| Metric (Unit) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|
| New SaaS Clients Added (Count) | 140 **[TYL_3228496_2]** | 145 **[0000860731-23-000018_tyl-20230331.htm:29]** | 170 **[0000860731-23-000028_tyl-20230630.htm:32]** | 161 **[0000860731-23-000037_tyl-20230930.htm:35]** | 156 **[TYL_3373664_4]** | 200 **[0000860731-24-000025_tyl-20240331.htm:28]** | 203 **[0000860731-24-000042_tyl-20240630.htm:30]** | 181 **[TYL_3403788_4]** |
| Existing On-Premises Clients Converted to SaaS (Count) | 82 **[TYL_3228496_2]** | 73 **[TYL_3247724_1]** | 94 **[TYL_3255796_2]** | 79 **[0000860731-23-000037_tyl-20230930.htm:35]** | 92 **[TYL_3373664_1]** | 90 **[0000860731-24-000025_tyl-20240331.htm:28]** | 111 **[0000860731-24-000042_tyl-20240630.htm:30]** | 108 **[0000860731-24-000052_tyl-20240930.htm:32]** |
| New Software Contract Mix - SaaS (%) | 86% **[TYL_3228496_2]** | 87% **[0000860731-23-000018_tyl-20230331.htm:29]** | 82% **[TYL_3383847_1]** | 80% **[TYL_3363888_3]** | 89% **[TYL_3373664_1]** | 92% **[0000860731-24-000025_tyl-20240331.htm:28]** | 90% **[0000860731-24-000042_tyl-20240630.htm:30]** | 97% **[TYL_3403788_1]** |
| ARR ($ Billion) | 1.50 **[0000860731-23-000004_a991earningsrelease12312022.htm:0]** | 1.58 **[0000860731-23-000018_tyl-20230331.htm:30]** | 1.66 **[0000860731-23-000028_tyl-20230630.htm:33]** | 1.65 **[0000860731-23-000037_tyl-20230930.htm:36]** | 1.61 **[0000860731-24-000006_tyl-20231231.htm:50]** | 1.72 **[0000860731-24-000025_tyl-20240331.htm:27]** | 1.80 **[0000860731-24-000042_tyl-20240630.htm:28]** | 1.85 **[0000860731-24-000052_tyl-20240930.htm:30]** |

5d200f7be0af72402c54a6a9cbe3a16cf8f0adc20a6d3890402b4a07323f2699

| Metric [USD Million] | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Enterprise Software Segment** | | | | | | | | |
| SaaS | **111.0**    | **115.9**    | **120.7**    | N/A | **128.1**    | **136.0**    | **144.4**    | N/A |
| Transaction-based fees | **37.4**    | **38.7**    | **45.2**    | N/A | **51.9**    | **55.7**    | **61.6**    | N/A |
| Maintenance | **110.1**    | **110.0**    | **111.6**    | N/A | **111.2**    | **109.2**    | **109.3**    | N/A |
| Professional services | **51.5**    | **55.3**    | **52.4**    | N/A | **54.9**    | **58.7**    | **53.9**    | N/A |
| Software licenses and royalties | **8.1**    | **9.5**    | **7.5**    | N/A | **8.6**    | **5.3**    | **5.4**    | N/A |
| Hardware and other | **5.2**    | **6.4**    | **10.4**    | N/A | **8.4**    | **7.8**    | **9.0**    | N/A |
| Intercompany | **5.1**    | **6.9**    | N/A | N/A | **(6.2)**    | **6.5**    | N/A | N/A |
| **Total Revenues** | **328.3**    | **342.5**    | **353.8**    | N/A | **369.2**    | **379.3**    | **390.7**    | N/A |
| **Platform Technologies Segment** | | | | | | | | |
| SaaS | **15.6**    | **15.6**    | **17.8**    | N/A | **20.6**    | **19.9**    | **22.2**    | N/A |
| Transaction-based fees | **116.5**    | **127.7**    | **111.5**    | N/A | **112.6**    | **122.0**    | **119.0**    | N/A |
| Maintenance | **5.0**    | **6.6**    | **5.9**    | N/A | **6.0**    | **6.1**    | **6.2**    | N/A |
| Professional services | **9.4**    | **11.2**    | **8.7**    | N/A | **9.9**    | **13.2**    | **10.5**    | N/A |
| Software licenses and royalties | **2.1**    | **0.3**    | **3.0**    | N/A | **0.2**    | **0.01**    | **0.8**    | N/A |
| Hardware and other | N/A | **0.0**    | N/A | N/A | N/A | N/A | **0.9**    | N/A |
| Intercompany | **(5.1)**    | **0.0**    | N/A | N/A | N/A | **0.5**    | N/A | N/A |
| **Total Revenues** | **148.6**    | **161.3**    | **146.9**    | N/A | **149.3**    | **161.7**    | **164.4**    | N/A |
| **Corporate** | | | | | | | | |
| Intercompany | **(5.1)**    | **(6.9)**    | N/A | N/A | **(6.2)**    | **(0.06)**    | **(11.7)**    | N/A |
| **Total Revenues** | **471.9**    | **504.3**    | **494.7**    | **480.9**    | **512.4**    | **541.0**    | **543.3**    | N/A |

