

~~DELAWARE~~Delaware		75-2303920
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)



5101 TENNYSON PARKWAY	PLANO ~~TEXAS~~	Texas	75024 ~~(Address~~
(Address of principal executive offices)	(City)	(State)	(Zip code) ~~(972) 713-3700~~ ~~(Registrant’s telephone number, including area code)~~

(972) 713-3700

(Registrant’s telephone number, including area code)



Title of each class	Trading symbol	Name of each exchange on which registered
COMMON STOCK, $0.01 PAR VALUE	TYL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data file required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesx☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer," "accelerated filer,” "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x☒

The number of shares of common stock of registrant outstanding on October ~~30, 2018~~29, 2019 was ~~38,823,257.~~38,986,401.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017			Three Months Ended September 30,					Nine Months Ended September 30,
				As Adjusted					As Adjusted			2019		2018			2019		2018
Revenues:
Software licenses and royalties	$	22,444		$	22,762	$	67,620		$	63,826		$	25,379	$	22,444		$	67,847	$	67,620
Subscriptions	58,699			44,352		160,736			124,731			75,272		58,699			216,022		160,736
Software services	48,199			46,045		144,812			134,401			54,997		48,199			160,841		144,812
Maintenance	96,215			91,847		286,188			266,965			109,833		96,215			316,674		286,188
Appraisal services	5,544			6,290		16,470			19,268			6,008		5,544			17,455		16,470
Hardware and other	4,966			3,410		17,475			14,007			3,911		4,966			18,751		17,475
Total revenues	236,067			214,706		693,301			623,198			275,400		236,067			797,590		693,301

Cost of revenues:
Software licenses and royalties	957			826		2,939			2,204			971		957			2,680		2,939
Acquired software	5,897			5,473		17,003			16,243			7,975		5,897			22,645		17,003
Software services, maintenance and subscriptions	111,508			98,036		327,080			287,748			128,545		111,508			371,464		327,080
Appraisal services	3,505			4,089		10,854			12,568			4,096		3,505			11,306		10,854
Hardware and other	2,574			2,293		11,718			10,408			3,096		2,574			14,870		11,718
Total cost of revenues	124,441			110,717		369,594			329,171			144,683		124,441			422,965		369,594

Gross profit	111,626			103,989		323,707			294,027			130,717		111,626			374,625		323,707

Selling, general and administrative expenses	52,605			44,513		152,471			130,293			63,888		52,605			187,481		152,471
Research and development expense	17,050			11,834		45,929			35,307			21,130		17,050			60,172		45,929
Amortization of customer and trade name intangibles	4,386			3,360		11,742			10,016
Amortization of other intangibles												5,646		4,386			15,762		11,742

Operating income	37,585			44,282		113,565			118,411			40,053		37,585			111,210		113,565

Other income (expense), net	1,041			75		2,198			(216		)
Other income, net												499		1,041			838		2,198
Income before income taxes	38,626			44,357		115,763			118,195			40,552		38,626			112,048		115,763
Income tax (benefit) provision	(298		)	5,521		(147		)	14,820
Income tax provision (benefit)												162		(298		)	12,311		(147		)
Net income	$	38,924		$	38,836	$	115,910		$	103,375		$	40,390	$	38,924		$	99,737	$	115,910

Earnings per common share:
Basic	$	1.00		$	1.04	$	3.01		$	2.78		$	1.04	$	1.00		$	2.58	$	3.01
Diluted	$	0.96		$	0.99	$	2.87		$	2.63		$	1.00	$	0.96		$	2.49	$	2.87

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)


	September 30, 2018 (unaudited)			December 31, 2017
				As Adjusted			September 30, 2019 (unaudited)			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	219,452		$	185,926		$	161,438		$	134,279
Accounts receivable [less allowance for doubtful accounts of $5,110 in 2018 and $5,427 in 2017]	281,523			246,188
Accounts receivable (less allowance for doubtful accounts of $4,302 in 2019 and $4,647 in 2018)							347,982			298,912
Short-term investments	52,349			43,159			32,931			44,306
Prepaid expenses	32,790			32,206			24,544			33,258
Income tax receivable	13,281			11,339			4			4,697
Other current assets	2,299			1,997			2,907			3,406
Total current assets	601,694			520,815			569,806			518,858

Accounts receivable, long-term	12,966			12,107			20,437			16,020
Operating lease right-of-use assets							20,172			—
Property and equipment, net	156,498			152,315			169,950			155,177
Other assets:
Goodwill	749,502			657,987			826,040			753,718
Other intangibles, net	282,806			229,617			377,580			276,852
Non-current investments and other assets	61,156			38,510			71,104			70,338
Total assets	$	1,864,622		$	1,611,351		$	2,055,089		$	1,790,963

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	4,597		$	8,174		$	9,060		$	6,910
Accrued liabilities	66,020			64,675			69,781			66,480
Operating lease liabilities							6,413			—
Current income tax payable							—			—
Deferred revenue	326,421			298,613			391,560			350,512
Total current liabilities	397,038			371,462			476,814			423,902

Revolving line of credit							—			—
Deferred revenue, long-term	493			1,274			241			424
Deferred income taxes	44,965			46,879			40,303			41,791
Operating lease liabilities, long-term							18,134			—

Commitments and contingencies							—			—

Shareholders' equity:
Preferred stock, $10.00 par value; 1,000,000 shares authorized; none issued	—			—			—			—
Common stock, $0.01 par value; 100,000,000 shares authorized; 48,147,969 shares issued and outstanding as of September 30, 2018 and December 31, 2017	481			481
Common stock, $0.01 par value; 100,000,000 shares authorized; 48,147,969 shares issued and outstanding as of September 30, 2019 and December 31, 2018							481			481
Additional paid-in capital	724,935			626,867			692,586			731,435
Accumulated other comprehensive loss, net of tax	(46		)	(46		)	(46		)	(46		)
Retained earnings	740,373			624,463			870,546			771,925
Treasury stock, at cost; 9,179,922 and 10,262,182 shares in 2018 and 2017, respectively	(43,617		)	(60,029		)
Treasury stock, at cost; 9,172,316 and 9,872,505 shares in 2019 and 2018, respectively							(43,970		)	(178,949		)
Total shareholders' equity	1,422,126			1,191,736			1,519,597			1,324,846
Total liabilities and shareholders' equity	$	1,864,622		$	1,611,351		$	2,055,089		$	1,790,963

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2018			2017			Nine Months Ended September 30,
				As Adjusted			2019			2018
Cash flows from operating activities:
Net income	$	115,910		$	103,375		$	99,737		$	115,910
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	45,627			39,700			56,547			45,627
Share-based compensation expense	37,966			27,368			44,369			37,966
Operating lease right-of-use assets - non cash							3,979			—
Deferred income tax benefit	(5,034		)	(13,705		)	(10,329		)	(5,034		)
Changes in operating assets and liabilities, exclusive of effects of acquired companies:
Accounts receivable	(31,393		)	(6,672		)	(35,544		)	(31,393		)
Income taxes	(1,942		)	(467		)	4,553			(1,942		)
Prepaid expenses and other current assets	983			(3,663		)	(7,630		)	983
Accounts payable	(4,729		)	(2,733		)	1,548			(4,729		)
Operating lease liabilities							(4,530		)	—
Accrued liabilities	1,523			1,316			(1,379		)	1,523
Deferred revenue	20,442			(2,138		)	27,206			20,442
Net cash provided by operating activities	179,353			142,381			178,527			179,353

Cash flows from investing activities:
Additions to property and equipment	(23,460		)	(37,734		)	(28,833		)	(23,460		)
Purchase of marketable security investments	(92,638		)	(49,905		)	(27,322		)	(92,638		)
Proceeds from marketable security investments	60,208			21,175			56,854			60,208
Investment in software							(3,540		)	—
Cost of acquisitions, net of cash acquired	(167,308		)	(9,761		)	(199,870		)	(167,308		)
Decrease in other	857			418
(Increase) decrease in other							(493		)	857
Net cash used by investing activities	(222,341		)	(75,807		)	(203,204		)	(222,341		)

Cash flows from financing activities:
Decrease in net borrowings on revolving line of credit	—			(10,000		)
Purchase of treasury shares	—			(7,032		)	(17,786		)	—
Proceeds from exercise of stock options	70,536			33,568			62,295			70,536
Contributions from employee stock purchase plan	5,978			5,342			7,327			5,978
Net cash provided by financing activities	76,514			21,878			51,836			76,514

Net increase in cash and cash equivalents	33,526			88,452			27,159			33,526
Cash and cash equivalents at beginning of period	185,926			36,151			134,279			185,926
Cash and cash equivalents at end of period	$	219,452		$	124,603		$	161,438		$	219,452

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)



	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Treasury Stock					Total Shareholders' Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Shares		Amount			Total Shareholders' Equity
Balance at June 30, 2019	48,148	$	481	$	715,920		$	(46	)	$	830,156	(9,582	)	$	(124,881	)	$	1,421,630
Net income	—	—		—			—			40,390		—		—			40,390
Exercise of stock options and vesting of restricted stock units	—	—		(38,160		)	—			—		396		78,323			40,163
Employee taxes paid for withheld shares upon equity award settlement	—	—		—			—			—		(1	)	(191		)	(191		)
Stock compensation	—	—		14,887			—			—		—		—			14,887
Issuance of shares pursuant to employee stock purchase plan	—	—		(61		)	—			—		15		2,779			2,718
Treasury stock purchases	—	—		—			—			—		—		—			—
Balance at September 30, 2019	48,148	$	481	$	692,586		$	(46	)	$	870,546	(9,172	)	$	(43,970	)	$	1,519,597



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Treasury Stock					Total Shareholders' Equity
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Shares		Amount			Total Shareholders' Equity
Balance at June 30, 2018	48,148	$	481	$	686,782	$	(46	)	$	701,449	(9,517	)	$	(48,377	)	$	1,340,289
Net income	—	—		—		—			38,924		—		—			38,924
Exercise of stock options and vesting of restricted stock units	—	—		21,645		—			—		326		4,574			26,219
Stock compensation	—	—		14,476		—			—		—		—			14,476
Issuance of shares pursuant to employee stock purchase plan	—	—		2,032		—			—		12		186			2,218
Treasury stock purchases	—	—		—		—			—		—		—			—
Balance at September 30, 2018	48,148	$	481	$	724,935	$	(46	)	$	740,373	(9,179	)	$	(43,617	)	$	1,422,126

See accompanying notes.

