Key Takeaways:
- SaaS Momentum: Tyler’s cloud transition drives 20% SaaS revenue growth with strong customer adoption.
- Price Projection: Based on current fundamentals, TYL stock could reach $437 by December 2027.
- Potential Gains: This target represents a total return of 21% from the current price of $361.
- Annual Return: Investors could see roughly 11% growth over the next 1.9 years.
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Tyler Technologies (TYL) delivered another strong quarter in Q3, surpassing expectations across key revenue and profitability metrics. The company reported nearly 10% total revenue growth, led by 20% SaaS revenue expansion and 11.5% transaction revenue growth.
CEO Lynn Moore emphasized the company’s resilience amid a healthy public-sector budget environment.
- Throughout 2025, Tyler has not seen any fundamental change in demand, and efficiency mandates are viewed as a long-term tailwind for their software and services.
- Mobile data consumption trends and cloud adoption continue to drive the company’s competitive position in the government software market.
- Total SaaS bookings reached an all-time high in Q3, growing 5.8% year-over-year.
- The company’s cloud-first strategy is fully embedded across operations, with AI-driven solutions creating deeper client relationships and expanding cross-sell opportunities.
- Recent wins include contracts with Hillsborough County, Florida, for document automation and a statewide deal with Pennsylvania for its National Emergency Response Information System.
- CFO Brian Miller provided an early look at 2026, projecting SaaS revenue growth of approximately 20% and total recurring revenue growth within their long-term target range of 10% to 12%.
- This outlook reflects solid progress toward Tyler’s 2030 goals, though management cautioned that growth and margin expansion will not be linear.
Despite strong execution and an increasingly cloud-centric revenue mix, Tyler trades at $361, leaving upside for investors who recognize the company’s dominant position in public-sector digital transformation.
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What the Model Says for Tyler Technologies Stock
We analyzed Tyler’s transformation into a leading public-sector cloud software provider with expanding AI capabilities.
Public sector agencies face aging infrastructure and workforce constraints, driving demand for cloud migration and automation.
Tyler’s established client relationships spanning decades position the company to guide government entities through this technology shift.
The cloud transition accelerates recurring revenue growth. With approximately 50% of Tyler’s customer base by revenue still on-premise, significant runway remains for conversions.
Management expects the flip trajectory to continue upward through 2027-2028, with large statewide and county systems representing the majority of remaining opportunities.
Tyler’s AI initiatives provide additional growth vectors. Early deployments of document automation and priority-based budgeting deliver 10%-30% productivity gains for clients, creating clear value propositions.
The company’s access to vast government data through 15,000+ clients, combined with deep domain expertise, creates competitive advantages that point solutions cannot replicate.
Using a forecast of 9.5% annual revenue growth and 27% operating margins, our model projects the stock will rise to $437 within 1.9 years. This assumes a 29.2x price-to-earnings multiple.
That represents compression from Tyler’s historical P/E averages of 45.7x (one year) and 52.4x (five years). The lower multiple reflects near-term uncertainty around AI monetization timing and the natural maturity of Tyler’s market leadership position.
The real value lies in capturing sustained public sector cloud adoption while expanding high-margin AI solutions across an entrenched customer base.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TYL stock:
1. Revenue Growth: 9.5%
Tyler’s growth centers on cloud migration and market share gains.
The company delivered 9.7% total revenue growth in Q3, with SaaS revenues up 20%. Management projects that this SaaS momentum will continue in 2026, with approximately 20% growth.
The recurring revenue model provides visibility. Total ARR reached $2.05 billion, up 10.7%, reflecting steady new business, client expansions, and on-premise customer flips to SaaS.
With half the installed base still on-premise and average flip multiples of 1.7x to 1.8x on maintenance revenue, conversion runway remains substantial.
Public safety and courts & justice solutions show particular strength. RFP and demo activity reached two-year highs in Q2 and Q3 for enterprise ERP, signaling robust pipeline development despite temporary procurement delays earlier in the year.
2. Operating margins: 27.3%
Tyler has expanded non-GAAP operating margins to 26.6%, up 120 basis points year over year.
This reflects a positive shift in revenue mix toward higher-margin SaaS and transaction businesses, along with cloud operational efficiencies.
Management expects continued margin expansion but notes the trajectory will not be linear.
Investments in AI tooling for 2,000 product development team members and competitive product enhancements will create near-term headwinds.
However, the company remains on track to meet or exceed 2030 margin targets.
3. Exit P/E Multiple: 29.2x
The market values Tyler at 29.7x earnings currently. We assume modest compression to 29.2x over our forecast period, reflecting the company’s transition from high-growth cloud adoption to a more mature recurring revenue profile.
While Tyler commands a premium multiple for its mission-critical software and sticky client base, uncertainty around AI revenue monetization and the pace of market expansion justifies some multiple normalization.
As the company demonstrates AI’s contribution to growth and maintains execution across its global public sector footprint, the premium valuation should persist.
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What Happens If Things Go Better or Worse?
Government software faces budget cycles and technology adoption curves. Here’s how Tyler stock might perform under different scenarios through December 2029:
- Low Case: If revenue growth moderates to 8.2% and net income margins compress to 21%, investors still see a 17.1% total return (4.1% annually).
- Mid Case: With 9.1% growth and 22.5% margins, we expect a total return of 47.4% (10.5% annually).
- High Case: If cloud acceleration drives 10% revenue growth while Tyler maintains 23.7% margins, returns could hit 80.5% total (16.4% annually).
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The range reflects execution on cloud conversions, AI product adoption, and the company’s ability to expand wallet share with existing clients.
In the bear case, budget constraints slow public-sector IT spending, or competitive pressure limits pricing power.
In the bull case, AI solutions drive faster-than-expected upsell activity and new client acquisitions accelerate as efficiency mandates intensify.
How Much Upside Does Tyler Technologies Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
