Specialist
Former VP at Tyler Technologies Inc
Agenda
- Tyler Technologies’ (NYSE: TYL) overall operating environment and public sector software trends
- Competitive dynamics among Tyler Technologies, Oracle (NYSE: ORCL), Infor, Microsoft (NASDAQ: MSFT), Workday (NASDAQ: WDAY), CentralSquare and more
- Shift to cloud-first, margin expansion potential and product differentiation
- ERP (enterprise resource planning) penetration into enterprise segment and government stimulus impact
- Outlook for H2 2022 and beyond
Questions
1.
Can you start with an overview of Tyler Technologies’ overall operating environment, pulling out the top 2-3 key trends or drivers we should think about?
2.
What key themes are impacting demand for public sector software in general and what’s your 12-18-month demand outlook? What macro trends should we monitor?
3.
You said there are many different business segments that are silos within Tyler. Which of these segments might be particularly recession-resilient or could perform the best during an economic downturn? You mentioned public safety. What stands out to you about the sectors operating within the company across public safety, ERP [enterprise resource planning], courts and justice and the platform technologies? Is there anything else we can learn from 2008 in terms of the subsectors’ performances?
4.
Could you expand on Tyler’s efforts within public safety and provide some context around the product initiatives and go-to-market strategy there? What key changes should we be aware of in this market?
5.
What do you think is the main driver of net-new public safety business? You highlighted the CAD [computer-aided dispatch] and RMS [records management software] products, and I think Enforcement Mobile resonates with customers the most, but are any particular products within the suite the main drivers? Does the approach of the suite and the aggregate typically lead to increased win rates? Which products, features or functionalities resonate the most with customers?
6.
How often are customers, so cities, working with multiple vendors, because this is a best-of-breed environment at times and CentralSquare might be encroaching on some territory? Is there a lot of resonating power with the suite in the aggregate, or do customers tend to work with multiple vendors from multiple solutions more often? How do you see that trending over the next few years?
7.
Can you outline the public sector safety market’s size and scope? Third-party research indicates it could be a USD 30bn TAM. How penetrated is this already in terms of existing vendors, and what might be the runway to continue to penetrate that customer base?
8.
Could you outline the competitive landscape across public safety and other portions? Who do you consider to be the key competitors? You mentioned CentralSquare a few times. What drives Tyler’s differentiation vs those peers?
9.
Who would you say are Tyler’s other broader key competitors across all solutions offered, and how does the company differentiate itself?
10.
What are your thoughts on Tyler’s partnership with AWS [Amazon Web Services]? How much traction could that garner across the customer base? Can you expand on the need for a cloud-native vendor in the sector and how those dynamics have shifted across the competitive landscape?
11.
Which customer segments might be more risk-averse to moving to AWS, if any? Are there any risks here?
12.
Can you discuss the customer decision-making process to move onto the SaaS product? A large percentage of Tyler’s new business was sold on SaaS in Q1 2022 per the company’s earnings report. What underpins the demand for SaaS relative to the perpetual licence product?
13.
You said Tyler has made several acquisitions or investments in new products, but I think the USD 2.3bn acquisition of NIC in 2021 is the standout. How are you assessing the growth opportunities from this deal? How difficult or successful could the integration execution be? What do you make of the vision of potentially expanding deeper into areas such as payments?
14.
Could you elaborate on what you think is leading to the success in cross-selling Tyler into the NIC installed base and vice versa? Could you discuss the differences and challenges? What enables a strong growth outlook and a robust opportunity in that cross-sell channel?
15.
Could you discuss Tyler’s general acquisition strategy and reflect on some other acquisitions that seem to be successfully integrated, such as VendEngine or ReadySub? What are the obvious pain points in integrating these assets? What might be Tyler’s future acquisition strategy and opportunities?
16.
Can you discuss the pandemic-era environment and the government stimulus benefits? How might Tyler continue to benefit from stimuli?
17.
Are there any specific data points we could monitor that might indicate there’s continued stimulus to support local governments and whether these funds are being used for projects that could flow into Tyler?
18.
What is your outlook for Tyler’s ability to drive margin expansion in the near term, and what factors into your opinions?
19.
How do you assess the strength of Tyler’s overall moat? Which parts of the company’s product portfolio do you think are the strongest or the greatest competitive differentiators? Is it just the ERP system in the aggregate?
20.
Do you think Tyler will continue to benefit from more internal product development or M&A activity, in terms of creating new modules to upsell or cross-sell across the installed base?
21.
Are there any potential risks, wildcards or disruptors we should monitor that could impact Tyler or the overall sector?
22.
Is there anything else on Tyler that you want to highlight?