TYLER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)



	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock					Total Shareholders' Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Shares		Amount			Total Shareholders' Equity
Balance at December 31, 2018	48,148	$	481	$	731,435		$	(46	)	$	771,925		(9,872	)	$	(178,949	)	$	1,324,846
Retained earnings adjustment-adoption of Topic 842 Leases, net of taxes	—	—		—			—			(1,116		)	—		—			(1,116		)
Net income	—	—		—			—			99,737			—		—			99,737
Exercise of stock options and vesting of restricted stock units	—	—		(82,449		)	—			—			746		144,744			62,295
Employee taxes paid for withheld shares for taxes upon equity award	—	—		—			—			—			(17	)	(3,572		)	(3,572		)
Stock compensation	—	—		44,369			—			—			—		—			44,369
Issuance of shares pursuant to employee stock purchase plan	—	—		(769		)	—			—			43		8,096			7,327
Treasury stock purchases	—	—		—			—			—			(72	)	(14,289		)	(14,289		)
Balance at September 30, 2019	48,148	$	481	$	692,586		$	(46	)	$	870,546		(9,172	)	$	(43,970	)	$	1,519,597



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Treasury Stock					Total Shareholders' Equity
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Shares		Amount			Total Shareholders' Equity
Balance at December 31, 2017	48,148	$	481	$	626,867	$	(46	)	$	624,463	(10,262	)	$	(60,029	)	$	1,191,736
Net income	—	—		—		—			115,910		—		—			115,910
Exercise of stock options and vesting of restricted stock units	—	—		54,666		—			—		1,048		15,870			70,536
Stock compensation	—	—		37,966		—			—		—		—			37,966
Issuance of shares pursuant to employee stock purchase plan	—	—		5,436		—			—		35		542			5,978
Treasury stock purchases	—	—		—		—			—		—		—			—
Balance at September 30, 2018	48,148	$	481	$	724,935	$	(46	)	$	740,373	(9,179	)	$	(43,617	)	$	1,422,126

See accompanying notes.

Tyler Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Tables in thousands, except per share data)

(1) Basis of Presentation

We prepared the accompanying condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States, or GAAP, for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of September 30, ~~2018,~~2019, and December 31, ~~2017,~~2018, and operating result amounts are for the three and nine months ended September 30, ~~2018,~~2019, and ~~2017,~~2018, respectively, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, ~~2017.~~2018. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year.

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources and includes all components of net income (loss) and other comprehensive income (loss). We had no items of other comprehensive income (loss) for the three and nine months ended September 30, ~~2018~~2019, and ~~2017.~~

~~Effective January 1, 2018, we adopted the requirements of Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers,~~ utilizing the full retrospective approach as discussed in Note 2 - Accounting Standards and Significant Accounting Policies. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standard, as indicated by the "as adjusted" footnote.2018.

(2) Accounting Standards and Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the accounting policies for ~~revenue~~leases recognition ~~and deferred commissions~~ that were adjusted as a result of adopting ASU No. ~~2014-09,~~2016-02, Leases ("Topic 842"), there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on February ~~21, 2018,~~20, 2019, that have had a material impact on our condensed consolidated financial statements and related notes.

USE OF ESTIMATES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, ~~and~~ determining the standalone selling price ~~(“SSP”~~("SSP") of performance obligations, variable consideration, and other obligations such as returns and refunds; loss contingencies; the estimated useful life of deferred commissions; the carrying amount and estimated useful lives of intangible assets; the carrying amount of operating lease right-of-use assets and operating lease liabilities; determining share-based compensation expense; the valuation allowance for receivables; and determining the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from estimates.

REVENUE RECOGNITION

Nature of Products and ~~Services~~

We provide integrated software systems and related services for the public sector, with a focus on local governments. We develop and market a broad line of software solutions and services to address the information technology (“IT”) needs of cities, counties, schools and other local government entities. In addition, we provide professional IT services, including software and hardware installation, data conversion, training, and for certain customers, product modifications, along with continuing maintenance and support for customers using our systems. We also provide subscription-based services such as software as a service (“SaaS”) arrangements, which utilize the Tyler private cloud, and electronic document filing solutions (“e-filing”). In addition, we provide property appraisal outsourcing services for taxing jurisdictions.Services:

We earn revenue from software licenses, royalties, subscription-based services, software services, post-contract customer support (“PCS” or “maintenance”), hardware, and appraisal services. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps:

Identification of the contract, or contracts, with a customer

Identification of the performance obligations in the contract

Determination of the transaction price

Allocation of the transaction price to the performance obligations in the contract

Recognition of revenue when, or as, we satisfy a performance obligation

Most of our software arrangements with customers contain multiple performance obligations that range from software licenses, installation, training, and consulting to software modification and customization to meet specific customer needs (services), hosting, and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include software services, such as training or installation, are evaluated to determine whether ~~those~~the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are ~~essential to~~separately identifiable from other promises in the ~~product’s functionality.~~contract. The transaction price is allocated to the distinct performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. Revenue is recognized net of allowances for sales adjustments and any taxes collected from customers, which are subsequently remitted to governmental authorities.

~~Software Arrangements:~~

~~Software Licenses and Royalties~~

Many of our software arrangements involve “off-the-shelf” software. We recognize the revenue allocable to "off-the-shelf" software licenses and specified upgrades at a point in time when control of the software license transfers to the customer, unless the software is not considered distinct. We consider off-the-shelf software to be distinct when it can be added to an arrangement with minor changes in the underlying code, it can be used by the customer for the customer’s purpose upon installation and remaining services such as training are not considered essential to the product's functionality.

For arrangements that involve significant production, modification or customization of the software, or where software services are otherwise not considered distinct, we recognize revenue over time by measuring progress-to-completion. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent.

Software license fees are billed in accordance with the contract terms. Typically, a majority of the fee is due when access to the software license is made available to the customer and the remainder of the fee due over a passage of time stipulated by the contract. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met.

We recognize royalty revenue when the sale occurs under the terms of our third-party royalty arrangements. Currently, our third-party royalties are recognized on an estimated basis and are trued up when we receive notice of amounts we are entitled to receive. Typically, we receive notice of royalty revenues we are entitled to and billed on a quarterly basis in the quarter immediately following the royalty reporting period.

~~Software Services~~

As noted above, some of our software arrangements include services considered essential or require significant customization to meet the customer's desired functionality. For these software arrangements, both the software licenses and related software services revenue are not distinct and are recognized over time using the progress-to-completion method. We measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met. When software services are distinct, the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material basis.

~~Post-Contract Customer Support~~

Our customers generally enter into PCS agreements when they purchase our software licenses. PCS includes telephone support, bug fixes, and rights to upgrades on a when-and-if available basis. PCS is considered distinct when purchased with our software licenses. Our PCS agreements are typically renewable annually. PCS is recognized over time on a straight-line basis over the period the PCS is provided. All significant costs and expenses associated with PCS are expensed as incurred.

~~Computer Hardware Equipment~~

~~Revenue allocable to computer hardware equipment is recognized at a point in time when control of the equipment is transferred to the customer.~~

~~Subscription-Based Services:~~

Subscription-based services consist of revenues derived from SaaS arrangements, which utilize the Tyler private cloud, and electronic filing transactions. Revenue from subscription-based services is generally recognized over time on a ratable basis over the contract term, beginning on the date that our service is made available to the customer. Our subscription contracts are generally three to five years or longer in length, billed annually in advance, and non-cancelable.

For SaaS arrangements, we evaluate whether the customer has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the customer can feasibly maintain the software on the customer’s hardware or enter into another arrangement with a third-party to host the software. We allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated SSP. When it is determined that software is distinct and the customer has the ability to take control of the software, we recognize revenue allocable to the software license fee when access to the software license is made available to the customer. We recognize hosting services ratably over the term of the arrangement, which range from one to ten years but are typically for a period of three to five years. For software services associated with certain SaaS arrangements, we have concluded that the services are not distinct, and we recognize the revenue ratably over the remaining contractual period once we have provided the customer access to the software. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met.

Electronic filing transaction fees primarily pertain to documents filed with the courts by attorneys and other third-parties via our e-filing services and retrieval of filed documents via our access services. For each document filed with a court, the filer generally pays a transaction fee and a court filing fee to us and we remit a portion of the transaction fee and the filing fee to the court. We record as revenue the transaction fee, while the portion of the transaction fee remitted to the courts is recorded as cost of sales as we are acting as a principal in the arrangement. Court filing fees collected on behalf of the courts and remitted to the courts are recorded on a net basis and thus do not affect the statement of comprehensive income. For e-filing transaction fees, we have the right to charge the customer an amount that directly corresponds with the value to the customer of our performance to date. Therefore, we recognize revenue for these services over time based on the amount billable to the customer in accordance with the 'as invoiced' practical expedient in ASC 606-10-55-18. In some cases, we are paid on a fixed fee basis and recognize the revenue ratably over the contractual period.

Costs of performing services under subscription-based arrangements are expensed as incurred, except for certain direct and incremental contract origination and set-up costs associated with SaaS arrangements. Such direct and incremental costs are capitalized and amortized ratably over the useful life.

~~Appraisal Services:~~

For our property appraisal projects, we recognize revenue using the progress-to-completion method since many of these projects are implemented over one to three-year periods and consist of various unique activities. Appraisal services require a significant level of integration and interdependency with various individual service components; therefore, the service components are not considered distinct. Appraisal services are recognized over time by measuring progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. These arrangements are often implemented over an extended period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent. Contract fees are typically billed on a milestone basis as defined within contract terms. We record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues, depending on whether the revenue recognition criteria have been met.

