Tyler Technologies Q3: SaaS Revenue Grows 21% and Free Cash Flow Hits Record

Tyler Technologies said Wednesday that its software-as-a-service revenue grew 21.2% in the third quarter and free cash flow hit a quarterly record, while the public sector software provider kept buying back stock at a rapid clip.

Total revenue rose 8.7% to $647.6 million, according to the earnings release Tyler filed with an 8-K on Wednesday. SaaS revenue climbed to $242.2 million, and free cash flow rose 11.9% to $277.0 million.

Recurring revenue carries the quarter

Recurring revenue increased 11.0% to $568.8 million and made up 87.8% of total revenue. Subscription revenue grew 15.3% to $462.6 million, and annualized recurring revenue reached $2.28 billion, also up 11.0%.

Transaction revenue rose 9.5% to $220.4 million. CFO Brian Miller said in the release that growth in that line was 14.2% excluding the impact of the wind-down of a Texas payments contract.

Older revenue streams continued to shrink as clients shift to the cloud. Maintenance revenue slipped to $106.2 million from $111.3 million, and professional services revenue dipped to $63.0 million from $64.7 million.

Profit climbs

GAAP operating income rose 19.5% to $117.0 million. GAAP net income was $95.1 million, or $2.33 a diluted share, up 12.7%. Non-GAAP EPS rose 10.0% to $3.52, and adjusted EBITDA increased 13.4% to $192.7 million.

"We achieved solid third quarter results, with double-digit recurring revenue growth, robust margin expansion, strong bookings, and record quarterly free cash flow," said Lynn Moore, Tyler's executive chair, president and CEO. He said the company has sold about 300 deals containing AI across its client base to date.

Buybacks and a deal

Tyler repurchased 1,148,389 shares in the quarter for about $379 million, leaving about $1.37 billion under its existing authorizations. Moore said the company has repurchased about 8.5% of its outstanding shares so far this year.

On July 30, the company completed its acquisition of CODY Systems, a public safety software provider, for about $27.7 million in cash.

Tyler's balance sheet at Sept. 30 showed $1.41 billion of convertible senior notes due 2031. At the end of 2025, it carried $599.7 million of convertible notes due 2026 and none due 2031. Cash and cash equivalents fell to $788.2 million from $1.02 billion over the same period. CFO Miller said the company's strong balance sheet and significant remaining buyback authorization leave it with the flexibility to invest in growth and pursue acquisitions.

2026 guidance

For the full year, Tyler expects total revenue of $2.535 billion to $2.565 billion and non-GAAP diluted EPS of $12.95 to $13.20. It projects a free cash flow margin of 26% to 28%, research and development expense of $245 million to $250 million and capital expenditures of $20 million to $22 million.

The company will hold a question-and-answer call on Thursday morning.

Sources

1. Tyler Technologies Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 28, 2026 (accession 0000860731-26-000056)

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