Tyler Technologies (TYL) 10-K risk factor changes: FY2024 vs FY2023

Despite the network and application security, [added: 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.

A global economic slowdown, [removed: the lingering of] 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 [removed: competitors.][added: competitors or from engaging with our clients directly.]

Subcontracting arrangements where we are not the prime contractor pose unique risks to us because we may not have control over the [removed: customer] [added: client] relationship, and our ability to generate revenues under such subcontracts may depend on the prime contractor, its performance and relationship with the [removed: customer,] [added: client,] and its relationship with us.

A material portion of our business is provided through software hosting services, which are sometimes hosted from and use computing infrastructure provided by third parties, including [removed: Amazon Web Services (AWS).][added: AWS.]

Problems faced by our hosting service providers could adversely affect the experience of our [removed: customers.][added: clients.]

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 [removed: customers] [added: clients] may experience reduced service levels, and our business may suffer.

We cannot be certain that we have taken all appropriate steps to deter misappropriation of our intellectual [removed: property.][added: property, including to the extent our data is consumed by generative artificial intelligence technology.]

*Clients may elect to terminate our [removed: maintenance] [added: recurring] contracts and manage operations internally.*

It is possible that our clients may elect to not renew [removed: maintenance] [added: 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 [removed: basis).][added: basis), or migrating to a different cloud solution.]

- Political resistance to the concept of contracting with third parties to provide IT [added: solutions, or resistance to adopting cloud] solutions

[removed: We expect that a] [added: A] public health crisis, such as a pandemic, may negatively impact our business and financial results.

As seen with [removed: a] [added: the COVID] pandemic, 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.

Increased competition could [added: also] result in pricing pressure, fewer client orders, reduced gross margins, and loss of market share.

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 upon a fundamental change, or to repay our indebtedness obligations under our [removed: 2021] [added: 2024] Credit Agreement, each of which could adversely affect our business and results of operations.*

As of December 31, [removed: 2023,] [added: 2024,] we had outstanding an aggregate principal amount of $600 million of our Convertible Senior Notes and [removed: $50 million] [added: none] under our [removed: 2021] [added: 2024] Credit Agreement.

The Indenture governing the Convertible Senior Notes and the [removed: 2021] [added: 2024] Credit Agreement do contain, and our future indebtedness agreements may [removed: contain] [added: contain,] covenants that [removed: may] 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 [removed: 2021] [added: 2024] Credit Agreement (and the Indenture by means of a cross-default) restricts, absent consent of the agent and lenders under the [removed: 2021] [added: 2024] Credit Agreement, our ability and the ability of our restricted subsidiaries to, among other things:

In addition, the [removed: 2021] [added: 2024] Credit Agreement (and the Indenture by means of a cross-default) contains other customary affirmative and negative covenants, and events of default.

The [removed: 2021] [added: 2024] Credit Agreement is unsecured but requires us to maintain certain financial ratios regarding our total leverage and [removed: interest coverage 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 [removed: 2021] [added: 2024] Credit Agreement that may, in turn, result in a default under the Indenture.

If an event of default under the [removed: 2021] [added: 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.

Should the lenders proceed against the guarantees, we cannot give assurance that we would have sufficient assets to pay amounts due on the [removed: 2021] [added: 2024] Credit Agreement and the Convertible Senior Notes.

Our borrowings under the [removed: 2021] [added: 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 [removed: continue to] 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.

[removed: Revolving credit facility loans and Term A-1] Loans under the [removed: 2021 Credit Agreement] [added: revolving credit facility will] bear [removed: interest] [added: interest,] at [added: the Company’s option, at] a per annum rate [removed: equal to, at our option,] [added: of] either (1) the [removed: administrative agent’s] [added: Administrative Agent’s] prime commercial lending rate (subject to certain higher rate determinations) [removed: (the “Base Rate”)] plus a margin of 0.125% to 0.75% or (2) the one-, three-, [removed: six-, or, subject to approval by all lenders, twelve-month] [added: or six-month] SOFR rate plus a margin of 1.125% to 1.75%.

The margin in each case is based upon [removed: our] [added: Tyler’s] total net leverage ratio, as determined pursuant to the [removed: 2021] [added: 2024] Credit Agreement.

Our liquidity and ongoing access to capital could be materially and negatively affected by [removed: increased] volatility in the financial and securities markets, including increased inflation and interest rates.

[removed: ∙] 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 and our operating performance.

There [removed: has] [added: have] been [added: periods of] increased volatility in the financial and securities markets, as well as increased inflation and interest rates, which generally has made access to capital less certain and has increased the cost of obtaining new [removed: capital.][added: capital, and future volatility may create similar risks.]

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 [removed: costs,] [added: costs] have unintended negative effects, including on client service or retention, our business would be adversely affected.

We have at times experienced and [added: may] continue to experience challenges in recruiting qualified personnel.

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.

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 evolving threat landscape, including new technologies that leverage artificial intelligence, may increase the external threats to the data we store and process.

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 threats.

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.

As we assess the challenges and opportunities of incorporating AI technologies into our products and services, we may not successfully enhance our offerings in alignment with market demands or industry expectations at a pace that matches our competitors.

Delays in adoption or innovation could render our offerings less competitive or obsolete.

AI technology is rapidly evolving, and 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 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.

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.

On September 25, 2024, the Company entered into a $700.0 million credit agreement with the various lenders party 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.

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.*

*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.

In September 2020, we filed a Current Report on Form 8-K reporting a security incident (the "Incident") involving ransomware disrupting access to some of our internal IT systems and telephone systems.

Although we completed our investigation into the Incident and believe we contained and recovered from the Incident, we are subject to risk and uncertainties as a result of the Incident.

There can be no assurance as to what the ongoing impact of the Incident will be, if any.

In April 2021, we entered into the 2021 Credit Agreement with significantly increased borrowing capacity of up to $1.4 billion, and on the closing of the acquisition of NIC Inc. (“NIC”) on April 21, 2021, we borrowed initial loans in the aggregate principal amount of $1.15 billion.

The 2021 Credit Agreement also has an option to increase the amount available up to an additional $500 million subject to our leverage and other factors.

The proceeds from the issuance of our Convertible Senior Notes and from loans under the 2021 Credit Agreement were used as sources of funding for the acquisition of NIC.

Our Term A-2 Loans bear interest, at our option, at a per annum rate of either (1) the Base Rate plus a margin of 0% to 0.5% or (2) the one-, three-, six-, or, subject to approval by all lenders, twelve-month SOFR rate plus a margin of 0.875% to 1.5%.

Based on the debt under the 2021 Credit Agreement, the aggregate principal outstanding balance as of December 31, 2023 is $50.0 million, and each quarter of a point change in interest rates would result in a $125,000 change in annual interest expense.

In January 2023, we amended our 2021 Credit Agreement to replace the LIBOR reference rate with the SOFR reference rate.

*Inflation and interest rates.*

For a comparison of our Results of Operations for the years ended December 31, [removed: 2022,] [added: 2023,] and [removed: 2021,] [added: 2022,] and our Cash Flow discussion for the year ended December [removed: 2022,] [added: 2023,] 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, [removed: 2022,] [added: 2023,] as filed with the SEC on February 21, [removed: 2023.][added: 2024.]

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, primarily local and state governments, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from [removed: cyber-attacks and] [added: cyber-attacks,] security [removed: vulnerabilities;] [added: vulnerabilities and software updates;] (3) our ability to protect client information from security breaches and 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 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; (7) general economic, political and market conditions, including continued inflation and rising interest rates; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) 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; (10) 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 (11) costs of compliance and any failure to comply with government and stock exchange regulations.

We provide subscription-based services such as software as a service (“SaaS”) and transaction-based [removed: fees] [added: services] primarily related to digital government services and [removed: online] payment processing.

Additionally, we provide property appraisal [removed: outsourcing] services for taxing jurisdictions.

[removed: In accordance with ASC 280-10, Segment Reporting, we] [added: We] report our results in two reportable segments.

The Enterprise Software [removed: ("ES")] [added: (“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 [removed: solutions;] [added: solutions,] courts and public safety [removed: solutions;] [added: solutions,] education solutions, and property and recording solutions.

The Platform Technologies [removed: ("PT")] [added: (“PT”)] reportable segment provides public sector entities with [removed: software solutions to] platform and transformative solutions including digital solutions, payment processing, [removed: streamline] [added: streamlined] data processing, and [removed: improve] [added: improved] operations and workflows.

[removed: We define segment] [added: Segment] operating income for our [removed: business units] [added: reportable segments is defined] as income before non-cash amortization of intangible assets associated with their acquisitions, interest expense, and income taxes.

Certain [removed: amounts for] [added: presentation items from] previous years have been [removed: reclassified] [added: adjusted] to conform [removed: to the] [added: with] current year presentation.

On October 31, 2023, we acquired Resource Exploration, Inc. (“ResourceX”), a leading provider of budgeting software to the public [removed: sector.][added: sector, and ARInspect, Inc. (“ARInspect”), a leading provider of AI powered machine learning solutions for public sector field operations.]

The actual operating results of CSI and [removed: ResourceX, from their respective dates of acquisition,] [added: ResourceX] are included in the operating results of the ES [removed: segment.][added: segment from their respective dates of acquisition.]

[removed: *2023] [added: *2024] Operating Results*

For the twelve months ended December 31, [removed: 2023,] [added: 2024,] total revenues increased [removed: 5.5%] [added: 9.5%] compared to the prior period.

Revenues from recent acquisitions [removed: comprised $22.3] [added: contributed $10.4] million or [removed: 1.2%, of] [added: 0.5%, to] the [added: total revenue] increase.