4e88be1862d07087f0c1f6d1cbba912b520ff453da88240e2a5e7cfd939fe9b0

83cc00261a0b8d3425c699226c52461837b6d7c762d50206b68f687c39f335ca

036eaaebf1d6e72d63dad5fd81b8f4beeb7b0bb05b29812359a485ed65ccea12

Tyler Technologies, Inc. is a leading provider of integrated software and technology management solutions for the public sector, serving local, state, and federal government entities. The company offers a broad range of software solutions and services designed to support essential government functions, including public safety, justice, public health, taxation, budgeting, infrastructure, land use, utility and civic services, regulation, K-12 education, and social services **[0000860731-24-000006_tyl-20231231.htm:4]** **[0000860731-24-000006_tyl-20231231.htm:11]**. Tyler's business is organized into two main segments: Enterprise Software (ES) and Platform Technologies (PT) **[0000860731-24-000006_tyl-20231231.htm:48]** **[0000860731-24-000042_tyl-20240630.htm:27]** **[0000860731-24-000052_tyl-20240930.htm:29]**. The company generates revenue primarily from subscription-based services, including software as a service (SaaS) and transaction-based fees related to digital government services and online payment processing **[0000860731-24-000006_tyl-20231231.htm:93]** **[TYL_3403788_1]**.

1. **Enterprise Software (ES)** - Provides software systems for mission-critical "back-office" functions such as public administration, courts, public safety, education, and property recording solutions.
2. **Platform Technologies (PT)** - Offers platform and transformative solutions, including digital solutions, payment processing, and streamlined data processing.

c37d9fd825dcd667815a250219880cffbfcc32c5c97a2c6a0fa1fa3e06402e3e

1. The Total Contract Value (TCV) of cloud flips tripled to $36 million this quarter; do you expect this level of growth in cloud flips to be sustainable, and how does this align with your projections for cloud adoption through 2030?
2. You've indicated that competition in the market remains neutral, but can you provide more detail on how competitors like ServiceNow and Workday are impacting your business in key sub-verticals such as ERP and public safety?
3. With some clients still hesitant to migrate to the cloud due to control concerns and aging infrastructure, what specific strategies are you implementing to address these hesitations and accelerate cloud adoption among your existing on-premise client base?
4. Given that version consolidation is crucial for your cloud efficiency and margin improvement goals, particularly in products like Public Safety where consolidation may be lagging, what challenges are you facing in this process, and how might they affect your timeline for achieving targeted gross margin improvements?
5. As the impact of ARPA funds on your deals has been somewhat mixed, how are you assessing the potential risks associated with the eventual depletion of these funds, and what measures are you taking to sustain your growth in the absence of such government funding?

768a65a17ca7675e3d71013dc59016e24eb828fb427118f3c6c23159c6ded04b

Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

085136e7ab93e0ef33bfea728f997b7e41a1ad7c17e336a699a58c3c981341bf

- Oracle Corporation
- Infor
- SAP AG
- Workday, Inc.
- CentralSquare Technologies
- Thomson Reuters Corporation
- Motorola Solutions, Inc.
- Axon Enterprise, Inc.
- Constellation Software, Inc.  **[0000860731-24-000006_tyl-20231231.htm:13]** 

12682e4cdb8893fb1158a4331fddc2db0a970da9489015114e627f9588667cb8

New SaaS Clients Added (Count)

Existing On-Premises Clients Converted to SaaS (Count)

New Software Contract Mix - SaaS (%)

ARR ($ Billion)

45eff3970b3bb1619c5e541ec15ec92483a09fa46d976168c26e37ad1c3fd5a9

10e5704897d77e7736cc766e48e26e78b2cf10147e3d793f46d770d4cd7ea405

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Revenues**: $2.125 billion to $2.145 billion, with organic growth of approximately **9%**.
  - **Merchant Fees**: Expected to increase by approximately **7%** over last year.
  - **GAAP Diluted EPS**: $6.13 to $6.28.
  - **Non-GAAP Diluted EPS**: $9.47 to $9.62.
  - **Free Cash Flow Margin**: 21% to 23%, including an estimated impact of approximately **$54 million** of incremental cash taxes related to Section 174  **[TYL_3403788_5]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Revenues**: $2.120 billion to $2.150 billion, with organic growth of approximately **9%**.
  - **Merchant Fees**: Expected to increase by approximately **6%** over the previous year.
  - **GAAP Diluted EPS**: $5.76 to $5.96.
  - **Non-GAAP Diluted EPS**: $9.25 to $9.45.
  - **Free Cash Flow Margin**: 18% to 20%, including an estimated impact of approximately **$60 million** of incremental cash taxes related to Section 174  **[TYL_3394444_5]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Revenues**: $2.110 billion to $2.140 billion, with organic growth of approximately **8.5%**.
  - **Merchant Fees**: Expected to be up slightly over last year.
  - **GAAP Diluted EPS**: $5.27 to $5.47.
  - **Non-GAAP Diluted EPS**: $9.10 to $9.30.
  - **Free Cash Flow Margin**: 17% to 19%, including an estimated impact of approximately **$58 million** of incremental cash taxes related to Section 174  **[TYL_3380909_4]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Revenues**: $2.095 billion to $2.135 billion, with organic growth of approximately **8%**.
  - **Merchant Fees**: Expected to be down slightly.
  - **GAAP Diluted EPS**: $5.17 to $5.37.
  - **Non-GAAP Diluted EPS**: $8.90 to $9.10.
  - **Free Cash Flow Margin**: 17% to 19%, including the impact of incremental cash taxes related to Section 174 of approximately **$50 million**  **[TYL_3373664_5]** .

