Tyler Technologies Inc at Wells Fargo TMT Summit Transcript

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

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : It's amazing. So obviously, you'll have a lot of perspective to add to the conversation, but I'm sure you've noticed or maybe you haven't, but we've certainly noticed that over the past year in software, there's been this renewed interest and appreciation for vertical-focused software, right? We went through a period where horizontal software was very top of mind. And the idea was just -- the growth characteristics of those businesses captured a lot of attention. You've just been methodically doing what you're doing for a long time. And maybe we can just start by speaking to what Tyler does and what has kind of enabled that consistent profile that investors have come to appreciate again.

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : When we just think about the breadth, like how much of an advantage is that versus the fragmented players that are trying to do one thing? Is there an association with Tyler more broadly across public sector that helps? Or what has enabled our business model to succeed?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Can you just talk about the TAM and the penetration rates within the industry? Because I think sometimes investors think, well, gosh, Tyler has been around a long time. I wonder if they're starting to run into some level of penetration. But you're not, for [what we've] seen. Just maybe for those who don't have appreciation for how vast, like all these different categories end up being -- provide some --

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : So can we bring cloud in the conversation and talk about the progress that you've made there? So Tyler has embarked on the cloud transformation. It seems like it's catching some good momentum. We've seen signs that the margins have troughed and are starting to build back. But maybe walk through the past couple of years, what the sort of impetus was for moving towards cloud? And just how you've seen receptivity, given you mentioned customers can be slow moving? So maybe it takes some time for that momentum to build. But what has the progress started to look like there?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : We've talked about the sort of the slow-moving characteristics is one side of the customer profile, but the other side is they can't go out of business, they can't go anywhere. They have to find budget. Like these things have to happen at some point. So what are you able to say around visibility into where the market is going, where the opportunities are in the next one, two, three years out? And how that just informs whatever you're doing from a prioritization standpoint and spend as CFO?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : And your customers kind of awareness of that [TCO] discussion and the discussion around reasons the cloud might come in more than the maintenance revenue stream, but you're enabling so much more. Is that something that you're finding most of the entities that you serve now just better --

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : One question that we get from investors who are just coming up to speed on Tyler is just that is there any sort of macro-related exposure to think about? I think investors here, government and think, well, maybe there's something tied to election cycles or tied to something that might potentially impact the business. But you're broadly diversified, and I think you've sort of highlighted that. But in your assessment and amount of time as part of Tyler, have you noticed any macro sensitivities at all?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Yes. I think that's helpful. Can we spend a little bit of time talking about the M&A strategy, how that -- I mean, you mentioned market is fragmented. I'm sure you pick up little points of opportunity just in your expertise within the public sector. So what informs the M&A strategy, prioritization efforts there?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Is that more of the reason that you said there have been zero over the past year or maybe for the year before? Is it more just digestion of prior acquisitions and the things that you're working on? Or was some of it at all tied to the interest rate environment?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Yes, that makes sense. How would you gauge progress with NIC thus far? And if there is an evolution of that progress, like the lessons learned, how you would view the synergies and cross-sell potential there currently versus what it looked like when you first made the acquisition? 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 04, 2024 / 8:45PM, TYL.N - Tyler Technologies Inc at Wells Fargo TMT Summit

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Why wouldn't that be a no-brainer for those customers, given you mentioned you're already touching payments, and I think all of us have experienced places that we go, whether it's the DMV or somewhere else, where you're surprised there's not a better payments portal or something like that? Is it also just tied to the slower-moving nature of decision-making? Is it harder to go back and cross-sell something if a customer is already renewed? Or what are the things that --

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : I'd be remiss if I didn't spend a little bit of time on the target. I think that the 2030 target model comes up often in investor conversations. Can you speak to the level of visibility you have that far into the future, given you do have long customer lifetimes? And what needs to happen for you to execute on both the growth and the margin side of those targets?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Is there a trade-off that we should think about at all if payments is outpacing overall growth on the margin side?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Okay. I think time for just one more. So I'll leave it to you for closing thoughts. We've talked about this as a very consistent business. I don't know how much your planning cycle shifts from year to year. But as we're coming into year-end, if there are bigger areas of strategic focus, areas of investment, prioritization, anything else that you would kind of highlight in helping frame the next one or three years for investors?

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : Can you expand on that, just with the AI --

Question: Michael Turrin - Wells Fargo Securities, LLC - Analyst : It sounds like you've got plenty to keep busy with. Brian, I appreciate you making the trip to the West Coast. This is great.