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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM | 10-K

☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-10485

TYLER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware | 75-2303920
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.)
5101 Tennyson Parkway |
Plano, | Texas | 75024
(Address of principal executive offices) | (Zip code)

Registrant’s telephone number, including area code: (972) 713-3700
__________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading symbol | Name of each exchange on which registered
COMMON STOCK, $0.01 PAR VALUE | TYL | New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
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, a smaller reporting company, or an emerging growth company. See the definitions 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 (Do not check if smaller reporting company) |  | ☐ |  | 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. |  | ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. |  | ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant was $25,541,975,159 based on the reported last sale price of common stock on June 30, 2025, which is the last business day of the registrant’s most recently completed second fiscal quarter.
The number of shares of common stock of the registrant outstanding on February 16, 2026 was 42,985,340.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this annual report is incorporated by reference from the registrant’s definitive proxy statement for its annual meeting of stockholders to be held on May 5, 2026.

TYLER TECHNOLOGIES, INC.
FORM 10-K
TABLE OF CONTENTS

|  | PAGE
| PART I |
Item 1. | Business | 3
Item 1A. | Risk Factors | 11
Item 1B. | Unresolved Staff Comments | 21
Item 1C. | Cybersecurity | 21
Item 2. | Properties | 23
Item 3. | Legal Proceedings | 24
Item 4. | Mine Safety Disclosures | 24
| PART II |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 25
Item 6. | [Reserved] | 26
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 40
Item 8. | Financial Statements and Supplementary Data | 41
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 41
Item 9A. | Controls and Procedures | 41
Item 9B. | Other Information | 41
Item 9C. | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | 42
| PART III |
Item 10. | Directors, Executive Officers and Corporate Governance | 43
Item 11. | Executive Compensation | 43
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 43
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 43
Item 14. | Principal Accounting Fees and Services | 43
| PART IV |
Item 15. | Exhibits, Financial Statement Schedules | 44
Item 16. | Form 10-K Summary | 46
Signatures | 47

2

PART I
ITEM 1. BUSINESS.
DESCRIPTION OF BUSINESS
Tyler Technologies, Inc. (“Tyler” or “Company”) is a leading provider of integrated software and technology management solutions for the public sector. Our solutions empower local, state, and federal government entities to create smarter, safer, and stronger communities. We offer the broadest range of software solutions and services designed for every level of public sector government agency. Our solutions deliver mission-critical technology to support the essential functions of government, including public safety, justice, public health, taxation and budgeting, infrastructure and land use, outdoor recreation, utility and civic services, regulation, K-12 education, and social services. We provide both the back-office systems-of-record that serve the operational needs of specific government agencies, as well as platform technology solutions that are designed to integrate with our back-office solutions and be deployed and connected across many agencies. Examples of transformative platform technologies include our market-leading payments platform, data platform, low-code application development platform, and digital resident experience solutions.
We maintain deep, long-term relationships with state and local government agencies, including dedicated state-level offices in the 30 states in which we have enterprise contracts. Our professional information technology (“IT”) services include cloud-based software deployment, data conversion, and training. We also provide continuing client support services to ensure product performance and reliability, providing us with long-term client relationships and a significant base of recurring revenue.
MARKET OVERVIEW
The federal, state, and local public sector market is one of the largest and most decentralized IT markets in the country, consisting of hundreds of federal agencies, all 50 states, approximately 3,000 counties, 36,000 cities and towns, and 12,600 school districts. This market is also comprised of approximately 40,000 special districts and other agencies, each with specialized delegated responsibilities and unique information management requirements.
Today, government agencies play an essential role in all aspects of society, including providing protection and security, delivering public services, ensuring public health, effectively administrating public resources, developing and enforcing regulations, and maintaining engagement with the public. In an increasingly digital world, constituents expect more transparency, frictionless service, and better online experiences from public entities. As a result, government entities recognize the increasing value of information management systems and services to, among other things, improve transactional revenue collection, provide transparency and increased access to information, and streamline the delivery of services to their constituents. Government bodies recognize “digital government” is not just a modern convenience, but a requirement for good governance. From integrated public safety and justice information systems to systems that integrate tax, finance, infrastructure, and land use processes, many jurisdictions have benefited significantly from the implementation of jurisdiction-wide systems that allow different agencies or government offices to share data and provide a more comprehensive approach to information management.
Agencies at all levels of government face challenges in attracting and retaining the staff necessary to support their IT operations. As a result, they seek to establish long-term relationships with reliable providers of high-quality IT products and services such as Tyler.
Although governments often face budgetary constraints in their operations, their primary revenue sources are usually property, business, and sales tax revenue, as well as transactional fees and service charges, which historically tend to be relatively stable. Government agencies increasingly rely on digital payment solutions to streamline the collection and distribution of government funds. In addition, the acquisition of modern technology typically enables governments to operate more efficiently and securely and often provides a measurable return on investment that justifies the purchase of software and related services.
Tyler management believes we compete based on several key factors, including:
•The breadth, depth, and quality of our product and service offerings
•Deep industry expertise with proven implementation success
•Technological innovation
•Name recognition, reputation, and references
•Value and return-on-investment
•Financial strength and stability
3

