TYLER TECHNOLOGIES INC
For the period ended Mar 31, 2025. Filed Apr 25, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 25, 2025
TYL$420.56-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-23.
0000860731-24-000052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-25.
0000860731-25-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 106 current paragraphs.
25 unchanged; 56 reworded; 22 added; 9 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 15 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Our Chief Operating Decision Maker (“CODM”) uses segment operating income or loss to assess performance and to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. During the fiscal periods presented, we had no significant transactions between reportable segments. Corporate unallocated amounts are comprised of non-cash amortization of intangible assets associated with acquisitions, depreciation associated with unallocated property and equipment assets, compensation costs for the executive management team and certain shared services staff, and share-based compensation expense for the entire company. Corporate unallocated amounts also include incidental revenues and expenses related to a company-wide user conference and rental income.
Current report
SaaS
Current report
Transaction-based fees
Current report
For the three months ended March 31, 2025, new transaction clients, volume increases from online payments and e-filing services, and price increases by certain third-party processing partners from whom we receive a share of revenues contributed to the growth in transaction-based fees compared to the prior period.
Current report
Subscriptions, maintenance, and professional services.
Current report
Software licenses and royalties.
Current report
Amortization of software development.
Current report
The following table sets forth a comparison of our amortization of software development for the three months ended March 31 ($ in thousands):
Current report
Amortization of acquired software.
Current report
The following table sets forth a comparison of our amortization of acquired software for the three months ended March 31 ($ in thousands):
Current report
S&M expense as a percentage of revenues was 6.5%, for the three months ended March 31, 2025, compared to 7.1% for the three months ended March 31, 2024. S&M expense remained flat when compared to the prior period. S&M expense as a percentage of revenue was lower due to an increase in compensation capitalized as contract acquisition costs compared to the prior period.
Current report
Research and development expense increased 63% for the three months ended March 31, 2025, compared to the prior period, and is primarily due to the redeployment of resources to research and development due to continued migration of clients to our SaaS products and version consolidation of on-premises software products with support obligations. Also contributing to the increase was a shift in new product development initiatives from capitalized development projects to other development activities that are expensed to research and development, as well as higher related share-based compensation expense.
Current report
Segment Operating Income
Current report
The following table sets forth a comparison of the operating income by reportable segments for the three months ended March 31 ($ in thousands):
Current report
The increase in the ES segment operating income is primarily due to higher subscription revenues as a result of the ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues. These increases are partially offset by lower revenue from software licenses, maintenance, and hardware and other. Also offsetting the increase in segment operating income are higher expenses related to a shift in new product development initiatives from capitalized development projects to projects that are expensed to research and development.
Current report
The increase in the PT segment operating income is primarily due to growth in transaction-based revenues and a reduction in headcount in sales and marketing personnel, partially offset by higher merchant fees.
Current report
The increase in Corporate unallocated is primarily due to higher share-based compensation expense. For the three months ended March 31, 2025, total share-based compensation expense grew $10.8 million compared to the prior period, generally due to a higher stock price for share-based awards issued in the current period. This increase was partially offset by the decline in amortization of other intangibles compared to the prior period due to the impact of certain trade name intangible assets becoming fully amortized as a result of accelerated amortization expense in 2024.
Current report
See Note 3 “Segment and Related Information” for a reconciliation between our operating segment and consolidated financial results for the periods presented.
Current report
Investing activities used cash of $96.2 million in the three months ended March 31, 2025, compared to $12.7 million in the three months ended March 31, 2024. On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total purchase price, net of cash acquired of $215,000, was approximately $18.2 million, subject to certain post-closing adjustments including a working capital holdback of $210,000. We invested $72.0 million and received $1.8 million in proceeds from investment grade corporate bonds, U.S. Treasuries and asset-backed securities. Approximately $5.6 million of software development costs were capitalized. Approximately $2.3 million was invested in property and equipment.
