Investor Day Recap: The Model of Consistency; Increased Recurring Revenue and Margin Targets for FY30

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Investor Day Recap: The Model of Consistency; Increased Recurring Revenue and Margin Targets for FY30

June 9, 2026

Following the recent share repurchases, 2026 EPS guidance raised from

$12.50-12.75 to $12.80-13.05 to account for the higher cash balances from

the convertible debt offering and lower share count, as they executed ~

$350m in repurchases in conjunction (~1mn shares). We are tweaking our

model to reflect this updated outlook with a greater 2H EPS weighting.

Increasing Transaction Penetration a Big Opportunity

Payments represent a very large opportunity for TYL and are a critical

growth lever over the next five years. For perspective, TYL's 2025

transaction revenue was ~$800m. Just within their installed base, mgmt.

sizes the addressable opportunity at ~$4b. The total serviceable market

is ~2.5x that at $10b. This means TYL is <30% penetrated within their

own installed base, creating a long runway of highly accretive growth.

Mgmt.'s goal is to increase the transaction attach rate from the mid-20s

today to 40%+ by 2030. This is driving mgmt.'s expectation to compound

transaction revenue at 10%+ through FY30. Increasing these attach rates

are important, in our opinion, because of the attractive ROIs to TYL. Not

only does transaction revenue increase ARPU (+10% on avg), it likely lowers

churn, resulting in even better customer LTVs.

Also contributing to potential Transactions growth is coming from the

flexible contracting options being offered by TYL. Several customers are

now finding the fee-based payment arrangements in which the core

platform SaaS fee is replaced with a per-transaction fee, in addition to the

actual payment fees. So the payor pays a convenience fee per transaction

comprised of credit card processing fee plus platform fee, which over time