PRODUCTS AND SERVICES
We provide a comprehensive and flexible suite of products and services that addresses the information technology needs of cities, counties, states, schools, federal agencies, and other government entities.
We design, develop, market, and support a broad range of software solutions to serve mission-critical “back-office” functions of the public sector. Many of our back-office software applications integrate with our transformative platform solutions, such as our unified payments platform, data and insights platform, and digital public engagement solutions that allow for real-time public access to a variety of information or that allow the public to transact business with governments online.
Each of our core software solutions consists of several fully integrated applications. In some of the product areas, such as financial management and education and property appraisal and tax, we offer multiple solutions designed to meet the needs of different sized governments.
A description of our primary suites of products and services follows:
Platform & Transformative Technology Solutions
Our platform and transformative technology solutions create the foundation for government innovation and enhance our clients’ ability to connect with constituents, conduct business, collect and disburse funds, safeguard systems, and leverage data to its fullest. Many of these solutions are integrated into our products, while others can be leveraged as add-on solutions. Our platform & transformative technology solutions include:
•Cybersecurity: Augments government agencies’ resources with access to advanced expertise for program design, 24/7 threat detection and response, customized employee training, vulnerability testing, and more.
•Data & Insights: Allows agencies to transform data into insights about financial, operational, and strategic outcomes by making it easier to surface meaningful data for informing government decisions and citizens.
•Digital Solutions: Provides a seamless cross-department experience so that agencies can deliver a unified citizen experience and achieve better outcomes while helping workers and policymakers share, communicate, and leverage data more effectively.
•Payments: The leading integrated payments platform for Tyler’s public sector clients, processing nearly half a billion transactions annually and covers the entire payments lifecycle, including integrated credit, debit and ACH processing, billing, invoice presentment, merchant onboarding, support, collections, reconciliation, and disbursements.
•Platform Technologies: A low-code application development platform purpose-built for the public sector. Enables government workers to quickly build solutions and applications that suit their needs.
•Outdoor Recreation: Designed specifically for local, state, and federal outdoor agencies, our solutions encompass campsite reservations, activity registrations, licensing sales and renewals, and real-time data for conservation and park management.
Public Administration Solutions
Our public administration solutions connect the dots between departments, agencies, municipalities, and states to deliver the core business functions of the public sector. By making it easier to manage the business side of the public sector, agencies can focus on delivering the resources and services required to make their community a place where people want to live. Our public administration solutions include:
•Civic Services: Business management and community development solutions manage permitting, enforcement, health and safety inspections, compliance, maintenance and work orders, 311 requests, and more.
•ERP: Integrates core financial applications with human resources, revenue management, tax billing, utilities, asset management, and payment processing.
•Property & Recording: Manages all aspects of the property tax life cycle, including appraisal services, valuation, tax billing and collections, assessment administration, and land and official records.
•Regulatory: Permitting, licensing and regulatory management help local, state, and federal government agencies and departments of any size simplify every aspect of regulatory compliance.
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Courts & Public Safety Solutions
Our integrated courts and public safety solutions are used at the municipal, county, state, and federal levels to help courts, prosecutors, defenders, jails, sheriffs’ offices, police departments, and probation officers keep their communities safe. Our courts and public safety solutions include:
•Corrections: Connects courts, public safety, and supervision agencies to ensure safer and more efficient operations for correctional facilities.
•Courts & Justice: Provides case management and shares data with all justice partners by connecting courts, prosecutors, public defenders, and the filing community.
•Public Safety: Provides real-time information and instant data sharing across jurisdictions and promotes intelligence-led responses so that help arrives faster and more prepared while complying with state and federal reporting mandates.
K-12 Education Solutions
Our integrated school solutions enable districts to operate as a single system across campuses and functions. By bringing data together and making it accessible as needed to administrators, teachers, students, bus drivers, and parents, we are able to improve everyone’s ability to support the educational journey. Our K–12 Education solutions include:
•School ERP: Manages K-12 schools’ most essential business functions by integrating financial, budgeting, and procurement data. Our suite of human resource management tools helps schools efficiently manage payroll and employee information and hire and retain qualified teachers, staff, and substitutes.
•Student Transportation: Manages every aspect of the student transportation operation with integrated software and telematic hardware solutions to help ensure operational efficiency and cost-effectiveness.
Health & Human Services Solutions
Our integrated solutions enable health and human service agencies to leverage data and optimize operations to better maintain the well-being of communities. Our health & human services solutions include:
•Environmental Health: Streamlines the process of issuing permits, performing health inspections, running reports, and investigating complaints.
•Disability & Benefits: Helps programs and agencies administer benefits and makes it easier to manage the complexity of services like medical cannabis regulation, veterans’ benefits, vocational rehabilitation, workers’ compensation, and more.
Revenues
We derive our revenues from three primary sources:
•Subscription-based services
•Maintenance and support
•Professional services
Subscription-Based Services
Subscriptions revenue consists of revenues derived from our Software as a Service (“SaaS”) arrangements and transaction-based fees. We are able to provide the majority of our software products through our SaaS model. The clients who choose this model typically do not wish to maintain, update and operate these systems directly, or make up-front capital expenditures to implement these advanced technologies. The contract terms for these arrangements range from one to 10 years but are typically contracted for periods of generally one to three years. The majority of our SaaS or hosting arrangements include additional professional services as well as maintenance and support services.
Transaction-based fees primarily relate to digital government services, online payment solutions (which are sometimes offered with the assistance of third-party vendors), and online dispute resolution solutions. Digital government services consist of websites and applications that allow consumers, such as businesses and citizens, to access government information, complete transactions and make electronic payments. Our online payments solution covers the entire payments life cycle, including billing, presentment, merchant onboarding, collections, reconciliation, and disbursements. We also provide electronic document filing solutions (“e-filing”) that simplify the filing and management of court related documents for courts and law offices.
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Maintenance and Support
Support is provided through an omni-channel approach including phone, knowledge base and client support portal experiences. For more complicated issues, our staff, with the clients’ permission, can log on to clients’ systems remotely. We maintain our clients’ software largely through releases that contain improvements and incremental additions of features and functionality, along with updates necessary because of legislative or regulatory changes.
Nearly all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases multi-year, contracts, with a typical fee based on a percentage of the software product’s license fee. These fees can generally be increased on renewal and may also increase as new license fees increase. Maintenance and support fees are generally paid annually in advance. Most maintenance contracts automatically renew unless the client or Tyler gives notice of termination prior to expiration. Similar maintenance and support services are provided to our SaaS clients and are included in their subscription fees, which are classified as subscription revenue.
Professional Services
We provide a variety of professional services to clients who utilize our software products. Our clients contract with us for installation, training, and data conversion services in connection with their implementation of Tyler’s software solutions, whether through a SaaS arrangement or on-premise software license. The complete implementation process for a typical system includes planning, design, data conversion, set-up and testing. At the culmination of the implementation process, an implementation team is generally onsite at the client’s facility or available via remote video conferencing to help ensure the smooth go-live with the new system. Implementation fees are charged separately to clients on either a fixed-fee or hourly charge basis, depending on the contract.
Both in connection with the installation of new systems and on an ongoing basis, we provide extensive training services and programs related to our products and services. Training can be provided in our training centers, onsite at clients’ locations, at meetings and conferences, or remotely, and can be customized to meet clients’ requirements. The vast majority of our clients contract with us for training services, both to improve their employees’ proficiency and productivity and to fully utilize the functionality of our systems. Training services are generally billed on an hourly or daily basis, along with travel and other expenses.
Our other sources of revenue include software licenses and royalties and hardware equipment, which represented 2.5% and 3.2% of total revenues for the twelve months ended December 31, 2025 and 2024, respectively.
STRATEGY
Our objective is to grow our revenues and earnings organically, supplemented by focused strategic acquisitions. The key components of our business strategy are to:
•Provide high quality, value–added products and services to our clients. We compete on the basis of, among other things, delivering to clients our deep domain expertise in government operations through the high value products and services in the market. We believe we have achieved a reputation as a premium product and service provider to the public sector market.
•Continue to expand our product and service offerings. While we already have what we believe to be the broadest line of software products for the public sector, we continually strive to upgrade our core software applications and expand our complementary product and service offerings to respond to technological advancements and the changing needs of our clients. We regularly add new products and services to our portfolio through internal product development as well as acquisitions. We believe that the addition of new features and applications enhances the market appeal of our core products. We have also broadened our offerings of consulting and business process reengineering services.
•Accelerate our move to the cloud. We have offered most of our core products in both an on-premises license model and a cloud-based subscription model for several years and have seen a steady increase in the percentage of new software clients choosing our cloud model in recent years. Beginning in late 2019, we moved our approach to sales from “cloud-neutral” to “cloud-first,” with an increasing preference to provide our solutions in the cloud. We are making significant investments in optimizing our products to be deployed efficiently in the public cloud. Over a multi-year period we have been transitioning from hosting clients in Tyler’s proprietary data centers to utilizing Amazon Web Services (“AWS”) for cloud hosting.
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•Expand our client base. We seek to establish long-term relationships with new clients primarily through our sales and marketing efforts. While we currently have clients in all 50 states, Canada, the Caribbean, the United Kingdom, Australia, and other international locations, some of our solutions have not fully achieved nationwide geographic penetration. We intend to continue to expand into new geographic markets by adding sales staff and targeting marketing efforts by solutions in those areas. We also intend to continue to expand our client base to include larger jurisdictions. While our traditional market focus has primarily been on small and mid-sized governments, our increased size and market presence, together with the technological advances and improved scalability of certain of our solutions, are allowing us to achieve increasing success in selling to larger clients. We also expect to expand our presence in international markets by leveraging our leadership position in the United States through the disciplined pursuit of selected opportunities in other countries.
•Expand our existing client relationships. Our existing client base offers significant opportunities for additional sales of solutions and services that we currently offer, but that existing clients do not fully utilize. Add-on sales to existing clients typically involve lower sales and marketing expense than sales to new clients. In particular, since the acquisition of NIC Inc. (“NIC”) in April 2021, we have been successfully selling Tyler software products into NIC’s client base and in turn providing NIC’s payment services to Tyler’s client base. We expect those opportunities to continue to expand.
•Grow recurring revenues. We have a large recurring revenue base from subscription-based services and maintenance and support, which generated revenues of $2.0 billion, or 87% of total revenues, in 2025. We have historically experienced very low client turnover (approximately 2% annually), and recurring revenues continue to grow as the installed client base increases. Subscription-based revenues have been our fastest growing revenue category over the past five years, increasing from $784.4 million in 2021 to $1.6 billion in 2025. We monitor Annualized Recurring Revenue (“ARR”), which is calculated based on quarter-to-date end total recurring revenues multiplied by four. ARR was $2.06 billion and $1.86 billion as of December 31, 2025, and 2024, respectively. ARR increased approximately 11% compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements and expansion with existing clients.
•Maximize economies of scale and take advantage of financial leverage in our business. We seek to build and maintain a larger client base to create economies of scale, enabling us to provide value-added products and services to our clients while expanding our operating margins. In addition, we believe that we have a marketing and administrative infrastructure in place that can be leveraged to accommodate significant long-term growth without proportionately increasing sales and marketing and general and administrative expenses.
•Attract and retain highly qualified employees. We believe that the depth and quality of our management and staff is one of our significant strengths, and that the ability to retain such employees is crucial to our continued growth and success. We believe that our stable management team, financial strength and growth opportunities, as well as our leadership position in the public sector market, enhance our attractiveness as an employer for highly skilled employees.
•Pursue strategic acquisitions. We selectively pursue strategic acquisitions that provide us with one or more of the following:
◦New products and services to complement our existing offerings
◦Entry into new markets related to the public sector
◦New clients and/or geographic expansion
•Establish strategic alliances. We have a strategic collaboration agreement with AWS for cloud hosting services, which brings together Tyler, the nation’s largest software company exclusively focused on the public sector, and AWS, the broadest and deepest cloud platform. Specifically, the agreement with AWS provides the framework for development, training and collaboration in order to support next-generation applications that have the scalability, resiliency, and security AWS offers. AWS is assisting us in accelerating innovation and the development of strategic initiatives. These initiatives bring the most advanced cloud-native services to Tyler clients to help improve the flow of information and provide a better experience for state, local, and federal governments.
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SALES, MARKETING AND CLIENTS
We market our products and services primarily through direct sales and marketing personnel located throughout the United States. Other in-house sales staff focus on add-on sales, professional services and support. For certain products, we also utilize a partner network for both sales and professional services, primarily in the state and federal markets.
Sales of new systems are typically generated from referrals from other government offices or departments within a county or municipality, referrals from other local governments, relationships established between sales representatives and county or local officials, contacts at trade shows, direct mailings, and direct contact from prospects already familiar with us. We are active in numerous national, state, county, and local government associations and participate in annual meetings, trade shows, and educational events.
Clients consist primarily of federal, state, county and municipal agencies, school districts and other local government offices. In counties, clients include the auditor, treasurer, tax assessor/collector, county clerk, district clerk, county and district court judges, probation officers, sheriff, and county appraiser. At municipal government sites, clients include directors from various departments, including administration, finance, utilities, public works, code enforcement, personnel, purchasing, taxation, municipal court and police. At the state and federal levels, clients include Chief Information Officers and agency heads.
COMPETITION
We compete with numerous local, regional, and national firms that provide or offer some or many of the same solutions and services that we provide. Many of these competitors are smaller companies that may offer less expensive solutions than ours. Many of these firms operate within a specific geographic area and/or in a narrow product or service niche. We also compete with national firms, some of which have greater financial and technical resources than we do, including Oracle Corporation, Infor, SAP AG, Workday, Inc., CentralSquare Technologies, Thomson Reuters Corporation, Motorola Solutions, Inc., Axon Enterprise, Inc., and Constellation Software, Inc. In addition, we sometimes compete with consulting and systems integration firms, which develop custom systems, primarily for larger governments. We also occasionally compete with central internal information service departments of governments, which requires us to persuade the end-user department to discontinue service by its own personnel and outsource the service to us.
We compete on a variety of factors, including price, service, name recognition, reputation, technological capabilities, and the ability to configure products and services to address the individual requirements of the client. Our ability to offer an integrated system of applications for several offices or departments is often a competitive advantage. Governmental units often are required to seek competitive proposals through a request for proposal process, and some prospective clients use consultants to assist them with the proposal and vendor selection process.
SUPPLIERS
Substantially all of the computers, peripherals, printers, scanners, operating system software, office automation software, and other equipment necessary for the implementation and provision of our software systems and services are presently available from several third-party sources. Hardware is purchased on original equipment manufacturer or distributor terms at discounts from retail. We have not experienced any significant supply problems.
SEASONALITY
Transaction-based fees are generally derived from multi-year contracts with our clients that generate fees from payment transactions and digital government services and are collected on a recurring basis during the contract term. Transaction-based fees are historically highest in the second quarter, which coincides with peak outdoor recreation seasons and statutory filing deadlines in many jurisdictions, and lowest in the fourth quarter due to fewer business days and lower transaction volumes around holidays.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS, AND LICENSES
We regard certain features of our internal operations, software, and documentation as confidential and proprietary and rely on a combination of contractual restrictions, trade secret laws and other measures to protect our proprietary intellectual property. We generally do not rely on patents. We typically license our software products under non-exclusive license agreements, which are generally non-transferable and have a perpetual term.
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HUMAN CAPITAL RESOURCES
Human Capital
Our experienced, collaborative team is one of the most significant contributors to our success in empowering the public sector to create smarter, safer, and stronger communities. Our effectiveness in attracting and developing talented team members, many of whom spend the majority of their careers at Tyler serving our public sector clients, demonstrates our commitment to providing a welcoming and safe workplace, with a strong culture, compensation and benefits, and continual growth opportunities for our team members.
As of December 31, 2025, we had approximately 7,800 team members. Approximately 93% of our team members work in one of our 63 U.S. offices or remotely in the U.S. Approximately 650 of our team members are in Canada, the Philippines, or India. Race and gender reporting is based on information provided by team members.
We believe our efforts in managing and supporting our workforce are effective, as evidenced by current levels of applicants, team member tenure, high levels of engagement reported through survey feedback from Tyler team members, and low team member turnover.
Our team continues to work collaboratively with and for our clients and partners across multiple work arrangements: fully office-based, fully remote and a blended approach of office-based and remote work. As of December 31, 2025, approximately 51% of team members work remotely and 49% of team members are either partially or fully office-based. Collaboration is an important part of our culture. We are dedicated to creating opportunities for our team members to connect in person, enhancing both our partially and fully office-based presence, while maintaining the flexibility that supports their productivity and well-being.
Voluntary workforce turnover (rolling 12-month attrition) was 7% and 8% as of December 31, 2025 and 2024, respectively, and consistently outperforms industry levels. The average tenure of our team members is approximately eight years, and approximately 30% of employees have been employed by Tyler for more than ten years. The most frequent factor cited by team members leaving Tyler in 2025 was career opportunities. While 29% of positions filled in 2025 were filled by existing Tyler team members, we continue to invest in talent development and career opportunities for team members, as discussed in further detail below.
Investments in Talent
We are committed to providing Tyler team members with career growth opportunities and the training and resources necessary to continually strengthen their skills. Our talent assessment and development programs are designed to provide managers and individual contributors with the resources to achieve career goals, strengthen management and business skills and effectively lead their teams.
For example, in 2025:
•Division presidents and corporate function executives conducted annual leadership assessment and talent reviews with their human resources’ leaders and leadership teams to identify development priorities within their teams.
•Nearly 300 Tyler managers participated in our nine-month Tyler Manager Development program which includes more than 50 hours of interactive, experiential learning focused on developing skills managers need to lead high performing teams. The program also includes multiple leadership assessments, including 360-degree feedback, and a dedicated mentor to support their development.
•Tyler launched a new process for onboarding new leaders to ensure integration into Tyler’s way of leading and to give participants a jump start for success. The half-day session is led by Tyler’s senior executive team and allows for meaningful interaction and expectation setting for new leaders.
•Tyler team members completed over 31,000 hours of Tyler-sponsored leadership training, professional development, and compliance training to support continuous learning and career development.
•As we continue our multi-year investment in developing cloud capabilities across the Tyler workforce, 134 AWS certifications were attained in 2025, and communities of practice were established to facilitate learning and best practice sharing.
•At Tyler, we recognize and value the expertise our team members bring, unique to our software, services and our public sector clients. Accordingly, 91% of eligible team members were redeployed and remain at Tyler through our Workforce Redeployment and Retention Program. In redeploying talent impacted by position eliminations due to the evolving nature of our business, we demonstrate our values of community, inclusion and growth -- redeploying rather than reducing our workforce -- whenever possible to grow our business and strengthen our culture.
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Oversight and Management
Our human resources team is tasked with leading and supporting our organization in managing employment-related matters, including recruiting and hiring, onboarding and training, compensation planning, and talent management and development. Our executive team is responsible for periodically reviewing team member programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices. Management periodically reports to the Board of Directors and its committees regarding human capital measures and results that guide how we attract, retain and develop a workforce to enable our business strategies.
Health & Safety
We continually invest in the well-being of Tyler team members and their families, providing a range of resources in support of mental and emotional, financial, and physical health and wellness.
Inclusion
One of Tyler’s stated core values is inclusion, which we define as respecting and valuing each other. Consistent with our value of inclusion, in 2025, Tyler:
•Launched the new leader orientation program referenced above to accelerate the ability of leaders new to Tyler to onboard and integrate across our team;
•Expanded our Employee Resource Group (ERG) footprint with the launch of two new ERGs - Tyler Black and New@Tyler;
•Increased the participation in our equity compensation grant program with over 13% of 2025 recipients representing first-time grantees; and
•Retained and redeployed 91% of eligible team members impacted by position elimination to other roles within Tyler, respecting the value they bring to our clients and our team.
INTERNET WEBSITE AND AVAILABILITY OF PUBLIC FILINGS
We file annual, quarterly, current and other reports, proxy statements and other information with the Securities and Exchange Commission, or SEC, pursuant to the Securities Exchange Act. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room by calling the SEC at 1-800-732-0330. The SEC maintains an Internet site that contains reports, proxy and other information statements, and other information regarding issuers, including us, that file electronically with the SEC. The address of this site is http://www.sec.gov.
We also maintain a website at www.tylertech.com. We make available free of charge through this site our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Forms 4 and 5, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to the SEC. In addition, copies of our annual report will be made available, free of charge, upon written request.
Our “Code of Business Conduct and Ethics” is also available on our website. We intend to satisfy the disclosure requirements regarding amendments to, or waivers from, a provision of our Code of Business Conduct and Ethics by posting such information on our website.
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ITEM 1A. RISK FACTORS.
An investment in our common stock involves a high degree of risk. Investors evaluating our company should carefully consider the factors described below and all other information contained in this Annual Report. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Additional factors and uncertainties not currently known to us or that we currently consider immaterial could also harm our business, operating results, and financial condition. This section should be read in conjunction with the Financial Statements and related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report. We may make forward-looking statements from time to time, both written and oral. We undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements. Our actual results may differ materially from those projected in any such forward-looking statements due to a number of factors, including those set forth below and elsewhere in this Annual Report.
Risks Associated with Our Business, Including Our Software Products
Cyber-attacks, the use of artificial intelligence and security vulnerabilities can disrupt our business and harm our competitive position.
Threats to IT security can take, and have in the past taken, a variety of forms. Individuals, groups of hackers, and sophisticated organizations, including state-sponsored organizations, may take steps that pose threats to our clients and our IT. Bad actors have in the past and may in the future develop and deploy malicious software to gain access to our internal networks, and/or to attack our products and services, gain access to data centers we use to host client deployments, or act in a coordinated manner to launch distributed denial of service or other coordinated attacks. Cyber threats are constantly evolving, thereby increasing the difficulty of detecting and successfully defending against them. Cyber threats can have cascading impacts that unfold with increasing speed across our internal networks and systems and those of our partners and clients. Breaches of our internal network have disrupted and could in the future disrupt the security of our internal systems and business applications, and could impair our ability to provide services to our clients and protect the privacy of their data, result in product development delays, compromise confidential or technical business information harming our competitive position, result in theft or misuse of our intellectual property or other assets, require us to allocate more resources to improve technologies, or otherwise adversely affect our business. Our business policies and internal security controls may not keep pace with these evolving threats. For example, the evolving use of artificial intelligence (“AI”) increases the risk of cyberattacks and data breaches, which themselves can evolve more rapidly when artificial intelligence is used to facilitate the attack. Despite our network and application security, threat intelligence services, internal control measures, and physical security procedures we employ to safeguard our systems, we may still be vulnerable to a security breach, intrusion, or loss or theft of confidential client data, transaction data, or proprietary company information, which may harm our business, reputation and future financial results. Use of artificial intelligence by our team members, whether authorized or unauthorized, could increase the risk that our intellectual property and other proprietary information may be unintentionally disclosed. In addition, vulnerabilities in our clients’ on-premises infrastructure have in the past and may in the future be exploited by a bad actor, with the resulting impacts being linked to or attributed to, correctly or incorrectly, our software or services, which could also harm our business, reputation, and future financial results, even if our software or services were not the cause of the exploitation. The lost revenue, containment, remediation, investigation, legal and other costs could be significant and may exceed our insurance policy limits or may not be covered by insurance at all. Further, we may be subject to regulatory enforcement actions and litigation that could result in financial judgments, the payment of settlement amounts and/or disputes with insurance carriers concerning coverage.
Disclosure of personally identifiable information and/or other sensitive client data could result in liability and harm our reputation.
We store and process increasingly large amounts of personally identifiable information and other confidential information of our clients. The continued occurrence of high-profile data breaches provides evidence of an external environment increasingly hostile to information security. Despite our efforts to improve security controls, it is possible our security controls over personal data, our training of employees on data security, and other practices we follow may not prevent the improper disclosure of sensitive client data that we store and manage. The evolving threat landscape, including new technologies that leverage artificial intelligence, may increase the external threats to the data we store and process. Disclosure of personally identifiable information and/or other sensitive client data has resulted in the past, and may result in the future, in obligations to send “data breach” notifications under applicable state laws, or to assist our clients in doing so, which could result in liability and harm our reputation.
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We depend on third parties with whom we engage or collaborate for certain projects, deliverables, and/or financial transaction processes. If these parties fail to satisfy their obligations to us or we are unable to maintain these relationships, our operating results and business prospects could be adversely affected.
To satisfy our obligations under client contracts, we often engage third parties to provide certain deliverables or fulfill certain software or services requirements. We may also use third parties to ensure that our services and solutions integrate with the software, systems, or infrastructure requirements of other vendors and service providers used by us internally or by our clients. Our ability to operate our internal systems and/or to serve our clients and deliver our solutions in a timely manner depends on our ability to retain and maintain relationships, including contractual arrangements, with third-party vendors and service providers and the ability of these third parties to meet their obligations in a timely manner, as well as on our effective oversight of their performance. If any third party fails to perform on a timely basis the agreed-upon services, our ability to fulfill our obligations may be jeopardized. Third-party performance deficiencies could result in breaches of our obligations under, or terminations for defaults of, one or more of our client contracts. A breach or termination for default could expose us to liability for damages and have an adverse effect on our business prospects, results of operations, cash flows and financial condition and our ability to compete for future contracts and orders. A global economic slowdown, a pandemic, or similar circumstances could also adversely affect the businesses of our third-party providers, hindering their ability to provide the services on which we rely. Our agreements with third parties typically are non-exclusive and do not prohibit them from working with our competitors or from engaging with our clients directly. If we are unsuccessful in establishing or maintaining our relationships with these third parties, our ability to compete in the marketplace or to grow our revenues could be impaired, and our business, operating results or financial condition could be adversely affected.
In addition, we may act as a subcontractor to a third-party prime contractor to secure new projects. Subcontracting arrangements where we are not the prime contractor pose unique risks to us because we may not have control over the client relationship, and our ability to generate revenues under such subcontracts may depend on the prime contractor, its performance and relationship with the client, and its relationship with us. We could suffer losses in the event a prime contract under which we serve as a subcontractor is terminated, whether for non-performance by the prime contractor or otherwise. Upon a termination of the prime contract, our subcontract would similarly terminate, and the resulting contract loss could have an adverse effect on our business prospects, results of operations, cash flows and financial condition and our ability to compete for future contracts and orders.
We rely on third-party providers—including Amazon Web Services (AWS)—for hosting services and other technology-related services needed to deliver certain of our cloud solutions and other functionality. Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability.
A material portion of our business is provided through software hosting services, which are generally hosted from and use computing infrastructure provided by third parties, including AWS. These hosting services depend on the uninterrupted operation of data centers and the ability to protect computer equipment and information stored in these data centers against damage that may be caused by natural disaster, fire, power loss, telecommunications or Internet failure, acts of terrorism, unauthorized intrusion, computer viruses, and other similar damaging events. Some of our hosting operations have in the past, and may in the future, become unavailable or inoperable for an extended period, harming our ability to fulfill our contractual commitments. Although we take what we believe to be reasonable precautions against such occurrences, we can give no assurance that damaging events such as these will not result in a prolonged interruption of our services, which could result in client dissatisfaction, loss of revenues, and damage to our business.
Third-party hosting service providers and other third-party vendors have no obligation to renew their agreements with us on commercially reasonable terms or at all. If we are unable to renew these agreements on commercially reasonable terms, we may be required to transition to a new provider and we may incur significant costs and possible service interruption or functional degradation in connection with doing so. In addition, such service providers could decide to close their facilities or change or suspend their service offerings without adequate notice to us. Moreover, any financial difficulties, such as bankruptcy, faced by such service providers may have negative effects on our business, the nature and extent of which are difficult to predict. Because we cannot easily switch third-party hosting service providers, and in certain instances other third-party vendor arrangements, any disruption with respect to our current providers would impact our operations and our business could be adversely impacted. Problems faced by our third-party providers could adversely affect the experience of our clients. For example, AWS has experienced significant service outages in the past and may do so again in the future. As we continue to migrate legacy solutions deployed on premises to the cloud, and to optimize our solutions for the cloud, we may be exposed to additional cybersecurity and artificial intelligence threats.
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Material portions of our business require the Internet infrastructure to be reliable.
Significant part of our future success continues to depend on the use of the Internet as a means to access public information and perform transactions electronically, including, for example, electronic filing of court documents and electronic payment processing. This in part requires ongoing maintenance of the Internet infrastructure, especially to prevent interruptions in service, as well as additional development of that infrastructure. This requires a reliable network backbone with the necessary speed, data capacity, security, and timely development of complementary products for providing reliable Internet access and services. If this infrastructure fails to be sufficiently developed or be adequately maintained, our business would be harmed because users may not be able to access our solutions. To date, any such outages have been temporary, and any business interruptions were contained and immaterial.
We employ third-party licensed software and software components for use in or with our solutions, and the inability to maintain these licenses or the presence of errors or security vulnerabilities in the software we license could limit the functionality of our products and result in increased costs or reduced service levels, which would adversely affect our business.
We incorporate and include third-party software into and with certain of our products and solutions. We also use third-party software and tools in certain areas of the development process for our solutions. We anticipate that we will continue to rely on such third-party software and development tools in the future. There can be no assurance that these third parties will continue to make their software or tools available to us on acceptable terms, or at all, not make their products available to our competitors on more favorable terms, invest the appropriate levels of resources in their products and services to maintain and enhance the capabilities of their software, or remain in business. Any impairment in our relationship with these third parties or our ability to license or otherwise use their software or tools could have a material adverse effect on our business, results of operations, cash flow, and financial condition. Although we believe that there are commercially reasonable alternatives to the third-party software and tools we currently license, this may not always be the case, or they may be difficult, time-consuming, or costly to replace. In addition, although we maintain a supplier security evaluation process, if the third-party software or tools we use has or have errors, security vulnerabilities, or otherwise malfunctions, the functionality of our solutions may be negatively impacted, our clients may experience reduced service levels, and our business may suffer. To the extent a third-party relies on artificial intelligence, improper processing of data by those service providers could harm our reputation, business and clients, or expose us to legal liability.
Certain of our solutions utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business.
Certain of our solutions include software covered by open source licenses. The terms of various open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solutions. It is possible under the terms of certain open source licenses, if we combine our proprietary software with open source software in a certain manner, that we could be required to release the source code of our proprietary software and make our proprietary software available under open source licenses. In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our solutions, or otherwise be limited in the licensing of our solutions, each of which could reduce or eliminate the value of our solutions. In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Many of the risks associated with the use of open source software cannot be eliminated and could adversely affect our business.
We run the risk of errors or defects with new products or enhancements to existing products.
Our software products are complex and have in the past, and may in the future, contain errors or defects, especially when first introduced or when new versions or enhancements are released. Any such defects could result in a loss of revenues or delay market acceptance. Our agreements typically contain provisions designed to limit our exposure to potential liability. However, it is possible we may not always successfully negotiate such provisions in our client contracts or the limitation of liability provisions may not be effective due to existing or future federal, state, or local laws, ordinances, or judicial decisions. Although we maintain errors and omissions and general liability insurance, and we try to structure contracts to limit liability, we cannot guarantee that a successful claim could not be made or would not have a material adverse effect on our future operating results.
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We must timely adapt to and implement technological changes to be remain competitive.
The market for our products is characterized by rapid technological change, evolving industry standards, ever-changing client requirements, and frequent new product introductions and enhancements. New products, technologies and industry standards can render our existing products obsolete and unmarketable. As a result, our future success will depend, in part, upon our ability to enhance existing products and develop and introduce new products that keep pace with technological developments, satisfy increasingly sophisticated client requirements, and achieve market acceptance. We cannot make assurances that we will successfully identify new product opportunities and develop and bring new products to market in a timely and cost-effective manner. The products, capabilities, or technologies developed by others could also render our products or technologies outdated or noncompetitive. Our business may be adversely affected if we are unable to develop or acquire new software products or develop enhancements to existing products on a timely and cost-effective basis, or if such new products or enhancements are not adopted and purchased by the market.
As we assess the challenges and opportunities of incorporating AI technologies into our products and services, we may fail to enhance our offerings in alignment with market demands, timing or industry expectations at a pace that matches our competitors. Delays in our adoption or innovation could render our offerings less competitive or obsolete. AI technology is rapidly evolving. While we are prioritizing a measured approach based on known best practices, the investments required, the need for specialized skills and expertise, and the shifting legal and regulatory landscape may expose us to operational, financial, and reputational risks. Additionally, AI-generated outputs may be misleading, insecure, inaccurate, harmful, or otherwise flawed, potentially resulting in adverse consequences to our business.
We may be unable to protect our proprietary rights.
Many of our product and service offerings incorporate proprietary information, trade secrets, know-how, and other intellectual property rights. We rely on a combination of contract rights, copyrights, and trade secret laws to establish and protect our proprietary rights in our technology. We cannot be certain that we have taken all appropriate steps to deter misappropriation of our intellectual property, including to the extent our data is consumed by generative artificial intelligence technology. There has also been a recent change in the legal standards and regulations that courts and the U.S. patent office may apply in favorably evaluating software patent rights (see the United States Patent and Trademark Office Memorandum dated December 5, 2025 to the Patent Examining Corp from Charles Kim, Deputy Commissioner for Patents regarding the advance notice of change to the Manual of Patent Examining Procedure in light of Ex Parte Desjardins, Appeal No. 2024-000567 (PTAB September 26, 2025, Appeals Review Panel Decision)). We are not currently involved in any material intellectual property litigation; however, we may be a party to such litigation in the future to protect our proprietary information, trade secrets, know-how, and other intellectual property rights. We cannot provide assurance that third parties will not assert infringement or misappropriation claims against us with respect to current or future products. Any claims or litigation, with or without merit, could be time-consuming, costly, and divert the time and attention of management. Any such claims and litigation could also cause product shipment delays or require us to enter into royalty or licensing arrangements. Such royalty or licensing arrangements, if required, may not be available on terms acceptable to us, if at all. Therefore, litigation to defend and enforce our intellectual property rights could have a material adverse effect on our business, regardless of the final outcome of such litigation.
Clients may elect to terminate our recurring contracts and manage operations internally.
We provide annually recurring maintenance contracts for clients who are deployed on-premises and recurring software as a service contracts for clients who are deployed in the cloud. It is possible that our clients may elect to not renew recurring contracts for our software, trying instead to maintain and operate the software themselves using their perpetual license rights (excluding software applications that we provide on a hosted or software as a service basis) or migrating to a different cloud solution. Alternatively, clients may elect to drop maintenance on certain modules that they ultimately decide not to use. This could adversely affect our revenues and profits. Additionally, clients may inadvertently allow our intellectual property or other information to fall into the hands of third parties, including our competitors, which could adversely affect our business.
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Risks Associated with Selling Products and Services into the Public Sector Marketplace
Selling products and services into the public sector poses unique challenges.
We derive substantially all of our revenues from sales of software and services to state, county, and city governments, other federal or municipal agencies, and other public entities. We expect that sales to public sector clients will continue to account for substantially all of our revenues in the future. We face many risks and challenges associated with contracting with governmental entities, including:
•Resource limitations caused by budgetary constraints, which may provide for a termination of executed contracts due to a lack of future funding
•Long and complex sales cycles
•Payment terms that are subject to achieving implementation milestones, which have in the past and may in the future create differences in opinion with clients as to whether milestones have been achieved
•Political resistance to the concept of contracting with third parties to provide IT solutions, or resistance to adopting cloud solutions
•Legislative changes affecting a local government’s authority to contract with third parties
•Varying bid procedures and internal processes for bid acceptance
•Various other political factors, including changes in governmental administrations and personnel or budget initiatives
Each of these risks is outside our control. If we fail to adequately adapt to these risks and uncertainties, our financial performance could be adversely affected.
Global health crises, such as a pandemic, may adversely affect our business and results of operations.
A public health crisis, such as a pandemic, may negatively impact our business and financial results. Certain infection rates or virus strains may result in government authorities imposing measures to contain the virus, including travel bans and restrictions, quarantines, and business limitations and shutdowns. While we are unable to accurately predict the full impact that a health crisis or pandemic would have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures and associated compliance, a pandemic may negatively impact our revenues and other financial results. Because an increasing portion of our revenues are recurring, the effect of a public health-related shutdown on our results of operations may also not be fully reflected for some time.
A prolonged economic slowdown could harm our operations.
A prolonged economic slowdown or recession could reduce demand for our software products and services. Governments may face financial pressures that could in turn affect our growth rate and profitability in the future. There is no assurance that government spending levels will be unaffected by declining or stagnant general economic conditions, and if budget shortfalls occur, they may negatively impact government IT spending and could adversely affect our business.
The open bidding process creates uncertainty in predicting future contract awards.
Many governmental agencies purchase products and services through an open bidding process. Generally, a governmental entity will publish an established list of requirements requesting potential vendors to propose solutions for the established requirements. To respond successfully to these requests for proposals, we must accurately estimate our cost structure for servicing a proposed contract, the time required to establish operations for the prospective client, and the likely terms of any other third-party proposals submitted. We cannot guarantee that we will win any bids in the future through the request for proposal process, or that any winning bids will ultimately result in contracts on favorable terms. Our failure to secure contracts through the open bidding process, or to secure such contracts on favorable terms, may adversely affect our revenues and gross margins.
We face significant competition from other vendors and potential new entrants into our markets.
Our market is highly fragmented with a large number of competitors that vary in size, product platform, and product scope. Our competitors include consulting firms, publicly held companies that focus on selected segments of the public sector market, and a significant number of smaller, privately held companies. Certain competitors have greater technical, marketing, and financial resources than we do. We cannot assure investors that such competitors will not develop products or offer services that are superior to our products or services or that achieve greater market acceptance.
We also compete with internal, centralized IT departments of governmental entities, which requires us to persuade the end-user to stop the internal service and outsource to us. In addition, our clients and prospective clients could elect to provide information management services internally through new or existing departments, which could reduce the market for our services.
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We could face additional competition as other established and emerging companies enter the public sector software market and new products and technologies are introduced. The development of next-generation solutions that utilize advanced features, including artificial intelligence and machine learning, may require us to make predictions about the willingness of the public sector market to adopt such offerings. As we choose to invest in such technologies, we may be required to commit significant resources to maintain the competitiveness of our offerings before knowing whether we have correctly predicted market receptiveness to them.
Increased competition could also result in pricing pressure, fewer client orders, reduced gross margins, and loss of market share. Current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, thereby increasing the ability of their products to address the needs of our prospective clients. It is possible that new competitors or alliances may emerge and rapidly gain significant market share. We cannot assure investors that we will be able to compete successfully against current and future competitors, and the failure to do so could have a material adverse effect upon our business.
Fixed-price contracts may affect our profits.
Some of our contracts are structured on a fixed-price basis, which can lead to various risks, including:
•The failure to accurately estimate the resources and time required for an engagement
•The failure to effectively manage our clients’ expectations regarding the scope of services delivered for a fixed fee
•The failure to timely and satisfactorily complete fixed-price engagements within budget
If we do not adequately assess and manage these and other risks, we may be subject to cost overruns and penalties, which may harm our financial performance.
Changes in the insurance markets may affect our business.
Some of our clients, primarily those for our property appraisal services, require that we secure performance bonds before they will select us as their vendor. In addition, we have in the past been required to provide letters of credit as security for the issuance of a performance bond. We cannot guarantee that we will be able to secure such performance bonds in the future on terms that are favorable to us, if at all. Our inability to obtain performance bonds on favorable terms or at all could impact our future ability to win some contract awards, particularly large property appraisal services contracts, which could negatively impact revenues. In addition, the general insurance markets may experience volatility and/or restrictive coverage trends, which may lead to future increases in our general and administrative expenses and negatively impact our operating results.
Risks Related to Our Indebtedness
Servicing our indebtedness requires a significant amount of cash. If a fundamental change occurs, we may not have sufficient cash flow from our business to pay our indebtedness, and we may not otherwise have the ability to raise the funds necessary to settle for cash conversions of the Convertible Senior Notes or to repurchase the Convertible Senior Notes, or to repay our indebtedness obligations under our 2024 Credit Agreement, each of which could adversely affect our business and results of operations.
On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lender parties thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender (the “2024 Credit Agreement”). The 2024 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $700.0 million, including subfacilities for standby letters of credit and swingline loans. On March 9, 2021, we issued 0.25% Convertible Senior Notes due in 2026 in the aggregate principal amount of $600.0 million (“the Convertible Senior Notes” or “the Notes”). The Convertible Senior Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of March 9, 2021, with U.S. Bank National Association as trustee.
As of December 31, 2025, we had outstanding an aggregate principal amount of $600 million of our Convertible Senior Notes and none under our 2024 Credit Agreement. Our indebtedness may increase our vulnerability to any generally adverse economic and industry conditions, and we and our subsidiaries may, subject to the limitations in the terms of our existing and future indebtedness, incur additional debt, secure existing or future debt or recapitalize our debt. If we incur additional indebtedness, the risks related to our business would increase and our ability to service or repay our indebtedness may be adversely impacted.
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Holders may convert their Convertible Senior Notes at their option prior to the scheduled maturity date of the Convertible Senior Notes, March 15, 2026. Upon conversion of the Convertible Senior Notes, we elect to deliver shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share). In addition, holders of our Convertible Senior Notes will have the right to require us to repurchase their Convertible Senior Notes upon the occurrence of a fundamental change (as defined in the Indenture, dated as of March 9, 2021, between the Company and U.S. Bank National Association, as trustee (the “Trustee”) (the “Indenture”)), at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest, if any. Although it is our intention, and we currently expect to have the ability, to settle the Convertible Senior Notes in cash, there is a risk that we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Senior Notes surrendered or Convertible Senior Notes being converted. In addition, our ability to make payments may be limited by law, by regulatory authority, or by agreements governing our future indebtedness. Our failure to repurchase Convertible Senior Notes at a time when the repurchase is required by the Indenture or to pay any cash payable on future conversions of the Convertible Senior Notes as required by the Indenture would constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other existing or future indebtedness. If the repayment of other indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the other indebtedness and repurchase the Convertible Senior Notes or make cash payments upon conversions thereof. We have elected net-share settlement related to the premium of the maturing Convertible Senior Note, we may settle our conversion obligation by delivering a potential number of shares of our common stock, which could cause dilution to our existing shareholders.
Our ability to make scheduled payments of the principal and interest on our indebtedness when due or to make payments upon conversion or repurchase demands with respect to our Convertible Senior Notes, or to refinance our indebtedness as we may need or desire, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under our existing indebtedness, and any future indebtedness we may incur, and to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance existing or future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our existing or future indebtedness and have a material adverse effect on our business, results of operations, and financial condition.
Covenant restrictions under our indebtedness may limit our ability to operate our business and may adversely affect our financial condition, results of operations, and earnings per share.
The Indenture governing the Convertible Senior Notes and the 2024 Credit Agreement do contain, and our future indebtedness agreements may contain, covenants that restrict our ability to finance future operations or capital needs or to engage in other business activities. Subject to customary carve-outs, thresholds and baskets, the 2024 Credit Agreement (and the Indenture by means of a cross-default) restricts, absent consent of the agent and lenders under the 2024 Credit Agreement, our ability and the ability of our restricted subsidiaries to, among other things:
• Incur additional indebtedness,
• Permit liens on our assets,
• Make certain investments, acquisitions and dispositions,
• Make certain specified fundamental changes, and
• Make certain restricted payments.
In addition, the 2024 Credit Agreement (and the Indenture by means of a cross-default) contains other customary affirmative and negative covenants, and events of default. The 2024 Credit Agreement is unsecured but requires us to maintain certain financial ratios regarding our total leverage and other financial conditions in addition to the restrictions described above. Events beyond our control, including changes in general economic and business conditions, may result in a breach of any of these covenants and result in a default under the 2024 Credit Agreement that may, in turn, result in a default under the Indenture. If an event of default under the 2024 Credit Agreement occurs, the lenders could terminate all commitments to lend and elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. If we were unable to pay such amounts, the lenders could proceed against the guarantees by our direct and indirect material domestic subsidiaries. Should the lenders proceed against the guarantees, we cannot give assurance that we would have sufficient assets to pay amounts due on the 2024 Credit Agreement and the Convertible Senior Notes.
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Variable rate indebtedness subjects the Company to interest rate risk, which could cause our debt service obligations to increase significantly.
Our borrowings under the 2024 Credit Agreement are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. Loans under the revolving credit facility will bear interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) plus a margin of 0.125% to 0.75% or (2) the one-, three-, or six-month SOFR rate plus a margin of 1.125% to 1.75%. The margin in each case is based upon Tyler’s total net leverage ratio, as determined pursuant to the 2024 Credit Agreement. In addition to paying interest on the outstanding principal of loans under the revolving credit facility, the Company is required to pay a commitment fee initially in the amount of 0.125% per annum, which will subsequently range from 0.125% to 0.25% based upon the Company’s total net leverage ratio.
Fluctuation in inflation and interest rate could adversely affect our financial condition and results of operations.
Our liquidity and ongoing access to capital could be materially and negatively affected by volatility in the financial and securities markets, including increased inflation and interest rates. Our continued access to sources of liquidity depends on multiple factors, including global macroeconomic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, the Federal Reserve’s monetary policy and our operating performance. There have been periods of increased volatility in the financial and securities markets, as well as increased inflation and interest rates, which generally have made access to capital less certain and have increased the cost of obtaining new capital, and future volatility may create similar risks. We may need to obtain equity, equity-linked, or debt financing in the future to fund our operations, including our acquisition strategy, and there is no guarantee that such debt financing will be available in the future, or that it will be available on commercially reasonable terms, in which case we may need to seek other sources of funding.
Risks Associated with Our Periodic Results and Stock Price
Fluctuations in quarterly revenues could adversely impact our operating results and stock price.
Our revenues and operating results can be difficult to predict and may fluctuate substantially from quarter to quarter for a variety of reasons, including:
•Clients may unexpectedly postpone or cancel procurement processes due to changes in strategic priorities, project objectives, budget, or personnel
•Client purchasing processes vary significantly and a client’s internal approval, expenditure authorization, and contract negotiation processes can be difficult and time consuming to complete, even after selection of a vendor
•The number, timing, and significance of software product enhancements and new software product announcements by us and our competitors may affect purchase decisions
•The size of license transactions can vary significantly
In each fiscal quarter, our expense levels, operating costs, and staffing levels are based to some extent on projections of future revenues and are relatively fixed. If our actual revenues fall below expectations, we could experience a reduction in earnings. Also, if actual revenues or earnings for any given quarter fall below expectations, it may lead to a decline in our stock price.
Increases in our investment in research and development could decrease overall margins.
An important element of our corporate strategy is to continue to dedicate a significant amount of resources to research and development and related product and service opportunities, both through internal investments and the acquisition of intellectual property from companies that we have acquired. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position, and research and development expense could adversely affect operating margins.
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Our stock price may be volatile.
The market price of our common stock may be volatile. Examples of factors that may significantly impact our stock price include:
•Actual or anticipated fluctuations in our operating results
•Announcements of technological innovations, new products, or new contracts by us or our competitors, including uncertainties surrounding new and evolving artificial intelligence tools that could be perceived automate functions that may reduce the demand for certain products and services
•Developments with respect to patents, copyrights, or other proprietary rights
•Conditions and trends in the software and other technology industries
•Changes in financial estimates by securities analysts
•Changes in interest rates and Federal Reserve monetary policy
•General political, economic and market conditions and other factors
In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices of technology company stocks, which have in the past and may in the future adversely affect the market price of our stock. Sometimes, securities class action litigation is filed following periods of volatility in the market price of a particular company’s securities. We cannot assure investors that similar litigation will not occur in the future with respect to us. Such litigation could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect upon our financial performance.
Our financial outlook may not be realized.
From time to time, in press releases and otherwise, we may publish forecasts or other forward-looking statements regarding our results, including estimated revenues or earnings. Any forecast of our future performance reflects various assumptions. These assumptions are subject to significant uncertainties, and as a matter of course, any number of them may prove to be incorrect. Further, the achievement of any forecast depends on numerous risks and other factors (including those described in this discussion), many of which are beyond our control. As a result, we cannot be certain that our performance will be consistent with any management forecasts or that the variation from such forecasts will not be material and adverse. Current and potential stockholders are cautioned not to base their entire analysis of our business and prospects upon isolated predictions, but instead are encouraged to utilize our entire publicly available mix of historical and forward-looking information, as well as other available information regarding us, our products and services, and the software industry when evaluating our prospective results of operations.
Risks Associated with Our Growth Strategy and Other General Corporate Risks
We may experience difficulties in executing our acquisition strategy.
A material portion of our historical growth has resulted from strategic acquisitions, and we expect to continue to identify and pursue strategic acquisitions with suitable candidates. These transactions involve significant challenges and risks, including risks that a transaction does not advance our business strategy; that we do not achieve the expected return on our investment; that we have difficulty integrating business systems and technology; that we have difficulty retaining or integrating new employees; that the transactions distract management from our other businesses; that we acquire unforeseen liabilities; and other unanticipated events. Our future success will depend, in part, on our ability to successfully integrate future acquisitions into our operations. It may take longer than expected to realize the full benefits of these transactions, such as increased revenue, enhanced efficiencies, or increased market share, or the benefits may be ultimately less than we expected. Although we conduct due diligence reviews of potential acquisition candidates, we may not identify all material liabilities or risks related to acquisition candidates. There can be no assurance that any such strategic acquisitions will be accomplished on favorable terms or will result in profitable operations.
Our failure to properly manage growth could adversely affect our business.
We continue to expand our operations by pursuing existing and potential market opportunities. This growth places significant demands on management and operational resources. In order to manage growth effectively, we must implement and improve our operational systems, procedures, and controls on a timely basis. If we fail to implement these systems, our business may be materially adversely affected.
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Increases in labor costs, including wages, and an overall tightening of the U.S labor market, generally, or as the result of changing U.S. policy could adversely affect our business, results of operations or financial condition.
The labor costs associated with our business are subject to several external factors, including unemployment levels and the quality and the size of the labor market, prevailing wage rates, minimum wage laws, wages and other forms of remuneration and benefits offered to prospective employees by competitor employers, health insurance costs and other insurance costs, and changes in employment and labor legislation or other workplace regulation, such as changing immigration policies affecting the labor market. If we are unable to mitigate wage rate increases driven by increases to the competitive labor market through automation and other labor savings initiatives, our labor costs may increase. Furthermore, high inflation rates could also push up our labor costs. There is no assurance that our revenues will increase at the same rate as these labor cost increases to maintain the same level of profitability.
In the event we must offer increased wages or other competitive benefits and incentives to attract and retain qualified personnel and fail to do so, the quality of our workforce could decline, causing certain aspects of our business to suffer. Increases in labor costs could force us to increase our prices, which could adversely impact sales. Although we have not experienced any material labor shortage to date, we have observed an overall tightening and increasingly competitive labor market and have recently experienced and expect to continue to experience some labor cost pressures. If we are unable to hire and retain capable employees, manage labor cost pressures, or if mitigating measures we take in response to increased labor costs have unintended negative effects, including on client service or retention, our business would be adversely affected. If competitive pressures or other factors prevent us from offsetting increased labor costs, our profitability may decline and could have an adverse effect on our business, results of operations or financial condition.
We may be unable to hire, integrate, and retain qualified personnel.
Our continued success will depend upon the availability and performance of our key management, sales, marketing, client support, and product development personnel. The loss of key management or technical personnel could adversely affect us. We believe that our continued success will depend in large part upon our ability to attract, integrate, and retain such personnel. We have at times experienced and may continue to experience challenges in recruiting qualified personnel. Competition for qualified software development, sales, and other personnel is intense, and we cannot assure you that we will be successful in attracting and retaining such personnel. In addition, competitive job markets may increase our costs relating to compensation packages due to higher salary expectations and pressures.
Compliance with changing regulation of corporate governance may result in additional expenses.
Changing laws, regulations, and standards relating to corporate governance, compliance, and public disclosure can create uncertainty for public companies. The costs required to comply with such evolving laws across the various states and at the federal level are difficult to predict and/or harmonize. To maintain high standards of corporate governance, compliance, and public disclosure, we intend to invest all reasonably necessary resources to comply with evolving standards. This investment may result in an unforeseen increase in general and administrative expense and a diversion of management’s time and attention from revenue-generating activities, which may harm our operating results.
Evolving legal and regulatory landscape over artificial intelligence technologies creates uncertainties.
There is uncertainty about the extent to which privacy and data protection laws apply to artificial intelligence technologies, and any delay in addressing those concerns may result in liability or regulatory investigations and fines, as well as harms to our business and reputation. In addition, issues related to intellectual property rights in artificial intelligence technologies have not been fully addressed by the courts or regulators. As such, to the extent we implement generative artificial intelligence technologies into our products and/or services, we may face resulting exposure to claims related to copyright infringement or other intellectual property misappropriation.
We do not foresee paying dividends on our common stock.
We have not declared nor paid a cash dividend since we entered the software business in 1998. We intend to retain earnings for use in the operation and expansion of our business. We do not anticipate paying cash dividends on our common stock in the foreseeable future.
Provisions in our certificate of incorporation, bylaws, and Delaware law could deter takeover attempts.
Our Board of Directors may issue up to 1,000,000 shares of preferred stock and may determine the price, rights, preferences, privileges, and restrictions, including voting and conversion rights, of these preferred shares. These determinations may be made without any further vote or action by our stockholders. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock may make it more difficult for a third-party to acquire a majority of our outstanding voting stock. In addition, some provisions of our Certificate of Incorporation, Bylaws, and the Delaware General Corporation Law could also delay, prevent, or make more difficult a merger, tender offer, or proxy contest involving us.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 1C. CYBERSECURITY.
Tyler is committed to remaining vigilant in an ever-changing security environment. Our public sector clients are attractive, data-rich targets for threat actors. We partner closely with our clients to assist them in following evolving best practices and constantly evaluate our own policies and procedures to help ensure that we are implementing safeguards that protect their data and ours.
The same cybersecurity threats that predominate across most industries challenge Tyler as well as our clients. These threats range from crude phishing attempts to distributed denial-of-service disruptions to sophisticated malware and ransomware, among others. The evolving use of artificial intelligence increases the risk of cyberattacks and data breaches, which themselves can evolve more rapidly when artificial intelligence is used to facilitate the attack. We are acutely aware that these same threats exist for our acquisition targets, our suppliers, and our third-party business partners, and that a cybersecurity incident or vulnerability experienced by any of these entities could also materially and/or adversely impact our business operations and/or performance, both operational and financial, and could harm our reputation and/or competitive position. In addition, vulnerabilities in our clients’ on-premises infrastructure have in the past and may in the future be exploited by bad actors, with the resulting impacts being linked to or attributed to, correctly or incorrectly, our software or services, which could also cause harm to our business, reputation, and future financial results, even if our software or services were not the cause of the exploitation. Given the criticality of a strong cybersecurity posture, we continuously and conscientiously invest in our security infrastructure, tooling, and related resources.
Cyber Risk Management Strategy
The Board of Directors is responsible for overseeing Tyler’s senior management in the execution of its risk-management responsibilities and for assessing Tyler’s overall approach to risk management. The Board exercises these responsibilities periodically as part of its meetings and through its committees, each of which examines various components of enterprise risk. The Audit Committee oversees management of financial risks, as well as Tyler’s policies with respect to risk assessment and risk management, including but not limited to information security risk.
Tyler’s Chief Information Security Office (“CISO”) leads the information security responsibility at Tyler. He has spent his career in information security, joining Tyler in 2018 and previously working in the payments and semiconductor manufacturing industries. He is a Certified Information Systems Security Professional (“CISSP”) and a Certified Data Privacy Solutions Engineer (“CDPSE”).
The CISO reports directly to Tyler’s Chief Operating Officer (“COO”), who in turn reports to the President & Chief Executive Officer. Tyler believes this organizational structure provides a holistic and collaborative approach to cybersecurity risk management, as the COO also oversees Tyler’s information technology, technology, and cloud operations teams, with whom the CISO works regularly and closely. The CISO also has a dotted line to the Chair of the Audit Committee.
The CISO leads a full-time Security Risk & Compliance team that assesses, identifies and manages material risks from cybersecurity threats and oversees our Information Security Risk Management Program. These efforts include the identification, assessment, and treatment of potential harms to Tyler’s technology, data, and intellectual property. The team continually monitors the potential for harm to help manage the level of risk.
To help protect client information and Tyler data, Tyler leverages both internal and external resources, including third-party assessments and threat intelligence services, to work to identify and respond to information security risks. For example:
Internal Resources: Our full-time information security team focuses on managing incoming security risks and developing preventative responses to potential future risks, using tools targeted at people, processes, and technology. These efforts include security training for all employees at hire and on an annual basis thereafter, unannounced security testing (particularly on topics such as phishing), and periodic security alert messages for education or urgent security communications.
We repeatedly test our software during the development cycle, including internal assessments of our flagship solutions. We work closely with Tyler’s Data Privacy Officer and her team to educate Tyler team members on complementary privacy-by-design principles. We continuously iterate on access management policies for both technological and physical resources.
Tyler staffs an internal incident response team designed to launch when a potential or suspected security incident is reported to or identified by Tyler. That team is composed of a multi-disciplinary group of Tyler team members, including representatives from the security, privacy, communications, and relevant business unit teams, as well as outside threat intelligence, forensic and legal advisors that are called on as needed. The incident response team’s goal is to confirm, contain, mitigate, and remediate the incident, as applicable, and to conduct a “lessons learned” process when the incident response is completed.
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To help ensure disaster recovery and business continuity, Tyler maintains a business continuity plan with comprehensive procedures designed to recover Tyler and client assets quickly and effectively following a service disruption. Tyler’s policies and procedures with respect to disaster recovery, as well as its process to help recover critical technology platforms, data center infrastructure, and operations, are updated regularly, tested annually, and reviewed by third-party auditors. We also partner with our Internal Audit team to regularly assess and respond to evolving risk management findings.
External resources: Tyler leverages third-party assessments, intelligence services, audits, and reporting obligations to provide additional layers of accountability, monitoring and testing. This includes a bug reporting program that we publish that invites any third party to report a security vulnerability they have identified. We also use a Qualified Security Assessor to perform an annual Payment Card Industry Data Security Standards assessment that tests our credit card data controls, and we undergo an annual System & Organizational Control audit to generate a report of our key compliance controls and objectives, among other things. Given our technology in the courts and public safety markets, we also manage compliance with the Criminal Justice Information Systems (“CJIS”) security standards that are established by the Federal Bureau of Investigation (“FBI”), and we partner with our clients and third-party CJIS compliance consultants to help ensure that we adhere to the requirements applicable to us.
Technology: Tyler also utilizes technology to help harden our environment from internal and external threats. We leverage a third-party endpoint detection & response solution and threat intelligence software, as well as web-filtering tools, a multi-factor authentication tool, and related tools that support our “defense-in-depth” strategy. These tools are operated by subject-matter experts that report to the CISO, and Tyler employees are educated on the tooling to the extent applicable.
Third Parties: Our management of third-party security risks is an area of heightened focus for us. Over the past several years, we have worked to formalize our security due diligence process for each acquisition target, such that security is a formally embedded component of our due diligence and typically involves our independent testing of the target’s technology prior to closing the acquisition. Where a vulnerability or risk is identified, we generally require remediation by the target or attempt to ensure a remediation path post-closing, with contractual protections and liability parameters set forth in the purchase agreement.
We strive to continuously enhance our vendor risk analysis, with a goal of universalizing the use of form cybersecurity questionnaires and/or security addenda where applicable. We consider the results of a security and privacy review of material vendor contracts, as well as our material contracts with business partners. Our goal is to proactively identify and manage potential security risks and vulnerabilities, and to clearly articulate the responsibility – whether shared, divided, flow-down, or otherwise – of Tyler, our acquisition targets, our vendors, and/or our business partners. We expect third parties – including our clients – to report cybersecurity incidents to us so that we can assess the impact of any incident on us.
Cybersecurity Governance
Tyler has a formal multi-layered security governance structure, with the goal of ensuring that responsibilities are clear, information is effectively communicated, priorities are coordinated, and proper oversight is provided. Each “layer” of the governance structure has unique meeting, reporting, and action cadences to help ensure consistent communication between our security working groups, our leadership team, and our Board of Directors.
On at least a quarterly basis, the CISO provides a formal report to the Audit Committee and to the Board of Directors. Our Audit Committee Chair and CISO also communicate on an as-needed basis between those quarterly reports. In 2022, Tyler’s Lead Independent Director completed the requirements to receive the CERT Certificate in Cybersecurity Oversight from the Software Engineering Institute at Carnegie Mellon University. Another Tyler director possesses more than 38 years of Department of Defense experience in cyberspace operations and major computer network architectures.
Tyler’s governance practices are supported by several segments of Tyler’s senior leadership, management, and teams, including security working groups and a security governance committee. The security governance committee, which meets on at least a quarterly basis to review the threat landscape and security initiatives at Tyler, is led by the CISO and includes senior leadership from Tyler’s legal and operational teams, as well as the presidents of each of Tyler’s three operating groups and Tyler’s President & CEO.
Operationalizing Cybersecurity Risk Management
We firmly believe – and communicate regularly – that all Tyler team members have a vital role to play in cybersecurity risk management. We identify their responsibilities as falling into three key areas:
•Participating in training to identify and promptly report risks;
•Staying informed by reading all pertinent information and security communications; and
•Actively engaging in ongoing training initiatives.
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We observe Cybersecurity Awareness month with interactive weekly training, workshops, and additional resources on strong cybersecurity practices. In addition to Cybersecurity Awareness month, additional cybersecurity training and awareness initiatives occur throughout the calendar year, including annual security compliance training; a monthly Cybersecurity Awareness Series composed of articles and training highlighting current cybersecurity concerns; company-wide communication as necessary to alert team members of potential threats; and weekly security-related videos with opportunities to win prizes through participation. We track participation in training events and boast high participation rates, with continuous reflection on strategies for driving participation yet higher.
Each application team at Tyler has a security champion who proactively operationalizes security best practices on his or her team. The security champion helps to ensure that security measures are built into our programs from development to deployment. We have over 100 security champions who can collaboratively advocate security tools throughout the lifecycle of our applications.
Measuring Cybersecurity Risks
In order to evaluate whether a cybersecurity risk is material to Tyler, we take a multi-disciplinary approach to assessing qualitative and quantitative factors. The cross-functional team includes senior leadership from Tyler’s information security, legal, finance, and accounting teams, as well as senior leadership from the impacted business unit(s).
When an incident is reported, Tyler assembles its incident response team and initiates its incident response process as soon as possible. Working with the incident response team, the CISO aims to take an initial measurement of qualitative and quantitative metrics, typically within 24 hours of the incident report, to help determine whether Tyler’s Chief Financial Officer (“CFO”) and Chief Accounting Officer (“CAO”) should be engaged to do a deeper analysis of quantitative factors. The CFO and CAO are expected to engage with the Company’s Chief Legal Officer (“CLO”), Chief Administrative Officer (“CAdO”), and Audit Committee Chair to evaluate, holistically, not just the quantitative factors but the qualitative factors as well. If that team determines that the incident may represent a risk of national security, the CLO may contact the US attorney general for a disclosure delay of up to 30 days, or if applicable the team may coordinate to prepare and publish a Form 8-K, if management believes the materiality threshold has been reached. Whether or not the incident is deemed material, the incident response team will monitor the incident on an ongoing basis to attempt to ensure containment, mitigation, and remediation, as well as to monitor for evolving factors that subsequently push the incident to a materiality threshold that requires disclosure and reporting.
Quantitative metrics for evaluating a security incident include the potential or actual financial loss, the costs of impacted data records, remediation costs, and/or third-party expenses. Qualitative factors include potential or actual impacts to Tyler’s reputation and/or competitiveness, disruptions to Tyler’s business, and/or risk of litigation or regulatory action. In evaluating an incident, Tyler also works to assess whether the incident is related to another recent incident and whether the incident may represent a threat to national security. Tyler does not expect an incident to rise to that level unless Tyler infrastructure is deemed “critical infrastructure” by the Cybersecurity and Infrastructure Security Agency (“CISA”).
Notwithstanding these ongoing efforts and our multi-layered approach to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. While Tyler maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured.
Please see Item 1A, “Risk Factors,” for a discussion of cybersecurity risks.
ITEM 2. PROPERTIES.
We occupy a total of approximately 1.4 million square feet of office space, of which approximately 777,000 square feet is in various office facilities we own. We own or lease offices for our major operations in the states of Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Kansas, Massachusetts, Maine, Michigan, Missouri, Montana, New York, Ohio, Tennessee, Texas, Virginia, Washington, Washington D.C., Wisconsin, Ontario and British Columbia, Canada, the Philippines and India.
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ITEM 3. LEGAL PROCEEDINGS.
During the first quarter of 2022, we received a notice of termination for convenience under a contractual arrangement with a state government client. Upon receipt of the termination notice, we ceased performing services under the contractual arrangement and sought payment of contractually owed fees in connection with the termination for convenience.
The client was unresponsive to our outreach for several months, and on August 23, 2022, we filed a lawsuit to enforce our rights and remedies under the applicable contractual arrangement. The client subsequently asked us to negotiate directly with the client to attempt to resolve the dispute. The negotiations were not successful, and on March 20, 2024, we reinitiated our lawsuit. A December 2025 mediation did not result in a resolution of the dispute. Although we believe our products and services were delivered in accordance with the terms of our contract and that we are entitled to payment in connection with the termination for convenience, at this time the matter remains unresolved. We can provide no assurances that we will not incur additional costs as we pursue our rights and remedies under the contract.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is traded on the New York Stock Exchange under the symbol “TYL”. At December 31, 2025, we had approximately 869 stockholders of record. Most of our stockholders hold their shares in street name; therefore, there are substantially more than 869 beneficial owners of our common stock.
We did not pay any cash dividends in 2025 or 2024. Our bank credit agreement contains restrictions on the payment of cash dividends. We intend to retain earnings for use in the operation and expansion of our business and do not anticipate paying a cash dividend in the foreseeable future.
The following table summarizes certain information related to our stock incentive plan, restricted stock units and our employee stock purchase plan. There are no warrants or rights related to our equity compensation plans as of December 31, 2025.

