Summary
Tyler Technologies reported third-quarter revenue of $543.3 million, up 9.8% from the prior-year quarter. Recurring revenue from subscriptions and maintenance reached $462.8 million, up 12.1%, and represented 85.2% of total revenue, up from 83.4%. SaaS revenue grew 20.3% to $166.6 million. Transaction-based revenue rose 15.2% on an organic basis to $180.6 million. Annualized recurring revenue was $1.85 billion, up 12.1%, and backlog stood at $2.13 billion, up 9.2% from September 30, 2023. Gross profit was $237.5 million, up 5.5%, but gross margin fell to 43.7% from 45.5%. Operating income rose 29.5% to $82.8 million, and operating margin expanded to 15.2% from 12.9%. Net income was $75.9 million, up 61.4%, and diluted earnings per share were $1.74, up $0.64 or 58.2%.
The quarter showed a clear mix shift toward cloud and transaction offerings. SaaS arrangements made up approximately 97% of new software contract value, up from approximately 80%. Tyler added 181 new SaaS clients in the quarter and 108 existing on-premises clients converted to SaaS. Since September 30, 2023, the company added 740 new SaaS clients and 401 on-premises clients converted. For the nine months ended September 30, 2024, about 89% of new software contracts were subscription-based and about 11% were perpetual licenses, compared with about 81% and about 19% in the prior-year period. Subscriptions revenue rose 17.6% to $347.2 million. SaaS fees were $166.6 million in the quarter and $471.4 million for the nine months, up 20% and 22%. Transaction-based fees grew 15% to $180.6 million for the quarter and 7% to $522.7 million for the nine months. Maintenance revenue decreased 2% in the quarter and was flat for the nine months. Software licenses and royalties revenue decreased 41% in the quarter and 34% for the nine months, while professional services revenue increased 5% and 7%, respectively. Employee count reached 7,386 as of September 30, 2024, up from 7,301 a year earlier.
Cash generation was a standout. Operating cash flow was $263.7 million for the quarter, up 48.6%, and $399.9 million for the nine months, up 71.6%. Free cash flow was $252.9 million for the quarter, up 55.5%, with free cash flow margin of 46.5% compared with 32.9%. Capital expenditures were $2.88 million for the quarter, down 53.0%, and $16.7 million for the nine months, up 33.8%. Deferred revenue was $682.4 million, up 13.5% from the prior-year quarter. The company also refinanced its credit facility during the period and reported no borrowings outstanding under it.
Management's full-year 2024 guidance calls for non-GAAP diluted earnings per share of $9.47 to $9.62 and a free cash flow margin of 21% to 23%. Research and development expense is expected to land between $119 million and $122 million. The company also noted that cash tax payments in the third quarter included approximately $6 million tied to IRC Section 174 capitalization rules. Management said progress toward its 2025 and 2030 targets will not be linear, while confidence in reaching those targets continues to grow. Risks include changes in public sector budgets and regulatory environments, cyber-attacks and security vulnerabilities, data center interruptions, acquisition integration, project delays, reductions in transaction size, fewer transactions, delays in new products, lower renewal rates, inflation, rising interest rates, competition, labor costs, and compliance costs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $543.3M | $541.0M | +0.4% | $494.7M | +9.8% |
| Gross profit | $237.5M | $237.8M | -0.1% | $225.2M | +5.5% |
| Gross margin | 43.7% | 44.0% | -0.3 pp | 45.5% | -1.8 pp |
| Sales & marketing | $38.2M | $41.6M | -8.1% | $35.9M | +6.4% |
| General & administrative | $72.5M | $75.4M | -3.9% | $78.5M | -7.7% |
| Operating income (loss) | $82.8M | $78.0M | +6.1% | $63.9M | +29.5% |
| Operating margin | 15.2% | 14.4% | +0.8 pp | 12.9% | +2.3 pp |
| Net income (loss) | $75.9M | $67.7M | +12.0% | $47.0M | +61.4% |
| Net margin | 14.0% | 12.5% | +1.5 pp | 9.5% | +4.5 pp |
| Diluted EPS | $1.74 | $1.57 | +$0.17 | $1.10 | +$0.64 |
Risks
The ongoing shift from perpetual software licenses to SaaS arrangements is reducing software licenses and royalties revenue, which decreased 41% for the quarter and 34% year to date. Maintenance revenue also decreased 2% for the quarter. The company expects software license revenues to continue to decline as it shifts its model, though SaaS arrangements generate higher overall revenue over the contract term.
Overall gross margin decreased 1.8 pp to 43.7% for the quarter and 0.3 pp to 43.8% year to date, attributed to lower software license and maintenance revenue, higher software development amortization, and higher personnel costs.
The company faces risks related to attracting and retaining qualified personnel and rising labor costs. Professional services staff grew by 127 employees since September 30, 2023, and higher personnel costs contributed to increased cost of subscriptions, maintenance, and professional services.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Adjusted EBITDA
Annualized Recurring Revenue (ARR)
New SaaS Clients Added
Free Cash Flow Margin
Non-GAAP Gross Margin
Non-GAAP Operating Income
Existing On-Premises Clients Converted to SaaS
Recurring Revenue
SaaS Revenue
Subscription Revenue
Backlog
Recurring Revenue % of Total Revenue
Transaction-based Revenue
Summary, forecast, risks and KPIs are extracted from TYLER TECHNOLOGIES INC's SEC filings for Q3 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.