenses	29,411		22,787		58,357		42,263

Total share-based compensation expense	$	38,302	$	30,407	$	75,962	$	57,273