Tyler Technologies, Inc. · NYSE:TYL
Tyler Technologies — Investor Presentation (March 2023)
43 slides from Tyler Technologies's investor presentation, March 2023
Slide 1: Investor Presentation
Investor Presentation Tyler Technologies | March 2023
Slide 2: Statement Regarding Use of Non-GAAP Measures
Statement Regarding Use of Non-GAAP Measures Tyler Technologies has provided in this presentation financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-
Slide 3: Forward-Looking Statements
Forward-Looking Statements This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectat
Slide 4: Tyler: A Winning Long-Term Growth Story
Tyler: A Winning Long-Term Growth Story Consistent Long-Term Faster EPS Massive Opportunity, Revenue Growth Growth a Market Leader With Just 16% 19% ~6% CAGR CAGR share since 2012 since 2012 of fragmented $35B market Uniquely positioned to deliver the most comprehensive mission-critical digital solu
Slide 5: Tyler: A Winning Long-Term Growth Story
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 6: Record of Success
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 7: The Leader in Providing Software Solutions to the Public Sector
A T A G L A N C E The Leader in Providing Software Solutions to the Public Sector 1 MARKET 80% RECURRI NG 1.1X F REE CASH F LO W T O 98% G RO SS CUST O MER PO SI T I O N REVENUES 2022 NO N-G AAP NET I NCO ME RET ENT I O N – AVG . LAST 5 YEARS R E V E N U E B R E A K D O W N ERP / COURTS & PUBLIC PLA
Slide 8: Tyler is Entering a New Growth Era
Tyler is Entering a New Growth Era 1998 - 2014 2017 - 2021 2022+ Built Leadership Accelerating Transition Next Generation Position To Subscription SaaS Business Built a broad portfolio of software solutions Shift to cloud-first, Realizing Connected Communities vision for exclusively for local govern
Slide 9: Executing Long-Term Growth and Cloud-First Strategy
Executing Long-Term Growth and Cloud-First Strategy 1 2 3 Leveraging largest Cloud-first approach Strategic build or buy installed base creates with roadmap to drive acquisition strategy unique sales long-term recurring supported by synergies and revenue, double existing opportunistic share opportun
Slide 10: Tyler Transformation is Well Underway
Tyler Transformation is Well Underway W ITH HIGHER GROWTH, HIGHER LONG-TERM MARGIN PROFILE 2022 Non-Recurring 23% Revenues 17% CAGR IN 2010 $1.850B $1.2B RECURRING REVENUE Non-Recurring LAST 5 YEARS Revenues 83% 45% $289M 55% Recurring Revenues Recurring Revenues 18.2% 23.6% NON-GAAP OPERATING MARGI
Slide 11: Market Leader
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 12: Strong Tailwinds Driving Market Growth
Strong Tailwinds Driving Market Growth Strong Secular Driving Large To Grow Steadily at Tailwinds… Market… Mid-High Single Digits Many antiquated Total¹ 7-9% government systems no Market annual market growth longer supported $35B Governments shifting systems to the cloud Addressable Market Sub
Slide 13: Targeting a Large, Fragmented Market with Antiquated Systems
Targeting a Large, Fragmented Market with Antiquated Systems >88,000 Local Governments >450,000 Potential Systems 1/3 2/3 Competitive Antiquated Deployments Deployments 20+ year old systems Legacy vendors Homegrown / custom COBOL systems 13
Slide 14: Tyler Delivers the Broadest, Most Integrated Solutions
Tyler Delivers the Broadest, Most Integrated Solutions FOR LOCAL GOVERNMENT Public Administration Courts & Public Safety Platform Technologies O U R C O M P E T I T I O N Accela Constellation Software Axon Enterprise Motorola Solutions Accenture Paymentus BS&A Software Infor CentralSquare Pioneer AC
Slide 15: Local Government has the Most Stable Sources of Funding
Local Government has the Most Stable Sources of Funding Local State Federal Charges and Misc. Property 18.8% Payroll Charges Taxes Taxes and Individual Sales Taxes 35% Income 47% Misc. 23.1% Taxes 22.7% Individual Income 50% Taxes Sales 17.8% Taxes 7.3% Other Individual Corporate 8% Income Other Inc
Slide 16: Clear Market Leader with Deep Competitive Moat
