SEC Form 10-Q filed by Tyler Technologies Inc.

7/30/25 4:44:30 PM ET

Computer Software: Prepackaged Software

Technology

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tyl-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number 1-10485

TYLER TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware						75-2303920
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)


5101 TENNYSON PARKWAY	PLANO	Texas	75024
(Address of principal executive offices)	(City)	(State)	(Zip code)

(972) 713-3700

(Registrant’s telephone number, including area code)


Title of each class	Trading symbol	Name of each exchange on which registered
COMMON STOCK, $0.01 PAR VALUE	TYL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of common stock of registrant outstanding on July 28, 2025 was 43,261,810.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues:
Subscriptions	$	405,075	$	333,682	$	780,064	$	646,925
Maintenance	112,123		115,309		224,924		232,527
Professional services	58,612		71,928		122,662		136,734
Software licenses and royalties	3,663		5,329		10,657		14,063
Hardware and other	16,644		14,728		22,975		23,086
Total revenues	596,117		540,976		1,161,282		1,053,335

Cost of revenues:
Subscriptions, maintenance, and professional services	292,595		277,145		570,648		546,015
Software licenses and royalties	1,839		1,560		3,749		3,125
Amortization of software development	5,505		4,484		10,884		8,847
Amortization of acquired software	9,319		9,240		18,613		18,479
Hardware and other	13,675		10,731		17,123		15,387
Total cost of revenues	322,933		303,160		621,017		591,853

Gross profit	273,184		237,816		540,265		461,482

Sales and marketing expense	36,312		41,565		72,785		77,992
General and administrative expense	76,601		75,420		156,053		148,130
Research and development expense	50,842		28,951		98,686		58,384
Amortization of other intangibles	13,833		13,845		27,972		31,963

Operating income	95,596		78,035		184,769		145,013

Interest expense	(1,262)		(1,253)		(2,508)		(3,437)
Other income, net	8,179		1,883		15,542		3,728
Income before income taxes	102,513		78,665		197,803		145,304
Income tax provision	17,886		10,927		32,124		23,396
Net income	$	84,627	$	67,738	$	165,679	$	121,908

Earnings per common share:
Basic	$	1.96	$	1.59	$	3.84	$	2.87
Diluted	$	1.93	$	1.57	$	3.76	$	2.82

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	84,627	$	67,738	$	165,679	$	121,908
Other comprehensive (loss) income, net of tax:
Securities available-for-sale and transferred securities:
Change in net unrealized holding (losses) gains on available-for-sale securities during the period	(31)		55		42		108

Reclassification adjustment for net income on sale of available-for-sale securities, included in net income	(1)		—		—		—
Other comprehensive (loss) income, net of tax	(32)		55		42		108
Comprehensive income	$	84,595	$	67,793	$	165,721	$	122,016

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)


	June 30, 2025 (unaudited)		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	787,447	$	744,721
Accounts receivable (less allowance for losses and sales adjustments of $27,445 in 2025 and $17,325 in 2024)	714,413		587,634
Short-term investments	104,899		23,257
Prepaid expenses	91,096		65,135
Income tax receivable	17,601		11,975
Other current assets	8,236		8,057
Total current assets	1,723,692		1,440,779
Accounts receivable, long-term	7,015		7,153
Operating lease right-of-use assets	34,723		31,433
Property and equipment, net	161,293		163,775
Other assets:
Software development costs, net	74,719		76,117
Goodwill	2,542,019		2,531,653
Other intangibles, net	793,725		831,966
Non-current investments	2,994		10,758
Other non-current assets	85,575		86,381
	$	5,425,755	$	5,180,015
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	171,582	$	156,817
Accrued liabilities	172,610		197,709
Operating lease liabilities	8,998		9,643

Deferred revenue	720,497		701,438
Current portion of convertible senior notes due 2026, net	598,798		—
Total current liabilities	1,672,485		1,065,607


Convertible senior notes due 2026, net	—		597,934
Deferred revenue, long-term	22,878		22,376
Deferred income taxes	36,437		47,503
Operating lease liabilities, long-term	33,922		30,791
Other long-term liabilities	25,366		27,382
Total liabilities	1,791,088		1,791,593
Commitments and contingencies	—		—
Shareholders' equity:
Preferred stock, $10.00 par value; 1,000,000 shares authorized; none issued	—		—
Common stock, $0.01 par value; 100,000,000 shares authorized; 48,147,969 shares issued and outstanding as of June 30, 2025 and December 31, 2024	481		481
Additional paid-in capital	1,620,258		1,539,301
Accumulated other comprehensive loss, net of tax	(115)		(157)
Retained earnings	2,032,478		1,866,799
Treasury stock, at cost; 4,896,113 and 5,184,092 shares in 2025 and 2024, respectively	(18,435)		(18,002)
Total shareholders' equity	3,634,667		3,388,422
	$	5,425,755	$	5,180,015

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	165,679	$	121,908
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	68,943		74,236
Gains from sale of investments	—		(1)
Share-based compensation expense	75,962		57,273

Amortization of operating lease right-of-use assets	4,860		4,865
Deferred income tax benefit	(11,080)		(36,807)
Other	39		190
Changes in operating assets and liabilities, exclusive of effects of acquired companies:
Accounts receivable	(126,188)		(89,785)
Income tax payable	(5,626)		17,909
Prepaid expenses and other current assets	(25,712)		(32,586)
Accounts payable	14,765		4,136
Operating lease liabilities	(5,663)		(6,426)
Accrued liabilities	(19,727)		(1,173)
Deferred revenue	18,531		19,263
Other long-term liabilities	(314)		3,141
Net cash provided by operating activities	154,469		136,143

Cash flows from investing activities:
Additions to property and equipment	(7,822)		(13,850)
Purchase of marketable security investments	(107,286)		—
Proceeds and maturities from marketable security investments	34,284		6,351


Investment in software development	(10,400)		(16,493)
Cost of acquisitions, net of cash acquired	(18,230)		(1,302)
Other	526		21
Net cash used by investing activities	(108,928)		(25,273)

Cash flows from financing activities:

Payment on term loans	—		(50,000)



Purchase of treasury shares	(1,605)		—

Proceeds from exercise of stock options, net of withheld shares for taxes upon equity award settlement	(3,155)		15,885
Contributions from employee stock purchase plan	9,322		8,474
Other	(7,377)		—
Net cash used by financing activities	(2,815)		(25,641)

Net increase in cash and cash equivalents	42,726		85,229
Cash and cash equivalents at beginning of period	744,721		165,493
Cash and cash equivalents at end of period	$	787,447	$	250,722

See accompanying notes.


	Six Months Ended June 30,
	2025		2024
Supplemental cash flow information:
Cash paid for interest	$	969	$	1,930
Cash paid for income taxes, net	46,293		39,062
Non-cash investing and financing activities:
Non-cash additions to property and equipment	$	502	$	45

TYLER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at March 31, 2025	48,148	$	481	$	1,581,856	$	(83)	$	1,947,851	(5,035)	$	(17,401)	$	3,512,704
Net income	—	—		—		—		84,627		—	—		84,627
Other comprehensive loss, net of tax	—	—		—		(32)		—		—	—		(32)
Exercise of stock options and vesting of restricted stock units	—	—		(5,209)		—		—		163	18,536		13,327
Employee taxes paid for withheld shares upon equity award settlement	—	—		—		—		—		(32)	(18,008)		(18,008)
Share-based compensation	—	—		38,302		—		—		—	—		38,302
Issuance of shares pursuant to employee stock purchase plan	—	—		5,309		—		—		11	43		5,352
Treasury stock repurchases	—	—		—		—		—		(3)	(1,605)		(1,605)

Balance at June 30, 2025	48,148	$	481	$	1,620,258	$	(115)	$	2,032,478	(4,896)	$	(18,435)	$	3,634,667


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at March 31, 2024	48,148	$	481	$	1,385,095	$	(273)	$	1,657,943	(5,707)	$	(20,111)	$	3,023,135
Net income	—	—		—		—		67,738		—	—		67,738
Other comprehensive income, net of tax	—	—		—		55		—		—	—		55
Exercise of stock options and vesting of restricted stock units	—	—		5,168		—		—		194	12,933		18,101
Employee taxes paid for withheld shares upon equity award settlement	—	—		—		—		—		(25)	(12,249)		(12,249)
Share-based compensation	—	—		30,407		—		—		—	—		30,407
Issuance of shares pursuant to employee stock purchase plan	—	—		4,866		—		—		14	55		4,921

Balance at June 30, 2024	48,148	$	481	$	1,425,536	$	(218)	$	1,725,681	(5,524)	$	(19,372)	$	3,132,108

TYLER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2024	48,148	$	481	$	1,539,301	$	(157)	$	1,866,799	(5,184)	$	(18,002)	$	3,388,422
Net income	—	—		—		—		165,679		—	—		165,679
Other comprehensive income, net of tax	—	—		—		42		—		—	—		42
Exercise of stock options and vesting of restricted stock units	—	—		(4,251)		—		—		328	34,022		29,771
Employee taxes paid for withheld shares for taxes upon equity award settlement	—	—		—		—		—		(56)	(32,926)		(32,926)
Share-based compensation	—	—		75,962		—		—		—	—		75,962
Issuance of shares pursuant to employee stock purchase plan	—	—		9,246		—		—		19	76		9,322
Treasury stock purchases	—	—		—		—		—		(3)	(1,605)		(1,605)

Balance at June 30, 2025	48,148	$	481	$	1,620,258	$	(115)	$	2,032,478	(4,896)	$	(18,435)	$	3,634,667


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2023	48,148	$	481	$	1,354,787	$	(326)	$	1,603,773	(5,858)	$	(20,720)	$	2,937,995
Net income	—	—		—		—		121,908		—	—		121,908
Other comprehensive income, net of tax	—	—		—		108		—		—	—		108
Exercise of stock options and vesting of restricted stock units	—	—		3,430		—		—		389	35,911		39,341
Employee taxes paid for withheld shares for taxes upon equity award settlement	—	—		—		—		—		(51)	(23,456)		(23,456)
Share-based compensation	—	—		57,273		—		—		—	—		57,273
Issuance of shares pursuant to employee stock purchase plan	—	—		8,379		—		—		24	95		8,474
Reimbursement of shares from escrow	—	—		1,667		—		—		(28)	(11,202)		(9,535)
Balance at June 30, 2024	48,148	$	481	$	1,425,536	$	(218)	$	1,725,681	(5,524)	$	(19,372)	$	3,132,108

Tyler Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Tables in thousands, except per share data)

(1) Basis of Presentation

We prepared the accompanying condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”), for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of June 30, 2025, and December 31, 2024, and operating result amounts are for the three and six months ended June 30, 2025, and 2024, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, 2024. Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. Certain amounts for previous years have been reclassified to conform to the current year presentation.

