VOL. XCIV, NO. 247
★ MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Friday, December 26, 2025
Tyler Technologies, Inc.
TYL · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Tyler Technologies is a GovTech software provider focused on mission-critical systems for state and local governments and other public sector entities. Its Enterprise Software segment sells integrated back-office application suites (e.g., ERP/public administration, courts & justice, public safety, education, property/recording) with high switching costs driven by complex implementations and public sector procurement dynamics. Its Platform Technologies segment provides payments and digital/workflow platforms that integrate with Tyler's installed base, generating recurring transaction-based fees. Moats are primarily demand-side (switching costs, procurement inertia, suite integration) supported by long-term contracts and scale in payments transactions.
Primary segment
Enterprise Software
Market structure
Competitive
Market share
5%-7% (reported)
HHI: —
Coverage
2 segments · 6 tags
Updated 2025-12-26
Segments
Enterprise Software
Public sector enterprise application software for mission-critical back-office functions (ERP/public administration, courts & justice, public safety, education, property & recording)
Revenue
70.7%
Structure
Competitive
Pricing
moderate
Share
5%-7% (reported)
Peers
Platform Technologies
Public sector platform solutions (payments processing, digital government services, data processing and workflow platforms)
Revenue
29%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Enterprise Software
Public sector enterprise application software for mission-critical back-office functions (ERP/public administration, courts & justice, public safety, education, property & recording)
Revenue share based on FY2024 segment revenues in Form 10-K (year ended 2024-12-31). Operating profit share is based on FY2024 segment operating income for ES+PT only (excludes Corporate segment operating loss/overhead).
Training Org Change Costs
Demand
Training Org Change Costs
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Implementations require data conversion, training, and process change across departments; systems support mission-critical government functions, raising switching costs and risk of replacement.
Erosion risks
- Cloud migrations used as switching events
- Improved data portability and interoperability standards
- Budget-driven re-competes during contract renewals
Leading indicators
- Gross client retention rate
- Net revenue retention / ARR growth
- Large contract win/loss announcements
Counterarguments
- RFP-driven procurement means incumbency does not guarantee renewal
- Modern SaaS architectures can reduce migration and implementation friction
Procurement Inertia
Demand
Procurement Inertia
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Public sector buying cycles are governed by formal RFP and open-bid processes; vendor selection often relies on references and risk minimization, favoring proven incumbents.
Erosion risks
- Procurement modernization (modular contracting, shorter cycles)
- Expansion of cooperative purchasing vehicles reducing incumbent advantage
- Consultant influence shifting vendor selection
Leading indicators
- Average sales cycle length
- Win rate on competitive bids
- Pipeline mix: new logos vs expansions
Counterarguments
- RFP processes keep deals contestable and can increase price pressure
- Large horizontal vendors can subsidize bids with broader portfolios
Suite Bundling
Demand
Suite Bundling
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Integrated applications across multiple departments reduce the need for point solutions and increase attachment/cross-sell; integration with Tyler platform solutions (payments, data, digital engagement) increases stickiness.
Erosion risks
- Best-of-breed point solutions with strong APIs
- Interoperability mandates and open integration standards
- Customer preference for modular procurement
Leading indicators
- Module attach rate per client
- Cross-sell rate of platform solutions into Enterprise Software accounts
- Average number of products per customer
Counterarguments
- Agencies may choose niche vendors for specific functions
- Integration platforms can reduce the value of single-vendor suites
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Subscription arrangements can span multiple years and maintenance/support is often auto-renewing, supporting a recurring revenue base and reducing near-term churn.
Erosion risks
- Termination provisions and renewals subject to rebid
- Government budget shortfalls delaying or canceling projects
- Performance issues triggering non-renewals
Leading indicators
- Deferred revenue trend
- ARR and recurring revenue growth
- Renewal rates for maintenance and subscriptions
Counterarguments
- Public sector contracts may be terminated for convenience
- Renewals can become competitive events with aggressive pricing
Platform Technologies
Public sector platform solutions (payments processing, digital government services, data processing and workflow platforms)
Revenue share based on FY2024 segment revenues in Form 10-K (year ended 2024-12-31). Operating profit share is based on FY2024 segment operating income for ES+PT only (excludes Corporate segment operating loss/overhead). Key supplier includes AWS due to Tyler's transition to AWS for cloud hosting.
Data Workflow Lockin
Demand
Data Workflow Lockin
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Platform products (payments, digital services, data/workflow tools) integrate with back-office government applications and citizen-facing transactions; replacing them requires re-integration and process change.
Erosion risks
- Standardized APIs reduce integration switching costs
- Disintermediation by core ERP vendors bundling payments/digital services
- Commodity payment processing offers from large fintechs
Leading indicators
- Platform attach rate within Enterprise Software installed base
- Transaction volume growth and churn
- Net revenue retention for platform products
Counterarguments
- Payment processing is often viewed as a commodity service with frequent vendor switching
- Governments may prefer separate best-of-breed platforms connected via integration layers
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
High payment and digital transaction volumes support product investment and cost leverage versus smaller vendors.
Erosion risks
- Fee compression in merchant acquiring and payment processing
- Regulatory or network-rule changes affecting economics
- Scale advantages captured by much larger global processors
Leading indicators
- Transaction revenue growth vs transaction count
- Gross margin trend for transaction revenues
- Take-rate stability
Counterarguments
- Largest payment processors may still have superior scale and pricing
- Pass-through interchange/processing fees can limit margin leverage
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Transaction-based fees and digital services are often governed by multi-year agreements, supporting recurring revenue streams.
Erosion risks
- Termination-for-convenience provisions in government contracts
- Rebids at renewal with aggressive pricing
- Budget-driven contract scope reductions
Leading indicators
- Deferred revenue trend for the segment
- ARR and recurring transaction revenue growth
- Renewal and retention metrics
Counterarguments
- Government contracts can be rebid; incumbency is not guaranteed
- Customers may separate payments from software vendor to reduce fees
Brand Trust
Demand
Brand Trust
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Handling citizen payments and sensitive government data makes vendor reliability, security posture, and reputation important selection factors.
Erosion risks
- Security incidents damaging reputation
- New entrants winning on lower prices
- Commoditization of digital government front ends
Leading indicators
- Security incident disclosures and uptime metrics
- Client retention for payments/digital services
- Competitive win/loss trends in payments RFPs
Counterarguments
- Large, well-known payment processors may have stronger consumer brand trust
- Reputation advantages can be offset by price or procurement rules
Evidence
We provide professional IT services to our clients, including software and hardware installation, data conversion, training.
Implementation services imply significant organizational change and switching costs.
Gross client retention 98%.
High retention is consistent with sticky, mission-critical systems.
Governmental units often are required to seek competitive proposals through a request for proposal process.
Formal procurement processes slow switching and can advantage established vendors with strong references.
Many governmental agencies purchase products and services through an open bidding process.
Open bidding is a structural feature of the customer base; it shapes long sales cycles and vendor selection friction.
Our ability to offer an integrated system of applications for several offices or departments is often a competitive advantage.
Directly supports suite/integration advantage.
Showing 5 of 15 sources.
Risks & Indicators
Erosion risks
- Cloud migrations used as switching events
- Improved data portability and interoperability standards
- Budget-driven re-competes during contract renewals
- Procurement modernization (modular contracting, shorter cycles)
- Expansion of cooperative purchasing vehicles reducing incumbent advantage
- Consultant influence shifting vendor selection
Leading indicators
- Gross client retention rate
- Net revenue retention / ARR growth
- Large contract win/loss announcements
- Implementation backlog and go-live delays
- Average sales cycle length
- Win rate on competitive bids
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.