Tyler Technologies Surpasses Q1 Earnings and Revenue Estimates

Tyler Technologies, Inc. TYL started 2025 on a strong note with reporting better-than-expected first-quarter results. The company reported first-quarter non-GAAP earnings of $2.78 per share, which beat the Zacks Consensus Estimate by 8.6% and increased 28.9% year over year.

Tyler Technologies surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 3.8%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Tyler Technologies’ first quarter revenues increased 10.3% year over year to $565.2 million. The top line beat the Zacks Consensus Estimate of $556 million by 1.7%.

The year-over-year improvement in the top line was primarily driven by a rise in subscription revenues. During the first quarter, software subscription arrangements comprised approximately 96% of the total new software contract value as the company continued to transform into a software-as-a-service model from its on-premise license-based model.

Quarterly Details of Tyler Technologies

Tyler Technologies’ recurring revenues from maintenance and subscriptions increased 13.3% year over year to $487.8 million and accounted for 86.3% of the total quarterly revenues. The company reported annualized recurring revenues on a non-GAAP basis of $1.95 billion, up 13.3% year over year.

Segment-wise, Maintenance revenues (accounting for 20% of total revenues) were $112.8 million, down from $117.2 million reported in the year-ago quarter. Our model estimate for Maintenance revenues was pegged at $114 million.

Subscription revenues (66.4% of total revenues) grew 19.7% year over year to $375 million, while our model estimate for the same was pinned at $361.7 million.

Software licenses and royalties (1.2% of total revenues) of approximately $7 million fell year over year by 19.9%. Our model predicted Software licenses and royalties’ sales to decrease 18.7% to $7.1 million.

Professional Services revenues (11.3% of total revenues) amounted to $64.1 million, down 2.1% from the year-ago quarter. Our model estimate for the same was pegged at $64.5 million.

Hardware and other revenues (1.1% of total revenues) were down 24.3% from the year-ago quarter to $6.3 million. Our model estimate for Hardware and other revenues was pegged at $7.7 million.

Tyler’s Operating Details

Tyler Technologies’ non-GAAP gross profit increased 18.6% year over year to $285.1 million. Moreover, the non-GAAP gross margin improved 650 basis points (bps) to 50.4%.

Adjusted EBITDA increased 21.5% year over year to $162.3 million.

Non-GAAP operating income for the quarter totaled $151.4 million and jumped 24.4% year over year. The non-GAAP operating margin expanded 300 bps to 26.8%.

Tyler’s Balance Sheet & Other Details

As of March 31, 2025, TYL’s cash and cash equivalents were $705.7 million compared with $744.7 million as of Dec. 31, 2024.

The company generated an operating cash flow of $56.2 million and a free cash flow of $48.3 million in the first quarter of 2025.

Tyler Revised FY25 Guidance

Tyler Technologies now projects full-year 2025 revenues between $2.31 billion and $2.35 billion, up from the earlier guidance range of $2.30-$2.34 billion. The Zacks Consensus Estimate for 2025 revenues is pegged at $2.32 billion, indicating year-over-year growth of 8.6%.

The company now projects its adjusted earnings per share in the range of $11.05-$11.35, up from the previously provided guidance of $10.90-$11.15. The consensus mark for 2025 earnings is pegged at $11.02 per share.

Tyler’s Zacks Rank & Other Stocks to Consider

Currently, TYL carries a Zacks Rank #2 (Buy).

Broadcom AVGO, Credo Technology CRDO and Cirrus Logic CRUS are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. While Broadcom and Credo Technology sport a Zacks Rank #1 (Strong Buy) each, Cirrus Logic carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s fiscal 2025 earnings has been revised upward by 4 cents to $6.60 per share in the past 30 days, suggesting an increase of 35.5% from fiscal 2024’s reported figure. Broadcom shares have rallied 36.7% over the past year.

The Zacks Consensus Estimate for Credo Technology’s fiscal 2025 earnings has moved upward by 13 cents to 63 cents per share in the past 60 days, reflecting robust 600% year-over-year growth. Credo Technology shares have risen 27.8% in the trailing 12 months.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2026 earnings has been revised upward by 3 cents to $6.82 per share over the past 60 days, and suggests a year-over-year decline of 2.9%. Cirrus Logic shares have risen 1.7% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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