88b7902395f1218174a917b1f497051d3660c122fc72f92787bfc3a4f41dac28

| Name               | Position                                         | Start Date       | Short Bio                                                                                                                                                                                                 |
|--------------------|--------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| H. Lynn Moore, Jr. | President and Chief Executive Officer            | January 2017 (President), May 2018 (CEO) | H. Lynn Moore, Jr. has been serving as the **President of Tyler Technologies, Inc. since January 2017** and was named **Chief Executive Officer in May 2018**. He has been a director of the company since 2017 and is a member of the Executive Committee. Prior to his current roles, Mr. Moore served as Executive Vice President from February 2008 through December 2016, General Counsel from September 1998 through December 2016, and Secretary from October 2000 through December 2016. He also held the position of Vice President from October 2000 until February 2008. Before joining Tyler Technologies, Mr. Moore was associated with the law firm of Hughes & Luce, LLP in Dallas, Texas, from August 1992 to August 1998, where he represented numerous publicly held and privately owned entities in various corporate and securities, finance, litigation, and other matters  **[0000860731-24-000015_tyl-20240329.htm:15]** **[0001140361-23-015230_ny20006877x1_def14a.htm:17]** . |
| Brian K. Miller    | Executive Vice President, Chief Financial Officer and Treasurer | February 2008    | Brian K. Miller has been with Tyler Technologies since **1997**. He has served as the Executive Vice President, Chief Financial Officer, and Treasurer since **February 2008**. Prior to this role, he was the Senior Vice President, Chief Financial Officer, and Treasurer from **May 2005** to **February 2008**. Before that, he held the position of Vice President, Finance and Treasurer from **May 1999** through **April 2005**, and Vice President, Chief Accounting Officer, and Treasurer from **December 1997** through **April 1999**. Before joining Tyler Technologies, Mr. Miller held various senior financial management positions at Metro Airlines, Inc. from **June 1986** through **December 1997**  **[0000860731-24-000015_tyl-20240329.htm:16]** **[0001140361-23-015230_ny20006877x1_def14a.htm:18]** **[TYL_3410788_0]** . |
| Jeffrey D. Puckett | Chief Operating Officer                          | February 2021    | Jeffrey D. Puckett has served as the **Chief Operating Officer** of Tyler Technologies, Inc. since **February 2021**. In his role, he oversees the company's cloud initiatives, corporate technology, IT, and information security teams. Prior to this, from 2019 until February 2021, he was the Chief Strategy Officer. Mr. Puckett has been with the company since 1992, having served in various roles, including President of the Courts & Justice division, and has over 30 years of direct industry experience  **[0000860731-24-000015_tyl-20240329.htm:17]** **[0001140361-23-015230_ny20006877x1_def14a.htm:19]** . |

a85a022283bb5f01230f5816cdbddd658baffe0c0687c19dc417a7b25cd0007f

**Annual guidance for FY 2024:**
- **Total Revenues**: $2.125 billion to $2.145 billion  **[TYL_3403788_5]**  (no change from $2.120 billion to $2.150 billion  **[TYL_3394444_5]** )  
- **Merchant Fees**: 7%  **[TYL_3403788_5]**  (raised from 6%  **[TYL_3394444_5]** )  
- **GAAP Diluted EPS**: $6.13 to $6.28  **[TYL_3403788_5]**  (raised from $5.76 to $5.96  **[TYL_3394444_5]** )  
- **Non-GAAP Diluted EPS**: $9.47 to $9.62  **[TYL_3403788_5]**  (raised from $9.25 to $9.45  **[TYL_3394444_5]** )  
- **Free Cash Flow Margin**: 21% to 23%  **[TYL_3403788_5]**  (raised from 18% to 20%  **[TYL_3394444_5]** )  

bc036d81841a3b65a4a500c42b539e027e738b71478db6a2aa6684061572842a

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | October 2002    |
| End Date/Duration        | No expiration   |
| Total additional amount  | 1.5 million shares (Feb 2019)  **[0000860731-24-000052_tyl-20240930.htm:38]**  |
| Remaining authorization  | 2.2 million shares (as of 2024-12-21)  **[0000860731-24-000052_tyl-20240930.htm:38]**  |
| Details                  | The program is used to manage capital structure and return value to shareholders. Repurchases are influenced by market conditions and employee stock option exercises, funded by cash balances and credit facility.  **[0000860731-24-000052_tyl-20240930.htm:38]** **[0000860731-24-000025_tyl-20240331.htm:34]** **[0000860731-23-000009_tyl-20221231.htm:71]** **[0000860731-24-000006_tyl-20231231.htm:66]** **[0000860731-22-000043_tyl-20220930.htm:44]** **[0000860731-22-000035_tyl-20220630.htm:42]** **[0000860731-24-000006_tyl-20231231.htm:45]** **[0000860731-23-000009_tyl-20221231.htm:42]** **[0000860731-24-000042_tyl-20240630.htm:36]** **[0000860731-23-000028_tyl-20230630.htm:40]**  |

49f7ae012e8cec5dbb793e7fe89bbaac4ea64aaf09b395b0af7958a15d26640a

- **Tyler Technologies' pace of migrating clients to the cloud is constrained by lengthy processes and version compatibility issues**, especially with larger clients, potentially slowing revenue growth.  **[TYL_3380909_8]**
- **Despite elevated demand, the company's overall revenue growth has slowed over the last two years**, with uncertainty about significant acceleration in the near term.  **[TYL_3380909_10]**
- **Initiatives to improve sales synergies are still work-in-progress**, which may delay the realization of potential benefits.  **[TYL_3380909_6]**

0d7877f21695577b57e737d2f052c0942664c342fbe57e507e68f0db96f50902

| Name               | Start Date | End Date | Reason for Change |
|--------------------|------------|----------|-------------------|
| Ernst & Young LLP  | 1966  **[0000860731-24-000006_tyl-20231231.htm:86]**  | Present  | Current auditor   |