[removed: Subscription revenues] [added: Subscriptions revenue] grew [removed: 14.5%] [added: 15.8%] for the twelve months ended December 31, [removed: 2023,] [added: 2024,] primarily due to an ongoing shift [removed: to] [added: toward] SaaS [removed: in the mix of] [added: arrangements for both] new [removed: arrangements; an increase in revenues associated with the conversion of on-premises clients to SaaS;] and [added: existing clients, along with] growth in [removed: our transaction-based revenues such as e-filing and payments, offset by the absence of COVID pandemic related] [added: certain] transaction-based [removed: revenue.][added: revenues.]

Subscriptions and maintenance are considered recurring revenue sources and comprised approximately [removed: 83%] [added: 84%] of our revenues in [removed: 2023.][added: 2024.]

During [removed: 2023,] [added: 2024,] based on our number of [removed: customers,] [added: clients,] attrition was approximately 2%.

Annualized Recurring Revenue [added: (“ARR”)] - [removed: The majority of our revenues are comprised of revenues from subscriptions] [added: Subscriptions] and [removed: maintenance, which we consider to be] [added: maintenance are considered] recurring [removed: revenues] [added: revenue] sources.

[removed: Annualized recurring revenue (ARR)] [added: ARR] is calculated by annualizing the current [removed: quarter's] [added: quarter’s] recurring revenues from maintenance and subscriptions as reported in our statement of income.

ARR is a metric [removed: we believe is] widely used by companies in the technology sector and by investors, which we believe offers insight to the stability of our maintenance and subscription revenues to be recognized within the [removed: year, which are considered recurring in nature, with some seasonality.][added: year.]

[removed: Subscription revenues primarily] [added: Subscriptions revenue] consists of revenues derived from our SaaS arrangements and transaction-based [removed: fees, which relate] [added: fees primarily related] to digital government [removed: services, including e-filing transactions] [added: services] and payment processing.

These revenues are considered recurring because revenues from these sources are expected to [removed: reoccur] [added: re-occur] in similar annual amounts for the term of our relationship with the client.

Transaction-based [removed: fees] [added: 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.

ARR was [removed: $1.61] [added: $1.86] billion and [removed: $1.50] [added: $1.61] billion as of December 31, [removed: 2023,] [added: 2024,] and [removed: 2022,] [added: 2023,] respectively.

ARR increased [removed: 8%] [added: approximately 15%] compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS [removed: arrangements.][added: arrangements for both new and existing clients and expansion in transaction-based fees.]

Cost of Revenues and Gross Margins – Our primary cost [removed: component is] [added: components are hosting costs 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 [removed: software licenses and royalties,] subscription-based services, [removed: and] maintenance and [removed: support.][added: support and software licenses and royalties.]

As of December 31, [removed: 2023,] [added: 2024,] our total employee count included in cost of revenues increased to [removed: 5,129] [added: 5,250] from [removed: 5,021] [added: 5,129] at December 31, [removed: 2022, including 61 employees who joined us through acquisitions completed since December 31, 2022.][added: 2023.]

Uses of cash include acquisitions, capital investments in property and equipment and software development, [added: debt repayment] and discretionary purchases of treasury stock.

Our working capital needs are fairly stable throughout the year with the significant components of cash [removed: outflows being payment of personnel expenses offset by cash] inflows representing collection of accounts receivable and cash receipts from clients in advance of revenue being [removed: earned.][added: earned, offset by cash outflows, primarily payment of personnel expenses.]

[removed: The preparation of these] [added: These] financial statements [removed: requires] [added: 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 [removed: assets and liabilities at the date of the financial statements, the reported amounts of revenues, cost of] [added: assets, liabilities,] revenues and [removed: expenses during the reporting period,] [added: expenses,] and related disclosure of [removed: contingencies.][added: contingent assets and liabilities.]

Significant items subject to such estimates and assumptions include the [added: recoverability of goodwill and other intangible assets and estimated useful lives of intangible assets, the] application of the progress toward completion methods of revenue recognition, estimation for revenue recognition and multiple performance obligation [removed: arrangements, and the recoverability of goodwill and other intangible assets and estimated useful lives of intangible assets.][added: arrangements.]

*Revenue Recognition.* We earn the majority of our revenues from subscription-based services and post-contract [removed: customer] [added: client] support (“PCS” or “maintenance”).

Our software arrangements with [removed: customers] [added: clients] contain multiple performance obligations that range from software licenses, installation, training, [removed: and consulting related to] [added: consulting,] software modification and customization to meet specific [removed: customer needs (services), hosting,] [added: client needs; hosting;] and PCS.

For arrangements that involve significant production, modification or customization of the software, or where professional services [removed: are] otherwise [removed: not] [added: cannot be] considered distinct, we recognize revenue [added: as control is transferred to the client] over time [removed: by measuring progress-to-completion.][added: using progress-to-completion methods.]

[removed: Subscription-based services consist] [added: Subscriptions revenues] primarily [added: consist] of revenues derived from [added: our] SaaS arrangements and [removed: transactions from digital government services; payment processing; and electronic filing (‘‘e-filing”).][added: transaction-based fees.]

The transaction price is allocated to the [removed: separate] [added: distinct] performance obligations on a relative [removed: SSP] [added: standalone selling price (“SSP”)] basis.

If the conclusion of [removed: this] [added: an impairment] assessment is that it is more likely than not that [removed: a reporting unit's] [added: the] fair value [added: of the reporting unit] is more than its carrying value, [added: goodwill is not considered impaired, and] we are not required to perform [removed: a] [added: the] quantitative [added: goodwill] impairment test.

During [removed: 2023,] [added: 2024,] we did not identify any triggering events that would indicate that the carrying amount of our intangible assets may not be recoverable.

Our reportable segments are organized on the basis of a combination of the products and services they deliver to clients and the function the public sector client performs.

The primary financial measures used by the CODM for assessing performance and allocating resources are segment income or loss from operations.

The CODM uses segment income or loss from operations before income taxes, not including gains and losses on investments, to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process.

Segment gross profit for our operating segments units is defined as gross profit before non-cash amortization of acquired software associated with acquisitions.

During the fiscal periods presented, we had no significant transaction between reportable segments.

We did not complete any acquisitions during the twelve months ended December 31, 2024,.

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.

Research and development (“R&D”) expense – These costs 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.

As of December 31, 2024, our total employee count included in R&D expense increased to 870 from 830 at December 31, 2023

ARR was $1.86 billion and $1.61 billion as of December 31, 2024, and 2023, respectively, an increase of approximately 15% compared to the prior period.

The public sector software market continues to experience heightened activity.

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements.

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.

Depending on the contract, we measure progress-to-completion primarily using labor hours incurred.

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 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.

See Note 8, “Goodwill and Other Intangible Assets,” for additional information.

*Recent adoption of new accounting pronouncements*

As of December 31, 2024, we adopted the new standard which has been applied retrospectively by the Company.

This change did not have a significant impact on the Company’s financial statements and disclosures.

See Note 2, “Segment and Related Information,” for further discussion.

*New accounting pronouncements*

In January 2025, the FASB issued ASU 2025-01 - *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.* This update clarifies that all public business entities must adopt the guidance in ASU 2024-03 for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting 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.

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.

This guidance is not expected to have a material impact 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.

This guidance is not expected to have a material impact on the Company’s financial statements.

| | | | 2024 | | | | | | 2023 | | | | | | | | |

| | | | 2024 | | | | | | 2023 | | | | | | $ | | | | | | % | | |

| ES | | | $ | 794,475 | | | | | $ | 634,262 | | | | | $ | 160,213 | | | | | 25 | | % |

| PT | | | 548,456 | | | | | | 525,250 | | | | | | 23,206 | | | | | | 4 | | % |

| Total subscriptions revenue | | | $ | 1,342,931 | | | | | $ | 1,159,512 | | | | | $ | 183,419 | | | | | 16 | | % |

SaaS

The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the listed years ended December 31 ($ in thousands):

As of January 1, 2023, our data and insights solutions business unit was integrated into the remaining business units across both reportable segments with no material change to the results of the reportable segments.

We evaluate performance based on several factors, of which the primary financial measure is business segment operating income.

Segment operating income includes intercompany transactions.

The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement.

Beginning January 1, 2023, we no longer report the appraisal services revenue and related costs as separate categories in the statement of income due to less significance on our overall operating results.

Therefore, we have combined the appraisal services revenue category with the professional services revenue category; and the related cost of revenue category for appraisal services is now combined with the cost of revenue category related to subscriptions, maintenance and professional services on the consolidated statements of income for all reporting periods presented.

The total purchase price, net of cash acquired of $48,000, was approximately $16.3 million, consisting of $9.1 million paid in cash, $5.7 million of common stock and $1.5 million related to working capital and indemnity holdbacks, subject to certain post-closing adjustments.

On October 31, 2023, we acquired ARInspect, Inc. (“ARInspect”), a leading provider of AI powered machine learning solutions for public sector field operations.

The total purchase price, net of cash acquired of $1.0 million, was approximately $20.5 million, consisting of $19.1 million paid in cash and $2.4 million related to working capital and indemnity holdbacks, subject to certain post-closing adjustments.

The total purchase price, net of cash acquired of $415,000, was approximately $36.2 million, consisting of $33.4 million paid in cash and $3.3 million related to working capital and indemnity holdbacks, subject to certain post-closing adjustments.

*2022*

On October 31, 2022, we acquired Rapid Financial Solutions, LLC (“Rapid”), a provider of reliable, scalable, and secure payments with best-in-class card issuance and digital disbursement capabilities.

The total purchase price, net of cash acquired of $2.2 million, was approximately $67.4 million, consisting of $51.5 million paid in cash and, $18.2 million of common stock.

On February 8, 2022, we acquired US eDirect Inc. (“US eDirect”), a leading provider of technology solutions for campground and outdoor recreation management.

The total purchase price, net of cash acquired of $6.4 million, was approximately $116.5 million, consisting of $122.9 million paid in cash.