Current report
We will settle any conversions of Convertible Senior Notes either entirely in cash or in a combination of cash and shares of our common stock, at our election. As of March 31, 2025, none of the conditions allowing holders of the Convertible Senior Notes to convert have been met.
Current report
We received income tax refunds, net of taxes paid, of $323,000 and $680,000 in the three months ended March 31, 2025, and 2024, respectively.
Current report
From time to time we engage in discussions with potential acquisition candidates. In order to pursue such opportunities, which could require significant commitments of capital, we may be required to incur debt or to issue additional potentially dilutive securities in the future. No assurance can be given as to our future acquisition opportunities and how such opportunities will be financed.
Removed paragraphs (9)
Previous report
We evaluate performance based on several factors. The primary financial measure is business segment operating income. We define segment operating income for our business units as income before non-cash amortization of intangible assets associated with their acquisitions, interest expense, and income taxes. Segment operating income includes intercompany transactions. The majority of our intercompany transactions relate to contracts involving more than one business unit and are valued based on the contractual arrangement. Corporate segment operating loss primarily consists of compensation costs for the executive management team, certain shared services staff, and share-based compensation expense for the entire company. Corporate segment operating loss also includes revenues and expenses related to a company-wide user conference.
Previous report
On October 31, 2023, we acquired Resource Exploration, Inc. (“ResourceX”), a leading provider of budgeting software to the public sector. Also on October 31, 2023, we acquired ARInspect, Inc. (“ARInspect”), a leading provider of AI-powered machine learning solutions for public sector field operations. On August 8, 2023, we acquired Computing System Innovations, LLC (“CSI”), a leading provider of artificial intelligence automation, redaction, and indexing solution for courts, recorders, attorneys, and others.
Previous report
Our backlog as of September 30, 2024, was $2.13 billion, a 9% increase compared to September 30, 2023.
Previous report
Subscriptions revenue grew 18% and 14% for the three and nine months ended September 30, 2024, respectively, compared to the prior period, primarily due to an ongoing shift toward SaaS arrangements, along with growth in certain transaction-based revenues. Subscription revenues from recent acquisitions contributed $1.3 million, or 0.4%, and $3.8 million, or 0.4%, to the increase for the three and nine months ended September 30, 2024, respectively.
Previous report
Professional services revenue increased 5% and 7% for the three and nine months ended September 30, 2024, respectively, compared to the prior period. The increase is primarily attributable to higher new contract volume along with increased billing rates.
Previous report
S&M expense as a percentage of revenues was 7.0% and 7.3%, respectively, for the three and nine months ended September 30, 2024, compared to 7.3% and 7.5%, for the three and nine months ended September 30, 2023, respectively. For both the three and nine months ended September 30, 2024, S&M expense increased approximately 6%, compared to the prior period. The increase in S&M expense is primarily attributed to higher bonus, commission, and trade show expenses, offset by lower professional fees related to marketing and advertising.
Previous report
Research and development expense increased 6%, for both the three and nine months ended September 30, 2024, compared to the prior period, mainly due to a number of product development initiatives shifting from capitalized development projects to projects that are expensed to research and development.
Previous report
Investing activities used cash of approximately $34.7 million in the nine months ended September 30, 2024. We received $7.7 million in proceeds from investment grade corporate bonds, municipal bonds and asset-backed securities. Approximately $24.4 million of software development costs were capitalized. Approximately $16.7 million was invested in property and equipment, including $7.5 million related to real estate. The remaining additions were for computer equipment and furniture and fixtures in support of growth. We also paid $1.4 million for working capital holdbacks related to acquisitions completed in 2023.
Previous report
We made income tax payments, net of refunds, of $45.7 million and $118.0 million in the nine months ended September 30, 2024, and 2023, respectively. In the nine months ended September 30, 2024, stock option exercise activity generated net tax benefits of $17.2 million and reduced tax payments accordingly, as compared to $5.6 million in the same period in 2023.
