On Thursday, Tyler Technologies, Inc. (NYSE:TYL) saw its price target increased by JPMorgan to $705 from the previous $660, while the firm maintained an Overweight rating on the company's shares. The adjustment follows Tyler Tech's reported acceleration in transaction revenue growth, which has been attributed to a rise in payment volumes and a strong number of Software as a Service (SaaS) agreements and conversions. These factors have collectively pushed the company's annual recurring revenue (ARR) growth up by 4 percentage points to 12%.
The analyst pointed out that the growing number of larger deals Tyler Tech is securing is expected to hasten the company's top-line growth in the year 2025. Additionally, the company is anticipated to experience margin expansion due to favorable outcomes from hosting services and deals with Amazon (NASDAQ:AMZN) Web Services (AWS).
Tyler Technologies also provided further details on its free cash flow (FCF), which was a positive revelation for investors. Management's confirmation of a significant upside risk to the previously projected FCF target range for 2025 was particularly well-received.
JPMorgan's optimism is further bolstered by the nature of the free cash flow beat and the company's potential for sustained growth. The analyst expressed increased confidence in Tyler Tech's performance, leading to the decision to raise the price target. Tyler Tech remains on JPMorgan's Analyst Focus List as a recommended growth idea within the vertical software sector.
In other recent news, Tyler Technologies reported a year-over-year increase of 8% in third-quarter bookings, reaching $586 million, while SaaS revenue reached $166.6 million, indicating a 20.3% year-over-year increase. The company also saw a 15.2% year-over-year increase in transaction revenue, reaching $180.6 million. Tyler Tech's Non-GAAP earnings per share (EPS) exceeded forecasts, despite revenue falling slightly short of expectations.
In analyst updates, Barclays upgraded Tyler Tech to Overweight, while DA Davidson maintained its Neutral rating with a consistent price target of $550.00. BTIG also maintained a Buy rating on the company.
Tyler Technologies has entered into agreements with the Phoenix Municipal Court and the Arkansas Department of Labor and Licensing to implement its cloud-based solutions aimed at enhancing efficiency. The company also refined its full-year 2024 revenue outlook to a range of $2,125 million to $2,145 million and increased its full-year 2024 Non-GAAP earnings per share (EPS) guidance to $9.47-$9.62.
InvestingPro Insights
Tyler Technologies' strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $26.1 billion, reflecting its significant presence in the software industry. Tyler's revenue growth of 6.7% over the last twelve months and 7.28% in the most recent quarter aligns with the article's mention of accelerated transaction revenue growth and increased SaaS agreements.
InvestingPro Tips reveal that 16 analysts have revised their earnings upwards for the upcoming period, which corroborates JPMorgan's positive outlook on the company. Additionally, Tyler Technologies has shown a high return over the last year, with a one-year price total return of 55.61%, underscoring the company's strong performance mentioned in the article.
The company's trading near its 52-week high and its large price uptick over the last six months (38.95%) reflect the market's confidence in Tyler's growth trajectory. This aligns with JPMorgan's increased price target and maintained Overweight rating.
For investors seeking more comprehensive insights, InvestingPro offers 17 additional tips for Tyler Technologies, providing a deeper understanding of the company's financial health and market position.
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