599f4b69dcd29cd3881f18f326cbfb32688698068f946840f65ed8ff084f8443

a381afc8c4d902e8f6a326d6c0c7a2c927f94cbb0d679dcf8569552322d3b267

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $543.3M (+10% YoY)  **[0000860731-24-000052_tyl-20240930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:1]**   
- Enterprise Software: $390.7M (+10% YoY)  **[0000860731-24-000052_tyl-20240930.htm:12]** **[0000860731-23-000037_tyl-20230930.htm:11]**   
- SaaS Revenue: $166.6M (+20% YoY)  **[0000860731-24-000052_tyl-20240930.htm:12]** **[0000860731-23-000037_tyl-20230930.htm:13]** **[0000860731-23-000037_tyl-20230930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:11]**   
- Transaction-Based Fees: $180.5M (+15% YoY)  **[0000860731-24-000052_tyl-20240930.htm:12]** **[0000860731-23-000037_tyl-20230930.htm:13]** **[0000860731-23-000037_tyl-20230930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:11]**   
- Operating Income (EBIT): $82.8M (+30% YoY)  **[0000860731-24-000052_tyl-20240930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:1]**   
- Net Income: $75.9M (**+61%** YoY)  **[0000860731-24-000052_tyl-20240930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:1]**   
- EPS (Diluted): $1.74 (**+60%** YoY)  **[0000860731-24-000052_tyl-20240930.htm:1]** **[0000860731-23-000037_tyl-20230930.htm:1]**   

261b3155fcd9192ffbb7bc034bd333045d60fe78d24e87ed41f0181511f5aa47

dfdebbdcec680fab8435bc5cedc115f443db9cd8679f335c3f35787ae6c263eb

4c77eba2ac29ebbb61e8aa4b3b7aebc75d5f7e7235cc8282ae4cd9f521b9834f

| Year | Amount Due (Millions) | Debt Type                  | Interest Rate | % of Total Debt                     |
|------|------------------------|---------------------------|---------------|--------------------------------------|
| 2026 | $600.0                | Convertible Senior Notes  | 0.25%         | 100.0% = (600.0 / 600.0) * 100 **[0000860731-24-000052_tyl-20240930.htm:2]** **[0000860731-24-000052_tyl-20240930.htm:17]** |
| 2029 | $0.0                  | 2024 Credit Agreement     | SOFR + 1.125% | 0.0% = (0.0 / 600.0) * 100 **[0000860731-24-000052_tyl-20240930.htm:15]** **[0000860731-24-000052_tyl-20240930.htm:39]**     |

6fd91e0313778a9bff67ad2d255c57269865408a01f3de980d53d432869f49a5

Annualized recurring revenue (USD billions)

Annualized recurring revenue growth (percentage)

Number of new SaaS clients (count)

Number of existing on-premises clients converting to SaaS (count)

Percentage of new software contracts that are perpetual license (percentage)

Percentage of new software contracts that are subscription-based (percentage)

Increase in professional services staff (count)

Total number of employees (count)

Backlog (USD billions)

Backlog growth (percentage)

SaaS fees growth (percentage)

Transaction-based fees growth (percentage)

2fef8c0c1434210004e2dcbdf8aa531db359839157e8b7d6ff5c3389eff87d63

- Tyler Technologies' Public Safety division is lagging in version consolidation, with only **30% completion**, potentially delaying margin improvements in that segment.  **[TYL_3403788_14]**
- The company is taking a deliberate approach to AI, without significant AI benefits included in its long-term targets, which may place it behind competitors rapidly adopting AI technologies.  **[TYL_3403788_23]**
- Revenue from client migrations ("flips") to cloud is **lumpy**, and recent strong quarterly results may not be indicative of future performance, leading to potential fluctuations in revenue growth.  **[TYL_3403788_7]**

80151cad89333b4ff270c5d7dd20cad04b72ec05bbfdd50649b49e53654ca79d

- **Tyler Technologies raised its annual revenue guidance for the first time since 2014, reflecting strong confidence in future growth**.  **[TYL_3380909_21]**
- **Operating margins expanded by 210 basis points in Q1, driven by improved cloud efficiencies and effective expense management**, with further improvements expected.  **[TYL_3380909_12]**
- **Accelerating cloud transition with 93% of new software contract value coming from SaaS, aiming to move 80–85% of on-premises customers to the cloud by 2030**, which should boost recurring revenues and margins.  **[TYL_3380909_8]**

3060732886dc8fdb394e6040b3d2c575a5a4e5f2441ef7be990889b48646178a

1. **Raised Guidance for Full Year**  
   **Q:** Why did you raise full-year guidance after Q1?  
   **A:** We raised our full-year guidance due to improved visibility and confidence in our sales outlook, which is something we haven't done since **2014**.  **[TYL_3380909_20]**  Sales indicators are positive, and we're seeing factors aligning to give us that confidence.  **[TYL_3380909_20]** 

2. **Operating Margins and Expectations**  
   **Q:** How do cloud operations impact operating margins this year?  
   **A:** Improved cloud efficiencies from product optimizations and cost savings with AWS are driving higher margins. Operating income dollars increased **19% year-over-year**.  **[TYL_3380909_12]**  We expect continued efficiencies from cloud migration and other internal initiatives throughout the year.  **[TYL_3380909_12]** 

3. **SaaS Conversions and Cloud Migration**  
   **Q:** Are you accelerating SaaS conversions, especially in Public Safety?  
   **A:** Yes, we're leading with SaaS in Public Safety, and **75%** of Public Safety deals in Q1 were SaaS, exceeding our plan of **50%**.  **[TYL_3380909_8]**  Cybersecurity concerns are also encouraging clients to move to SaaS faster.  **[TYL_3380909_8]** **[TYL_3380909_15]** 