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all components of net income (loss) and other comprehensive income (loss). During the three and six months ended June 30, 2025, we had approximately $32,000, of other comprehensive loss, and $42,000, of other comprehensive income, net of taxes, respectively, from our available-for-sale investment holdings. During the three and six months ended June 30, 2024, we had approximately $55,000 and $108,000, of other comprehensive income, net of taxes, respectively, from our available-for-sale investment holdings, respectively.

(2) Accounting Standards and Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 19, 2025, that have had a material impact on our condensed consolidated financial statements and related notes. See Recently Pronounced Accounting Standard below.

REVENUE RECOGNITION

Nature of Products and Services

We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. We earn the majority of our revenues from subscription-based services and post-contract client support (“PCS” or “maintenance”). Other sources of revenue are professional services, software licenses and royalties, and hardware and other. Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps:

•Identification of the contract, or contracts, with a client

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, we satisfy a performance obligation

Our software arrangements with clients contain multiple performance obligations that range from software license deliveries, installation, training, consulting, software modification and customization to meet specific client needs; hosting; and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include professional services, such as training or installation, are evaluated to determine whether those services are highly interdependent or interrelated to the product’s functionality. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price (“SSP”) basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, client demographics, and the number and types of users within our contracts.

For arrangements that involve significant production, modification, or customization of the software, or where professional services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the client over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent.

Subscription-Based Services

Subscription-based services consist primarily of revenues derived from software as a service (“SaaS”) arrangements and transaction-based fees. For SaaS arrangements, we evaluate whether the client has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the client can feasibly maintain the software on the client’s hardware or enter into another arrangement with a third party to host the software. We recognize SaaS services ratably over the term of the arrangement, which range from one to 10 years, but most arrangements are typically for periods of one to three years. For professional services associated with certain SaaS arrangements, we have concluded that the services are not distinct, and we recognize the revenue ratably over the remaining contractual period once we have provided the client access to the software.

Transaction-based fees primarily relate to digital government services and online payment services, which are sometimes offered with the assistance of third-party vendors. When we are the principal in a transaction, we record the revenue and related costs on a gross basis. Otherwise, we net the cost of revenue associated with the service against the gross revenue (amount billed to the client) and record the net amount as revenue.

For transaction-based revenues from digital government services and online payments, we have the right to charge the client an amount that directly corresponds with the value to the client of our performance to date. Therefore, we recognize revenues for these services over time based on the amount billable to the client. In some cases, we are paid on a fixed-fee basis and recognize the revenue ratably over the contractual period. Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances where variable consideration exists, we include in our estimates additional revenues for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably, and its realization is probable.

Costs of performing services under subscription-based arrangements are expensed as incurred, except for certain direct and incremental contract origination costs associated with SaaS arrangements. Such direct and incremental costs are capitalized and amortized ratably over the period of benefit.

Post-Contract Client Support (Maintenance)

Our clients generally enter into PCS agreements when they purchase our software licenses. PCS includes telephone support, bug fixes, and rights to upgrades on a when-and-if available basis. PCS is considered distinct when purchased with our software licenses. Our PCS agreements are typically renewable annually. PCS is recognized over time on a straight-line basis over the period the PCS is provided. All significant costs and expenses associated with PCS are expensed as incurred.

Professional Services

When professional services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material or milestone basis. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met.

Revenue is recognized net of allowances for sales adjustments and any taxes collected from clients, which are subsequently remitted to governmental authorities.

Refer to Note 4, “Disaggregation of Revenue” for further information, including the economic factors that affect the nature, amount, timing, and uncertainty of revenues and cash flows of our various revenue categories.

Contract Balances

Accounts receivable and allowance for losses and sales adjustments

Timing of revenue recognition may differ from the timing of invoicing to clients. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when invoicing occurs prior to revenue recognition. For multi-year agreements, we generally invoice clients annually at the beginning of each annual coverage period.

Accounts receivable is as follows:


	June 30, 2025		December 31, 2024
Accounts receivable - current	$	714,413	$	587,634
Accounts receivable - long term	7,015		7,153
Total accounts receivable	$	721,428	$	594,787

Total accounts receivable, including total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $721.4 million and $594.8 million, as of June 30, 2025, and December 31, 2024, respectively. We have recorded unbilled receivables of $111.8 million and $115.6 million as of June 30, 2025, and December 31, 2024, respectively. Unbilled receivables expected to be collected within one year have been included with the current portion of accounts receivable in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with the long-term portion of accounts receivable in the accompanying condensed consolidated balance sheets. Unbilled receivables also include retention receivables of $10.8 million and $11.4 million as of June 30, 2025, and December 31, 2024, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings.

We maintain allowances for losses and sales adjustments, which losses are recorded against revenue at the time the loss is incurred. Because most of our clients are domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payments. Consequently, we have not recorded a reserve for credit losses. Events or changes in circumstances that indicate the carrying amount for the allowances for losses and sales adjustments may require revision include, but are not limited to, managing our client’s expectations regarding the scope of the services to be delivered and defects or errors in new versions or enhancements of our software products. Our allowances for losses and sales adjustments are $27.4 million and $17.3 million as of June 30, 2025, and December 31, 2024, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

We perform an impairment assessment annually on October 1, or more frequently if indicators of potential impairment exist, which includes evaluating qualitative and quantitative factors to assess the likelihood of an impairment of each reporting unit’s goodwill. If the conclusion of an impairment assessment is that it is more likely than not that the fair value of the reporting unit is more than its carrying value, goodwill is not considered impaired, and we are not required to perform the quantitative goodwill impairment test. If the conclusion of an impairment assessment is that it is more likely than not that the fair value is less than its carrying value, we perform the quantitative goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. Impairments, if any, are based on the excess of the carrying amount over the fair value.

Other Intangible Assets

We make judgments about the recoverability of purchased intangible assets other than goodwill whenever events or changes in circumstances indicate that an impairment may exist. Client base and acquired software each comprise approximately half of our purchased intangible assets other than goodwill. We review our client turnover each year for indications of impairment. Our client turnover has historically been very low. If indications of impairment are determined to exist, we measure the recoverability of assets by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the assets exceeds their estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the assets exceeds the fair value of the assets.

For the three and six months ended June 30, 2025, no triggering event or changes to circumstances indicated that a potential impairment had occurred for goodwill or other intangible assets.

RECENTLY PRONOUNCED ACCOUNTING STANDARDS

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-04 - Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This guidance clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. It is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. As of January 1, 2025, we have early-adopted this standard, and the new standard did not have a material impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This guidance requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. This guidance is not expected to have a material impact on the Company’s financial statements.

In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. This guidance is not expected to have a material impact on the Company’s financial statements.

(3) Segment and Related Information

Reportable operating segments are determined based on the Company’s management approach. The management approach, as defined by FASB ASC 280 “Segment Reporting,” is based on the way that the Chief Operating Decision Maker (“CODM”) organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. Our CODM, for purposes of FASB ASC 280, is our chief executive officer.

We report our results in two reportable segments. Our reportable segments are organized on the basis of a combination of the products and services they deliver to clients and the function that the public sector client performs. Operating segments that have met the aggregation criteria have been combined into our two reportable segments. The Enterprise Software (“ES”) reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: public administration solutions, courts and public safety solutions, education solutions, and property and recording solutions. The Platform Technologies (“PT”) reportable segment provides public sector entities with platform and transformative solutions including digital solutions, payment processing, streamlined data processing, and improved operations and workflows.

The CODM uses segment operating income or loss to assess performance and to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. During the fiscal periods presented, we had no significant transactions between reportable segments. Corporate unallocated amounts are comprised of non-cash amortization of intangible assets associated with acquisitions, depreciation associated with unallocated property and equipment assets, compensation costs for the executive management team and certain shared services staff, and share-based compensation expense for the entire company. Corporate unallocated amounts also include incidental revenues and expenses related to a company-wide user conference and rental income.


