Tyler Technologies Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kirk Materne - Evercore ISI - Analyst : Lynn, maybe just to you, I'll ask them just consecutively. I guess, first for you, Lynn, obviously, you guys have been through a lot of macro cycles. What's the leading indicator you're looking at just in terms of sort of the health of the business? You guys mentioned your RFPs in particular. But I was just wondering if you could add a little color to what you're keeping an eye on just to make sure that the macro sort of volatility is not seeping into sort of customer thought processes. And then Brian, for you, the ARR number was also down a little bit this quarter year-over-year. I assume it sort of plays into that broader commentary you had on SaaS deals. But I was wondering if you could add a little bit more color on that as well.

Question: Ken Wong - Oppenheimer - Analyst : I guess this could go to Lynn or Brian, but on that softer booking side, you guys called out consultant deals maybe seeing a little bit of a pushout. Or any reason to think that, that could materialize into something more concerning? I mean, what's your confidence that those deals will get over the finish line versus -- I mean, we've seen the headlines with significant slashes in IT services. And just love any color there from either of you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 2:00PM, TYL.N - Q1 2025 Tyler Technologies Inc Earnings Call

Question: Terry Tillman - Truist Securities - Analyst : It's a question that might actually be two parts, but sorry about that ahead of time. But just one thing is on the bookings. It was good to see that the contract value on flips up though year-over-year. And then the new deals, obviously, was down year-over-year. But as you look through the rest of the year in terms of visibility and just kind of execution risk and what seems kind of easier to plan for, how does it feel on the flip side versus new SaaS bookings? And then Brian, the contract duration that was 2.7 years, that definitely came down from 4Q. Anything to think about going forward?

Question: Michael Turrin - Wells Fargo Securities - Analyst : I want to just try to tie some of the comments together. We're getting questions on the bookings and new deal metrics from Q1. Lynn mentioned some Q4 pull forward. So it sounds like maybe it's more of that than the consulting commentary that may have had an impact on Q1. And then on REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 2:00PM, TYL.N - Q1 2025 Tyler Technologies Inc Earnings Call the consulting commentary, is there anything you see internally that you can do on your side to just work around any impacts there on the fringe, given you're more focused on software? I think the public sector spend focus is more on software than services. I'm just wondering, is there any place you can run that just can help continue to build on some of the momentum you're signing with RFPs?

Question: Alexei Gogolev - JP Morgan - Analyst : Lynn, if I may ask one more question about flips. I think in the past, you suggested that you had about 400 flips last year and were hoping to see about 550 this year. With 106 in Q1, are you still on track for that 550 target?

Question: Joshua Reilly - Needham & Co. - Analyst : If we look at the payments business, volumes were quite strong this quarter. How much of a driver vehicle history record polls maybe influenced that growth improvement? And is there any unusual transaction activity we should be considering in Q1? And do you expect the normal sequential increase in transaction volumes peaking in Q2 with historical trends?

Question: Saket Kalia - Barclays - Analyst : Brian, maybe for you, just given all the questions on SaaS bookings or SaaS new ARR, I was wondering if we could unpack that just a little bit. Then maybe the question is, how much -- if you had to estimate, how much do you think was sort of pulled forward in Q4 roughly? And then is there a way to think about how much was maybe awarded this quarter but wasn't contracted, which maybe adds to some of that lumpiness? Does that make sense?

Question: Robert Oliver - Baird - Analyst : Lynn, just a two-part question for you just around some high-level trends. I guess, first, around ARPA. I just would be curious to hear from you. There is some chatter coming from D.C. particularly around the Department of Education around attempts to claw back some of the ARPA funds that have been already allocated and Trump administration has made clear they want to get some of that money back. And I just would be curious to hear, I know you guys have some exposure to schools in what you're hearing there or hearing there generally. And is that the reason perhaps for some slightly slower contract activity? And then I just wanted to check on the federal side for you guys on the BPM side. Just if you guys have done any audit of that business to understand how you guys sit relative to DOGE. I know it's a very small percentage portion of your business going back to 2019 acquisition. Just wanted to check the box that we're comfortable there.

Question: Jonathan Ho - William Blair & Company - Analyst : Just wanted to better understand sort of commentary around what's happened with some of the transaction fee increases and pass-throughs as well as the Texas contract and maybe what your expectations are going forward.

Question: Gabriela Borges - Goldman Sachs - Analyst : Lynn and Brian, your comments throughout the last 45 minutes have been very consistent in saying the areas where you see an impact from DOGE or from consulting or from deal scrutiny, all of those areas are small. So my question for you is how do you think about the risk that some of these fringe issues on the margin but are more mainstream as we go through the year, what would be a scenario where you see more of an impact as we go through the year and how do you think about sizing that?

Question: Alex Zukin - Wolfe Research - Analyst : I guess maybe just a two-parter for me. On new SaaS deals versus on-premise SaaS flips, is it -- should we assume that new SaaS deal ARR versus last year is going to be a little bit less around some of the pause and caution that you called or saw in Q1? And will conversions, the flips drive more of the SaaS growth this year than do SaaS deals? And then on kind of leading from that, if you look at the -- if you look at the performance of SaaS, maybe help us just a little bit the year on the SaaS revenue line? And what are the puts and takes kind of hitting the low end versus the high end of your full year guide on the SaaS revenue line?

Question: Keith M. Housum - Northcoast Research - Analyst : Brian, I just want to revisit the comment you made regarding sales and marketing expense being down, I think it was 2% to 4% year-over-year. Perhaps can you provide a little more color on that? And did that have a benefit in the first quarter and what you guys are doing there?