TYLER TECHNOLOGIES, INC. (TYL): what the price requires
At today's price, TYLER TECHNOLOGIES, INC. (TYL) is priced for today's economics sustained for ~7.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TYL
Headline
| Field | Value |
|---|---|
| Ticker | TYL |
| Company | TYLER TECHNOLOGIES, INC. |
| Current price | $313.97/sh |
| Composition | Subscriptions: SaaS 33% / Transaction-based fees 35% / Maintenance 19% / Professional services 10% / Software licenses and royalties 1% / Hardware and other 2% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 9.6% |
| Operating margin today | 16.1% |
| Margin compression implied | -6.5pp |
| Must persist for | 7.3y |
| Multiple paid | 35x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.98σ |
| cohort percentile (of 177 peers) | 65 |
| sustained it ~7.3 years at this level | 22% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.05x | 5 | expensive |
| Earnings | 2.31x | 5 | expensive |
| Relative | 1.09x | 5 | expensive |
| Growth | 0.88x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $385.69 | 0.81x | yes | FCF base $0.7B, growth 9% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection |
| DCF Exit Multiple | Growth | $355.59 | 0.88x | yes | Exit EV/EBITDA: 24.4x / 26.4x / 28.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $287.95 | 1.09x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 29.1x / 35.0x / 40.9x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $79.11 | 3.97x | yes | BV/sh $82.47, ROE (TTM) 8.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $77.49 | 4.05x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $266.60 | 1.18x | yes | Rev $2.4B, growth 9% (input: historical growth; tapered), Terminal P/S: 4.7x / 5.7x / 6.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $86.88 | 3.61x | yes | EPS $7.24, growth 9% (input: historical EPS growth), PEG=4.59 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $53.39 | 5.88x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.27B × (1−24%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $77.22 | 4.07x | yes | BV $82.47 + 5yr PV of (ROE (TTM) 8.9% − Kₑ 9.3%) × BV; BV grows 5.8%/yr |
| Graham Number | Asset | $115.91 | 2.71x | yes | √(22.5 × EPS $7.24 × BVPS $82.47) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $297.64 | 1.05x | yes | EBITDA $0.51B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $173.88 | 1.81x | yes | FCF $687.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $136.10 | 2.31x | yes | SBC-adj FCF $0.54B (FCF $0.69B − SBC $0.15B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $164.97 | 1.90x | yes | EPS $7.24 × (8.5 + 2×9.3%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $19.79 | 15.87x | yes | BV $82.47 × (ROIC 2.2% / WACC 9.1%) |
| P/Sales Sector | Relative | $441.41 | 0.71x | yes | Revenue $2.38B × sector P/S 8.0x |
| PEG Fair Value | Relative | $101.47 | 3.09x | yes | EPS $7.24 × (PEG 1.5 × growth 9.3% (input: historical EPS growth)) → PE 14.0x |
| Earnings Yield | Earnings | $78.27 | 4.01x | yes | EPS $7.24 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $253.3m |
| Net debt / NOPAT (after-tax) | 0.87x |
| Net debt / operating income (pre-tax) | 0.66x |
| Interest coverage | 79.5x |
| Share count CAGR (dilution) | 0.4% |
| Burning cash | no |
Bullet Takeaways
- Tyler runs the back-office software for cities, counties, and courts, and the model is built on conversion: clients on legacy on-premises licenses migrating to subscriptions, where the filing names that SaaS conversion "a significant driver of our revenue growth, together with transaction-based revenues and maintenance rate increases" alongside attrition the company calls historically very low.
- The price is the risk, not the business: at roughly 32 times operating income the market is paying for a self-funding growth pace to persist about six to seven years, a stretch in duration rather than rate, and asset-value and earnings-power methods both read the price as well above what current profitability supports.
- Watch the SaaS migration pace and free cash flow conversion at the next quarterly print; Q1 2026 free cash flow more than doubled to $102.8M, and whether that margin holds is the cleanest near-term tell on the thesis.
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 compounds rather than churns.
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)
- MANH (MANHATTAN ASSOCIATES, INC.)
- (no filing in the citation store)
- PCOR (Procore Technologies, Inc.)
- (no filing in the citation store)
- GWRE (Guidewire Software, Inc.)
- (no filing in the citation store)
- SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
- (no filing in the citation store)
- JKHY (JACK HENRY & ASSOCIATES, INC.)
- (no filing in the citation store)
- APPF (AppFolio, Inc.)
- (no filing in the citation store)
- VERX (Vertex, Inc.)
- (no filing in the citation store)
Platform Technologies (reported)
- ACIW (ACI WORLDWIDE, INC.)
- (no filing in the citation store)
- PAYC (Paycom Software, Inc.)
- (no filing in the citation store)
- EVTC (EVERTEC, Inc.)
- (no filing in the citation store)
- VERX (Vertex, Inc.)
- (no filing in the citation store)
- BILL (BILL HOLDINGS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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