| Number of securities to be issued upon exercise of outstanding options, warrants, purchase rights and vesting of restricted stock units as of December 31, 2025 |  | Weighted average exercise price of outstanding options and unvested restricted stock units |  | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in initial column as of December 31, 2025)
Plan Category |  |  |  |  |
Equity compensation plans approved by security shareholders: |  |  |  |  |
2018 Incentive Stock Plan | 1,108,268 |  |  | $ | 381.78 |  |  | 3,852,369 |
Employee Stock Purchase Plan | 9,850 |  |  | 385.86 |  | 443,397 |
| 1,118,118 |  |  | $ | 381.82 |  |  | 4,295,766 |

As of December 31, 2025, we had authorization to repurchase up to approximately 1.8 million additional shares of Tyler common stock. During 2025, we repurchased approximately 303,067 shares of our common stock for an aggregate purchase price of $174.7 million and approximately 84,113 shares to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards.
A summary of the repurchase activity during 2025, is as follows:

Period | Total number of shares repurchased1 |  | Additional number of shares authorized that may be repurchased |  | Average price paid per share |  | Maximum number of shares that may be repurchased under current authorization
Three months ended March 31 | 24,607 |  |  | — |  |  | $ | 606.27 |  |  | 2,137,253 |
Three months ended June 30 | 34,248 |  |  | — |  |  | 572.66 |  |  | 2,103,005 |
Three months ended September 30 | 300,025 |  |  | — |  |  | 576.82 |  |  | 1,802,980 |
October 1 through October 31 | — |  |  | — |  |  | — |  |  | 1,802,980 |
November 1 through November 30 | — |  |  | — |  |  | — |  |  | 1,802,980 |
December 1 through December 31 | 28,300 |  |  | — |  |  | 469.57 |  |  | 1,774,680 |
| 387,180 |  |  | — |  |  | 570.48 |  |  |

The repurchase program, which was approved by our Board of Directors, was announced in October 2002, and was amended at various times from 2003 through 2026. On February 3, 2026, our Board of Directors authorized the repurchase of $1.0 billion of our common stock,which replaced and superseded all previous authorizations. Our share repurchase program allows us to repurchase shares at our discretion. There is no expiration date specified for the authorization. As of February 18, 2026, we have remaining authorization from our Board of Directors to repurchase up to $885.0 million of our common stock under the new repurchase plan.
1 I ncludes 84,113 shares withheld by us to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards and units. The level of this acquisition activity varies from period to period based upon the timing of award grants and vesting.
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Performance Graph
The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
The following table compares total shareholder returns for Tyler over the last five years to the Standard and Poor’s 500 Stock Index and the Standard and Poor’s 600 Information Technology Index assuming a $100 investment made on December 31, 2020. Each of the three measures of cumulative total return assumes reinvestment of dividends. The stock performance shown on the graph below is not necessarily indicative of future price performance.