Reworded paragraphs (56)
Previous wording
We report our results in two reportable segments. Business units that have met the aggregation criteria have been combined into ourtwo reportable segments. The Enterprise Software (“ES”) reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: public administration solutions; courts and public safety solutions; education solutions; and property and recording solutions. The Platform Technologies (“PT”) reportable segment provides public sector entities with platform and transformative solutions including digital solutions, payment processing, streamlined data processing, and improved operations and workflows.
Current wording
We report our results in two reportable segments. Our reportable segments are organized on the basis of a combination of the products and services they deliver to clients and the function the public sector client performs. Operating segments that have met the aggregation criteria have been combined into our two reportable segments. The Enterprise Software (“ES”) reportable segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: public administration solutions, courts and public safety solutions, education solutions, and property and recording solutions. The Platform Technologies (“PT”) reportable segment provides public sector entities with platform and transformative solutions including digital solutions, payment processing, streamlined data processing, and improved operations and workflows.
Previous wording
The actual operating results of CSI and ResourceX are included in the operating results of the ES segment from their respective dates of acquisition. The operating results of ARInspect are included in the operating results of the PT segment since the date of acquisition.
Current wording
On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total purchase price, net of cash acquired of $215,000, was approximately $18.2 million, subject to certain post-closing adjustments including working capital holdbacks of $210,000. The actual operating results of MyGov are included with the operating results of the ES segment since the date of acquisition.
Previous wording
We did not complete any acquisitions during the nine months ended September 30, 2024.
Current wording
We did not complete any acquisitions during the 2024 fiscal period.
Previous wording
For the three and nine months ended September 30, 2024, total revenues increased 10% and 9%, respectively, compared to the prior period primarily due to an increase in subscription revenue. Revenues from recent acquisitions contributed $3.0 million, or 1%, and $9.8 million, or 1%, to the total revenue increase for the three and nine months ended September 30, 2024, respectively, compared to the prior period.
Current wording
For the three months ended March 31, 2025, total revenues increased 10% compared to the prior period, primarily due to an increase in subscription revenue.
Previous wording
Subscriptions revenue grew 18% and 14% for the three and nine months ended September 30, 2024, respectively, compared to the prior period, primarily due to an ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues.
Current wording
Subscriptions revenue grew 20% for the three months ended March 31, 2025, compared to the prior period, primarily due to an ongoing shift toward SaaS arrangements for both new and existing clients, along with growth in certain transaction-based revenues.
Previous wording
Our total employee count increased to 7,386 as of September 30, 2024, including 50 employees who joined us through acquisitions completed since September 30, 2023, from 7,301 as of September 30, 2023.
Current wording
Our total employee count increased to 7,462 as of March 31, 2025, including 12 employees who joined us through acquisitions completed since March 31, 2024, from 7,305 as of March 31, 2024.
Previous wording
Subscriptions and maintenance are considered recurring revenue sources. Annualized recurring revenues (ARR) are calculated by annualizing the current quarter’s recurring revenues from maintenance and subscriptions as reported in our statement of income. Management believes ARR is an indicator of the annual run rate of our recurring revenues, as well as a measure of the effectiveness of the strategies we deploy to drive revenue growth over time. ARR is a metric we believe is widely used by companies in the technology sector and by investors, which we believe offers insight to the stability of our maintenance and subscription revenues to be recognized within the year, which are considered recurring in nature, with some seasonality.
Current wording
Annualized recurring revenues (ARR) - Subscriptions and maintenance are considered recurring revenue sources. ARR is calculated by annualizing the current quarter’s recurring revenues from maintenance and subscriptions as reported in our statement of income. Management believes ARR is an indicator of the annual run rate of our recurring revenues, as well as a measure of the effectiveness of the strategies we deploy to drive revenue growth over time. ARR is a metric widely used by companies in the technology sector and by investors, which we believe offers insight into the stability of our maintenance and subscription revenues to be recognized within the year.
