TYLER TECHNOLOGIES, INC. (TYL): what the price assumes

In the published model solve dated 2026-Q2, anchored at $377.94, TYLER TECHNOLOGIES, INC. (TYL) is priced for today's economics sustained for ~8.6 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-18.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/TYL

Headline

FieldValue
TickerTYL
CompanyTYLER TECHNOLOGIES, INC.
Current price$377.94/sh
CompositionSubscriptions: SaaS 33% / Transaction-based fees 35% / Maintenance 19% / Professional services 10% / Software licenses and royalties 1% / Hardware and other 2%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)10.7%
Operating margin today15.1%
Margin compression (value-band)-4.4pp
Must persist for8.6y
Multiple paid44x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.1% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.98σ
cohort percentile (of 188 peers)76

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset4.09x4expensive
Earnings2.83x5expensive
Relative4.32x2expensive
Growth0.90x3justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.5%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$444.920.85xyesFCF base $0.7B, growth 8% (input: historical growth), terminal g 4.0%, WACC 8.5%, 6yr projection
DCF Exit MultipleGrowth$418.820.90xyesExit EV/EBITDA: 29.3x / 31.3x / 33.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative——noP/E 35x (static sector reference · 2026-04), scenarios: 29.3x / 35.0x / 40.7x (bear / base = reference held flat / bull), EV/EBITDA 25x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$85.694.41xyesBV/sh $74.17, ROE (TTM) 10.7%, ke 9.3%
Two-Stage Excess ReturnAsset$91.884.11xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$316.631.19xyesRev $2.4B, growth 8% (input: historical growth; tapered), Terminal P/S: 5.3x / 6.4x / 7.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$90.484.18xyesEPS $7.54, growth 7% (input: historical EPS growth), PEG=6.36 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$48.437.80xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.28B × (1−22%) / WACC 8.5% → EPV (no growth)
Residual IncomeAsset$93.054.06xyesBV $74.17 + 5yr PV of (ROE (TTM) 10.7% − Kₑ 9.3%) × BV; BV grows 6.9%/yr
Graham NumberAsset$112.173.37xyes√(22.5 × EPS $7.54 × BVPS $74.17) — Graham's conservative floor
EV/EBITDA RelativeRelative——noEBITDA $0.51B × sector EV/EBITDA 25.0x
FCF YieldEarnings$174.892.16xyesFCF $714.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$133.672.83xyesSBC-adj FCF $0.56B (FCF $0.71B − SBC $0.16B) capitalized at Kₑ
Ben Graham FormulaEarnings$148.472.55xyesEPS $7.54 × (8.5 + 2×7.5%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$17.9521.06xyesBV $74.17 × (ROIC 2.0% / WACC 8.5%) (excluded from median)
P/Sales SectorRelative——noRevenue $2.43B × sector P/S 8.0x
PEG Fair ValueRelative$84.794.46xyesEPS $7.54 × (PEG 1.5 × growth 7.5% (input: historical EPS growth)) → PE 11.2x
Earnings YieldEarnings$81.514.64xyesEPS $7.54 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Enterprise Softwareoperatingenterprise$1.7t—withheldunresolved no unit value
Platform Technologiesoperatingenterprise$628.6b—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$438.6m
Net debt / NOPAT (after-tax)1.54x
Net debt / operating income (pre-tax)1.19x
Interest coverage56.4x
Share count CAGR (buyback)-0.3%
Burning cashno

Bullet Takeaways

Bull Case

Start with what Tyler does with its cash, because it tells you how management reads its own business. Year to date the company repaid $600M of convertible notes, repurchased roughly 2.5% of its shares, and still funded the $223M acquisition of For The Record. Retiring convertible debt that carried an initial conversion price near $493 a share, per the filing's "initial conversion price of approximately $493.44 per share of common stock", removes a dilution overhang while buybacks shrink the count into rising cash generation. This is a company funding growth from its own operations rather than from the equity market, and the share count has barely moved over the trailing window.

The engine underneath is conversion economics. Tyler sells back-office software to governments, the slowest customers to switch and the stickiest once they do, and the migration of those clients from one-time licenses to recurring subscriptions is the growth lever. The 10-K states that clients converting from traditional arrangements to the SaaS model are "a significant driver of our revenue growth, together with transaction-based revenues and maintenance rate increases", and that on the maintenance side "nearly all of our on-premises software clients contract with us for maintenance and support" under auto-renewing contracts. Q1 2026 carried SaaS revenue up 23.5% to $222.4M and recurring revenue up 10.4%, the kind of base that rolls forward year after year with the contract renewals doing the work.