For the three months ended June 30, 2025	Enterprise Software		Platform Technologies		Totals
Revenues
Subscriptions:
SaaS	$	168,059	$	21,512
Transaction-based fees	79,786		135,718
Maintenance	106,779		5,344
Professional services	56,862		1,750
Software licenses and royalties	3,846		(183)
Hardware and other	8,950		128
Total segment revenues	424,282		164,269		588,551
Less:
Cost of revenues	178,462		114,980
Sales and marketing expense	24,971		5,034
General and administrative expense	10,867		13,374
Research and development expense	39,395		4,215
Segment operating income	$	170,587	$	26,666	$	197,253


For the three months ended June 30, 2024	Enterprise Software		Platform Technologies		Totals
Revenues
Subscriptions:
SaaS	$	136,045	$	19,933
Transaction-based fees	55,701		122,003
Maintenance	109,196		6,113
Professional services	58,731		13,197
Software licenses and royalties	5,319		10
Hardware and other	7,815		—
Total segment revenues	372,807		161,256		534,063
Less:
Cost of revenues	173,473		103,210
Sales and marketing expense	28,001		5,601
General and administrative expense	13,016		14,484
Research and development expense	24,731		3,052
Segment operating income	$	133,586	$	34,909	$	168,495


For the six months ended June 30, 2025	Enterprise Software		Platform Technologies		Totals
Revenues
Subscriptions:
SaaS	$	326,800	$	42,851
Transaction-based fees	149,625		260,788
Maintenance	213,758		11,166
Professional services	111,455		11,207
Software licenses and royalties	10,840		(183)
Hardware and other	14,550		169
Total segment revenues	827,028		325,998		1,153,026
Less:
Cost of revenues	347,749		223,973
Sales and marketing expense	50,238		9,765
General and administrative expense	22,459		26,775
Research and development expense	77,075		8,533
Segment operating income	$	329,507	$	56,952	$	386,459


For the six months ended June 30, 2024	Enterprise Software		Platform Technologies		Totals
Revenues
Subscriptions:
SaaS	$	264,187	$	40,575
Transaction-based fees	107,585		234,578
Maintenance	220,378		12,149
Professional services	113,624		23,110
Software licenses and royalties	13,890		173
Hardware and other	16,173		—
Total segment revenues	735,837		310,585		1,046,422
Less:
Cost of revenues	344,278		201,748
Sales and marketing expense	53,227		11,265
General and administrative expense	24,464		27,977
Research and development expense	49,583		6,431
Segment operating income	$	264,285	$	63,164	$	327,449


	Three Months Ended June 30,				Six Months Ended June 30,
Reconciliation of reportable segment operating income to the Company's consolidated totals:	2025		2024		2025		2024
Total segment operating income	$	197,253	$	168,495	$	386,459	$	327,449
Corporate unallocated:
Total revenues	7,566		6,913		8,256		6,913
Cost of revenues	(29,491)		(26,477)		(49,295)		(45,827)
Sales and marketing expense	(6,307)		(7,963)		(12,782)		(13,500)
General and administrative expense	(52,360)		(47,920)		(106,819)		(95,689)
Research and development expense	(7,232)		(1,168)		(13,078)		(2,370)
Amortization of other intangibles	(13,833)		(13,845)		(27,972)		(31,963)
Interest expense	(1,262)		(1,253)		(2,508)		(3,437)
Other income, net	8,179		1,883		15,542		3,728
Income before income taxes	$	102,513	$	78,665	$	197,803	$	145,304

The following table presents reconciliations of segment revenues from external customers and other segment information to the Company’s consolidated totals:


	Three Months Ended June 30,				Six Months Ended June 30,
Revenues:	2025		2024		2025		2024
ES	$	424,282	$	372,807	$	827,028	$	735,837
PT	164,269		161,256		325,998		310,585
Corporate unallocated	7,566		6,913		8,256		6,913
Total consolidated	$	596,117	$	540,976	$	1,161,282	$	1,053,335

Depreciation and amortization expense:
ES	$	7,400	$	8,498	$	14,007	$	18,994
PT	22,282		21,529		44,499		45,284
Corporate unallocated	4,640		4,112		10,437		9,958
Total consolidated	$	34,322	$	34,139	$	68,943	$	74,236

Software development expenditures:
ES	$	692	$	2,110	$	2,241	$	3,731
PT	4,086		4,346		8,077		8,579
Corporate	72		2,651		82		4,183
Total consolidated	$	4,850	$	9,107	$	10,400	$	16,493

Capital expenditures:
ES	$	1,552	$	5,602	$	2,282	$	12,002
PT	2,854		825		3,793		1,512
Corporate	1,081		141		1,747		336
Total consolidated	$	5,487	$	6,568	$	7,822	$	13,850


Segment assets:	June 30, 2025		December 31, 2024
ES	$	633,080	$	572,224
PT	412,418		416,635
Corporate	4,380,257		4,191,156
Total consolidated	$	5,425,755	$	5,180,015

Segment assets primarily consist of net accounts receivable, prepaid expenses and other current assets, and net property and equipment and software development costs. Corporate assets primarily consist of cash and investments; prepaid insurance; goodwill and intangibles associated with acquisitions; deferred income taxes; software development costs, net; and net property and equipment mainly related to unallocated information and technology assets. Certain presentation items from previous years have been adjusted to conform with current year presentation.

(4) Disaggregation of Revenue

The tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenues and cash flows.

Recurring Revenues

The majority of our revenues are comprised of revenues from subscriptions and maintenance, which we consider to be recurring revenues. Subscription revenues primarily consist of revenues derived from our SaaS arrangements and transaction-based fees. These revenues are considered recurring because revenues from these sources are expected to re-occur in similar annual amounts for the term of our relationship with the client. Transaction-based fees are generally the result of multi-year contracts with our clients that result in fees generated by payment transactions and digital government services and are collected on a recurring basis during the contract term. The contract terms for subscription arrangements range from one to 10 years but are typically contracted for initial periods of one to three years. Nearly all of our on-premises software client contracts with us for maintenance and support. Maintenance and support are generally provided under auto-renewing annual contracts or multi-year contracts. We consider all other revenue categories to be non-recurring revenues.

Recurring revenues and non-recurring revenues recognized during the period are as follows:


For the three months ended June 30, 2025	Enterprise Software		Platform Technologies		Corporate Unallocated		Totals
Revenues
Subscriptions:
SaaS	$	168,059	$	21,512	$	—	$	189,571
Transaction-based fees	79,786		135,718		—		215,504
Maintenance	106,779		5,344		—		112,123
Total recurring revenues	354,624		162,574		—		517,198

Professional services	56,862		1,750		—		58,612
Software licenses and royalties	3,846		(183)		—		3,663
Hardware and other	8,950		128		7,566		16,644
Total non-recurring revenues	69,658		1,695		7,566		78,919

Total	$	424,282	$	164,269	$	7,566	$	596,117


For the three months ended June 30, 2024	Enterprise Software		Platform Technologies		Corporate Unallocated		Totals
Revenues
Subscriptions:
SaaS	$	136,045	$	19,933	$	—	$	155,978
Transaction-based fees	55,701		122,003		—		177,704
Maintenance	109,196		6,113		—		115,309
Total recurring revenues	300,942		148,049		—		448,991

Professional services	58,731		13,197		—		71,928
Software licenses and royalties	5,319		10		—		5,329
Hardware and other	7,815		—		6,913		14,728
Total non-recurring revenues	71,865		13,207		6,913		91,985

Total	$	372,807	$	161,256	$	6,913	$	540,976


For the six months ended June 30, 2025	Enterprise Software		Platform Technologies		Corporate Unallocated		Totals
Revenues
Subscriptions:
SaaS	$	326,800	$	42,851	$	—	$	369,651
Transaction-based fees	149,625		260,788		—		410,413
Maintenance	213,758		11,166		—		224,924
Total recurring revenues	690,183		314,805		—		1,004,988

Professional services	111,455		11,207		—		122,662
Software licenses and royalties	10,840		(183)		—		10,657
Hardware and other	14,550		169		8,256		22,975
Total non-recurring revenues	136,845		11,193		8,256		156,294

Total	$	827,028	$	325,998	$	8,256	$	1,161,282


For the six months ended June 30, 2024	Enterprise Software		Platform Technologies		Corporate Unallocated		Totals
Revenues
Subscriptions:
SaaS	$	264,187	$	40,575	$	—	$	304,762
Transaction-based fees	107,585		234,578		—		342,163
Maintenance	220,378		12,149		—		232,527
Total recurring revenues	592,150		287,302		—		879,452

Professional services	113,624		23,110		—		136,734
Software licenses and royalties	13,890		173		—		14,063
Hardware and other	16,173		—		6,913		23,086
Total non-recurring revenues	143,687		23,283		6,913		173,883

Total	$	735,837	$	310,585	$	6,913	$	1,053,335

(5) Deferred Revenue and Performance Obligations

Total deferred revenue, including long-term, by segment is as follows:


	June 30, 2025		December 31, 2024
Enterprise Software	$	716,698	$	683,909
Platform Technologies	25,840		36,117
Corporate	837		3,788
Totals	$	743,375	$	723,814

Changes in total deferred revenue, including long-term, were as follows:


	Six Months Ended June 30, 2025
Balance as of December 31, 2024	$	723,814
Deferral of revenue	771,669
Recognition of deferred revenue	(752,108)
Balance as of June 30, 2025	$	743,375

Remaining Performance Obligations

We expect to recognize as revenue approximately 97% of our deferred revenue balance as of June 30, 2025, in the next 12 months, and the remainder thereafter. We believe the portion of the transaction price allocated to the remaining performance obligations which is not included in our deferred revenue balance is not a meaningful indicator of future revenue due to contracts with transaction-based fees that vary with transaction activity, the variability in subscription term lengths, and termination provisions included in some contracts that limit inclusion and cause variability from period to period.

(6) Deferred Commissions

Deferred commissions are as follows:


	June 30, 2025		December 31, 2024
Prepaid commissions	$	17,770	$	18,037
Long-term deferred commissions	43,826		38,762
Total deferred commissions	$	61,596	$	56,799

Amortization expense related to deferred commissions is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Amortization expense	$	4,943	$	4,882	$	10,043	$	9,644

Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in sales and marketing expense in the accompanying condensed consolidated statements of income.

(7) Acquisitions

We have performed a preliminary valuation analysis of the fair market value of MyGov’s assets and liabilities. In connection with this transaction, we acquired total tangible assets of $0.7 million and assumed liabilities of approximately $1.1 million. We recorded goodwill of approximately $10.3 million, which is expected to be deductible for tax purposes, and other identifiable intangible assets of approximately $8.5 million. The operating results of MyGov are included with the operating results of the Enterprise Software segment since the inception date of the acquisition. The impact of this acquisition on our operating results, assets, and liabilities is not material.

As of June 30, 2025, the purchase price allocation for MyGov is not final; therefore, certain preliminary valuation estimates of fair value assumed at the acquisition date for intangible assets and receivables are subject to change as valuations are finalized. Our balance sheet as of June 30, 2025, reflects the allocation of the purchase price to the net assets acquired based on their estimated fair value at the date of the acquisition. The fair value of the assets and liabilities acquired are based on valuations using Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

During the six months ended June 30, 2025, we paid $7.4 million in cash for long-term indemnity holdbacks related to prior acquisitions.