Company / Index | 12/31/20 |  | 12/31/21 |  | 12/31/22 |  | 12/31/23 |  | 12/31/24 |  | 12/31/25
Tyler Technologies, Inc. | 100 |  |  | 123.24 |  |  | 73.86 |  |  | 95.78 |  |  | 132.10 |  |  | 103.99 |
S&P 500 Stock Index | 100 |  |  | 128.71 |  |  | 105.40 |  |  | 133.10 |  |  | 166.40 |  |  | 196.16 |
S&P 600 Information Technology Index | 100 |  |  | 126.85 |  |  | 98.48 |  |  | 119.11 |  |  | 118.14 |  |  | 140.68 |

ITEM 6. [RESERVED]
This section has been eliminated as a result of adopting the November 19, 2020, amendment to Item 301 of Regulation S-K.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K. For a comparison of our Results of Operations for the years ended December 31, 2024, and 2023, and our Cash Flow discussion for the year ended December 2024, see “Part II, Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal government agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, evolving use of artificial intelligence (“AI”), security vulnerabilities and software updates, or changes in our ability to access third-party software and services; (3) our ability to protect client information from security breaches or misuse through AI and to provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to actively monitor developments in AI regulation and ethical standards as we expect that future changes in the regulatory landscape may affect our product development timelines, compliance costs, and market opportunities related to AI; (7) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (8) general economic, political and market conditions, including inflation and changes in interest rates; (9) technological and market risks associated with the development of new technologies, products or services or of new versions of existing or acquired products or services; (10) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (11) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (12) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in Item 1A, “Risk Factors”. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.
OVERVIEW
General
We provide integrated information management solutions and services for the public sector. We develop and market a broad line of software products and services to address the information technology (“IT”) needs of public sector entities. We provide subscription-based services such as software as a service (“SaaS”) and transaction-based services primarily related to digital government services and payment processing. In addition, we provide professional IT services to our clients, including software and hardware installation, data conversion, training, and for certain clients, product modifications, along with continuing maintenance and support for clients using our systems. Additionally, we provide property appraisal services for taxing jurisdictions.
We report our results in two reportable segments. Our reportable segments are organized on the basis of a combination of the products and services they deliver to clients and the function that the public sector client performs. Operating segments that have met the aggregation criteria have been combined into our two reportable segments. The Enterprise Software (“ES”) reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: public administration solutions, courts and public safety solutions, education solutions, and property and recording solutions. The Platform Technologies (“PT”) reportable segment provides public sector entities with platform and transformative solutions including digital solutions, payment processing, streamlined data processing, and improved operations and workflows.
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The Chief Operating Decision Maker (“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 accounting policies of the reportable segments are the same as those described in Note 1, “Summary of Significant Accounting Policies
See Note 2, “Segment and Related Information,” in the notes to the financial statements for additional information.
Recent Acquisitions
2025
On December 2, 2025, we acquired Edu.Link, Inc. (“Edulink”). Edulink is a SaaS company focused on educator evaluation, performance management, professional development, and compliance tracking geared specifically to the unique needs of K-12 schools. The total cash purchase price, net of cash acquired of $716,000, was approximately $37.3 million, subject to certain post-closing adjustments, including holdbacks of $2.5 million.
On November 19, 2025, we acquired CloudGavel, LLC (“CG”). CG is a SaaS company specializing in cloud electronic warrant solutions that allows for real time interaction for judges and law enforcement personnel. The total cash purchase price, net of cash acquired of $147,000, was approximately $16.6 million, subject to certain post-closing adjustments, including holdbacks of $2.9 million.
On July 28, 2025, we acquired Emergency Networking, Inc. (“EN”). EN is a SaaS company specializing in cloud-native software for fire departments and emergency medical services agencies. The total cash purchase price, net of cash acquired of $497,000, was approximately $19.4 million, subject to certain post-closing adjustments, including holdbacks of $2.5 million.
On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total cash purchase price, net of cash acquired of $215,000, was approximately $18.2 million.
The actual operating results of Edulink,CG, EN, and MyGov, from their respective dates of acquisition, are included in the operating results of the ES segment.
2024
We did not complete any acquisitions during the twelve months ended December 31, 2024.
2025 Operating Results
For the twelve months ended December 31, 2025, total revenues increased 9.1% compared to the prior period, primarily due to an increase in subscription revenue.
Subscriptions revenue grew 18.1% for the twelve months ended December 31, 2025, primarily due to an ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues. We monitor and analyze several key performance indicators in order to manage our business and evaluate our financial and operating performance. These indicators include the following:
Revenues – We derive our revenues from four primary sources: subscription-based arrangements from SaaS and transaction-based fees; maintenance; professional services; and software licenses and royalties. Subscriptions and maintenance are considered recurring revenue sources and comprised approximately 87% of our revenues in 2025. The number of new SaaS clients and the number of existing clients who convert from our traditional software arrangements to our SaaS model are a significant driver of our revenue growth, together with transaction-based revenues and maintenance rate increases. In addition, we also monitor our client base and attrition, which historically is very low. During 2025, based on our number of clients, attrition was approximately 2%.
Annualized Recurring Revenues (“ARR”) - Subscriptions and maintenance are considered recurring revenue sources. ARR is calculated by annualizing the current quarter’s recurring revenues from maintenance and subscriptions as reported in our statement of income. Management believes ARR is an indicator of the annual run rate of our recurring revenues, as well as a measure of the effectiveness of the strategies we deploy to drive revenue growth over time. ARR is a metric widely used by companies in the technology sector and by investors, which we believe offers insight into the stability of our maintenance and subscription revenues to be recognized within the year.
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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. Transaction-based revenues are historically highest in the second quarter, which coincides with peak outdoor recreation seasons and statutory filing deadlines in many jurisdictions, and lowest in the fourth quarter due to fewer business days and lower transaction volumes around holidays. Because ARR is an annualized revenue amount, the metric can fluctuate from quarter to quarter due to this seasonality.
ARR was $2.06 billion and $1.86 billion for the periods ending December 31, 2025, and 2024, respectively. ARR increased approximately 11% compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements for both new and existing clients and expansion in transaction-based fee arrangements.
Cost of Revenues and Gross Margins – Our primary cost components are hosting costs, merchant fees, and personnel expenses in connection with providing software implementation, subscription-based services and maintenance and support to our clients. We can improve gross margins by controlling headcount and related costs and by expanding our revenue base, especially from those products and services that produce incremental revenue with relatively low incremental cost, such as subscription-based services, maintenance and support and software licenses and royalties. Continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations could decrease support costs with resources redeployed toward development. As of December 31, 2025, our total employee count included in cost of revenues declined to 5,073 from 5,250 at December 31, 2024.
Sales and Marketing (“S&M”) Expense – The primary components of S&M expense include sales personnel salaries and share-based compensation expense, sales commissions, travel-related expenses, advertising and marketing materials, and allocated depreciation, facilities, and IT support. Sales commissions typically fluctuate with revenues and share-based compensation expense generally increases based on increased levels of awards issued during the period and as the market price of our stock increases. Other S&M expenses tend to grow at a slower rate than revenues.
General and Administrative (“G&A”) Expense – The primary components of G&A expense include personnel salaries and share-based compensation expense for general corporate functions, including senior management, finance, accounting, legal, human resources and corporate development, third-party professional fees, travel-related expenses, insurance, allocation of depreciation, facilities and IT support costs, acquisition-related expenses and other administrative expenses. Share-based compensation expense generally increases based on increased level of awards issued during the period and as the market price of our stock increases. Other administrative expenses tend to grow at a slower rate than revenues.
Research and development (“R&D”) Expense – These costs include compensation costs and share-based compensation expense for engineering and product management personnel, third-party contractor expenses, software development tools and other expenses related to researching and developing new solutions or upgrading and enhancing existing solutions that do not qualify for capitalization, and allocated depreciation, facilities and IT support costs. Share-based compensation expense generally increases based on increased level of awards issued during the period and as the market price of our stock increases. As of December 31, 2025, our total employee count included in R&D expense increased to 1,368 from 870 at December 31, 2024.
Liquidity and Cash Flows – The primary driver of our cash flows is net income. Uses of cash include acquisitions, capital investments in property and equipment and software development, debt repayment and discretionary purchases of treasury stock. Our working capital needs are fairly stable throughout the year with the significant components of cash inflows representing collection of accounts receivable and cash receipts from clients in advance of revenue being earned, offset by cash outflows, primarily payment of personnel expenses. In recent years, we have also received significant amounts of cash from employees exercising stock options and contributing to our Employee Stock Purchase Plan.
Balance Sheet – Cash, accounts receivable and deferred revenue balances are important indicators of our business.
Outlook
ARR was $2.06 billion and $1.86 billion for the periods ending December 31, 2025, and 2024, respectively, an increase of approximately 11% compared to the prior period. The public sector software market continues to experience heightened activity. We expect to continue to achieve solid growth in revenues and earnings. With our strong financial position and cash flow, we plan to continue to make significant investments in product development and continue to accelerate our move to the cloud to better position us to continue to expand our addressable market and strengthen our competitive position over the long term.
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CRITICAL ACCOUNTING ESTIMATES
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements. These financial statements have been prepared following the requirements of accounting principles generally accepted in the United States (“GAAP”) and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies require significant judgments and estimates used in the preparation of our financial statements. The discussion below supplements Note 1, “Summary of Significant Accounting Policies,” within the notes to the consolidated financial statements.
Revenue Recognition. Our software arrangements with clients contain multiple performance obligations that include software license deliveries, installation, training, consulting, software modification and customization to meet specific client needs; hosting; and post-contract client support (“PCS”). For these contracts, 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.
Business Combinations. Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations, we use all available information.
For tangible and identifiable intangible assets acquired in a business combination, management estimates the fair value of assets acquired, along with their useful lives, and liabilities assumed based on factors including quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques, including discounted cash flows and market multiple analyses. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants.
We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain new information about facts and circumstances that existed as of the closing date. If actual results are materially different than the assumptions we used to determine fair value of the assets acquired and liabilities assumed through a business combination as well as the estimated useful lives of the acquired intangible assets, it is possible that adjustments to the carrying values of such assets and liabilities will have a material impact on our financial position and results of operations.
Goodwill and Other Intangible Assets. 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. Qualitative factors include general economic conditions, market conditions, actual or expected financial performance, a sustained decrease in share price or other changes in the reporting units that are judgmentally weighted. Quantitative factors may include estimates of future revenues, operating costs, and capital costs, growth rates, and discount rates reflecting the judgmental assessment of risk in those assumptions.
All intangible assets (other than goodwill) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, measured by comparison of the carrying amount to estimated undiscounted future cash flows. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and reductions in growth rates. In addition, products, capabilities, or technologies developed by others may render our software products obsolete or non-competitive.
Any adverse change in these factors or changes in estimates could have a significant impact on the recoverability of goodwill or other intangible assets.
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RECENT ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
In July 2025, the FASB issued ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This guidance provides a practical expedient available to all entities to simplify the estimation of the expected credit losses for current accounts receivables and current contract assets arising from revenue contracts under ASC 606. 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 December 31, 2025, we adopted this standard. Due to most of our clients being domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payment; as such, this standard did not have a material impact on the Company’s financial statements.
In November 2024, the FASB issued 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 early adopted this standard, which did not 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. As of December 31, 2025, we adopted this standard and it has been applied prospectively. This change did not have a significant impact on the Company’s financial statements and disclosures. The Company’s income tax disclosures have been updated to comply with the new requirements, including enhanced disaggregation in the rate reconciliation and additional information regarding income taxes paid by jurisdiction. See Note 13, “Income Tax,” for further discussion.
RECENTLY PRONOUNCED ACCOUNTING STANDARDS
In September 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update removes the prescriptive software development “project stages” and requires capitalization of software costs once (1) management authorizes and commits funding and (2) completion and use are probable. Entities must evaluate significant development uncertainty related to technological innovations or performance requirements. The amendments also require Subtopic 360-10 disclosures for all capitalized internal-use software costs and clarify that intangible asset disclosures under Subtopic 350-30 are not required. The standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance 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.
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ANALYSIS OF RESULTS OF OPERATIONS AND OTHER
The following discussion compares the historical results of operations on a basis consistent with GAAP for the years ended December 31, 2025 and 2024:

| Percent of Total Revenues Years Ended December 31,
| 2025 |  | 2024 |  |
Revenues: |  |  |  |  |
Subscriptions | 68.0 | % |  | 62.8 | % |  |
Maintenance | 19.1 |  |  | 21.7 |  |  |
Professional services | 10.4 |  |  | 12.3 |  |  |
Software licenses and royalties | 0.5 |  |  | 1.2 |  |  |
Hardware and other | 2.0 |  |  | 2.0 |  |  |
Total revenues | 100.0 |  |  | 100.0 |  |  |
Cost of revenues: |  |  |  |  |
Subscriptions, maintenance, and professional services | 49.3 |  |  | 52.1 |  |  |
Software licenses, royalties, and amortization of acquired software | 1.9 |  |  | 2.0 |  |  |
Amortization of software development | 1.0 |  |  | 0.9 |  |  |
Hardware and other | 1.3 |  |  | 1.2 |  |  |
Sales and marketing expense | 6.4 |  |  | 7.4 |  |  |
General and administrative expense | 13.6 |  |  | 14.1 |  |  |
Research and development expense | 8.8 |  |  | 5.5 |  |  |
Amortization of other intangibles | 2.4 |  |  | 2.8 |  |  |
Operating income | 15.3 |  |  | 14.0 |  |  |
Interest expense | (0.2) |  |  | (0.3) |  |  |
Other income, net | 1.6 |  |  | 0.7 |  |  |
Income before income taxes | 16.7 |  |  | 14.4 |  |  |
Income tax provision | 3.2 |  |  | 2.1 |  |  |
Net income | 13.5 | % |  | 12.3 | % |  |

2025 Compared to 2024
Revenues
Subscriptions
The following table sets forth a comparison of our subscriptions revenue for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 1,009,431 |  |  | $ | 794,475 |  |  | $ | 214,956 |  |  | 27 | %
PT | 576,772 |  |  | 548,456 |  |  | 28,316 |  |  | 5 | %
Total subscriptions revenue | $ | 1,586,203 |  |  | $ | 1,342,931 |  |  | $ | 243,272 |  |  | 18 | %

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Subscriptions revenue consists of revenues derived from our SaaS arrangements and transaction-based fees primarily related to digital government services and payment processing.
SaaS fees
The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 691,288 |  |  | $ | 559,842 |  |  | $ | 131,446 |  |  | 23 | %
PT | 86,481 |  |  | 84,937 |  |  | 1,544 |  |  | 2 | %
Total SaaS fees revenue | $ | 777,769 |  |  | $ | 644,779 |  |  | $ | 132,990 |  |  | 21 | %

For the twelve months ended December 31, 2025, SaaS fees increased compared to the prior period. The growth is primarily attributable to new SaaS clients as well as existing on-premises clients who converted to our SaaS model. Since December 31, 2024, we have added 612 new SaaS clients, while 488 existing on-premises clients have converted to our SaaS offerings. Our new software contract mix for the twelve months ended December 31, 2025, was 11% perpetual software license arrangements and approximately 89% subscription-based arrangements, compared to approximately 12% perpetual software license arrangements and approximately 88% subscription-based arrangements for the twelve months ended December 31, 2024.
Transaction-based fees
The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 318,143 |  |  | $ | 234,633 |  |  | $ | 83,510 |  |  | 36 | %
PT | 490,291 |  |  | 463,519 |  |  | 26,772 |  |  | 6 | %
Total transaction-based fees revenue | $ | 808,434 |  |  | $ | 698,152 |  |  | $ | 110,282 |  |  | 16 | %

For the twelve months ended December 31, 2025, contributing to the growth in transaction-based fees compared to prior period are the new transaction clients, volume increases from online payments and e-filing services, and price increases by certain third-party processing partners from whom we receive a share of revenues.
Maintenance
The following table sets forth a comparison of our maintenance revenue for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 422,886 |  |  | $ | 438,455 |  |  | $ | (15,569) |  |  | (4) | %
PT | 22,728 |  |  | 24,677 |  |  | (1,949) |  |  | (8) |
Total maintenance revenue | $ | 445,614 |  |  | $ | 463,132 |  |  | $ | (17,518) |  |  | (4) | %

We provide maintenance and support services for our software products and certain third-party software. Maintenance revenue decreased 4% compared to the prior period primarily due to the impact of 488 clients converting from on-premises license arrangements to SaaS, partially offset by maintenance price increases.
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Professional services
The following table sets forth a comparison of our professional services revenue for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 213,749 |  |  | $ | 219,933 |  |  | $ | (6,184) |  |  | (3) | %
PT | 28,951 |  |  | 44,058 |  |  | (15,107) |  |  | (34) |
Total professional services revenue | $ | 242,700 |  |  | $ | 263,991 |  |  | $ | (21,291) |  |  | (8) | %

Professional services revenue primarily consists of professional services billed in connection with implementing our software, converting client data, training client personnel, custom development activities, consulting, and property appraisal services. New clients who implement our software generally contract with us to provide the related professional services. Existing clients also periodically purchase additional training, consulting and minor programming services.
Professional services revenue decreased 8% compared to the prior period. The decrease is primarily due to loss reserves related to agencies within two state governments. The remainder of the decrease in professional services revenues compared to the prior period is related to an intentional reduction in custom development work as well as efficiencies in the delivery of professional services.
Software licenses and royalties
The following table sets forth a comparison of our software licenses and royalties revenue for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 13,049 |  |  | $ | 25,292 |  |  | $ | (12,243) |  |  | (48) | %
PT | (233) |  |  | 1,065 |  |  | (1,298) |  |  | (122) |
Total software licenses and royalties revenue | $ | 12,816 |  |  | $ | 26,357 |  |  | $ | (13,541) |  |  | (51) | %

Software licenses and royalties revenue decreased 51% compared to the prior period primarily due to a loss reserve for remaining exposure related to a contract dispute previously disclosed. The remainder of the decline is due to the ongoing shift in the mix of new software contracts toward more SaaS offerings. Refer to the SaaS revenue section for further details on our revenue mix shift.
We expect that software license revenues will continue to decline as we shift our model away from perpetual software license to SaaS.
Cost of revenues and overall gross margins
The following table sets forth a comparison of the key components of our cost of revenues for the listed years ended December 31 ($ in thousands):

|  |  |  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Subscriptions, maintenance, and professional services | $ | 1,148,889 |  |  | $ | 1,112,778 |  |  | $ | 36,111 |  |  | 3 | %
Software licenses and royalties | 8,006 |  |  | 6,277 |  |  | 1,729 |  |  | 28 |
Amortization of software development | 22,663 |  |  | 18,806 |  |  | 3,857 |  |  | 21 |
Amortization of acquired software | 37,435 |  |  | 36,964 |  |  | 471 |  |  | 1 |
Hardware and other | 31,647 |  |  | 27,217 |  |  | 4,430 |  |  | 16 |
Total cost of revenues | $ | 1,248,640 |  |  | $ | 1,202,042 |  |  | $ | 46,598 |  |  | 4 | %

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Subscriptions, maintenance, and professional services.
The following table sets forth a comparison of our costs of subscriptions, maintenance, and professional services for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Subscriptions, maintenance, and professional services | $ | 1,148,889 |  |  | $ | 1,112,778 |  |  | $ | 36,111 |  |  | 3 | %

Cost of subscriptions, maintenance and professional services primarily consist of personnel costs related to installation of our software, conversion of client data, training client personnel, public cloud hosting costs, support activities, and various other services such as custom development, ongoing operation of our SaaS solutions, property appraisal outsourcing activities, digital government services, and other transaction-based services such as e-filing. Other costs included are merchant and interchange fees required to process credit/debit card transactions and bank fees to process automated clearinghouse transactions related to our payments business.
In 2025, the cost of subscriptions, maintenance and professional services grew 3% compared to the prior period. The increase is primarily due to a $25.4 million increase in merchant fees and other third-party fees related to higher transaction volumes, a $21.0 million increase in hosting costs, and a $4.8 million increase in stock-based compensation expense. The increase was partially offset by the redeployment of resources to research and development due to continued migration of clients to our SaaS products and the consolidation of versions of on-premises software products with support obligations.
Software licenses and royalties.
The following table sets forth a comparison of our costs of software licenses and royalties for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Software licenses and royalties | $ | 8,006 |  |  | $ | 6,277 |  |  | $ | 1,729 |  |  | 28 | %

Costs of software licenses and royalties primarily consist of direct third-party software costs. We do not have any direct costs associated with royalties. The cost of software licenses and royalties for the twelve months ended December 31, 2025, grew 28%, compared to the prior period due to higher third-party software costs.
Amortization of software development.
The following table sets forth a comparison of our amortization of software development for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Amortization of software development | $ | 22,663 |  |  | $ | 18,806 |  |  | $ | 3,857 |  |  | 21 | %

Amortization of software development costs included in cost of revenues primarily consist of personnel costs which were previously capitalized. We begin to amortize capitalized costs when a product is available for general release to clients. Amortization expense is determined on a product-by-product basis at a rate not less than straight-line basis over the software’s remaining estimated economic life of, generally, three to seven years.
In 2025, amortization of software development costs increased 21% compared to the prior period due to new capitalized software development projects going into service in the past year.
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Amortization of acquired software.
The following table sets forth a comparison of our amortization of acquired software for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Amortization of acquired software | $ | 37,435 |  |  | $ | 36,964 |  |  | $ | 471 |  |  | 1 | %

Amortization expense related to acquired software attributed to business combinations is included with cost of revenues. The estimated useful lives of acquired software range from five to 10 years.
In 2025, amortization of acquired software increased 1% compared to the prior period due to amortization of newly acquired software from recent acquisitions completed in fiscal year 2025.
The following table sets forth a comparison of gross profit and overall gross margin for the periods presented as of December 31:

|  | 2025 |  | 2024 |  | Change
Total gross profit |  | $ | 1,083,700 |  |  | $ | 935,761 |  |  | $ | 147,939 |
Overall gross margin |  | 46.5 | % |  | 43.8 | % |  | 2.7 | %

Overall gross margin. Our 2025 blended gross margin increased 2.7% compared to 2024. The increase in overall gross margin compared to the prior period is primarily attributed to a shift in our revenue mix toward higher-margin SaaS revenues. Also contributing to the increase in overall gross margin in 2025 is the redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations. The increase is partially offset by declines in software licenses, maintenance and professional services revenues and increases in merchant fees, hosting costs, and software development amortization expense.
Sales and marketing expense
Sales and marketing (“S&M”) expense consists primarily of salaries, employee benefits, travel, share-based compensation expense, commissions and related overhead costs for sales and marketing employees, as well as professional fees, trade show activities, advertising costs and other marketing costs. The following table sets forth a comparison of our S&M expense for the years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Sales and marketing expense | $ | 148,570 |  |  | $ | 157,731 |  |  | $ | (9,161) |  |  | (6) | %

S&M expense as a percentage of revenues was 6.4% in 2025 compared to 7.4% in 2024. S&M expense decreased 6% compared to the prior period. The decrease in S&M expense is primarily attributed to an increase in compensation capitalized as contract acquisition costs compared to the prior period.
General and administrative expense
General and administrative (“G&A”) expense consists primarily of personnel salaries and share-based compensation expense for general corporate functions including senior management, finance, accounting, legal, human resources and corporate development, as well as third-party professional fees, travel-related expenses, insurance, allocation of depreciation, facilities and IT support costs, amortization of software development for internal use, acquisition-related expenses and other administrative expenses. The following table sets forth a comparison of our G&A expense for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
General and administrative expense | $ | 316,447 |  |  | $ | 300,938 |  |  | $ | 15,509 |  |  | 5 | %

G&A expense as a percentage of revenue was 13.6% in 2025 compared to 14.1% in 2024. G&A expense increased 5% compared to the prior period. The increase in G&A expense is primarily attributed to a $8.7 million increase in personnel expenses, a $4.9 million increase in professional fees expense, and a $4.4 million increase in share-based compensation expense due to the higher stock price for share-based awards issued in the current period. These increases are partially offset by a decline in bonus expense due to greater outperformance related to targets in 2024, compared to 2025.
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Research and development expense
Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with new product development. Research and development expense consists mainly of costs associated with development of new products and new functionality in our current SaaS products. The following table sets forth a comparison of our research and development expense for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Research and development expense | $ | 204,588 |  |  | $ | 117,939 |  |  | $ | 86,649 |  |  | 73 | %

Research and development expense as a percentage of revenue was 8.8% in 2025 compared to 5.5% in 2024. Research and development expense increased 73% in 2025 compared to the prior period, with the majority of the increase due the redeployment of resources to research and development resulting from the continued migration of clients to our SaaS products and version consolidation of on-premises software products with support obligations, together with increased investments in a number of new Tyler product development initiatives across our product suites including investments in artificial intelligence. The remainder of the increase is attributed to a $16.7 million increase in share-based compensation expense in 2025 compared to the prior period.
Amortization of other intangibles
Other intangibles represents the portion of the purchase price allocated to the identified intangible assets for client-related intangibles, trade names, and leases acquired. The remaining excess purchase price is allocated to goodwill that is not subject to amortization. Amortization expense related to acquired software is included with cost of revenues while amortization expense of other intangibles is recorded as operating expense. The estimated useful lives of other intangibles range from one to 25 years. The following table sets forth a comparison of amortization of other intangibles for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Amortization of other intangibles | $ | 56,419 |  |  | $ | 59,627 |  |  | $ | (3,208) |  |  | (5) | %

In 2025, amortization of other intangibles decreased 5% compared to the prior period due to the impact of certain trade name intangible assets becoming fully amortized as a result of accelerated amortization expense in 2024, partially offset by the impact of amortization of new other intangibles from acquisitions completed in 2025.
Estimated annual amortization expense relating to client related, trade name, and leases acquired intangibles, excluding acquired software for which the amortization expense is recorded as cost of revenues, for the next five years and thereafter is as follows (in thousands):

2026 | $ | 57,248 |
2027 | 56,317 |
2028 | 55,660 |
2029 | 55,127 |
2030 | 54,125 |
Thereafter | 394,089 |

Segment Operating Income
The following table sets forth a comparison of the operating income by reportable segments for the listed years ended December 31 ($ in thousands):

Segment Operating Income (loss): |  |  | Change
| 2025 |  | 2024 |  | $ |  | %
ES | $ | 660,631 |  |  | $ | 546,415 |  |  | $ | 114,216 |  |  | 21 | %
PT | 106,064 |  |  | 116,526 |  |  | (10,462) |  |  | (9) | %

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The increase of 21% in the ES segment operating income in 2025 is primarily due to the $215.0 million increase in subscription revenues as a result of the ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues from new and existing customers. The increase is partially offset by lower revenues of $34.0 million compared to prior period from software licenses, maintenance, and professional services, including a loss reserve of approximately $9.7 million of remaining exposure related to a contract dispute previously disclosed. Also partially offsetting the increase in segment operating income is an increase in total personnel expense of $22.1 million and an increase in total hosting costs of $18.2 million compared to the prior period.
The decrease of 9% in the PT segment operating income in 2025 is primarily due to loss reserves of approximately $10.7 million for two state contracts, primarily impacting lower revenue from professional services, as well as higher merchant fees. Somewhat offsetting the decline in the PT segment operating income is an increase in subscription revenues compared to prior period.
See Note 2 “Segment and Related Information” for a reconciliation between our operating segment and consolidated financial results for the periods presented.
Interest expense
The following table sets forth a comparison of our interest expense for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Interest expense | $ | (4,995) |  |  | $ | (5,931) |  |  | $ | 936 |  |  | (16)%

Interest expense is comprised of interest expense and non-usage and other fees associated with our borrowings. Interest expense decreased 16% compared to the prior period primarily due to a reduction in interest incurred as a result of our repayment of the Term Loans in early 2024.
Other income, net
The following table sets forth a comparison of our other income, net for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Other income, net | $ | 37,637 |  |  | $ | 14,572 |  |  | $ | 23,065 |  |  | 158%

Other income, net, is primarily comprised of interest income from invested cash. The change in other income, net, compared to the prior period is due to increased interest income generated from higher invested cash balances in 2025 compared to 2024. Also contributing to the increase in other income is dividend income of $1.8 million received in 2025; no dividend income received in 2024.
Income tax provision
The following table sets forth a comparison of our income tax provision for the listed years ended December 31 ($ in thousands):

|  |  | Change
| 2025 |  | 2024 |  | $ |  | %
Income tax provision | $ | 74,715 |  |  | $ | 45,141 |  |  | $ | 29,574 |  |  | 66 | %
Effective income tax rate | 19.1 | % |  | 14.6 | % |  |  |  |

