TYLER TECHNOLOGIES INC
For the period ended Jun 30, 2025. Filed Jul 30, 2025.
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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.
Jun 30, 2025 · Filed Jul 30, 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 2025-03-31; filed 2025-04-25.
0000860731-25-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-30.
0000860731-25-000036
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 106 previous paragraphs and 107 current paragraphs.
42 unchanged; 59 reworded; 6 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 22 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 (6)
Current report
SaaS fees
Current report
Professional services revenues decreased 19% and 10% for the three and six months ended June 30, 2025, respectively, compared to the prior period. The decrease for the three and six months ended June 30, 2025, respectively, is primarily due to loss reserves of approximately $8.5 million for contracts with agencies within two state governments. The remainder of the decrease in professional services revenues compared to the prior period is related to an intentional reduction in custom development work as well as efficiencies in the delivery of professional services.
Current report
Research and development expense increased 76% and 69%, respectively, for the three and six months ended June 30, 2025, compared to the prior period, with the majority of the increase due the redeployment of resources to research and development resulting from the continued migration of clients to our SaaS products and version consolidation of on-premises software products with support obligations, together with increased investments in a number of new Tyler product development initiatives across our product suites. The remainder of the increase is attributed to $4.9 million and $8.8 million increases related to share-based compensation expense for the three and six months ended June 30, 2025, respectively, compared to the prior period.
Current report
The decrease for the three and six months ended June 30, 2025, respectively, in the PT segment operating income is primarily due to a decline in professional services revenue attributed to loss reserves of approximately $8.5 million for contracts with agencies within two state governments.
Current report
On July 4, 2025, the reconciliation bill, commonly referred to as the OBBBA was signed into law, which includes a broad range of tax reform provisions that may affect our Company. The OBBBA allows an elective deduction for domestic Research and Development (“R&D”), a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (“Net CFC Tested Income”), among other provisions. We are currently evaluating the impact of these provisions, which could affect our effective tax rate in 2025 and future periods. We anticipate a significant reduction in current tax payments in the next 12 months, as well as a decrease in deferred tax assets and the income tax payable related to the provisions for full expensing of domestic R&D and bonus depreciation. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.
Current report
We made income tax payments, net of refunds, of $46.3 million and $39.1 million in the six months ended June 30, 2025, and June 30, 2024, respectively.
Removed paragraphs (5)
Previous report
SaaS
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Reworded paragraphs (59)
Previous wording
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, security vulnerabilities and software updates; (3) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (7) general economic, political and market conditions, including continued inflation and rising interest rates; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (10) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (11) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in Item 1A, “Risk Factors”. We expressly disclai…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, including local, state and federal government agencies, that could negatively impact information technology spending; (2) disruption to our business and harm to our competitive position resulting from cyber-attacks, security vulnerabilities and software updates; (3) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (4) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (5) material portions of our business require the Internet infrastructure to be adequately maintained; (6) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (7) general economic, political and market conditions, including inflation and rising interest rates; (8) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (9) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (10) the ability to attract and retain qualified personnel and dealing with rising labor costs, the loss or retirement of key members of management or other key personnel; and (11) costs of compliance and any failure to comply with government and stock exchange regulations. These factors and other risks that affect our business are described in Item 1A, “Risk Factors”. We expressly …
Excerpt shortened here; the source contains the full paragraph.
Previous 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.
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 that 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
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 wording
Our 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.
Previous 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.
Current wording
On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The total cash purchase price, net of cash acquired of $215,000, was approximately $18.2 million. The actual operating results of MyGov are included with the operating results of the ES segment since the date of acquisition.
Previous 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.
Current wording
For both the three and six months ended June 30, 2025, total revenues increased 10%, compared to the prior period, primarily due to an increase in subscription revenue.
Previous 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.
Current wording
Subscriptions revenue grew 21.4% and 20.6%, respectively, for the three and six months ended June 30, 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 7,462 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.