(8) Debt

The following table summarizes our total outstanding borrowings:


	Rate	Maturity Date	June 30, 2025		December 31, 2024
2024 Credit Agreement
Revolving credit facility	S + 1.125%	September 2029	$	—	$	—
Convertible Senior Notes due 2026	0.25%	March 2026	600,000		600,000
Total borrowings			600,000		600,000
Less: unamortized debt discount and debt issuance costs			(1,202)		(2,066)
Total borrowings, net			598,798		597,934


Current portion of convertible senior notes due 2026, net			598,798		—
Long Term - convertible senior notes due 2026, net			—		597,934
Total Debt			$	598,798	$	597,934

2024 Credit Agreement

On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lender parties thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender (the “2024 Credit Agreement”). The 2024 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $700.0 million, including sub-facilities for standby letters of credit and swingline loans. The 2024 Credit Agreement matures on September 25, 2029, and loans may be prepaid at any time, without premium or penalty, subject to certain minimum amounts and payment of any Secured Overnight Financing Rate (“SOFR”) breakage costs. The 2024 Credit Agreement replaced Tyler’s previous $500.0 million unsecured credit facility under the credit agreement dated April 21, 2021, among the Company and various lenders party thereto, which was scheduled to mature in April 2026.

The 2024 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and defined events of defaults. The 2024 Credit Agreement requires us to maintain certain financial ratios and other financial conditions and limits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens.

Loans under the revolving credit facility will bear interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) plus a margin of 0.125% to 0.75% or (2) the one-, three-, or six-month SOFR rate plus a margin of 1.125% to 1.75%. The margin in each case is based upon Tyler’s total net leverage ratio, as determined pursuant to the 2024 Credit Agreement. In addition to paying interest on the outstanding principal of loans under the revolving credit facility, the Company is required to pay a commitment fee initially in the amount of 0.125% per annum, which will subsequently range from 0.125% to 0.25% based upon the Company’s total net leverage ratio. Borrowings under the 2024 Credit Agreement may be used for general corporate purposes, including working capital requirements, acquisitions and capital expenditures.

Convertible Senior Notes due 2026

On March 9, 2021, we issued 0.25% Convertible Senior Notes due in 2026 in the aggregate principal amount of $600.0 million (“the Convertible Senior Notes” or “the Notes”). The Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of March 9, 2021, with U.S. Bank National Association as trustee (the “Indenture”). The net proceeds from the issuance of the Convertible Senior Notes were $591.4 million, net of initial purchasers’ discounts of $6.0 million and debt issuance costs of $2.6 million.

The Convertible Senior Notes are senior, unsecured obligations and are (i) equal in right of payment to our future senior, unsecured indebtedness; (ii) senior in right of payment to our future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries.

The Convertible Senior Notes accrue interest at a rate of 0.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The Convertible Senior Notes mature on March 15, 2026, unless earlier repurchased, redeemed, or converted.

Before September 15, 2025, holders of the Convertible Senior Notes have the right to convert their Convertible Senior Notes only upon the occurrence of certain events. Under the terms of the Indenture, the Convertible Senior Notes are convertible into common stock of Tyler Technologies, Inc. (referred to herein as “our common stock”) at the following times or circumstances:

•during any calendar quarter commencing after the calendar quarter ended June 30, 2021, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

•during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “Measurement Period”) if the trading price per $1,000 principal amount of Convertible Senior Notes, as determined following a request by their holder in accordance with the procedures in the Indenture, for each trading day of the Measurement Period, was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

•upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the Indenture);

•upon the occurrence of specified corporate events; or

•on or after September 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, March 15, 2026.

With certain exceptions, upon a change of control or other fundamental change (both as defined in the Indenture governing the Convertible Senior Notes), the holders of the Convertible Senior Notes may require us to repurchase all or part of the principal amount of the Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes, plus any accrued and unpaid interest up to, but excluding, the redemption date.

As of June 30, 2025, none of the conditions allowing holders of the Convertible Senior Notes to convert have been met.

From and including September 15, 2025, holders of the Convertible Senior Notes may convert their Convertible Senior Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle any conversions of the Convertible Senior Notes either entirely in cash or in a combination of cash and shares of our common stock, at our election. However, upon conversion of any Convertible Senior Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted.

The initial conversion rate is 2.0266 shares of common stock per $1,000 principal amount of Convertible Senior Notes, which represents an initial conversion price of approximately $493.44 per share of common stock. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Convertible Senior Notes are redeemable, in whole or in part, at our option at any time, and from time to time, on or after March 15, 2024, and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price of the Notes on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. In addition, calling any Note for redemption constitutes a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

Effective Interest Rate

The weighted average interest rate for the borrowings under the Convertible Senior Notes was 0.25% as of June 30, 2025. For the six months ended June 30, 2025, the effective interest rate was 0.54% for the Convertible Senior Notes. The following sets forth the interest expense recognized related to the borrowings and commitment fees for unused portions under the 2024 Credit Agreement, the 2021 Credit Agreement and Convertible Senior Notes and is included in interest expense in the accompanying condensed consolidated statements of income:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Contractual interest expense - Revolving Credit Facility	$	(256)	$	(229)	$	(495)	$	(459)
Contractual interest expense - Term Loans	—		—		—		(761)
Contractual interest expense - Convertible Senior Notes	(375)		(375)		(750)		(750)
Amortization of debt discount and debt issuance costs	(631)		(649)		(1,263)		(1,467)
Total	$	(1,262)	$	(1,253)	$	(2,508)	$	(3,437)

As of June 30, 2025, we had one outstanding letter of credit totaling $500,000. The letter of credit, which guarantees our performance under a client contract, automatically renews annually unless canceled in writing, and expires in the third quarter of 2025.

(9) Financial Instruments

The following table presents our financial instruments:


	June 30, 2025		December 31, 2024
Cash and cash equivalents	$	787,447	$	744,721

Available-for-sale investments	107,893		34,015
Equity investment	10,000		10,000
Total	$	905,340	$	788,736

Cash and cash equivalents consist primarily of money market funds with original maturity dates of three months or less, for which we determine fair value through quoted market prices.

Our investment portfolio is classified as available-for-sale in order to have the flexibility to buy and sell investments and maximize cash liquidity. Our available-for-sale investments primarily consist of investment grade corporate bonds, U.S. Treasuries, and asset-backed securities with maturity dates through 2027. These investments are presented at fair value and are included in short-term investments and non-current investments in the accompanying condensed consolidated balance sheets. Unrealized gains or losses associated with the investments are included in accumulated other comprehensive income (loss), net of tax in the accompanying condensed consolidated balance sheets and other comprehensive income (loss), net of tax in the statements of comprehensive income. For our available-for-sale investments, we do not have the intent to sell, nor is it more likely than not that we would be required to sell before recovery of their cost basis.

As of June 30, 2025 and December 31, 2024, we have an accrued interest receivable balance of approximately $860,000 and $227,000, respectively, which is included in accounts receivable, net. We do not measure an allowance for credit losses for accrued interest receivables. We record any losses within the maturity period or at the time of sale of the investment, and any write-offs to accrued interest receivables are recorded as reductions to interest income in the period of the loss. During the three and six months ended June 30, 2025, we have recorded no losses for accrued interest receivables. Interest income and amortization of discounts and premiums are included in other income, net in the accompanying condensed consolidated statements of income.

The following table presents the components of our available-for-sale investments:


	June 30, 2025		December 31, 2024
Amortized cost	$	108,047	$	34,225
Unrealized gains	12		3
Unrealized losses	(166)		(213)
Estimated fair value	$	107,893	$	34,015

As of June 30, 2025, we have $104.9 million of available-for-sale debt securities with contractual maturities of one year or less and $3.0 million with contractual maturities greater than one year. As of June 30, 2025, 59 available-for-sale securities with a fair value of $57.8 million have been in a loss position for one year or less and three securities with a fair value of $5.1 million have been in a loss position for greater than one year.

The following table presents the activity on our available-for-sale investments:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Proceeds from sales and maturities	$	32,528	$	3,080	$	34,284	$	6,351
Realized gains on sales, net of tax	1		—		—		—

Our equity investment consists of an 18% interest in BFTR, LLC, a wholly owned subsidiary of Bison Capital Partners V L.P. BFTR, LLC is a privately held Australian company specializing in digitizing the spoken word in court and legal proceedings. The investment in common stock is carried at cost less any impairment write-downs because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values.

(10) Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability. Guidance on fair value measurements and disclosures establishes a valuation hierarchy for disclosure of inputs used in measuring fair value defined as follows:

•Level 1—Inputs are unadjusted quoted prices that are available in active markets for identical assets or liabilities.

•Level 2—Inputs include quoted prices for similar assets and liabilities in active markets and quoted prices in non-active markets, inputs other than quoted prices that are observable, and inputs that are not directly observable, but are corroborated by observable market data.

•Level 3—Inputs that are unobservable and are supported by little or no market activity and reflect the use of significant management judgment.

The classification of a financial asset or liability within the hierarchy is determined based on the least reliable level of input that is significant to the fair value measurement. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We also consider the counterparty and our own non-performance risk in our assessment of fair value.

The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of June 30, 2025:


	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	787,447	$	—	$	—	$	787,447
Available-for-sale investments	—		107,893		—		107,893
Equity investment	—		—		10,000		10,000


Convertible Senior Notes due 2026	—		739,890		—		739,890

The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of December 31, 2024:


	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	744,721	$	—	$	—	$	744,721
Available-for-sale investments	—		34,015		—		34,015
Equity investment	—		—		10,000		10,000



Convertible Senior Notes due 2026	—		731,310		—		731,310

Assets that are measured at fair value on a recurring basis

Accounts receivables, accounts payables, short-term obligations and certain other assets carrying value approximate fair value because of the short maturity of these instruments.

As of June 30, 2025, we have $107.9 million in investment grade corporate bonds, U.S. Treasuries, and asset-backed securities with maturity dates through 2027. The fair values of these securities are considered Level 2 as they are based on inputs from quoted prices in markets that are not active or other observable market data.

