Tyler Technologies Delivers Strong Results; Guidance Tweaked Slightly Higher; FVE Steady at $530

After strong results and only modest adjustments to its full-year outlook, we maintain our $530 per share fair value estimate for wide-moat Tyler Technologies and continue to view shares as attractive. Business momentum continues with growth in software subscriptions and transactional revenue and incremental signs of cross-selling success between NIC and legacy Tyler. We expect the firm's full embrace of the cloud will be a drag on profitability over the next several years, but we do not anticipate much of a longer-term impact from this move. We expect margins to bottom in 2023, with revenue growth not really impacted given that most new business already arrives via subscriptions.