The actual operating results of Rapid and US eDirect, from their respective dates of acquisition, are included in the operating results of the PT segment.

Subscription revenues from recent acquisitions comprised $18.3 million or 1.8%, of the increase.

The local government software market continues to be active with sales activity indicators generally trending at or above pre-pandemic levels in most sectors of our business, and our backlog at December 31, 2023 reached $2.03 billion, an 8% increase from the prior period.

Our discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Revenue is recognized upon transfer of control of promised products or services to customers 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 customer

*•*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

Arrangements that include professional services, such as training or installation, are evaluated to determine whether the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are separately identifiable from other promises in the contract.

Many 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 customer, unless the software is not considered distinct.

We consider off-the-shelf software to be distinct when it can be added to an arrangement with minor changes in the underlying code, it can be used by the customer for the customer’s purpose upon installation, and remaining services such as training are not considered highly interdependent or highly interrelated to the product's functionality.

We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts.

These arrangements are often implemented over an extended period and occasionally require us to revise total cost estimates.

When professional services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material or milestones basis.

Revenue from subscription-based services is generally recognized over time on a ratable basis over the contract term, beginning on the date that our service is made available to the customer.

For SaaS arrangements, we evaluate whether the customer has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the customer can feasibly maintain the software on the customer’s hardware or enter into another arrangement with a third party to host the software.

We allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated SSP.

We recognize SaaS arrangements ratably over the terms of the arrangements, which range from one to ten years, but are typically for periods of three to five 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 customer access to the software.

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.

For transaction-based revenues, we have the right to charge the customer an amount that directly corresponds with the value to the customer of our performance to date.

As of December 31, [removed: 2023,] [added: 2024,] we had [removed: $50.0 million of] [added: no] outstanding borrowings under our [removed: amended 2021] [added: 2024] Credit Agreement and available borrowing capacity under the [removed: amended 2021] [added: 2024] Credit Agreement was [removed: $500.0] [added: $700.0] million.

[removed: In accordance with our amended 2021 Credit Agreement, the borrowings] [added: Loans] under the [removed: Revolving Credit Facility and the Term Loan A-1] [added: 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) [removed: (the “Base Rate”)] plus a margin of 0.125% to 0.75% or (2) the one-, three-, [removed: six-, or, subject to approval by all lenders, twelve-month] [added: or six-month] SOFR rate plus a margin of 1.125% to 1.75%.

As of December 31, 2023, we have fully repaid amounts due under Term Loan A-2.

For the twelve months ended December 31, 2023, the effective interest rate for our borrowings was 7.63%.

Based on the aggregate outstanding principal balance under the amended 2021 Credit Agreement as of December 31, 2023, of $50.0 million, each quarter of a point change in interest rates would result in a $125,000 change in annual interest expense.

Tyler Technologies, Inc. [removed: (“Tyler”)] [added: (“Tyler” or “Company”)] is a leading provider of integrated software and technology management solutions for the public sector.

We maintain deep, long-term relationships with state and local government agencies, including dedicated state-level offices in the [removed: 28] [added: 29] states in which we have enterprise contracts.

- Payments: [removed: As the] [added: The] leading platform for public sector [removed: payment] [added: payments that] processes nearly half a billion transactions annually and covers the entire payments life cycle, including billing, presentment, merchant onboarding, collections, reconciliation, and disbursements.

- Public Safety: [removed: Integrated public safety solutions designed to comply with state and federal reporting mandates, provide] [added: Provides] real-time information and instant data sharing across [removed: jurisdictions,] [added: jurisdictions] and [removed: promote] [added: promotes] intelligence-led responses so that help arrives faster and more [removed: prepared.][added: prepared while complying with state and federal reporting mandates.]

We derive our revenues from [removed: four] [added: three] primary sources:

Subscriptions revenue consists of revenues derived from our SaaS arrangements and [removed: transactions-based] [added: transaction-based] fees.

The clients who choose this model typically do not wish to maintain, update and operate these systems [added: directly,] or make up-front capital expenditures to implement these advanced technologies.

The contract terms for these arrangements range from one to [removed: ten] [added: 10] years but are typically contracted for [removed: initial] periods of [removed: three] [added: generally one] to [removed: five] [added: three] years.

[removed: Other sources of subscriptions revenue are derived from transaction-based] [added: Transaction-based] fees primarily [removed: related] [added: relate] to digital government services, online payment [removed: solutions, which] [added: solutions (which] are sometimes offered with the assistance of third-party [removed: vendors,] [added: vendors),] and online dispute resolution solutions.

Support is provided to clients over the phone or via the [removed: Web] [added: Internet] through help desks staffed by our client support representatives.

We generally provide maintenance and support for our on-premises clients under annual, or in some [removed: cases, multi-year] [added: cases multi-year,] contracts, with a typical fee based on a percentage of the software product’s license fee.

Similar [added: maintenance and] support [removed: is] [added: services are] provided to our SaaS clients and [removed: is] [added: are] included in their subscription fees, which are classified as subscription-based revenue.

At the culmination of the implementation process, [removed: a data] [added: 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.

We believe we have achieved a reputation as a premium product and service provider to the [removed: government] [added: public sector] market.

[removed: We are making significant investments in optimizing our products to be deployed efficiently in the public cloud and over] [added: Over] a multi-year period [removed: are] [added: we have been] transitioning from hosting clients in Tyler’s proprietary data centers to utilizing Amazon Web Services (“AWS”) for cloud hosting.

We also intend to continue to expand our [removed: customer] [added: client] base to include larger jurisdictions.

Our existing [removed: customer] [added: client] base offers significant opportunities for additional sales of solutions and services that we currently offer, but that existing clients do not fully utilize.

In particular, since the acquisition of [removed: NIC, Inc.( “NIC”)] [added: 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 [removed: continue.][added: continue to expand.]

We have a large recurring revenue base from subscription-based services and maintenance and support, which generated revenues of [removed: $1.6] [added: $1.8] billion, or [removed: 83%] [added: 84%] of total revenues, in [removed: 2023.][added: 2024.]

We have historically experienced very low [removed: customer] [added: client] turnover (approximately 2% [removed: annually)] [added: annually),] and recurring revenues continue to grow as the installed [removed: customer] [added: client] base increases.

Subscription-based revenues have been our fastest growing revenue category over the past five years, increasing from [removed: $296.4] [added: $350.6] million in [removed: 2019] [added: 2020] to [removed: $1.2] [added: $1.3] billion in [removed: 2023.][added: 2024.]

ARR was [removed: $1.61] [added: $1.86] billion and [removed: $1.50] [added: $1.61] billion as of December 31, [removed: 2023,] [added: 2024,] and [removed: 2022,] [added: 2023,] respectively.

ARR increased [removed: 8%] [added: approximately 15%] compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements.

We have a strategic collaboration agreement with [removed: Amazon Web Services ("AWS")] [added: AWS] for cloud hosting services, which brings together Tyler, the [removed: nation's] [added: nation’s] largest software company exclusively focused on the public sector, and AWS, the broadest and deepest cloud platform.

These initiatives [removed: will] bring the most advanced cloud-native services to Tyler [removed: clients,] [added: clients] to help improve the flow of information and provide a better experience for state, local, and federal governments.

For certain [removed: products] [added: products,] we also utilize a partner network for both sales and professional services, primarily in the state and federal markets.

Many of these firms operate within a specific geographic area [removed: and / or] [added: and/or] in a narrow product or service niche.

We compete on a variety of factors, including price, service, name recognition, reputation, technological capabilities, and the ability to [removed: modify existing] [added: configure] products and services to [removed: accommodate] [added: address] the individual requirements of the client.

Governmental units often are required to seek competitive proposals through a request for proposal [removed: process] [added: process,] and some prospective clients use consultants to assist them with the proposal and vendor selection process.

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 [added: strong] culture, [added: compensation and] benefits, and continual growth opportunities for our team members.

As of December 31, [removed: 2023,] [added: 2024,] we had approximately [removed: 7,300] [added: 7,400] team members.

Approximately [removed: 95%] [added: 94%] of our team members work in one of our [removed: 66] [added: 54] U.S. offices or remotely in the U.S. Approximately [removed: 388] [added: 450] of our team members are in Canada, the Philippines, or India.

The tables below represent our workforce demographics as of December 31, [removed: 2023:][added: 2024:]

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 [removed: continuous] survey feedback from Tyler team members, and [removed: our] low [added: team member] turnover.

Prior to COVID, [added: approximately] 40% of team members worked remotely, primarily in sales and professional services roles.

As of December 31, [removed: 2023, 63%] [added: 2024, approximately 55%] of team members work remotely and [removed: 37%] [added: 45%] of team members are either partially or fully [removed: office based.][added: office-based.]

Voluntary workforce turnover (rolling 12-month attrition) was 8% as of December 31, [removed: 2023, a decrease from 2022 turnover of 10%] [added: 2024] and [removed: a return] [added: 2023, which was similar] to [removed: pre-COVID] [added: pre COVID] levels of turnover at Tyler [removed: which] [added: that] consistently [removed: outperforms our] [added: outperform] industry [removed: peers.][added: levels.]

The average tenure of our team members continues to be approximately [removed: seven years] [added: eight years,] and approximately [removed: 28%] [added: 30%] of our employees have been employed by Tyler for more than ten years.

The most frequent factor cited by team members leaving Tyler in [removed: 2023] [added: 2024] was career [removed: opportunities, with compensation also cited as a factor.][added: opportunities.]

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.

Our other sources of revenue include software licenses and royalties and computer hardware equipment, which represent 3% and 4% of total revenues for the twelve months ended December 31, 2024 and 2023, respectively.

