Tyler Technologies (TYL) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

SaaS growth and execution risks

• Over half of current SaaS growth is driven by prior year bookings, with timing of contract flips from on-prem to cloud being a key variable.

• New bookings have less impact on current year revenue due to lag between signing and revenue recognition.

• Execution risks and opportunities are mainly related to timing of migrations and bookings, not pricing.

• Total SaaS bookings, including flips and renewals, are the best leading indicator of future growth.

Guidance, acquisitions, and revenue outlook

• Recent guidance increase is almost entirely due to the FTR acquisition, which is undergoing its own cloud transition.

• There is some variability in FTR's revenue mix between cloud and on-prem, but overall SaaS outlook for the year remains unchanged.

• Only minor timing adjustments for cloud flips have been made, with no material change to full-year SaaS expectations.

Cloud migration and customer dynamics

• About 55% of revenue is now SaaS, with 45% still on-prem; migration pace is influenced by customer infrastructure and workforce challenges.

• Expectation that 80% of 2023 on-prem customers will move to cloud by 2030, with peak conversions in 2027–2029.

• Migration is often delayed by public sector hiring issues, hardware depreciation cycles, and cybersecurity concerns.

• Education on cloud benefits and limiting new features to cloud versions are used to encourage migration.

• Maintenance pricing increases may be used as a future incentive for cloud adoption.