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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   ☒  No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   ☒     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   ☐     No   ☒

The number of shares of common stock of registrant outstanding on July 28, 2025 was 43,261,810.

ITEM 1. Financial Statements

(In thousands, except per share amounts)

(Unaudited)

(Unaudited)

(In thousands, except par value and share amounts)

			June 30, 2025 (unaudited)						December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	787,447					$	744,721
Accounts receivable (less allowance for losses and sales adjustments of $27,445 in 2025 and $17,325 in 2024)			714,413						587,634
Short-term investments			104,899						23,257
Prepaid expenses			91,096						65,135
Income tax receivable			17,601						11,975
Other current assets			8,236						8,057
Total current assets			1,723,692						1,440,779
Accounts receivable, long-term			7,015						7,153
Operating lease right-of-use assets			34,723						31,433
Property and equipment, net			161,293						163,775
Other assets:
Software development costs, net			74,719						76,117
Goodwill			2,542,019						2,531,653
Other intangibles, net			793,725						831,966
Non-current investments			2,994						10,758
Other non-current assets			85,575						86,381
			$	5,425,755					$	5,180,015
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	171,582					$	156,817
Accrued liabilities			172,610						197,709
Operating lease liabilities			8,998						9,643
Deferred revenue			720,497						701,438
Current portion of convertible senior notes due 2026, net			598,798						—
Total current liabilities			1,672,485						1,065,607
Convertible senior notes due 2026, net			—						597,934
Deferred revenue, long-term			22,878						22,376
Deferred income taxes			36,437						47,503
Operating lease liabilities, long-term			33,922						30,791
Other long-term liabilities			25,366						27,382
Total liabilities			1,791,088						1,791,593
Commitments and contingencies			—						—
Shareholders' equity:
Preferred stock, $10.00 par value; 1,000,000 shares authorized; none issued			—						—
Common stock, $0.01 par value; 100,000,000 shares authorized; 48,147,969 shares issued and outstanding as of June 30, 2025 and December 31, 2024			481						481
Additional paid-in capital			1,620,258						1,539,301
Accumulated other comprehensive loss, net of tax			(115)						(157)
Retained earnings			2,032,478						1,866,799
Treasury stock, at cost; 4,896,113 and 5,184,092 shares in 2025 and 2024, respectively			(18,435)						(18,002)
Total shareholders' equity			3,634,667						3,388,422
			$	5,425,755					$	5,180,015

(Unaudited)

(Unaudited)

			Common Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Treasury Stock												Total Shareholders' Equity
			Shares						Amount																								Shares						Amount
Balance at March 31, 2025			48,148						$	481					$	1,581,856					$	(83)					$	1,947,851					(5,035)						$	(17,401)					$	3,512,704
Net income			—						—						—						—						84,627						—						—						84,627
Other comprehensive loss, net of tax			—						—						—						(32)						—						—						—						(32)
Exercise of stock options and vesting of restricted stock units			—						—						(5,209)						—						—						163						18,536						13,327
Employee taxes paid for withheld shares upon equity award settlement			—						—						—						—						—						(32)						(18,008)						(18,008)
Share-based compensation			—						—						38,302						—						—						—						—						38,302
Issuance of shares pursuant to employee stock purchase plan			—						—						5,309						—						—						11						43						5,352
Treasury stock repurchases			—						—						—						—						—						(3)						(1,605)						(1,605)
Balance at June 30, 2025			48,148						$	481					$	1,620,258					$	(115)					$	2,032,478					(4,896)						$	(18,435)					$	3,634,667

(Unaudited)

			Common Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Treasury Stock												Total Shareholders' Equity
			Shares						Amount																								Shares						Amount
Balance at December 31, 2024			48,148						$	481					$	1,539,301					$	(157)					$	1,866,799					(5,184)						$	(18,002)					$	3,388,422
Net income			—						—						—						—						165,679						—						—						165,679
Other comprehensive income, net of tax			—						—						—						42						—						—						—						42
Exercise of stock options and vesting of restricted stock units			—						—						(4,251)						—						—						328						34,022						29,771
Employee taxes paid for withheld shares for taxes upon equity award settlement			—						—						—						—						—						(56)						(32,926)						(32,926)
Share-based compensation			—						—						75,962						—						—						—						—						75,962
Issuance of shares pursuant to employee stock purchase plan			—						—						9,246						—						—						19						76						9,322
Treasury stock purchases			—						—						—						—						—						(3)						(1,605)						(1,605)
Balance at June 30, 2025			48,148						$	481					$	1,620,258					$	(115)					$	2,032,478					(4,896)						$	(18,435)					$	3,634,667

Tyler Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Tables in thousands, except per share data)

(1)    Basis of Presentation

We prepared the accompanying condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“GAAP”), for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of June 30, 2025, and December 31, 2024, and operating result amounts are for the three and six months ended June 30, 2025, and 2024, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, 2024. Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. Certain amounts for previous years have been reclassified to conform to the current year presentation.