We are making significant investments in optimizing our products to be deployed efficiently in the public cloud.

| Overall | | | 69.6% | | | 7.7% | | | 4.7% | | | 4.9% | | | 2.1% | | | 0.5% | | | 10.5% | | |

| Leadership | | | 84.0% | | | 6.3% | | | 2.9% | | | 3.1% | | | 1.4% | | | 0.4% | | | 1.9% | | |

| Overall | | | 60.6% | | | 37.1% | | | 2.0% | | | 0.3% | | |

| Leadership | | | 62.1% | | | 37.9% | | | —% | | | —% | | |

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.

- The executive team, in partnership with HR, updated the leadership competencies required to execute our Tyler 2030 vision and beyond.

The competencies were integrated into key people processes, including performance evaluations and 360 feedback assessments.

They also served as the foundation for a new leadership framework to build a pipeline of talent from new leaders through executive level leadership.

The program also includes multiple leadership assessments, including 360-degree feedback, and a dedicated mentor to support their development.

- Tyler enhanced our investment in our enterprise-wide mentoring platform to support mentoring relationships for targeted skill building and formal mentoring engagements.

- As we continue our multi-year investment in developing cloud skills across the Tyler workforce, 657 Tyler team members participated in approximately 13,000 hours of AWS cloud training, resulting in 99 AWS certifications and 227 accreditations completed.

*Inclusion*

One of Tyler’s stated core values is inclusion, which we define as respecting and valuing each other.

To organize our efforts on this particular value, we operate Tyler Together, with strategic pillars focused on our culture, career development, and community impact.

In 2024, achievements included:

- Improved metrics in our talent attraction and retention efforts;

- Extending equity grants to a broader segment of our workforce, with over 20% of 2024 grantees representing first-time grantees; and

- The re-launch or first-time launch of Employee Resource Groups (“ERGs”) including Tyler Women, Tyler Military Veterans, and the Tyler LGBTQ+ Network, each with defined business objectives.

Gartner, Inc., a leading information technology research and advisory company, estimates that: state and local government application and vertical specific software spending are expected to grow from $31.8 billion in 2024 to $46.9 billion in 2027; professional services and support segments of that market are expected to expand from $36.4 billion in 2024 to $46.8 billion in 2027; application and vertical specific software sales in the primary and secondary education segments of the market are expected to expand from $6.2 billion in 2024 to $8.6 billion in 2027 while related professional services and support are expected to grow from $5.7 billion in 2024 to $7.5 billion in 2027.

For the national and international government markets, Gartner estimates that application and vertical specific software sales are expected to expand from $48.0 billion in 2024 to $71.9 billion in 2027, while related professional services and support are expected to grow from $71.6 billion in 2024 to $93.5 billion in 2027.

Tyler is a leading provider of integrated solutions for the public sector.

- Software licenses and royalties

In certain arrangements, the client may also acquire a license to the software.

Software Licenses and Royalties

Many 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 customer, unless the software is not considered distinct.

We consider "off-the-shelf" software to be distinct when it can be added to an arrangement with minor changes in the underlying code, it can be used by the customer for the customer’s purpose upon installation, and remaining services such as training are not considered highly interdependent or interrelated to the product's functionality.

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 using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts.

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 customer and the remainder of the fee due over a passage of time stipulated by the contract.

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.

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.

We typically receive notice of royalty revenue we are entitled to and billed on a quarterly basis in the quarter immediately following the royalty reporting period and adjustments have not been significant.

Contracts for software products and services are generally implemented over periods of three months to one year, although some complex implementations may span multiple years, with annually renewing maintenance and support update agreements thereafter.

BACKLOG

At December 31, 2023, our revenue backlog was approximately $2.03 billion compared to $1.89 billion at December 31, 2022.

The backlog generally represents signed contracts under which the revenue has not been recognized.

Approximately $937 million, or 46%, of the backlog is expected to be recognized during 2024.

We believe that, due to the rapid rate of technological change in the computer software industry, trade secrets and copyright protection are less significant than factors such as the knowledge, ability and experience of our employees, frequent product enhancements, and timeliness and quality of support services.

| | | | | | | | | | | | | | | | | | | | | | | | |

| Overall | | | 70.5% | | | 7.6% | | | 4.7% | | | 4.7% | | | 2.1% | | | 0.5% | | | 9.9% | | |

| Leadership | | | 96.4% | | | 1.8% | | | —% | | | —% | | | —% | | | 1.8% | | | —% | | |

| Overall | | | 61.8% | | | 37.2% | | | 0.2% | | | 0.8% | | |

| Leadership | | | 60.0% | | | 40.0% | | | —% | | | —% | | |

- 823 Tyler team members participated in approximately 11,000 hours of AWS cloud certification training.

There were 324 AWS accreditations and 102 certifications completed, as we continue to invest in developing cloud skills across the Tyler workforce.

We provide a range of offerings in support of mental and emotional, financial, and physical health and wellness not only for our team members, but also for their family members.

Our team members continued to demonstrate elevated levels of mental, physical and financial stress in 2023.

These levels increased during the pandemic and have been slow to moderate.

Given this, we enhanced mental health resources for managers and team members in 2023 and increased the level of financial education resources available to staff at Tyler.

*Diversity and Inclusion*

We believe in the benefits of a diverse workforce and inclusive culture, and we achieved notable improvements in several key areas under our DEI Strategic Pillars in 2023 including:

- Parity in female hires and three-year improvement in racial diversity from application through to hire for the first time since we began tracking recruiting of diverse candidates;

- Continued increase through the year in the depth and diversity of equity grants across Tyler with over 20% of 2023 grantees representing first time grantees;

- A decision to redesign our efforts across Tyler to elevate and accelerate our focus on inclusion in alignment with our business objectives through the establishment of Tyler-wide Employee Resource Groups “(ERGs”) with multiple executive sponsors, which will be implemented in 2024.

[removed: On] [added: 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 [removed: arrangement, and since then have been engaged directly with the client on payment resolution.][added: 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.

The client was unresponsive to our outreach for several months.

For the Fiscal Year Ended December 31, [removed: 2023][added: 2024]

Yes ☐ No [removed: ☒][added: ☐]

The aggregate market value of the voting stock held by non-affiliates of the registrant was [removed: $17,373,822,183] [added: $21,332,091,018] based on the reported last sale price of common stock on June 30, [removed: 2023,] [added: 2024,] 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 [removed: 20, 2024] [added: 18, 2025] was [removed: 42,276,136.][added: 43,013,800.]

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 [removed: 9, 2024.][added: 6, 2025.]

| Item 1. | | | [removed: [Business](#iddf9da6170a9419a8a140727417a2987_13)] [added: [Business](#ibb5a95fde29942f7abb4aea17db2d795_13)] | | | [removed: [3](#iddf9da6170a9419a8a140727417a2987_13)] [added: [3](#ibb5a95fde29942f7abb4aea17db2d795_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#iddf9da6170a9419a8a140727417a2987_16)] [added: Factors](#ibb5a95fde29942f7abb4aea17db2d795_19)] | | | [removed: [11](#iddf9da6170a9419a8a140727417a2987_16)] [added: [11](#ibb5a95fde29942f7abb4aea17db2d795_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#iddf9da6170a9419a8a140727417a2987_19)] [added: Comments](#ibb5a95fde29942f7abb4aea17db2d795_22)] | | | [removed: [21](#iddf9da6170a9419a8a140727417a2987_19)] [added: [21](#ibb5a95fde29942f7abb4aea17db2d795_22)] | | |

| Item 1C. | | | [removed: [Cybersecurity](#iddf9da6170a9419a8a140727417a2987_1685)] [added: [Cybersecurity](#ibb5a95fde29942f7abb4aea17db2d795_25)] | | | [removed: [21](#iddf9da6170a9419a8a140727417a2987_1685)] [added: [21](#ibb5a95fde29942f7abb4aea17db2d795_25)] | | |

| Item 2. | | | [removed: [Properties](#iddf9da6170a9419a8a140727417a2987_22)] [added: [Properties](#ibb5a95fde29942f7abb4aea17db2d795_28)] | | | [removed: [24](#iddf9da6170a9419a8a140727417a2987_22)] [added: [23](#ibb5a95fde29942f7abb4aea17db2d795_28)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#iddf9da6170a9419a8a140727417a2987_25)] [added: Proceedings](#ibb5a95fde29942f7abb4aea17db2d795_31)] | | | [removed: [24](#iddf9da6170a9419a8a140727417a2987_25)] [added: [24](#ibb5a95fde29942f7abb4aea17db2d795_31)] | | |

| Item 4. | | | [Mine [removed: Safety](#iddf9da6170a9419a8a140727417a2987_28) [Disclosures](#iddf9da6170a9419a8a140727417a2987_28)] [added: Safety Disclosures](#ibb5a95fde29942f7abb4aea17db2d795_34)] | | | [removed: [24](#iddf9da6170a9419a8a140727417a2987_28)] [added: [24](#ibb5a95fde29942f7abb4aea17db2d795_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#iddf9da6170a9419a8a140727417a2987_34)] [added: Securities](#ibb5a95fde29942f7abb4aea17db2d795_40)] | | | [removed: [25](#iddf9da6170a9419a8a140727417a2987_34)] [added: [25](#ibb5a95fde29942f7abb4aea17db2d795_40)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#iddf9da6170a9419a8a140727417a2987_37)] [added: [\[Reserved\]](#ibb5a95fde29942f7abb4aea17db2d795_43)] | | | [removed: [26](#iddf9da6170a9419a8a140727417a2987_37)] [added: [26](#ibb5a95fde29942f7abb4aea17db2d795_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#iddf9da6170a9419a8a140727417a2987_40)] [added: Operations](#ibb5a95fde29942f7abb4aea17db2d795_46)] | | | [removed: [27](#iddf9da6170a9419a8a140727417a2987_40)] [added: [27](#ibb5a95fde29942f7abb4aea17db2d795_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#iddf9da6170a9419a8a140727417a2987_61)] [added: Risk](#ibb5a95fde29942f7abb4aea17db2d795_67)] | | | [removed: [40](#iddf9da6170a9419a8a140727417a2987_61)] [added: [39](#ibb5a95fde29942f7abb4aea17db2d795_67)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#iddf9da6170a9419a8a140727417a2987_64)] [added: Data](#ibb5a95fde29942f7abb4aea17db2d795_70)] | | | [removed: [40](#iddf9da6170a9419a8a140727417a2987_64)] [added: [39](#ibb5a95fde29942f7abb4aea17db2d795_70)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#iddf9da6170a9419a8a140727417a2987_67)] [added: Disclosure](#ibb5a95fde29942f7abb4aea17db2d795_73)] | | | [removed: [40](#iddf9da6170a9419a8a140727417a2987_67)] [added: [39](#ibb5a95fde29942f7abb4aea17db2d795_73)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#iddf9da6170a9419a8a140727417a2987_70)] [added: Procedures](#ibb5a95fde29942f7abb4aea17db2d795_76)] | | | [removed: [40](#iddf9da6170a9419a8a140727417a2987_70)] [added: [39](#ibb5a95fde29942f7abb4aea17db2d795_76)] | | |

