We came across a bullish thesis on Tyler Technologies, Inc. (TYL) on Substack by Business Model Mastery. In this article, we will summarize the bulls’ thesis on TYL. Tyler Technologies, Inc. (TYL)’s share was trading at $570.20 as of April 17th. TYL’s trailing and forward P/E were 94.25 and 51.55 respectively according to Yahoo Finance.
An executive in suit presenting a large touch screen of the company’s cloud-based enterprise platform.
Tyler Technologies (TYL) stands as a quietly dominant force in the public sector technology landscape, offering a deeply integrated suite of cloud-based software, payments, and data services across federal, state, and local government entities. Unlike broad ERP vendors, Tyler specializes in mission-critical public sector systems—managing property tax billing, court dockets, digital payments, and administrative infrastructure for over 36,000 municipalities and school districts. In 2024, Tyler reported $1.3 billion in subscription revenue, making up over 60% of total sales and growing at 22.6% year-over-year. With 84% of its total revenue recurring and no single customer contributing over 10%, Tyler’s financial profile is both resilient and decentralized, built on long-term contracts that frequently span a decade and are embedded in essential workflows. The company’s moat stems from decades of public sector-specific regulatory expertise, a 7,400-strong workforce with deep regional knowledge, and an institutional memory that few, if any, competitors can replicate. This expertise ensures software adapts in real-time to evolving local laws—an advantage generic ERP vendors like Oracle or SAP can’t easily match.
Tyler’s cloud pivot began in earnest in 2019 and by 2024, nearly all new sales are SaaS-based. Its infrastructure, powered by Amazon Web Services, supports a low-code platform that enables quick customization for each government client, accelerating deployments and stickiness. The 2021 acquisition of NIC added a powerful payments rail, processing over 500 million transactions annually, which seamlessly integrates into Tyler’s ERP backbone and is projected to generate roughly $300 million in revenue for 2024. This cross-sell synergy strengthens Tyler’s customer retention, which boasts churn rates near 2%, and gives the company pricing power and a foundation for upselling additional modules like digital engagement tools or environmental health systems.
Even professional services, which grew modestly to $368.8 million, serve as an on-ramp to higher-margin software revenue. Strategic acquisitions are always bolt-on and mission-aligned, enhancing Tyler’s end-to-end platform without disrupting its focus. Meanwhile, employee retention—30% of staff have over a decade of tenure—fuels continuity in implementing complex government systems, ensuring high satisfaction and faster adaptation to legal changes. Tyler is effectively the operating system for public sector infrastructure, and while other tech firms may falter during economic slowdowns, Tyler continues to grow because government agencies can’t delay the collection of taxes, court management, or public safety. With its robust financial model, unmatched domain expertise, and cloud-first execution, Tyler Technologies presents a compelling long-term investment opportunity in a highly defensible niche.
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