Tyler Technologies Inc. (NYSE: TYL) announced the pricing of $1.25 billion in convertible senior notes due 2031, increasing the offering size from the previously announced $1 billion.

The notes will carry a 0.50% annual interest rate and mature on July 15, 2031. The initial conversion rate is set at 2.4634 shares per $1,000 principal amount of notes, representing a conversion price of approximately $405.94 per share. This reflects a 30% premium over the company's stock price of $312.27 on May 11.

Tyler estimates net proceeds of approximately $1.22 billion after deducting fees and expenses. The company plans to use $162.8 million to fund capped call transactions designed to reduce potential dilution from note conversions. Another $320.7 million will be used to repurchase 1,026,900 shares of common stock in concurrent transactions.

The notes will be convertible under certain conditions before April 15, 2031, and at holders' discretion thereafter until maturity. Tyler may redeem the notes starting July 20, 2029, if its stock price exceeds 130% of the conversion price for a specified period.

The company entered into capped call transactions with initial purchasers or affiliates, with a cap price of approximately $655.77 per share, representing a 110% premium over the current stock price. These transactions are intended to offset potential dilution upon note conversion.

Initial purchasers received an option to purchase up to an additional $187.5 million in notes within 13 days of issuance. The offering is scheduled to settle on May 14, subject to customary closing conditions.

The notes and any shares issuable upon conversion have not been registered under the Securities Act and are being offered in a private placement to qualified institutional buyers.