Previous wording
Subscriptions revenues primarily consist of revenues derived from our SaaS arrangements and transaction-based fees. These revenues are considered recurring because revenues from these sources are expected to re-occur in similar annual amounts for the term of our relationship with the client. Transaction-based fees are generally the result of multi-year contracts with our clients that result in fees generated by payment transactions and digital government services and are collected on a recurring basis during the contract term. Transaction-based revenues are historically highest in the second quarter, which coincides with peak outdoor recreation seasons and statutory filing deadlines in many jurisdictions, and lowest in the fourth quarter due to fewer business days and lower transaction volumes around holidays. Because ARR is an annualized revenue amount, the metric can fluctuate from quarter to quarter due to this seasonality.
Current wording
Subscription revenues primarily consist of revenues derived from our SaaS arrangements and transaction-based fees. These revenues are considered recurring because revenues from these sources are expected to re-occur in similar annual amounts for the term of our relationship with the client. Transaction-based fees are generally the result of multi-year contracts with our clients that result in fees generated by payment transactions and digital government services and are collected on a recurring basis during the contract term. Transaction-based revenues are historically highest in the second quarter, which coincides with peak outdoor recreation seasons and statutory filing deadlines in many jurisdictions, and lowest in the fourth quarter, due to fewer business days and lower transaction volumes around holidays. Because ARR is an annualized revenue amount, the metric can fluctuate from quarter to quarter due to this seasonality.
Previous wording
ARR was $1.85 billion and $1.65 billion as of September 30, 2024, and 2023, respectively. ARR increased 12% compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements for both new and existing clients and expansion in transaction-based fees.
Current wording
ARR was $1.95 billion and $1.72 billion as of March 31, 2025, and 2024, respectively. ARR increased approximately 13% compared to the prior period primarily due to an increase in subscriptions revenue resulting from an ongoing shift toward SaaS arrangements for both new and existing clients and expansion in transaction-based fee arrangements.
Previous wording
The following table sets forth a comparison of our subscriptions revenue for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of our subscriptions revenue for the three months ended March 31 ($ in thousands):
Previous wording
Subscriptions revenue consists of revenue derived from our SaaS arrangements and transaction-based fees primarily related to digital government services and payment processing. We also provide electronic document filing ("e-filing") solutions for which revenue is derived from transaction fees and fixed-fee arrangements.
Current wording
Subscriptions revenue consists of revenues derived from our SaaS arrangements and transaction-based fees primarily related to digital government services and payment processing.
Previous wording
Total subscriptions revenue derived from SaaS fees was $166.6 million and $471.4 million for the three and nine months ended September 30, 2024, respectively, compared to $138.5 million and $387.0 million for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2024, SaaS fees grew 20%, or $28.1 million, and 22%, or $84.4 million, respectively, compared to prior period. New SaaS clients as well as existing on-premises clients who converted to our SaaS model provided the majority of the subscriptions revenue increase. In the three and nine months ended September 30, 2024, we added 181 and 584 new SaaS clients, respectively, and 108 and 309 existing on-premises clients, respectively, elected to convert to our SaaS model. Since September 30, 2023, we have added 740 new SaaS clients, while 401 existing on-premises clients have converted to our SaaS offerings. Our new software contract mix for the nine months ended September 30, 2024, was approximately 11% perpetual software license arrangements and approximately 89% subscription-based arrangements, compared to approximately 19% perpetual software license arrangements and approximately 81% subscription-based arrangements for the nine months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025, SaaS fees grew 21%, or $31.3 million, compared to the prior period. That growth is primarily attributable to new SaaS clients as well as existing on-premises clients who converted to our SaaS model. Since March 31, 2024, we have added 672 new SaaS clients, while 431 existing on-premises clients have converted to our SaaS offerings. Our new software contract value mix for the three months ended March 31, 2025, was approximately 4% perpetual software license arrangements and approximately 96% subscription-based arrangements, compared to approximately 7% perpetual software license arrangements and approximately 93% subscription-based arrangements for the three months ended March 31, 2024.