Significant Judgments:

Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement ~~(traditional~~(license or subscription) includes both software licenses and software services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the software services and recognized over time.

The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts.We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine SSP using the expected cost-plus margin approach.

For arrangements that involve significant production, modification or customization of the software, or where software services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the customer over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred, or value added. The progress-to-completion method generally results in the recognition of reasonably consistent profit margins over the life of a contract because we can provide reasonably dependable estimates of contract billings and contract costs. We use the level of profit margin that is most likely to occur on a contract. If the most likely profit margin cannot be precisely determined, the lowest probable level of profit margin in the range of estimates is used until the results can be estimated more precisely. These arrangements are often implemented over an extended time period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent.

Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances whereby variable consideration exists, we include in our estimates additional revenue for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably and its realization is probable.

Refer to Note 1213 - Disaggregation of Revenue for further information, including the economic factors that affect the nature, amount, timing, and uncertainty of revenue and cash flows of our various revenue categories.

Contract Balances:

Accounts receivable and allowance for doubtful accounts

Timing of revenue recognition may differ from the timing of invoicing to customers. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We record an unbilled receivable related to revenue recognized for on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses.

At September 30, 2019, and December 31, 2018, total current and long-term accounts receivable, net of allowance for doubtful accounts, was $368.4 million and $314.9 million, respectively. We have recorded unbilled receivables of $126.5 million and $104.2 million at September 30, 2019, and December 31, 2018, respectively. Included in unbilled receivables are retention receivables of $12.9 million and $12.2 million at September 30, 2019, and December 31, 2018, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings. Unbilled receivables expected to be collected within one year have been included with accounts receivable, current portion in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with accounts receivable, long-term portion in the accompanying condensed consolidated balance sheets.

We maintain allowances for doubtful accounts, which are provided at the time the revenue is recognized. Since most of our customers are domestic governmental entities, we rarely incur a loss resulting from the inability of a customer to make required payments. Events or changes in circumstances that indicate the carrying amount for the allowances for doubtful accounts may require revision, include, but are not limited to, deterioration of a customer’s financial condition, failure to manage our customer’s expectations regarding the scope of the services to be delivered, and defects or errors in new versions or enhancements of our software products.

The following table summarizes the changes in the allowance for doubtful ~~accounts:~~accounts (in thousands):



	Nine months ended September 30, 2019
Balance, beginning of period December 31, 2018	$	4,647
Provisions for losses - accounts receivable	2,908
Collection of accounts previously written off	—
Deductions for accounts charged off or credits issued	(3,253		)
Balance, end of period	$	4,302

September 30, 2018
Balance, beginning of period December 31, 2017 $ 5,427
Provisions for losses - accounts receivable 1,714
Collection of accounts previously written off (212 )
Deductions for accounts charged off or credits issued (1,819 )
Balance, end of period $ 5,110
LEASES

~~The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance.~~ We determine ~~the allowance~~if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. We currently do not have any finance lease arrangements.

Operating lease ROU assets and operating lease liabilities are recognized based on ~~known troubled accounts, historical experience, and other currently available evidence.~~

~~In connection with our appraisal services contracts and certain software services contracts, we may perform work prior to when~~ the ~~software and services are billable and/or payable pursuant to~~present value of the ~~contract. Unbilled revenue is not billable at the balance sheet date but is recoverable~~future minimum lease payments over the ~~remaining life of the contract through billings made in accordance with contractual agreements. The termination clauses in~~lease term at commencement date. As most of our ~~contracts~~leases do not provide ~~for~~an implicit rate, we use our incremental borrowing rate based on the ~~payment for~~information available at commencement date of the lease in determining the present value of ~~products delivered~~future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or ~~services performed in~~terminate the event of early termination. We have historically recorded such unbilled receivables (costs and estimated profit in excess of billings) in connection with (1) property appraisal services contracts accountedlease when it is reasonably certain that we will exercise that option. Lease expense for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing normally occurs subsequently and may span another accounting period; (2) software services contracts accounted for using progress-to-completion method of revenue recognition using labor hours as a measure of progress towards completion in which the services are performed in one accounting period but the billing for the software element of the arrangement may be based upon the specific phase of the implementation; (3) software revenue for which we haveminimum lease payments is recognized revenue at the point in time when the software is made available to the customer but the billing has not yet been submitted to the customer; (4) some of our contracts which provide for an amount to be withheld from a progress billing (generally between 5% and 20% retention) until final and satisfactory project completion is achieved; and (5) in a limited number of cases, extended payment terms, which may be granted to customers with whom we generally have a long-term relationship and favorable collection history.

~~The opening balance of current and long-term accounts receivable, net of allowance for doubtful accounts, was $226.8 million (as adjusted) as of January 1, 2017.~~

As of September 30, 2018, and December 31, 2017, total current and long-term accounts receivable, net of allowance for doubtful accounts, was $294.5 million and $258.3 million (as adjusted), respectively. We have recorded unbilled receivables of $86.9 million and $64.6 million (as adjusted) at September 30, 2018, and December 31, 2017, respectively. Included in unbilled receivables are retention receivables of $8.3 million and $7.2 million at September 30, 2018, and December 31, 2017, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings. Unbilled receivables expected to be collected within one year have been included with accounts receivable, current portion in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with accounts receivable, long-term portion in the accompanying condensed consolidated balance sheets.

Payment terms and conditions vary by contract type, although, terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises term licenses that are invoiced annually with revenue recognized upfront.

~~Deferred Revenue~~

The majority of deferred revenue consists of deferred maintenance revenue that has been billed based on contractual terms in the underlying arrangement, with the remaining balance consisting of payments received in advance of revenue being earned under software licensing, subscription-based services, software and appraisal services and hardware installation. Refer to Note 13 - Deferred Revenue and Performance Obligations for further information, including deferred revenue by segment and changes in deferred revenue during the period.

~~Deferred Commissions~~

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over ~~a period~~the lease term. Leases with an initial term of benefit that we have determined to be three to seven years. We utilized the 'portfolio approach' practical expedient in ASC 606-10-10-4, which allows entities to apply the guidance to a portfolio of contracts with similar characteristics because the effects12 months or less are not recorded on the ~~financial statements of this approach would not differ materially from applying~~balance sheet; we recognize lease expense for these leases on a straight-line basis over the ~~guidance to individual contracts. Using the 'portfolio approach', we determined the period of benefit by taking into consideration our customer contracts, our technology life-cycle~~lease term. We have lease agreements with lease and ~~other factors. Sales commissions for renewal contracts~~non-lease components, which are generally ~~not paid in connection with the renewal of~~accounted as a contract. In the small number of instances where a commission is paid on a renewal, it is not commensurate with the commission paid on the initial sale and is recognized over the term of renewal, which is generally one year. Amortization expense related to deferred commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. Refer to Note 5 - Deferred Commissions for further information.single lease component.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

~~Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers. ASU No. 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605,~~ ~~Revenue Recognition ("Topic 605")~~, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. Topic 606 also includes Subtopic 340-40 ~~Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, we refer to ASU No. 2014-09 and Subtopic 340-40 as the "new standard."~~

Leases.We adopted Topic 842 using the ~~requirements of~~transition method that allows us to initially apply the ~~new standard as~~guidance at the adoption date of January 1, ~~2018, utilizing~~2019, and recognized a cumulative-effect adjustment to the ~~full retrospective method~~opening balance of ~~transition. Adoption~~retained earnings in the period of adoption. We used the package of practical expedients that allows us to not reassess: (1) lease classification for any expired or existing leases and (2) initial direct costs for any expired or existing leases. We did not elect to use the hindsight application for evaluating the life of the ~~new standard resulted~~lease arrangement. The impact of adoption is reflected in ~~changes~~the financial information herein. For additional details, see Note 10 to our accounting policies for revenue recognition, trade and other receivables, and deferred commissions as detailed below. We applied the new standard using a practical expedient where the consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed.

condensed consolidated financial statements.

The impact of ~~adopting ASU No. 2014-09~~Topic 842 on our ~~total revenues~~consolidated balance sheet beginning January 1, 2019, included the recognition of ROU assets and lease liabilities for ~~2017 and 2016 was not material. The impact of adopting the new standard on our retained earnings and deferred commissions is material. The most significant impact of the new standard relates to~~operating leases, while our accounting for software license revenue. Specifically, under the new standard, software license fees under perpetual agreements are no longer subject to 100% discount allocations from other performance obligations in the contract. Discounts in arrangements are allocated across all performance obligations increasing license revenues and decreasing revenues allocated to other performance obligations. In addition, in most cases, net license fees (total license fees less any allocated discounts) are recognized at the point in time when control of the software license transfers to the customer versus our legacy policy of recognizing revenue upon delivery and only to the extent billable per the contractual terms. Under the new standard, time-based license fees are no longer recognized over the contractual period of the license and are instead recognized at the point in time when the control of the software license transfers to the customer. Revenues related to our PCS renewals, SaaS offerings and appraisal services remainfinance leases remained substantially unchanged. Due to the complexity of certain contracts, the actual revenue recognition treatment required under the new standard is dependent on contract-specific terms and may vary in some instances from recognition at the time of billing.

Adoption of the new standard requires that incremental costs directly related to obtaining a contract (typically sales commissions) must be recognized as an asset and expensed on a systematic basis that is consistent with the transfer to the customer of the goods and services to which the asset relates, unless that life is less than one year. Prior to adoption of the new standard, we deferred sales commissions and recognized expense over the relevant initial contractual term, which was generally one to two years. Under the new standard, we amortize these costs over a period of benefit that we have determined to be three to seven years.

We ~~adjusted our condensed consolidated financial statements from amounts previously reported due~~had no finance leases prior to the adoption of Topic 842 and currently do not have any.

