Tyler Technologies (TYL) D.A. Davidson 2nd Annual Technology & Consumer Conference 2026 summary

Strategic vision and cloud transition

• Updated 2030 targets include higher recurring revenue, margin, and free cash flow goals, reflecting confidence from exceeding 2025 milestones.

• Completed migration of 5,000 clients to AWS, exiting all proprietary data centers by end of 2025.

• Aggressive version consolidation and sunsetting of older software versions to streamline upgrades and facilitate cloud migration.

• SaaS revenue CAGR target raised to 20% for the next five years, with operating margin target increased to mid-30s by 2030.

• Free cash flow target for 2030 increased to $1.1–$1.2 billion, with margin expectations also raised.

Revenue model evolution and market opportunity

• SaaS subscriptions expected to grow from 35% to 55% of revenue by 2030, with recurring revenues exceeding 90%.

• Local government remains the largest segment, but state-level business has expanded, especially after the NIC acquisition.

• Current market penetration is about 10–11% of potential local government systems, with significant upsell and greenfield opportunities.

• Win rates for flagship products often exceed 50%, with some segments like courts reaching 75–80%.

• Gross retention rates are 98% by revenue, with net retention north of 110% due to upsells and pricing.

State market expansion and transaction-funded models

• NIC acquisition enabled entry into state markets and introduced transaction-funded models, allowing for new revenue streams without direct state budget impact.

• Large contracts, such as California State Parks, leverage transaction fees instead of SaaS fees, creating significant long-term value.

• Payment engine integration with core products enables value-added services and premium pricing.

• Transaction-funded deals blur the line between software and payments, often not reflected in SaaS bookings.