Tyler Technologies (TYL) investor relations material

Executive summary

• Achieved record SaaS bookings and free cash flow in Q2 2026, with SaaS revenues up 21.7% year-over-year and total revenues reaching $645.1 million, driven by strong subscription growth and strategic acquisitions.

• Public sector demand remains robust, supported by healthy budgets, modernization, digital transformation, and high RFP activity.

• Advanced AI strategy with growing client engagement and early adoption, alongside significant share repurchases and the acquisition of For The Record.

• Annualized recurring revenues (ARR) reached $2.24 billion as of June 30, 2026, up 8.2% year-over-year, reflecting ongoing SaaS adoption.

• Net income for Q2 2026 was $93.5 million, with diluted EPS of $2.23, up from $1.93 in the prior year.

Financial highlights

• SaaS revenues grew 21.7% to $230.6 million; total revenues for Q2 2026 were $645.1 million, up 8.2% year-over-year.

• Subscription revenues rose 12% to $453.7 million; transaction revenues increased 3.5% to $223.1 million.

• Free cash flow reached a record $118.5 million, up 34.7% year-over-year, with margin expanding to 18.4%.

• Gross margin improved to 47.6% in Q2 2026; non-GAAP operating margin was 25.7%.

• Maintenance revenues declined 5.6% due to migration to SaaS.

Outlook and guidance

• 2026 revenue guidance: $2.535 billion to $2.575 billion, implying 9.5% growth at midpoint; SaaS revenue expected to grow 21.5–23.5%.

• Non-GAAP diluted EPS guidance: $12.95–$13.20; free cash flow margin expected between 26% and 28%.

• R&D expense projected at $245 million to $250 million.

• AI revenue contribution anticipated to become meaningful in 12–18 months, ramping up through 2027 and 2028.

• Capital spending for 2026 projected between $18 million and $20 million.