4. **Transaction Revenue Dynamics**  
   **Q:** What's driving transaction revenue growth and margin impacts?  
   **A:** We had clients change from gross to net models, impacting revenue comparisons but improving margins.  **[TYL_3380909_13]** **[TYL_3380909_17]**  Most clients prefer gross arrangements, so we don't see this as a trend. We're achieving better pricing through embedding our payments platform with our software, adding value for customers.  **[TYL_3380909_17]** 

5. **Organic Revenue Growth Acceleration**  
   **Q:** Can you accelerate organic revenue growth soon?  
   **A:** Our win rates remain consistent, and we're starting to see overall revenue growth pick up after slowing over the last two years.  **[TYL_3380909_10]**  Sales outlook is positive, and significant parts of our business may be ahead of plan.  **[TYL_3380909_7]** **[TYL_3380909_10]** 

6. **Impact of Acquisitions**  
   **Q:** How meaningful are recent AI-powered acquisitions?  
   **A:** The three acquisitions collectively contributed around **$4 million** in quarterly revenue.  **[TYL_3380909_19]**  They fit our model of adding faster-growing products we can leverage in our installed base. We're excited about their potential to outperform expectations.  **[TYL_3380909_19]** 

7. **Competition from Startups**  
   **Q:** Are you seeing opportunities due to competitors' implementation challenges?  
   **A:** Yes, we've observed venture-backed startups struggling to get customers live, especially in Public Safety.  **[TYL_3380909_11]**  This allows us to highlight Tyler's strengths in execution and longstanding market presence.  **[TYL_3380909_11]** 

8. **Cross-Selling Transaction Systems**  
   **Q:** How is adding transaction systems to customers progressing?  
   **A:** We're in the very early stages but making progress with integrating payments into our products.  **[TYL_3380909_14]**  We've had **288** new payments deals, but it's a small fraction of our customer base, so there's a long runway ahead.  **[TYL_3380909_14]** 

9. **Sales Outlook and Market Conditions**  
   **Q:** Is the strong demand environment sustainable?  
   **A:** Markets are healthy, budgets are strong, and sales indicators are positive. We're on pace to exceed last year's **750** new deals, with over **200** subscription contracts this quarter.  **[TYL_3380909_9]**  We haven't seen much impact from presidential election years historically.  **[TYL_3380909_7]** 

10. **ARPA Funds Impact**  
    **Q:** How are ARPA funds affecting your business?  
    **A:** ARPA funds need to be committed by the end of **2024** and spent by **2026**.  **[TYL_3380909_18]**  While we've seen commitments, it's not the biggest market factor. We expect it to remain a tailwind through 2026 as commitments turn into purchases.  **[TYL_3380909_18]** 

11. **Potential for Further Investment**  
    **Q:** Will you increase investments given the improved outlook?  
    **A:** We don't plan to deviate from our disciplined approach. We have sufficient investments in place around revenue growth and margin expansion, and we like our current balance.  **[TYL_3380909_21]** 

2534a3be6addfbbedd6f8321ec1bad03ca654256e1e25944eac72bacb6f6a5c1

1. **SaaS Growth & Flips**  
   **Q:** What's driving SaaS growth and flips?  
   **A:** SaaS revenues are growing strongly, with total new software deals up **11% year-over-year**, flips up **18%**, and new SaaS deals up **20%**.  **[TYL_3394444_11]**  The average ARR from flips increased by almost **20%** this quarter.  **[TYL_3394444_11]**  This momentum reflects healthy public sector budgets and a strong sales pipeline, with **97%** of new business coming from SaaS.  **[TYL_3394444_11]** 

2. **Gross Margin Improvement**  
   **Q:** Will AWS contract renewal improve gross margins?  
   **A:** The AWS contract renewal is expected to enhance gross margins over the next **6-7 years**.  **[TYL_3394444_8]**  As more clients move to AWS and spending increases, the company receives additional discounts.  **[TYL_3394444_8]**  Operational efficiencies from product optimization and version consolidation also contribute to expected gross margin improvements.  **[TYL_3394444_8]** 

3. **Payments Business Growth**  
   **Q:** How is the payments business performing?  
   **A:** Payments revenue is expected to grow in the **mid- to high-teens** in the second half.  **[TYL_3394444_14]**  Same-store growth is typically in the **high single digits** to around **10%**.  **[TYL_3394444_14]**  Additional growth comes from new customers, with **$8 million** of new ARR added from new payment customers this quarter.  **[TYL_3394444_14]** 

4. **Public Safety Cloud Adoption**  
   **Q:** How is cloud adoption in public safety progressing?  
   **A:** Public safety customers are increasingly adopting cloud solutions, providing a competitive advantage.  **[TYL_3394444_10]**  The company offers all core public safety products in a SaaS environment, which is not the case for all competitors.  **[TYL_3394444_10]**  They had **6 flips** in public safety in Q2, some due to cybersecurity concerns like ransomware.  **[TYL_3394444_10]** 

5. **Tyler 2030 Vision Progress**  
   **Q:** Is progress towards Tyler 2030 exceeding expectations?  
   **A:** The company is seeing more uplift than expected in recent quarters, validating their Tyler 2030 goals.  **[TYL_3394444_13]**  Flips are happening faster and are larger, increasing the value of the pipeline.  **[TYL_3394444_13]**  While progress won't be linear, the momentum makes management more confident in achieving their long-term objectives.  **[TYL_3394444_13]** 