Amounts recognized at January 1, 2019, for operating leases were as follow (in thousands):




Operating lease right-of-use assets	$	15,633
Operating lease liabilities	(4,344		)
Operating lease liabilities, long-term	(12,405		)
Retained earnings	$	(1,116	)

No impact was recorded to the ~~new standard. Select unaudited condensed consolidated~~ statement of income ~~line items, which reflect~~for the adoption of ~~the new standard, are as follows (in thousands, except per share data):~~

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Statement of Income:

Software licenses and royalties $ 19,842
$ 2,920
$ 22,762
$ 55,172
$ 8,654
$ 63,826
Subscriptions 44,840
(488 ) 44,352
125,889
(1,158 ) 124,731
Software services 47,479
(1,434 ) 46,045
139,869
(5,468 ) 134,401
Maintenance 92,285
(438 ) 91,847
268,556
(1,591 ) 266,965
Appraisal services 6,290
—
6,290
19,268
—
19,268
Hardware and other 3,410
—
3,410
14,057
(50 ) 14,007
Total revenues 214,146
560
214,706
622,811
387
623,198
Selling, general and administrative expenses 44,656
(143 ) 44,513
131,249
(956 ) 130,293
Amortization of customer and trade name intangibles 3,492
(132 ) 3,360
10,413
(397 ) 10,016
Operating income 43,447
835
44,282
116,671
1,740
118,411
Income tax provision 5,259
262
5,521
14,308
512
14,820
Net income $ 38,263
$ 573
$ 38,836
$ 102,147
$ 1,228
$ 103,375

Earnings per common share:
Basic $ 1.02
$ 1.04
$ 2.74
$ 2.78
Diluted $ 0.97
$ 0.99
$ 2.60
$ 2.63

~~Select condensed consolidated balance sheet line items, which reflect the adoption of the new standard, are as follows (in thousands):~~

December 31, 2017
As Reported Adjustments As Adjusted
Balance Sheet:

Accounts receivable $ 227,127
$ 19,061
$ 246,188
Prepaid expenses 27,252
4,954
32,206
Accounts receivable, long-term 7,536
4,571
12,107
Other intangibles, net 236,444
(6,827 ) 229,617
Total assets 1,589,592
21,759
1,611,351
Deferred revenue 309,461
(10,848 ) 298,613
Deferred income taxes 38,914
7,965
46,879
Retained earnings 599,821
24,642
624,463
Total liabilities and shareholders' equity $ 1,589,592
$ 21,759
$ 1,611,351

~~Our adoption of ASU No. 2014-09 had no impact on our net cash provided by or used in operating, investing or financing activities for any of the periods reported.~~

~~Recent tax legislation~~. On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was enacted into law. The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions for businesses and individuals. For businesses, the Tax Act reduces the U.S. corporate federal income tax rate from a maximum of 35% to a flat 21% rate and transitions from a worldwide tax system to a territorial tax system. The Tax Act also adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and a tax on global intangible low-taxed income (GILTI). The most significant impact of the Tax Act to us is the reduction in the U.S. federal corporate income tax rate. Refer to Note 8 - Income Tax Provision for further information.Topic 842.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

~~Leases.~~ ~~On February 25,~~In June 2016, the FASB issued ~~its new lease accounting guidance in~~ ASU ~~No. 2016-02,~~ ~~Leases ("Topic 842"~~2016-13, Financial Instruments - Credit Losses, (“ASU 2016-13”). ~~Under~~ASU 2016-13 changes the ~~new guidance, lessees will be required to recognize the following~~impairment model for ~~all leases (except for short-term leases) at the commencement date:~~

~~A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis;~~most financial assets and

~~A right-of-use asset, which is an asset that represents the lessee’s right~~ certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use ~~or control the use of,~~ a ~~specified asset for the lease term.~~

Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presentednew forward-looking expected loss model that will result in the ~~financial statements. The modified retrospective approach would not require any transition accounting~~earlier recognition of allowance for ~~leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.~~

~~Topic 842~~losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for a fiscal year beginning after December 15, 2018, including interim periods ~~therein. Early application~~within that fiscal year. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is permitted for all business entities upon issuance. We are assessing the financial impact of adopting the new standard; however, we are currently unable to provide a reasonable estimate regarding the financial impact.adopted. We will adopt the new standard in ~~fiscal year 2019.~~ the first quarter of 2020 and are currently assessing its potential impact on our consolidated financial statements and results of operations.

(3) Acquisitions

On August 31, 2018, we acquired all of the assets of CaseloadPRO, L.P. ("CaseloadPRO"), a company that provides a fully featured probation case management system. The purchase price was $9.2 million, of which $9.1 million was paid in cash and approximately $150,000 was accrued as of September 30, 2018. The impact of this acquisition on our operating results is not material.

On April 30, 2018, we acquired all of the equity interests of Sage Data Security, LLC ("Sage"), a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle, including program development, education and training, technical testing, advisory services, and digital forensics. The total purchase price was $11.6 million paid in cash. The impact of this acquisition on our operating results is not material.

~~On April 30, 2018,~~February 28, 2019, we acquired all of the capital stock of ~~Socrata,~~MP Holdings Parent, Inc. dba MicroPact ("~~Socrata"~~MicroPact"), a ~~company that provides open data and data-as-a-service~~leading provider of commercial off-the-shelf (COTS) solutions, including ~~cloud-based data integration, visualization, analysis,~~entellitrak®, a low-code application development platform for case management and ~~reporting solutions for state and local government agencies.~~business process management used extensively in the public sector. The total purchase price, net of cash acquired of ~~$1.7~~$2.0 million, was ~~$147.6~~approximately $203.7 million consisting of $198.2 million paid in ~~cash.~~

cash, accrued contingent consideration of $6.6 million contingent upon the achievement of certain financial performance objectives, and $1.0 million accrued for certain holdbacks, subject to certain post-closing adjustments.

We have performed a preliminary valuation analysis of the fair market value of ~~Socrata’s~~MicroPact’s assets and liabilities. The following table summarizes the preliminary allocation of the ~~preliminary~~ purchase price as of the acquisition ~~date.~~

date:



(In thousands)
Cash	$	1,983
Accounts receivable	12,247
Other current assets	8,979
Other noncurrent assets	10,417
Identifiable intangible assets	131,443
Goodwill	73,193
Accounts payable	(602		)
Accrued expenses	(2,542		)
Other noncurrent liabilities	(8,879		)
Deferred revenue	(11,312		)
Deferred tax liabilities, net	(9,209		)
Total consideration	$	205,718

Cash $ 1,724
Accounts receivable 3,616
Other current assets 2,057
Other noncurrent assets 68
Identifiable intangible assets 75,000
Goodwill 78,909
Accounts payable (1,254 )
Accrued expenses (1,717 )
Deferred revenue (5,915 )
Deferred tax liabilities, net (3,120 )
Total consideration $ 149,368

In connection with this transaction, we acquired total tangible assets of ~~$7.5~~$33.6 million and assumed liabilities of approximately ~~$8.9~~$23.3 million. We recorded goodwill of ~~$78.9~~$73.2 million, none of which is expected to be deductible for tax purposes, and other identifiable intangible assets of approximately ~~$75.0~~$131.4 million. The ~~$75.0~~$131.4 million of intangible assets are attributable to customer relationships, acquired software, ~~and~~ trade name and favorable fair value of an operating lease and will be amortized over a weighted average period of approximately 1411 years. We recorded deferred tax liabilities of ~~$3.1~~$9.2 million related to estimated fair value allocations. ~~Socrata’s~~

The acquisition of MicroPact augments our product solutions, ~~are a direct complement~~positions us in new practice areas such as health and human services, and presents opportunities to expand our ~~current offerings and will provide a~~business across new and ~~important additional revenue stream.By offering Socrata within virtually every Tyler product suite,~~complementary markets. We intend to expand our ~~clients will have~~total addressable market through MicroPact's strong presence in the opportunity to make their existing data discoverable, usable and actionable, but more importantly, potentially include data from other agencies and jurisdictions to make analysis even more powerful and meaningful.federal market. Therefore, the goodwill of ~~$78.9~~$73.2 million arising from this acquisition is primarily attributed to our ability to ~~integrate Socrata's solutions with our existing portfolio and to~~ generate increased revenues, earnings and cash flow by ~~leveraging~~expanding our ~~sales resources~~addressable market and client base. ~~We also incurred fees~~In the nine months ended September 30, 2019, we recorded adjustments to the preliminary opening balance sheet attributed to changes in accounts receivable, deferred revenue, customer relationships, contingent consideration and related deferred taxes resulting in a net decrease to goodwill of approximately $578,000 for financial advisory, legal, accounting, due diligence, valuation and other various services necessary to complete the acquisition. These fees were expensed in 2018 and are included in selling, general and administrative expenses.

$8.8 million.

The following unaudited pro forma consolidated operating results information ~~of the consolidated results of operations have~~has been prepared as if the ~~Socrata~~MicroPact acquisition had occurred at January 1, ~~2017,~~2018, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs and tax effects.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Revenues	$	275,400	$	257,236	$	809,389	$	750,240
Net income	40,390		40,907		99,449		115,181
Basic earnings per share	1.04		1.06		2.58		2.99
Diluted earnings per share	$	1.00	$	1.01	$	2.49	$	2.85

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017

Revenues $ 236,067
$ 220,825
$ 701,742
$ 642,034
Net income 38,924
34,119
107,763
89,599
Basic earnings per share 1.00
0.91
2.80
2.41
Diluted earnings per share $ 0.96
$ 0.87
$ 2.67
$ 2.28

~~Pro~~The pro forma information above does not include acquisitions that are not considered material to our results of operations. The pro forma information does not purport to represent what our results of operations actually would have been had such transaction ~~or event~~ occurred on the date specified or to project our results of operations for any future period.

On February 1, 2019, we acquired all the assets of Civic, LLC ("MyCivic"), a company that provides software solutions to connect communities. The total purchase price was $3.7 million in cash.

