Tyler Technologies priced $1.25 billion of convertible senior notes in an underwritten offering, the company announced. The offering carries a 0.875% coupon and matures in 2029.
The software maker set the conversion price at $595 per share, representing a 27.5% premium to the closing price on the pricing date. Tyler Technologies plans to use net proceeds to repay existing debt and for general corporate purposes.
Credit Suisse, Goldman Sachs, and Barclays are underwriting the offering. The underwriters hold a 13-day option to purchase up to $187.5 million in additional notes.
Tyler Technologies shares trade on the New York Stock Exchange. The company provides cloud-based software solutions for the public sector, including courts, municipal governments, and schools. This convertible issuance comes as the company seeks to refinance its capital structure while locking in investor demand at premium valuations.
The 0.875% coupon reflects the current low-rate environment for investment-grade convertible debt. The 27.5% conversion premium sits above historical averages, indicating strong investor appetite for Tyler's equity. A conversion price at $595 per share values the equity component at levels substantially above recent trading ranges, giving the company substantial cushion before conversion occurs.
Convertible bonds serve as hybrid instruments, combining fixed income characteristics with embedded equity upside. For Tyler, this structure allows debt issuance at below-market interest rates while providing investors potential equity participation if shares appreciate toward the $595 conversion threshold.
The offering underscores confidence in Tyler's business fundamentals and competitive positioning in the government software space. The company has built dominant market share in its vertical, providing mission-critical systems that generate recurring revenue streams. Strong cash generation and predictable customer bases support the company's ability to service debt while managing growth investments.
Settlement