6. **AI Acquisitions Performance**  
   **Q:** How are AI acquisitions contributing?  
   **A:** The AI-related acquisitions (CSI, ResourceX, ARInspect) are performing well, contributing to new business growth.  **[TYL_3394444_15]**  They are leveraging existing sales teams to cross-sell these products, enhancing competitive advantage in new sales and providing opportunities to deploy through the installed base.  **[TYL_3394444_15]** 

7. **Second Half Guidance**  
   **Q:** What is the guidance for the second half?  
   **A:** Revenue is expected to increase slightly, particularly in professional services and SaaS.  **[TYL_3394444_12]**  Earnings are anticipated to be generally in the same range as the second quarter in the third and fourth quarters.  **[TYL_3394444_12]**  Cash flow in the third quarter will be strong due to timing of maintenance collections.  **[TYL_3394444_12]** 

8. **R&D Capitalization Impact**  
   **Q:** Why is CapEx higher and R&D declining?  
   **A:** There's a shift between capitalizing and expensing R&D costs based on the nature of projects.  **[TYL_3394444_7]**  More development costs are being capitalized, leading to higher CapEx and lower R&D expenses.  **[TYL_3394444_7]**  This reflects a reallocation between capitalization and expense, not a reclassification of R&D.  **[TYL_3394444_7]** 

bab0029601b084f50a48b223c28f434a9b0cb82734a20e592b78288279724762

- **Earnings are expected to remain flat in the next two quarters**, as the company anticipates earnings "generally in the same range" in Q3 and Q4 as in Q2.  **[TYL_3394444_12]**
- **Gross margin improvements may be delayed**, with the CEO stating that while margins are expected to improve in the long term, **"I don't know that necessarily it's going to happen in the next 12 months."**  **[TYL_3394444_8]**
- **Large court SaaS flip opportunities may take time to materialize**, with the CEO noting that while they expect momentum to grow, **"I'm not going to say that they're going to start happening in the month of September."**  **[TYL_3394444_15]**

1aa5b5f1f72123f34295f0a08564b645fc519a2c422c37b6969acf207fff452b

- **Strong Cross-Selling Success Leading to Larger Deals and ARR Growth:** Tyler Technologies has made internal changes to incentivize cross-selling, resulting in significant integrated deals like a **$1.6 million ARR** contract with Kenosha, Wisconsin, and almost **$2 million ARR** with St. Petersburg, Florida. This strategy is contributing to ARR growth.  **[TYL_3403788_13]**
- **Transactions Business Exceeding Expectations with New Clients and Faster Onboarding:** The transactions business saw revenues up sequentially due to over **200 new payments customers** added in the quarter and faster onboarding processes. Significant go-lives like the **California State Parks contract adding about $3 million revenue** demonstrate strong execution.  **[TYL_3403788_11]**
- **Strong Growth in Cloud Flips Indicating Successful Cloud Transition:** The total contract value from cloud flips more than tripled compared to last year, with **TCV of flips up to $36 million**. Average ARR of flips rose **37.2%**, reflecting continued momentum in moving clients to the cloud.  **[TYL_3403788_7]**

c2b81e54e90cc1ebde11648c42a4624a2e1ca3a4580aa72a9244dd72b3b79baa

- **Accelerated Cloud Adoption in Public Safety**: Tyler Technologies' Public Safety segment is experiencing a rapid shift to cloud solutions, with 46% of Q4 deals being cloud-based, up from 16% in Q2. The company expects this to exceed 50% next year and believes it is well-positioned to capitalize on this market shift due to its cloud strategy and new leadership with experience in cloud transitions.  **[TYL_3373664_19]**
- **Confidence in Meeting Long-term Growth Targets**: Despite initial 2024 revenue guidance being slightly below expectations, management remains confident in achieving their 2025 and 2030 projections. This confidence is based on strong demand, a healthy sales pipeline, and competitive wins against key competitors, indicating robust business prospects.  **[TYL_3373664_11]**
- **Operational Efficiency Driving Margin Expansion**: The company is realizing operating leverage through its cloud transition, including moving customers to AWS and planning to close its first data center midyear. These efforts are leading to cost efficiencies and are expected to continue driving margin expansion over the next several years.  **[TYL_3373664_23]**

6eba28a3ea79a8c992873df40050f5c4c4915c3d0aa79260e202e177fc7b7e1c

- *1. Significant Progress in Cloud Transition and Version Consolidation:** Tyler has made **significant progress in version consolidation**, with **95% of clients in their enterprise ERP division now on a single version**, compared to multiple versions a few years ago **[TYL_3394444_21]**. This is critical to their cloud transition strategy, leading to operational efficiencies and improved client satisfaction.
- *2. Strong Growth in SaaS Adoption and Flips:** There is a **rapid increase in public safety clients' willingness to adopt the cloud**, with **90% of second quarter public safety contract value being SaaS**, compared to 13% a year ago **[TYL_3394444_10]**. Tyler is capitalizing on this trend, having **97% of new software contract value in SaaS** and **flips up by 18% year-over-year** **[TYL_3394444_11]**. The **average ARR from flips increased by almost 20%** **[TYL_3394444_11]**, indicating strong growth prospects.
- *3. Successful Cross-Selling and Integration Leading to New Opportunities:** Tyler is seeing **increased momentum in cross-selling**, especially at the state level, due to internal realignment and enhanced collaboration between divisions **[TYL_3394444_9]**. The company's recent AI-based acquisitions are performing well, contributing to growth and providing a competitive advantage, with **multiple new deals and cross-sell wins** leveraging these solutions **[TYL_3394444_15]**.

