TYL · Q2 2026 Earnings

Bullish

Tyler Technologies

Reported July 29, 2026

30-second summary

Tyler grew Q2 FY2026 revenue 8.2% to $645M with SaaS +21.7% — extending the 20%+ streak to 22 quarters and comfortably inside the FY 20.5–22.5% band — while raising FY2026 non-GAAP EPS guidance 3.6% at the midpoint to $12.95–$13.20 and reaffirming revenue at $2.535–$2.575B. The mixed reads: revenue missed consensus by 0.5% ($645M vs. $648M), transaction growth slowed further to +3.5% (from +6.4% in Q1 FY2026), and non-GAAP operating margin stepped down to 25.7% from Q1 FY2026's 27.2% — and is also down 80bps from Q2 FY2025's 26.5%. The EPS raise is real but partly mechanical — net interest income guidance more than doubled from $8–10M to $19–21M, doing meaningful work in the flow-through to the bottom line.

Headline numbers

EPS

Q2 FY2026

$3.08

0.0% vs est.

Revenue

Q2 FY2026

$0.65B

+8.2% YoY

-0.5% vs est.

Gross margin

Q2 FY2026

50.4%

Free cash flow

Q2 FY2026

$0.12B

Operating margin

Q2 FY2026

25.7%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$0.65B	$0.60B	+8.2%	$0.61B	+5.1%
EPS	$3.08	$2.91	+5.8%	$3.09	-0.3%
Gross margin	50.4%	45.8%	+460bps	51.3%	-90bps
Operating margin	25.7%	16.0%	+970bps	27.2%	-150bps
Free cash flow	$0.12B	$0.09B	+35.2%	$0.10B	+15.8%

Guidance

FY2026 non-GAAP EPS guidance raised +3.6% to $12.95-$13.20, with net interest income nearly doubled; revenue and FCF margin guidance reaffirmed.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q2 FY2026	—	$0.645 billion	-0.5% below estimate	Missed
Non-GAAP EPS	Q2 FY2026	—	$3.08	in-line	Met

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Non-GAAP EPS	FY2026	$12.50 to $12.75	$12.95 to $13.20	+$0.45 to $0.45 at midpoint (+3.6% midpoint)	Raised
Net Interest Income	FY2026	$8 million to $10 million	$19 million to $21 million	+$9M to $11M (+112.5% at midpoint)	Raised
Capitalized Software Development Costs	FY2026	$6 million	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Revenue ($2.535 billion to $2.575 billion), Free Cash Flow Margin (26% to 28%), Research and Development Expense ($245 million to $250 million), Capital Expenditures ($18 million to $20 million)

Segment performance

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
SaaS revenues	$0.231B	$0.19B	+21.6%
Subscription revenues	$0.454B	$0.405B	+12.1%
Transaction revenues	$0.223B	—	+3.5%
Recurring revenues	$0.56B	—	+8.2%

Platform metrics

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Annualized Recurring Revenue (ARR)	$2.24 billion	$2.07 billion	—
SaaS Revenue Growth	21.7%	—	—
Recurring Revenue as % of Total	86.7%	—	—

Profitability

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Free Cash Flow	$118.5 million	—	—
Free Cash Flow Margin	18.4%	—	—
Non-GAAP Operating Margin	25.7%	—	—
Adjusted EBITDA	$176.4 million	$169.1 million	—
Operating Cash Flow	$124.4 million	—	—

Management tone

Q3 FY2025 offensive M&A pivot → Q4 FY2025 capital return inflection → Q1 FY2026 confident execution / FTR reframing → Q2 FY2026 raised confidence, 2030 targets lifted

No transcript available for this quarter — tone analysis is drawn from the press release language against prior-quarter transcripts.

The 2030 plan moved from "conservative floor" (Q3 FY2025) through "does not contemplate M&A or AI upside" (Q4 FY2025) to explicitly *raised* this quarter. Three quarters ago management framed the 2030 targets as a base case with M&A/AI as unmodeled upside; this quarter the press release states: "Our raised 2030 financial targets reflect our continued strong execution and confidence in achieving our long-term vision." The signal: management is now willing to formally lift the long-term bar rather than just characterize it as conservative. This is the first hard commitment attached to the previously verbal upside optionality — and it lands alongside the FY2026 EPS raise, tightening the narrative that the multi-year model is being re-based higher.

SaaS growth commentary has hardened from "streak preserved" (Q4 FY2025 at 20.2%) through "reacceleration" (Q1 FY2026 at 23.5%) to "sustained momentum" (Q2 FY2026 at 21.7%). The press-release language shifted from Q1 FY2026's implicit deceleration framing ("21 consecutive quarters") to Q2 FY2026's confidence framing ("SaaS revenues accelerated 21.7%, marking 22 consecutive quarters of 20% or greater SaaS growth"). Two quarters above the FY band midpoint is now the trajectory, not the outlier — the sub-20% Q3 FY2025 print is fading in the rearview.

