Tyler Technologies Inc at UBS Global TMT Conference (Virtual) Transcript

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

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Maybe just to start off, I think we've all experienced how challenging a year it's been for state and local governments. Those are your customers. So maybe we could just start off, could you give us a quick overview of what you're seeing in your customer base at this point? And how the current pandemic has either negatively or positively impacted what they're spending on?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to follow-up on that thought. I think on the last earnings call, Lynn mentioned that pipelines were still kind of unchanged, but the pace at which deals was moving was slower. And going back to the budgets, I'm curious if it's a function of the budgets there, but states are being, and local municipalities are being a bit slower, just to make sure they have money, if they need it versus the money is just not there at all right now. Can you just give a little context around -- assuming we get a vaccine, assuming things get a little bit more back to normal, how quickly things could potentially recover in your view?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to round the point out because it does seem like one of the sticking points right now in Washington is funding for state and local governments and what that looks like. Well, I mean, I guess if you think about your own guidance and sort of the outlook you present, how sensitive is that to whether or not Washington comes through and gets some additional funding to some of the areas that are in need right now?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe on the flip side of that, and you got to the IT modernization point, but certainly, governments had to respond like the rest of us, do things more remotely, digitize a bit more and maybe systems are even more broken than a large European bank, not naming any names. It was a pretty big -- a big shift. And just I mean, personally, my dad works on a planning committee in the county I grew up in. And they weren't even sure virtual meetings were legal. So he's in his late 70s, lifetime smoker having to go to Board meetings, it was definitely causing a lot of agita in the family (inaudible). So I'm just curious, are you seeing, I guess, that in 2 phases of change, are you seeing more focus on how things can be done virtually and digitally, maybe even accelerating certain types of projects? And to the extent that you are, is it purely a budget and cultural set of gates that you're now getting through? Or are there sort of legal things that need to happen in order to enable more digitization that might take a little longer?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And then maybe just to stay on that point for a bit. One of the things that I found really impressive is how quickly Tyler was able to spin up a virtual courtroom system and get that in front of customers and kind of help them in this time of dramatic change. Can you touch on that a little bit? First, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2020 / 5:05PM, TYL.N - Tyler Technologies Inc at UBS Global TMT Conference (Virtual) kind of how quickly you were able -- how were you able to get that out there so quickly with the free trial? And then secondly, as you move through that period, how does that convert to potential revenue opportunity for Tyler down the road?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Great. And one of the things that came up on the Q3 call was that public service -- or Public Safety was a relative area of strength. Can you talk a little bit about what's happening in that product set? And what some of the drivers there are helping that be a little bit more resilient?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And then maybe just to -- well, I have another question, but maybe just around that discussion around [unity] investments and now really delivering returns. If we think about the investment cycle around that product, it's sort of the second derivative that now it's more sort of maintaining what you've got, maybe yielding a little bit of a better, call it, LTV to CAC or whatever the right metric is. But you should start to see that ROI contribute a bit more to leverage in the model as you move forward?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And then just on the demand environment around Public Safety. It seems like with a lot of -- you mentioned to fund the police but just with some of the social attention on law enforcement and how they help the community versus some of the more controversial things. This seems like transparency is a big part of that. I mean, is that something that's contributing to some of the increase you're seeing in RFPs that public safety agencies feel like they need to have better community relations, be more transparent and technology is one way to accomplish them?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : I think it makes -- anyway, I did want to ask about Socrata as well. And there, you sort of mentioned the Public Safety use case, but certainly, public health has also been a big opportunity for data transparency, real-time information from governments on what's going on and case rates and hospital fill rates and things like that. Has that created any new opportunities or incremental demand for Tyler as state and local governments just generally try and make that data more accessible in real time to a very hungry public.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And in those scenarios where there's a very immediate and very real pain point around a need to know that's particularly acute. When you get in the door with that type of use case, I know it's still probably pretty early. But I guess, 2 questions. One, how do you kind of ensure that, that isn't a solution that maybe gets switched off once there's a vaccine, and we all go back to normal? And two, to the extent you're in the door on those, how quickly do you think that could potentially start to move into other use cases that maybe weren't being thought about before but now there's the familiarity, meaning are there any proof points at this point that you can -- once you're in the door, you can get that expansion?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And just shifting gears a bit to another end market that Tyler has strengthened, and that's the education market. And another industry that's dealing with change, I have a second-grade virtual class happening in the next room, thankfully not in here yet. But how are you -- I guess, maybe 2 questions here. First, as education pivots to virtual/remote, is that something that helps you or hurts you in terms of your ability to sell? And maybe we'll start with that and then go from there.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And then on just a related note, I would imagine that the limited budgets school have available for technology are probably kind of, in some ways, consumed with Zoom learning and things like that right now. But at some point, hopefully, sooner than later, from my perspective, the kids will start to go back to school, maybe some of that budget gets freed up a bit. Like any market, this environment shows the limitations of being on-prem having legacy systems. Do you see sort of a scenario where some of this modernization effort in the schools could start to pick up a bit more in the back-office side once the need to invest in remote support eases?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And just rounding that point out, M&A has been part of your strategy. You've built out a lot of very interesting product categories through M&A to the extent that some people who might have been competing with you for interesting assets are a little bit more constrained right now and some of those interesting assets might be dealing with their own challenges and being subscale. Does that open the door for you to be a bit more opportunistic about deals in the near term? Or do you feel like you've got the right pieces for the time being? How should we think about that?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Great. In the last couple of minutes here, I'm going to ask you a question, which might be a little bit of an unfair question, but I'd just be curious to get your thoughts. I think there's been a lot of media attention around demographics and postpandemic seeing maybe an outflow of people from large urban centers into smaller cities. We've certainly seen a couple of big technology companies relocate to Texas, and you're going to have a lot more neighbors down there, I guess. Given what you said earlier about particular strength in smaller municipalities, is that potentially a net positive for Tyler if you see people migrating out of big cities into smaller, more livable cities? Or is it just way too early to know what that means. It just strikes me that the property taxes there probably see some upswell from that.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Okay. Great. Well, Brian, thank you so much. It's always a pleasure to talk with you. And I know I enjoyed the conversation. I know I'm sure others online enjoyed hearing your thoughts. So thank you for being here, and good luck with the rest of your day.