823907f4233f43edef19685fb16bfb100db9bb867bfe310286a0e304972c5943

1. **Revenue Guidance Confidence**  
   **Q:** How confident are you in hitting 2025 revenue targets?  
   **A:** Management is confident in achieving both the 2025 and 2030 revenue projections despite initial 2024 guidance being slightly below expectations due to flat to slightly declining merchant fee growth. Excluding merchant fees, growth is closer to **9.3% to 9.4%**. They attribute this confidence to strong demand, competitive wins, and a robust sales pipeline.  **[TYL_3373664_11]** ,  **[TYL_3373664_12]** 

2. **AWS Agreement Extension**  
   **Q:** How does the new AWS agreement support profitability growth?  
   **A:** The extended agreement with AWS runs through **2031**, aligning with Tyler's 2030 initiative. AWS has made commitments on pricing, innovation, and marketing, helping Tyler lower costs and improve efficiencies. The partnership is more mature now, enabling better optimization of products for the cloud.  **[TYL_3373664_9]** 

3. **Flips Pace and Impact**  
   **Q:** Can you accelerate flips while reducing sales and marketing expenses?  
   **A:** Flips don't require significant sales and marketing efforts, as they are managed through inside sales and existing client relationships. Resources are sufficient to drive the expected pace of flips without increasing expenses significantly.  **[TYL_3373664_7]** 

4. **Free Cash Flow vs. EBIT Margin**  
   **Q:** Will free cash flow margins expand faster than EBIT margins?  
   **A:** In the near term, both margins expand similarly, but long term, free cash flow growth should be higher due to reduced CapEx from exiting data centers, lower software development expenses, and favorable cash flow characteristics of recurring revenues like SaaS and transaction fees.  **[TYL_3373664_9]** 

5. **California Parks Deal Impact**  
   **Q:** How will the California Parks deal affect revenues and margins?  
   **A:** The California Parks deal, the largest transaction deal in Tyler's history, is self-funded and will initially be a margin drag in **2024** due to upfront expenses but will ramp up significantly in **2025**, contributing approximately **$20 million** in annual revenues and enhancing margins over the contract term ending in 2031.  **[TYL_3373664_15]** ,  **[TYL_3373664_16]** 

6. **Idaho Courts Migration**  
   **Q:** Will the Idaho Courts migration trigger other state migrations?  
   **A:** Idaho is the first state among 16 or 17 with on-premise case management systems to migrate to the cloud. Success with Idaho is expected to encourage other states to follow, as clients often look for reference implementations before adopting new technologies.  **[TYL_3373664_12]** ,  **[TYL_3373664_13]** 

7. **Transaction Revenue Shift Impact**  
   **Q:** How did gross to net transaction revenue shift affect results?  
   **A:** A state contract changed from gross to net revenue recognition midyear, impacting the second half of the year by **$9 to $10 million** and expected to have a similar impact in the first half of next year. This resulted in a several million-dollar impact on the quarter's transaction revenues.  **[TYL_3373664_13]** ,  **[TYL_3373664_14]** 

8. **R&D Expense Growth**  
   **Q:** What's driving mid-teens growth in R&D expenses?  
   **A:** Increased R&D expenses are due to ongoing cloud development, optimization, and efficiency efforts. There's a shift from capitalized R&D to expensed R&D, impacting the income statement but not cash flow. Despite this, margin expansion is expected as the company moves away from capitalized software development.  **[TYL_3373664_19]** ,  **[TYL_3373664_20]** 

9. **Operating Leverage Levers**  
   **Q:** What are the levers for additional operating leverage in 2024?  
   **A:** Operating leverage is driven by cloud operations efficiencies from moving customers to AWS, closing data centers, achieving scale, and improved AWS costs. Version consolidation also creates efficiencies in support and development, contributing to margin expansion towards 2030 targets.  **[TYL_3373664_23]** 

10. **Capital Deployment Plans**  
    **Q:** How will you deploy capital after reducing debt payments?  
    **A:** The company plans to build cash reserves to pay off a **$600 million** convertible note due in over two years, prioritizing financial flexibility. Simultaneously, they will continue strategic and accretive M&A, having spent around **$75 million** on acquisitions last year.  **[TYL_3373664_24]** 

11. **Public Safety Market Shift**  
    **Q:** Is cloud adoption in public safety changing the competitive landscape?  
    **A:** The shift to cloud in public safety is accelerating, with **46%** of Q4 deals being cloud-based, up from **16%** in Q2. Tyler is well-positioned with its cloud strategy and new leadership, and while new cloud-native competitors have emerged, they have faced challenges. Tyler anticipates leading this market transition.  **[TYL_3373664_19]** 

12. **Potential R&D Tax Legislation Impact**  
    **Q:** What if R&D tax payments are reversed by legislation?  
    **A:** If legislation passes delaying the tax changes until **2026**, Tyler would avoid incremental tax payments like the **$50 million** expected this year. Recovering the **$127 million** paid in 2023 would involve offsets against future tax payments or refunds, but details are still uncertain.  **[TYL_3373664_27]** 

13. **Cybersecurity Driving Cloud Adoption**  
    **Q:** Are cybersecurity issues prompting clients to move to cloud?  
    **A:** Yes, recent cybersecurity incidents have impacted on-premises clients, leading some who were previously resistant to the cloud to adopt Tyler's cloud solutions for greater stability and security.  **[TYL_3373664_29]** 

14. **License Revenue and TCV Trends**  
    **Q:** How will license TCV trend as flips increase?  
    **A:** License revenues are expected to decline over time as more clients migrate to SaaS. New business is now **high 80%** SaaS, and this percentage will expand, with very little license revenue expected in the future. Total contract value (TCV) will vary based on SaaS terms, generally higher for longer contracts.  **[TYL_3373664_32]** ,  **[TYL_3373664_33]** 

