Tyler Technologies, Inc. (TYL): A Bull Case Theory

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Tyler Technologies (TYL) has evolved from a diversified concern conglomerate into the starring supplier of vertical marketplace bundle (VMS) for U.S. section governments, demonstrating a unsocial operation of scale, specialization, and recurring gross resilience. Founded successful 1966 arsenic Saturn Industries by Joseph F. McKinney, the institution initially navigated aboriginal bankruptcy and analyzable divestitures, strategically selling disconnected non-core concern businesses portion returning important worth to shareholders.

This disciplined attack acceptable the signifier for a transformative pivot successful the precocious 1990s nether caller leadership, focusing connected authorities IT solutions, including justice, tax, and appraisal software. Tyler’s occurrence stems from heavy vertical expertise, long-standing lawsuit relationships, and a highly sticky lawsuit base, with gross retention rates of 98% and contracts that often span decades, making it hard for competitors, including PE-backed firms oregon ample bundle incumbents, to displace them.

Tyler has leveraged acquisitions to consolidate a highly fragmented market, completing implicit 45 acquisitions since 1998, including large purchases similar New World Systems, NIC, and the upcoming For The Record, expanding some its state-level and transactional outgo capabilities. Its strategical displacement to a SaaS exemplary since 2019, powered by AWS, has converted implicit 2,000 on-premise products to subscription-based offerings, creating semipermanent recurring gross portion temporarily affecting header maturation owed to accounting transitions.

The institution present generates $2.1 cardinal successful revenues with $5.2 cardinal successful operating currency flow, operates debt-free, and holds $745 cardinal successful cash. Tyler’s ascendant marketplace position, precocious switching costs, and government-specific expertise insulate it from AI disruption, making existent fears overblown. With a 21.4x P/FCF valuation, a zero-debt equilibrium sheet, and a modulation to high-margin SaaS, Tyler offers a resilient and compelling concern accidental with constricted downside and important semipermanent upside.

Previously, we covered a bullish thesis connected Tyler Technologies, Inc. (TYL) by Douglas Ott successful October 2024, which highlighted beardown SaaS gross growth, cloud-based subscription adoption, robust escaped currency flow, and strategical nationalist assemblage acquisitions. TYL’s banal terms has depreciated by astir 47.6% since our sum owed to a Q4 2025 net miss, slashed 2026 maturation guidance amid maintenance/hardware gross weakness, and broader AI disruption fears, contempt coagulated SaaS growth. The Fat Pitch shares a akin presumption but emphasizes Tyler’s humanities transformation, sticky authorities lawsuit base, and semipermanent competitory moat.