TYLER TECHNOLOGIES INC

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, 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, evolving use of artificial intelligence (“AI”), security vulnerabilities and software updates, or changes in our ability to access third-party software and services; (3) our ability to protect client information from security breaches or misuse through AI and to 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 actively monitor developments in AI regulation and ethical standards as we expect that future changes in the regulatory landscape may affect our product development timelines, compliance costs, and market opportunities related to AI; (7) 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; (8) general economic, political and market conditions, including inflation and changes in interest rates; (9) technological and market risks associated with the development of new technologies, products or services or of new versions of existing or acquired products or services; (10) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure …

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, evolving use of artificial intelligence (“AI”), security vulnerabilities and software updates, or changes in our ability to access third-party software and services; (3) our ability to protect client information from security breaches or misuse through AI and to 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 actively monitor developments in AI regulation and ethical standards as we expect that future changes in the regulatory landscape may affect our product development timelines, compliance costs, and market opportunities related to AI; (7) our ability to successfully research, develop, integrate, and commercialize AI capabilities into our solutions, to achieve client adoption of those capabilities, and to effectively monetize them is subject to significant risks, including the continued need for substantial investment, competition from new and existing market participants offering alternative AI solutions, and the possibility that clients may not adopt or pay for AI features at the levels we expect, any of which could result in disruption to our business, adversely affect our revenue and margins, and harm our competitive position; (8) our ability to achieve our financial forecasts due to various factors, inclu…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Revenue from certain product offerings, along with related expenses, for the prior period has been reclassified to conform to their current period presentation. Furthermore, certain depreciation and amortization expenses for the prior periods have been reclassified to corporate unallocated to be consistent with the current year presentation that better aligns with the Corporate classification of certain assets on the condensed consolidated balance sheets as Corporate. These changes had no impact on the Company's consolidated results of operations, financial position, or cash flows.

Current wording

Revenue from certain product offerings, along with related expenses, for the prior period have been reclassified to conform to their current period presentation. Furthermore, certain depreciation and amortization expenses for the prior periods have been reclassified to corporate unallocated to be consistent with the current year presentation that better aligns with the Corporate classification of certain assets on the condensed consolidated balance sheets as Corporate. These changes had no impact on the Company's consolidated results of operations, financial position, or cash flows.

Previous wording

On April 14, 2026, we completed the acquisition of the remaining equity of BFTR, LLC (“For the Record” or “FTR”), a provider of cloud connected software that captures, stores, and manages courtroom audio and video with secure chain of custody. The actual operating results of FTR are included in the operating results of the ES segment beginning April 14, 2026.

Current wording

On July 30, 2026, we acquired CODY Systems (“CODY”), an established public safety company that provides software and data management, integration, and exchange solutions for public safety, law enforcement, and other public sector entities. On April 14, 2026, we completed the acquisition of the remaining equity of BFTR, LLC (“For the Record” or “FTR”), a provider of cloud-connected software that captures, stores, and manages courtroom audio and video with secure chain of custody.

Previous wording

On December 2, 2025, we acquired Edu.Link, Inc. (“Edulink”), a SaaS company focused on educator evaluation, performance management, professional development, and compliance tracking geared specifically to the unique needs of K-12 schools. On November 19, 2025, we acquired CloudGavel, LLC (“CG”), a SaaS company specializing in cloud electronic warrant solutions that allows for real time interaction for judges and law enforcement personnel. On July 28, 2025, we acquired Emergency Networking, Inc. (“EN”), a SaaS company specializing in cloud-native software for fire departments and emergency medical services agencies. On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development. The actual operating results of Edulink, CG, EN, and MyGov, from their respective dates of acquisition, are included in the operating results of the ES segment.

Current wording

On December 2, 2025, we acquired Edu.Link, Inc. (“Edulink”), a SaaS company focused on educator evaluation, performance management, professional development, and compliance tracking geared specifically to the unique needs of K-12 schools. On November 19, 2025, we acquired CloudGavel, LLC (“CG”), a SaaS company specializing in cloud electronic warrant solutions that allows for real time interaction for judges and law enforcement personnel. On July 28, 2025, we acquired Emergency Networking, Inc. (“EN”), a SaaS company specializing in cloud-native software for fire departments and emergency medical services agencies. On January 31, 2025, we acquired MyGov, LLC (“MyGov”), a provider of SaaS platform solutions for community development.