The increase in the income tax provision in 2025 compared to the prior period is primarily due to higher income before taxes and state income taxes and decreases in excess tax benefits from share-based compensation and research tax credits, offset by lower uncertain tax positions. The increase in the effective income tax rate in 2025 is driven by lower excess tax benefits from share-based compensation and research tax credit benefits and an increase in state taxes, offset by lower uncertain tax positions. The tax benefits related to research tax credits totaled $18.4 million in 2025 compared to $22.1 million in 2024. The tax expense related to uncertain tax positions in 2025 was $2.1 million compared to $10.1 million in 2024. The share-based exercise and vesting activity in 2025 generated $15.0 million of excess tax benefits, while exercise and vesting activity in 2024 generated $21.1 million of excess tax benefits.
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The effective income tax rates for the periods presented are different from the statutory United States federal income tax rate of 21% primarily due to the tax benefits of research tax credits and excess tax benefits related to stock incentive awards, offset by state income taxes, liabilities for uncertain tax positions, and non-deductible business expenses.
On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes a broad range of tax reform provisions that may affect our Company. The OBBBA allows an elective deduction for domestic Research and Development (“R&D”), a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on Foreign-Derived Deduction Eligible Income and income from non-U.S. subsidiaries (“Net CFC Tested Income”), among other provisions. In 2025, we recognized the effects of the OBBBA, which resulted in a $72.9 million decrease in our deferred tax asset associated with capitalized research and experimental expenditures and a corresponding reduction in current income tax liabilities. The legislation did not have a material impact on our income tax expense for 2025.
FINANCIAL CONDITION AND LIQUIDITY
As of December 31, 2025, we had cash and cash equivalents of $1.0 billion compared to $744.7 million as of December 31, 2024. We also had $142.5 million invested in investment grade corporate bonds, U.S. Treasuries and asset-backed securities as of December 31, 2025. These investments have varying maturity dates through 2027 and are held as available-for-sale. Net cash provided by operating activities continues to be our primary source of funds to finance operating needs and capital expenditures. Other potential capital resources include cash on hand, public and private issuances of debt or equity securities, and our revolving credit facility. It is possible that our ability to access the capital and credit markets in the future may be limited by economic conditions or other factors. We believe that our cash on hand, cash provided by operating activities, and available credit are sufficient to fund our working capital requirements and capital expenditures for at least the next twelve months.
The following table sets forth a summary of cash flows for the listed years ended December 31 (in thousands):

| 2025 |  | 2024 |  | 2023
Cash flows provided (used) by: |  |  |  |  |
Operating activities | $ | 653,543 |  |  | $ | 624,633 |  |  | $ | 380,440 |
Investing activities | (222,494) |  |  | (67,612) |  |  | (76,960) |
Financing activities | (160,370) |  |  | 22,207 |  |  | (311,844) |
Net increase (decrease) in cash and cash equivalents | $ | 270,679 |  |  | $ | 579,228 |  |  | $ | (8,364) |

In 2025, operating activities provided cash of $653.5 million, compared to $624.6 million in 2024. Operating activities that provided cash were primarily comprised of net income of $315.6 million, adjusted for non-cash depreciation and amortization charges of $138.4 million, non-cash share-based compensation expense of $151.3 million and non-cash amortization of operating lease right-of-use assets of $9.5 million. Changes in working capital, excluding cash, were approximately $24.1 million mainly due to higher accounts receivable. Also contributing to the decrease in working capital are the timing of prepaid expenses, payroll related payments, payments for operating leases and income tax payments. These decreases were offset by timing of payments to and receipts from our government partners, increases in deferred revenues and deferred taxes associated with stock option activity during the period. In general, changes in deferred revenue are cyclical and primarily driven by the timing of our maintenance and subscription renewal billings. Our renewal dates occur throughout the year, but our largest maintenance billing cycles occur in the second and fourth quarters. Subscription renewals are billed throughout the year.
Investing activities used cash of $222.5 million in 2025 compared to $67.6 million in 2024. We invested $228.5 million and received $121.9 million in proceeds from investment grade corporate bonds, U.S. Treasuries and asset-backed securities. We capitalized approximately $16.8 million of software development costs. We invested approximately $16.0 million in property and equipment in 2025. Lastly, approximately $83.7 million, net of cash acquired, was invested in acquisitions completed during fiscal year 2025.
Financing activities used cash of $160.4 million in 2025 and provided cash of $22.2 million in 2024. During 2025, we repurchased approximately 303,000 shares of our common stock for an aggregate purchase price of $174.7 million. Net of withheld shares for taxes upon equity award settlement, we received $3.1 million from stock option exercises and received $18.8 million from employee stock purchase plan activity. We also paid $7.7 million in cash for long-term indemnity holdbacks related to prior acquisitions.
We paid interest of $2.2 million in 2025 and $3.1 million in 2024. See Note 10, “Debt,” to the consolidated financial statements for discussions of the Convertible Senior Notes and the 2024 Credit Agreement.
We paid income taxes, net of refunds received, of $40.8 million in 2025, compared to $84.2 million in 2024.
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On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lender parties thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender (the “2024 Credit Agreement”). The 2024 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $700.0 million, including sub-facilities for standby letters of credit and swingline loans. The 2024 Credit Agreement matures on September 25, 2029, and loans may be prepaid at any time, without premium or penalty, subject to certain minimum amounts and payment of any SOFR breakage costs. The 2024 Credit Agreement replaced Tyler’s previous $500.0 million unsecured credit facility under the credit agreement dated April 21, 2021, among the Company and various lenders party thereto (the “2021 Credit Agreement”), which was scheduled to mature in April 2026.
We have no outstanding borrowings under the 2024 Credit Agreement, with an available borrowing capacity of $700.0 million as of December 31, 2025.
As of December 31, 2025, we had $600.0 million in outstanding principal for the Convertible Senior Notes due in 2026. We will settle any conversions of the Convertible Senior Notes in a combination of cash and shares of our common stock. However, upon conversion of any Convertible Senior Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to the principal amount of the Notes being converted. As of December 31, 2025, we have entered the Free Convertibility Period, effective on September 15, 2025 until the close of business on the second scheduled trading day immediately preceding maturity date, March 15, 2026. No conversions have occurred to date.
On February 2, 2026, we signed a definitive agreement to acquire the remaining equity interest of privately held company in which we currently hold a minority interest. The transaction, which has a cash purchase price of approximately $212.5 million, is expected to close in the first quarter of 2026, subject to the satisfaction of customary closing conditions and regulatory approvals.
On February 3, 2026, our Board of Directors authorized the repurchase of $1.0 billion of our common stock. The authorization replaced prior authorizations under our repurchase program originally announced in October 2002 and amended at various times from 2003 through 2019. Our share repurchase program allows us to repurchase shares at our discretion. Market conditions, as well as the volume of employee stock option exercises, influence the timing of the buybacks and the number of shares repurchased. Share repurchases are generally funded using our existing cash balances and borrowings under our credit facility and may occur through open market purchases and transactions structured through investment banking institutions, privately negotiated transactions and/or other mechanisms. There is no expiration date specified for the authorization. As of February 18, 2026, we have remaining authorization from our Board of Directors to repurchase up to $885.0 million of our common stock under the new repurchase plan.
We anticipate that 2026 capital spending will be between $24 million and $26 million, including approximately $10 million of capitalized software development. We expect the majority of the other capital spending will consist of computer equipment and software for infrastructure replacements and expansion. Capital spending and cash tax payments are expected to be funded from existing cash balances and cash flows from operations.
From time to time we engage in discussions with potential acquisition candidates. In order to pursue such opportunities, which could require significant commitments of capital, we may be required to incur debt or to issue additional potentially dilutive securities in the future. No assurance can be given as to our future acquisition opportunities and how such opportunities will be financed.
We lease office facilities, transportation and other equipment for use in our operations. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 10 years. Some of these leases include options to extend for up to six years.
Our estimated future obligations consist of debt, uncertain tax positions, leases, and purchase commitments as of December 31, 2025. Refer to Note 10, “Debt,” Note 13, “Income Tax,” Note 17, “Leases,” and Note 19, “Commitment and Contingencies,” to the consolidated financial statements for related discussions.
CAPITALIZATION
At December 31, 2025, our capitalization consisted of $599.7 million of outstanding debt and $3.7 billion of shareholders’ equity.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the risk of loss that may affect us due to adverse changes in financial market prices and interest rates.
As of December 31, 2025, we had no outstanding borrowings under our 2024 Credit Agreement and available borrowing capacity under the 2024 Credit Agreement was $700.0 million.
Loans under the revolving credit facility will bear interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) plus a margin of 0.125% to 0.75% or (2) the one-, three-, or six-month SOFR rate plus a margin of 1.125% to 1.75%.
40

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The reports of our independent registered public accounting firm and our financial statements, related notes, and supplementary data are included as part of this Annual Report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act) designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosures. Management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on this evaluation, the chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025.
Management’s Report on Internal Control Over Financial Reporting
Tyler’s management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Securities Exchange Act Rule 13a-15(f). Tyler’s internal control over financial reporting is designed to provide reasonable assurance to Tyler’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management assessed the effectiveness of Tyler’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on our assessment, we concluded that, as of December 31, 2025, Tyler’s internal control over financial reporting was effective based on those criteria.
Tyler’s internal control over financial reporting as of December 31, 2025, has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited Tyler’s financial statements. Ernst & Young’s attestation report on Tyler’s internal control over financial reporting appears on page F-1 hereof.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
(c) Trading Plans.
On March 6, 2025, H. Lynn Moore, Jr. executed a Rule 10b5-1 trading plan under which trading could not begin until June 10, 2025, and that terminated on February 9, 2026. Additional information is available in the Form 8-K filed on March 11, 2025. No other director or officer has a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement in place as of February 18, 2026.
41

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
42

PART III
See the information under the following captions in Tyler’s definitive Proxy Statement, which is incorporated herein by reference. Only those sections of the Proxy Statement that specifically address the items set forth herein are incorporated by reference. Such incorporation by reference does not include the Compensation Discussion and Analysis, the Compensation Committee Report or the Audit Committee Report, which are included in the Proxy Statement.

|  | Headings in Proxy Statement
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. |  | “Tyler Management” and “Corporate Governance Principles and Board Matters”

ITEM 11. EXECUTIVE COMPENSATION. |  | “Executive Compensation”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |  | “Security Ownership of Certain Beneficial Owners and Management”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |  | "Executive Compensation" and “Certain Relationships and Related Transactions”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. |  |
The information required under this item may be found under the section captioned “Proposals For Consideration – Proposal Two – Ratification of Our Independent Auditors for Fiscal Year 2025” in our Proxy Statement when filed.

43

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this Annual Report:

(a) |  | (1) |  |  | The financial statements are filed as part of this Annual Report. |  |
|  |  |  |  |  | Page
|  |  |  | Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) |  | F-1
|  |  |  | Consolidated Statements of Income for the years ended December 31, 202 5, 202 4, and 202 3 |  | F-3
|  |  |  | Consolidated Statements of Comprehensive Income for the years ended December 31, 202 5, 202 4, and 202 3 |  | F-4
|  |  |  | Consolidated Balance Sheets as of December 31, 202 5 and 202 4 |  | F-5
|  |  |  | Consolidated Statements of Cash Flows for the years ended December 31, 202 5, 202 4, and 202 3 |  | F-6
|  |  |  | Consolidated Statements of Shareholders’ Equity for the years ended December 31, 202 5, 202 4, and 202 3 |  | F-8
|  |  |  | Notes to Consolidated Financial Statements |  | F-9
|  | (2) |  |  | Financial statement schedules: |  |
|  |  |  | There are no financial statement schedules filed as part of this Annual Report, since the required information is included in the financial statements, including the notes thereto, or the circumstances requiring inclusion of such schedules are not present. |  |
|  | (3) |  |  | Exhibits |  |
|  |  |  | Certain of the exhibits to this Annual Report are hereby incorporated by reference, as specified: |  |

44

Exhibit Number |  | Description
3.1 |  | Amended and Restated Certificate of Incorporation of Tyler Three, as amended through May 14, 1990, and Certificate of Designation of Series A Junior Participating Preferred Stock (filed as Exhibit 3.1 to our Form 10-Q for the quarter ended June 30, 1990, and incorporated by reference herein), as amended by the Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.1 to our Form 8-K, dated February 19, 1998, and incorporated by reference herein), as amended by Certificate of Amendment dated May 19, 1999 to the Restated Certificate of Incorporation (filed as Exhibit 3.4 to our Form 10-K for the year ended December 31, 2000, and incorporated by reference herein), as amended by Certificate of Amendment dated July 29, 2025 to the Restated Certificate of Incorporation (filed as Exhibit 3.1 to our Form 10-Q for the quarter ended July 30, 2025, and incorporated by reference herein).
3.2 |  | Amended and Restated By-Laws of Tyler Technologies Inc., dated May 11, 2023 (filed as Exhibit 3.1 to our Form 8-K dated May 15, 2023, and incorporated by reference herein).
4.1 |  | Specimen of Common Stock Certificate (filed as Exhibit 4.1 to our registration statement no. 33-33505 and incorporated by reference herein).
4.2 |  | Indenture, dated as of March 9, 2021, between Tyler Technologies, Inc. and U.S. Bank National Association, as trustee, relating to the 0.25% Convertible Senior Notes due 2026 (filed as Exhibit 4.1 to our Form 8-K, dated March 9, 2021, and incorporated by reference herein).
10 |  | Credit Agreement dated September 25, 2024, among Tyler Technologies, Inc. and Wells Fargo Bank, N. A. as Administrative Agent and other lenders party hereto (filed as Exhibit 10.1 to our Form 8-K dated September 30, 2024, and incorporated by reference herein)
10.1 |  | Employee Stock Purchase Plan (filed as Exhibit 10.1 to our registration statement 333-182318 dated June 25, 2012 and incorporated by reference herein).
10.2 |  | Amended and Restated Executive Employment Agreement, effective as of May 12, 2022, by and between Tyler Technologies, Inc. and John S. Marr, Jr.(filed as Exhibit 10.1 to our Form 8-K dated May 18, 2022 and incorporated by reference herein).
10.3 |  | Amended and Restated Executive Employment Agreement, effective as of May 12, 2022, by and between Tyler Technologies, Inc. and H. Lynn Moore, Jr. (filed as Exhibit 10.2 to our Form 8-K dated May 18, 2022 and incorporated by reference herein).
10.4 |  | Amended and Restated Executive Employment Agreement, effective as of May 12, 2022, by and between Tyler Technologies, Inc. and Brian K. Miller (filed as Exhibit 10.3 to our Form 8-K dated May 18, 2022 and incorporated by reference herein).
10.5 |  | Executive Employment Agreement, effective as of May 12, 2022, by and between Tyler Technologies, Inc. and Jeffrey D. Puckett (filed as Exhibit 10.4 to our Form 8-K dated May 18, 2022 and incorporated by reference herein).
10.6 |  | Tyler Technologies, Inc. Amended and Restated 2018 Incentive Plan, effective as of May 9, 2024 (filed as Exhibit 10.1 to our registration statement no 333-279458 and incorporated by reference herein).
14 |  | Code of Business Conduct and Ethics of Tyler Technologies, Inc. dated May 9, 2024 (filed as Exhibit 14 to our form 10-K dated February 19, 2025, and incorporated by reference herein).
19 |  | Revised Insider Trading Policy of Tyler Technologies, Inc., dated November 6, 2025 (filed as E xhibit 19 to our Form 10-K dated February 18, 2026, and incorporated by reference herein).

45

Exhibit Number |  | Description
*21 |  | Subsidiaries of Tyler Technologies, Inc.
*23 |  | Consent of Independent Registered Public Accounting Firm.
*31.1 |  | Rule 13a-14(a) Certification by Principal Executive Officer.(a) Certification by Principal Executive Officer.
*31.2 |  | Rule 13a-14(a) Certification by Principal Financial Officer.
*32.1 |  | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
*101.INS |  | Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags, including Cover Page XBRL tags, are embedded within the Inline XBRL Document.
*101.SCH |  | Inline XBRL Taxonomy Extension Schema Document.
*101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.LAB |  | Inline XBRL Extension Labels Linkbase Document.
*101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
*101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* | — Filed herewith.

A copy of each exhibit may be obtained at a price of 15 cents per page, with a $10.00 minimum order, by writing Investor Relations, 5101 Tennyson Parkway, Plano, Texas 75024.
ITEM 16. FORM 10-K SUMMARY
None.
46

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | TYLER TECHNOLOGIES, INC.
Date: February 18, 2026 |  | By: |  | /s/ H. Lynn Moore, Jr.
|  |  |  | H. Lynn Moore, Jr.
|  |  |  | President and Chief Executive Officer
|  |  |  | (principal executive officer)

POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears below constitutes and appoints H. Lynn Moore, Jr. and Brian K. Miller, and each of them, as his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 18, 2026.
47

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicated have signed this report below.

Date: February 18, 2026 |  | By: |  | /s/ John S. Marr, Jr.
|  |  |  | John S. Marr, Jr.
|  |  |  | Executive Chairman of the Board
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ H. Lynn Moore, Jr.
|  |  |  | H. Lynn Moore, Jr.
|  |  |  | President and Chief Executive Officer
|  |  |  | (principal executive officer)
Date: February 18, 2026 |  | By: |  | /s/ Brian K. Miller
|  |  |  | Brian K. Miller
|  |  |  | Executive Vice President and Chief Financial Officer
|  |  |  | (principal financial officer)
Date: February 18, 2026 |  | By: |  | /s/ Jason P. Durham
|  |  |  | Jason P. Durham
|  |  |  | Chief Accounting Officer
|  |  |  | (principal accounting officer)
Date: February 18, 2026 |  | By: |  | /s/ Glenn A. Carter
|  |  |  | Glenn A. Carter
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ Margot L. Carter
|  |  |  | Margot L. Carter
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ Brenda A. Cline
|  |  |  | Brenda A. Cline
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ Ronnie D. Hawkins, Jr.
|  |  |  | Ronnie D. Hawkins, Jr.
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ Andrew D. Teed
|  |  |  | Andrew D. Teed
|  |  |  | Director
Date: February 18, 2026 |  | By: |  | /s/ Daniel M. Pope
|  |  |  | Daniel M. Pope
|  |  |  | Director

48

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Tyler Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Tyler Technologies, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1966.
Dallas, Texas
February 18, 2026
F-1

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Tyler Technologies, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Tyler Technologies, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Tyler Technologies, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 18, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
February 18, 2026
F-2

Tyler Technologies, Inc.
Consolidated Statements of Income
For the years ended December 31,
(In thousands, except per share amounts)

| 2025 |  | 2024 |  | 2023
Revenues: |  |  |  |  |
Subscriptions | $ | 1,586,203 |  |  | $ | 1,342,931 |  |  | $ | 1,159,512 |
Maintenance | 445,614 |  |  | 463,132 |  |  | 466,661 |
Professional services | 242,700 |  |  | 263,991 |  |  | 249,976 |
Software licenses and royalties | 12,816 |  |  | 26,357 |  |  | 38,096 |
Hardware and other | 45,007 |  |  | 41,392 |  |  | 37,506 |
Total revenues | 2,332,340 |  |  | 2,137,803 |  |  | 1,951,751 |
Cost of revenues: |  |  |  |  |
Subscriptions, maintenance and professional services | 1,148,889 |  |  | 1,112,778 |  |  | 1,001,221 |
Software licenses and royalties | 8,006 |  |  | 6,277 |  |  | 10,821 |
Amortization of software development | 22,663 |  |  | 18,806 |  |  | 12,625 |
Amortization of acquired software | 37,435 |  |  | 36,964 |  |  | 36,062 |
Hardware and other | 31,647 |  |  | 27,217 |  |  | 29,923 |
Total cost of revenues | 1,248,640 |  |  | 1,202,042 |  |  | 1,090,652 |
Gross profit | 1,083,700 |  |  | 935,761 |  |  | 861,099 |
Sales and marketing expense | 148,570 |  |  | 157,731 |  |  | 149,770 |
General and administrative expense | 316,447 |  |  | 300,938 |  |  | 308,575 |
Research and development expense | 204,588 |  |  | 117,939 |  |  | 109,585 |
Amortization of other intangibles | 56,419 |  |  | 59,627 |  |  | 74,632 |
Operating income | 357,676 |  |  | 299,526 |  |  | 218,537 |
Interest expense | (4,995) |  |  | (5,931) |  |  | (23,629) |
Other income, net | 37,637 |  |  | 14,572 |  |  | 3,328 |
Income before income taxes | 390,318 |  |  | 308,167 |  |  | 198,236 |
Income tax provision | 74,715 |  |  | 45,141 |  |  | 32,317 |
Net income | $ | 315,603 |  |  | $ | 263,026 |  |  | $ | 165,919 |
Earnings per common share: |  |  |  |  |
Basic | $ | 7.32 |  |  | $ | 6.17 |  |  | $ | 3.95 |
Diluted | $ | 7.20 |  |  | $ | 6.05 |  |  | $ | 3.88 |

See accompanying notes.
F-3

Tyler Technologies, Inc.
Consolidated Statements of Comprehensive Income
For the years ended December 31,
(In thousands)

| 2025 |  | 2024 |  | 2023
Net income | $ | 315,603 |  |  | $ | 263,026 |  |  | $ | 165,919 |
Other comprehensive income, net of tax: |  |  |  |  |
Securities available-for-sale and transferred securities: |  |  |  |  |
Change in net unrealized holding gains on available-for-sale securities during the period | 152 |  |  | 151 |  |  | 518 |
Reclassification adjustment for net income (loss) on sale of available-for-sale securities, included in net income | (6) |  |  | 18 |  |  | — |
Other comprehensive income, net of tax | 146 |  |  | 169 |  |  | 518 |
Comprehensive income | $ | 315,749 |  |  | $ | 263,195 |  |  | $ | 166,437 |

See accompanying notes.
F-4

Tyler Technologies, Inc.
Consolidated Balance Sheets
(In thousands, except par value and share amounts)

| December 31, 2025 |  | December 31, 2024
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 1,015,400 |  |  | $ | 744,721 |
Accounts receivable (less allowance for losses and sales adjustments of $31,972 in 2025 and $17,325 in 2024) | 638,798 |  |  | 587,634 |
Short-term investments | 81,800 |  |  | 23,257 |
Prepaid expenses | 74,734 |  |  | 65,135 |
Income tax receivable | 23,748 |  |  | 11,975 |
Other current assets | 9,408 |  |  | 8,057 |
Total current assets | 1,843,888 |  |  | 1,440,779 |
Accounts receivable, long-term | 5,968 |  |  | 7,153 |
Operating lease right-of-use assets | 35,602 |  |  | 31,433 |
Property and equipment, net | 160,355 |  |  | 163,775 |
Other assets: |  |  |
Software development costs, net | 68,371 |  |  | 76,117 |
Goodwill | 2,590,013 |  |  | 2,531,653 |
Other intangibles, net | 780,414 |  |  | 831,966 |
Non-current investments | 60,698 |  |  | 10,758 |
Other non-current assets | 93,599 |  |  | 86,381 |
| $ | 5,638,908 |  |  | $ | 5,180,015 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 174,653 |  |  | $ | 156,817 |
Accrued liabilities | 190,693 |  |  | 197,709 |
Operating lease liabilities | 9,598 |  |  | 9,643 |
Deferred revenue | 780,838 |  |  | 701,438 |
Current portion of convertible senior notes due 2026, net | 599,663 |  |  | — |
Total current liabilities | 1,755,445 |  |  | 1,065,607 |
Convertible senior notes due 2026, net | — |  |  | 597,934 |
Deferred revenue, long-term | 20,988 |  |  | 22,376 |
Deferred income taxes | 95,063 |  |  | 47,503 |
Operating lease liabilities, long-term | 33,347 |  |  | 30,791 |
Other long-term liabilities | 31,276 |  |  | 27,382 |
Total liabilities | 1,936,119 |  |  | 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 in 2025 and 2024 | 481 |  |  | 481 |
Additional paid-in capital | 1,616,119 |  |  | 1,539,301 |
Accumulated other comprehensive loss, net of tax | (11) |  |  | (157) |
Retained earnings | 2,182,402 |  |  | 1,866,799 |
Treasury stock, at cost; 5,027,037 and 5,184,092 shares in 2025 and 2024, respectively | (96,202) |  |  | (18,002) |
Total shareholders' equity | 3,702,789 |  |  | 3,388,422 |
| $ | 5,638,908 |  |  | $ | 5,180,015 |

