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Tyler Technologies (NYSE: TYL): The Government Software Giant You’ve Never Heard Of (But Definitely Paid For)
Executive Summary
Tyler Technologies (NYSE: TYL) is the kind of stock that Warren Buffett would marry if it could cook and file paperwork. It’s not flashy. It doesn’t sell ads or push NFTs. What it does do is build sticky, mission-critical software for governments—county clerks, school districts, police departments, courtrooms, tax assessors, and everyone else you yell at in city hall.
Think of it as the Salesforce of small-town America—except nobody ever churns, the contracts are multi-year, and the budget always gets renewed (because it’s funded by your property taxes).
Company Overview: Software With a Gavel
Tyler Technologies provides enterprise resource planning (ERP), case management, appraisal, tax billing, and public safety software to local governments across all 50 states. Core customer base:
- Counties
- Cities
- School districts
- Courts
- Law enforcement
Core Business Segments:
- Enterprise Resource Planning (ERP):
- General ledger, HR/payroll, budgeting, procurement
- Basically QuickBooks for governments—but with more committees and compliance.
- Justice & Public Safety:
- Court case management, jail software, e-citations, 911 systems
- Yes, even your traffic ticket probably touched Tyler’s code.
- Appraisal & Tax:
- Property valuation, tax billing, appeals systems
- The software behind “Why did my property taxes go up 17%?”
- Records & Document Management:
- Digitizing land records, permits, deeds
- Making bureaucracy slightly less painful.
Business Model Breakdown: SaaS, But With Sirens
1. High Switching Costs
- Government entities are allergic to change. Once Tyler is in, it stays—often for decades.
- Replacing it means training, compliance headaches, vendor reviews, and public hearings. Good luck.
2. Multi-Year Contracts + Recurring Revenue
- Tyler’s contracts run 3–10 years.
- About 80%+ of revenue is recurring (subscriptions, maintenance, cloud services).
- That’s predictable cash flow with taxpayer backing.
3. Vertical Integration + Cross-Sell Flywheel
- Tyler offers software for nearly every government function.
- Start with tax billing? Soon you’re adding court software, police dashboards, and more.
- It’s like playing SimCity with real money.
4. Cloud Migration = Margin Expansion
- Governments are slowly ditching on-prem systems.
- Tyler is leading the cloud shift with Tyler Cloud and Everest platform.
- More uptime, more recurring SaaS revenue, less customer support bloat.
Why It Works: Government Is the Ultimate Customer
- Governments don’t go bankrupt.
- They have legally mandated budgets.
- They don’t cancel software—they form a task force to study canceling it.
Tyler is the rare business that:
- Doesn’t chase consumers,
- Doesn’t rely on ads,
- And doesn’t fear recession.
Even in downturns, property tax bills go out, traffic fines are enforced, and budgets need balancing—and Tyler’s software runs it all.
Macroeconomic Mojo
- Recession-resilient demand: City hall doesn’t close in a bear market.
- Inflation pass-through: Contracts often have built-in CPI escalators.
- Government digital transformation: COVID forced even the most tech-phobic clerks into the 21st century. Tyler now rides that tailwind.
Bonus: Local governments are flush with federal and state stimulus dollars. That’s Tyler’s playground.
Risks (Because Nothing’s Bulletproof)
- Procurement delays: Governments move slower than molasses uphill in winter.
- Cybersecurity threats: Municipal systems are juicy ransomware targets.
- Valuation sensitivity: Tyler trades at a premium—so any slowdown can trigger multiple compression.
Still, its moat is deep. Replacing Tyler means public RFPs, council meetings, and training 80-year-old county clerks to use something new. Most cities would rather just raise taxes.
Setup & Valuation
- Gross margin: ≈45–50% and expanding as cloud mix increases
- Annual revenue growth: ≈7–10%, mostly organic
- Free cash flow margin: ≈20%+ on a normalized basis
- Debt: Very manageable, post-2021 NIC acquisition
It’s not cheap—but it never is. Tyler is a compounder hiding in plain sight.
TL;DR
Tyler Technologies is:
- A pure-play government SaaS kingpin,
- Sitting on recurring, recession-resistant revenue,
- Quietly powering the most reliable customer base in America: your local tax office.
And while Silicon Valley’s chasing 30-day DAUs, Tyler’s collecting 30-year property assessments.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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