06de3be61ced74e4a497f29b3f79cb922aeefa8de941adbbfb5413bb1e495e73

- **Declining license revenues**: Tyler Technologies expects **license revenues to decline** as they shift towards SaaS models, potentially impacting traditional revenue streams.  **[TYL_3373664_33]**
- **Significant seasonality in transaction revenues**: The company experiences **significant seasonality** in its transaction business, which could lead to unpredictable quarterly results.  **[TYL_3373664_21]**
- **Upcoming $600 million convertible debt**: The company has a **$600 million convertible debt due in a little more than two years**, which may limit capital deployment and require building cash reserves.  **[TYL_3373664_24]**

99a3b9d7e3d85f19450ff9bd6e12c480bcc9c25299d10392ccae2e24c7cdf5a9

1. **2025 Guidance and Cash Flow**  
   **Q:** Will top-line growth accelerate in 2025? How are you thinking about free cash flow margin?  
   **A:** Management is not ready to provide guidance for 2025 yet but mentioned they are **ahead of their 2025 targets** on the path to 2030. They expect **2025 cash flow to be at least consistent with this year**, noting they are **well ahead** on cash flow and above their 2025 target already. Some one-time effects this year, like the **$29 million** prepayment from the Kentucky courts contract, are not typical.  **[TYL_3403788_10]** ,  **[TYL_3403788_12]** 

2. **Free Cash Flow and One-Time Items**  
   **Q:** Can you quantify one-time items affecting free cash flow? Should we expect margins to stay at least at this year's level next year?  
   **A:** The **$29 million** prepayment from the Kentucky courts contract is a significant one-time item affecting cash flow, but such prepayments are not typical. Management expects margins to remain at least at current levels next year, as they are ahead of their initial plans.  **[TYL_3403788_12]** 

3. **Version Consolidation and Margin Benefits**  
   **Q:** What's the status of version consolidation, and how will it benefit margins?  
   **A:** Version consolidation is progressing well, with flagship products like **Enterprise Justice and ERP** now down to **1 or 2 versions** from **5–7 versions** previously. This reduces the resources needed for maintenance and support, contributing to margin outperformance this year. They expect continued improvement in gross margins as part of their **Tyler 2030 goals**.  **[TYL_3403788_14]** ,  **[TYL_3403788_21]** 

4. **Transaction Business Growth**  
   **Q:** What are the drivers behind transaction revenue growth, and is seasonality changing?  
   **A:** Despite typical seasonality, transaction revenue grew due to new payments clients, faster onboarding, and significant deals like the **California State Parks contract** adding about **$3 million** and the **Florida SunPass** adding a couple of million dollars. Seasonality hasn't changed; growth is driven by new business and increased adoption.  **[TYL_3403788_11]** ,  **[TYL_3403788_22]** 

5. **Services Business Impact on Margins**  
   **Q:** How is the shift to SaaS affecting services, and what is the impact on margins?  
   **A:** Services revenue is expected to remain flat or decrease due to efficiencies in client onboarding and moving away from large custom implementations. As services are lower margin, less services in the revenue mix, combined with improved services margins, will positively impact overall margins, contributing towards their **2030 margin targets**.  **[TYL_3403788_16]** 

6. **Demand Sustainability and ARPA Funds**  
   **Q:** How sustainable is current demand, and how much benefit is coming from ARPA funds?  
   **A:** Budgets remain strong, with leading indicators like RFP counts and demos consistent. ARPA funds have been helpful in certain deals but are not a major driver of sales growth. The impact of ARPA funds may continue up to 2026, but they don't attribute significant growth directly to it.  **[TYL_3403788_15]** ,  **[TYL_3403788_18]** 

7. **AI Opportunities and Long-Term Guidance**  
   **Q:** Is AI included in long-term guidance, and how are customers thinking about leveraging AI?  
   **A:** The **2030 targets** did not include significant AI-driven efficiencies or sales. While customer interest in AI is growing, it's not yet a major driver in deals. They are taking a deliberative approach to AI, with applications like the CSI acquisition's **document redaction solution** providing ROI to clients.  **[TYL_3403788_19]** ,  **[TYL_3403788_23]** 

8. **Competitive Landscape**  
   **Q:** Are you seeing more competition from ServiceNow and Workday?  
   **A:** The competitive landscape has been neutral, with no significant increase in competition. They see some competition from **horizontal players like Workday** in ERP and **ServiceNow** in certain areas, but overall win rates are consistent with past periods.  **[TYL_3403788_9]** 

9. **Cross-Selling Success**  
   **Q:** What are you doing to drive cross-selling, and will it increase after flips?  
   **A:** Internal initiatives like changes to compensation to promote a **One Tyler** approach have enhanced cross-selling. Flips offer opportunities for upselling. Products like **Courts & Justice with Public Safety** and integrated deals in **Kenosha, Wisconsin** and **St. Petersburg, Florida** illustrate cross-selling success.  **[TYL_3403788_13]** 

10. **Client Hesitation to Flip**  
    **Q:** Why are clients hesitant to flip to the cloud, and how do you convince them?  
    **A:** Clients may hesitate due to a desire for control, especially those used to managing their own systems. Factors like aging infrastructure and increased cyber attacks are driving demand for flips. Seeing neighboring jurisdictions successfully move to the cloud reduces hesitancy, and Tyler's strong execution helps convince clients.  **[TYL_3403788_7]** ,  **[TYL_3403788_17]** 

103969abe93fbdddd46b8147ecf82a93e280d82d2838bd5462a5a5ec6000e9a1

Tyler Technologies Inc (TYL)

Financials