| Item 9B. | | | [Other [removed: Information](#iddf9da6170a9419a8a140727417a2987_73)] [added: Information](#ibb5a95fde29942f7abb4aea17db2d795_79)] | | | [removed: [41](#iddf9da6170a9419a8a140727417a2987_73)] [added: [40](#ibb5a95fde29942f7abb4aea17db2d795_79)] | | |

| Item 9C. | | | [removed: [D](#iddf9da6170a9419a8a140727417a2987_76)[isclosure](#iddf9da6170a9419a8a140727417a2987_76) [Regarding] [added: [Disclosure Regarding] Foreign Jurisdictions That [removed: Prevent](#iddf9da6170a9419a8a140727417a2987_76) [](#iddf9da6170a9419a8a140727417a2987_76)[Inspections](#iddf9da6170a9419a8a140727417a2987_76)] [added: Prevent Inspections](#ibb5a95fde29942f7abb4aea17db2d795_82)] | | | [removed: [41](#iddf9da6170a9419a8a140727417a2987_76)] [added: [40](#ibb5a95fde29942f7abb4aea17db2d795_82)] | | |

| | | | [PART [removed: III](#iddf9da6170a9419a8a140727417a2987_79)] [added: III](#ibb5a95fde29942f7abb4aea17db2d795_85)] | | | | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#iddf9da6170a9419a8a140727417a2987_82)] [added: Governance](#ibb5a95fde29942f7abb4aea17db2d795_88)] | | | [removed: [42](#iddf9da6170a9419a8a140727417a2987_82)] [added: [41](#ibb5a95fde29942f7abb4aea17db2d795_88)] | | |

| Item 11. | | | [Executive [removed: Compensation](#iddf9da6170a9419a8a140727417a2987_85)] [added: Compensation](#ibb5a95fde29942f7abb4aea17db2d795_91)] | | | [removed: [42](#iddf9da6170a9419a8a140727417a2987_85)] [added: [41](#ibb5a95fde29942f7abb4aea17db2d795_91)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#iddf9da6170a9419a8a140727417a2987_88)] [added: Matters](#ibb5a95fde29942f7abb4aea17db2d795_94)] | | | [removed: [42](#iddf9da6170a9419a8a140727417a2987_88)] [added: [41](#ibb5a95fde29942f7abb4aea17db2d795_94)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#iddf9da6170a9419a8a140727417a2987_91)] [added: Independence](#ibb5a95fde29942f7abb4aea17db2d795_97)] | | | [removed: [42](#iddf9da6170a9419a8a140727417a2987_91)] [added: [41](#ibb5a95fde29942f7abb4aea17db2d795_97)] | | |

| Item 14. | | | [Principal Accounting Fees and [removed: Services](#iddf9da6170a9419a8a140727417a2987_94)] [added: Services](#ibb5a95fde29942f7abb4aea17db2d795_100)] | | | [removed: [42](#iddf9da6170a9419a8a140727417a2987_94)] [added: [41](#ibb5a95fde29942f7abb4aea17db2d795_100)] | | |

| Item 15. | | | [Exhibits, Financial Statement [removed: Schedules](#iddf9da6170a9419a8a140727417a2987_100)] [added: Schedules](#ibb5a95fde29942f7abb4aea17db2d795_106)] | | | [removed: [43](#iddf9da6170a9419a8a140727417a2987_100)] [added: [42](#ibb5a95fde29942f7abb4aea17db2d795_106)] | | |

| | | | [PART I](#ibb5a95fde29942f7abb4aea17db2d795_10) | | | | | |

| | | | [PART II](#ibb5a95fde29942f7abb4aea17db2d795_37) | | | | | |

| | | | [PART IV](#ibb5a95fde29942f7abb4aea17db2d795_103) | | | | | |

| Item 16. | | | [Form 10-K Summary](#ibb5a95fde29942f7abb4aea17db2d795_109) | | | [44](#ibb5a95fde29942f7abb4aea17db2d795_109) | | |

| [Signatures](#ibb5a95fde29942f7abb4aea17db2d795_112) | | | | | | [45](#ibb5a95fde29942f7abb4aea17db2d795_112) | | |

| | | | [PART I](#iddf9da6170a9419a8a140727417a2987_10) | | | | | |

| | | | [PART II](#iddf9da6170a9419a8a140727417a2987_31) | | | | | |

| | | | [PART IV](#iddf9da6170a9419a8a140727417a2987_97) | | | | | |

| Item 16. | | | [Form 10](#iddf9da6170a9419a8a140727417a2987_1718)[\-](#iddf9da6170a9419a8a140727417a2987_1718)[K Su](#iddf9da6170a9419a8a140727417a2987_1718)[mmary](#iddf9da6170a9419a8a140727417a2987_1718) | | | [45](#iddf9da6170a9419a8a140727417a2987_1718) | | |

| [Signatures](#iddf9da6170a9419a8a140727417a2987_103) | | | | | | [46](#iddf9da6170a9419a8a140727417a2987_103) | | |

To help protect client information and Tyler data, Tyler leverages both internal and external resources, including third-party [removed: assessments,] [added: assessments and threat intelligence services,] to work to identify and respond to information security risks.

We repeatedly test our [removed: software,] [added: software] during the development [removed: cycle and once out in the field,] [added: cycle,] including internal assessments of our flagship solutions.

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 [added: 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 [removed: conducts] [added: to conduct] a “lessons learned” process when the incident response is completed.

*External resources:* Tyler leverages third-party assessments, [added: intelligence services,] audits, and reporting obligations to provide additional layers of accountability, monitoring and testing.

Another Tyler director possesses more than [removed: 37] [added: 38] years of Department of Defense experience in cyberspace operations and major computer network architectures.

The CFO and CAO are expected to engage with the Company’s Chief Legal Officer [removed: (“CLO”)] [added: (“CLO”), Chief Administrative Officer (“CAdO”),] and Audit [added: 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 [removed: an] [added: a Form] 8-K, if management believes the materiality threshold has been reached.

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.

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 harm our business, reputation, and future financial results, even if our software or services were not the cause of the exploitation.

We occupy a total of approximately [removed: 1.3] [added: 1.4] million square feet of office space, of which approximately [removed: 762,000] [added: 787,000] 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, [removed: North Carolina,] New York, Ohio, Tennessee, Texas, Virginia, Washington, Washington D.C., Wisconsin, Ontario and British Columbia, Canada, the Philippines and India.

At December 31, [removed: 2023,] [added: 2024,] we had approximately [removed: 1,039] [added: 953] stockholders of record.

Most of our stockholders hold their shares in street name; therefore, there are substantially more than [removed: 1,039] [added: 953] beneficial owners of our common stock.

We did not pay any cash dividends in [removed: 2023] [added: 2024] or [removed: 2022.][added: 2023.]

There are no warrants or rights related to our equity compensation plans as of December 31, [removed: 2023.][added: 2024.]

| | | | Number of securities to be issued upon exercise of outstanding options, warrants, purchase rights and vesting of restricted stock units as of December 31, [removed: 2023] [added: 2024] | | | | | | 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, [removed: 2023)] [added: 2024)] | | |

As of December 31, [removed: 2023,] [added: 2024,] we had authorization to repurchase up to approximately [removed: 2.3] [added: 2.2] million additional shares of Tyler common stock.

A summary of the repurchase activity during [removed: 2023] [added: 2024] is as follows:

| Period | | | Total number of shares [removed: repurchased] [added: 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 | | | [removed: —] [added: 53,362] | | | | | | — | | | | | | [removed: —] [added: $] | [added: 419.95] | | | | | [removed: 2,270,091] [added: 2,216,729] | | |

| Three months ended June 30 | | | [removed: —] [added: 25,506] | | | | | | — | | | | | | [removed: —] [added: 480.23] | | | | | | [removed: 2,270,091] [added: 2,191,223] | | |

| Three months ended September 30 | | | [removed: —] [added: 615] | | | | | | — | | | | | | [removed: —] [added: 567.53] | | | | | | [removed: 2,270,091] [added: 2,190,608] | | |

As of February [removed: 21, 2024,] [added: 19, 2025,] we had remaining authorization to repurchase up to [removed: 2.3] [added: 2.2] million additional shares of our common stock.

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, [removed: 2018.][added: 2019.]