Current wording
Our total employee count increased to 7,542 as of June 30, 2025, including 12 employees who joined us through acquisitions completed since June 30, 2024, from 7,360 as of June 30, 2024.
Previous 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.
Current wording
ARR was $2.07 billion and $1.80 billion as of June 30, 2025, and 2024, respectively. ARR increased approximately 15% 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
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements. These condensed consolidated financial statements have been prepared following the requirements of GAAP for the interim period and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, potential impairment of intangible assets and goodwill, and share-based compensation expense. As these are condensed financial statements, one should also read expanded information about our critical accounting policies and estimates provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates from the information provided in our Form 10-K for the year ended December 31, 2024.
Current wording
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements. These condensed consolidated financial statements have been prepared following the requirements of GAAP for the interim period and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and potential impairment of intangible assets and goodwill. As these are condensed financial statements, one should also read expanded information about our critical accounting policies and estimates provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates from the information provided in our Form 10-K for the year ended December 31, 2024.
Previous wording
The following table sets forth a comparison of our subscriptions revenue for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our subscriptions revenue for the three and six months ended June 30 ($ in thousands):
Previous wording
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 wording
The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the three and six months ended June 30 ($ in thousands):
Previous wording
For the three months ended March 31, 2025, SaaS fees grew 21%, or $31.3 million, compared to the prior period. That growth is primarily attributable to new SaaS clients as well as existing on-premises clients who converted to our SaaS model. Since March 31, 2024, we have added 672 new SaaS clients, while 431 existing on-premises clients have converted to our SaaS offerings. Our new software contract value mix for the three months ended March 31, 2025, was approximately 4% perpetual software license arrangements and approximately 96% subscription-based arrangements, compared to approximately 7% perpetual software license arrangements and approximately 93% subscription-based arrangements for the three months ended March 31, 2024.
Current wording
For the three and six months ended June 30, 2025, SaaS fees grew 22% and 21%, respectively, compared to the prior period. That growth is primarily attributable to new SaaS clients as well as existing on-premises clients who converted to our SaaS model. Since June 30, 2024, we have added 641 new SaaS clients, while 438 existing on-premises clients have converted to our SaaS offerings. Our new software contract value mix for the six months ended June 30, 2025, was approximately 96% subscription-based arrangements and approximately 4% perpetual software license arrangements, compared to approximately 95% subscription-based arrangements and approximately 5% perpetual software license arrangements for the six months ended June 30, 2024.
Previous wording
The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the three and six months ended June 30 ($ in thousands):
Previous wording
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 wording
For the three and six months ended June 30, 2025, transaction-based fees grew 21% and 20%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, volume increases from online payments from new and existing customers contributed approximately $22.7 million and $44.9 million, respectively, to the growth in transactions fees compared to prior period and price increases by certain third-party processing partners from whom we receive a share of revenues contributed the remainder of the growth for both periods, respectively, compared to the prior period.
Previous wording
The following table sets forth a comparison of our maintenance revenue for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our maintenance revenue for the three and six months ended June 30 ($ in thousands):
Previous 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.
Current wording
We provide maintenance and support services for our software products and certain third-party software. Maintenance revenue decreased 3% for both the three and six months ended June 30, 2025, compared to the prior period primarily due to the impact of 438 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 months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our professional services revenue for the three and six months ended June 30 ($ 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. The decrease in professional services revenues compared to the prior period is as expected from lower custom development work and efficiencies.
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.
Previous wording
The following table sets forth a comparison of our software licenses and royalties revenue for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our software licenses and royalties revenue for the three and six months ended June 30 ($ in thousands):
Previous 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.
Current wording
For the three and six months ended June 30, 2025, software licenses and royalties revenue decreased 31% and 24%, respectively, compared to the prior period primarily because of the ongoing shift in the mix of new software contracts toward more SaaS offerings. Refer to the SaaS revenue section for further details on our revenue mix shift.
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 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.
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.