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all components of net income (loss) and other comprehensive income (loss). During the three and six months ended June 30, 2025, we had approximately $32,000, of other comprehensive loss, and $42,000, of other comprehensive income, net of taxes, respectively, from our available-for-sale investment holdings. During the three and six months ended June 30, 2024, we had approximately $55,000 and $108,000, of other comprehensive income, net of taxes, respectively, from our available-for-sale investment holdings, respectively.

(2)    Accounting Standards and Significant Accounting Policies

There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 19, 2025, that have had a material impact on our condensed consolidated financial statements and related notes. See Recently Pronounced Accounting Standard below.

Nature of Products and Services

We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. We earn the majority of our revenues from subscription-based services and post-contract client support (“PCS” or “maintenance”). Other sources of revenue are professional services, software licenses and royalties, and hardware and other. Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps:

•Identification of the contract, or contracts, with a client

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, we satisfy a performance obligation

Our software arrangements with clients contain multiple performance obligations that range from software license deliveries, installation, training, consulting, software modification and customization to meet specific client needs; hosting; and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include professional services, such as training or installation, are evaluated to determine whether those services are highly interdependent or interrelated to the product’s functionality. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price (“SSP”) basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, client demographics, and the number and types of users within our contracts.

For arrangements that involve significant production, modification, or customization of the software, or where professional services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the client over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent.

Subscription-based services consist primarily of revenues derived from software as a service (“SaaS”) arrangements and transaction-based fees. For SaaS arrangements, we evaluate whether the client has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the client can feasibly maintain the software on the client’s hardware or enter into another arrangement with a third party to host the software. We recognize SaaS services ratably over the term of the arrangement, which range from one to 10 years, but most arrangements are typically for periods of one to three years. For professional services associated with certain SaaS arrangements, we have concluded that the services are not distinct, and we recognize the revenue ratably over the remaining contractual period once we have provided the client access to the software.

Transaction-based fees primarily relate to digital government services and online payment services, which are sometimes offered with the assistance of third-party vendors. When we are the principal in a transaction, we record the revenue and related costs on a gross basis. Otherwise, we net the cost of revenue associated with the service against the gross revenue (amount billed to the client) and record the net amount as revenue.

For transaction-based revenues from digital government services and online payments, we have the right to charge the client an amount that directly corresponds with the value to the client of our performance to date. Therefore, we recognize revenues for these services over time based on the amount billable to the client. In some cases, we are paid on a fixed-fee basis and recognize the revenue ratably over the contractual period. Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances where variable consideration exists, we include in our estimates additional revenues for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably, and its realization is probable.

Costs of performing services under subscription-based arrangements are expensed as incurred, except for certain direct and incremental contract origination costs associated with SaaS arrangements. Such direct and incremental costs are capitalized and amortized ratably over the period of benefit.

Our clients generally enter into PCS agreements when they purchase our software licenses. PCS includes telephone support, bug fixes, and rights to upgrades on a when-and-if available basis. PCS is considered distinct when purchased with our software licenses. Our PCS agreements are typically renewable annually. PCS is recognized over time on a straight-line basis over the period the PCS is provided. All significant costs and expenses associated with PCS are expensed as incurred.

When professional services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material or milestone basis. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met.

Revenue is recognized net of allowances for sales adjustments and any taxes collected from clients, which are subsequently remitted to governmental authorities.

Refer to Note 4, “Disaggregation of Revenue” for further information, including the economic factors that affect the nature, amount, timing, and uncertainty of revenues and cash flows of our various revenue categories.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to clients. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when invoicing occurs prior to revenue recognition. For multi-year agreements, we generally invoice clients annually at the beginning of each annual coverage period.

Accounts receivable is as follows:

Total accounts receivable, including total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $721.4 million and $594.8 million, as of June 30, 2025, and December 31, 2024, respectively. We have recorded unbilled receivables of $111.8 million and $115.6 million as of June 30, 2025, and December 31, 2024, respectively. Unbilled receivables expected to be collected within one year have been included with the current portion of accounts receivable in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with the long-term portion of accounts receivable in the accompanying condensed consolidated balance sheets. Unbilled receivables also include retention receivables of $10.8 million and $11.4 million as of June 30, 2025, and December 31, 2024, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings.

We maintain allowances for losses and sales adjustments, which losses are recorded against revenue at the time the loss is incurred. Because most of our clients are domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payments. Consequently, we have not recorded a reserve for credit losses. Events or changes in circumstances that indicate the carrying amount for the allowances for losses and sales adjustments may require revision include, but are not limited to, managing our client’s expectations regarding the scope of the services to be delivered and defects or errors in new versions or enhancements of our software products. Our allowances for losses and sales adjustments are $27.4 million and $17.3 million as of June 30, 2025, and December 31, 2024, respectively.