Previous wording

On May 14, 2026, we issued 0.50% Convertible Senior Notes due in 2031 for the aggregate principal amount of $1.44 billion (the “2031 Notes”). The 2031 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of May 14, 2026, between the Company and U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the issuance of the 2031 Notes were $1.41 billion, net of initial purchasers’ discounts of $25.2 million and debt issuance costs of $4.4 million. On May 14, 2026, we used approximately $320.7 million of the net proceeds of the offering of the 2031 Notes to repurchase 1,026,900 shares of our common stock. Including this repurchase, we repurchased approximately 2.4 million shares under our share repurchase program, for the six months ended June 30, 2026.

Current wording

On May 14, 2026, we issued 0.50% Convertible Senior Notes due in 2031 for the aggregate principal amount of $1.44 billion (the “2031 Notes”). The 2031 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of May 14, 2026, between the Company and U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the issuance of the 2031 Notes were $1.41 billion, net of initial purchasers’ discounts of $25.2 million and debt issuance costs of $4.4 million. On May 14, 2026, we used approximately $320.7 million of the net proceeds of the offering of the 2031 Notes to repurchase 1,026,900 shares of our common stock. Including this repurchase, we repurchased approximately 3.6 million shares under our share repurchase program for the nine months ended September 30, 2026.

Previous wording

As of June 30, 2026, the aggregate amount due of the 2031 Notes was $1.44 billion.

Current wording

As of September 30, 2026, the aggregate principal amount due of the 2031 Notes was $1.44 billion.

Previous wording

For the three and six months ended June 30, 2026, total revenues increased 8.2% and 8.4%, respectively, compared to the prior period, primarily due to an increase in subscriptions revenue. Revenues from recent acquisitions contributed $11.4 million and $15.3 million to the total revenue increase for the three and six months ended June 30, 2026, respectively, compared to the prior period.

Current wording

For the three and nine months ended September 30, 2026, total revenues increased 8.7% and 8.5%, respectively, compared to the prior period, primarily due to an increase in subscriptions revenue. Revenues from recent acquisitions contributed $13.9 million and $29.2 million to the total revenue increase for the three and nine months ended September 30, 2026, respectively, compared to the prior period.

Previous wording

Subscriptions revenue grew 12.0% and 13.3%, respectively, for the three and six months ended June 30, 2026, 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. Revenues from recent acquisitions contributed $8.1 million and $11.7 million to the subscriptions revenue increase for the three and six months ended June 30, 2026, respectively, compared to the prior period.

Current wording

Subscriptions revenue grew 15.3% and 14.0%, respectively, for the three and nine months ended September 30, 2026, 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. Revenues from recent acquisitions contributed $9.8 million and $21.5 million to the subscriptions revenue increase for the three and nine months ended September 30, 2026, respectively, compared to the prior period.

Previous wording

Our total employee count increased to 7,879 as of June 30, 2026, including 237 employees who joined us through acquisitions completed since June 30, 2025. Our employee count was 7,542 as of June 30, 2025.

Current wording

Our total employee count increased to 7,972 as of September 30, 2026, including 274 employees who joined us through acquisitions completed since September 30, 2025. Our employee count was 7,689 as of September 30, 2025.

Previous wording

ARR was $2.24 billion and $2.07 billion as of June 30, 2026, and 2025, respectively. ARR increased approximately 8% 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 $2.28 billion and $2.05 billion as of September 30, 2026, and 2025, respectively. ARR increased approximately 11% 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 derived from SaaS fees for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of our subscriptions revenue derived from SaaS fees for the three and nine months ended September 30 ($ in thousands):

Previous wording

For the three and six months ended June 30, 2026, SaaS fees grew 22% and 23%, respectively, compared to the prior period. The growth is primarily due to sales to new clients and expansions with existing clients, along with new SaaS revenues from existing on-premises clients converting to our SaaS offerings. Annual price increases for existing clients also contributed to the growth. SaaS revenues from recent acquisitions contributed $8.1 million and $11.6 million to the total SaaS revenue increase for the three and six months ended June 30, 2026, respectively, compared to the prior period.

Current wording

For the three and nine months ended September 30, 2026, SaaS fees grew 21% and 22%, respectively, compared to the prior period. The growth is primarily due to sales to new clients and expansions with existing clients, along with new SaaS revenues from existing on-premises clients converting to our SaaS offerings. Annual price increases for existing clients also contributed to the growth. SaaS revenues from recent acquisitions contributed $9.8 million and $21.3 million to the total SaaS revenue increase for the three and nine months ended September 30, 2026, respectively, compared to the prior period.