Previous wording
Total subscriptions revenue derived from transaction-based fees was $180.6 million and $522.7 million for the three and nine months ended September 30, 2024, respectively, compared to $156.7 million and $486.4 million for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2024, transaction-based fees for both periods grew 15%, or $23.9 million, and 7%, or $36.3 million, respectively, compared to prior period. Contributing to the growth in transaction-based fees for the three and nine months ended September 30, 2024, are the new transaction customers and volume increases from online payments and e-filing services, as well as the impact of transaction-based fees from recent acquisitions of $1.3 million and $3.8 million, respectively, compared to prior period. These increases compared to prior period are partially offset by a change from the gross revenue model to the net revenue model for payments revenue under one of our state enterprise agreements that results in merchant fees recorded as a reduction in revenue rather than as cost of revenues.
Current wording
The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the three months ended March 31 ($ in thousands):
Previous wording
The following table sets forth a comparison of our maintenance revenue for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of our maintenance revenue for the three months ended March 31 ($ in thousands):
Previous wording
We provide maintenance and support services for our software products and certain third-party software. Maintenance revenue decreased 2% for the three months ended September 30, 2024, and was flat for the nine months ended September 30, 2024, compared to the prior period. For the three and nine months ended September 30, 2024, maintenance revenue declined primarily due to the impact of clients converting from on-premises license arrangements to SaaS, partially offset by maintenance price increases.
Current wording
We provide maintenance and support services for our software products and certain third-party software. Maintenance revenue decreased compared to the prior period primarily due to the impact of clients converting from on-premises license arrangements to SaaS, partially offset by maintenance price increases.
Previous wording
The following table sets forth a comparison of our professional services revenue for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of our professional services revenue for the three months ended March 31 ($ in thousands):
Previous wording
Professional services revenue primarily consists of professional services billed in connection with implementing our software, converting client data, training client personnel, custom development activities, consulting, and property appraisal services. New clients who implement our software generally contract with us to provide the related professional services. Existing clients also periodically purchase additional training, consulting and minor programming services.
Current wording
Professional services revenue primarily consists of professional services billed in connection with implementing our software, converting client data, training client personnel, custom development activities, consulting, and property appraisal services. New clients who implement our software generally contract with us to provide the related professional services. Existing clients also periodically purchase additional training, consulting and minor programming services. The decrease in professional services revenues compared to the prior period is as expected from lower custom development work and efficiencies.
Previous wording
The following table sets forth a comparison of our software licenses and royalties revenue for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of our software licenses and royalties revenue for the three months ended March 31 ($ in thousands):
Previous wording
Software licenses and royalties revenue decreased 41% and 34% for the three and nine months ended September 30, 2024, respectively, compared to the prior period. The decrease is primarily attributed to the shift in the mix of new software contracts toward more SaaS.
Current wording
The decrease in software licenses and royalties revenue compared to the prior period is primarily attributed to the shift in the mix of new software contracts toward more SaaS offerings.
Previous wording
Although the mix of new contracts between subscription-based and perpetual license arrangements may vary from quarter to quarter and year to year, we expect that software license revenues will continue to decline as we shift our model away from perpetual licenses to SaaS. Subscription-based arrangements result in lower software license revenue in the initial year as compared to perpetual software license arrangements, but generate higher overall revenue over the term of the contract.
Current wording
Although the mix of new contracts between subscription-based and perpetual license arrangements may vary from quarter to quarter and year to year, we expect that software license revenues will continue to decline as we shift our model away from perpetual software licenses to SaaS. Subscription-based arrangements result in lower software license revenue in the initial year as compared to perpetual software license arrangements, but generate higher overall revenue over the term of the contract.