See accompanying notes.
F-5

Tyler Technologies, Inc.
Consolidated Statements of Cash Flows
For the years ended December 31
(In thousands)

| 2025 |  | 2024 |  | 2023
Cash flows from operating activities: |  |  |  |  |
Net income | $ | 315,603 |  |  | $ | 263,026 |  |  | $ | 165,919 |
Adjustments to reconcile net income to cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 138,358 |  |  | 143,437 |  |  | 154,079 |
Gains (losses) from sale of investments | (8) |  |  | 24 |  |  | 1 |
Share-based compensation expense | 151,276 |  |  | 122,813 |  |  | 108,338 |
Provision (reductions in allowance) for losses and sales adjustments - accounts receivable | 14,647 |  |  | (5,504) |  |  | 8,233 |
Amortization of operating lease right-of-use assets | 9,506 |  |  | 8,932 |  |  | 16,688 |
Deferred income tax provision (benefit) | 43,851 |  |  | (30,663) |  |  | (73,704) |
Other | 80 |  |  | 207 |  |  | 475 |
Changes in operating assets and liabilities, exclusive of effects of acquired companies: |  |  |  |  |
Accounts receivable | (61,688) |  |  | 28,795 |  |  | (39,878) |
Income tax receivable | (12,001) |  |  | (14,441) |  |  | (41,201) |
Prepaid expenses and other current assets | (18,884) |  |  | (29,775) |  |  | (19,668) |
Accounts payable | 17,836 |  |  | 10,509 |  |  | 41,485 |
Operating lease liabilities | (11,146) |  |  | (11,650) |  |  | (11,533) |
Accrued liabilities | (3,336) |  |  | 43,387 |  |  | 13,069 |
Deferred revenue | 70,291 |  |  | 90,775 |  |  | 58,513 |
Other long-term liabilities | (842) |  |  | 4,761 |  |  | (376) |
Net cash provided by operating activities | 653,543 |  |  | 624,633 |  |  | 380,440 |
Cash flows from investing activities: |  |  |  |  |
Additions to property and equipment | (16,015) |  |  | (20,535) |  |  | (20,519) |
Purchase of marketable security investments | (228,465) |  |  | (32,448) |  |  | (10,617) |
Proceeds and maturities from marketable security investments | 121,890 |  |  | 15,994 |  |  | 49,412 |
Investment in software development | (16,778) |  |  | (29,401) |  |  | (32,490) |
Cost of acquisitions, net of cash acquired | (83,652) |  |  | (1,395) |  |  | (62,759) |
Other | 526 |  |  | 173 |  |  | 13 |
Net cash used by investing activities | (222,494) |  |  | (67,612) |  |  | (76,960) |
Cash flows from financing activities: |  |  |  |  |
Payment on term loans | — |  |  | (50,000) |  |  | (345,000) |
Payment of debt issuance costs | — |  |  | (2,637) |  |  | — |
Purchase of treasury shares | (174,650) |  |  | — |  |  | — |
Proceeds from exercise of stock options, net of withheld shares for taxes upon equity award settlement | 3,144 |  |  | 57,213 |  |  | 16,960 |
Contributions from employee stock purchase plan | 18,848 |  |  | 17,631 |  |  | 16,196 |
Other | (7,712) |  |  | — |  |  | — |
Net cash (used) provided by financing activities | (160,370) |  |  | 22,207 |  |  | (311,844) |
Net increase (decrease) in cash and cash equivalents | 270,679 |  |  | 579,228 |  |  | (8,364) |
Cash and cash equivalents at beginning of period | 744,721 |  |  | 165,493 |  |  | 173,857 |
Cash and cash equivalents at end of period | $ | 1,015,400 |  |  | $ | 744,721 |  |  | $ | 165,493 |

See accompanying notes.
F-6

| 2025 |  | 2024 |  | 2023
Supplemental cash flow information: |  |  |  |  |
Cash paid for interest | $ | 2,164 |  |  | $ | 3,095 |  |  | $ | 19,154 |
Cash paid for income taxes, net | 40,761 |  |  | 84,204 |  |  | 142,820 |
Non-cash investing and financing activities: |  |  |  |  |
Non-cash additions to property and equipment | $ | 312 |  |  | $ | 254 |  |  | $ | 3,123 |
Issuance of shares for acquisitions | — |  |  | — |  |  | 5,675 |

F-7

Tyler Technologies, Inc.
Consolidated Statements of Shareholders’ Equity
For the years ended December 31, 2025, 2024, and 2023
(In thousands)

| 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, 2022 | 48,148 |  |  | $ | 481 |  |  | $ | 1,209,725 |  |  | $ | (844) |  |  | $ | 1,437,854 |  |  | (6,365) |  |  | $ | (22,827) |  |  | $ | 2,624,389 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 165,919 |  |  | — |  |  | — |  |  | 165,919 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 518 |  |  | — |  |  | — |  |  | — |  |  | 518 |
Exercise of stock options and vesting of restricted stock units | — |  |  | — |  |  | 15,122 |  |  | — |  |  | — |  |  | 514 |  |  | 29,575 |  |  | 44,697 |
Employee taxes paid for withheld shares upon equity award settlement | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (74) |  |  | (27,737) |  |  | (27,737) |
Stock compensation | — |  |  | — |  |  | 108,338 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 108,338 |
Issuance of shares pursuant to employee stock purchase plan | — |  |  | — |  |  | 15,988 |  |  | — |  |  | — |  |  | 52 |  |  | 208 |  |  | 16,196 |
Issuance of shares for acquisitions | — |  |  | — |  |  | 5,614 |  |  | — |  |  | — |  |  | 15 |  |  | 61 |  |  | 5,675 |
Balance at December 31, 2023 | 48,148 |  |  | 481 |  |  | 1,354,787 |  |  | (326) |  |  | 1,603,773 |  |  | (5,858) |  |  | (20,720) |  |  | 2,937,995 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 263,026 |  |  | — |  |  | — |  |  | 263,026 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 169 |  |  | — |  |  | — |  |  | — |  |  | 169 |
Exercise of stock options and vesting of restricted stock units | — |  |  | — |  |  | 41,926 |  |  | — |  |  | — |  |  | 739 |  |  | 55,548 |  |  | 97,474 |
Employee taxes paid for withheld shares upon equity award settlement | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (78) |  |  | (40,261) |  |  | (40,261) |
Stock compensation | — |  |  | — |  |  | 122,813 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 122,813 |
Issuance of shares pursuant to employee stock purchase plan | — |  |  | — |  |  | 17,456 |  |  | — |  |  | — |  |  | 43 |  |  | 175 |  |  | 17,631 |
Reimbursement of shares from escrow | — |  |  | — |  |  | 2,319 |  |  | — |  |  | — |  |  | (30) |  |  | (12,744) |  |  | (10,425) |
Balance at December 31, 2024 | 48,148 |  |  | 481 |  |  | 1,539,301 |  |  | (157) |  |  | 1,866,799 |  |  | (5,184) |  |  | (18,002) |  |  | 3,388,422 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 315,603 |  |  | — |  |  | — |  |  | 315,603 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 146 |  |  | — |  |  | — |  |  | — |  |  | 146 |
Exercise of stock options and vesting of restricted stock units | — |  |  | — |  |  | (86,411) |  |  | — |  |  | — |  |  | 505 |  |  | 135,784 |  |  | 49,373 |
Employee taxes paid for withheld shares upon equity award settlement | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (84) |  |  | (46,229) |  |  | (46,229) |
Stock compensation | — |  |  | — |  |  | 151,276 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 151,276 |
Issuance of shares pursuant to employee stock purchase plan | — |  |  | — |  |  | 11,953 |  |  | — |  |  | — |  |  | 39 |  |  | 6,895 |  |  | 18,848 |
Treasury stock purchases | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (303) |  |  | (174,650) |  |  | (174,650) |
Balance at December 31, 2025 | 48,148 |  |  | $ | 481 |  |  | $ | 1,616,119 |  |  | $ | (11) |  |  | $ | 2,182,402 |  |  | (5,027) |  |  | $ | (96,202) |  |  | $ | 3,702,789 |

See accompanying notes.
F-8

Tyler Technologies, Inc.
Notes to Consolidated Financial Statements
(Tables in thousands, except per share data)
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
We provide integrated software systems and related services for the public sector. We develop and market a broad line of software solutions and services to address the information technology (“IT”) needs primarily of cities, counties, states, schools, federal agencies, and other government entities. We provide subscription-based services includes software as a service (“SaaS”), transaction-based digital government services and online payment processing, and electronic document filing solutions. In addition, we provide professional IT services, including software and hardware installation, data conversion, training, and for certain clients, product modifications, along with continuing maintenance and support for clients using our solutions. We also provide property appraisal outsourcing services for taxing jurisdictions.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include our parent company and 66 subsidiaries, which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. 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 twelve months ended December 31, 2025, 2024 and 2023, we had approximately $146,000, $169,000 and $518,000 of other comprehensive income, net of taxes, from our available-for-sale investment holdings, respectively.
USE OF ESTIMATES
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations and loss contingencies; the recoverability of goodwill and other intangible assets, valuation and estimated useful lives of intangible assets; and determining the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from estimates.
CASH AND CASH EQUIVALENTS
Cash in excess of that necessary for operating requirements is invested in short-term, highly liquid, income-producing investments. Investments with original maturities of three months or less are classified as cash and cash equivalents, which primarily consist of cash on deposit with several banks and money market funds. Cash and cash equivalents are stated at cost, which approximates market value.
REVENUE RECOGNITION
Nature of Products and Services
We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. 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
F-9

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. 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 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.
Revenue is recognized net of allowances for sales adjustments and any taxes collected from clients, which are subsequently remitted to governmental authorities.
Subscription-Based Services
Subscription-based services consist primarily of revenues derived from 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 of 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.
Maintenance (Post-Contract Client Support)
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.
Professional Services
When professional services are distinct, the fee allocable to the service element is recognized over the time we perform the services. Contract fees are typically billed on a time and material or 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.
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. Changes in these judgments or estimates could cause an increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.
F-10

Software Licenses and Royalties
Certain of our software arrangements involve “off-the-shelf” software. We recognize the revenue allocable to “off-the-shelf” software licenses and specified upgrades at a point in time when control of the software license transfers to the client, unless the software is not considered distinct. For arrangements that involve significant production, modification or customization of the software, or where professional services are otherwise not considered distinct, we recognize revenue over time by measuring progress-to-completion generally using labor hours.
Software license fees are billed in accordance with the contract terms. Typically, a majority of the fee is due when access to the software license is made available to the client and the remainder of the fee is due over a passage of time stipulated by the contract.
We recognize royalty revenue when the sale occurs under the terms of our third-party royalty arrangements. Currently, our third-party royalties are recognized on an estimated basis and adjusted if needed, when we receive notice of amounts we are entitled to receive.
Computer Hardware Equipment
Revenue allocable to computer hardware equipment is recognized at a point in time when control of the equipment is transferred to the client.
Refer to Note 3 - “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
Accounts receivable and allowance for losses and sales adjustments
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.
In connection with certain professional services contracts, we may perform work prior to when the software and services are billable and/or payable pursuant to the contract. Unbilled revenue is not billable at the balance sheet date but is recoverable over the remaining life of the contract through billings made in accordance with contractual agreements. The termination clauses in most of our contracts provide for the payment for the value of products delivered or services performed in the event of early termination. We have historically recorded such unbilled receivables (costs and estimated profit in excess of billings) in connection with (1) professional services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing for the software element of the arrangement may be based upon the specific phase of the implementation; (2) software revenue for which we have recognized revenue at the point in time when the software is made available to the client but the billing has not yet been submitted to the client; (3) some of our contracts which provide for an amount to be withheld from a progress billing (generally between 5% and 15% retention) until final and satisfactory project completion is achieved; and (4) in a limited number of cases, extended payment terms, which may be granted to clients with whom we generally have a long-term relationship and favorable collection history.
Accounts receivable is as follows:

| Years ended December 31,
| 2025 |  | 2024
Accounts receivable - current | $ | 638,798 |  |  | $ | 587,634 |
Accounts receivable - long term | 5,968 |  |  | 7,153 |
Total accounts receivable | $ | 644,766 |  |  | $ | 594,787 |

Total accounts receivable, including total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $644.8 million and $594.8 million, as of December 31, 2025, and December 31, 2024, respectively. We have recorded unbilled receivables of $98.4 million and $115.6 million as of December 31, 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 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 consolidated balance sheets. Unbilled receivables also include retention receivables of $12.3 million and $11.4 million as of December 31, 2025, and December 31, 2024, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings.
F-11

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide clients with simplified and predictable ways of purchasing our products and services, not to receive financing from our clients or to provide clients with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises term licenses that are invoiced annually with revenue recognized upfront.
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 were $32.0 million and $17.3 million as of December 31, 2025, and December 31, 2024, respectively.
The following table summarizes the changes in the allowance for losses and sales adjustments:

| Years ended December 31,
| 2025 |  | 2024
Balance at beginning of year | $ | 17,325 |  |  | $ | 22,829 |
Provisions for losses (reductions in allowance) and sales adjustments - accounts receivable | 14,647 |  |  | (5,504) |
Balance at end of year | $ | 31,972 |  |  | $ | 17,325 |

Deferred Revenue
The majority of deferred revenue consists of deferred subscription-based services revenue that has been billed based on contractual terms in the underlying arrangement, with the remaining balance consisting of payments received in advance of revenue being earned under maintenance, software licensing, professional services, and hardware installation. Refer to Note 4 - “Deferred Revenue and Performance Obligations” for further information, including deferred revenue by segment and changes in deferred revenue during the period.
Deferred Commissions
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a client. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be generally three to five years. We utilize the “portfolio approach” practical expedient, which allows entities to apply the guidance to a portfolio of contracts with similar characteristics because the effects on the financial statements of this approach would not differ materially from applying the guidance to individual contracts. Using the “portfolio approach”, we determine the period of benefit by taking into consideration our client contracts, our technology life-cycle and other factors. Sales commissions for renewal contracts are generally not paid in connection with the renewal of a contract. In the small number of instances where a commission is paid on a renewal, it is not commensurate with the commission paid on the initial sale and is recognized over the term of renewal, which is generally one year.
Deferred commissions have been included with prepaid expenses for the current portion and other non-current assets for the long-term portion in the accompanying consolidated balance sheets. Amortization expense related to deferred commissions is included in sales and marketing expense in the accompanying consolidated statements of income. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Refer to Note 5 - “Deferred Commissions” for further information.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred taxes arise because of different treatment between financial statement accounting and tax accounting, known as “temporary differences”. We record the tax effect of these temporary differences as “deferred tax assets” (generally items that can be used as a tax deduction or credit in the future periods) and “deferred tax liabilities” (generally items that we received a tax deduction for, which have not yet been recorded in the income statement). The deferred tax assets and liabilities are measured using enacted tax rules and laws that are expected to be in effect when the temporary differences are expected to be recovered or settled. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be “realized”.
F-12

We do not recognize a tax benefit for uncertain tax positions unless management’s assessment concludes that it is “more likely than not” that the position is sustainable based on its technical merits. If the recognition threshold is met, we recognize a tax benefit based upon the largest amount of the tax benefit that is more likely than not probable, determined by cumulative probability of being realized upon settlement with the taxing authority. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the consolidated statements of income.
SHARE-BASED COMPENSATION
We have a share-based award plan that provides for the grant of stock options, restricted stock units and performance share units to key employees, directors and non-employee consultants. Stock options generally vest after three to five years of continuous service from the date of grant and have a contractual term of 10 years. Restricted stock unit grants generally vest ratably over three to five years of continuous service from the date of grant. Each performance share unit represents the right to receive one share of our common stock based on our achievement of certain financial performance targets during applicable performance periods, which generally cliff vest in one or three years. We account for share-based compensation utilizing the fair value recognition pursuant to ASC 718, Stock Compensation. See Note 15, “Share-Based Compensation,” for further information.
BUSINESS COMBINATIONS
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations, management uses all available information.
For tangible and identifiable intangible assets acquired in a business combination, management estimates the fair value of assets acquired and liabilities assumed based on quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques, including discounted cash flows and market multiple analyses. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants.
We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain new information about facts and circumstances that existed as of the closing date. If actual results are materially different than the assumptions we used to determine fair value of the assets acquired and liabilities assumed as well as the estimated useful lives of the intangible assets acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have a material impact on our financial position and results of operations. See Note 6 , “Acquisitions,” for further information.
Contingent future cash payments related to acquisitions are recognized at fair value as of the acquisition date and included in the determination of the acquisition date purchase price. Subsequent changes in the fair value of the contingent future cash payments are recognized in earnings in the period that the change occurs. We have no contingent consideration outstanding as of December 31, 2025.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
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.
There have been no impairments to goodwill in any of the periods presented. Adverse changes in the qualitative factors, including possible further declines in our market capitalization or higher discount rates implied by market conditions could require us to perform a quantitative impairment test and may result in the recognition of a goodwill impairment in future periods. See Note 8, “Goodwill and Other Intangible Assets,” for additional information.
F-13

Other Intangible Assets
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. 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. There have been no impairments of intangible assets in any of the periods presented.
PROPERTY AND EQUIPMENT, NET
Property, equipment and purchased software are recorded at original cost and increased by the cost of any significant improvements after purchase. We expense maintenance and repairs when incurred. Depreciation and amortization is calculated using the straight-line method over the shorter of the asset’s estimated useful life or the term of the lease in the case of leasehold improvements.
To assess potential impairment, we periodically evaluate whether current facts or circumstances indicate that the carrying value of our property and equipment or other long-lived assets to be held and used may not be recoverable. If such circumstances are determined to exist, we measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset or appropriate grouping of assets and the estimated undiscounted future cash flows expected to be generated by the assets. 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. There was no impairment of long-lived assets in any of the periods presented.
SOFTWARE DEVELOPMENT COSTS
Software development costs primarily consist of personnel costs. We capitalize software development costs upon the establishment of technological feasibility and prior to the availability of the product for general release to clients for software sold to third parties and capitalize application development stage costs of software developed for internal use. During the twelve months period ended December 31, 2025, 2024, and 2023, respectively, we capitalized approximately $16.8 million, $29.4 million, and $32.5 million of software development costs. We begin to amortize capitalized costs when a product is available for general release to clients or when internal use software is ready for its intended use. Amortization expense is determined on a product-by-product basis at a rate not less than straight-line basis over the software’s remaining estimated economic life of, generally, three to seven years.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and include compensation costs for engineering and product management personnel, third-party contractor expenses, software development tools and other expenses related to researching and developing new solutions or upgrading and enhancing existing solutions that do not qualify for capitalization, and allocated depreciation, facilities and IT support costs. We expensed research and development costs of $204.6 million in 2025, $117.9 million in 2024, and $109.6 million in 2023.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable from clients, and investments in marketable securities. Our cash and cash equivalents primarily consist of operating account balances and money market funds, which are maintained at several major domestic financial institutions and the balances often exceed insured amounts. We perform periodic evaluations of the credit standing of these financial institutions. As of December 31, 2025, we had cash and cash equivalents of $1.0 billion.
Concentrations of credit risk with respect to receivables are limited due to the size and geographical diversity of our client base. As a result, we do not believe we have any significant concentrations of credit risk as of December 31, 2025.
LEASES
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities, current and long-term, on our consolidated balance sheets. We currently do not have any finance lease arrangements.
F-14

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date of the lease in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred less lease incentives received. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.
INDEMNIFICATION
Most of our software license agreements indemnify our clients in the event that the software sold infringes upon the intellectual property rights of a third party. These agreements typically provide that in such event we will either modify or replace the software so that it becomes non-infringing or procure for the client the right to use the software. We have not recorded a liability associated with these indemnifications, as we are not aware of any pending or threatened infringement actions that are possible losses. We believe the estimated fair value of these intellectual property indemnification clauses is minimal.
We have also agreed to indemnify certain officers and our Board members if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. We maintain directors’ and officers’ liability insurance coverage to protect against any such losses. We have not recorded a liability associated with these indemnifications. Because of our insurance coverage, we believe the estimated fair value of these indemnification agreements is minimal.
RECENT ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
In July 2025, the FASB issued ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This guidance provides a practical expedient available to all entities to simplify the estimation of the expected credit losses for current accounts receivables and current contract assets arising from revenue contracts under ASC 606. 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 December 31, 2025, we adopted this standard. Due to most of our clients being domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payment; as such, this standard did not have a material impact on the Company’s financial statements.
In November 2024, the FASB issued 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 early adopted this standard, which did not 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. As of December 31, 2025, we adopted this standard and it has been applied prospectively. This change did not have a significant impact on the Company’s financial statements and disclosures. The Company’s income tax disclosures have been updated to comply with the new requirements, including enhanced disaggregation in the rate reconciliation and additional information regarding income taxes paid by jurisdiction. See Note 13, “Income Tax,” for further discussion.
RECENTLY PRONOUNCED ACCOUNTING STANDARDS
In September 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update removes the prescriptive software development “project stages” and requires capitalization of software costs once (1) management authorizes and commits funding and (2) completion and use are probable. Entities must evaluate significant development uncertainty related to technological innovations or performance requirements. The amendments also require Subtopic 360-10 disclosures for all capitalized internal-use software costs and clarify that intangible asset disclosures under Subtopic 350-30 are not required. The standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the Company’s financial statements.
F-15

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.
(2)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.
We report our results in two reportable segments. Our reportable segments are organized on the basis of a combination of the products and services they deliver to clients and the function that the public sector client performs. Operating segments that have met the aggregation criteria have been combined into our two reportable segments. The Enterprise Software (“ES”) reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: public administration solutions, courts and public safety solutions, education solutions, and property and recording solutions. The Platform Technologies (“PT”) reportable segment provides public sector entities with platform and transformative solutions including digital solutions, payment processing, streamlined data processing, and improved operations and workflows.
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 accounting policies of the reportable segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.

For the year ended December 31, 2025 | Enterprise Software |  | Platform Technologies |  |  |  |  |  | Totals
Revenues |  |  |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |  |  |
SaaS | $ | 691,288 |  |  | $ | 86,481 |  |  |  |  |  |  |
Transaction-based fees | 318,143 |  |  | 490,291 |  |  |  |  |  |  |
Maintenance | 422,886 |  |  | 22,728 |  |  |  |  |  |  |
Professional services | 213,749 |  |  | 28,951 |  |  |  |  |  |  |
Software licenses and royalties | 13,049 |  |  | (233) |  |  |  |  |  |  |
Hardware and other | 35,306 |  |  | 336 |  |  |  |  |  |  |
Total segment revenues | 1,694,421 |  |  | 628,554 |  |  |  |  |  |  | 2,322,975 |
Less: |  |  |  |  |  |  |  |  |
Cost of revenues | 725,718 |  |  | 431,657 |  |  |  |  |  |  |
Sales and marketing expense | 101,243 |  |  | 19,931 |  |  |  |  |  |  |
General and administrative expense | 45,483 |  |  | 53,057 |  |  |  |  |  |  |
Research and development expense | 161,346 |  |  | 17,845 |  |  |  |  |  |  |
Segment operating income | $ | 660,631 |  |  | $ | 106,064 |  |  |  |  |  |  | $ | 766,695 |

F-16

For the year ended December 31, 2024 | Enterprise Software |  | Platform Technologies |  |  |  | Totals
Revenues |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |
SaaS | $ | 559,842 |  |  | $ | 84,937 |  |  |  |  |
Transaction-based fees | 234,633 |  |  | 463,519 |  |  |  |  |
Maintenance | 438,455 |  |  | 24,677 |  |  |  |  |
Professional services | 219,933 |  |  | 44,058 |  |  |  |  |
Software licenses and royalties | 25,292 |  |  | 1,065 |  |  |  |  |
Hardware and other | 33,447 |  |  | 992 |  |  |  |  |
Total segment revenues | 1,511,602 |  |  | 619,248 |  |  |  |  | 2,130,850 |
Less: |  |  |  |  |  |  |
Cost of revenues | 706,952 |  |  | 411,351 |  |  |  |  |
Sales and marketing expense | 109,981 |  |  | 21,618 |  |  |  |  |
General and administrative expense | 48,072 |  |  | 57,627 |  |  |  |  |
Research and development expense | 100,182 |  |  | 12,126 |  |  |  |  |
Segment operating income | $ | 546,415 |  |  | $ | 116,526 |  |  |  |  | $ | 662,941 |

For the year ended December 31, 2023 | Enterprise Software |  | Platform Technologies |  |  |  | Totals
Revenues |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |
SaaS | $ | 459,544 |  |  | $ | 68,433 |  |  |  |  |
Transaction-based fees | 174,718 |  |  | 456,817 |  |  |  |  |
Maintenance | 442,781 |  |  | 23,880 |  |  |  |  |
Professional services | 209,727 |  |  | 40,249 |  |  |  |  |
Software licenses and royalties | 32,709 |  |  | 5,387 |  |  |  |  |
Hardware and other | 30,176 |  |  | — |  |  |  |  |
Total segment revenues | 1,349,655 |  |  | 594,766 |  |  |  |  | 1,944,421 |
Less: |  |  |  |  |  |  |
Cost of revenues | 653,407 |  |  | 368,017 |  |  |  |  |
Sales and marketing expense | 102,325 |  |  | 25,196 |  |  |  |  |
General and administrative expense | 57,481 |  |  | 64,406 |  |  |  |  |
Research and development expense | 92,686 |  |  | 12,701 |  |  |  |  |
Segment operating income | $ | 443,756 |  |  | $ | 124,446 |  |  |  |  | $ | 568,202 |

Reconciliation of reportable segment operating income to the Company's consolidated totals: | Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Total segment operating income | $ | 766,695 |  |  | $ | 662,941 |  |  | $ | 568,202 |
Corporate unallocated: |  |  |  |  |
Total revenues | 9,365 |  |  | 6,953 |  |  | 7,330 |
Cost of revenues | (91,265) |  |  | (83,739) |  |  | (69,228) |
Sales and marketing expense | (27,396) |  |  | (26,132) |  |  | (22,249) |
General and administrative expense | (217,907) |  |  | (195,239) |  |  | (186,688) |
Research and development expense | (25,397) |  |  | (5,631) |  |  | (4,198) |
Amortization of other intangibles | (56,419) |  |  | (59,627) |  |  | (74,632) |
Interest expense | (4,995) |  |  | (5,931) |  |  | (23,629) |
Other income, net | 37,637 |  |  | 14,572 |  |  | 3,328 |
Income before income taxes | $ | 390,318 |  |  | $ | 308,167 |  |  | $ | 198,236 |

