Tyler Technologies (TYL) Baird 2024 Global Consumer, Technology, & Services Conference summary

Market overview and growth strategy

• Focuses exclusively on public sector software, serving local, state, and federal levels with a broad product suite.

• Recurring revenues have grown at a 22% CAGR since 2018, with SaaS revenue growth in the 20s since 2019.

• Currently generates 83% recurring revenues, with 98% gross retention and strong free cash flow.

• Cloud transition reached an inflection point, with cloud revenues now surpassing on-premise revenues.

• Four growth pillars: leveraging installed base, expanding TAM, cloud transition, and growing transactions business.

Financial targets and performance

• Mid- and long-term targets include 10%-12% recurring revenue growth and total revenues approaching $4B by 2030.

• Operating margin target to exceed 30% by 2030, up from 23% in 2023.

• Free cash flow expected to surpass $1B by 2030, with margin in the high twenties.

• Q1 outperformed expectations, leading to a raised full-year outlook.

• Market activity and RFPs are at or above pre-COVID highs, supported by strong local government budgets and ARPA funds.

Cloud transition and modernization

• Governments are accelerating digital modernization, driven by citizen demand and workforce shortages.

• Average system replaced is over 20 years old, with post-COVID needs pushing faster adoption.

• Cloud adoption has accelerated, with 75%-85% of customers expected to migrate by 2030.

• Version consolidation and sunsetting older products are key to enabling cloud migration and margin uplift.