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NOW vs. TYL: Which Cloud-Based Enterprise Software Stock Has an Edge?
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Key Takeaways
ServiceNow saw 20% YoY growth in customers with over $5M ACV, totaling 508 by Q1 2025.
NOW expects Q2 subscription revenues of $3.03-$3.035B, up roughly 19.5% YoY on a constant currency basis.
Tyler forecasts 2025 revenue of $2.31-$2.35B, with cloud subscriptions driving its 8.94% projected growth.
ServiceNow (NOW - Free Report) and Tyler Technologies (TYL - Free Report) are well-known providers of cloud-based enterprise software stocks. Both are helping enterprises in digital transformation through their respective cloud-supported solutions. However, customer focus is different as ServiceNow’s solutions cater to large enterprises (financial services, healthcare and life sciences, manufacturing, public sector, retail, technology and telecom), while Tyler is a pure-play government software provider.
Digital transformation offers a massive growth opportunity, driven by the growing adoption of cloud computing and artificial intelligence (AI). Per IDC estimates, the digital transformation market is expected to hit roughly $4 trillion by 2027, seeing a CAGR of 16.2% over the 2022-2027 timeframe. Both NOW and Tyler are well-poised to benefit from this higher spending trend.
The Case for ServiceNow
ServiceNow has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. A strong portfolio and rich partner base are expanding NOW’s clientele. Exiting first-quarter 2025, ServiceNow had 72 transactions of more than $1 million in net new annual contract value (ACV). The company expanded its customer relationships, reaching 508 customers with more than $5 million in ACV at the end of the reported quarter, which represents 20% year-over-year customer growth.
NOW’s expanding portfolio has been a key catalyst. In May 2025, ServiceNow introduced its Core Business Suite, an AI-powered solution designed to streamline and transform core business operations, including HR, finance, procurement, facilities and legal, by unifying workflows and automating processes across departments to improve efficiency, reduce time to value, and enhance employee experiences.
The launch of AI agents in ServiceNow’s Security and Risk solutions transforms enterprise security by enabling self-defending systems, improving response times, and enhancing risk management. The solution is developed in collaboration with Microsoft and Cisco. NOW also announced advancements in autonomous IT, introducing agentic AI capabilities on the ServiceNow AI Platform to drive zero outages, zero downtime and zero service desk incidents.
NOW expects second-quarter subscription revenues to be $3.03-$3.035 billion, which suggests a rise of 19% to 19.5% year over year on a GAAP basis and 19.5% on a constant currency basis.
The Case for Tyler
Tyler offers mission-critical software to the public sector that handles essential services like 911, dispatch, court, permits, licenses, land records, utilities, and property taxes. Property taxes are the primary source of revenues for local government entities, and are fairly stable in nature, which makes Tyler’s revenue base less volatile.
Tyler is benefiting from the public sector’s ongoing transition from on-premise and outdated systems to scalable cloud-based systems. The multi-year transition is expected to boost Tyler’s recurring revenues, which currently account for approximately 80% of revenues. Strong adoption of cloud-based systems is expected to drive subscription revenues, Tyler’s fastest-growing revenue category over the past seven years.
Acquisitions have played a major role in shaping Tyler’s growth trajectory. The company has acquired 14 businesses in the last five years. The acquisition of Computing System Innovations (CSI) is noteworthy. CSI’s flagship product, Intellidact Platform, is a suite of applications that enhance document processing and identity protection with AI technology. This platform increases workflow efficiencies through automated document classification and data extraction, while using redaction to reduce the risk of privacy information leakage. The integration of CSI’s AI-driven redaction and indexing solution, Intellidact Platform, to Tyler’s eFile & Serve solution portfolio is a key catalyst.
Tyler Technologies now projects full-year 2025 revenues between $2.31 billion and $2.35 billion. The Zacks Consensus Estimate for revenues is currently pegged at $2.33 billion, indicating 8.94% year-over-year growth.
NOW’s Earnings Estimate Revision Positive, TYL’s Goes South
The Zacks Consensus Estimate for NOW’s 2025 earnings is pegged at $16.54 per share, up by a penny over the past 30 days, indicating an 18.82% increase over fiscal 2024’s reported figure.
Both NOW’s and TYL’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. ServiceNow’s average surprise of 6.61% is much better than Tyler’s surprise of 3.82%, reflecting a good quality of earnings beat on a consistent basis.
Price Performance and Valuation of NOW and TYL
While ServiceNow shares have declined 4.4%, Tyler climbed 1.9%, year to date.
NOW and TYL Stock’s Performance
Image Source: Zacks Investment Research
Valuation-wise, both ServiceNow and Tyler are overvalued, as suggested by the Value Score of F.
However, in terms of forward 12-month Price/Sales, Tyler shares are trading at 10.48X, lower than NOW’s 14.99X.
TYL and NOW Valuation
Image Source: Zacks Investment Research
Conclusion
Both ServiceNow and Tyler Technologies benefit from strong demand for digital transformation amid challenging macroeconomic conditions and lingering concerns related to tariffs. NOW’s strong portfolio, acquisitions, and rich partner base are noteworthy compared to Tyler, which is suffering from stiff competition and challenging macroeconomic conditions.
ServiceNow, with a Zacks Rank #3 (Hold), currently has an edge over Tyler Technologies, which has a Zacks Rank #4 (Sell).