Previous 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):

Current wording

The following table sets forth a comparison of our subscriptions revenue derived from transaction-based fees for the three and nine months ended September 30 ($ in thousands):

Previous wording

For the three and six months ended June 30, 2026, transaction-based fees grew 4% and 5%, respectively, compared to the prior period. The increase in transaction-based fees compared to prior period are from new transaction clients and volume increases from online payments and e-filing services, somewhat offset by the decline in revenues of approximately $12.5 million and $24.8 million, for the three and six months ended June 30, 2026, respectively, due to the wind-down in the fourth quarter of 2025 of one state’s payment processing contract.

Current wording

For the three and nine months ended September 30, 2026, transaction-based fees grew 9% and 6%, respectively, compared to the prior period. The increase in transaction-based fees compared to the prior period is from new transaction clients and volume increases from online payments and e-filing services, somewhat offset by the decline in revenues of approximately $8.3 million and $33.0 million, for the three and nine months ended September 30, 2026, respectively, due to the wind-down in the fourth quarter of 2025 of one state’s payment processing contract.

Previous wording

The following table sets forth a comparison of our maintenance revenue for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of our maintenance revenue for the three and nine months ended September 30 ($ in thousands):

Previous wording

We provide maintenance and support services for on-premises clients that license our software products and certain third-party software. Maintenance revenue decreased 6% and 5%, respectively, for the three and six months ended June 30, 2026, compared to the prior period primarily due to the impact of clients converting from on-premises license arrangements to SaaS since June 30, 2025, partially offset by maintenance price increases.

Current wording

We provide maintenance and support services for on-premises clients that license our software products and certain third-party software. Maintenance revenue decreased 5% for both the three and nine months ended September 30, 2026, compared to the prior period primarily due to the impact of clients converting from on-premises license arrangements to SaaS since September 30, 2025.

Previous wording

The following table sets forth a comparison of our professional services revenue for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of our professional services revenue for the three and nine months ended September 30 ($ in thousands):

Previous wording

Professional services revenue increased 8% and 1%, respectively, for the three and six months ended June 30, 2026, compared to the prior period. The increase in professional services revenues compared to prior period is primarily due to the timing of time and material projects and the timing of specific reserves taken in prior periods, partially offset by an intentional reduction in custom development, as well as efficiencies in the delivery of professional services.

Current wording

Professional services revenue decreased 3% and remained flat for the three and nine months ended September 30, 2026, respectively, compared to the prior period. For the three months ended September 30, 2026, the decrease in professional services revenues compared to prior period is primarily due to timing of time and material projects nearing completion in the prior period and the intentional reduction in custom development. For the nine months ended September 30, 2026, professional services revenues remained flat primarily due to the timing of specific reserves taken in prior periods.

Previous wording

The following table sets forth a comparison of other revenue for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of other revenue for the three and nine months ended September 30 ($ in thousands):

Previous wording

Other revenue primarily consists of software licenses, royalties and computer hardware. Other revenue increased 14% and 10%, respectively, for the three and six months ended June 30, 2026, compared to the prior period. Other revenue increased primarily due to an increase in computer hardware revenue. The increase is somewhat offset by the decline in revenue from software licenses due to the ongoing shift in the mix of new software contracts to SaaS. Refer to the SaaS fees section for further details on our revenue mix shift.

Current wording

Other revenue primarily consists of software licenses, royalties and computer hardware. Other revenue decreased 16% and 1%, respectively, for the three and nine months ended September 30, 2026, compared to the prior period. The decrease is primarily due to the decline in revenue from software licenses due to the ongoing shift in the mix of new software contracts to SaaS, partially offset by an increase in computer hardware revenue. Refer to the SaaS fees section for further details on our revenue mix shift.

Previous 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):

Current 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):

Previous 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):

Current wording

The following table sets forth a comparison of our costs of subscriptions, maintenance, and professional services for the three and nine months ended September 30 ($ in thousands):

Previous wording

The cost of subscriptions, maintenance, and professional services for both the three and six months ended June 30, 2026, increased 5%, compared to the prior period. For the three months ended June 30, 2026, the increase is primarily due to a $19.0 million increase in merchant fees related to higher activity and an increase in interchange fee rates, an increase of $5.5 million in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, and a $3.3 million increase from recent acquisitions. The increases were partially offset by an $11.0 million reduction in merchant fees, following the wind-down in the fourth quarter of 2025 of a state payment processing contract, and the redeployment of resources to research and development due to continued migration of clients to our SaaS products and the 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 nine months ended September 30, 2026, increased 6% and 5%, respectively, compared to the prior period. For the three months ended September 30, 2026, the increase is primarily due to a $21.0 million increase in merchant fees related to higher activity and an increase in interchange fee rates, an increase of $4.5 million in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, and a $4.9 million increase from recent acquisitions. The increases were partially offset by a $7.2 million reduction in merchant fees following the wind-down in the fourth quarter of 2025 of a state payment processing contract and the redeployment of resources to research and development due to continued migration of clients to our SaaS products and the consolidation of versions of on-premises software products with support obligations.