Clear Market Leader with Deep Competitive Moat Local / Niche Larger Multi-Focus Differentiator Players National Players Singular focus on public sector Broad public sector solutions Families of connected suites Large R&D spend on public sector solutions Large installed base to leverage Robust SaaS s
Slide 17: Industry-Leading R&D Investment Further Widens the Moat
A CLOSER LOOK Industry-Leading R&D Investment Further Widens the Moat Leading Revenues R&D Accelerating (2022) ~2X $1.85B 120 $105M 100 $93M $88M $81M 80 $63M 60 $47M ~$400M 40 20 0 Tyler Next Largest 2017 2018 2019 2020 2021 2022 Competitor 17
Slide 18: Massive Opportunity to Grow for Many Years Ahead
B E Y O N D O U R C U R R E N T T A M : Massive Opportunity to Grow for Many Years Ahead NEW MARKETS End User Expansion International Federal Payments Core Market ~$35B Local Government and K-12 State TAM ~$15B Tyler Product Expansion 18
Slide 19: Powerful & Predictable
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 20: A Powerful Cash Generation Engine
A Powerful Cash Generation Engine Cash From Operations Free Cash Flow $400M $372M $381M $355M $350M $300M $331M $250M $255M $327M $316M $250M Cumulative $196M $200M free cash flow $223M $213M $150M 2017-2022 $153M $100M $1.6B $50M $0M 2017 2018 2019 2020 2021 2022 FCF Margin Average Last 5 Years = 2
Slide 21: Disciplined and Strategic Capital Allocation
Disciplined and Strategic Capital Allocation Organic Growth Acquisitions Stock Repurchases $334M $1.1B $193M 21% 67% 12% Industry leading product development 16 acquisitions last 5 years; 3 in 2022 1.8M shares repurchased last 5 years R&D of $105M in 2022 NIC acquisition of $2.3B funded with cash an
Slide 22: Acquisitions are a Core Competency
A C L O S E R L O O K A T A C Q U I S I T I O N S Acquisitions are a Core Competency Acquisitions add to our capabilities and accelerate growth Date Acquisition ` 2022 Rapid Financial Solutions 2022 US eDirect Expands TAM 2022 Quatred 2021 Arx 2021 VendEngine 2021 NIC KEY Adds technology and 2021 Re
Slide 23: Cloud First
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 24: Recent Initiatives Accelerate Shift to the Cloud
Recent Initiatives Accelerate Shift to the Cloud Strategic agreement with Amazon Web Services ‒ highlights shift to cloud-first ‒ delivers scale and security from using world’s Civic Data & largest public cloud Engagement Insights Drive to connecting business functions of local government with t
Slide 25: Shift to Cloud-First Driving Rapid Growth in Subscription Revenues
Shift to Cloud-First Driving Rapid Growth in Subscription Revenues New Bookings Shifting to SaaS Driving Rapid Growth Subscription Revenues Fastest (% of new software TCV bookings in Subscription Revenues Growing Segment from subscriptions) (% of total revenues) 83% 49% 63% 62% 71% 42% 31% CAGR 29%
Slide 26: Tyler is Increasingly a High ARR Business
Tyler is Increasingly a High ARR Business Total 2022 Revenues $1.85B $441M 27% SaaS ARR $1.85B ARR Recurring 73% with $586M Transactions/ 39% Payments ARR 8.2% Organic $471M Growth Maintenance ARR Non-recurring 27% 34% 2022 26
Slide 27: Illustrative Example of Clients Moving to the Cloud
Illustrative Example of Clients Moving to the Cloud TYLER’S ANNUAL REVENUES DOUBLE W HEN EXISTING PERPETUAL CLIENTS MOVE TO THE CLOUD On-premises Perpetual Cloud Revenue Growth License Model Model Potential $1M 22,000 Cloud Software lifetime revenue License / of 27,000 Maintenance $400k is ~ 2X* gre
Slide 28: Sustainable Growth
A G E N D A Tyler: A Winning Long-Term Growth Story Record of Market Powerful & Cloud Sustainable Success Leader Predictable First Growth An impressive A clear leader in A powerful, predictable Cloud-first strategy, Delivering long-term track record attractive markets cash-generation engine accelera
Slide 29: Transforming Local Government From Today's World of Siloed Back Office Systems
TYLER’S VISION: HELPING TO BUILD CONNECTED CITIES Transforming Local Government From Today’s World of Siloed Back Office Systems Schools Emergency Services Corrections County Administration Community Services Local Dispatch Neighborhoods & Business Public Works Law Court House Enforcement City Hall
Slide 30: Leading the Way To Tomorrow's World of Connected Communities
