Tyler Technologies, Inc. Piper Sandler 5th Annual Growth Frontiers Conference

Thanks for having me. Yeah.

Yeah. Sure. If you are not familiar with Tyler, we are the leading provider of software for the public sector. We focus exclusively on the public sector. We have by far the widest set of solutions for public sector entities across federal is really small, but federal, state, and local governments. We also have by far the biggest customer base of anyone in the public sector. So we have about 50,000 installations of our products across about 16,000 different government entities. And about a third of our revenues today are also transaction-based. So we have a growing transaction business with payments that are embedded across our software solutions and other transaction-based offerings.

Just had an investor day in June, laid out new, updated, and raised targets for our 2030 Tyler vision, where we're talking about roughly a 20% SaaS CAGR through 2030, a 10%-12% transaction growth CAGR, and operating margins going from the mid-20s to the mid-30s over that time period. So laid out a lot of recent information about our plans there, and we're excited about the opportunities for us over the next few years.

Yeah. The market doesn't change a lot, and it's got a lot of characteristics that if you're in the government market, it's very attractive. But if you're not in it might be viewed as less attractive. I think the constant is the governments always need to do more with less. They never have enough budget, even in a really good economy, and when things are booming, there's never enough money or enough resources. So that's always a factor. Today, there's an awful lot of pressure around staffing challenges. They're going to get worse because governments are really facing a big wave of retirements over the next five years, the silver tsunami, they're calling it. But they really just don't have enough people to do the things they need to get done.

Part of the reason behind that is that often they have old technology. That they have inefficient processes that are governed by old technology. They do not have online access for citizen self-service. They struggle with remote work because of some of their systems, which also then leads to them struggling to hire people. A lot of this stuff is interrelated, but at the core, a lot of it has to do with staffing challenges and this general sort of theme or drive to improve government efficiency. DOGE obviously was a big talking point. But beyond DOGE at the federal level, there is a general goal of improving government efficiency, and technology is really the way they are going to do that, and that is good for us.

We are seeing people start to, in some cases, replace old technology sooner than when it absolutely has to be replaced when it is dying, but recognizing that there is an ROI and there are efficiency gains by updating their technology. AI will over time be one of those things.

Some of it is the progress we have made from 2023 to 2025, and that we are sort of ahead of schedule. Some of it are the acquisitions we have made over that timeframe, and we kind of laid out in our capital allocation presentation how our acquisitions over the last five years have a CAGR that is about twice Tyler's core growth rate. The acquisitions we have made in recent years are growing at a 24% CAGR. As we continue to make acquisitions and along with the ones we have already made, they are contributing to higher growth. But when you look at kind of what builds up to that 20% SaaS CAGR, it is sort of a low teens growth from our new logo SaaS sales and expansions with our existing customers, including kind of the regular pricing we get. We also have very low attrition.

We typically over a very long period of time only have gross retention of 98%-99%. Our customers don't get acquired, and they don't go out of business. They are very sticky. We start out with a good starting point there. Low teens growth from new SaaS and expansion, and then mid-single-digit contribution from our on-premise customers flipping or moving to SaaS. We typically get a 1.7x uplift from maintenance to SaaS, so that's contributing mid-single digits on top of that. We expect that contribution to continue to increase over the next four to five years as we continue to make progress with migrating our on-prem customers. We've had 22 straight quarters of more than 20% SaaS growth, so we've got a pretty good base that we're working on.

We do expect the flip contribution to continue to increase over the next few years.