Assets that are measured at fair value on a nonrecurring basis

As of June 30, 2025, we have an 18% interest in BFTR, LLC. As we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values, our investment is carried at cost less any impairment write-downs. Periodically, our investment is assessed for impairment. We do not reassess the fair value of the investments if there are no identified events or changes in circumstances that indicate fair value of the investment or indicate impairment. No events or changes in circumstances have occurred during the period that require reassessment. There has been no impairment of this investment for the periods presented. This investment is included in other non-current assets in the accompanying condensed consolidated balance sheets.

As described in Note 2, “Summary of Significant Accounting Policies,” we assess goodwill for impairment annually on October 1. In addition, we review goodwill, property and equipment, and other intangibles for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During the fourth quarter of 2024, we completed our annual assessment of goodwill which did not result in an impairment charge. Further, we identified no indicators of impairment to goodwill, property and equipment, and other intangibles. Therefore, no impairment was recorded as of or for the six months ended June 30, 2025.

Financial instruments measured at fair value only for disclosure purposes

The fair value of our Convertible Senior Notes is determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input. See Note 8, “Debt,” for further discussion.

The carrying amount of the Convertible Senior Notes is the par value less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the term of the Convertible Senior Notes. Interest expense is included in the accompanying condensed consolidated statements of income.

The following table presents the fair value and carrying value, net, of our Convertible Senior Notes:


	Fair Value at				Carrying Value at
	June 30, 2025		December 31, 2024		June 30, 2025		December 31, 2024






Convertible Senior Notes due 2026	$	739,890	$	731,310	$	598,798	$	597,934

(11) Income Tax Provision

We had an effective income tax rate of 17.4% and 16.2% for the three and six months ended June 30, 2025, respectively, compared to 13.9% and 16.1% for the three and six months ended June 30, 2024, respectively. The increase in the effective tax rate for the three months ended June 30, 2025, as compared to the prior period, is due to a decrease in excess tax benefits related to stock incentive awards and research tax credit benefits, partially offset by a decrease in liabilities for uncertain tax positions. The increase in the effective tax rate for the six months ended June 30, 2025, as compared to the prior period, is due to a decrease in research tax credit benefits, partially offset by an increase in excess tax benefits related to stock incentive awards and decreases in liabilities for uncertain tax positions and state taxes.

The effective income tax rates for the periods presented are different from the statutory United States federal income tax rate of 21% primarily due to the excess tax benefits related to stock incentive awards and the tax benefits of research tax credits, offset by state income taxes, liabilities for uncertain tax positions, and non-deductible business expenses.

We made income tax payments, net of refunds, of $46.3 million and $39.1 million in the six months ended June 30, 2025, and June 30, 2024, respectively.

On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes a broad range of tax reform provisions that may affect our Company. The OBBBA allows an elective deduction for domestic Research and Development (“R&D”), a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (“Net CFC Tested Income”), among other provisions. We are currently evaluating the impact of these provisions, which could affect our effective tax rate in 2025 and future periods. We anticipate a significant reduction in current tax payments in the next 12 months, as well as a decrease in deferred tax assets and the income tax payable related to the provisions for full expensing of domestic R&D and bonus depreciation. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.

(12) Share-Based Compensation

The following table summarizes share-based compensation expense related to share-based awards, which is recorded in the condensed consolidated statements of income:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cost of revenues	$	8,891	$	7,620	$	17,605	$	15,010
Operating expenses	29,411		22,787		58,357		42,263
Total share-based compensation expense	$	38,302	$	30,407	$	75,962	$	57,273

(13) Earnings Per Share

The following table details the reconciliation of basic earnings per share to diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Numerator for basic and diluted earnings per share:
Net income	$	84,627	$	67,738	$	165,679	$	121,908
Denominator:
Weighted-average basic common shares outstanding	43,163		42,527		43,174		42,528
Assumed conversion of dilutive securities:
Stock awards	609		748		661		758
Convertible Senior Notes	157		—		181		—
Denominator for diluted earnings per share - Adjusted weighted-average shares	43,929		43,275		44,016		43,286
Earnings per common share:
Basic	$	1.96	$	1.59	$	3.84	$	2.87
Diluted	$	1.93	$	1.57	$	3.76	$	2.82

For the three and six months ended June 30, 2025, and 2024, stock awards representing the right to purchase common stock of approximately 83,000 and 53,000 shares and 75,000 and 119,000 shares, respectively, were not included in the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

We have used the if-converted method for calculating any potential dilutive effect of the Convertible Senior Notes on our diluted net income per share if our average stock price for the period exceeded the conversion price of $493.44 per share of common stock. Under the if-converted method, the Notes are assumed to be converted at the beginning of the period and the resulting common shares, if dilutive, are included in the denominator of the diluted earnings per share calculation for the entire period being presented. For the six months ended June 30, 2025, our average stock price for the period exceeded the conversion price resulting in a dilutive impact of the if-converted method as reflected in the table above. For the six months ended June 30, 2024, our average stock price for the period did not exceed the conversion price; therefore, there was no dilutive impact as reflected in the table above.

(14) Leases

We lease office facilities, transportation, and other equipment for use in our operations. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to nine years. Some of these leases include options to extend for up to six years. We have no finance leases as of June 30, 2025. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the condensed consolidated balance sheets.

The components of operating lease expense were as follows:


Lease Costs	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Operating lease cost	$	2,502	$	2,246	$	4,846	$	4,411
Short-term lease cost	506		522		1,070		1,073
Variable lease cost	159		136		407		374
Net lease cost	$	3,167	$	2,904	$	6,323	$	5,858

Supplemental information related to leases is as follows:


Other Information	Six Months Ended June 30,
	2025			2024
Cash flows:
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	6,295		$	6,310

Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	7,737		$	2,428

Lease term and discount rate:
Weighted average remaining lease term (years)	5.8			6.5
Weighted average discount rate	3.37		%	1.63		%

Rental income from third parties

We own office buildings in Falmouth, Yarmouth and Orono, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; Moraine, Ohio; and Kingston Springs, Tennessee. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2025 and 2035, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.

Rental income from third-party tenants for the three and six months ended June 30, 2025, totaled $812,000 and $1.6 million, respectively, and for the three and six months ended June 30, 2024, totaled $791,000 and $1.6 million, respectively. Rental income is included in hardware and other revenue on the condensed consolidated statements of income. As of June 30, 2025, future minimum operating rental income based on contractual agreements is as follows:


Year ending December 31,	Amount
2025 (Remaining)	$	1,122
2026	2,648
2027	2,387
2028	2,139
2029	1,465
Thereafter	5,884
Total	$	15,645

(15) Commitments and Contingencies

Litigation

During the first quarter of 2022, we received a notice of termination for convenience under a contractual arrangement with a state government client. Upon receipt of the termination notice, we ceased performing services under the contractual arrangement and sought payment of contractually owed fees of approximately $15 million in connection with the termination for convenience.

The client was unresponsive to our outreach for several months, and on August 23, 2022, we filed a lawsuit to enforce our rights and remedies under the applicable contractual arrangement. The client subsequently asked us to negotiate directly with the client to attempt to resolve the dispute. The negotiations were not successful, and on March 20, 2024, we reinitiated our lawsuit. Although we believe our products and services were delivered in accordance with the terms of our contract and that we are entitled to payment in connection with the termination for convenience, at this time the matter remains unresolved. We can provide no assurances that we will not incur additional costs as we pursue our rights and remedies under the contract.

Purchase Commitments

We have contractual obligations for third-party technology used in our solutions and for other services that we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. As of June 30, 2025, the remaining aggregate minimum purchase commitment under these arrangements was approximately $609.2 million through 2031.

(16) Subsequent Events

On July 28, 2025, we completed an acquisition for the total consideration of approximately $20 million, paid in all cash, subject to certain post-closing adjustments including indemnity and working capital holdbacks.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal government agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, security vulnerabilities and software updates; (3) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (7) general economic, political and market conditions, including inflation and rising interest rates; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (10) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (11) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in Item 1A, “Risk Factors”. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

GENERAL

We provide integrated information management solutions and services for the public sector. We develop and market a broad line of software products and services to address the IT needs of public sector entities. We provide subscription-based services such as software as a service (“SaaS”) and transaction-based services primarily related to digital government services and payment processing. In addition, we provide professional IT services to our clients, including software and hardware installation, data conversion, training, and for certain clients, product modifications, along with continuing maintenance and support for clients using our systems. Additionally, we provide property appraisal services for taxing jurisdictions.

Our CODM uses segment operating income or loss to assess performance and to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. During the fiscal periods presented, we had no significant transactions between reportable segments. Corporate unallocated amounts are comprised of non-cash amortization of intangible assets associated with acquisitions, depreciation associated with unallocated property and equipment assets, compensation costs for the executive management team and certain shared services staff, and share-based compensation expense for the entire company. Corporate unallocated amounts also include incidental revenues and expenses related to a company-wide user conference and rental income.

See Note 3, “Segment and Related Information,” in the notes to the financial statements for additional information.

Recent Acquisitions

2025

On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total cash purchase price, net of cash acquired of $215,000, was approximately $18.2 million. The actual operating results of MyGov are included with the operating results of the ES segment since the date of acquisition.

2024

We did not complete any acquisitions during the 2024 fiscal period.

Operating Results

For both the three and six months ended June 30, 2025, total revenues increased 10%, compared to the prior period, primarily due to an increase in subscription revenue.

Subscriptions revenue grew 21.4% and 20.6%, respectively, for the three and six months ended June 30, 2025, compared to the prior period, primarily due to an ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues.

Our total employee count increased to 7,542 as of June 30, 2025, including 12 employees who joined us through acquisitions completed since June 30, 2024, from 7,360 as of June 30, 2024.