As of September 30, ~~2018,~~2019, the purchase price allocations for ~~Socrata, Sage~~MicroPact and ~~CaseloadPRO~~MyCivic are not yet complete. The preliminary estimates of fair value assumed at the acquisition date for intangible assets, ~~receivables and~~ deferred revenue, accrued contingent consideration, accrued holdbacks and related deferred taxes are subject to change as valuations are finalized. The operating results of ~~Socrata, Sage~~MicroPact and ~~CaseloadPRO~~MyCivic are included ~~with~~in the operating results of the Enterprise Software segment since their ~~date~~respective dates of acquisition. Revenues from ~~Socrata~~MicroPact included in Tyler's results of operations were approximately ~~$5.4~~$16.4 million and ~~$8.4~~$36.4 million ~~and the net losses were $3.9 million and $7.9 million~~ for ~~both~~ the three and nine months ended September 30, ~~2018,~~2019, respectively, and net loss was $2.0 million and $5.6 million for the three and nine months ended September 30, 2019, respectively. Revenues and operating results from ~~Sage and CaseloadPRO~~MyCivic included in ~~2018~~2019 results were not significant. During the nine months ended September 30, 2019, we incurred fees of approximately $0.9 million for financial advisory, legal, accounting, due diligence, valuation and other various services necessary to complete these acquisitions. These fees were expensed in 2019 and are included in Selling, general and administrative expenses on the condensed consolidated statement of income.

Our balance sheet as of September 30, ~~2018,~~2019, reflects the allocation of the purchase price to the assets acquired based on their fair value at the date of each acquisition. The fair value of the assets and liabilities acquired are based on valuations using Level III, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

(4) Shareholders’ Equity

The following table details activity in our common ~~stock:~~stock (in thousands):



	Three Months Ended September 30,							Nine Months Ended September 30,
	2019				2018			2019					2018
	Shares	Amount			Shares	Amount		Shares		Amount			Shares	Amount
Purchases of treasury shares	—	$	—		—	$	—	(72	)	$	(14,289	)	—	$	—
Stock option exercises	395	40,163			326	26,219		691		62,295			1,048	70,536
Employee stock plan purchases	15	2,718			12	2,218		43		7,327			35	5,978
Restricted stock units vested, net of withheld shares upon award settlement	1	$	(191	)	—	$	—	38		$	(3,572	)	—	$	—

Nine Months Ended September 30,
2018 2017
Shares Amount Shares Amount
Purchases of treasury shares —
$ —
(42 ) $ (6,171 )
Stock option exercises 1,048
70,536
787
33,568
Employee stock plan purchases 35
$ 5,978
40
$ 5,342

As of September 30, ~~2018,~~2019, we had authorization from our board of directors to repurchase up to ~~2.0~~2.6 million additional shares of ~~Tyler~~our common stock.

(5) Deferred Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be three to seven years. Deferred commissions were ~~$21.4~~$27.4 million and ~~$19.3~~$21.9 million ~~(as adjusted)~~ as of September 30, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively. Amortization expense was $4.4 million and $12.3 million for the three and nine months ended September 30, 2019, respectively, and $3.8 million and $10.9 million for the three and nine months ended September 30, 2018, ~~respectively, and $2.6 million and $7.9 million for the three and nine months ended September 30, 2017 (as adjusted),~~ respectively. There were no0 indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in ~~selling,~~Selling, general and administrative expenses in the accompanying condensed consolidated statements of income.

(6) Other Assets

~~Cash and cash equivalents consist of cash on deposit with several domestic banks and money market funds.~~

As of September 30, ~~2018,~~2019, we have ~~$95.8~~$68.2 million in investment grade corporate and municipal bonds with maturity dates ranging through 2022. We intend to hold these bonds to maturity and have classified them as such. We believe cost approximates fair value because of the relatively short duration of these investments. The fair values of these securities are considered Level II as they are based on inputs from quoted prices in markets that are not active or other observable market data. These investments are included in short-term investments and non-current investments and other assets.

We have a $15.0 million investment in convertible preferred stock representing a 20% interest in Record Holdings Pty Limited, a privately held Australian company specializing in digitizing the spoken word in court and legal proceedings. The investment in convertible preferred stock is accounted under the cost method because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values. Our investment is carried at cost less any impairment write-downs. Annually, our cost method investments are assessed for impairment. We do not reassess the fair value of cost method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments. This investment is included in non-current investments and other assets.

(7) Revolving Line of Credit

On ~~November 16, 2015,~~September 30, 2019, we entered into a ~~$300~~$400 million credit agreement with various lender parties and Wells Fargo Bank, National Association, as Administrative Agent (the “Credit ~~Facility”~~Agreement”). The Credit ~~Facility~~Agreement provides for a revolving credit line up to ~~$300~~$400 million, including a ~~$10~~$25 million sublimit for letters of credit. The Credit ~~Facility~~Agreement matures on September 30, 2024. The new Credit Agreement replaces Tyler’s existing $300 million secured credit facility, which was scheduled to mature in November ~~16,~~ 2020. Borrowings under the Credit ~~Facility~~Agreement may be used for general corporate purposes, including working capital requirements, acquisitions and share repurchases.

Borrowings under the Credit ~~Facility~~Agreement bear interest at a rate of either (1) Wells Fargo Bank’s prime rate (subject to certain higher rate determinations) plus a margin of ~~0.25%~~0.125% to ~~1.00%~~0.75% or (2) the ~~30, 60, 90~~one-, two-, three-, or ~~180 day~~six-month LIBOR rate plus a margin of ~~1.25%~~1.125% to ~~2.00%~~1.75%. As of September 30, ~~2018,~~2019, the interest rates were 5.25% under the Wells Fargo Bank's prime rate and ~~3.49%~~approximately 3.14% under athe 30-day LIBOR ~~contract.~~option. The Credit ~~Facility is secured by substantially all of our assets. The Credit Facility~~Agreement requires us to maintain certain financial ratios and other financial conditions and prohibits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens. As of September 30, ~~2018,~~2019, we were in compliance with those covenants.

As of September 30, ~~2018,~~2019, we had no0 outstanding ~~borrowings. Available borrowing capacity~~borrowings under the Credit ~~Facility~~Agreement, and available borrowing capacity was ~~$300~~$400.0 million.

(8) Income Tax Provision

We had an effective income tax rate of 0.4% and 11.0% for the three and nine months ended September 30, 2019, respectively, compared to negative 0.8% and negative 0.1% for the three and nine months ended September 30, 2018, ~~respectively, compared to 12.4% and 12.5% (as adjusted)~~respectively. The change in the effective tax rate for the three and nine months ended September 30, ~~2017, respectively.~~ 2019, as compared to the same period in 2018, was principally driven by the fluctuations of the excess tax benefits related to stock incentive awards.

The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 21% ~~in 2018 and 35% in 2017 principally~~ due to excess tax benefits related to stock ~~option exercises.~~incentive awards, state income taxes, non-deductible business expenses, and the tax benefit of research tax credits. The excess tax ~~benefit~~benefits related to stock ~~option exercises~~incentive awards realized ~~was~~were $11.6 million and $18.6 million for the three and nine months ended September 30, 2019, respectively, compared to $9.3 million and $30.0 million for the three and nine months ended September 30, 2018, ~~respectively, compared to $9.0 million~~respectively. Excluding the excess tax benefits, the effective rate was 28.9% and ~~$27.6 million~~27.6% for the three and nine months ended September 30, ~~2017, respectively. Excluding the excess tax benefits, the effective rate was~~2019, compared to 23.3% and 25.8% for the three and nine months ended September 30, 2018, ~~respectively, compared to 32.8% and 35.9% (as adjusted) for the three and nine months ended September 30, 2017,~~ respectively. Other differences from the federal statutory income tax rate include state income taxes, non-deductible business expenses, the tax benefit of research tax credits, provisional amounts associated with the Tax Act recorded in 2018, and in 2017, the tax benefit of the domestic production activities deduction.

The decrease in effective tax rate for the three and nine months ended September 30, 2018, as compared to the same periods in 2017 was due primarily to the reduction of the U.S. corporate tax rate from 35% to 21% as a result of the Tax Act, the increase in excess tax benefit related to stock option exercises and the research tax credit benefit, offset by the elimination of the domestic production activities deduction and the increased limitations on the deduction for executive compensation. In the fourth quarter of 2017, we recorded a $26.0 million (as adjusted under Topic 606) tax benefit due to the remeasurement of deferred tax assets and liabilities at a lower tax rate. As of September 30, 2018, we increased the provisional amounts for the income tax effects of the Tax Act recorded in 2017 to $27.7 million to reflect actual amounts reported in income tax returns filings. We will continue to analyze the estimates and further guidance on the application of the law, and additional revisions may occur throughout the allowable measurement period which will not exceed one year from the enactment of the Tax Act. Overall, the changes due to the Tax Act will favorably affect income tax expense and future U.S. earnings.

We made tax payments of ~~$6.8~~$18.1 million and ~~$29.0~~$6.8 million in the nine months ended September 30, ~~2018,~~2019, and ~~2017,~~2018, respectively.

