Tyler Technologies (TYL) Oppenheimer 27th Virtual Annual Technology, Internet & Communications Conference summary

Business overview and market positioning

• Focuses exclusively on public sector software, serving federal, state, and local governments, with 70%+ of business from local entities.

• Offers a broad suite of mission-critical applications, including financial, court, public safety, and property tax systems.

• Transaction-based business, especially payments, supplements core software and is expected to grow at or above core rates.

• 98% of revenue is domestic, with limited international exposure.

• Data and analytics platform (Socrata) serves some international clients, mainly in the UK.

Macro environment and demand trends

• Market activity and RFP volume have returned to or exceeded pre-COVID levels, with robust and stable demand.

• Government budgets, especially at the local level, remain strong due to stable property values and supplemental federal funds (ARPA) available through 2026.

• Demand is consistent across products, with public safety seeing accelerated cloud adoption and strong win rates.

• Digital modernization, remote work, and analytics needs are driving incremental demand beyond standard system replacement cycles.

Cloud transition and technology strategy

• Cloud transition reached an inflection point in 2023, with cloud revenues surpassing on-premise revenues and shifting from a margin headwind to a tailwind.

• Nearly all new business is cloud-based; about 40% of revenue is now from cloud customers, with rapid migration expected from 2025 onward.

• Cloud-optimized product releases and version consolidation are key to accelerating customer migration and improving efficiency.

• Security concerns, especially ransomware, and IT staffing challenges are increasing customer interest in cloud solutions.

• AWS is the primary cloud partner, with most customers directed there for hosting.