TYL

Tyler Technologies is the entrenched leader in software for US state and local governments — courts, public safety, ERP, payments — a market defined by long contracts, high switching costs and recurring, recession-resistant revenue. The model is compounding cleanly: FY2025 revenue grew 9.1% to $2.33B while net income jumped 20.0% to $316M and diluted EPS rose 19.0% to $7.20, with earnings growth comfortably outpacing revenue as the cloud transition matures and gross profit expands 15.8% (gross margin 46.5%).

The balance sheet is conservative and improving: liabilities/equity of just 0.52x, $1.02B cash (+36.3%) against $600M long-term debt, and $654M of operating cash flow on minimal capex ($16.0M) — a capital-light profile that converts profit to cash. Management is beginning to return capital ($175M of buybacks) while retaining flexibility for tuck-in acquisitions. The 8.5% ROE looks modest, but it is depressed by a large equity base and acquired goodwill rather than weak economics; cash returns on the operating business are far higher.