F-17

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

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Revenues: |  |  |  |  |
ES | $ | 1,694,421 |  |  | $ | 1,511,602 |  |  | $ | 1,349,655 |
PT | 628,554 |  |  | 619,248 |  |  | 594,766 |
Corporate unallocated | 9,365 |  |  | 6,953 |  |  | 7,330 |
Total consolidated | $ | 2,332,340 |  |  | $ | 2,137,803 |  |  | $ | 1,951,751 |
Depreciation and amortization expense: |  |  |  |  |
ES | $ | 29,372 |  |  | $ | 37,179 |  |  | $ | 25,445 |
PT | 89,476 |  |  | 89,372 |  |  | 110,354 |
Corporate unallocated | 19,510 |  |  | 16,886 |  |  | 18,280 |
Total consolidated | $ | 138,358 |  |  | $ | 143,437 |  |  | $ | 154,079 |
Software development expenditures: |  |  |  |  |
ES | $ | 2,387 |  |  | $ | 7,612 |  |  | $ | 6,619 |
PT | 14,160 |  |  | 15,558 |  |  | 15,840 |
Corporate | 231 |  |  | 6,231 |  |  | 10,031 |
Total consolidated | $ | 16,778 |  |  | $ | 29,401 |  |  | $ | 32,490 |
Capital expenditures: |  |  |  |  |
ES | $ | 4,980 |  |  | $ | 15,283 |  |  | $ | 16,788 |
PT | 5,739 |  |  | 4,168 |  |  | 2,380 |
Corporate | 5,296 |  |  | 1,084 |  |  | 1,351 |
Total consolidated | $ | 16,015 |  |  | $ | 20,535 |  |  | $ | 20,519 |

| Years ended December 31,
| 2025 | 2024
Segment assets |  |
ES | $ | 534,864 |  | $ | 572,224 |
PT | 416,998 |  | 416,635 |
Corporate | 4,687,046 |  | 4,191,156 |
Total consolidated | $ | 5,638,908 |  | $ | 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, net. Corporate assets primarily consist of cash and investments; prepaid insurance; goodwill and intangibles associated with acquisitions; deferred income taxes; software development costs, net; and property and equipment, net mainly related to unallocated information and technology assets. Certain presentation items from previous years have been adjusted to conform with current year presentation.
F-18

(3)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.
Recurring Revenues
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 clients contract 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:

For the year ended December 31, 2025 | Enterprise Software |  | Platform Technologies |  | Corporate Unallocated |  | Totals
Revenue: |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |
SaaS | $ | 691,288 |  |  | $ | 86,481 |  |  | $ | — |  |  | $ | 777,769 |
Transaction-based fees | 318,143 |  |  | 490,291 |  |  | — |  |  | 808,434 |
Maintenance | 422,886 |  |  | 22,728 |  |  | — |  |  | 445,614 |
Total recurring revenues | 1,432,317 |  |  | 599,500 |  |  | — |  |  | 2,031,817 |
Professional services | 213,749 |  |  | 28,951 |  |  | — |  |  | 242,700 |
Software licenses and royalties | 13,049 |  |  | (233) |  |  | — |  |  | 12,816 |
Hardware and other | 35,306 |  |  | 336 |  |  | 9,365 |  |  | 45,007 |
Total non-recurring revenues | 262,104 |  |  | 29,054 |  |  | 9,365 |  |  | 300,523 |
Total revenues | $ | 1,694,421 |  |  | $ | 628,554 |  |  | $ | 9,365 |  |  | $ | 2,332,340 |

For the year ended December 31, 2024 | Enterprise Software |  | Platform Technologies |  | Corporate Unallocated |  | Totals
Revenue: |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |
SaaS | $ | 559,842 |  |  | $ | 84,937 |  |  | $ | — |  |  | $ | 644,779 |
Transaction-based fees | 234,633 |  |  | 463,519 |  |  | — |  |  | 698,152 |
Maintenance | 438,455 |  |  | 24,677 |  |  | — |  |  | 463,132 |
Total recurring revenues | 1,232,930 |  |  | 573,133 |  |  | — |  |  | 1,806,063 |
Professional services | 219,933 |  |  | 44,058 |  |  | — |  |  | 263,991 |
Software licenses and royalties | 25,292 |  |  | 1,065 |  |  | — |  |  | 26,357 |
Hardware and other | 33,447 |  |  | 992 |  |  | 6,953 |  |  | 41,392 |
Total non-recurring revenues | 278,672 |  |  | 46,115 |  |  | 6,953 |  |  | 331,740 |
Total revenues | $ | 1,511,602 |  |  | $ | 619,248 |  |  | $ | 6,953 |  |  | $ | 2,137,803 |

F-19

For the year ended December 31, 2023 | Enterprise Software |  | Platform Technologies |  | Corporate Unallocated |  | Totals
Revenue: |  |  |  |  |  |  |
Subscriptions: |  |  |  |  |  |  |
SaaS | $ | 459,544 |  |  | $ | 68,433 |  |  | $ | — |  |  | $ | 527,977 |
Transaction-based fees | 174,718 |  |  | 456,817 |  |  | — |  |  | 631,535 |
Maintenance | 442,781 |  |  | 23,880 |  |  | — |  |  | 466,661 |
Total recurring revenues | 1,077,043 |  |  | 549,130 |  |  | — |  |  | 1,626,173 |
Professional services | 209,727 |  |  | 40,249 |  |  | — |  |  | 249,976 |
Software licenses and royalties | 32,709 |  |  | 5,387 |  |  | — |  |  | 38,096 |
Hardware and other | 30,176 |  |  | — |  |  | 7,330 |  |  | 37,506 |
Total non-recurring revenues | 272,612 |  |  | 45,636 |  |  | 7,330 |  |  | 325,578 |
Total revenues | $ | 1,349,655 |  |  | $ | 594,766 |  |  | $ | 7,330 |  |  | $ | 1,951,751 |

(4)DEFERRED REVENUE AND PERFORMANCE OBLIGATIONS
Total deferred revenue, including long-term, by segment is as follows:

| December 31, 2025 |  | December 31, 2024
Enterprise Software | $ | 755,894 |  |  | $ | 683,909 |
Platform Technologies | 39,443 |  |  | 36,117 |
Corporate | 6,489 |  |  | 3,788 |
Totals | $ | 801,826 |  |  | $ | 723,814 |

Changes in total deferred revenue, including long-term, were as follows:

| 2025
Balance at beginning of year | $ | 723,814 |
Deferral of revenue | 1,549,541 |
Recognition of deferred revenue | (1,471,529) |
Balance at end of year | $ | 801,826 |

Remaining Performance Obligations
We expect to recognize as revenue approximately 97% of our deferred revenue balance as of December 31, 2025, in the next 12 months, and the remainder thereafter. We believe the portion of transaction price allocated to the remaining performance obligations which is not included in our deferred revenue balance is not a meaningful indicator of future revenue due to contracts with transaction-based fees that vary with transaction activity, the variability in subscription term lengths, and termination provisions included in some contracts that limit inclusion and cause variability from period to period.
(5)DEFERRED COMMISSIONS
Deferred commissions are as follows:

|  | December 31, 2025 |  | December 31, 2024
Prepaid commissions |  | $ | 24,006 |  |  | $ | 18,037 |
Long-term deferred commissions |  | 54,561 |  |  | 38,762 |
Total deferred commissions |  | $ | 78,567 |  |  | $ | 56,799 |

F-20

Amortization expense related to deferred commissions is as follows:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Amortization expense | $ | 21,881 |  |  | $ | 19,916 |  |  | $ | 18,589 |

Deferred commissions have been included with prepaid expenses for the current portion and other non-current assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in sales and marketing expense in the accompanying condensed consolidated statements of income.
(6)ACQUISITIONS
2025
Edulink
On December 2, 2025, we acquired Edu.Link, Inc. (“Edulink”). Edulink is a SaaS company focused on educator evaluation, performance management, professional development, and compliance tracking geared specifically to the unique needs of K-12 schools. The total cash purchase price, net of cash acquired of $716,000, was approximately $37.3 million, subject to certain post-closing adjustments, including holdbacks of $2.5 million.
We have performed a preliminary valuation analysis of the fair market value of Edulink’s assets and liabilities. In connection with this transaction, we acquired total tangible assets of $2.5 million and assumed liabilities of approximately $6.6 million. We recorded goodwill of approximately $24.7 million, which is deductible for tax purposes, and other identifiable intangible assets of approximately $17.4 million.
CloudGavel
On November 19, 2025, we acquired CloudGavel, LLC (“CG”). CG is a SaaS company specializing in cloud electronic warrant solutions that allows for real time interaction for judges and law enforcement personnel. The total cash purchase price, net of cash acquired of $147,000, was approximately $16.6 million, subject to certain post-closing adjustments, including holdbacks of $2.9 million.
We have performed a preliminary valuation analysis of the fair market value of CG’s assets and liabilities. In connection with this transaction, we acquired total tangible assets of $0.9 million and assumed liabilities of approximately $0.9 million. We recorded goodwill of approximately $10.6 million, which is not deductible for tax purposes, and other identifiable intangible assets of approximately $7.6 million. We recorded net deferred tax liabilities of $1.6 million related to the tax effect of our estimated fair value allocations.
Emergency Networking
On July 28, 2025, we acquired Emergency Networking, Inc. (“EN”). EN is a SaaS company specializing in cloud-native software for fire departments and emergency medical services agencies. The total cash purchase price, net of cash acquired of $497,000, was approximately $19.4 million, subject to certain post-closing adjustments, including holdbacks of $2.5 million.
We have performed a preliminary valuation analysis of the fair market value of EN’s assets and liabilities. In connection with this transaction, we acquired total tangible assets of $1.6 million and assumed liabilities of approximately $1.3 million. We recorded goodwill of approximately $12.6 million, which is not deductible for tax purposes, and other identifiable intangible assets of approximately $9.1 million. We recorded net deferred tax liabilities of $2.1 million related to the tax effect of our estimated fair value allocations.
MyGov
On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total cash purchase price, net of cash acquired of $215,000, was approximately $18.2 million.
We have performed a preliminary valuation analysis of the fair market value of MyGov’s assets and liabilities. In connection with this transaction, we acquired total tangible assets of $0.7 million and assumed liabilities of approximately $1.1 million. We recorded goodwill of approximately $10.4 million, which is expected to be deductible for tax purposes, and other identifiable intangible assets of approximately $8.5 million.
F-21

As of December 31, 2025, the purchase price allocations for Edulink, CG, MyGov and EN are not final; therefore, certain preliminary valuation estimates of fair value assumed at the acquisition date for intangible assets and receivables are subject to change as valuations are finalized. Our balance sheet as of December 31, 2025, reflects the allocation of the purchase price to the net assets acquired based on their estimated fair value at the date of the acquisition. The fair value of the assets and liabilities acquired are based on valuations using Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The actual operating results of Edulink,CG, EN, and MyGov, from their respective dates of acquisition, are included in the operating results of the ES segment. Also, the impact of these acquisitions on our operating results, assets, and liabilities is not material, individually or in the aggregate.
During the twelve months ended December 31, 2025, we paid $7.7 million in cash for long-term indemnity holdbacks related to prior acquisitions.
In the twelve months ended December 31, 2025, we incurred fees of approximately $714,000 for financial advisory, legal, accounting, due diligence, valuation, and other various services necessary to complete acquisitions. These costs were expensed in 2025 and are included in general and administrative expense in the accompanying consolidated statements of income.
2024
We did not complete any acquisitions during twelve months ended December 31, 2024.
In 2024, the Company settled certain fully indemnified matters related to two acquisitions completed in prior years resulting in the reimbursement of shares of our common stock from escrow for $10.4 million.
In 2024, we also paid $1.4 million in cash for holdbacks related to other acquisitions completed in 2023.
(7)PROPERTY AND EQUIPMENT, NET AND SOFTWARE DEVELOPMENT COSTS, NET
Property and equipment, net consists of the following at December 31:

| Useful Lives (years) |  | 2025 |  | 2024
Land | — |  |  | $ | 23,181 |  |  | $ | 23,163 |
Building and leasehold improvements | 5-39 |  | 178,585 |  |  | 181,066 |
Computer equipment and purchased software | 3-5 |  | 93,400 |  |  | 99,156 |
Furniture and fixtures | 5 |  | 35,483 |  |  | 34,495 |
Transportation equipment | 5 |  | 251 |  |  | 222 |
|  |  | 330,900 |  |  | 338,102 |
Accumulated depreciation and amortization |  |  | (170,545) |  |  | (174,327) |
Property and equipment, net |  |  | $ | 160,355 |  |  | $ | 163,775 |

Depreciation expense was $18.9 million in 2025, $23.3 million in 2024, and $25.0 million in 2023.
There were no expenditures for real estate and the expansion of existing facilities in 2025 and $7.5 million in 2024.
F-22

Software development costs, net consists of the following at December 31:

| Useful Lives (years) |  | 2025 |  | 2024
Software development costs | 3-7 |  | $ | 136,565 |  |  | $ | 118,698 |
Accumulated amortization |  |  | (68,194) |  |  | (42,581) |
Software development costs, net |  |  | $ | 68,371 |  |  | $ | 76,117 |

Amortization expense for software development costs is recorded to cost of revenues and general and administrative expense as follows:

| 2025 |  | 2024 |  | 2023
Amortization expense for software development costs recorded to cost of revenues | $ | 22,663 |  |  | $ | 18,806 |  |  | $ | 12,625 |
Amortization expense for software development costs recorded to general and administrative expense | 1,862 |  |  | 1,601 |  |  | 930 |
Total | $ | 24,525 |  |  | $ | 20,407 |  |  | $ | 13,555 |

Estimated annual amortization expense related to software development costs:

2026 | $ | 24,005 |
2027 | 17,811 |
2028 | 13,097 |
2029 | 9,485 |
2030 | 3,973 |
| $ | 68,371 |

(8)GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the two years ended December 31, 2025 are as follows:

| Enterprise Software |  | Platform Technologies |  | Total
Balance as of 12/31/2023 | $ | 837,002 |  |  | $ | 1,695,107 |  |  | $ | 2,532,109 |
Purchase price adjustments related to the purchase of prior year acquisitions | (235) |  |  | (221) |  |  | (456) |
Balance as of 12/31/2024 | 836,767 |  |  | 1,694,886 |  |  | 2,531,653 |
Goodwill acquired related to the purchase of MyGov | 10,368 |  |  | — |  |  | 10,368 |
Goodwill acquired related to the purchase of EN | 12,611 |  |  | — |  |  | 12,611 |
Goodwill acquired related to the purchase of CG | 10,639 |  |  | — |  |  | 10,639 |
Goodwill acquired related to the purchase of Edulink | 24,742 |  |  | — |  |  | 24,742 |
Balance as of 12/31/2025 | $ | 895,127 |  |  | $ | 1,694,886 |  |  | $ | 2,590,013 |

Other intangible assets and related accumulated amortization consists of the following at December 31:

| 2025 |  | 2024
Gross carrying amount of other intangibles: |  |  |
Client related intangibles | $ | 987,423 |  |  | $ | 958,924 |
Acquired software | 296,710 |  |  | 284,900 |
Trade names | 3,520 |  |  | 5,320 |
Leases acquired | 2,394 |  |  | 4,585 |
| 1,290,047 |  |  | 1,253,729 |
Accumulated amortization | (509,633) |  |  | (421,763) |
Total other intangibles, net | $ | 780,414 |  |  | $ | 831,966 |

F-23

Amortization expense for acquired software is recorded to cost of revenues. Amortization expense for client related intangibles, trade names and leases acquired is recorded to amortization of other intangibles. Total amortization expense for other intangible assets was $94.2 million in 2025, $96.9 million in 2024, and $111.0 million in 2023.
The amortization periods of other intangible assets is summarized in the following table:

| December 31, 2025 |  | December 31, 2024
| Gross Carrying Amount |  | Weighted Average Amortization Period |  | Accumulated Amortization |  | Gross Carrying Amount |  | Weighted Average Amortization Period |  | Accumulated Amortization
Non-amortizable intangibles: |  |  |  |  |  |  |  |  |  |  |
Goodwill | $ | 2,590,013 |  |  | — |  |  | $ | — |  |  | $ | 2,531,653 |  |  | — |  |  | $ | — |
Amortizable intangibles: |  |  |  |  |  |  |  |  |  |  |
Client related intangibles | $ | 987,423 |  |  | 18 years |  | $ | 316,347 |  |  | $ | 958,924 |  |  | 18 years |  | $ | 261,407 |
Acquired software | 296,710 |  |  | 8 years |  | 188,862 |  |  | 284,900 |  |  | 8 years |  | 152,317 |
Trade names | 3,520 |  |  | 11 years |  | 2,143 |  |  | 5,320 |  |  | 12 years |  | 3,902 |
Leases acquired | 2,394 |  |  | 11 years |  | 2,281 |  |  | 4,585 |  |  | 7 years |  | 4,137 |

Estimated annual amortization expense related to other intangible assets:

2026 | $ | 88,870 |
2027 | 86,225 |
2028 | 83,433 |
2029 | 65,659 |
2030 | 56,977 |
Thereafter | 399,250 |
| $ | 780,414 |

(9)ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31:

| 2025 |  | 2024
Accrued wages, bonuses and commissions | $ | 97,139 |  |  | $ | 109,207 |
Other accrued liabilities | 93,554 |  |  | 88,502 |
| $ | 190,693 |  |  | $ | 197,709 |

(10)DEBT
The following table summarizes our total outstanding borrowings:

| Rate |  | Maturity Date |  | December 31, 2025 |  | December 31, 2024
2024 Credit Agreement - Revolving credit facility | S + 1.125% |  | September 2029 |  | $ | — |  |  | $ | — |
Convertible Senior Notes due 2026 | 0.25% |  | March 2026 |  | 600,000 |  |  | 600,000 |
Total borrowings |  |  |  |  | 600,000 |  |  | 600,000 |
Less: unamortized debt discount and debt issuance costs |  |  |  |  | (337) |  |  | (2,066) |
Total borrowings, net |  |  |  |  | 599,663 |  |  | 597,934 |
Current portion of convertible senior notes due 2026, net |  |  |  |  | 599,663 |  |  | — |
Long Term - convertible senior notes due 2026, net |  |  |  |  | — |  |  | 597,934 |
Total Debt |  |  |  |  | $ | 599,663 |  |  | $ | 597,934 |

F-24

2024 Credit Agreement
On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lender parties thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender (the “2024 Credit Agreement”). The 2024 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $700.0 million, including sub-facilities for standby letters of credit and swingline loans. The 2024 Credit Agreement matures on September 25, 2029, and loans may be prepaid at any time, without premium or penalty, subject to certain minimum amounts and payment of any SOFR breakage costs. The 2024 Credit Agreement replaced Tyler’s previous $500.0 million unsecured credit facility under the credit agreement dated April 21, 2021, among the Company and various lenders party thereto (the “2021 Credit Agreement”), which was scheduled to mature in April 2026.
The 2024 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and defined events of defaults. The 2024 Credit Agreement requires us to maintain certain financial ratios and other financial conditions and limits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens. As of December 31, 2025, we had no outstanding borrowings, and we were in compliance with all covenants.
Loans under the revolving credit facility will bear interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) plus a margin of 0.125% to 0.75% or (2) the one-, three-, or six-month SOFR rate plus a margin of 1.125% to 1.75%. The margin in each case is based upon Tyler’s total net leverage ratio, as determined pursuant to the 2024 Credit Agreement. In addition to paying interest on the outstanding principal of loans under the revolving credit facility, the Company is required to pay a commitment fee initially in the amount of 0.125% per annum, which will subsequently range from 0.125% to 0.25% based upon the Company’s total net leverage ratio. Borrowings under the 2024 Credit Agreement may be used for general corporate purposes, including working capital requirements, acquisitions and capital expenditures.
2021 Credit Agreement
In connection with the completion of a prior acquisition the Company entered into a $1.4 billion Credit Agreement (the “2021 Credit Agreement”) with the various lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender, and Issuing Lender. The 2021 Credit agreement included a senior unsecured revolving credit facility (which has been replaced by the 2024 credit agreement discussed above) and an amortizing five-year term loan in the aggregate amount of $600.0 million (the “Term Loan A-1”).
The Term Loan A-1 bore interest, at the Company’s option, at a per annum rate of either (1) the Administrative Agent’s prime commercial lending rate (subject to certain higher rate determinations) (the “Base Rate”) plus a margin of 0.125% to 0.75% or (2) the one-, three-, six-, or, subject to approval by all lenders, twelve-month SOFR rate plus a margin of 1.125% to 1.75%.
During the twelve months ended December 31, 2024, we repaid $50.0 million of the Term Loans and had no borrowings outstanding under the 2021 Credit Agreement prior to its termination on September 25, 2024.
Convertible Senior Notes due 2026
On March 9, 2021, we issued 0.25% Convertible Senior Notes due in 2026 in the aggregate principal amount of $600.0 million (“the Convertible Senior Notes” or “the Notes”). The Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of March 9, 2021, with U.S. Bank National Association as trustee (the “Indenture”). The net proceeds from the issuance of the Convertible Senior Notes were $591.4 million, net of initial purchasers’ discounts of $6.0 million and debt issuance costs of $2.6 million.
The Convertible Senior Notes are senior, unsecured obligations and are (i) equal in right of payment to our future senior, unsecured indebtedness; (ii) senior in right of payment to our future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries.
The Convertible Senior Notes accrue interest at a rate of 0.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The Convertible Senior Notes mature on March 15, 2026, unless earlier repurchased, redeemed, or converted.
F-25

Before September 15, 2025, holders of the Convertible Senior Notes had the right to convert their Convertible Senior Notes only upon the occurrence of certain events. Under the terms of the Indenture, the Convertible Senior Notes are convertible into common stock of Tyler Technologies, Inc. (referred to herein as “our common stock”) at the following times or circumstances:
•during any calendar quarter commencing after the calendar quarter ended June 30, 2021, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
•during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “Measurement Period”) if the trading price per $1,000 principal amount of Convertible Senior Notes, as determined following a request by their holder in accordance with the procedures in the Indenture, for each trading day of the Measurement Period, was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;
•upon the occurrence of certain corporate events or distributions on our common stock, including but not limited to a “Fundamental Change” (as defined in the Indenture);
•upon the occurrence of specified corporate events.
On September 15, 2025, we entered the Free Convertibility Period (as defined in the Indenture), during which the holders of the Convertible Senior Notes may convert their Convertible Senior Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle any conversions of the Convertible Senior Notes in a combination of cash and shares of our common stock at maturity. However, upon conversion of any Convertible Senior Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to the principal amount of the Notes being converted. As of December 31, 2025, no conversions have occurred.
The initial conversion rate is 2.0266 shares of common stock per $1,000 principal amount of Convertible Senior Notes, which represents an initial conversion price of approximately $493.44 per share of common stock. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.
The Convertible Senior Notes are redeemable, in whole or in part, at our option at any time, and from time to time, on or after March 15, 2024, and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price of the Notes on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. Subject to certain exceptions, if a change of control or other fundamental change (both as defined in the Indenture governing the Convertible Senior Notes), the holders of the Convertible Senior Notes may require us to repurchase all or part of the principal amount of the Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes, plus any accrued and unpaid interest up to, but excluding, the redemption date. In addition, calling any Note for redemption constitutes a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.
F-26

Effective Interest Rate
The weighted average interest rate for the borrowings under the Convertible Senior Notes was 0.25% as of December 31, 2025. For the twelve months ended December 31, 2025, the effective interest rate was 0.54% for the Convertible Senior Notes. The following sets forth the interest expense recognized related to the borrowings and commitment fees for unused portions under the 2024 Credit Agreement, the 2021 Credit Agreement and Convertible Senior Notes and is included in interest expense in the accompanying consolidated statements of income:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Contractual interest expense - Revolving Credit Facility | $ | (968) |  |  | $ | (924) |  |  | $ | (1,539) |
Contractual interest expense - Term Loans | — |  |  | (761) |  |  | (16,016) |
Contractual interest expense - Convertible Senior Notes | (1,500) |  |  | (1,500) |  |  | (1,500) |
Amortization of debt discount and debt issuance costs | (2,527) |  |  | (2,746) |  |  | (4,574) |
Total | $ | (4,995) |  |  | $ | (5,931) |  |  | $ | (23,629) |

As of December 31, 2025, we had one outstanding letter of credit totaling $500,000. The letter of credit, which guarantees our performance under a client contract, automatically renews annually unless canceled in writing, and expires in the third quarter of 2026.
(11) FINANCIAL INSTRUMENTS
The following table presents our financial instruments:

| December 31, 2025 |  | December 31, 2024
Cash and cash equivalents | $ | 1,015,400 |  |  | $ | 744,721 |
Available-for-sale investments | 142,498 |  |  | 34,015 |
Equity investment | 10,000 |  |  | 10,000 |
Total | $ | 1,167,898 |  |  | $ | 788,736 |

Cash and cash equivalents consist primarily of money market funds with original maturity dates of three months or less, for which we determine fair value through quoted market prices.
Our investment portfolio is classified as available-for-sale in order to have the flexibility to buy and sell investments and maximize cash liquidity. Our available-for-sale investments primarily consist of investment grade corporate bonds, U.S. Treasuries, and asset-backed securities with maturity dates through 2027. These investments are presented at fair value and are included in short-term investments and non-current investments in the accompanying consolidated balance sheets. Unrealized gains or losses associated with the investments are included in accumulated other comprehensive income (loss), net of tax in the accompanying consolidated balance sheets and other comprehensive income (loss), net of tax in the statements of comprehensive income. For our available-for-sale investments, we do not have the intent to sell, nor is it more likely than not that we would be required to sell before recovery of their cost basis.
As of December 31, 2025 and 2024, we have an accrued interest receivable balance of approximately $1.3 million and $227,000, respectively, which is included in accounts receivable, net. We do not measure an allowance for credit losses for accrued interest receivables. We record any losses within the maturity period or at the time of sale of the investment and any write-offs to accrued interest receivables are recorded as reductions to interest income in the period of the loss. During the twelve months ended December 31, 2025, we have recorded no losses for accrued interest receivables. Interest income and amortization of discounts and premiums are included in other income, net in the accompanying consolidated statements of income.
F-27

The following table presents the components of our available-for-sale investments:

| December 31, 2025 |  | December 31, 2024
Amortized cost | $ | 142,515 |  |  | $ | 34,225 |
Unrealized gains | 127 |  |  | 3 |
Unrealized losses | (144) |  |  | (213) |
Estimated fair value | $ | 142,498 |  |  | $ | 34,015 |

