Tyler Technologies (TYL) Stock Forecast & Price Target

Tyler Technologies reported significant growth in new software bookings, achieving approximately $141 million in new SaaS contract value during the fourth quarter, reflecting a 37% year-over-year increase. The company's recurring revenue reached $463.9 million, up 14.9% year-over-year and constituting 85.7% of total revenues, while total annual recurring revenue (ARR) also grew by 14.9% to $1.86 billion. Furthermore, subscription revenue climbed to $348.8 million, representing a 21.9% year-over-year increase, indicating robust demand for its software solutions and a strong outlook for future growth.

Tyler Technologies faces significant revenue challenges, particularly due to the anticipated decline in transaction revenues linked to the wind-down of its Texas payments contract, along with expectations of a drop in professional services revenue. The company anticipates that license revenues will decrease by 18% - 20%, compounded by declines in maintenance and hardware revenues, resulting in a projected overall decline in topline revenue for FY25. Additionally, the reclassification of certain costs will pressure gross margins, bringing them close to 50%, which could further strain financial performance amid the ongoing shift to subscription-based services.