We perform an impairment assessment annually on October 1, or more frequently if indicators of potential impairment exist, which includes evaluating qualitative and quantitative factors to assess the likelihood of an impairment of each reporting unit’s goodwill. If the conclusion of an impairment assessment is that it is more likely than not that the fair value of the reporting unit is more than its carrying value, goodwill is not considered impaired, and we are not required to perform the quantitative goodwill impairment test. If the conclusion of an impairment assessment is that it is more likely than not that the fair value is less than its carrying value, we perform the quantitative goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. Impairments, if any, are based on the excess of the carrying amount over the fair value.

We make judgments about the recoverability of purchased intangible assets other than goodwill whenever events or changes in circumstances indicate that an impairment may exist. Client base and acquired software each comprise approximately half of our purchased intangible assets other than goodwill. We review our client turnover each year for indications of impairment. Our client turnover has historically been very low. If indications of impairment are determined to exist, we measure the recoverability of assets by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the assets exceeds their estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the assets exceeds the fair value of the assets.

For the three and six months ended June 30, 2025, no triggering event or changes to circumstances indicated that a potential impairment had occurred for goodwill or other intangible assets.

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-04 - Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This guidance clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. It is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. As of January 1, 2025, we have early-adopted this standard, and the new standard did not have a material impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This guidance requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. This guidance is not expected to have a material impact on the Company’s financial statements.

In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. This guidance is not expected to have a material impact on the Company’s financial statements.

(3)    Segment and Related Information

Reportable operating segments are determined based on the Company’s management approach. The management approach, as defined by FASB ASC 280 “Segment Reporting,” is based on the way that the Chief Operating Decision Maker (“CODM”) organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. Our CODM, for purposes of FASB ASC 280, is our chief executive officer.

The CODM uses segment operating income or loss to assess performance and to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. During the fiscal periods presented, we had no significant transactions between reportable segments. Corporate unallocated amounts are comprised of non-cash amortization of intangible assets associated with acquisitions, depreciation associated with unallocated property and equipment assets, compensation costs for the executive management team and certain shared services staff, and share-based compensation expense for the entire company. Corporate unallocated amounts also include incidental revenues and expenses related to a company-wide user conference and rental income.

The following table presents reconciliations of segment revenues from external customers and other segment information to the Company’s consolidated totals:

						Three Months Ended June 30,												Six Months Ended June 30,
Revenues:						2025						2024						2025						2024
ES						$	424,282					$	372,807					$	827,028					$	735,837
PT						164,269						161,256						325,998						310,585
Corporate unallocated						7,566						6,913						8,256						6,913
Total consolidated						$	596,117					$	540,976					$	1,161,282					$	1,053,335
Depreciation and amortization expense:
ES						$	7,400					$	8,498					$	14,007					$	18,994
PT						22,282						21,529						44,499						45,284
Corporate unallocated						4,640						4,112						10,437						9,958
Total consolidated						$	34,322					$	34,139					$	68,943					$	74,236
Software development expenditures:
ES						$	692					$	2,110					$	2,241					$	3,731
PT						4,086						4,346						8,077						8,579
Corporate						72						2,651						82						4,183
Total consolidated						$	4,850					$	9,107					$	10,400					$	16,493
Capital expenditures:
ES						$	1,552					$	5,602					$	2,282					$	12,002
PT						2,854						825						3,793						1,512
Corporate						1,081						141						1,747						336
Total consolidated						$	5,487					$	6,568					$	7,822					$	13,850

Segment assets:						June 30, 2025						December 31, 2024
ES						$	633,080					$	572,224
PT						412,418						416,635
Corporate						4,380,257						4,191,156
Total consolidated						$	5,425,755					$	5,180,015

Segment assets primarily consist of net accounts receivable, prepaid expenses and other current assets, and net property and equipment and software development costs. Corporate assets primarily consist of cash and investments; prepaid insurance; goodwill and intangibles associated with acquisitions; deferred income taxes; software development costs, net; and net property and equipment mainly related to unallocated information and technology assets. Certain presentation items from previous years have been adjusted to conform with current year presentation.

(4)    Disaggregation of Revenue

The tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenues and cash flows.

The majority of our revenues are comprised of revenues from subscriptions and maintenance, which we consider to be recurring revenues. Subscription revenues primarily consist of revenues derived from our SaaS arrangements and transaction-based fees. These revenues are considered recurring because revenues from these sources are expected to re-occur in similar annual amounts for the term of our relationship with the client. Transaction-based fees are generally the result of multi-year contracts with our clients that result in fees generated by payment transactions and digital government services and are collected on a recurring basis during the contract term. The contract terms for subscription arrangements range from one to 10 years but are typically contracted for initial periods of one to three years. Nearly all of our on-premises software client contracts with us for maintenance and support. Maintenance and support are generally provided under auto-renewing annual contracts or multi-year contracts. We consider all other revenue categories to be non-recurring revenues.

Recurring revenues and non-recurring revenues recognized during the period are as follows: