Cadence vs Tyler: Evaluating Growth and Stability Potential

In the dynamic world of software applications, Cadence Design Systems, Inc. (CDNS) and Tyler Technologies, Inc. (TYL) stand out as influential players with distinct market focuses. Cadence leads in integrated circuit design tools and verification platforms, while Tyler specializes in public sector management software. Both companies innovate in their niches, offering growth potential through technology-driven solutions. This article will help you determine which company presents the most compelling investment opportunity in 2026.

Table of contents

• Companies Overview
• Income Statement Comparison
• Financial Ratios Comparison
• Strategic Positioning
• Stock Comparison
• Analyst Opinions Comparison
• Strengths and Weaknesses
• Which Stock to Choose?

Companies Overview

I will begin the comparison between Cadence Design Systems, Inc. and Tyler Technologies, Inc. by providing an overview of these two companies and their main differences.

Cadence Design Systems, Inc. Overview

Cadence Design Systems, Inc. focuses on providing software, hardware, and services for integrated circuit (IC) design and verification worldwide. The company offers products covering digital IC design, system design, and intellectual property, serving markets such as 5G communications, automotive, aerospace, and industrial sectors. Headquartered in San Jose, California, Cadence is a key player in the semiconductor and electronic design automation industry.

Tyler Technologies, Inc. Overview

Tyler Technologies, Inc. delivers integrated information management software and services specifically tailored for the public sector. The company’s solutions cover financial management, judicial and public safety systems, appraisal and tax management, and school administration. Based in Plano, Texas, Tyler Technologies supports government agencies and educational institutions with software designed to automate and streamline their operations.

Key similarities and differences

Both companies operate within the software application industry but target distinct markets: Cadence serves high-tech hardware design and verification sectors, while Tyler focuses on public sector software solutions. Cadence has a larger workforce and market capitalization, reflecting its broader technology scope. Tyler emphasizes government and education systems with cloud collaboration, whereas Cadence specializes in semiconductor design tools and IP products.

Income Statement Comparison

Below is a comparison of key income statement metrics for Cadence Design Systems, Inc. and Tyler Technologies, Inc. for the fiscal year 2024.

Metric	Cadence Design Systems, Inc.	Tyler Technologies, Inc.
Market Cap	86.4B	18.9B
Revenue	4.64B	2.14B
EBITDA	1.67B	466M
EBIT	1.47B	314M
Net Income	1.06B	263M
EPS	3.89	6.17
Fiscal Year	2024	2024

Income Statement Interpretations

Cadence Design Systems, Inc.

Cadence’s revenue and net income have shown strong growth from 2020 to 2024, with revenue increasing from $2.68B to $4.64B and net income rising from $591M to $1.06B. Gross and EBIT margins remain favorable at 86.05% and 31.71%, respectively. In 2024, revenue growth slowed to 13.48% but margins held steady, supporting stable profitability.

Tyler Technologies, Inc.

Tyler’s revenue also grew significantly over the period, from $1.12B in 2020 to $2.14B in 2024, with net income climbing from $195M to $263M. Margins remain favorable, though gross margin at 40.98% and EBIT margin at 14.69% are lower than Cadence’s. The latest year saw a 9.53% revenue increase and a notable 44.73% net margin growth, indicating improved operational efficiency.

Which one has the stronger fundamentals?

Both companies exhibit favorable income statement fundamentals with strong revenue growth and positive margin trends. Cadence leads in absolute scale and margin levels, while Tyler shows higher recent margin expansion and EPS growth. Cadence’s more stable net margin contrasts with Tyler’s wider fluctuations. Overall, both demonstrate solid profitability but differ in scale and margin consistency.

Financial Ratios Comparison

The table below presents a side-by-side comparison of key financial ratios for Cadence Design Systems, Inc. (CDNS) and Tyler Technologies, Inc. (TYL) for the fiscal year 2024.

Ratios	Cadence Design Systems, Inc. (CDNS)	Tyler Technologies, Inc. (TYL)
ROE	22.58%	7.76%
ROIC	13.43%	6.20%
P/E	77.20	93.42
P/B	17.44	7.25
Current Ratio	2.93	1.35
Quick Ratio	2.74	1.35
D/E	0.55	0.19
Debt-to-Assets	28.80%	12.32%
Interest Coverage	17.77	50.50
Asset Turnover	0.52	0.41
Fixed Asset Turnover	7.68	10.95
Payout ratio	0	0
Dividend yield	0%	0%

Interpretation of the Ratios

Cadence Design Systems, Inc.

Cadence Design Systems presents a largely favorable ratio profile with strong net margin (22.74%), ROE (22.58%), and ROIC (13.43%), supported by a solid current ratio of 2.93 and low debt-to-assets of 28.8%. However, high P/E (77.2) and P/B (17.44) ratios raise valuation concerns. The company does not pay dividends, likely prioritizing reinvestment and growth.

Tyler Technologies, Inc.

Tyler Technologies shows mixed ratios: a favorable net margin of 12.3% and strong interest coverage (52.96), but a weak ROE (7.76%) and asset turnover (0.41) that may indicate operational inefficiency. The P/E ratio is high at 93.42. Tyler does not pay dividends, possibly reflecting reinvestment or growth focus in its business model.

Which one has the best ratios?

Cadence Design Systems holds the advantage with a higher proportion of favorable ratios (57.14%) compared to Tyler’s 50%, especially in profitability and liquidity metrics. Tyler’s weaker ROE and asset turnover, alongside its higher unfavorable ratio share, suggest relatively less robust financial health. Overall, Cadence’s ratios appear more balanced and favorable.

Strategic Positioning

This section compares the strategic positioning of Cadence Design Systems, Inc. and Tyler Technologies, Inc. regarding market position, key segments, and exposure to technological disruption:

Cadence Design Systems, Inc. vs Tyler Technologies, Inc. Positioning

Cadence has a diversified technology focus across multiple high-tech markets, leveraging hardware and software integration, while Tyler concentrates on integrated public sector solutions with a narrower market scope. Cadence’s broader segment spread offers varied business drivers compared to Tyler’s specialized approach.

Which has the best competitive advantage?

Cadence exhibits a slightly favorable moat with value creation despite declining ROIC, indicating some sustainable competitive advantage. Tyler shows a very unfavorable moat with value destruction and declining profitability, suggesting weaker competitive positioning.

Stock Comparison

The stock price chart reveals contrasting price movements and trading dynamics for Cadence Design Systems, Inc. and Tyler Technologies, Inc. over the past 12 months, highlighting a generally bullish but decelerating trend for both with recent weakening.

Trend Analysis

Cadence Design Systems, Inc. (CDNS) exhibited a 4.59% price increase over the past year, indicating a bullish trend with deceleration. The stock ranged from a low of 232.88 to a high of 373.35, showing moderate volatility with a standard deviation of 29.12.

Tyler Technologies, Inc. (TYL) posted a 0.58% price increase over the same period, reflecting a neutral to mildly bullish trend with deceleration. Its price ranged from 403.35 to 641.7, showing higher volatility with a standard deviation of 61.82.

Comparatively, Cadence Design Systems delivered the highest market performance with a stronger overall price increase, despite both stocks experiencing recent declines and seller dominance in trading volumes.

Target Prices

The current target price consensus for Cadence Design Systems, Inc. and Tyler Technologies, Inc. reflects bullish analyst expectations.

Company	Target High	Target Low	Consensus
Cadence Design Systems, Inc.	418	275	381
Tyler Technologies, Inc.	675	470	584

Analysts project upside potential for both stocks, with Cadence’s consensus target about 20% above its current price of 317.45 USD, and Tyler Technologies’ consensus target roughly 33% above its current price of 440.01 USD. This indicates positive market sentiment for these technology firms.

Analyst Opinions Comparison

This section compares analysts’ ratings and grades for Cadence Design Systems, Inc. and Tyler Technologies, Inc.:

Rating Comparison

Which one is the best rated?

Both CDNS and TYL share the same overall rating of B and a moderate overall score of 3. CDNS excels in return on assets and equity, while TYL scores better in discounted cash flow and debt to equity. Their ratings are comparable but differ in specific strengths.

Scores Comparison

The scores comparison between Cadence Design Systems and Tyler Technologies is as follows:

Which company has the best scores?

Cadence Design Systems shows higher scores in both Altman Z-Score and Piotroski Score, indicating stronger financial stability and health than Tyler Technologies based on the provided data.

Grades Comparison

Here is a comparison of recent grades assigned by established grading companies for Cadence Design Systems, Inc. and Tyler Technologies, Inc.:

Cadence Design Systems, Inc. Grades

The following table summarizes recent analyst ratings from reputable grading firms for Cadence Design Systems, Inc.:

Grading Company	Action	New Grade	Date
Needham	Maintain	Buy	2025-12-22
Wells Fargo	Maintain	Overweight	2025-10-28
Baird	Maintain	Outperform	2025-10-28
Needham	Maintain	Buy	2025-10-28
JP Morgan	Maintain	Overweight	2025-10-28
Oppenheimer	Maintain	Underperform	2025-10-28
Rosenblatt	Maintain	Neutral	2025-10-28
Rosenblatt	Maintain	Neutral	2025-10-22
Needham	Maintain	Buy	2025-07-29
Loop Capital	Maintain	Buy	2025-07-29

The overall grades for Cadence Design Systems show a predominance of Buy and Overweight ratings, indicating generally positive analyst sentiment with isolated neutral and underperform views.

Tyler Technologies, Inc. Grades

The following table presents recent analyst ratings from credible grading firms for Tyler Technologies, Inc.:

Grading Company	Action	New Grade	Date
Piper Sandler	Maintain	Overweight	2026-01-13
Wells Fargo	Maintain	Equal Weight	2026-01-08
DA Davidson	Maintain	Neutral	2025-12-09
Evercore ISI Group	Maintain	In Line	2025-10-31
DA Davidson	Maintain	Neutral	2025-10-31
DA Davidson	Maintain	Neutral	2025-10-10
DA Davidson	Maintain	Neutral	2025-08-05
Barclays	Maintain	Overweight	2025-07-31
Needham	Maintain	Buy	2025-05-13
Barclays	Maintain	Overweight	2025-04-25

Tyler Technologies’ grades show a mix of Overweight and Neutral ratings, with fewer Buy ratings compared to Cadence, reflecting a more cautious analyst stance.

Which company has the best grades?

Cadence Design Systems, Inc. has received a higher proportion of Buy and Outperform ratings compared to Tyler Technologies, Inc., which features more Neutral and Equal Weight grades. This suggests Cadence is viewed more favorably by analysts, potentially signaling stronger expected performance or confidence, which investors might consider when evaluating risk and opportunity profiles.

Strengths and Weaknesses

Below is a comparative overview of key strengths and weaknesses for Cadence Design Systems, Inc. (CDNS) and Tyler Technologies, Inc. (TYL) based on recent financial and operational data.

Criterion	Cadence Design Systems, Inc. (CDNS)	Tyler Technologies, Inc. (TYL)
Diversification	Strong product and maintenance segment with growing technology services; diversified revenue streams	Moderate diversification with SaaS, transaction fees, maintenance, and professional services; less hardware exposure
Profitability	High net margin (22.7%) and ROIC (13.4%), creating value though with declining trend	Moderate net margin (12.3%) and neutral ROIC (6.2%), but profitability is declining and value is being lost
Innovation	Significant investment reflected in high P/E (77.2) and strong product demand; innovation-driven growth	Innovation reflected in SaaS and platform technologies, but higher P/E (93.4) and declining ROIC indicate challenges
Global presence	Established global footprint with strong asset turnover and financial stability	Focused primarily on U.S. public sector markets with less asset turnover but strong interest coverage
Market Share	Leading position in electronic design automation with steady revenue growth (4.2B in product sales 2024)	Leading provider in public sector software with revenue of over 2B across segments but slower growth

Key takeaways: CDNS shows strong profitability and diversification with solid value creation despite a declining ROIC trend. TYL faces profitability challenges and declining returns but maintains a specialized market position. Both companies require cautious monitoring of profitability trends for investment decisions.

Risk Analysis

Below is a comparative table summarizing key risks for Cadence Design Systems, Inc. (CDNS) and Tyler Technologies, Inc. (TYL) based on the most recent data from 2024-2026.

Metric	Cadence Design Systems, Inc. (CDNS)	Tyler Technologies, Inc. (TYL)
Market Risk	Moderate (Beta 1.02, tech sector volatility)	Moderate (Beta 0.92, stable public sector demand)
Debt level	Moderate (D/E 0.55, stable interest coverage)	Low (D/E 0.19, strong interest coverage)
Regulatory Risk	Moderate (Global tech regulations, IP protection)	Moderate (Government contracting and data privacy)
Operational Risk	Moderate (Complex IC design processes)	Moderate (Integrated public sector software complexity)
Environmental Risk	Low (Primarily software, limited physical footprint)	Low (Software services with minimal direct environmental impact)
Geopolitical Risk	Moderate (Global supply chain and market exposure)	Low to Moderate (Primarily US-focused public sector)

The most impactful risks for Cadence are market volatility and regulatory challenges in the global semiconductor design space, while Tyler faces risks mainly from government regulatory changes and moderate market risk. Both companies maintain strong financial health with low bankruptcy risk, but investors should watch Cadence’s higher leverage and valuation multiples carefully.

Which Stock to Choose?

Cadence Design Systems, Inc. (CDNS) shows a favorable income evolution with strong revenue and net income growth over 2020-2024. Its financial ratios are mostly favorable, reflecting robust profitability, low debt levels, and a strong rating of B. Though its ROIC is declining, it remains above WACC, indicating value creation.

Tyler Technologies, Inc. (TYL) also posts favorable income growth, particularly in EBIT and EPS, despite a net margin decline overall. Its financial ratios are slightly favorable, with moderate profitability and low debt, supported by a B rating. However, its ROIC is below WACC and declining, implying value erosion.

For investors prioritizing stable profitability and value creation, CDNS might appear more favorable due to its higher and more consistent returns and stronger financial ratios. Conversely, those focused on growth potential and recent earnings expansion could find TYL’s improving income statement more appealing despite its value challenges.

Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.

Go Further

I encourage you to read the complete analyses of Cadence Design Systems, Inc. and Tyler Technologies, Inc. to enhance your investment decisions:

• Cadence Design Systems, Inc. Analysis
• Tyler Technologies, Inc. Analysis