Previous wording
Cost of revenues and overall gross margin
Current wording
Cost of revenues and overall gross margins
Previous wording
The following table sets forth a comparison of the key components of our cost of revenues for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of the key components of our cost of revenues for the three months ended March 31 ($ in thousands):
Previous wording
The cost of subscriptions, maintenance, and professional services for the three and nine months ended September 30, 2024, increased $36.0 million, or 15%, and $73.8 million, or 10%, respectively, compared to the prior period. The impact from recent acquisitions was $1.3 million and $5.0 million for the three and nine months ended September 30, 2024, respectively. The remaining subscriptions, maintenance and professional services expenses increased 14% and 9% for the three and nine months ended September 30, 2024, respectively, due to increased hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, together with higher personnel costs. Our professional services staff grew by 127 employees since September 30, 2023, as we increased hiring to ensure that we are well-positioned to deliver our current backlog and anticipated new business. The increases were partially offset by a reduction in merchant fees associated with the change from the gross model to the net model for payments revenue under one of our state enterprise agreements.
Current wording
The following table sets forth a comparison of our costs of subscriptions, maintenance, and professional services for the three months ended March 31 ($ in thousands):
Previous wording
Subscriptions, maintenance, and professional services. Cost of subscriptions, maintenance and professional services primarily consist of personnel costs related to installation of our software, conversion of client data, training client personnel and support activities, including enhancing existing solutions, and various other services such as custom development, ongoing operation of SaaS, property appraisal outsourcing activities, digital government services, and other transaction-based services such as e-filing. Other costs included are interchange fees required to process credit/debit card transactions and bank fees to process automated clearinghouse transactions related to our payments business.
Current wording
Cost of subscriptions, maintenance and professional services primarily consist of personnel costs related to installation of our software, conversion of client data, training client personnel, public cloud hosting costs, and support activities, including enhancing existing solutions, and various other services such as custom development, ongoing operation of our SaaS solutions, property appraisal outsourcing activities, digital government services, and other transaction-based services such as e-filing. Other costs included are merchant and interchange fees required to process credit/debit card transactions and bank fees to process automated clearinghouse transactions related to our payments business.
Previous wording
Software licenses and royalties. Costs of software licenses and royalties primarily consist of direct third-party software costs. We do not have any direct costs associated with royalties.
Current wording
Costs of software licenses and royalties primarily consist of direct third-party software costs. We do not have any direct costs associated with royalties.
Previous wording
The cost of software licenses and royalties for the three and nine months ended September 30, 2024, decreased $1.3 million, or 40%, and $2.9 million, or 36%, respectively, compared to the prior period due to lower third-party software costs.
Current wording
The cost of software licenses and royalties for the three months ended March 31, 2025, increased 22%, compared to the prior period due to higher third-party software costs.
Previous wording
Amortization of software development. Software development costs included in cost of revenues primarily consist of personnel costs. We begin to amortize capitalized costs when a product is available for general release to customers. Amortization expense is determined on a product-by-product basis at a rate not less than straight-line basis over the software’s remaining estimated economic life of, generally, three to five years.
Current wording
Amortization software development costs included in cost of revenues primarily consist of personnel costs which were previously capitalized. We begin to amortize capitalized costs when a product is available for general release to clients. Amortization expense is determined on a product-by-product basis at a rate not less than straight-line basis over the software’s remaining estimated economic life of, generally, three to five years.
Previous wording
For the three and nine months ended September 30, 2024, amortization of software development costs increased $1.9 million, or 61%, and $5.2 million, or 61%, respectively, compared to the prior period, and is attributable to new capitalized software development projects going into service in the past year.
Current wording
For the three months ended March 31, 2025, amortization of software development costs increased 23% compared to the prior period due to new capitalized software development projects going into service in the past year.
Previous wording
Amortization of acquired software. Amortization expense related to acquired software attributed to business combinations is included with cost of revenues. The estimated useful lives of other intangibles range from five to 10 years.
Current wording
Amortization expense related to acquired software attributed to business combinations is included with cost of revenues. The estimated useful lives of acquired software range from three to 10 years.
Previous wording
For the three and nine months ended September 30, 2024, amortization of acquired software increased 2%, or $0.2 million, and 3%, or $0.8 million, respectively, compared to the prior period, due to amortization of newly acquired software from recent acquisitions completed in fiscal year 2023, partially offset by assets becoming fully amortized in the fourth quarter 2023.