TYLER’S VISION: HELPING TO BUILD CONNECTED CITIES Leading the Way To Tomorrow’s World of Connected Communities Analysis Engagement Layer Portals Dashboards Digital Infrastructure Layer Wearable Devices Sensors Smart Data Collection Layer Smart Mobile Apps Drones Meters Back-End Operational Systems L
Slide 31: Multiple Long-Term Growth Drivers
Multiple Long-Term Growth Drivers 5 Wise capital allocation ‒ M&A, internal investments in R&D and share repurchases 4 Expanding in adjacent markets ‒ larger jurisdictions, State, Federal, International 3 Capturing greater share with existing clients ‒ broadening portfolio, integrating analytics, cr
Slide 32: Leading the Industry: Impact of the NIC Acquisition
+ I M P A C T O F T H E A C Q U I S I T I O N F O R T Y L E R A N D O U R C L I E N T S Leading the Delivering Combining Connecting Engaging Industry Solutions Strengths Communities Citizens Combining the NIC’s clients gain NIC’s development NIC’s clients can Citizens can access strengths of TYL and
Slide 33: Example of a New Growth Opportunity
A CLOSER LOOK Example of a New Growth Opportunity Leveraging our capabilities/relationships – electronic payments REVENUE POTENTIAL eFiling of electronic court documents ~$455M Added ~$100M NIC 2020 2021 3-5 Years Out Electronic payment for multiple services: tickets, taxes, utilities, state agencie
Slide 34: Case Study Demonstrates Success of Our Acquisition Playbook
A CLOSER LOOK Case Study Demonstrates Success of Our Acquisition Playbook Acquire Integrate Invest Grow Enterprise Supervision What We Did: Key statewide 6 contract wins Contracts 2020+ Expands state level supervision market share Market-leading solution for $100M+ TAM Increased average 2019 d
Slide 35: Mid-Term Financial Targets
GOING FORWARD Mid-Term Financial Targets Revenue Margin Free Cash EPS Growth Expansion Flow Margin Growth ~8-10 % 30%+ ~25-30% ~15% Non-GAAP Operating 5-year CAGR margin 35
Slide 36: Growing Backlog, High Revenue Visibility
Growing Backlog High Revenue Visibility BACKLOG OF SIGNED CONTRACTS¹ $1,889M $1,796M $1,594M +5.2% $1,458M YOY $1,226M $1,247M $1,049M $845M $702M 2014 2015 2016 2017 2018 2019 2020 2021 2022 Adding 15-20 new clients every week 36 ¹ 2012 through 2015 are reported under ASC 605. 2016 forward are un
Slide 37: 2022 Results
2022 Results Revenues - Non-GAAP1 Diluted EPS - Non-GAAP1 ($B) ($) $1.850B $7.50 $1.595B $7.02 +16.0% +6.8% 2021 2022 2021 2022 ¹ See the reconciliation of GAAP to Non-GAAP measures included 37 in this presentation and in our earnings release.
Slide 38: 2023 Guidance - Pivotal Year
2023 Guidance - Pivotal Year Accelerated SaaS Shift and Continued Cloud Optimization Strategy Drivers Revenues - Non-GAAP1 Diluted EPS - Non-GAAP1 Guidance midpoint implies organic* growth of approx. 8% $1.935 - $1.970B $7.50 $7.50 - $7.65 $1.850B • Revenue range expectations: • Subscriptions growth
Slide 39: 2023 Guidance
2023 Guidance Impact of Non-Recurring COVID-Related Revenue – Ended in 2022 $20.0M • $51 million COVID revenues in 2022 • Subscriptions: $10.8M • Professional Services: $40.2M $16.0M • $0 in 2023 $11.9M $12.0M $13.1M $8.0M $11.7M $4.0M $8.7M $3.5M $2.1M $0.0M Q1 22 Q2 22 Q3 22 Q4 22 Subscriptions Pr
Slide 40: Non-GAAP Measures
Non-GAAP Measures THE FOLLOWING TABLE RECONCILES THE NON-GAAP MEASURES USED IN THIS PRESENTATION Twelve Months Ended December 31, 2022 2021 Reconciliation of non-GAAP revenues GAAP total revenues $ 1,850,204 $ 1,592,287 Non-GAAP adjustments: Write-down and adjustments to acquisition-related deferred
Slide 41: Non-GAAP Measures
Non-GAAP Measures THE FOLLOWING TABLE RECONCILES THE NON-GAAP MEASURES USED IN THIS PRESENTATION Twelve Months Ended December 31, 2022 2021 Reconciliation of non-GAAP net income and earnings per share GAAP net income $ 164,240 $ 161,458 Non-GAAP adjustments: Add: Total non-GAAP adjustments to operat
Slide 42: Non-GAAP Measures
Non-GAAP Measures THE FOLLOWING TABLE RECONCILES THE NON-GAAP MEASURES USED IN THIS PRESENTATION GAAP to Non-GAAP guidance reconciliation Non-GAAP diluted earnings per share excludes the estimated full year impact of share-based compensation expense and employer portion of payroll tax related to emp
Slide 43: tylertech.com
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