Last Update 31 Oct 25
Fair value Decreased 2.17%Tyler Technologies’ analyst price target was recently revised downward by analysts, decreasing from approximately $678.78 to $664.06. Analysts noted concerns around software-as-a-service growth and a lower terminal multiple, despite continued strong fundamentals and a recent guidance raise.
Analyst Commentary
Recent analyst updates on Tyler Technologies have provided a nuanced view on the company's valuation and growth prospects. While price targets have shifted, researchers continue to assess both supportive and cautionary elements within Tyler’s business outlook.
Bullish Takeaways
- Bullish analysts have highlighted Tyler Technologies’ attractive valuation, designating the company as a notable pick among its peers.
- The company has consistently outperformed earnings expectations, including a recent quarterly beat.
- Updates to guidance, particularly the raising of the low end of full-year expectations, have been positively received as a sign of management’s confidence in continued execution.
- Some project that future commentary, especially regarding fiscal 2026, may alleviate current concerns and offer further clarity on the longer-term growth trajectory.
Bearish Takeaways
- Bearish analysts have expressed concerns about the pace of software-as-a-service growth, which may pressure Tyler’s valuation premiums.
- Recent downward revisions in price targets reflect a more conservative outlook, stemming from uncertainty about future growth dynamics.
- A lower terminal multiple has been applied in some valuation frameworks, contributing to target cuts even after strong near-term performance.
- There is lingering caution surrounding how sustained growth rates may affect investor sentiment and Tyler’s premium positioning within the sector.
What's in the News
- Tyler Technologies completed the repurchase of 300,000 shares, amounting to $173 million, as part of its ongoing buyback program. This brings total buybacks since 2002 to over 20.8 million shares, or nearly 52% of total shares. (Key Developments)
- Tyler Technologies signed an agreement with Service Oklahoma to provide Tyler Cashiering and advanced payment analytics. The cloud solution, powered by AWS, will be rolled out at 44 locations statewide for POS and centralized revenue management. (Key Developments)
- The Fulton County Clerk of Superior and Magisterial Courts in Georgia selected Tyler’s Enterprise Records Management for land records to enhance workflow integration and public access and offer fraud alerts. (Key Developments)
- The Oklahoma Department of Labor chose Tyler’s State Regulatory Platform Suite (SRPS), including AI-driven field inspections, to modernize its licensing and regulatory enforcement systems in the cloud. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has decreased from $678.78 to $664.06, reflecting a modest downward adjustment.
- Discount Rate has risen slightly, moving from 8.47% to 8.52%.
- Revenue Growth projection has declined from 9.41% to 9.22%.
- Net Profit Margin estimate has increased from 16.33% to 16.72%.
- Future P/E Ratio has fallen notably, shifting from 79.34x to 72.89x.
Key Takeaways
- Strong demand for cloud-based, secure, and integrated solutions is driving recurring revenue, market leadership, and higher contract values amid digital transformation and regulatory tailwinds.
- Strategic acquisitions, unified client experience, and AI-powered offerings are boosting customer penetration, premium pricing, and scalable margin improvements across Tyler's expanding addressable market.
- Heavy reliance on government spending, unpredictable deal cycles, segment declines, acquisition risks, and intensifying competition all threaten Tyler's growth, margins, and long-term earnings stability.
Catalysts
About Tyler Technologies- Provides integrated software and technology management solutions for the public sector.
- The accelerating digital transformation initiatives across state and local governments are intensifying demand for cloud-based, integrated solutions, which directly support Tyler's ongoing success in SaaS client migrations (cloud flips) and recurring revenue growth; this secular momentum is reflected in a pipeline of large deals and an expected 25% annual increase in cloud flips, translating to sustained double-digit top-line revenue expansion.
- Increased cybersecurity and regulatory requirements, including new standards (e.g., NERIS for emergency services), are compelling agencies to modernize legacy systems, positioning Tyler's secure, compliant cloud offerings as a preferred choice and solidifying its market leadership, which supports higher average contract values and customer retention-positively impacting long-term recurring revenue and margin improvement.
- Tyler's strategic expansion of integrated product suites through acquisitions (such as Emergency Networking) and coordinated cross-sell/upsell initiatives, amplified by the One Tyler unified client experience, are increasing both contract size and product penetration per customer, which is expected to boost average revenue per account and drive robust top-line and earnings growth.
- Ongoing investment in AI-powered tools and automation-evident in product launches like the AI-driven Resident Assistant and enhanced budgeting solutions-caters to public sector labor challenges and the need for data-driven decision-making, enabling premium pricing, reducing customer churn, and unlocking scalable margin improvements over time.
- The increasing push for remote work and self-service government services is accelerating SaaS and transaction-based adoption, broadening Tyler's total addressable market and fueling strong payment volumes and high-margin transaction revenues, as evidenced by outperformance in this segment and expectations for sustained double-digit transaction revenue growth-benefiting both revenue predictability and net margin expansion.
Tyler Technologies Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Tyler Technologies's revenue will grow by 9.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 13.7% today to 16.3% in 3 years time.
- Analysts expect earnings to reach $480.4 million (and earnings per share of $10.81) by about September 2028, up from $306.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $370.2 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 79.3x on those 2028 earnings, up from 78.7x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
- Analysts expect the number of shares outstanding to grow by 1.08% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.47%, as per the Simply Wall St company report.
Tyler Technologies Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Tyler Technologies' business remains highly dependent on government budgets, and any long-term stagnation or cuts in state, local, or federal spending-especially if driven by macroeconomic slowdowns or shifting priorities-could slow new contracts and delay procurement cycles, potentially impacting revenue growth and creating sustained earnings volatility.
- The company notes pronounced lumpiness and unpredictability in large deal bookings and cloud migrations (flips), which, if persistent as their customer base shifts to larger governments and more complex implementations, could result in lower year-to-year revenue visibility and pressure on net margins due to increased implementation and support costs.
- The professional services and traditional maintenance/license segments are experiencing ongoing revenue declines (guided to continue), and if recurring SaaS and transaction revenue growth slows (from full client penetration or competitive pressure), the company's overall revenue base could shrink or stagnate, hurting earnings and margins over time.
- Expanding via acquisitions (e.g., Emergency Networking) introduces meaningful integration risks; failure to successfully scale new tuck-in products or meet compliance standards (such as NERIS for emergency services) may lead to missed cross-sell/upsell targets and margin dilution if synergies are not realized as anticipated, negatively impacting long-term net margins.
- Competitive threats from emerging GovTech startups (with innovative, cloud-native, or open-source solutions) and increasing demand by public agencies for open, interoperable, or best-of-breed ecosystems raise the risk that Tyler's integrated suite becomes less differentiated; this may force Tyler to increase R&D and discounting, eroding pricing power and pressuring future revenue and profitability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $678.778 for Tyler Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $800.0, and the most bearish reporting a price target of just $585.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.9 billion, earnings will come to $480.4 million, and it would be trading on a PE ratio of 79.3x, assuming you use a discount rate of 8.5%.
- Given the current share price of $558.41, the analyst price target of $678.78 is 17.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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