(9) Earnings Per Share

The following table details the reconciliation of basic earnings per share to diluted earnings per ~~share:~~share (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Numerator for basic and diluted earnings per share:
Net income	$	40,390	$	38,924	$	99,737	$	115,910
Denominator:
Weighted-average basic common shares outstanding	38,765		38,761		38,614		38,533
Assumed conversion of dilutive securities:
Stock awards	1,515		1,767		1,401		1,812
Denominator for diluted earnings per share - Adjusted weighted-average shares	40,280		40,528		40,015		40,345
Earnings per common share:
Basic	$	1.04	$	1.00	$	2.58	$	3.01
Diluted	$	1.00	$	0.96	$	2.49	$	2.87

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
As Adjusted As Adjusted
Numerator for basic and diluted earnings per share:
Net income $ 38,924
$ 38,836
$ 115,910
$ 103,375
Denominator:

Weighted-average basic common shares outstanding 38,761
37,391
38,533
37,238
Assumed conversion of dilutive securities:

Stock options 1,767
1,951
1,812
2,028
Denominator for diluted earnings per share
- Adjusted weighted-average shares
40,528
39,342
40,345
39,266
Earnings per common share:

Basic $ 1.00
$ 1.04
$ 3.01
$ 2.78
Diluted $ 0.96
$ 0.99
$ 2.87
$ 2.63

For the three and nine months ended September 30, 2019 and September 30, 2018, stock ~~options~~awards representing the right to purchase common stock of approximately 443,000 and 815,000 shares and 350,000 and 734,000 shares, respectively, were not included in the computation of diluted earnings per share because their inclusion would have had an ~~anti-dilutive~~antidilutive effect. ~~For~~

(10) Leases

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements and they expire from one year to eight years. Some of these leases include options to extend for up to 10 years. We had no finance leases and no related party lease agreements as of September 30, 2019. Operating lease costs were approximately $2.6 million and $7.3 million for the three and nine months ended September 30, ~~2017, stock options representing~~2019, respectively, and $1.7 million and $5.0 million for the three and nine months ended September 30, 2018, respectively.

The components of operating lease expense were as follows (in thousands):



Lease Costs	Financial Statement Classification	Three Months Ended September 30,		Nine Months Ended September 30,
		2019		2019
Operating lease cost	Selling, general and administrative expenses	$	1,692	$	4,726
Short-term lease cost	Selling, general and administrative expenses	545		1,707
Variable lease cost	Selling, general and administrative expenses	370		901
Net lease cost		$	2,607	$	7,334

As of September 30, 2019, ROU lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheet as follows (in thousands):



	September 30, 2019
Assets:
Operating lease right-of-use assets	$	20,172
Liabilities:
Operating leases, short-term	6,413
Operating leases, long-term	18,134
Total lease liabilities	$	24,547

Supplemental information related to leases was as follows:



Other Information	Nine Months Ended September 30,
	2019
Cash Flows (in thousands):
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	5,141

Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	3,350

Lease Term and Discount Rate:
Weighted average remaining lease term (years)	4
Weighted average discount rate	4.00		%

As of September 30, 2019, maturities of lease liabilities were as follows (in thousands):



Year ending December 31,	Amount
2019 (Remaining 2019)	$	2,124
2020	7,499
2021	6,063
2022	3,821
2023	2,856
Thereafter	4,528
Total lease payments	26,891
Less: Interest	(2,344		)
Present value of operating lease liabilities	$	24,547

As of December 31, 2018, the future minimum lease commitments related to lease agreements under Topic 840, the predecessor of Topic 842, were as follows (in thousands):



Year ending December 31,	Amount
2019	$	5,994
2020	5,146
2021	3,976
2022	1,925
2023	1,164
Thereafter	2,132
Total	$	20,337

We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2019 and 2025, some of which have options to extend the lease for up to five years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase ~~common stock of approximately 1,499,000~~the leased asset.

Rental income for the three and ~~1,303,000 shares were not~~nine months ended September 30, 2019, totaled $261,000 and $815,000, respectively, and for the three and nine months ended September 30, 2018 totaled $276,000 and $898,000, respectively. Rental income is included in Hardware and other revenue on the ~~computation~~condensed consolidated statements of ~~diluted earnings per share because their inclusion would have~~income. Future minimum operating rental income based on contractual agreements is as follows (in thousands):



Year ending December 31,	Amount

2019 (Remaining 2019)	$	331
2020	1,341
2021	1,372
2022	1,402
2023	1,432
Thereafter	2,395
Total	$	8,273

As of September 30, 2019, we had ~~an anti-dilutive effect.~~ no additional significant operating or finance leases that had not yet commenced.

~~(10)~~

(11) Share-Based Compensation

The following table summarizes share-based compensation expense related to share-based awards recorded in the condensed consolidated statements of income, pursuant to ASC 718, Stock ~~Compensation:~~Compensation (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of software services, maintenance and subscriptions	$	3,612	$	3,909	$	11,166	$	9,640
Selling, general and administrative expenses	11,275		10,567		33,203		28,326
Total share-based compensation expense	$	14,887	$	14,476	$	44,369	$	37,966

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Cost of software services, maintenance and subscriptions $ 3,909
$ 2,524
$ 9,640
$ 6,874
Selling, general and administrative expenses 10,567
7,267
28,326
20,494
Total share-based compensation expense $ 14,476
$ 9,791
$ 37,966
$ 27,368

~~(11)~~(12) Segment and Related Information

We provide integrated information management solutions and services for the public sector, with a focus on local governments.

We provide our software systems and services and appraisal services through ~~five~~5 business units, which focus on the following products:

financial management, education and planning, regulatory and maintenance software solutions;

financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions;

courts and justice and public safety software solutions;

data and insights solutions; and

appraisal and tax software solutions and property appraisal services.

In accordance with ASC 280-10, Segment Reporting, the financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions unit; courts and justice and public safety software solutions unit; and the data and insights solutions unit meet the criteria for aggregation and are presented in ~~one~~1 reportable segment, the Enterprise Software (“ES”) segment. The ES segment provides ~~municipal and county governments and schools~~public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such asas: financial management and education, courts and justice, ~~processes;~~ public ~~safety;~~safety, planning, regulatory and ~~maintenance;~~maintenance, land and vital records management and data ~~analytics.~~and insights. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.

We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income for our business units as income before non-cash amortization of intangible assets associated with their acquisitions, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Segment operating income for corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Corporate segment operating income also includes revenues and expenses related to a company-wide user conference.



For the three months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	23,449	$	1,930	$	—		$	25,379
Subscriptions	72,398		2,874		—			75,272
Software services	46,296		8,701		—			54,997
Maintenance	103,438		6,395		—			109,833
Appraisal services	—		6,008		—			6,008
Hardware and other	3,925		—		(14		)	3,911
Intercompany	4,029		—		(4,029		)	—
Total revenues	$	253,535	$	25,908	$	(4,043	)	$	275,400
Segment operating income	$	64,140	$	7,577	$	(18,043	)	$	53,674



For the three months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	19,544	$	2,900	$	—		$	22,444
Subscriptions	56,220		2,479		—			58,699
Software services	41,640		6,559		—			48,199
Maintenance	90,072		6,143		—			96,215
Appraisal services	—		5,544		—			5,544
Hardware and other	4,999		—		(33		)	4,966
Intercompany	3,373		—		(3,373		)	—
Total revenues	$	215,848	$	23,625	$	(3,406	)	$	236,067
Segment operating income	$	59,334	$	6,695	$	(18,161	)	$	47,868


For the nine months ended September 30, 2018
For the nine months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals		Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	60,224	$	7,396	$	—		$	67,620	$	60,443	$	7,404	$	—		$	67,847
Subscriptions	153,541		7,195		—			160,736		207,907		8,115		—			216,022
Software services	126,928		17,884		—			144,812		138,404		22,437		—			160,841
Maintenance	267,681		18,507		—			286,188		297,933		18,741		—			316,674
Appraisal services	—		16,470		—			16,470		—		17,455		—			17,455
Hardware and other	12,525		33		4,917			17,475		12,613		2		6,136			18,751
Intercompany	9,696		—		(9,696		)	—		11,242		—		(11,242		)	—
Total revenues	$	630,595	$	67,485	$	(4,779	)	$	693,301	$	728,542	$	74,154	$	(5,106	)	$	797,590
Segment operating income	$	174,365	$	16,845	$	(48,900	)	$	142,310	$	182,565	$	19,312	$	(52,260	)	$	149,617



For the nine months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	60,224	$	7,396	$	—		$	67,620
Subscriptions	153,541		7,195		—			160,736
Software services	126,928		17,884		—			144,812
Maintenance	267,681		18,507		—			286,188
Appraisal services	—		16,470		—			16,470
Hardware and other	12,525		33		4,917			17,475
Intercompany	9,696		—		(9,696		)	—
Total revenues	$	630,595	$	67,485	$	(4,779	)	$	693,301
Segment operating income	$	174,365	$	16,845	$	(48,900	)	$	142,310



	Three Months Ended September 30,						Nine Months Ended September 30,
Reconciliation of reportable segment operating income to the Company's consolidated totals:	2019			2018			2019			2018
Total segment operating income	$	53,674		$	47,868		$	149,617		$	142,310
Amortization of acquired software	(7,975		)	(5,897		)	(22,645		)	(17,003		)
Amortization of customer and trade name intangibles	(5,646		)	(4,386		)	(15,762		)	(11,742		)
Other income, net	499			1,041			838			2,198
Income before income taxes	$	40,552		$	38,626		$	112,048		$	115,763

For the three months ended September 30, 2017
As Adjusted
Enterprise
Software
Appraisal and Tax Corporate Totals
Revenues
Software licenses and royalties $ 21,143
$ 1,619
$ —
$ 22,762
Subscriptions 42,338
2,014
—
44,352
Software services 40,861
5,184
—
46,045
Maintenance 86,138
5,709
—
91,847
Appraisal services —
6,290
—
6,290
Hardware and other 3,412
—
(2 ) 3,410
Intercompany 2,660
—
(2,660 ) —
Total revenues $ 196,552
$ 20,816
$ (2,662 ) $ 214,706
Segment operating income $ 61,243
$ 5,450
$ (13,578 ) $ 53,115

For the nine months ended September 30, 2017
As Adjusted
Enterprise
Software
Appraisal and Tax Corporate Totals
Revenues
Software licenses and royalties $ 58,805
$ 5,021
$ —
$ 63,826
Subscriptions 119,033
5,698
—
124,731
Software services 120,190
14,211
—
134,401
Maintenance 251,457
15,508
—
266,965
Appraisal services —
19,268
—
19,268
Hardware and other 9,385
—
4,622
14,007
Intercompany 7,309
—
(7,309 ) —
Total revenues $ 566,179
$ 59,706
$ (2,687 ) $ 623,198
Segment operating income $ 167,767
$ 14,371
$ (37,468 ) $ 144,670

Three Months Ended September 30, Nine Months Ended September 30,
Reconciliation of reportable segment operating income to the Company's consolidated totals: 2018 2017 2018 2017
As Adjusted As Adjusted
Total segment operating income $ 47,868
$ 53,115
$ 142,310
$ 144,670
Amortization of acquired software (5,897 ) (5,473 ) (17,003 ) (16,243 )
Amortization of customer and trade name intangibles (4,386 ) (3,360 ) (11,742 ) (10,016 )
Other income (expense), net 1,041
75
2,198
(216 )
Income before income taxes $ 38,626
$ 44,357
$ 115,763
$ 118,195

~~(12)~~(13) Disaggregation of Revenue

The tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.