Annualized Recurring Revenues

Annualized recurring revenues (ARR) - Subscriptions and maintenance are considered recurring revenue sources. ARR is calculated by annualizing the current quarter’s recurring revenues from maintenance and subscriptions as reported in our statement of income. Management believes ARR is an indicator of the annual run rate of our recurring revenues, as well as a measure of the effectiveness of the strategies we deploy to drive revenue growth over time. ARR is a metric widely used by companies in the technology sector and by investors, which we believe offers insight into the stability of our maintenance and subscription revenues to be recognized within the year.

Subscription revenues primarily consist of revenues derived from our SaaS arrangements and transaction-based fees. These revenues are considered recurring because revenues from these sources are expected to re-occur in similar annual amounts for the term of our relationship with the client. Transaction-based fees are generally the result of multi-year contracts with our clients that result in fees generated by payment transactions and digital government services and are collected on a recurring basis during the contract term. Transaction-based revenues are historically highest in the second quarter, which coincides with peak outdoor recreation seasons and statutory filing deadlines in many jurisdictions, and lowest in the fourth quarter, due to fewer business days and lower transaction volumes around holidays. Because ARR is an annualized revenue amount, the metric can fluctuate from quarter to quarter due to this seasonality.

ARR was $2.07 billion and $1.80 billion as of June 30, 2025, and 2024, respectively. ARR increased approximately 15% compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements for both new and existing clients and expansion in transaction-based fee arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements. These condensed consolidated financial statements have been prepared following the requirements of GAAP for the interim period and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and potential impairment of intangible assets and goodwill. As these are condensed financial statements, one should also read expanded information about our critical accounting policies and estimates provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates from the information provided in our Form 10-K for the year ended December 31, 2024.

ANALYSIS OF RESULTS OF OPERATIONS


	Percent of Total Revenues
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues:
Subscriptions	68.0	%	61.7	%	67.2	%	61.4	%
Maintenance	18.8		21.3		19.4		22.1
Professional services	9.8		13.3		10.6		13.0
Software licenses and royalties	0.6		1.0		0.9		1.3
Hardware and other	2.8		2.7		1.9		2.2
Total revenues	100.0		100.0		100.0		100.0
Cost of revenues:
Subscriptions, maintenance, and professional services	49.2		51.2		49.2		51.8
Software licenses, royalties, and amortization of acquired software	1.9		2.0		1.9		2.1
Amortization of software development	0.9		0.8		0.9		0.8
Hardware and other	2.3		2.0		1.5		1.5
Sales and marketing expense	6.1		7.7		6.3		7.4
General and administrative expense	12.8		13.9		13.4		14.1
Research and development expense	8.5		5.4		8.5		5.5
Amortization of other intangibles	2.3		2.6		2.4		3.0
Operating income	16.0		14.4		15.9		13.8
Interest expense	(0.2)		(0.2)		(0.2)		(0.3)
Other income, net	1.4		0.3		1.3		0.4
Income before income taxes	17.2		14.5		17.0		13.9
Income tax provision	3.0		2.0		2.8		2.2
Net income	14.2	%	12.5	%	14.2	%	11.7	%

Revenues

Subscriptions

The following table sets forth a comparison of our subscriptions revenue for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	247,845	$	191,746	$	56,099	29	%	$	476,425	$	371,772	$	104,653	28	%
PT	157,230		141,936		15,294		11		303,639		275,153		28,486		10
Total subscriptions revenue	$	405,075	$	333,682	$	71,393	21	%	$	780,064	$	646,925	$	133,139	21	%

Subscriptions revenue consists of revenues derived from our SaaS arrangements and transaction-based fees primarily related to digital government services and payment processing.

SaaS fees

The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	168,059	$	136,045	$	32,014	24	%	$	326,800	$	264,187	$	62,613	24	%
PT	21,512		19,933		1,579		8		42,851		40,575		2,276		6
Total SaaS fees revenue	$	189,571	$	155,978	$	33,593	22	%	$	369,651	$	304,762	$	64,889	21	%

For the three and six months ended June 30, 2025, SaaS fees grew 22% and 21%, respectively, compared to the prior period. That growth is primarily attributable to new SaaS clients as well as existing on-premises clients who converted to our SaaS model. Since June 30, 2024, we have added 641 new SaaS clients, while 438 existing on-premises clients have converted to our SaaS offerings. Our new software contract value mix for the six months ended June 30, 2025, was approximately 96% subscription-based arrangements and approximately 4% perpetual software license arrangements, compared to approximately 95% subscription-based arrangements and approximately 5% perpetual software license arrangements for the six months ended June 30, 2024.

Transaction-based fees

The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	79,786	$	55,701	$	24,085	43	%	$	149,625	$	107,585	$	42,040	39	%
PT	135,718		122,003		13,715		11		260,788		234,578		26,210		11
Total transaction-based fees revenue	$	215,504	$	177,704	$	37,800	21	%	$	410,413	$	342,163	$	68,250	20	%

For the three and six months ended June 30, 2025, transaction-based fees grew 21% and 20%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, volume increases from online payments from new and existing customers contributed approximately $22.7 million and $44.9 million, respectively, to the growth in transactions fees compared to prior period and price increases by certain third-party processing partners from whom we receive a share of revenues contributed the remainder of the growth for both periods, respectively, compared to the prior period.

Maintenance

The following table sets forth a comparison of our maintenance revenue for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	106,779	$	109,196	$	(2,417)	(2)	%	$	213,758	$	220,378	$	(6,620)	(3)	%
PT	5,344		6,113		(769)		(13)		11,166		12,149		(983)		(8)
Total maintenance revenue	$	112,123	$	115,309	$	(3,186)	(3)	%	$	224,924	$	232,527	$	(7,603)	(3)	%

We provide maintenance and support services for our software products and certain third-party software. Maintenance revenue decreased 3% for both the three and six months ended June 30, 2025, compared to the prior period primarily due to the impact of 438 clients converting from on-premises license arrangements to SaaS, partially offset by maintenance price increases.

Professional services

The following table sets forth a comparison of our professional services revenue for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	56,862	$	58,731	$	(1,869)	(3)	%	$	111,455	$	113,624	$	(2,169)	(2)	%
PT	1,750		13,197		(11,447)		(87)		11,207		23,110		(11,903)		(52)
Total professional services revenue	$	58,612	$	71,928	$	(13,316)	(19)	%	$	122,662	$	136,734	$	(14,072)	(10)	%

Professional services revenue primarily consists of professional services billed in connection with implementing our software, converting client data, training client personnel, custom development activities, consulting, and property appraisal services. New clients who implement our software generally contract with us to provide the related professional services. Existing clients also periodically purchase additional training, consulting and minor programming services.

Professional services revenues decreased 19% and 10% for the three and six months ended June 30, 2025, respectively, compared to the prior period. The decrease for the three and six months ended June 30, 2025, respectively, is primarily due to loss reserves of approximately $8.5 million for contracts with agencies within two state governments. The remainder of the decrease in professional services revenues compared to the prior period is related to an intentional reduction in custom development work as well as efficiencies in the delivery of professional services.

Software licenses and royalties

The following table sets forth a comparison of our software licenses and royalties revenue for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	3,846	$	5,319	$	(1,473)	(28)	%	$	10,840	$	13,890	$	(3,050)	(22)	%
PT	(183)		10		(193)		(1,930)		(183)		173		(356)		(206)
Total software licenses and royalties revenue	$	3,663	$	5,329	$	(1,666)	(31)	%	$	10,657	$	14,063	$	(3,406)	(24)	%

For the three and six months ended June 30, 2025, software licenses and royalties revenue decreased 31% and 24%, respectively, compared to the prior period primarily because of the ongoing shift in the mix of new software contracts toward more SaaS offerings. Refer to the SaaS revenue section for further details on our revenue mix shift.

Although the mix of new contracts between subscription-based and perpetual license arrangements may vary from quarter to quarter and year to year, we expect that software license revenues will continue to decline as we shift our model away from perpetual software licenses to SaaS.

Cost of revenues and overall gross margins

The following table sets forth a comparison of the key components of our cost of revenues for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
Subscriptions, maintenance, and professional services	$	292,595	$	277,145	$	15,450	6	%	$	570,648	$	546,015	$	24,633	5	%
Software licenses and royalties	1,839		1,560		279		18		3,749		3,125		624		20
Amortization of software development	5,505		4,484		1,021		23		10,884		8,847		2,037		23
Amortization of acquired software	9,319		9,240		79		1		18,613		18,479		134		1
Hardware and other	13,675		10,731		2,944		27		17,123		15,387		1,736		11
Total cost of revenues	$	322,933	$	303,160	$	19,773	7	%	$	621,017	$	591,853	$	29,164	5	%

Subscriptions, maintenance, and professional services.

The following table sets forth a comparison of our costs of subscriptions, maintenance, and professional services for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Subscriptions, maintenance, and professional services	$	292,595	$	277,145	$	15,450	6	%	$	570,648	$	546,015	$	24,633	5	%

Cost of subscriptions, maintenance and professional services primarily consist of personnel costs related to installation of our software, conversion of client data, training client personnel, public cloud hosting costs, support activities, and various other services such as custom development, ongoing operation of our SaaS solutions, property appraisal outsourcing activities, digital government services, and other transaction-based services such as e-filing. Other costs included are merchant and interchange fees required to process credit/debit card transactions and bank fees to process automated clearinghouse transactions related to our payments business.

The cost of subscriptions, maintenance, and professional services for the three and six months ended June 30, 2025, increased 6% and 5%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, respectively, the increases are primarily due to $12.5 million and $24.0 million increases in merchant fees and other direct costs related to higher transaction volumes and increases of $5.6 million and $9.3 million, respectively, in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud. The increases were partially offset by redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations.

Software licenses and royalties.

The following table sets forth a comparison of our costs of software licenses and royalties for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Software licenses and royalties	$	1,839	$	1,560	$	279	18	%	$	3,749	$	3,125	$	624	20	%

Costs of software licenses and royalties primarily consist of direct third-party software costs. We do not have any direct costs associated with royalties revenues.

