Tyler Technologies, Inc.

Tyler reported 21.7% SaaS revenue growth and said Q2 delivered record SaaS bookings, record total bookings, and record second quarter free cash flow. Brian Miller said the midpoint of guidance implies about 100 basis points of margin expansion for the year, and he noted hiring is on plan and limited in the second half. On cash flow, he said Q2 free cash flow benefited from about $30 million less cash taxes than in Q2 last year, mainly tied to the One Big Beautiful Bill. Looking ahead, management said there is no meaningful change to the full-year outlook, with AI revenue contribution still small this year and more meaningful AI monetization expected in the second half of 2027 into 2028. They also said the company remains on track to convert 85% of 2023 maintenance to the cloud by 2030.

Lynn Moore framed the quarter as strategically busy and operationally productive, pointing to the Investor Day with new higher Tyler 2030 targets, the convertible debt offering, share repurchases, and the For The Record acquisition. He said public sector demand remains healthy, supported by modernization, digital transformation, cybersecurity, operational efficiency, and constituent engagement. On AI, he emphasized that the market is interested, but the company is not seeing any meaningful impact on the core business yet; instead, he expects AI to become more important over the next 12 to 18 months as products and commercialization ramp.

Brian Miller emphasized continued margin expansion, saying the midpoint of guidance implies about 100 basis points of expansion and that there was no real change to the spending outlook. He said hiring is right on plan and limited in the second half, and that the quarter included some one-time items that pressured margins. On cash, he highlighted record second-quarter free cash flow and said cash taxes were about $30 million lower than a year ago. He also said third-party payment processing headwinds were largely a last-year issue and not a major factor going forward, and he described share repurchases as a higher priority given the 2030 outlook and valuation.

Analysts pressed on whether AI is slowing sales cycles; management said no, describing the environment as business as usual and saying core business is not seeing impact. Questions around cloud conversion focused on incentives versus disincentives; Moore said Tyler is still emphasizing incentives now, with disincentives likely to become more visible over the next 12 to 24 months. On transactions, management said growth excluding Texas was about 10% and is driven by higher volumes, new names, and transaction-based software deals, including a $2 million starting ARR ramp for the newly signed motor vehicle deal that could grow to $10 million plus when mandated. Analysts also asked about AI pricing and labor augmentation; Moore said subscription uplift and outcome-based pricing are being tested, and that products like document automation and resident AI assistant are increasingly viewed through a labor-budget ROI lens.