Public sector demand narrative firmed from "no material change" (Q3 FY2025) through "modernization tailwinds" (Q4 FY2025/Q1 FY2026) to explicit *"healthy… sustained modernization priorities"* this quarter. The tonal escalation is subtle but consistent — each quarter has stepped the language up a notch. Combined with the buyback continuation and 2030 target raise, management is aligned around a "we are the winner in a dislocated software cycle" posture that started in Q4 FY2025.

Answers to last quarter's watch list

Transaction revenue ex-Texas, Q2 FY2026 print — Transaction reported at +3.5%, decelerated from Q1 FY2026's +6.4% and well below both the 5–7% reported FY guide and the 10–12% ex-Texas commit. Without a Texas carve-out disclosed on the print, it's not possible to isolate underlying vs. runoff, but the direction is unambiguously worse. The FY revenue guide reaffirmation implies management sees H2 recovery — which now needs to be substantial to hit the band.

Resolved negatively

FTR Q2 FY2026 contribution disclosure — No explicit FTR revenue contribution disclosed on the print. FY revenue guide was held flat despite one full quarter of FTR ownership, which either means FTR is running below early expectations or contribution is already baked into the Q1 FY2026 raise. Without transcript commentary, this remains ambiguous.

Continue monitoring

First quantified AI revenue or attach metric — Not disclosed on the press release. Fourth consecutive quarter without a quantified AI attach rate, pricing band, or aggregated bookings number. The AI narrative continues to lag the deal evidence.

Continue monitoring

SaaS bookings growth vs. SaaS revenue growth — SaaS bookings disclosed as a record quarterly high (qualitative); no growth rate quantified. Status: Partially resolved — direction is positive.

Buyback execution against authorization — Q2 FY2026 repurchases of 1.62M shares for $505M; YTD 5.6% of shares repurchased; new $1.5B authorization added ($1.745B total remaining as of July 29, 2026).

Resolved positively

Operating margin and gross margin trajectory — Non-GAAP operating margin printed 25.7% (down 150bps QoQ from 27.2%, and down 80bps YoY from Q2 FY2025's 26.5%) and non-GAAP gross margin 50.4% (down 90bps QoQ from 51.3%, but up 150bps YoY from Q2 FY2025's 48.9%). The Q1 FY2026 pace did NOT hold, and operating margin has slipped below the year-ago level even as gross margin expanded. Q1 FY2026 was the peak, not the new baseline. Status: Resolved negatively on the specific "pace holds" question; gross-margin leverage remains directionally favorable YoY, but operating margin is a new watch item.

What to watch into next quarter

Transaction revenue Q3 FY2026 print vs. FY 5–7% reported band: Q2 FY2026 came in at +3.5%, decelerating from Q1 FY2026's +6.4%. For the FY revenue guide (reaffirmed at $2.535–$2.575B) to hold, transaction needs to step up materially in H2 or SaaS/subscription need to overshoot. A Q3 FY2026 transaction print below 5% would put the FY revenue guide at real risk and force a downward revision in Q4 FY2026.

Explicit FTR revenue contribution: two full quarters of ownership by Q3 FY2026, and the FY revenue guide was held rather than raised again. Watch for the first disclosed FTR revenue number — a small figure would validate the transaction-line drag hypothesis; a strong figure would confirm the transaction problem is worse than it looks.

Net interest income sustainability: the FY guide jumped from $8–10M to $19–21M in one quarter. Watch Q3 FY2026 for whether the new run-rate holds — a fade back would mean the EPS raise partially reverses.

Non-GAAP operating margin stabilization: the QoQ step-down from 27.2% to 25.7% — and the 80bps YoY slip vs. Q2 FY2025 — is the first sign the Q1 FY2026 pace was a seasonal peak rather than the new baseline. Q3 FY2026 needs to hold above 25% for the FY2026 EPS midpoint of $13.075 to look defensible.

First quantified AI revenue disclosure: four quarters of qualitative AI progress and no attach rate, pricing band, or aggregated bookings number. Without one by Q3 FY2026, the "raised 2030 targets" narrative starts to look like it's leaning on M&A rather than AI monetization.

SaaS bookings quantification: Q2 FY2026 disclosed record SaaS and total bookings qualitatively but no growth rate. Watch Q3 FY2026 for a numeric bookings disclosure — that's the leading indicator for whether the 20%+ SaaS revenue streak is durable or backlog-burn-down.

Sources

Tyler Technologies Q2 FY2026 earnings press release (SEC filing, 6/30/2026 period): https://www.sec.gov/Archives/edgar/data/860731/000086073126000048/a991earningsrelease-6302026.htm
Tyler Technologies prior-quarter tapebrief coverage (Q2 FY2025 through Q1 FY2026)

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