Investment firm DA Davidson has adjusted its price target for Tyler Technologies (TYL, Financial), lowering it from $595 to $570 while maintaining a Neutral rating. This change follows the company's first-quarter results, which, although solid with revenues slightly surpassing expectations, showed weaker-than-anticipated SaaS bookings.
The firm highlights that the deviation in bookings stems from a shift in project closures. During the previous quarter, Q4, several municipalities expedited projects to secure American Rescue Plan stimulus funds. This rush contributed to pulling around $10 million worth of bookings from Q1 into Q4, affecting the expected figures for the first quarter.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for Tyler Technologies Inc (TYL, Financial) is $679.90 with a high estimate of $785.00 and a low estimate of $570.00. The average target implies an upside of 28.16% from the current price of $530.50. More detailed estimate data can be found on the Tyler Technologies Inc (TYL) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, Tyler Technologies Inc's (TYL, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Tyler Technologies Inc (TYL, Financial) in one year is $502.60, suggesting a downside of 5.26% from the current price of $530.5. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Tyler Technologies Inc (TYL) Summary page.
TYL Key Business Developments
Release Date: February 13, 2025
- Total Revenue: $541.1 million, up 12.5% year-over-year.
- Recurring Revenue Growth: Nearly 15%, driven by SaaS revenue growth of 23%.
- Transaction Revenue: Grew nearly 21% to $175.4 million.
- Non-GAAP Operating Margin: Expanded to 24.4%.
- Free Cash Flow: $216 million, a new high for a fourth quarter.
- New SaaS Contract Value: Approximately $141 million, up 37% over last year.
- Total Annualized Recurring Revenue: Approximately $1.86 billion, up 14.9%.
- New SaaS Arrangements: 150 new arrangements and 106 flips of existing clients.
- Average ARR from New SaaS Contracts: Increased 63% over last year.
- Cash and Investments: Approximately $779 million.
- Convertible Debt Outstanding: $600 million.
- 2025 Revenue Guidance: Between $2.30 billion and $2.34 billion.
- 2025 Non-GAAP EPS Guidance: Between $10.90 and $11.15.
- 2025 Free Cash Flow Margin Guidance: Between 24% and 26%.
- 2025 Subscription Revenue Growth Expectation: 15% to 18%.
- 2025 SaaS Revenue Growth Expectation: 21% to 24%.
- 2025 Transaction Revenue Growth Expectation: 10% to 12%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tyler Technologies Inc (TYL, Financial) reported a strong fourth quarter with recurring revenue growth of nearly 15%, driven by SaaS revenue growth of 23%.
- The company achieved its 16th consecutive quarter of SaaS revenue growth of 20% or more, with 97% of new software contract value in the cloud.
- Transaction revenue set a new quarterly high, growing nearly 21%, and the non-GAAP operating margin expanded to 24.4%.
- Free cash flow significantly exceeded expectations, reaching $216 million, marking a new high for a fourth quarter.
- The company continues to lead in cloud adoption, with notable multi-product SaaS contracts and increased momentum in public safety solutions.
Negative Points
- The wind down of the Texas payments processing contract, which expires in August 2025, is expected to impact transaction revenue growth.
- Maintenance revenue is expected to decline by 4% to 6% due to the ongoing shift to SaaS and acceleration of client flips.
- Professional services revenue is projected to be flat or down by 3%, reflecting efficiencies in cloud transition implementations.
- License revenues are expected to decline by 18% to 20%, with very few new license sales anticipated.
- Research and development expenses are expected to grow significantly, driven by redeployment of resources and incremental funding of AI initiatives.
