Tyler Technologies (TYL) Piper Sandler 5th Annual Growth Frontiers Conference summary

Market overview and customer challenges

• Public sector entities face persistent budget constraints and increasing staffing shortages, with a significant wave of retirements expected over the next five years, intensifying the need for efficiency improvements.

• Many government systems remain outdated, lacking online self-service and hindering remote work, which further exacerbates hiring and operational challenges.

• Governments are increasingly recognizing the ROI of updating technology and are beginning to replace legacy systems proactively rather than reactively.

SaaS transition and growth drivers

• SaaS revenue targets were raised to a 20% CAGR through 2030, driven by strong progress, acquisitions, and low customer attrition.

• Acquisitions in recent years have outpaced core growth, contributing a 24% CAGR, and migration from on-premise to SaaS continues to accelerate.

• Gross retention rates remain high at 98%-99%, with new SaaS sales and expansions providing low-teens growth and on-premise flips adding mid-single digits.

• The pace of on-premise to cloud conversions is expected to increase steadily over the next three to four years, with large customers representing a key variable in timing.

• Formalized plans and communications are underway to encourage on-premise clients to migrate to the cloud, using incentives and disincentives.

Customer base expansion and cross-sell opportunities

• The market for new government customers is stable, so growth is driven by deeper penetration and upselling within the existing base.

• Many government entities still use legacy or non-competitive systems, creating a steady opportunity for replacement and share gains.

• Structural changes in sales and commission strategies have been implemented to boost cross-sell and upsell, leveraging the broadest customer base and integrated product suites.