The cost of software licenses and royalties for the three and six months ended June 30, 2025, increased 18% and 20%, respectively, compared to the prior period due to higher third-party software costs.

Amortization of software development.

The following table sets forth a comparison of our amortization of software development for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Amortization of software development	$	5,505	$	4,484	$	1,021	23	%	$	10,884	$	8,847	$	2,037	23	%

Amortization of software development costs included in cost of revenues primarily consist of personnel costs which were previously capitalized. We begin to amortize capitalized costs when a product is available for general release to clients. Amortization expense is determined on a product-by-product basis at a rate not less than straight-line basis over the software’s remaining estimated economic life of, generally, three to five years.

For both the three and six months ended June 30, 2025, amortization of software development costs increased 23% compared to the prior period due to new capitalized software development projects going into service in the past year.

Amortization of acquired software.

The following table sets forth a comparison of our amortization of acquired software for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Amortization of acquired software	$	9,319	$	9,240	$	79	1	%	$	18,613	$	18,479	$	134	1	%

Amortization expense related to acquired software attributed to business combinations is included with cost of revenues. The estimated useful lives of acquired software range from three to 10 years.

For both the three and six months ended June 30, 2025, amortization of acquired software increased 1% compared to the prior period due to amortization of newly acquired software from a recent acquisition completed in fiscal year 2025, partially offset by assets becoming fully amortized in the fourth quarter of 2024.

The following table sets forth a comparison of gross profit and overall gross margin for the periods presented as of June 30:


	Three Months Ended						Six Months Ended
	2025		2024		Change		2025			2024			Change



Total gross profit	$273,184		$237,816		$35,368		$	540,265		$	461,482		$	78,783
Overall gross margin	45.8	%	44.0	%	1.8	%	46.5		%	43.8		%	2.7		%

Overall gross margin. For the three and six months ended June 30, 2025, our blended gross margin increased 1.8% and 2.7%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, the increase in overall gross margin compared to the prior period is primarily attributed to a shift in our revenue mix toward higher-margin SaaS revenues, as well as an increase in transaction margins. Also contributing to the increase in overall gross margin for the three and six months ended June 30, 2025, respectively, is the redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations. The increase in the overall gross margin is partially offset by declines in software licenses, maintenance and professional services and an increase in merchant fees and software development amortization expense.

Sales and marketing expense

Sales and marketing (“S&M”) expense consists primarily of salaries, employee benefits, travel, share-based compensation expense, commissions and related overhead costs for sales and marketing employees, as well as professional fees, trade show activities, advertising costs and other marketing costs. The following table sets forth a comparison of our S&M expense for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Sales and marketing expense	$	36,312	$	41,565	$	(5,253)	(13)	%	$	72,785	$	77,992	$	(5,207)	(7)	%

S&M expense as a percentage of revenues was 6.1% and 6.3%, respectively, for the three and six months ended June 30, 2025, compared to 7.7% and 7.4%, respectively, for the three and six months ended June 30, 2024. S&M expense decreased 13% and 7%, respectively, when compared to the prior period. The decrease in S&M expense is primarily attributed to an increase in compensation capitalized as contract acquisition costs compared to the prior period.

General and administrative expense

General and administrative (“G&A”) expense consists primarily of personnel salaries and share-based compensation expense for general corporate functions including senior management, finance, accounting, legal, human resources and corporate development, as well as third-party professional fees, travel-related expenses, insurance, allocation of depreciation, facilities and IT support costs, amortization of software development for internal use, acquisition-related expenses and other administrative expenses. The following table sets forth a comparison of our G&A expense for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



General and administrative expense	$	76,601	$	75,420	$	1,181	2	%	$	156,053	$	148,130	$	7,923	5	%

G&A expense as a percentage of revenue was 12.8% and 13.4%, respectively, for the three and six months ended June 30, 2025, compared to 13.9% and 14.1%, respectively, for the three and six months ended June 30, 2024. G&A expense increased 2% and 5%, respectively, for the three and six months ended June 30, 2025, compared to the prior period. For the three and six months ended June 30, 2025, the increase in G&A expense is primarily attributable to $1.1 million and $6.1 million increases, respectively, in share-based compensation expense due to a higher stock price for share-based awards issued in the current period.

Research and development expense

Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with new product development. Research and development expense consists mainly of costs associated with development of new products and new functionality in our current SaaS products. The following table sets forth a comparison of our research and development expense for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Research and development expense	$	50,842	$	28,951	$	21,891	76	%	$	98,686	$	58,384	$	40,302	69	%

Research and development expense increased 76% and 69%, respectively, for the three and six months ended June 30, 2025, compared to the prior period, with the majority of the increase due the redeployment of resources to research and development resulting from the continued migration of clients to our SaaS products and version consolidation of on-premises software products with support obligations, together with increased investments in a number of new Tyler product development initiatives across our product suites. The remainder of the increase is attributed to $4.9 million and $8.8 million increases related to share-based compensation expense for the three and six months ended June 30, 2025, respectively, compared to the prior period.

Amortization of other intangibles

Other intangibles represents the portion of purchase price allocated to the identified intangible assets for client-related intangibles, trade names and leases acquired. The remaining excess purchase price is allocated to goodwill that is not subject to amortization. Amortization expense related to acquired software is included with cost of revenues, while amortization expense of other intangibles is recorded as operating expense. The estimated useful lives of other intangibles range from one to 25 years. The following table sets forth a comparison of amortization of other intangibles for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%



Amortization of other intangibles	$	13,833	$	13,845	$	(12)	—	%	$	27,972	$	31,963	$	(3,991)	(12)	%

Amortization of other intangibles was flat for the three months ended June 30, 2025, and decreased 12% for the six months ended June 30, 2025, compared to the prior period due to the impact of certain trade name intangible assets becoming fully amortized as a result of accelerated amortization expense in 2024.

Segment Operating Income

The following table sets forth a comparison of the operating income by reportable segments for the three and six months ended June 30 ($ in thousands):



Segment Operating Income (loss):	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
ES	$	170,587	$	133,586	$	37,001	28	%	$	329,507	$	264,285	$	65,222	25	%
PT	26,666		34,909		(8,243)		(24)		56,952		63,164		(6,212)		(10)

For the three and six months ended June 30, 2025 the increase of 28% and 25%, respectively, in the ES segment operating income is primarily due to the $56.1 million and $104.7 million, respectively, increase in subscription revenues as a result of the ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues from new and existing customers. For the three and six months ended June 30, 2025, these increases are partially offset by lower revenue of $5.8 million and $11.8 million, respectively, compared to prior period from software licenses, maintenance, and professional services. Also offsetting the increase in segment operating income for the three and six months ended June 30, 2025, are higher expenses of $14.7 million and $27.5 million, respectively, compared to the prior period related to a shift in new product development initiatives as part of our increased investment in research and development.

The decrease for the three and six months ended June 30, 2025, respectively, in the PT segment operating income is primarily due to a decline in professional services revenue attributed to loss reserves of approximately $8.5 million for contracts with agencies within two state governments.

See Note 3 “Segment and Related Information” for a reconciliation between our operating segment and consolidated financial results for the periods presented.

Interest expense

The following table sets forth a comparison of our interest expense for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
Interest expense	$	(1,262)	$	(1,253)	$	(9)	1	%	$	(2,508)	$	(3,437)	$	929	(27)	%

Interest expense is comprised of interest expense and non-usage and other fees associated with our borrowings. The change in interest expense in the three months ended June 30, 2025, is flat compared to the prior period. The change for the six months ended June 30, 2025, compared to the prior period is primarily attributable to lower interest incurred as a result of our repayment of the Term Loans in early 2024.

Other income, net

The following table sets forth a comparison of our other income, net, for the three and six months ended June 30 ($ in thousands):


	Three Months Ended				Change				Six Months Ended				Change
	2025		2024		$		%		2025		2024		$		%
Other income, net	$	8,179	$	1,883	$	6,296	334	%	$	15,542	$	3,728	$	11,814	317	%

Other income, net, is primarily comprised of interest income from invested cash. The change in other income, net, in the three and six months ended June 30, 2025, compared to the prior period is due to increased interest income generated from higher invested cash balances in 2025 compared to 2024.

Income tax provision

The following table sets forth a comparison of our income tax provision for the three and six months ended June 30 ($ in thousands):


	Three Months Ended						Change				Six Months Ended						Change
	2025			2024			$		%		2025			2024			$		%
Income tax provision	$	17,886		$	10,927		$	6,959	64	%	$	32,124		$	23,396		$	8,728	37%

Effective income tax rate	17.4		%	13.9		%					16.2		%	16.1		%

The increase in the effective tax rate for the three months ended June 30, 2025, as compared to the prior period, is due to a decrease in excess tax benefits related to stock incentive awards and research tax credit benefits, partially offset by a decrease in liabilities for uncertain tax positions. The increase in the effective tax rate for the six months ended June 30, 2025, as compared to the prior period, is due to a decrease in research tax credit benefits, partially offset by an increase in excess tax benefits related to stock incentive awards and decreases in liabilities for uncertain tax positions and state taxes. The excess tax benefits related to stock incentive awards were $6.4 million and $14.7 million for the three and six months ended June 30, 2025, respectively. The excess tax benefits related to stock incentive awards were $7.1 million and $9.8 million for the three and six months ended June 30, 2024, respectively.

On July 4, 2025, the reconciliation bill, commonly referred to as the OBBBA was signed into law, which includes a broad range of tax reform provisions that may affect our Company. The OBBBA allows an elective deduction for domestic Research and Development (“R&D”), a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (“Net CFC Tested Income”), among other provisions. We are currently evaluating the impact of these provisions, which could affect our effective tax rate in 2025 and future periods. We anticipate a significant reduction in current tax payments in the next 12 months, as well as a decrease in deferred tax assets and the income tax payable related to the provisions for full expensing of domestic R&D and bonus depreciation. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.

