Tyler Earnings: Margins and SaaS Growth Punctuate Solid Results

We are maintaining our fair value estimate of $475 per share for wide-moat Tyler after the company reported solid third-quarter results that included revenue that was in line with our expectations and better-than-anticipated profitability. We view shares as attractive despite a post-earnings pop. SaaS growth ticked up, which is positive but something that we do not view as a durable trend. Management continues to guide to 20% compounded growth for SaaS through 2025. Margins were similarly strong, but we are not convinced that we need to make material changes to our model. Implied fourth-quarter growth was generally in line with our thinking. We continue to see federal stimulus funds as supporting the healthy environment and see consistent growth and margin expansion over time. We believe Tyler is the clear leader for municipal software needs and therefore continue to view shares as attractive.