[removed: ][added: ]

| Company / Index | | | [removed: 12/31/18] [added: 12/31/19] | | | | | | [removed: 12/31/19] [added: 12/31/20] | | | | | | [removed: 12/31/20] [added: 12/31/21] | | | | | | [removed: 12/31/21] [added: 12/31/22] | | | | | | [removed: 12/31/22] [added: 12/31/23] | | | | | | [removed: 12/31/23] [added: 12/31/24] | | |

| 2018 Incentive Stock Plan | | | 1,400,126 | | | | | | $ | 336.60 | | | | | 4,385,446 | | |

| Employee Stock Purchase Plan | | | 8,100 | | | | | | 490.14 | | | | | | 484,293 | | |

| | | | | | | | | | | | | | | | | | |

| | | | 1,408,226 | | | | | | $ | 337.48 | | | | | 4,869,739 | | |

During 2024, we did not repurchase any shares of our common stock, except to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards and units as described below.

| October 1 through October 31 | | | 273 | | | | | | — | | | | | | 586.23 | | | | | | 2,190,335 | | |

| November 1 through November 30 | | | 2,714 | | | | | | — | | | | | | 601.65 | | | | | | 2,187,621 | | |

| December 1 through December 31 | | | 25,761 | | | | | | — | | | | | | 629.06 | | | | | | 2,161,860 | | |

| | | | 108,231 | | | | | | — | | | | | | 489.74 | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

1 Includes 77,953 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.

Also includes 30,278 shares for the settlement of certain fully indemnified matters related to two acquisitions completed in prior years resulting in the reimbursement of shares of our common stock from escrow.

| Tyler Technologies, Inc. | | | 100 | | | | | | 145.50 | | | | | | 179.30 | | | | | | 107.46 | | | | | | 139.36 | | | | | | 192.20 | | |

| S&P 500 Stock Index | | | 100 | | | | | | 118.40 | | | | | | 152.39 | | | | | | 124.79 | | | | | | 157.59 | | | | | | 197.02 | | |

| S&P 600 Information Technology Index | | | 100 | | | | | | 127.81 | | | | | | 162.12 | | | | | | 125.86 | | | | | | 152.23 | | | | | | 151.00 | | |

| 2018 Incentive Stock Plan | | | 1,870,812 | | | | | | 283.09 | | | | | | 456,556 | | |

| Employee Stock Purchase Plan | | | 9,997 | | | | | | 355.4 | | | | | | 525,881 | | |

| Equity compensation plans not approved by security shareholders | | | — | | | | | | — | | | | | | — | | |

| | | | 1,880,809 | | | | | | $ | 283.47 | | | | | 982,437 | | |

During 2023, we did not purchase any shares of our common stock.

| October 1 through October 31 | | | — | | | | | | — | | | | | | — | | | | | | 2,270,091 | | |

| November 1 through November 30 | | | — | | | | | | — | | | | | | — | | | | | | 2,270,091 | | |

| December 1 through December 31 | | | — | | | | | | — | | | | | | — | | | | | | 2,270,091 | | |

| | | | — | | | | | | — | | | | | | — | | | | | | | | |

| Tyler Technologies, Inc. | | | 100 | | | | | | 161.46 | | | | | | 234.92 | | | | | | 289.50 | | | | | | 173.51 | | | | | | 225.01 | | |

| S&P 500 Stock Index | | | 100 | | | | | | 131.49 | | | | | | 155.68 | | | | | | 200.37 | | | | | | 164.08 | | | | | | 207.21 | | |

| S&P 600 Information Technology Index | | | 100 | | | | | | 139.59 | | | | | | 178.41 | | | | | | 226.31 | | | | | | 175.70 | | | | | | 212.50 | | |

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, [removed: 2023.][added: 2024.]

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, [removed: 2023.][added: 2024.]

Management assessed the effectiveness of Tyler’s internal control over financial reporting as of December 31, [removed: 2023.][added: 2024.]

Based on our assessment, we concluded that, as of December 31, [removed: 2023,] [added: 2024,] Tyler’s internal control over financial reporting was effective based on those criteria.

Tyler’s internal control over financial reporting as of December 31, [removed: 2023] [added: 2024] has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited Tyler’s financial statements.

[removed: Other than as described in the preceding paragraph, there] [added: 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, [removed: 2023,] [added: 2024,] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company has implemented new accounting and financial management software effective July 1, 2023, which is expected to improve the efficiency of certain financial and related business processes.

The implementation of our new system was not made in response to any identified deficiency or weakness in our internal controls over financial reporting.

The implementation was subject to various testing and review procedures prior to and after execution.

We have updated our internal controls over financial reporting, as necessary, to accommodate any modifications to our business processes or accounting procedures due to the implementation.

Management will continue to monitor, test and evaluate the operating effectiveness of internal controls related to the new accounting and financial management software during the post-implementation period to ensure that effective controls over financial reporting continue to be maintained.

| 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 [removed: 2023”] [added: 2024”] in our Proxy Statement when filed. | | | | | | | | |

| | | | | | | | | | | | | [Reports of Independent Registered Public Accounting [removed: Firm](#iddf9da6170a9419a8a140727417a2987_106)] [added: Firm](#ibb5a95fde29942f7abb4aea17db2d795_115)] (PCAOB ID: 42) | | | | | | [removed: [F-1](#iddf9da6170a9419a8a140727417a2987_106)] [added: [F-1](#ibb5a95fde29942f7abb4aea17db2d795_115)] | | |

| | | | | | | | | | | | | [Consolidated Statements of Income for the years ended December 31, [added: 2024,] 2023, [removed: 2022,] and [removed: 2021](#iddf9da6170a9419a8a140727417a2987_109)] [added: 2022](#ibb5a95fde29942f7abb4aea17db2d795_118)] | | | | | | [removed: [F-4](#iddf9da6170a9419a8a140727417a2987_109)] [added: [F-3](#ibb5a95fde29942f7abb4aea17db2d795_118)] | | |

| | | | | | | | | | | | | [Consolidated Statements of Comprehensive Income for the years ended December [removed: 31,] [added: 31,](#ibb5a95fde29942f7abb4aea17db2d795_121) [2024,] 2023, [removed: 2022,] and [removed: 2021](#iddf9da6170a9419a8a140727417a2987_112)] [added: 2022](#ibb5a95fde29942f7abb4aea17db2d795_121)] | | | | | | [removed: [F-5](#iddf9da6170a9419a8a140727417a2987_112)] [added: [F-4](#ibb5a95fde29942f7abb4aea17db2d795_121)] | | |

| | | | | | | | | | | | | [Consolidated Balance Sheets as of December 31, [removed: 2023] [added: 2024] and [removed: 2022](#iddf9da6170a9419a8a140727417a2987_115)] [added: 2023](#ibb5a95fde29942f7abb4aea17db2d795_124)] | | | | | | [removed: [F-6](#iddf9da6170a9419a8a140727417a2987_115)] [added: [F-5](#ibb5a95fde29942f7abb4aea17db2d795_124)] | | |

| | | | | | | | | | | | | [Consolidated Statements of Cash Flows for the years ended December [removed: 31,] [added: 31,](#ibb5a95fde29942f7abb4aea17db2d795_127) [2024,] 2023, [removed: 2022,] and [removed: 2021](#iddf9da6170a9419a8a140727417a2987_118)] [added: 2022](#ibb5a95fde29942f7abb4aea17db2d795_127)] | | | | | | [removed: [F-7](#iddf9da6170a9419a8a140727417a2987_118)] [added: [F-6](#ibb5a95fde29942f7abb4aea17db2d795_127)] | | |

| | | | | | | | | | | | | [Consolidated Statements of Shareholders’ Equity for the years ended December [removed: 31,] [added: 31,](#ibb5a95fde29942f7abb4aea17db2d795_133) [2024,] 2023, [removed: 2022,] and [removed: 2021](#iddf9da6170a9419a8a140727417a2987_124)] [added: 2022](#ibb5a95fde29942f7abb4aea17db2d795_133)] | | | | | | [removed: [F-9](#iddf9da6170a9419a8a140727417a2987_124)] [added: [F-8](#ibb5a95fde29942f7abb4aea17db2d795_133)] | | |

| | | | | | | | | | | | | [Notes to Consolidated Financial [removed: Statements](#iddf9da6170a9419a8a140727417a2987_127)] [added: Statements](#ibb5a95fde29942f7abb4aea17db2d795_136)] | | | | | | [removed: [F-10](#iddf9da6170a9419a8a140727417a2987_127)] [added: [F-9](#ibb5a95fde29942f7abb4aea17db2d795_136)] | | |

| [removed: 3.1] [added: [3.1](https://www.sec.gov/Archives/edgar/data/860731/000095013401002412/d84862ex3-4.txt)] | | | | | | [added: 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 [removed: herein).] [added: 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)](https://www.sec.gov/Archives/edgar/data/860731/000095013401002412/d84862ex3-4.txt).] | | |

| [removed: [3.3](https://www.sec.gov/Archives/edgar/data/860731/000086073123000021/a31amendedandrestatedasofm.htm)] [added: [3.2](https://www.sec.gov/Archives/edgar/data/860731/000086073123000021/a31amendedandrestatedasofm.htm)] | | | | | | [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).](https://www.sec.gov/Archives/edgar/data/860731/000086073123000021/a31amendedandrestatedasofm.htm) | | |

| [removed: [4.2](https://www.sec.gov/Archives/edgar/data/860731/000086073123000009/thirdamendmentto2021cred.htm)] [added: [10](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000860731/000086073124000046/tyl-20240930.htm)] | | | | | | [removed: [Third Amendment to the Credit] [added: [Credit] Agreement dated [removed: January 27, 2023,] [added: September 25, 2024,] among Tyler Technologies, Inc. and Wells Fargo Bank, N. A. as Administrative Agent and other lenders party hereto (filed as Exhibit [removed: 4.2] [added: 10.1] to our Form [removed: 10-K] [added: 8-K] dated [removed: February 22, 2023,] [added: September 30, 2024,] and incorporated by reference [removed: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073123000009/thirdamendmentto2021cred.htm)] [added: herein)](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000860731/000086073124000046/tyl-20240930.htm)] | | |