Timing of Revenue Recognition

Timing of revenue recognition by revenue category during the period is as ~~follows:~~follows (in thousands):


For the three months ended September 30, 2018
For the three months ended September 30, 2019
	Products and services transferred at a point in time		Products and services transferred over time		Total		Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	17,373	$	5,071	$	22,444	$	21,362	$	4,017	$	25,379
Subscriptions	—		58,699		58,699		—		75,272		75,272
Software services	—		48,199		48,199		—		54,997		54,997
Maintenance	—		96,215		96,215		—		109,833		109,833
Appraisal services	—		5,544		5,544		—		6,008		6,008
Hardware and other	4,966		—		4,966		3,911		—		3,911
Total	$	22,339	$	213,728	$	236,067	$	25,273	$	250,127	$	275,400


For the nine months ended September 30, 2018
For the nine months ended September 30, 2019
	Products and services transferred at a point in time		Products and services transferred over time		Total		Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	53,697	$	13,923	$	67,620	$	54,074	$	13,773	$	67,847
Subscriptions	—		160,736		160,736		—		216,022		216,022
Software services	—		144,812		144,812		—		160,841		160,841
Maintenance	—		286,188		286,188		—		316,674		316,674
Appraisal services	—		16,470		16,470		—		17,455		17,455
Hardware and other	17,475		—		17,475		18,751		—		18,751
Total	$	71,172	$	622,129	$	693,301	$	72,825	$	724,765	$	797,590



For the three months ended September 30, 2018
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	17,373	$	5,071	$	22,444
Subscriptions	—		58,699		58,699
Software services	—		48,199		48,199
Maintenance	—		96,215		96,215
Appraisal services	—		5,544		5,544
Hardware and other	4,966		—		4,966
Total	$	22,339	$	213,728	$	236,067

For the three months ended September 30, 2017
As Adjusted Products and services transferred at a point in time Products and services transferred over time Total
Revenues
Software licenses and royalties $ 18,007
$ 4,755
$ 22,762
Subscriptions —
44,352
44,352
Software services —
46,045
46,045
Maintenance —
91,847
91,847
Appraisal services —
6,290
6,290
Hardware and other 3,410
—
3,410
Total $ 21,417
$ 193,289
$ 214,706



For the nine months ended September 30, 2018
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	53,697	$	13,923	$	67,620
Subscriptions	—		160,736		160,736
Software services	—		144,812		144,812
Maintenance	—		286,188		286,188
Appraisal services	—		16,470		16,470
Hardware and other	17,475		—		17,475
Total	$	71,172	$	622,129	$	693,301

For the nine months ended September 30, 2017
As Adjusted Products and services transferred at a point in time Products and services transferred over time Total
Revenues
Software licenses and royalties $ 51,257
$ 12,569
$ 63,826
Subscriptions —
124,731
124,731
Software services —
134,401
134,401
Maintenance —
266,965
266,965
Appraisal services —
19,268
19,268
Hardware and other 14,007
—
14,007
Total $ 65,264
$ 557,934
$ 623,198

Recurring Revenue

The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from one to 10 years but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories.

Recurring revenues and non-recurring revenues recognized during the period are as ~~follows:~~follows (in thousands):



For the three months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals

Recurring revenues	$	175,836	$	9,269	$	—		$	185,105
Non-recurring revenues	73,670		16,639		(14		)	90,295
Intercompany	4,029		—		(4,029		)	—
Total revenues	$	253,535	$	25,908	$	(4,043	)	$	275,400



For the nine months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals

Recurring revenues	$	505,840	$	26,856	$	—		$	532,696
Non-recurring revenues	211,460		47,298		6,136			264,894
Intercompany	11,242		—		(11,242		)	—
Total revenues	$	728,542	$	74,154	$	(5,106	)	$	797,590



For the three months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals

Recurring revenues	$	146,292	$	8,622	$	—		$	154,914
Non-recurring revenues	66,183		15,003		(33		)	81,153
Intercompany	3,373		—		(3,373		)	—
Total revenues	$	215,848	$	23,625	$	(3,406	)	$	236,067



For the nine months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals

Recurring revenues	$	421,222	$	25,702	$	—		$	446,924
Non-recurring revenues	199,677		41,783		4,917			246,377
Intercompany	9,696		—		(9,696		)	—
Total revenues	$	630,595	$	67,485	$	(4,779	)	$	693,301

For the nine months ended September 30, 2018

Enterprise
Software
Appraisal and Tax Corporate Totals

Recurring revenues $ 421,222
$ 25,702
$ —
$ 446,924
Non-recurring revenues 199,677
41,783
4,917
246,377
Intercompany 9,696
—
(9,696 ) —
Total revenues $ 630,595
$ 67,485
$ (4,779 ) $ 693,301

For the three months ended September 30, 2017
As Adjusted
Enterprise
Software
Appraisal and Tax Corporate Totals

Recurring revenues $ 128,476
$ 7,723
$ —
$ 136,199
Non-recurring revenues 65,416
13,093
(2 ) 78,507
Intercompany 2,660
—
(2,660 ) —
Total revenues $ 196,552
$ 20,816
$ (2,662 ) $ 214,706

For the nine months ended September 30, 2017
As Adjusted
Enterprise
Software
Appraisal and Tax Corporate Totals

Recurring revenues $ 370,490
$ 21,206
$ —
$ 391,696
Non-recurring revenues 188,380
38,500
4,622
231,502
Intercompany 7,309
—
(7,309 ) —
Total revenues $ 566,179
$ 59,706
$ (2,687 ) $ 623,198

~~(13)~~(14) Deferred Revenue and Performance Obligations

Total deferred revenue, including long-term, by segment is as ~~follows:~~follows (in thousands):



	September 30, 2019		December 31, 2018
Enterprise Software	$	367,416	$	327,521
Appraisal and Tax	23,224		20,018
Corporate	1,161		3,397
Totals	$	391,801	$	350,936

September 30, 2018 December 31, 2017
As Adjusted
Enterprise Software $ 307,872
$ 277,198
Appraisal and Tax 16,450
20,387
Corporate 2,592
2,302
Totals $ 326,914
$ 299,887

~~The opening balance of total deferred revenue, including long-term, was $290.1 million (as adjusted) as of January 1, 2017.~~

Changes in total deferred revenue, including long-term, were as ~~follows:~~follows (in thousands):



	September 30, 2019
Balance, beginning of period December 31, 2018	$	350,936
Deferral of revenue	691,512
Recognition of deferred revenue	(650,647		)
Balance, end of period	$	391,801

September 30, 2018
Balance, beginning of period December 31, 2017 (As Adjusted) $ 299,887
Deferral of revenue 649,152
Recognition of deferred revenue (622,125 )
Balance, end of period $ 326,914

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized ("~~Backlog"~~backlog"), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of September 30, ~~2018~~2019, was ~~$1.2~~$1.4 billion, of which we expect to recognize approximately ~~51%~~49% as revenue over the next 12 months and the remainder thereafter.

~~(14)~~(15) Commitments and Contingencies

Other than routine litigation incidental to our business, there are no0 material legal proceedings pending to which we are party or to which any of our properties are subject.

~~(15)~~(16) Subsequent Events

The following events and transactions occurred subsequent to September 30, ~~2018:~~2019:

On October ~~1, 2018,~~30, 2019, we acquired certain assets of Courthouse Technologies, Ltd, an industry-leading provider of jury management systems that offers fully integrated, end-to-end software-as-a-service (SaaS) solution to manage all facets of ~~the capital stock of TradeMaster, Inc. dba MobileEyes, a company that develops software~~juror management, from source list generation to ~~improve public safety by supporting fire prevention~~juror processing and ~~suppression, emergency response, and structural safety.~~payment. The total purchase price was approximately ~~$4.8~~$19 million in cash, subject to certain post-closing adjustments.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

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) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (3) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (4) material portions of our business require the Internet infrastructure to be adequately maintained; (5) 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; (6) general economic, political and market conditions; (7) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (8) 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; (9) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (10) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in Item 1A, “Risk Factors.” We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

GENERAL

We provide integrated information management solutions and services for the public sector, with a focus on local governments. We develop and market a broad line of software products and services to address the IT needs of ~~cities, counties, schools and other local government~~public sector entities. In addition, we provide professional IT services to our clients, including software and hardware installation, data conversion, training, and for certain clients, product modifications, along with continuing maintenance and support for clients using our systems. We also provide subscription-based services ~~that~~such as software as a service (“SaaS”), which primarily utilize the Tyler private cloud, ~~such as e-filing,~~and electronic document filing solutions (“e-filing”), which ~~simplifies~~simplify the filing and management of court related documents. Revenues for e-filing are derived from transaction fees and, in some cases, fixed fee arrangements. We also provide property appraisal outsourcing services for taxing jurisdictions.

Our products generally automate seven major functional areas: (1) financial management and education, (2) courts and justice, (3) public safety (4) property appraisal and tax, (5) planning, regulatory and maintenance (6) land and vital records ~~and documents,~~management and (7) data and insights. We report our results in two segments. The Enterprise Software (“ES”) segment provides ~~municipal and county governments and schools~~public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such asas: financial management; courts and justice processes; public safety; planning, regulatory and maintenance; land and vital records ~~and documents;~~management; and data ~~and insights.~~analytics. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.

