Tyler Technologies (TYL) Stock Forecast & Price Target

Tyler Technologies has demonstrated strong financial performance, highlighted by a 37% year-over-year increase in new SaaS contract value, which reached approximately $141 million in the fourth quarter. Recurring revenue has also seen a robust growth of 14.9% year-over-year, totaling $463.9 million, while total annual recurring revenue grew by the same percentage to $1.86 billion, indicating a solid foundation for long-term stability. Furthermore, subscription revenue surged by 21.9% year-over-year to $348.8 million, surpassing estimates, while transaction-based revenues grew by 20.9% to $175.4 million, reflecting the company's effective sales execution and growth potential in its core product offerings.

Tyler Technologies's outlook is negatively affected by anticipated declines in various revenue segments, with management projecting an 18% to 20% drop in license revenues due to diminished sales to new clients, alongside expected decreases in maintenance and hardware revenues. The company's professional services revenue, which experienced only 2.1% year-over-year growth, may decline by approximately 3% in FY25 as the transition to cloud services impacts this low-margin segment. Furthermore, the wind-down of the Texas payments contract will exert additional downward pressure on overall transaction revenues, leading to a forecasted gross margin approaching 50% for 2025.