Tyler Technologies (TYL) Goldman Sachs Communacopia & Technology Conference summary

Demand environment and market trends

• Public sector demand remains robust, with stable RFPs and deal activity at or above pre-COVID levels.

• Strong local government budgets, supported by high property values and sales taxes, underpin demand.

• ARPA and federal stimulus funds provide additional support but are not the primary demand driver.

• Digital modernization and cloud adoption are accelerating, driven by workforce constraints and the need for efficiency.

• Governments are increasingly open to technology upgrades, especially post-COVID.

Cloud transition and operational efficiency

• Cloud revenues surpassed on-premise in 2023, with 90% of new business now cloud-based.

• Targeting 80-85% customer cloud conversion by 2030; currently at 40% cloud, 60% on-prem.

• Version consolidation and cloud-optimized product releases are key to accelerating migration.

• Customer incentives focus on added features in cloud versions, with pricing and support changes as future levers.

• Exiting private data centers in favor of AWS is expected to drive margin improvement, with duplicate costs declining after 2025.

Product innovation and AI adoption

• AI interest is rising among government clients, mainly to address workforce shortages and automate routine tasks.

• Recent acquisitions have enhanced AI capabilities, with a focus on citizen self-service and operational efficiency.

• AI investments are prioritized for high-impact, monetizable use cases like document processing and data entry.