Image: Bigstock
NOW vs. TYL: Which Cloud-Based Enterprise Software Stock Has an Edge?
Key Takeaways
ServiceNow (NOW - Free Report) and Tyler Technologies (TYL - Free Report) are well-known providers of cloud-based enterprise software stocks. Both are helping enterprises in digital transformation through their respective cloud-supported solutions. However, customer focus is different as ServiceNow’s solutions cater to large enterprises (financial services, healthcare and life sciences, manufacturing, public sector, retail, technology and telecom), while Tyler is a pure-play government software provider.
Digital transformation offers a massive growth opportunity, driven by the growing adoption of cloud computing and artificial intelligence (AI). Per IDC estimates, the digital transformation market is expected to hit roughly $4 trillion by 2027, seeing a CAGR of 16.2% over the 2022-2027 timeframe. Both NOW and Tyler are well-poised to benefit from this higher spending trend.
The Case for ServiceNow
ServiceNow has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. A strong portfolio and rich partner base are expanding NOW’s clientele. Exiting first-quarter 2025, ServiceNow had 72 transactions of more than $1 million in net new annual contract value (ACV). The company expanded its customer relationships, reaching 508 customers with more than $5 million in ACV at the end of the reported quarter, which represents 20% year-over-year customer growth.
NOW’s expanding portfolio has been a key catalyst. In May 2025, ServiceNow introduced its Core Business Suite, an AI-powered solution designed to streamline and transform core business operations, including HR, finance, procurement, facilities and legal, by unifying workflows and automating processes across departments to improve efficiency, reduce time to value, and enhance employee experiences.
The launch of AI agents in ServiceNow’s Security and Risk solutions transforms enterprise security by enabling self-defending systems, improving response times, and enhancing risk management. The solution is developed in collaboration with Microsoft and Cisco. NOW also announced advancements in autonomous IT, introducing agentic AI capabilities on the ServiceNow AI Platform to drive zero outages, zero downtime and zero service desk incidents.
NOW expects second-quarter subscription revenues to be $3.03-$3.035 billion, which suggests a rise of 19% to 19.5% year over year on a GAAP basis and 19.5% on a constant currency basis.
The Case for Tyler
Tyler offers mission-critical software to the public sector that handles essential services like 911, dispatch, court, permits, licenses, land records, utilities, and property taxes. Property taxes are the primary source of revenues for local government entities, and are fairly stable in nature, which makes Tyler’s revenue base less volatile.
Tyler is benefiting from the public sector’s ongoing transition from on-premise and outdated systems to scalable cloud-based systems. The multi-year transition is expected to boost Tyler’s recurring revenues, which currently account for approximately 80% of revenues. Strong adoption of cloud-based systems is expected to drive subscription revenues, Tyler’s fastest-growing revenue category over the past seven years.
Acquisitions have played a major role in shaping Tyler’s growth trajectory. The company has acquired 14 businesses in the last five years. The acquisition of Computing System Innovations (CSI) is noteworthy. CSI’s flagship product, Intellidact Platform, is a suite of applications that enhance document processing and identity protection with AI technology. This platform increases workflow efficiencies through automated document classification and data extraction, while using redaction to reduce the risk of privacy information leakage. The integration of CSI’s AI-driven redaction and indexing solution, Intellidact Platform, to Tyler’s eFile & Serve solution portfolio is a key catalyst.
Tyler Technologies now projects full-year 2025 revenues between $2.31 billion and $2.35 billion. The Zacks Consensus Estimate for revenues is currently pegged at $2.33 billion, indicating 8.94% year-over-year growth.
NOW’s Earnings Estimate Revision Positive, TYL’s Goes South
The Zacks Consensus Estimate for NOW’s 2025 earnings is pegged at $16.54 per share, up by a penny over the past 30 days, indicating an 18.82% increase over fiscal 2024’s reported figure.
ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote
However, the consensus mark for Tyler’s 2025 has declined by a penny to $11.13 per share over the past 30 days, suggesting 16.54% growth over 2024.
Tyler Technologies, Inc. Price and Consensus
Tyler Technologies, Inc. price-consensus-chart | Tyler Technologies, Inc. Quote
Both NOW’s and TYL’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. ServiceNow’s average surprise of 6.61% is much better than Tyler’s surprise of 3.82%, reflecting a good quality of earnings beat on a consistent basis.
Price Performance and Valuation of NOW and TYL
While ServiceNow shares have declined 4.4%, Tyler climbed 1.9%, year to date.
NOW and TYL Stock’s Performance
Image Source: Zacks Investment Research
Valuation-wise, both ServiceNow and Tyler are overvalued, as suggested by the Value Score of F.
However, in terms of forward 12-month Price/Sales, Tyler shares are trading at 10.48X, lower than NOW’s 14.99X.
TYL and NOW Valuation
Image Source: Zacks Investment Research
Conclusion
Both ServiceNow and Tyler Technologies benefit from strong demand for digital transformation amid challenging macroeconomic conditions and lingering concerns related to tariffs. NOW’s strong portfolio, acquisitions, and rich partner base are noteworthy compared to Tyler, which is suffering from stiff competition and challenging macroeconomic conditions.
ServiceNow, with a Zacks Rank #3 (Hold), currently has an edge over Tyler Technologies, which has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.