Tyler Technologies (TYL) Piper Sandler 5th Annual Growth Frontiers Conference summary

Business overview and market dynamics

• Leading provider of public sector software with 50,000 installations across 16,000 government entities; about one-third of revenue is transaction-based.

• Governments face persistent budget constraints and staffing shortages, exacerbated by a wave of retirements expected over the next five years.

• Legacy technology and inefficient processes drive demand for modernization and efficiency improvements.

• Customers are increasingly replacing outdated systems before failure, recognizing ROI and efficiency gains from upgrades.

SaaS transition and growth targets

• Updated 2030 vision targets a 20% SaaS CAGR, 10%-12% transaction growth CAGR, and operating margins rising from mid-20s to mid-30s.

• Growth driven by new logo SaaS sales, expansions, low attrition, and on-premise to SaaS migrations, with a 1.7x uplift from maintenance to SaaS.

• 22 consecutive quarters of 20%+ SaaS growth; flip contribution from on-premise to SaaS expected to increase over the next four to five years.

• Conversion targets for on-premise customers raised to 85%+, with large customers expected to move to the cloud in the next three to four years, though timing may be lumpy.

• Formalized plans and communications are underway to accelerate cloud migration among on-premise clients.

Customer base expansion and cross-sell strategy

• Market growth is steady due to replacement of legacy systems, with strong win rates and competitive positioning.

• Significant opportunity to expand product penetration within existing customers, moving from two or three products per customer to eight to ten.

• Structural changes in commission and quota structures, along with acquisitions and R&D, support cross-sell and upsell opportunities.