The bet the price makes is durability, and Tyler's structure is unusually suited to delivering it. Governments do not rip out their court, public-safety, and financial systems; switching means persuading an entire agency to abandon a working install, and the filing notes Tyler even competes against governments' own "internal, centralized IT departments" by convincing the end user to stop the internal service and outsource. Free cash flow more than doubling year over year to $102.8M, lifting free cash flow margin to 16.8%, shows the recurring base is starting to drop more cash to the bottom line as the heavy migration spending matures. If the conversion runway holds, the recurring mix keeps rising and the cash margin follows it.

Bear Case

The moat is real but it is being worked on at the edges, and the price assumes it holds at full strength for the better part of a decade. Tyler's defensibility rests on incumbency in government systems, yet the company's own 10-K is candid that it competes with firms developing "products or services or that achieve greater market acceptance" and, more pointedly, with the in-house IT departments of the agencies it sells to. The same filing flags labor cost pressure directly: if competitive pressures "prevent us from offsetting increased labor costs, our" business would be adversely affected. A people-heavy implementation business defending price against both new software entrants and clients' own staff is a moat that requires constant maintenance, not one that compounds untended.

Then there is what the price requires. At roughly 32 times operating income, today's price embeds company-wide growth held at its self-funding ceiling for about six to seven years. That pace is within what Tyler has recently delivered; the stretch is in how long it must persist, and only about a quarter of comparable fast-growers have sustained that rate for that long. If the duration falls short, the multiple compresses toward where the value-oriented methods sit. Those methods are emphatic: book-value-plus-profitability approaches and the zero-growth earnings anchor all land well below half the current price, because trailing return on equity near 9% sits below the cost of equity. The price is a forward-growth bet that the static lenses structurally cannot reach.

Growth has leaned partly on acquisition, which dilutes the clean-organic story the multiple implies. The 10-K's goodwill roll-forward shows the year's purchases of CG and Edulink adding to a goodwill balance that reached $895M for the US public sector within a total of $2.59B, and the Q1 revenue guidance raise was driven mainly by folding in For The Record's roughly $30M of acquired revenue. Bolt-ons are a legitimate strategy, but a growth rate that needs deals to stay at the ceiling is a different, lower-quality bet than the pure-conversion compounding the price is paying for, and it carries integration and impairment risk the organic story does not.

Valuation

Today's price is a wager on duration. At roughly 32 times operating income, the market is paying for company-wide operating growth to hold near its self-funding ceiling for about six to seven years. The near-term pace itself is unremarkable against what Tyler has recently posted; the demanding part is the persistence, and across comparable fast-growers only about a quarter sustained that rate for that span. The price is not betting Tyler grows fast next year. It is betting Tyler keeps doing it for most of a decade.

The methods we use to triangulate split cleanly on whether that bet is supported. The forward-growth methods and the peer-multiple lens land close to the price: the discounted cash-flow approaches and a sector-median P/E read the price as roughly fair, with the price sitting only modestly above where they reach. The asset-value methods are the opposite story, landing near a quarter of the price, because they capitalize a trailing return on equity of about 9% against a cost of equity above 9% and find no excess to pay for. The earnings-power anchor, which asks what the business is worth if it never grows again, sits far below the price as well. The pattern is unambiguous: only the methods that credit future growth reach this price, which means the entire premium is the durability of the conversion runway, not anything visible in current profitability.

Solvency is not the question here. Net debt of about $253M against trailing operating income of $368M leaves leverage under one turn, interest coverage above 70 times, and a share count that has crept up only fractionally. The balance sheet can carry the bet comfortably; the open question is entirely whether the recurring-revenue migration sustains the growth duration the price has already paid for.

Catalysts

The most recent print set the tone for the year. Q1 2026 delivered record total revenue of $613.5M, up 8.6%, with SaaS revenue up 23.5% to $222.4M and the company marking 21 consecutive quarters of 20%-or-greater SaaS growth. Free cash flow more than doubled to $102.8M, a 16.8% margin, and CEO Lynn Moore framed recurring and total revenues as setting new quarterly records.

Management modestly raised full-year 2026 guidance to total revenue of $2.535B to $2.575B and non-GAAP EPS of $12.50 to $12.75, with the revenue lift attributed mainly to the April 2026 close of the For The Record acquisition, which adds roughly $30M of revenue for the year. The note on adjusted EPS is the company's own non-GAAP convention; the GAAP Q1 figure was $1.90, against $1.88 a year earlier.

The next earnings report is the catalyst that matters, and the two numbers to watch are the SaaS conversion pace and whether the free-cash-flow margin gain holds rather than reverses. Both speak directly to the durability the price is underwriting, and a clean print on each is what the forward-growth case needs to keep earning its premium.

Peer Cohorts (Per Segment, With Filing Citations)

Enterprise Software (reported)

Platform Technologies (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release, April 30 2026 · Q1 2026 earnings call, April 30 2026

View the full interactive TYL report on boothcheck