FINANCIAL CONDITION AND LIQUIDITY

As of June 30, 2025, we had cash and cash equivalents of $787.4 million, compared to $744.7 million as of December 31, 2024. We also had $107.9 million invested in investment grade corporate bonds, U.S. Treasuries and asset-backed securities as of June 30, 2025. These investments have varying maturity dates through 2027 and are held as available-for-sale. Net cash provided by operating activities continues to be our primary source of funds to finance operating needs and capital expenditures. Other potential capital resources include cash on hand, public and private issuances of debt or equity securities, and our revolving credit facility. It is possible that our ability to access the capital and credit markets in the future may be limited by economic conditions or other factors. We believe that our cash on hand, cash provided by operating activities, and available credit are sufficient to fund our working capital requirements and capital expenditures for at least the next twelve months.

The following table sets forth a summary of cash flows for the six months ended June 30 ($ in thousands):


	2025		2024
Cash flows provided by:
Operating activities	$	154,469	$	136,143
Investing activities	(108,928)		(25,273)
Financing activities	(2,815)		(25,641)
Net increase in cash and cash equivalents	$	42,726	$	85,229

For the six months ended June 30, 2025, operating activities provided cash of $154.5 million, compared to $136.1 million in the six months ended June 30, 2024. Operating activities that provided cash were primarily comprised of net income of $165.7 million, non-cash depreciation and amortization charges of $68.9 million, non-cash share-based compensation expense of $76.0 million, and non-cash amortization of operating lease right-of-use assets of $4.9 million. Changes in working capital, excluding cash, decreased cash provided by operating activities by approximately $161.0 million, mainly due to higher accounts receivable. We have higher accounts receivable because our annual maintenance billing cycle peaks in the second quarter. Also contributing to the decrease in working capital are timing of payments to and receipts from our government partners, timing of prepaid expenses, timing of tax payments and deferred taxes associated with stock option activity during the period. These decreases were offset by increase in deferred revenue. In general, changes in deferred revenue are cyclical and primarily driven by the timing of our maintenance and subscription renewal billings. Our renewal dates occur throughout the year, but our largest maintenance billing cycles occur in the second and fourth quarters. Subscription renewals are billed throughout the year.

Investing activities used cash of $108.9 million in the six months ended June 30, 2025, compared to $25.3 million in the six months ended June 30, 2024. On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total cash purchase price, net of cash acquired of $215,000, was approximately $18.2 million. We invested $107.3 million and received $34.3 million in proceeds from investment grade corporate bonds, U.S. Treasuries and asset-backed securities. Approximately $10.4 million of software development costs were capitalized. Lastly, approximately $7.8 million was invested in property and equipment.

Financing activities used cash of $2.8 million in the six months ended June 30, 2025, compared to $25.6 million in the six months ended June 30, 2024. Net of withheld shares for taxes upon equity awards settlement, we paid $3.2 million from stock option exercises and received $9.3 million from employee stock purchase plan activity. During the six months ended June 30, 2025, we repurchased approximately 3,100 shares of our common stock for an aggregate purchase price of $1.6 million. We also paid $7.4 million in cash for long-term indemnity holdbacks related to prior acquisitions.

In February 2019, our Board of Directors authorized the repurchase of an additional 1.5 million shares of our common stock. The repurchase program, which was approved by our Board of Directors, was originally announced in October 2002 and was amended at various times from 2003 through 2019. As of July 30, 2025, we have authorization from our Board of Directors to repurchase up to 2.1 million additional shares of our common stock. Our share repurchase program allows us to repurchase shares at our discretion. Market conditions, as well as the volume of employee stock option exercises, influence the timing of the buybacks and the number of shares repurchased. Share repurchases are generally funded using our existing cash balances and borrowings under our credit facility and may occur through open market purchases and transactions structured through investment banking institutions, privately negotiated transactions and/or other mechanisms. There is no expiration date specified for the authorization.

On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lender parties thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender (the “2024 Credit Agreement”). The 2024 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $700.0 million, including sub-facilities for standby letters of credit and swingline loans. The 2024 Credit Agreement matures on September 25, 2029, and loans may be prepaid at any time, without premium or penalty, subject to certain minimum amounts and payment of any SOFR breakage costs. The 2024 Credit Agreement replaced Tyler’s previous $500.0 million unsecured credit facility under the credit agreement dated April 21, 2021, among the Company and various lenders party thereto, which was scheduled to mature in April 2026.

We have no outstanding borrowings under the 2024 Credit Agreement, with an available borrowing capacity of $700.0 million as of June 30, 2025.

As of June 30, 2025, we had $600.0 million in outstanding principal for the Convertible Senior Notes due in 2026.

We will settle any conversions of Convertible Senior Notes either entirely in cash or in a combination of cash and shares of our common stock, at our election. As of June 30, 2025, none of the conditions allowing holders of the Convertible Senior Notes to convert have been met.

In the six months ended June 30, 2025, and 2024, we paid interest of $1.0 million and $1.9 million, respectively. See Note 8, “Debt,” to the condensed consolidated financial statements for discussions of the Convertible Senior Notes and the 2024 Credit Agreement.

We made income tax payments, net of refunds, of $46.3 million and $39.1 million in the six months ended June 30, 2025, and June 30, 2024, respectively.

We anticipate that 2025 capital spending will be between $31.0 million and $33.0 million, including approximately $18.0 million of software development. We expect the majority of the other capital spending will consist of computer equipment and software for infrastructure replacements and expansion. Capital spending and cash tax payments are expected to be funded from existing cash balances and cash flows from operations.

From time to time we engage in discussions with potential acquisition candidates. In order to pursue such opportunities, which could require significant commitments of capital, we may be required to incur debt or to issue additional potentially dilutive securities in the future. No assurance can be given as to our future acquisition opportunities and how such opportunities will be financed.

There were no material changes to our future minimum contractual obligations since December 31, 2024, as previously disclosed in our 2024 Annual Report on Form 10-K filed with the SEC on February 19, 2025. Our estimated future obligations consist of debt, uncertain tax positions, leases, and purchase commitments as of June 30, 2025. Refer to Note 8, “Debt,” Note 11, “Income Tax,” Note 14, “Leases,” and Note 15, “Commitments and Contingencies,” to the condensed consolidated financial statements for related discussions.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may affect us due to adverse changes in financial market prices and interest rates.

As of June 30, 2025, we had no outstanding borrowings under our 2024 Credit Agreement and available borrowing capacity under the 2024 Credit Agreement was $700.0 million.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act) designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosures. Management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based on this evaluation, the chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

ITEM 1. Legal Proceedings

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, one should carefully consider the discussion of various risks and uncertainties contained in Part I, “Item 1A. Risk Factors” in our 2024 Annual Report on Form 10-K filed on February 19, 2025. We believe those risk factors are the most relevant to our business and could cause our results to differ materially from the forward-looking statements made by us. Please note, however, that those are not the only risk factors facing us. Additional risks that we do not consider material, or of which we are not currently aware, may also have an adverse impact on us. Our business, financial condition and results of operations could be seriously harmed if any of these risks or uncertainties actually occurs or materializes. In that event, the market price for our common stock could decline, and our shareholders may lose all or part of their investment. During the six months ended June 30, 2025, there were no material changes in the information regarding risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

As of June 30, 2025, we had authorization to repurchase of approximately 2.1 million additional shares of Tyler common stock. During the six months ended June 30, 2025, we repurchased approximately 3,100 shares of our common stock for an aggregate purchase price of $1.6 million and approximately 55,800 shares to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards.

A summary of the repurchase activity during as of June 30, 2025, is as follows:


Period	Total number of shares repurchased1	Additional number of shares authorized that may be repurchased	Average price paid per share		Maximum number of shares that may be repurchased under current authorization



Three months ended March 31	24,607	—	$	606.27	2,137,253
April 1 through April 30	3,080	—	523.62		2,134,173
May 1 through May 31	—	—	—		2,134,173
June 1 through June 30	31,168	—	577.51		2,103,005
	58,855	—	586.71

The repurchase program, which was approved by our Board of Directors, was announced in October 2002 and was amended at various times from 2003 through 2019. There is no expiration date specified for the authorization, and we may repurchase stock under the program from time to time.

1 Includes 55,788 shares withheld by us to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards and units. The level of this acquisition activity varies from period to period based upon the timing of award grants and vesting. Also includes 3,067 shares for common stock repurchases.

ITEM 3. Defaults Upon Senior Securities

None

ITEM 4. Mine Safety Disclosures

None

ITEM 5. Other Information

On March 6, 2025, H. Lynn Moore, Jr. executed a Rule 10b5-1 trading plan under which trading could not begin until June 10, 2025, and that terminates no later than February 9, 2026. Additional information is available in the Form 8-K filed on March 11, 2025. No other director or officer has a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement in place as of July 30, 2025.

ITEM 6. Exhibits


Exhibit 3.1						Amended and Restated Certificate of Incorporation of Tyler Technologies Inc., dated July 29 , 2025, (filed as Exhibit 3.1 to our Form 10-Q dated July 30, 2025, and incorporated by reference herein).
Exhibit 31.1						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1						Certifications Pursuant Certifications Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS						Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags, including Cover Page XBRL tags, are embedded within the Inline XBRL Document.
Exhibit 101.SCH						Inline XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.LAB						Inline XBRL Extension Labels Linkbase Document.
Exhibit 101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Exhibit 104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*File herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			TYLER TECHNOLOGIES, INC.
By:			/s/ Brian K. Miller
			Brian K. Miller
			Executive Vice President and Chief Financial Officer
			(principal financial officer and an authorized signatory)

Date: July 30, 2025

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Insider Trading

President and CEO Moore H Lynn Jr exercised 5,250 shares at a strike of $205.66 and sold $3,091,678 worth of shares (5,250 units at $588.89) (SEC Form 4)

Director Cline Brenda A exercised 2,500 shares at a strike of $167.14 and sold $1,541,625 worth of shares (2,500 units at $616.65) (SEC Form 4)

President and CEO Moore H Lynn Jr exercised 5,250 shares at a strike of $205.66 and sold $3,049,064 worth of shares (5,250 units at $580.77) (SEC Form 4)

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SEC Filings