Previous wording

For the six months ended June 30, 2026, the increase is primarily due to a $36.0 million increase in merchant fees related to higher activity and an increase in interchange fee rates, an increase of $11.4 million in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, and a $4.3 million increase from recent acquisitions. The increases were partially offset by a $21.5 million reduction in merchant fees following the wind-down in the fourth quarter of 2025 of a state payment processing contract, and the redeployment of resources to research and development due to continued migration of clients to our SaaS products and the consolidation of versions of on-premises software products with support obligations.

Current wording

For the nine months ended September 30, 2026, the increase is primarily due to a $57.0 million increase in merchant fees related to higher activity and an increase in interchange fee rates, an increase of $15.9 million in hosting costs as we expand our SaaS client base and transition from our proprietary data centers to the public cloud, and a $9.2 million increase from recent acquisitions. The increases were partially offset by a $28.7 million reduction in merchant fees following the wind-down in the fourth quarter of 2025 of a state payment processing contract and the redeployment of resources to research and development due to continued migration of clients to our SaaS products and the consolidation of versions of on-premises software products with support obligations.

Previous 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):

Current wording

The following table sets forth a comparison of our amortization of software development for the three and nine months ended September 30 ($ in thousands):

Previous wording

For the three and six months ended June 30, 2026, amortization of software development costs increased 1% and 3%, respectively, compared to the prior period due to new products released in the past year.

Current wording

For the three and nine months ended September 30, 2026, amortization of software development costs decreased 12% and 2%, respectively, compared to the prior period due to the decline in projects capitalized and projects reaching the end of their amortizable lives.

Previous 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):

Current wording

The following table sets forth a comparison of our amortization of acquired software for the three and nine months ended September 30 ($ in thousands):

Previous wording

For the three and six months ended June 30, 2026, amortization of acquired software declined 8% and 6%, respectively, compared to the prior period due to assets becoming fully amortized in the fourth quarter of 2025, partially offset by amortization of acquired software from new acquisitions completed in 2026.

Current wording

For both the three and nine months ended September 30, 2026, amortization of acquired software declined 6% compared to the prior period due to assets becoming fully amortized in the fourth quarter of 2025, partially offset by amortization of acquired software from new acquisitions completed in 2026.

Previous wording

The following table sets forth a comparison of other costs for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of other costs for the three and nine months ended September 30 ($ in thousands):

Previous wording

Other costs for the three and six months ended June 30, 2026, increased 11% and 25%, respectively, compared to the prior period. The increase was primarily driven by higher computer hardware sales.

Current wording

Other costs for the three and nine months ended September 30, 2026, decreased 6% and increased 15%, respectively, compared to the prior period. The decrease for the three months ended September 30, 2026, was primarily driven by lower computer hardware sales. The increase for the nine months ended September 30, 2026, was primarily driven by higher third-party software costs and hardware costs.

Previous wording

Overall gross margin. For the three and six months ended June 30, 2026, our blended gross margin increased 1.8% and 1.4%, respectively, compared to the prior period. For the three and six months ended June 30, 2026, the increase in overall gross margin compared to the prior period is primarily attributable to a shift in our revenue mix toward higher-margin SaaS revenues. That increase in the overall gross margin is partially offset by declines in software licenses and maintenance revenues and increases in merchant fees, hosting costs, and software development amortization expense.

Current wording

Overall gross margin. For the three and nine months ended September 30, 2026, our blended gross margin increased 1.9% and 1.6%, respectively, compared to the prior period. For the three and nine months ended September 30, 2026, the increase in overall gross margin compared to the prior period is primarily attributable to a shift in our revenue mix toward higher-margin SaaS revenues. That increase in the overall gross margin is partially offset by declines in software licenses and maintenance revenues and increases in merchant fees, hosting costs, and third-party software and hardware 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 six months ended June 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 and nine months ended September 30 ($ in thousands):

Previous wording

S&M expense as a percentage of revenues was 6.2% for both the three and six months ended June 30, 2026 compared to 6.1% and 6.3%, respectively, for the three and six months ended June 30, 2025. S&M expense increased 10% and 8%, respectively, compared to the prior period. The increase in S&M expense is primarily attributed to an increase in commission expense and higher personnel expense compared to the prior period.

