Tyler Technologies (TYL) Cantor Fitzgerald Global Technology & Industrial Growth Conference summary

Customer demand and technology adoption

• Public sector clients are risk-averse and slow to adopt new technologies, preferring proven solutions and waiting for peer validation before embracing innovations like AI or cloud computing.

• AI is a topic of curiosity among clients, but not yet a significant driver of new business or budget allocation; investments focus on practical, real-world applications to address staffing shortages and inefficiencies.

• AI solutions are being piloted and deployed in areas such as document automation for courts and resident engagement portals, with measurable cost savings and efficiency gains.

• Adoption of AI and cloud solutions is often funded from labor budgets due to their role in addressing workforce gaps.

• Broader rollout of AI and cloud-based products is expected to continue at a measured pace, consistent with historical public sector adoption trends.

Cloud transition and business model evolution

• Cloud migration has accelerated, with nearly 90% of new business now cloud-based, though the overall customer base is still transitioning.

• By 2030, 80-85% of on-prem customers from 2023 are expected to be on the cloud, with the peak of migrations projected for 2027-2029.

• Cloud transition enables higher recurring revenue (1.7-1.8x per customer) and creates upsell/cross-sell opportunities for additional products.

• Margin expansion is anticipated from product consolidation, cloud optimization, and scale efficiencies, targeting 30%+ operating profit margin by 2030.

• Double costs from maintaining both proprietary data centers and AWS are expected to roll off after this year, further improving margins.

Product strategy, integration, and market positioning

• The company offers the broadest product suite in the public sector, but average customer penetration remains modest, with significant cross-sell potential.

• Integrated solutions (Connected Communities) and acquisitions have enhanced the ability to provide end-to-end systems across government functions.

• Unified client experience is a focus, with a Chief Client Officer role created to standardize processes and improve support across products.

• Sales strategies are evolving to encourage cross-selling, with compensation changes and state-focused sales teams to leverage deep government relationships.

• Product lines span ERP, property tax, public safety, courts and justice, licensing, permitting, and school solutions, with courts and justice holding a dominant market share.