As of December 31, 2025, we have $81.8 million of available-for-sale debt securities with contractual maturities of one year or less and $60.7 million with contractual maturities greater than one year. As of December 31, 2025, 11 available-for-sale securities with a fair value of $8.9 million have been in a loss position for one year or less and four securities with a fair value of $6.1 million have been in a loss position for greater than one year.
The following table presents the activity on our available-for-sale investments:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Proceeds from sales and maturities | $ | 121,890 |  |  | $ | 15,994 |  |  | $ | 49,412 |
Realized gains (losses) on sales, net of tax | 6 |  |  | (18) |  |  | — |

Our equity investment consists of a minority interest in the common stock of a privately held company that is carried at cost less any impairment write-downs because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values. On February 2, 2026, we signed a definitive agreement to acquire the remaining equity interest of this investment. See Note 20 “Subsequent Events” for more information.
(12)FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability. Guidance on fair value measurements and disclosures establishes a valuation hierarchy for disclosure of inputs used in measuring fair value defined as follows:
•Level 1—Inputs are unadjusted quoted prices that are available in active markets for identical assets or liabilities.
•Level 2—Inputs include quoted prices for similar assets and liabilities in active markets and quoted prices in non-active markets, inputs other than quoted prices that are observable, and inputs that are not directly observable, but are corroborated by observable market data.
•Level 3—Inputs that are unobservable and are supported by little or no market activity and reflect the use of significant management judgment.
The classification of a financial asset or liability within the hierarchy is determined based on the least reliable level of input that is significant to the fair value measurement. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We also consider the counterparty and our own non-performance risk in our assessment of fair value.
The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of December 31, 2025:

| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 1,015,400 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,015,400 |
Available-for-sale investments | — |  |  | 142,498 |  |  | — |  |  | 142,498 |
Equity investment | — |  |  | — |  |  | 10,000 |  |  | 10,000 |
Convertible Senior Notes due 2026 | — |  |  | 607,500 |  |  | — |  |  | 607,500 |

F-28

The following table presents fair values of our financial and debt instruments categorized by their fair value hierarchy as of December 31, 2024:

| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 744,721 |  |  | $ | — |  |  | $ | — |  |  | $ | 744,721 |
Available-for-sale investments | — |  |  | 34,015 |  |  | — |  |  | 34,015 |
Equity investment | — |  |  | — |  |  | 10,000 |  |  | 10,000 |
Convertible Senior Notes due 2026 | — |  |  | 731,310 |  |  | — |  |  | 731,310 |

Assets that are measured at fair value on a recurring basis
Accounts receivables, accounts payables, short-term obligations and certain other assets carrying value approximate fair value because of the short maturity of these instruments.
As of December 31, 2025, we have $142.5 million in investment grade corporate bonds, U.S. Treasuries and asset-backed securities with maturity dates through 2027. The fair values of these securities are considered Level 2 as they are based on inputs from quoted prices in markets that are not active or other observable market data.
Assets that are measured at fair value on a nonrecurring basis
As of December 31, 2025, our equity investment consists of a minority interest in common stock of a privately held company. As we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values, our investment is carried at cost less any impairment write-downs. Periodically, our investment is assessed for impairment. We do not reassess the fair value of the investments if there are no identified events or changes in circumstances that indicate fair value of the investment or indicate impairment. No events or changes in circumstances have occurred during the period that require reassessment. There has been no impairment of this investment for the periods presented. This investment is included in other non-current assets in the accompanying consolidated balance sheets. On February 2, 2026, we signed a definitive agreement to acquire the remaining equity interest of this investment. See Note 20 “Subsequent Events” for more information.
As described in Note 1, “Summary of Significant Accounting Policies”, we assess goodwill for impairment annually on October 1. In addition, we review goodwill, property and equipment, and other intangibles for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During the fourth quarter of 2025, we completed our annual assessment of goodwill which did not result in an impairment charge. Further, for the year ended December 31, 2025,we identified no indicators of impairment to goodwill, property and equipment, and other intangibles; therefore, no impairment was recorded.
Financial instruments measured at fair value only for disclosure purposes
The fair value of our Convertible Senior Notes is determined based on quoted market prices for a similar liability when traded as an asset in an active market, a Level 2 input. See Note 10, “Debt,” for further discussion.
The carrying amount of the Convertible Senior Notes is the par value less the debt discount and debt issuance costs that are amortized to interest expense using the effective interest method over the term of the Convertible Senior Notes. Interest expense is included in the accompanying consolidated statements of income.
The following table presents the fair value and carrying value, net, of our Convertible Senior Notes:

| Fair Value at December 31, |  | Carrying Value at December 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Convertible Senior Notes due 2026 | $ | 607,500 |  |  | $ | 731,310 |  |  | $ | 599,663 |  |  | $ | 597,934 |

F-29

(13)INCOME TAX
We adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" on a prospective basis beginning with the year ended December 31, 2025.
Income before provision for income taxes was as follows:

| Years Ended December 31, |  |  |  |  |
| 2025 |  | 2024 |  | 2023 |  |  |  |  |  |  |  |  |
United States | $ | 387,841 |  |  | $ | 306,402 |  |  | $ | 196,538 |  |  |  |  |  |  |  |  |  |
Foreign | 2,477 |  |  | 1,765 |  |  | 1,698 |  |  |  |  |  |  |  |  |  |
Income before income taxes | $ | 390,318 |  |  | $ | 308,167 |  |  | $ | 198,236 |  |  |  |  |  |  |  |  |  |

Income tax provision on income from operations consists of the following:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
Federal | $ | 10,053 |  |  | $ | 60,612 |  |  | $ | 85,715 |
State | 20,004 |  |  | 14,807 |  |  | 19,803 |
Foreign | 807 |  |  | 385 |  |  | 503 |
Total current provision for taxes | 30,864 |  |  | 75,804 |  |  | 106,021 |
Deferred |  |  |  |  |
Federal | 41,996 |  |  | (27,089) |  |  | (63,649) |
State | 1,855 |  |  | (3,574) |  |  | (10,055) |
Total deferred provision for (benefit from) taxes | 43,851 |  |  | (30,663) |  |  | (73,704) |
Income tax provision | $ | 74,715 |  |  | $ | 45,141 |  |  | $ | 32,317 |

A reconciliation of the provision for income taxes to the amount computed by applying the 21% U.S. statutory income tax rate to our effective income tax expense rate for operations after the adoption of ASU 2023-09 is as follows:

| Years Ended December 31,
| 2025 |  | % |  |  |  |  |  |
U.S. federal statutory tax rate | $ | 81,967 |  |  | 21.0 | % |  |  |  |  |  |
State and local income taxes. net of federal income tax effect 1 | 17,658 |  |  | 4.5 |  |  |  |  |  |  |
Foreign tax effects | 287 |  |  | 0.1 |  |  |  |  |  |  |
Effect of cross-border tax laws | (121) |  |  | — |  |  |  |  |  |  |
Tax credits | (18,398) |  |  | (4.7) |  |  |  |  |  |  |
Nontaxable or nondeductible items |  |  |  |  |  |  |  |  |
Excess tax benefits of share-based compensation | (15,047) |  |  | (3.9) |  |  |  |  |  |  |
Executive compensation | 4,009 |  |  | 1.0 |  |  |  |  |  |  |
Other | 2,222 |  |  | 0.6 |  |  |  |  |  |  |
Changes in uncertain tax positions | 2,138 |  |  | 0.5 |  |  |  |  |  |  |
Effective tax rate | $ | 74,715 |  |  | 19.1 | % |  |  |  |  |  |

1 State taxes in California, Illinois, Massachusetts, New Jersey, Virginia, Kansas, Texas, Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
F-30

A reconciliation of the provision for income taxes to the amount computed by applying the 21% U.S. statutory income tax rate to our effective income tax expense rate for operations before the adoption of ASU 2023-09 is as follows:

| Years Ended December 31,
| 2024 |  | 2023
Federal income tax expense at statutory rate | $ | 64,715 |  |  | $ | 41,630 |
State income tax, net of federal income tax benefit | 8,917 |  |  | 6,881 |
Excess tax benefits of share-based compensation | (21,143) |  |  | (9,325) |
Tax credits | (22,095) |  |  | (20,494) |
Non-deductible business expenses | 4,786 |  |  | 5,191 |
Uncertain tax positions | 10,109 |  |  | 7,647 |
Other, net | (148) |  |  | 787 |
| $ | 45,141 |  |  | $ | 32,317 |

The tax effects of the major items recorded as deferred tax assets and liabilities as of December 31 are:

| 2025 |  | 2024
Deferred income tax assets: |  |  |
Capitalized research and experimental expenditures | $ | 96,038 |  |  | $ | 157,812 |
Operating expenses not currently deductible | 11,961 |  |  | 8,593 |
Share-based compensation and other employee benefit plans | 24,842 |  |  | 22,095 |
Loss and credit carryforwards | 5,349 |  |  | 5,836 |
Deferred revenue | 7,516 |  |  | 1,670 |
Other | 9 |  |  | 55 |
Total deferred income tax assets | 145,715 |  |  | 196,061 |
Valuation allowance | (1,133) |  |  | (794) |
Total deferred income tax assets, net of valuation allowance | 144,582 |  |  | 195,267 |
Deferred income tax liabilities: |  |  |
Intangible assets | (211,411) |  |  | (223,459) |
Property and equipment | (8,794) |  |  | (5,624) |
Prepaid expenses | (19,440) |  |  | (13,687) |
Total deferred income tax liabilities | (239,645) |  |  | (242,770) |
Net deferred income tax liabilities | $ | (95,063) |  |  | $ | (47,503) |

On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes a broad range of tax reform provisions that may affect our Company. The OBBBA allows an elective deduction for domestic Research and Development (“R&D”), a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on Foreign-Derived Deduction Eligible Income and income from non-U.S. subsidiaries (“Net CFC Tested Income”), among other provisions. In 2025, we recognized the effects of the OBBBA, which resulted in a $72.9 million decrease in our deferred tax asset associated with capitalized research and experimental expenditures and a corresponding reduction in current income tax liabilities. The legislation did not have a material impact on our income tax expense for 2025.
As of December 31, 2025, we had after-tax federal and state net operating loss and net tax credit carryforwards of $5.3 million, that will begin expiring in 2033, if not utilized. The acquired carryforwards are subject to an annual limitation but are expected to be realized. A valuation allowance was recorded against a state research and development credit carryforward in 2025 for $1.1 million due to state taxable income limitations on credit utilization. We believe it is more likely than not that all other deferred tax assets will be realized. However, the amount of the deferred tax asset considered realizable could be adjusted in the future if estimates of taxable income or reversing taxable temporary differences are revised.
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The following table provides a reconciliation of the gross unrecognized tax benefits from uncertain tax positions for the years ended December 31:

| 2025 |  | 2024 |  |
Balance at beginning of period | $ | 29,755 |  |  | $ | 20,869 |  |  |
Additions for tax positions of prior period | 2,095 |  |  | 4,970 |  |  |
Reductions for tax positions of prior period | (103) |  |  | — |  |  |
Additions for tax positions of current period | 5,078 |  |  | 4,346 |  |  |
Settlements | (496) |  |  | — |  |  |
Expiration of statutes of limitations | (4,190) |  |  | (430) |  |  |
Balance at end of period | $ | 32,139 |  |  | $ | 29,755 |  |  |

As of December 31, 2025 and December 31, 2024, we had uncertain tax positions of $34.3 million and $32.2 million, including interest and penalties of $2.2 million and $2.4 million, respectively, recorded within deferred tax liabilities, other long-term assets, and other long-term liabilities in our consolidated balance sheets. The total amount of unrecognized tax benefits, net of the federal income tax benefit of state taxes, if recognized, that would affect the effective tax rate is $31.0 million, $28.6 million and $20.1 million as of December 31, 2025, 2024, and 2023, respectively.
We are subject to U.S. federal income tax, as well as income tax of multiple state, local and foreign jurisdictions. We are routinely subject to income tax examinations by these taxing jurisdictions, but we do not have a history of, nor do we expect any material adjustments as a result of these examinations. With few exceptions, major U.S. federal, state, local and foreign jurisdictions are no longer subject to examination for years before 2021. As of February 18, 2026, no significant adjustments have been proposed by any taxing jurisdiction.
The Company paid income taxes in the following jurisdictions as of December 31:

| 2025 |  |  |  |  |
U.S federal taxes | $ | 26,007 |  |  |  |  |  |
State and local taxes |  |  |  |  |  |
California | 2,289 |  |  |  |  |  |
Other | 11,825 |  |  |  |  |  |
Foreign taxes | 640 |  |  |  |  |  |
Total income taxes paid | $ | 40,761 |  |  |  |  |  |

The amount of cash income taxes we paid during the years ended December 31, 2024 and 2023 was $84.2 million and $142.8 million, respectively.
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(14) SHAREHOLDERS’ EQUITY
The following table details activity in our common stock:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
| Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount
Treasury stock purchases | (303) |  |  | $ | (174,650) |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Exercise of stock options and vesting of restricted stock units | 505 |  |  | 49,373 |  |  | 739 |  |  | 97,474 |  |  | 514 |  |  | 44,697 |
Issuance of shares pursuant to employee stock purchase plan | 39 |  |  | 18,848 |  |  | 43 |  |  | 17,631 |  |  | 52 |  |  | 16,196 |
Employee taxes paid for withheld shares upon equity award settlement | (84) |  |  | (46,229) |  |  | (78) |  |  | (40,261) |  |  | (74) |  |  | (27,737) |
Issuance of shares for acquisitions | — |  |  | — |  |  | — |  |  | — |  |  | 15 |  |  | 5,675 |
Reimbursement of shares from escrow | — |  |  | — |  |  | (30) |  |  | (10,425) |  |  | — |  |  | — |

During 2025, we repurchased approximately 303,067 shares of our common stock for an aggregate purchase price of $174.7 million.
As of February 18, 2026, we have remaining authorization from our Board of Directors to repurchase up to $885.0 million of our common stock under the new repurchase plan.
(15) SHARE-BASED COMPENSATION
Share-Based Compensation Plan
In May 2024, stockholders approved the Tyler Technologies, Inc. amended and restated 2018 Stock Incentive Plan (“the Amended and Restated 2018 Plan”) which amended and restated the existing Tyler Technologies, Inc. 2018 Stock Option Plan (“the 2018 Plan”). Upon stockholder approval of the Amended and Restated 2018 Stock Incentive Plan, the remaining shares available for grant under the 2018 Plan were added to the shares authorized for grant under the Amended and Restated 2018 Stock Incentive Plan. Additionally, any awards previously granted under the 2018 Plan that expire unexercised or are forfeited are added to the shares authorized for grant under the Amended and Restated 2018 Stock Incentive Plan.
We grant stock awards under the Amended and Restated 2018 Stock Incentive Plan in the form of stock options, restricted stock units and performance share units. Stock options generally vest after three to five years of continuous service from the date of grant and have a contractual term of 10 years. Once options become exercisable, the employee can purchase shares of our common stock at the market price on the date we granted the option. Restricted stock unit grants generally vest ratably over three to five years of continuous service from the date of grant. Each performance share unit represents the right to receive one share of our common stock based on our achievement of certain financial performance targets during applicable performance periods. We account for share-based compensation utilizing the fair value recognition pursuant to ASC 718, Stock Compensation.
As of December 31, 2025, there were 3.9 million shares available for future grants under the Amended and Restated 2018 Stock Incentive Plan from the 27.5 million shares previously approved by the shareholders.
Determining Fair Value of Stock Compensation
Valuation and Amortization Method. We estimate the fair value of stock option awards granted using the Black-Scholes option valuation model. For restricted stock unit and performance stock unit awards, we estimate fair value as market value on the date of grant. We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.
Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. The expected life represents the weighted-average period the stock options are expected to be outstanding based primarily on the options’ vesting terms, remaining contractual life and the employees’ expected exercise based on historical patterns.
Expected Volatility. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock.
Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.
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Expected Dividend Yield. We have not paid any cash dividends on our common stock in more than ten years and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model.
Forfeitures. We recognize the effect of awards for which the requisite service period is not rendered when the award is forfeited (that is, we recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.
During fiscal years 2025, 2024 and 2023, no stock option awards were issued; therefore no Black-Scholes model assumptions are reportable.
Share-Based Award Activity
Stock Options
Options granted, exercised, forfeited and expired are summarized as follows:

| Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value
Outstanding at December 31, 2024 | 739 |  |  | $ | 248.52 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (239) |  |  | 206.54 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Outstanding at December 31, 2025 | 500 |  |  | $ | 268.58 |  |  | 3 |  | $ | 94,332 |
Exercisable at December 31, 2025 | 493 |  |  | $ | 266.69 |  |  | 3 |  | $ | 93,798 |

We had unvested options to purchase approximately 7,500 shares with a weighted average grant date exercise price of $392.95 as of December 31, 2025, and unvested options to purchase approximately 40,000 shares with a weighted average grant date exercise price of $371.20 as of December 31, 2024.
Other information pertaining to option activity was as follows during the twelve months ended December 31:

| 2025 |  | 2024 |  | 2023
Weighted average grant-date fair value of stock options granted | $ | — |  |  | $ | — |  |  | $ | — |
Total intrinsic value of stock options exercised | $ | 89,332 |  |  | $ | 159,022 |  |  | $ | 58,261 |

Restricted Stock Units and Performance Stock Units
The following table summarizes restricted stock unit and performance stock unit activity during the periods presented (shares in thousands):

| Number of Shares |  | Weighted Average Grant Date Fair Value per Share
Unvested at December 31, 2024 | 661 |  |  | $ | 435.18 |
Granted | 231 |  |  | 545.22 |
Vested | (266) |  |  | 435.99 |
Forfeited | (18) |  |  | 493.99 |
Unvested at December 31, 2025 | 608 |  |  | $ | 474.97 |

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Share-Based Compensation Expense
The following table summarizes share-based compensation expense related to share-based awards which is recorded in the consolidated statements of income:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Cost of revenues | $ | 36,129 |  |  | $ | 31,322 |  |  | $ | 26,607 |
Operating expenses | 115,147 |  |  | 91,491 |  |  | 81,731 |
Total share-based compensation expense | 151,276 |  |  | 122,813 |  |  | 108,338 |
Total tax benefit | (52,264) |  |  | (62,593) |  |  | (32,997) |
Net decrease in net income | $ | 99,012 |  |  | $ | 60,220 |  |  | $ | 75,341 |

As of December 31, 2025, we had $191.7 million of total unrecognized compensation cost related to unvested options and restricted stock units which is expected to be amortized over a weighted average amortization period of 2.0 years.
Employee Stock Purchase Plan
Under our Employee Stock Purchase Plan (“ESPP”) participants may contribute up to 15% of their annual compensation to purchase common shares of Tyler. The purchase price of the shares is equal to 85% of the closing price of Tyler shares on the last day of each quarterly offering period. As of December 31, 2025, there were 443,000 shares available for future issuances under the ESPP from the 2.0 million shares previously approved by the stockholders.
(16) EARNINGS PER SHARE
The following table details the reconciliation of basic earnings per share to diluted earnings per share:

| Years Ended December 31,
| 2025 |  | 2024 |  | 2023
Numerator for basic and diluted earnings per share: |  |  |  |  |
Net income | $ | 315,603 |  |  | $ | 263,026 |  |  | $ | 165,919 |
Denominator: |  |  |  |  |
Weighted-average basic common shares outstanding | 43,095 |  |  | 42,611 |  |  | 42,024 |
Assumed conversion of dilutive securities: |  |  |  |  |
Stock awards | 590 |  |  | 793 |  |  | 745 |
Convertible Senior Notes | 127 |  |  | 93 |  |  | — |
Denominator for diluted earnings per share - Adjusted weighted-average shares | 43,812 |  |  | 43,497 |  |  | 42,769 |
Earnings per common share: |  |  |  |  |
Basic | $ | 7.32 |  |  | $ | 6.17 |  |  | $ | 3.95 |
Diluted | $ | 7.20 |  |  | $ | 6.05 |  |  | $ | 3.88 |

Stock awards representing the right to purchase common stock of approximately 66,000 shares in 2025, 67,000 shares in 2024, and 343,000 shares in 2023, were not included in the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.
We have used the if-converted method for calculating any potential dilutive effect of the Convertible Senior Notes on our diluted net income per share if our average stock price for the period exceeded the conversion price of $493.44 per share of common stock. Under the if-converted method, the Notes are assumed to be converted at the beginning of the period and the resulting common shares, if dilutive, are included in the denominator of the diluted earnings per share calculation for the entire period being presented. For the twelve months ended December 31, 2025 and 2024, our average stock price for the period exceeded the conversion price resulting in a dilutive impact of the if-converted method as reflected in the table above. For the twelve months ended December 31, 2023, our average stock price for the period did not exceed the conversion price, therefore there was no dilutive impact as reflected in the table above.
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(17) LEASES
We lease office facilities, transportation and other equipment for use in our operations. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 10 years. Some of these leases include options to extend for up to six years. We have no finance leases as of December 31, 2025. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the consolidated balance sheets. We incurred no lease restructuring costs during 2025 and 2024, and $6.4 million in 2023, respectively.
The components of operating lease expense were as follows:

Lease Costs |  |  | Years ended December 31,
|  |  | 2025 |  | 2024 |  | 2023
Operating lease cost |  |  | $ | 10,958 |  |  | $ | 9,166 |  |  | $ | 19,468 |
Short-term lease cost |  |  | 2,046 |  |  | 2,124 |  |  | 2,121 |
Variable lease cost |  |  | 952 |  |  | 768 |  |  | 1,009 |
Net lease cost |  |  | $ | 13,956 |  |  | $ | 12,058 |  |  | $ | 22,598 |

Supplemental information related to leases is as follows:

Other Information | Years ended December 31,
| 2025 |  | 2024 |  | 2023
Cash flows: |  |  |  |  |
Cash paid amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash outflows from operating leases | $ | 12,368 |  |  | $ | 12,578 |  |  | $ | 12,555 |
Right-of-use assets obtained in exchange for lease obligations (non-cash): |  |  |  |  |
Operating leases | $ | 13,318 |  |  | $ | 4,404 |  |  | $ | 3,383 |
Lease term and discount rate: |  |  |  |  |
Weighted average remaining lease term (years) | 6 |  | 6 |  | 7
Weighted average discount rate | 3.60 | % |  | 3.22 | % |  | 1.59 | %

As of December 31, 2025, maturities of lease liabilities were as follows:

Year ending December 31, | Amount
2026 | $ | 10,602 |
2027 | 10,278 |
2028 | 6,719 |
2029 | 5,602 |
2030 | 5,132 |
Thereafter | 9,526 |
Total lease payments | 47,859 |
Less: Interest | (4,914) |
Present value of operating lease liabilities | $ | 42,945 |

Rental income from third parties
We own office buildings in Falmouth, Yarmouth and Orono, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; Moraine, Ohio; and Kingston Springs, Tennessee. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2026 and 2035, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.
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Rental income from third-party tenants was $2.7 million in 2025, $3.2 million in 2024, and $2.1 million in 2023. Rental income is included in hardware and other revenue on the consolidated statements of income. As of December 31, 2025, future minimum operating rental income based on contractual agreements is as follows:

Year ending December 31, | Amount
2026 | $ | 2,538 |
2027 | 2,276 |
2028 | 2,029 |
2029 | 1,355 |
2030 | 1,385 |
Thereafter | 4,196 |
Total | $ | 13,779 |

As of December 31, 2025, we had no additional significant operating or finance leases that had not yet commenced.
(18) EMPLOYEE BENEFIT PLANS
We provide a defined contribution plan for the majority of our employees meeting minimum service requirements. Eligible employees can contribute up to 30% of their current compensation to the plan subject to certain statutory limitations. We contribute up to a maximum of 3% of an employee’s compensation to the plan. We made contributions to the plan and charged operating results $20.7 million in 2025, $19.1 million in 2024, and $18.6 million in 2023.
(19) COMMITMENTS AND CONTINGENCIES
Litigation
During the first quarter of 2022, we received a notice of termination for convenience under a contractual arrangement with a state government client. Upon receipt of the termination notice, we ceased performing services under the contractual arrangement and sought payment of contractually owed fees in connection with the termination for convenience.
The client was unresponsive to our outreach for several months, and on August 23, 2022, we filed a lawsuit to enforce our rights and remedies under the applicable contractual arrangement. The client subsequently asked us to negotiate directly with the client to attempt to resolve the dispute. The negotiations were not successful, and on March 20, 2024, we reinitiated our lawsuit. A December 2025 mediation did not result in a resolution of the dispute. Although we believe our products and services were delivered in accordance with the terms of our contract and that we are entitled to payment in connection with the termination for convenience, at this time the matter remains unresolved. Amounts reserved related to this matter are included in our allowance for losses and sales adjustments as of December 31, 2025. We can provide no assurances that we will not incur additional costs as we pursue our rights and remedies under the contract.
Purchase Commitments
We have contractual obligations for third-party technology used in our solutions and for other services that we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. As of December 31, 2025, the remaining aggregate minimum purchase commitment under these arrangements was approximately $569 million through 2031. Future minimum payments related to purchase commitments based on contractual agreements are as follows:

Year ending December 31, | Amount
2026 | $ | 87,356 |
2027 | 83,537 |
2028 | 90,631 |
2029 | 93,436 |
2030 | 103,436 |
Thereafter | 110,936 |
Total | $ | 569,332 |

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(20) SUBSEQUENT EVENTS
On February 2, 2026, we signed a definitive agreement to acquire the remaining equity interest of privately held company in which we currently hold a minority interest. The transaction, which has a cash purchase price of approximately $212.5 million, is expected to close in the first quarter of 2026, subject to the satisfaction of customary closing conditions and regulatory approvals.
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