Our total employee count increased to 5,291 at September 30, 2019, from 4,447 at September 30, ~~2018, from 4,039 at September 30, 2017.~~

2018.

For the three and nine months ended September 30, ~~2018,~~2019, respectively, total revenues increased ~~10%~~16.7% and ~~11%~~15.0%, ~~respectively,~~ compared to the prior year ~~periods. Organic~~period.

Subscriptions revenue ~~growth was 7%~~grew 28.2% and 9%34.4% for the three and nine months ended September 30, 2018, respectively compared to the prior year periods and revenues from acquisitions completed as of September 30, 2018 contributed 3% and 2% of growth for the three and nine months ended September 30, 2018, respectively.

~~Subscriptions revenue grew 32% and 29% for the three and nine months ended September 30, 2018,~~2019, respectively, due to ~~a gradual~~an ongoing shift toward cloud-based, software as a service business, as well as continued ~~strong~~ growth in our e-filing revenues from courts. ~~Organic~~Excluding the impact of recent acquisitions, subscriptions revenue increased ~~22%~~23.2% and ~~23%~~24.8% for the three and nine months ended September 30, ~~2018,~~2019, respectively.

Our backlog at September 30, ~~2018~~2019 was ~~$1.2~~$1.4 billion, a 7%13.9% increase from last year.

Adoption of New ~~Revenue~~Lease Accounting Standard

On January 1, ~~2018,~~2019, we adopted ASU No. ~~2014-09,~~2016-02, Leases ("Topic 842") using the ~~full retrospective~~transition method that allows us to initially apply the guidance at the adoption date of ~~transition, which requires~~January 1, 2019, and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We used the package of practical expedients that ~~the new standard be applied~~allows us to ~~all periods presented.~~not reassess: (1) lease classification for any expired or existing leases and (2) initial direct costs for any expired or existing leases. The impacts of adoption are reflected in the financial information herein. For additional ~~details,~~information, see Note 210 to our condensed consolidated financial statements in this report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements. These condensed consolidated financial statements have been prepared following the requirements of accounting principles generally accepted in the United States (“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 amortization and 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, ~~2017.~~2018. Except for the accounting policies for ~~revenue recognition, trade and other receivables, and deferred commissions that were~~operating leases updated as a result of adopting ASU No. ~~2014-09,~~2016-02, 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, ~~2017.~~2018.

ANALYSIS OF RESULTS OF OPERATIONS


	Percent of Total Revenues
	Third Quarter				Nine Months Ended				Percent of Total Revenues
	2018		2017		2018		2017		Three Months Ended				Nine Months Ended
			As Adjusted				As Adjusted		2019		2018		2019		2018
Revenues:
Software licenses and royalties	9.5	%	10.6	%	9.8	%	10.2	%	9.2	%	9.5	%	8.5	%	9.8	%
Subscriptions	24.9		20.7		23.2		20.0		27.3		24.9		27.1		23.2
Software services	20.4		21.4		20.9		21.6		20.0		20.4		20.2		20.9
Maintenance	40.8		42.8		41.2		42.9		39.9		40.8		39.6		41.2
Appraisal services	2.3		2.9		2.4		3.1		2.2		2.3		2.2		2.4
Hardware and other	2.1		1.6		2.5		2.2		1.4		2.1		2.4		2.5
Total revenues	100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0
Cost of revenues:
Software licenses, royalties and acquired software	2.9		2.9		2.9		3.0		3.2		2.9		3.2		2.9
Software services, maintenance and subscriptions	47.2		45.7		47.2		46.2		46.7		47.2		46.6		47.2
Appraisal services	1.5		1.9		1.6		2.0		1.5		1.5		1.4		1.6
Hardware and other	1.1		1.1		1.7		1.7		1.1		1.1		1.9		1.7
Selling, general and administrative expenses	22.3		20.7		22.0		20.9		23.2		22.3		23.5		22.0
Research and development expense	7.2		5.5		6.6		5.7		7.7		7.2		7.5		6.6
Amortization of customer and trade name intangibles	1.9		1.6		1.7		1.6		2.1		1.9		2.0		1.7
Operating income	15.9		20.6		16.3		18.9		14.5		15.9		13.9		16.3
Other income (expense), net	0.4		—		0.3		(0.2	)
Other income, net									0.2		0.4		0.1		0.3
Income before income taxes	16.3		20.6		16.6		18.7		14.7		16.3		14.0		16.6
Income (benefit) tax provision	(0.1	)	2.6		—		2.4
Income tax provision (benefit)									0.1		(0.1	)	1.5		—
Net income	16.4	%	18.0	%	16.6	%	16.3	%	14.6	%	16.4	%	12.5	%	16.6	%



x ☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.



	September 30, 2018
Balance, beginning of period December 31, 2017	$	5,427
Provisions for losses - accounts receivable	1,714
Collection of accounts previously written off	(212		)
Deductions for accounts charged off or credits issued	(1,819		)
Balance, end of period	$	5,110



	Three Months Ended September 30, 2017							Nine Months Ended September 30, 2017
	As Reported		Adjustments			As Adjusted		As Reported		Adjustments			As Adjusted
Statement of Income:

Software licenses and royalties	$	19,842	$	2,920		$	22,762	$	55,172	$	8,654		$	63,826
Subscriptions	44,840		(488		)	44,352		125,889		(1,158		)	124,731
Software services	47,479		(1,434		)	46,045		139,869		(5,468		)	134,401
Maintenance	92,285		(438		)	91,847		268,556		(1,591		)	266,965
Appraisal services	6,290		—			6,290		19,268		—			19,268
Hardware and other	3,410		—			3,410		14,057		(50		)	14,007
Total revenues	214,146		560			214,706		622,811		387			623,198
Selling, general and administrative expenses	44,656		(143		)	44,513		131,249		(956		)	130,293
Amortization of customer and trade name intangibles	3,492		(132		)	3,360		10,413		(397		)	10,016
Operating income	43,447		835			44,282		116,671		1,740			118,411
Income tax provision	5,259		262			5,521		14,308		512			14,820
Net income	$	38,263	$	573		$	38,836	$	102,147	$	1,228		$	103,375

Earnings per common share:
Basic	$	1.02				$	1.04	$	2.74				$	2.78
Diluted	$	0.97				$	0.99	$	2.60				$	2.63




Cash	$	1,724
Accounts receivable	3,616
Other current assets	2,057
Other noncurrent assets	68
Identifiable intangible assets	75,000
Goodwill	78,909
Accounts payable	(1,254		)
Accrued expenses	(1,717		)
Deferred revenue	(5,915		)
Deferred tax liabilities, net	(3,120		)
Total consideration	$	149,368



	September 30, 2018
Balance, beginning of period December 31, 2017 (As Adjusted)	$	299,887
Deferral of revenue	649,152
Recognition of deferred revenue	(622,125		)
Balance, end of period	$	326,914


	Third Quarter				Change					Nine Months Ended				Change				Three Months Ended				Change					Nine Months Ended				Change
($ in thousands)	2018		2017		$			%		2018		2017		$		%		2019		2018		$			%		2019		2018		$		%
			As Adjusted									As Adjusted
ES	$	19,544	$	21,143	$	(1,599	)	(8	)%	$	60,224	$	58,805	$	1,419	2	%	$	23,449	$	19,544	$	3,905		20	%	$	60,443	$	60,224	$	219	—	%
A&T	2,900		1,619		1,281			79		7,396		5,021		2,375		47		1,930		2,900		(970		)	(33	)	7,404		7,396		8		—
Total software licenses and royalties revenue	$	22,444	$	22,762	$	(318	)	(1	)%	$	67,620	$	63,826	$	3,794	6	%	$	25,379	$	22,444	$	2,935		13	%	$	67,847	$	67,620	$	227	—	%



Exhibit 31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1		Certifications Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 10.1		Employment and Non-Competition Agreement between Tyler Technologies, Inc. and John S. Marr Jr. effective February 26, 2018 (filed as Exhibit 10.1 to our Form 8-K dated March 9, 2018 and incorporated by reference herein).

~~Exhibit 10.2~~		Employment and Non-Competition Agreement between Tyler Technologies, Inc. and H. Lynn Moore, Jr effective February 26, 2018 (filed as Exhibit 10.2 to our Form 8-K dated March 9, 2018 and incorporated by reference herein).

~~Exhibit 10.3~~		Employment and Non-Competition Agreement between Tyler Technologies, Inc. and Brian K. Miller effective February 26, 2018 (filed as Exhibit 10.3 to our Form 8-K dated March 9, 2018 and incorporated by reference herein).

~~Exhibit 10.4~~		Agreement and plan of merger by and among Tyler Technologies, Inc. ~~and Dedomena Acquisition,~~, TMP Subsidiary Inc., ~~Socrata, Inc~~MP Holdings Parent, Inc. (filed as Exhibit ~~10.4~~10.7 to our Form ~~10-Q~~10-K dated ~~May 10, 2018~~Feb 20, 2019 and incorporated by reference herein).

Exhibit ~~10.5~~10.2		~~Employee Stock Purchase Plan~~Credit Agreement dated September 30, 2019, among Tyler Technologies, Inc. and Wells Fargo Bank, N. A. as Administrative Agent and other lenders party hereto (filed as Exhibit 10.1 to our ~~registration statement 333-225011~~Form 8-K dated ~~May 17, 2018~~October 2, 2019 and incorporated by reference herein).

Exhibit 101		Instance Document

Exhibit 101		Schema Document

Exhibit 101		Calculation Linkbase Document

Exhibit 101		Labels Linkbase Document

Exhibit 101		Definition Linkbase Document

Exhibit 101		Presentation Linkbase Document



	TYLER TECHNOLOGIES, INC.
By:	/s/ Brian K. Miller
	Brian K. Miller
	Executive Vice President and Chief Financial Officer
	(principal financial officer and an authorized signatory)