Current wording
For the three months ended March 31, 2025, amortization of acquired software increased 1% compared to the prior period due to amortization of newly acquired software from recent acquisition completed in fiscal year 2025, partially offset by assets becoming fully amortized in the fourth quarter of 2024.
Previous wording
The following table sets forth a comparison of overall gross margin for the periods presented as of September 30:
Current wording
The following table sets forth a comparison of gross profit and overall gross margin for the periods presented as of March 31:
Previous wording
Overall Gross Margin. For the three and nine months ended September 30, 2024, our overall gross margin decreased 1.8% and 0.3%, respectively, compared to the prior period. For the three and nine months ended September 30, 2024, respectively, the decline in the overall gross margin compared to prior period is attributed to lower revenue from software licenses and maintenance, higher software development amortization expense, and higher personnel costs. The decline in overall gross margin compared to the prior period was partially offset by a higher revenue mix for subscription revenues compared to the prior period, resulting in an increase in incremental margin related to software services, maintenance and subscriptions.
Current wording
Overall gross margin. For the three months ended March 31, 2025, our blended gross margin increased 3.6% compared to the prior period. The increase in overall gross margin compared to the prior period is primarily attributed to a higher revenue mix for subscription revenues compared to the prior period, resulting in an increase in incremental margin related to SaaS and transaction revenues. Also contributing to the increase in overall gross margin is the redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations. The increase in the overall gross margin is partially offset by lower revenue from software licenses, maintenance and professional services, higher software development amortization expense, and higher personnel costs.
Previous wording
Sales and marketing (“S&M”) expense consists primarily of salaries, employee benefits, travel, share-based compensation expense, commissions and related overhead costs for sales and marketing employees, as well as professional fees, trade show activities, advertising costs and other marketing costs. The following table sets forth a comparison of our S&M expense for the three and nine months ended September 30 ($ in thousands):
Current wording
Sales and marketing (“S&M”) expense consists primarily of salaries, employee benefits, travel, share-based compensation expense, commissions and related overhead costs for sales and marketing employees, as well as professional fees, trade show activities, advertising costs and other marketing costs. The following table sets forth a comparison of our S&M expense for the three months ended March 31 ($ in thousands):
Previous wording
General and administrative (“G&A”) expense consists primarily of personnel salaries and share-based compensation expense for general corporate functions, including senior management, finance, accounting, legal, human resources and corporate development, as well as third-party professional fees, travel-related expenses, insurance, allocation of depreciation, facilities and IT support costs, amortization of software development for internal use, acquisition-related expenses and other administrative expenses. The following table sets forth a comparison of our G&A expense for the three and nine months ended September 30 ($ in thousands):
Current wording
General and administrative (“G&A”) expense consists primarily of personnel salaries and share-based compensation expense for general corporate functions including senior management, finance, accounting, legal, human resources and corporate development, as well as third-party professional fees, travel-related expenses, insurance, allocation of depreciation, facilities and IT support costs, amortization of software development for internal use, acquisition-related expenses and other administrative expenses. The following table sets forth a comparison of our G&A expense for the three months ended March 31 ($ in thousands):
Previous wording
G&A expense as a percentage of revenue was 13.3% and 13.8%, respectively, for the three and nine months ended September 30, 2024, compared to 15.9% and 15.5% for the three and nine months ended September 30, 2023. G&A expense decreased 8% and 3% for the three and nine months ended September 30, 2024, respectively, compared to the prior period. For the three months ended September 30, 2024, the decrease in G&A expense, compared to prior period, is primarily attributed to lower facilities costs resulting from lease restructurings, along with lower depreciation expense. For the nine months ended September 30, 2024, the decline in G&A expense is primarily attributed to lower facilities costs resulting from lease restructurings, partially offset by higher share-based compensation costs and an increase in software and other IT support costs.
