Tyler Technologies Surpasses Q2 Earnings and Revenue Estimates

Tyler Technologies, Inc. TYL reported better-than-expected second-quarter 2025 results. The company reported second-quarter non-GAAP earnings of $2.91 per share, which beat the Zacks Consensus Estimate by 4.7% and increased 21.3% year over year.

Tyler Technologies surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 4.4%.

Tyler Technologies’ second-quarter revenues increased 10.2% year over year to $596.1 million. The top line topped the Zacks Consensus Estimate of $586.2 million by 1.7%.

The year-over-year improvement in the top line was primarily driven by a rise in subscription revenues. During the second quarter, software subscription arrangements comprised approximately 96% of the total new software contract value as the company continued to transform into a software-as-a-service model from its on-premise license-based model.

Tyler Technologies’ Q2 Revenue Details

Tyler Technologies’ recurring revenues from maintenance and subscriptions increased 15.2% year over year to $517.2 million and accounted for 86.8% of the total quarterly revenues. The company reported annualized recurring revenues on a non-GAAP basis of $2.07 billion, up 15.2% year over year.

Segment-wise, Maintenance revenues (accounting for 18.8% of total revenues) were $112.1 million, down from $115.3 million reported in the year-ago quarter. Our model estimate for Maintenance revenues was pegged at $110 million.

Subscription revenues (68% of total revenues) grew 21.4% year over year to $405.1 million, while our model estimate for the same was pinned at $387.6 million.

Software licenses and royalties (0.6% of total revenues) of approximately $3.7 million fell year over year by 31.3%. Our model predicted that Software licenses and royalties’ sales would decrease 16.7% to $4.4 million.

Professional Services revenues (9.8% of total revenues) amounted to $58.6 million, down 18.5% from the year-ago quarter. Our model estimate for the same was pegged at $71 million.

Hardware and other revenues (2.8% of total revenues) were up 13% from the year-ago quarter to $16.6 million. Our model estimate for Hardware and other revenues was pegged at $12.5 million.

Tyler Technologies’ Operating Details

Tyler Technologies’ non-GAAP gross profit increased 14.4% year over year to $291.4 million. Moreover, the non-GAAP gross margin improved 180 basis points (bps) to 48.9%.

Adjusted EBITDA rose 18.3% year over year to $169.1 million.

Non-GAAP operating income for the quarter totaled $158.1 million and jumped 19.3% year over year. The non-GAAP operating margin expanded 200 bps to 26.5%.

Tyler Technologies’ Balance Sheet & Other Details

As of June 30, 2025, TYL’s cash and investments were $892.3 million compared with $807.4 million as of March 31, 2025.

The company generated an operating cash flow of $98.3 million and a free cash flow of $88 million in the second quarter of 2025. In the first half of 2025, it generated operating and free cash flows of $154.5 million and $136.3 million, respectively.

Tyler Revised FY25 Guidance

Tyler Technologies now projects full-year 2025 revenues between $2.33 billion and $2.36 billion, up from the earlier guidance range of $2.31-$2.35 billion. The Zacks Consensus Estimate for 2025 revenues is pegged at $2.33 billion, indicating year-over-year growth of 8.9%.

The company now projects its adjusted earnings per share in the range of $11.20-$11.50, up from the previously provided guidance of $11.05-$11.35. The consensus mark for 2025 earnings is pegged at $11.13 per share.

TYL’s Zacks Rank & Stocks to Consider

Currently, Tyler Technologies carries a Zacks Rank #3 (Hold).

Arista Networks ANET, Bumble BMBL and MongoDB MDB are some top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Arista Networks, Bumble and MongoDB sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2025 earnings has been revised upward by a penny to $2.58 per share over the past 30 days and suggests a year-over-year increase of 13.7%. Arista Networks shares have soared 10.4% year to date.

The Zacks Consensus Estimate for Bumble’s 2025 earnings has been revised upward by a penny to $1.05 per share in the past 30 days, calling for a strong improvement from the loss of $4.61 reported in 2024. Bumble shares have declined 7% year to date.

The Zacks Consensus Estimate for MongoDB’s fiscal 2026 earnings has been revised upward 20.4% to $3.07 per share in the past 60 days, implying a 16.1% year-over-year decline. MongoDB shares have risen 4.9% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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