| [removed: [4.3](https://www.sec.gov/Archives/edgar/data/860731/000086073121000020/exhibit101wellsfargo_tyl.htm)] [added: [19](https://www.sec.gov/Archives/edgar/data/860731/000086073123000028/tyl6302023exhibit101.htm)] | | | | | | [removed: [Credit Agreement dated April 21, 2021, among] [added: [Revised Insider Trading Policy of] Tyler Technologies, [removed: Inc. and Wells Fargo Bank, N. A. as Administrative Agent and other lenders party hereto (filed] [added: Inc., dated July 20, 2023,(filed] as [removed: Exhibit] [added: exhibit] 10.1 to our Form [removed: 8-K] [added: 10-Q] dated [removed: April 21, 2021,] [added: July 26, 2023,] and incorporated by reference [removed: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073121000020/exhibit101wellsfargo_tyl.htm)] [added: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073123000028/tyl6302023exhibit101.htm)] | | |

| [removed: [4.4](https://www.sec.gov/Archives/edgar/data/860731/000086073121000005/nicagreement2921.htm)] [added: [14](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)] | | | | | | [removed: [Agreement and Plan] [added: [Code] of [removed: Merger, dated February 9, 2021 by] [added: Business Conduct] and [removed: among] [added: Ethics of] Tyler Technologies, [removed: Inc., Topos Acquisition, Inc., and NIC, Inc.(filed] [added: Inc. dated](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [May](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[9](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[, 202](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[4](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [(filed] as [removed: Exhibit 2.1 to] [added: Exhibit](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [14](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [to] our [removed: Form 8-K, dated February 10, 2021,] [added: form](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [10](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[\-K dated](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [Fe](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[bruary](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm) [](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[19](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[, 202](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[5](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)[,] and incorporated by reference [removed: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073121000005/nicagreement2921.htm)] [added: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit14.htm)] | | |

| [removed: [4.5](https://www.sec.gov/Archives/edgar/data/860731/000086073121000018/exhibit41indenture3921.htm)] [added: [4.2](https://www.sec.gov/Archives/edgar/data/860731/000086073121000018/exhibit41indenture3921.htm)] | | | | | | [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 [removed: 2026.] [added: 2026] (filed as Exhibit 4.1 to our Form 8-K, dated March 9, 2021, and incorporated by reference [removed: herein.)](https://www.sec.gov/Archives/edgar/data/860731/000086073121000018/exhibit41indenture3921.htm)] [added: herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073121000018/exhibit41indenture3921.htm)] | | |

| [removed: [10.1](http://www.sec.gov/Archives/edgar/data/860731/000119312512282212/d371277ds8.htm)] [added: [10.1](https://www.sec.gov/Archives/edgar/data/860731/000119312512282212/d371277ds8.htm)] | | | | | | [Employee Stock Purchase Plan (filed as Exhibit 10.1 to our registration statement 333-182318 dated June 25, 2012 and incorporated by reference [removed: herein).](http://www.sec.gov/Archives/edgar/data/860731/000119312512282212/d371277ds8.htm)] [added: herein).](https://www.sec.gov/Archives/edgar/data/860731/000119312512282212/d371277ds8.htm)] | | |

| [removed: [1](https://www.sec.gov/Archives/edgar/data/860731/000086073122000024/a102employmentagreement-mo.htm)[0.3](https://www.sec.gov/Archives/edgar/data/860731/000086073122000024/a102employmentagreement-mo.htm)] [added: [10.3](https://www.sec.gov/Archives/edgar/data/860731/000086073122000024/a102employmentagreement-mo.htm)] | | | | | | [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).](https://www.sec.gov/Archives/edgar/data/860731/000086073122000024/a102employmentagreement-mo.htm) | | |

| [removed: [*21.1](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit211.htm)] [added: [*21](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit21.htm)] | | | | | | [Subsidiaries of Tyler Technologies, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit211.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit21.htm)] | | |

| [removed: [*23](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit-23.htm)] [added: [*23](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit-23.htm)] | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit-23.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit-23.htm)] | | |

| [removed: [*31.1](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit311.htm)] [added: [*31.1](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit311.htm)] | | | | | | [Rule 13a-14(a) Certification by Principal Executive Officer.(a) Certification by Principal Executive [removed: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit311.htm)] [added: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit311.htm)] | | |

| [removed: [*31.2](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit312.htm)] [added: [*31.2](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit312.htm)] | | | | | | [Rule 13a-14(a) Certification by Principal Financial [removed: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit312.htm)] [added: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit312.htm)] | | |

| [removed: [*32.1](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit321.htm)] [added: [*32.1](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit321.htm)] | | | | | | [Section 1350 Certification of Principal Executive Officer and Principal Financial [removed: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073124000006/tyl12312023exhibit321.htm)] [added: Officer.](https://www.sec.gov/Archives/edgar/data/860731/000086073125000007/tyl12312024exhibit321.htm)] | | |

| [10.6](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000860731/000086073124000031/tyl-20240509.htm) | | | | | | [Tyler Technologies, Inc. Amended and Restated 2018 Incentive Plan, effective as of May 9, 2024 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 9, 2024 and incorporated by reference herein).](https://www.sec.gov/ix?doc=/Archives/edgar/data/0000860731/000086073124000031/tyl-20240509.htm) | | |

| 3.2 | | | | | | 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). | | |

| [3.4](http://www.sec.gov/Archives/edgar/data/860731/000095013401002412/d84862ex3-4.txt) | | | | | | [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).](http://www.sec.gov/Archives/edgar/data/860731/000095013401002412/d84862ex3-4.txt) | | |

| [10.6](https://www.sec.gov/Archives/edgar/data/860731/000086073123000012/a991tylcode-ofxbusinessx.htm) | | | | | | [Code of Business Conduct and Ethics of Tyler Technologies, Inc. dated October 30, 2020 (filed as Exhibit 99.1 to our form 8-K dated March 31, 2023, and incorporated by reference herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073123000012/a991tylcode-ofxbusinessx.htm) | | |

| [10.7](https://www.sec.gov/Archives/edgar/data/860731/000086073123000028/tyl6302023exhibit101.htm) | | | | | | [Revised Insider Trading Policy of Tyler Technologies, Inc., dated July 20, 2023,(filed as exhibit 10.1 to our Form 10-Q dated July 26, 2023, and incorporated by reference herein).](https://www.sec.gov/Archives/edgar/data/860731/000086073123000028/tyl6302023exhibit101.htm) | | |

| [10.8](#iddf9da6170a9419a8a140727417a2987_1) | | | | | | [Agreement and plan of merger by and among Tyler Technologies, Inc. TMP Subsidiary, Inc., MP Holding Parent, Inc. (filed as Exhibit 10.7 to our Form 10-K dated February 20, 2019 and incorporated by reference herein).](http://www.sec.gov/Archives/edgar/data/860731/000086073119000009/plan_ofxmergermicropactexh.htm) | | |

| [10.9](http://www.sec.gov/Archives/edgar/data/860731/000086073118000016/tylproxy2018.htm#sb3775a337bee452f876ac4e4a6e1c03e) | | | | | | [Tyler Technologies, Inc. 2018 Stock Option Plan effective as of May 9, 2018 (filed as Appendix A to the registrant's Proxy Statement filed with the Commission on March 28, 2018 and incorporated by reference herein).](http://www.sec.gov/Archives/edgar/data/860731/000086073118000016/tylproxy2018.htm#sb3775a337bee452f876ac4e4a6e1c03e) | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ H. Lynn Moore, Jr. | | |

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 [removed: 21, 2024.][added: 19, 2025.]

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ John S. Marr, Jr. | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Brian K. Miller | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Jason P. Durham | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Glenn A. Carter | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Brenda A. Cline | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Ronnie D. Hawkins, Jr. | | |

| Date: February [removed: 21, 2024] [added: 19, 2025] | | | | | | By: | | | | | | /s/ Daniel M. Pope | | |

We have audited the accompanying consolidated balance sheets of Tyler Technologies, Inc. (the Company) as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] 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, [removed: 2023,] [added: 2024,] 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, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2023,] [added: 2024,] 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, [removed: 2023,] [added: 2024,] 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 [removed: 21, 2024] [added: 19, 2025] expressed an unqualified opinion thereon.

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 [removed: the] applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Critical Audit [removed: Matter][added: Matters]

[removed: The critical] [added: Critical] audit [removed: matter communicated below is a matter] [added: matters are matters] arising from the current period audit of the financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that: (1) [removed: relates] [added: relate] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

[removed: February 21,] [added: | | | |] 2024 [added: | | |]

We have audited Tyler Technologies, Inc.’s internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on criteria established in Internal [removed: Control–Integrated] [added: 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, [removed: 2023,] [added: 2024,] based on the COSO criteria.

We also have audited, in accordance with the [added: auditing] standards of the Public Company Accounting Oversight Board (United States) [removed: (PCAOB),] [added: (the PCAOB) and in accordance with auditing standards generally accepted in] the [added: United States of America, the] consolidated balance sheets of the Company as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] 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, [removed: 2023,] [added: 2024,] and the related notes and our report dated February [removed: 21, 2024] [added: 19, 2025] expressed an unqualified opinion thereon.