Current wording

S&M expense as a percentage of revenues was 6.2% for both the three and nine months ended September 30, 2026 compared to 6.3% for both the three and nine months ended September 30, 2025. S&M expense increased 7% and 8%, respectively, compared to the prior period. The increase in S&M expense is primarily attributed to an increase in commission expense and higher personnel expense 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 and six months ended June 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 and nine months ended September 30 ($ in thousands):

Previous wording

G&A expense as a percentage of revenue was 14.5% and 14.1%, respectively, for the three and six months ended June 30, 2026 compared to 12.8% and 13.4%, respectively, for the three and six months ended June 30, 2025. G&A expense increased 22% and 14%, respectively, for the three and six months ended June 30, 2026, compared to the prior period. For the three months ended June 30, 2026, the increase in G&A expense was primarily attributable to a $7.1 million increase in professional fees primarily from ligation-related expenses, a $3.3 million increase in share-based compensation expense, a $2.3 million increase in acquisition and restructuring costs, and a $2.4 million increase in G&A expense from recent acquisitions. For the six months ended June 30, 2026, the G&A expense increase is attributable to a $6.9 million increase in professional services primarily from litigation-related expenses, a $4.7 million write-off of previously capitalized software projects, a $1.7 million increase in software/hardware expense, and a $2.6 million increase in G&A expense from recent acquisitions.

Current wording

G&A expense as a percentage of revenue was 12.6% and 13.6%, respectively, for the three and nine months ended September 30, 2026 compared to 13.4% for both the three and nine months ended September 30, 2025. G&A expense increased 2% and 10%, respectively, for the three and nine months ended September 30, 2026, compared to the prior period. For the three months ended September 30, 2026, the increase in G&A expense was primarily attributable to a $1.2 million increase in professional fees primarily from litigation-related expenses and a $1.9 million increase from recent acquisitions, partially offset by a $1.9 million decline in personnel expenses primarily due to decline in bonuses. For the nine months ended September 30, 2026, the G&A expense increase is attributable to an $8.1 million increase in professional services primarily from litigation-related expenses, an $8.3 million increase from a write-off of previously capitalized software projects and restructuring costs, a $2.6 million increase in software and hardware expense, and a $4.5 million increase from recent acquisitions.

Previous wording

Research and development expense consists primarily of salaries, employee benefits and related overhead costs associated with product development. Research and development expense consists mainly of costs associated with development of new functionality in our current products that do not qualify for capitalization. The following table sets forth a comparison of our research and development expense for the three and six months ended June 30 ($ in thousands):

Current wording

Research and development expense ("R&D") consists primarily of salaries, employee benefits and related overhead costs associated with product development. Research and development expense consists mainly of costs associated with development of new functionality in our current products that do not qualify for capitalization. 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 wording

Research and development expense increased 24%, for both the three and six months ended June 30, 2026, compared to the prior period, with the majority of the increase due to 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.

Current wording

Research and development expense increased 22% and 24%, for the three and nine months ended September 30, 2026, respectively, compared to the prior period, with the majority of the increase due to the redeployment of resources from cost of revenues 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. In addition, R&D expense from recent acquisitions contributed $2.9 million and $5.7 million to the total R&D expense increase for the three and nine months ended September 30, 2026, respectively, compared to the prior period.

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 and six months ended June 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 and nine months ended September 30 ($ in thousands):

Previous wording

Amortization of other intangibles increased 12% and 6%, respectively, for the three and six months ended June 30, 2026, compared to the prior period, primarily due to amortization of other intangibles from acquisitions completed in 2026 and fourth quarter of 2025.

Current wording

Amortization of other intangibles increased 14% and 9%, respectively, for the three and nine months ended September 30, 2026, compared to the prior period, primarily due to amortization of other intangibles from acquisitions completed in 2026 and fourth quarter of 2025.

Previous wording

The following table sets forth a comparison of the operating income by reportable segments for the three and six months ended June 30 ($ in thousands):

Current wording

The following table sets forth a comparison of the operating income by reportable segments for the three and nine months ended September 30 ($ in thousands):