Current wording
G&A expense as a percentage of revenue was 14.1% for the three months ended March 31, 2025, compared to 14.2% for the three months ended March 31, 2024. G&A expense increased 9% for the three months ended March 31, 2025, compared to the prior period. For the three months ended March 31, 2025, the increase in G&A expense is primarily attributed to increases in amortization of software development for internal use and higher share-based compensation expense. For the three months ended March 31, 2025, share-based compensation expense grew $5.0 million compared to the prior period, primarily due to a higher stock price for share-based awards issued in the current period.
Previous wording
Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with new product development. Research and development expense consists mainly of costs associated with development of new products and technologies.
Current wording
Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with new product development. Research and development expense consists mainly of costs associated with development of new products and new functionality in our current SaaS products. The following table sets forth a comparison of our research and development expense for the three months ended March 31 ($ in thousands):
Previous wording
Other intangibles represents the portion of purchase price allocated to the identified intangible assets for customer-related intangibles, trade names and leases acquired. The remaining excess purchase price is allocated to goodwill that is not subject to amortization. Amortization expense related to acquired software is included with cost of revenues, while amortization expense of other intangibles is recorded as operating expense. The estimated useful lives of other intangibles range from one to 25 years. The following table sets forth a comparison of amortization of other intangibles for the three and nine months ended September 30 ($ in thousands):
Current wording
Other intangibles represents the portion of purchase price allocated to the identified intangible assets for client-related intangibles, trade names and leases acquired. The remaining excess purchase price is allocated to goodwill that is not subject to amortization. Amortization expense related to acquired software is included with cost of revenues, while amortization expense of other intangibles is recorded as operating expense. The estimated useful lives of other intangibles range from one to 25 years. The following table sets forth a comparison of amortization of other intangibles for the three months ended March 31 ($ in thousands):
Previous wording
For the three and nine months ended September 30, 2024, amortization of other intangibles decreased compared to the prior period due to the impact of certain trade name intangible assets becoming fully amortized as a result of accelerated amortization expense in the fourth quarter of 2023 and partially in 2024.
Current wording
For the three months ended March 31, 2025, amortization of other intangibles decreased 22% compared to the prior period due to the impact of certain trade name intangible assets becoming fully amortized as a result of accelerated amortization expense in 2024.
Previous wording
The following table sets forth a comparison of our interest expense for the three and nine months ended September 30 ($ in thousands):
Current wording
The following table sets forth a comparison of our interest expense for the three months ended March 31 ($ in thousands):
Previous wording
Interest expense is comprised of interest expense and non-usage and other fees associated with our borrowings. The change in interest expense in the three and nine months ended September 30, 2024, compared to the prior period is primarily attributable to lower interest incurred as a result of our repayment of the Term Loans.
Current wording
Interest expense is comprised of interest expense and non-usage and other fees associated with our borrowings. The change in interest expense in the three months ended March 31, 2025, compared to the prior period is primarily attributable to lower interest incurred as a result of our repayment of the Term Loans in early 2024.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the three months ended March 31 ($ in thousands):
Current report — wording carried from elsewhere
For the three months ended March 31, 2025, the cost of subscriptions, maintenance, and professional services increased 3% primarily due to increased hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, together with higher personnel costs. The increases were partially offset by redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations.
Current report — wording carried from elsewhere
The following table sets forth a comparison of our costs of software licenses and royalties for the three months ended March 31 ($ in thousands):
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table sets forth a comparison of our research and development expense for the three and nine months ended September 30 ($ in thousands):
Previous report — wording carried elsewhere
As of September 30, 2024, we had cash and cash equivalents of $538.3 million, compared to $165.5 million as of December 31, 2023. We also had $9.9 million invested in investment grade corporate bonds, municipal bonds and asset-backed securities as of September 30, 2024. These investments have varying maturity dates through 2027 and are held as available-for-sale. We believe our cash on hand, cash from operating activities, availability under our revolving line of credit, and access to the capital markets provide us with sufficient flexibility to meet our long-term financial needs.