We conducted our audit in accordance with the [added: auditing] standards of the PCAOB.

| | | | [removed: 2023] [added: 2024] | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | |

| [removed: Revenues:] [added: Revenues] | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Subscriptions | | | $ | [removed: 1,159,512] [added: 1,342,931] | | | | | $ | [removed: 1,012,304] [added: 1,159,512] | | | | | $ | [removed: 784,435] [added: 1,012,304] | |

| Maintenance | | | [removed: 466,661] [added: 463,132] | | | | | | [removed: 468,455] [added: 466,661] | | | | | | [removed: 474,287] [added: 468,455] | | |

| Professional services | | | [removed: 249,976] [added: 263,991] | | | | | | [removed: 277,625] [added: 249,976] | | | | | | [removed: 237,179] [added: 277,625] | | |

| Software licenses and royalties | | | [removed: 38,096] [added: 26,357] | | | | | | [removed: 59,406] [added: 38,096] | | | | | | [removed: 74,452] [added: 59,406] | | |

| Hardware and other | | | [removed: 37,506] [added: 41,392] | | | | | | [removed: 32,414] [added: 37,506] | | | | | | [removed: 21,934] [added: 32,414] | | |

| Total revenues | | | [removed: 1,951,751] [added: 2,137,803] | | | | | | [removed: 1,850,204] [added: 1,951,751] | | | | | | [removed: 1,592,287] [added: 1,850,204] | | |

| Subscriptions, maintenance and professional services | | | [removed: 1,001,221] [added: 1,112,778] | | | | | | [removed: 977,885] [added: 1,001,221] | | | | | | [removed: 818,219] [added: 977,885] | | |

| Software licenses and royalties | | | [removed: 10,821] [added: 6,277] | | | | | | [removed: 6,083] [added: 10,821] | | | | | | [removed: 3,552] [added: 6,083] | | |

| Amortization of software development | | | [removed: 12,625] [added: 18,806] | | | | | | [removed: 6,507] [added: 12,625] | | | | | | [removed: 2,325] [added: 6,507] | | |

| Amortization of acquired software | | | [removed: 36,062] [added: 36,964] | | | | | | [removed: 52,192] [added: 36,062] | | | | | | [removed: 45,601] [added: 52,192] | | |

| Hardware and other | | | [removed: 29,923] [added: 27,217] | | | | | | [removed: 23,674] [added: 29,923] | | | | | | [removed: 12,946] [added: 23,674] | | |

| Total cost of revenues | | | [removed: 1,090,652] [added: 1,202,042] | | | | | | [removed: 1,066,341] [added: 1,090,652] | | | | | | [removed: 882,643] [added: 1,066,341] | | |

| Gross profit | | | [removed: 861,099] [added: 935,761] | | | | | | [removed: 783,863] [added: 861,099] | | | | | | [removed: 709,644] [added: 783,863] | | |

| Sales and marketing expense | | | [removed: 149,770] [added: 157,731] | | | | | | [removed: 135,743] [added: 149,770] | | | | | | [removed: 118,624] [added: 135,743] | | |

| General and administrative expense | | | [removed: 308,575] [added: 300,938] | | | | | | [removed: 267,324] [added: 308,575] | | | | | | [removed: 271,955] [added: 267,324] | | |

| Research and development expense | | | [removed: 109,585] [added: 117,939] | | | | | | [removed: 105,184] [added: 109,585] | | | | | | [removed: 93,481] [added: 105,184] | | |

| Amortization of other intangibles | | | [removed: 74,632] [added: 59,627] | | | | | | [removed: 61,363] [added: 74,632] | | | | | | [removed: 44,849] [added: 61,363] | | |

| Operating income | | | [removed: 218,537] [added: 299,526] | | | | | | [removed: 214,249] [added: 218,537] | | | | | | [removed: 180,735] [added: 214,249] | | |

| Date: February 19, 2025 | | | | | | By: | | | | | | /s/ H. Lynn Moore, Jr. | | |

| Date: February 19, 2025 | | | | | | By: | | | | | | /s/ Margot L. Carter | | |

| | | | | | | | | | | | | Margot L. Carter | | |

| Date: February 19, 2025 | | | | | | By: | | | | | | /s/ Andrew D. Teed | | |

| | | | | | | | | | | | | Andrew D. Teed | | |

We determined that there are no critical audit matters.

February 19, 2025

| Net income | | | $ | 263,026 | | | | | $ | 165,919 | | | | | $ | 164,240 | |

| Cash and cash equivalents | | | $ | 744,721 | | | | | $ | 165,493 | |

| Income tax receivable | | | 11,975 | | | | | | — | | |

| | | | $ | 5,180,015 | | | | | $ | 4,676,663 | |

| | | | $ | 5,180,015 | | | | | $ | 4,676,663 | |

| Net income | | | $ | 263,026 | | | | | $ | 165,919 | | | | | $ | 164,240 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 263,026 | | | | | | — | | | | | | — | | | | | | 263,026 | | |

| Stock compensation | | | — | | | | | | — | | | | | | 122,813 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 122,813 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 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 | |

| Accounts receivable - current | | | $ | 587,634 | | | | | $ | 619,704 | |

| Accounts receivable - long term | | | 7,153 | | | | | | 8,988 | | |

| Total accounts receivable | | | $ | 594,787 | | | | | $ | 628,692 | |

| | | | 2024 | | | | | | 2023 | | |

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 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.

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.

RECENT ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

As of December 31, 2024, we adopted the new standard which has been applied retrospectively by the Company.

This change did not have a significant impact on the Company’s financial statements and disclosures.

See Note 2, “Segment and Related Information,” for further discussion.

In January 2025, the FASB issued ASU 2025-01 - *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.* This update clarifies that all public business entities must adopt the guidance in ASU 2024-03 for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting 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.

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.

This guidance is not expected to have a material impact 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.

This guidance is not expected to have a material impact on the Company’s financial statements.

Reportable operating segments are determined based on the Company’s management approach.

| Date: February 21, 2024 | | | | | | By: | | | | | | /s/ Mary Landrieu | | |

| | | | | | | | | | | | | Mary Landrieu | | |

| Date: February 21, 2024 | | | | | | By: | | | | | | /s/ Dustin R. Womble | | |

| | | | | | | | | | | | | Dustin R. Womble | | |

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

| | | | | | |

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| | | | Goodwill impairment tests | | |

| *Description of the Matter* | | | As of December 31, 2023, the Company’s goodwill balance of $2.5 billion was attributable to multiple reporting units. As disclosed in Note 1 to the consolidated financial statements, goodwill is assessed for impairment annually, or more frequently whenever events or changes in circumstances indicate its carrying value may not be recoverable. As part of its annual impairment test as of October 1, the Company performed a quantitative assessment for the platform technologies reporting unit which includes $1.7 billion, or 67%, of total goodwill as of December 31, 2023. The Company concluded that no impairment existed as of their annual assessment date. Auditing management’s quantitative assessment for goodwill impairment was complex and highly judgmental due to the significant judgment required to determine the fair value of this reporting unit. In particular, the Company’s fair value estimate for this reporting unit was sensitive to significant assumptions, such as weighted average cost of capital and revenue growth rates which are forward looking and affected by expectations about future market or economic conditions. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s review process for the quantitative goodwill impairment assessment, including controls over management’s review of the significant assumptions described above. To test the estimated fair value of the applicable reporting unit, we performed audit procedures that included, among others, assessing the methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We evaluated management’s forecasted revenue to identify, understand and evaluate changes as compared to historical results and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We also involved internal valuation specialists to assist in evaluating management’s methodologies and significant assumptions applied in developing the fair value estimates. | | |

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| | | | $ | 4,676,663 | | | | | $ | 4,687,417 | |

| Term loans, net | | | — | | | | | | 362,905 | | |

| Proceeds from term loans | | | — | | | | | | — | | | | | | 900,000 | | |

| Proceeds from issuance of convertible senior notes | | | — | | | | | | — | | | | | | 600,000 | | |

| Purchase of treasury shares | | | — | | | | | | — | | | | | | (12,977) | | |

| Cash and cash equivalents at beginning of period | | | 173,857 | | | | | | 309,171 | | | | | | 603,623 | | |

| Purchase consideration for conversion of unvested restricted stock awards | | | — | | | | | | — | | | | | | 1,872 | | |

| Balance at December 31, 2020 | | | 48,148 | | | | | | $ | 481 | | | | | $ | 905,332 | | | | | $ | (46) | | | | | $ | 1,112,156 | | | | | (7,609) | | | | | | $ | (31,812) | | | | | $ | 1,986,111 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 161,458 | | | | | | — | | | | | | — | | | | | | 161,458 | | |

| Stock compensation | | | — | | | | | | — | | | | | | 104,726 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 104,726 | | |

| Treasury stock purchases | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (33) | | | | | | (12,977) | | | | | | (12,977) | | |

| Purchase consideration for conversion of unvested restricted stock awards | | | — | | | | | | — | | | | | | 1,872 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,872 | | |

We did not have material items of other comprehensive income during the year ended December 31, 2021.

RECLASSIFICATIONS

Beginning January 1, 2023, we no longer report the appraisal services revenue and related costs as separate categories in the statement of income due to less significance on our overall operating results.

Therefore, we have combined the appraisal services revenue category with the professional services revenue category; and the related cost of revenue category for appraisal services is now combined with the cost of revenue category related to subscriptions, maintenance and professional services on the consolidated statements of income for all reporting periods presented.

We allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated SSP.

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.

Software Arrangements:

Our contracts with customers often include multiple performance obligations to a customer.

When a software arrangement (license or subscription) includes both software licenses and professional services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the professional services and recognized over time.

The transaction price is allocated to the separate performance obligations on a relative SSP basis.

We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.

For arrangements that involve significant production, modification, or customization of the software, or where professional services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the customer over time using progress-to-completion methods.

The progress-to-completion method generally results in the recognition of reasonably consistent profit margins over the life of a contract because we can provide reasonably dependable estimates of contract billings and contract costs.

These arrangements are often implemented over an extended time period and occasionally require us to revise total cost estimates.

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 seven years.

Amortization expense related to deferred commissions is included in sales and marketing expense in the accompanying consolidated statements of income.

Prepaid expenses and other current assets include direct and incremental costs such as commissions associated with arrangements for which revenue recognition has been deferred.