Previous 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):
Current wording
The following table sets forth a comparison of the key components of our cost of revenues for the three and six months ended June 30 ($ in thousands):
Previous 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):
Current wording
The following table sets forth a comparison of our costs of subscriptions, maintenance, and professional services for the three and six months ended June 30 ($ in thousands):
Previous 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.
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, support activities, and various other services such as custom development, ongoing operation of our SaaS solutions, property appraisal outsourcing activities, digital govern ment 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
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 wording
The cost of subscriptions, maintenance, and professional services for the three and six months ended June 30, 2025, increased 6% and 5%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, respectively, the increases are primarily due to $12.5 million and $24.0 million increases in merchant fees and other direct costs related to higher transaction volumes and increases of $5.6 million and $9.3 million, respectively, in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud. The increases were partially offset by redeployment of resources to research and development due to continued migration of clients to our SaaS products and consolidation of versions of on-premises software products with support obligations.
Previous wording
The following table sets forth a comparison of our costs of software licenses and royalties for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our costs of software licenses and royalties for the three and six months ended June 30 ($ in thousands):
Previous 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.
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 revenues.
Previous 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.
Current wording
The cost of software licenses and royalties for the three and six months ended June 30, 2025, increased 18% and 20%, respectively, compared to the prior period due to higher third-party software costs.
Previous wording
The following table sets forth a comparison of our amortization of software development for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our amortization of software development for the three and six months ended June 30 ($ in thousands):
Previous 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.
Current wording
Amortization of 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 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.
Current wording
For both the three and six months ended June 30, 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
The following table sets forth a comparison of our amortization of acquired software for the three months ended March 31 ($ in thousands):
Current wording
The following table sets forth a comparison of our amortization of acquired software for the three and six months ended June 30 ($ in thousands):
Previous 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.
Current wording
For both the three and six months ended June 30, 2025, amortization of acquired software increased 1% compared to the prior period due to amortization of newly acquired software from a recent acquisition completed in fiscal year 2025, partially offset by assets becoming fully amortized in the fourth quarter of 2024.
Previous 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.
Current wording
Overall gross margin. For the three and six months ended June 30, 2025, our blended gross margin increased 1.8% and 2.7%, respectively, compared to the prior period. For the three and six months ended June 30, 2025, the increase in overall gross margin compared to the prior period is primarily attributed to a shift in our revenue mix toward higher-margin SaaS revenues, as well as an increase in transaction margins. Also contributing to the increase in overall gross margin for the three and six months ended June 30, 2025, respectively, 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 declines in software licenses, maintenance and professional services and an increase in merchant fees and software development amortization expense.
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 months ended March 31 ($ 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 and six months ended June 30 ($ in thousands):
Previous wording
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 wording
S&M expense as a percentage of revenues was 6.1% and 6.3%, respectively, for the three and six months ended June 30, 2025, compared to 7.7% and 7.4%, respectively, for the three and six months ended June 30, 2024. S&M expense decreased 13% and 7%, respectively, when compared to the prior period. The decrease in S&M expense is primarily attributed to an increase in compensation capitalized as contract acquisition costs compared to the prior period.
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 months ended March 31 ($ 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 and six months ended June 30 ($ in thousands):
Previous 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.
Current wording
G&A expense as a percentage of revenue was 12.8% and 13.4%, respectively, for the three and six months ended June 30, 2025, compared to 13.9% and 14.1%, respectively, for the three and six months ended June 30, 2024. G&A expense increased 2% and 5%, respectively, for the three and six months ended June 30, 2025, compared to the prior period. For the three and six months ended June 30, 2025, the increase in G&A expense is primarily attributable to $1.1 million and $6.1 million increases, respectively, in share-based compensation expense due to a higher stock price for share-based awards issued in the current period.
Previous wording
Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with new product development. Research and development expense consists mainly of costs associated with development of new products and new functionality in our current SaaS products. The following table sets forth a comparison of our research and development expense for the three months ended March 31 ($ in thousands):
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 and six months ended June 30 ($ in thousands):
Previous 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):
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 and six months ended June 30 ($ in thousands):
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