Brian Miller
Executive Vice President, Chief Financial Officer and Treasurer at Tyler Technologies
Thanks, Lynn. Total revenues for the quarter were $494.7 million, up 4.5%. Organic revenue growth, which also excludes COVID-related revenues, was 6.0%. Last year's third quarter included $11.7 million of revenues from COVID-related initiatives at our Digital Solutions division, all of which ended in 2022. Subscriptions revenue increased 16.1% and organically rose 14.7%. Within subscriptions, our SaaS revenues grew organically 26% and to $138.5 million. It is important to note that as our software contract mix continues to shift towards SaaS, our growth rate may vary from quarter-to-quarter due to the lag in time from contract signing to the start of revenue recognition, but we remain on track with our near-term growth expectations of a 20% CAGR in SaaS revenues through 2025.
Transaction revenues grew 8.5% to $156.7 million, up 6% on an organic basis. License revenue declined 47.9% as our software business continues to shift to SaaS. SaaS deals comprised 80% of our Q3 new software contract value compared to 91% last year. As we noted earlier, last year's Q3 included two large SaaS deals totaling $70 million in contract value. Professional services revenue declined 14.9% primarily due to the absence of COVID-related revenues and was flat organically. We added 161 new SaaS arrangements and converted 79 existing on-premises clients to SaaS with a total contract value of approximately $71 million.
In Q3 of last year, we added 153 new SaaS arrangements and had 70 on-premises conversions with a total contract value of approximately $149 million. Overall, our pace of on-premises conversions to SaaS continues at a steady pace with 246 slips year-to-date, and we expect Q4 conversions will be 100 or more. More importantly, the total contract value associated with flips has increased year-to-date to $58 million. As we've discussed, conversions are a significant growth driver over the next several years as we accelerate the pace of flips. Including transaction revenues, expansions with existing clients and professional services, total bookings increased 10.3% on an organic basis. Our total annualized recurring revenue was approximately $1.65 billion, up 11% and organically grew 9.8%.
Operating margins were better than expected despite pressure from our ongoing cloud transition. Our non-GAAP OP margin was 24.8%, down by 10 basis points from Q3 of last year. As we discussed in prior quarters, merchant and interchange fees from our payments business under the gross revenue model have a meaningful impact on our overall margins. In Q3, we paid merchant fees of approximately $36 million. If those fees were netted out of both revenues and cost of revenues, our consolidated non-GAAP operating margin for the quarter would have been approximately 190 basis points higher.
Both cash flows from operations and free cash flow were robust this quarter at $177.5 million and $162.7 million, respectively, primarily driven by higher revenue collections. Cash flow in the quarter was impacted by approximately $22 million of incremental due to Section 174. On a pro forma basis, excluding the incremental Section 174 cash taxes of $112 million, our year-to-date free cash flow would be approximately $300 million, up 41% over last year. We continue to prioritize repayment of our term debt as a use of our cash flow. And in Q3, we reduced our term debt by $135 million. We ended Q3 with total outstanding debt of $740 million and cash and investments of approximately $153 million. Our net leverage at quarter end was approximately 1.24 times trailing 12-month pro forma EBITDA.
Our updated 2023 guidance is as follows: We expect total revenues will be between $1.942 billion and $1.962 billion. The midpoint of our guidance implies organic growth of approximately 7.5%. We expect GAAP diluted EPS will be between $3.82 and $3.96 and may vary significantly due to the impact of stock option activity on the GAAP effective tax rate. We expect non-GAAP diluted EPS will be between $7.66 and $7.80. Interest expense is expected to be approximately $24 million, including approximately $5 million of non-cash amortization of debt discounts and issuance costs. Other details of our guidance are included in our earnings release and in the Q3 earnings deck posted on our website.
In conjunction with our guidance for the full year, I'd like to remind you of the seasonality around our transaction revenues. While transaction revenues will grow year-over-year, as expected, they declined sequentially in Q3 and will decline sequentially again in Q4. Historically, transaction revenues are driven by two primary factors; state-determined deadlines like corporate filings and hunting seasons and the number of business days. Transaction revenues are typically at the highest in Q2, coinciding with peak outdoor seasons and tax deadlines. Transactions are at a seasonal low in the fourth quarter with fewer business days and less activity around the holidays.
As we noted previously, we are also seeing the revenue impact of a midyear contractual changes in one of our state enterprise agreements that include a move from a gross to net model for payments.
Now I'd like to turn the call back over to Lynn.
