Analyst Day Takeaways: Durable FCF Compounder With Long-Term AI Optionality

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Analyst Day Takeaways: Durable FCF Compounder With Long-Term AI Optionality

aS flips remain one of the clearest drivers of TYL’s recurring revenue growth path. TYL still has a

meaningful conversion pool, with on-prem maintenance representing 22% of recurring revenue, and management continues to

expect maintenance-to-SaaS conversions to drive ~1.7x recurring revenue uplift. The company expects ~$500mn of SaaS ARR

converted from flips over 2026-2030, supporting the ~20% SaaS CAGR embedded in the 2030 framework. Importantly,

management’s tone suggests the flip process is becoming more repeatable, with version consolidation, automation, and more

coordinated sales/client planning reducing the friction that historically slowed migrations.

AI More Likely to Expand TYL’s Moat Than Disrupt It. TYL’s AI message was clear: public sector adoption should favor trusted

incumbents with critical systems of record, sensitive workflow data, established distribution, and government-specific domain

expertise. Management argued AI can strengthen the existing $2.0bn recurring software base while expanding TYL’s opportunity

beyond software into labor augmentation, sizing the combined opportunity at ~$83bn versus the existing ~$44bn government

software TAM. Just as importantly, as customers build AI tools and integrations on top of TYL’s systems of record, those workflows

should become more embedded and the underlying systems stickier over time. While still early, TYL outlined a tangible monetization

framework across essentials/freemium functionality, subscription uplift, and outcome-based pricing, with 25+ production AI

agents/workflows expected in 2026 and early customer examples showing meaningful ARR uplift.