Tyler Technologies (TYL) Citi’s 2026 Global TMT Conference summary

Business overview and market dynamics

• Focuses on mission-critical software for public sector, with 70-75% of business from local governments and 20-25% from state governments.

• Transactions business, including payment processing, accounts for about a third of revenues.

• Market remains fragmented, offering significant domestic and international growth runway.

• Public sector customers value references, reputation, and long-term relationships, leading to long sales and replacement cycles.

• Demand is steady and non-discretionary due to the mission-critical nature of applications.

Technology adoption and cloud transition

• Governments are increasingly focused on efficiency, driving adoption of modern technology and cloud solutions.

• Cloud migration target increased to 85% of on-prem base by 2030, with 55% of the customer base already in the cloud.

• Nearly all new sales are cloud-based; migration is encouraged through incentives, new features, and maintenance price increases for on-prem customers.

• Major gating item is upgrading customers to current software versions before cloud migration.

• CEO has initiated formal planning with on-prem customers for cloud migration, including discussions on timelines and incentives.

Revenue growth and upsell opportunities

• SaaS revenue has grown above 20% for 23 consecutive quarters, driven by core growth and uplift from maintenance-to-SaaS flips.

• Uplift from SaaS flips averages 1.7x, with some upsell opportunities reaching 3-4x existing maintenance revenues.

• Incremental revenue from flips expected to peak in the next 2-4 years, then revert to core growth rates.

• Integrated payment solutions now offered to 30% of the customer base, expected to expand by 2-3% annually.

• Payments business is shifting from commoditized processing to integrated, higher-margin solutions.