Tyler Technologies Grows On Big SaaS Wins, Looks To Cloud Future

The company is seeing a big uptick of local and state governments embracing cloud, leading CEO Lynn Moore to question the company’s ‘cloud-agnostic’ model.

Tyler Technologies had its best-ever quarter for bookings, after signing two mega SaaS deals for their Odyssey court product, worth a combined $105 million, the company said during an earnings call.

Tyler CEO Lynn Moore said the two deals contributed to its 31st consecutive quarter of double-digit revenue gains, as sales grew 16.5 percent to $275.1 million. Net income came in at $32.0 million, or $0.80 per diluted share for the second quarter ending June 30.

Moore said while the market has been moving towards the SaaS environment, Plano, Texas-based Tyler has long remained cloud-agnostic, not pushing their state and local government customers into one solution over another, but allowing them to tell Tyler -- No. 46 on the CRN 2019 Solution Provider 500 -- what their needs are.

However, that could be about to change.

“We are taking a hard look at that internally,” Moore told investors. “One of our strategic initiatives for this year has really been looking at this and really focusing on a company-wide cloud strategy.”

Creating that strategy is a “significant focus” of senior management, he said. Those leaders are taking into consideration sales and sales incentives, products, and trying to determine the best way to optimize cloud moving forward, including pricing and financial modeling.

“We are recognizing the shift. We see it,” Moore said. “Historically, we’ve, I think you’ve heard us say, we’ve had mostly a cloud-agnostic approach, and I think that’s something we are taking a look at going forward.”

Software subscription revenues grew 38.6% this quarter. Total recurring revenues from maintenance and subscriptions grew 20.8% and comprised 65% of total revenue, Moore said. Quarterly bookings were the highest in company history at $452 million. Moore said Tyler has achieved subscription revenue growth of more than 20% in 49 of the last 54 quarters.

One analyst asked Moore if Tyler customers were being steered towards SaaS deals by outside consultants or if those customers were deciding on their own to go with cloud-based solutions.

“I think it’s a mixture,” Moore said. “I believe the number is roughly around 1/3 of our deal, there’s a consultant involved. Often, it’s not one of your better-known consultants like a Gartner, a Forrester but consultants who specialize in the Public Sector or the local government arena.”

Meanwhile, Tyler’s acquisition in 2018 of Sage Data Systems, a cyber security company, positions the company well to sell into municipal customers who may have security top-of-mind, after high profile ransomware attacks against cities and towns.

Moore said for all the attacks that make news, “there are at least that many, if not more, that have not actually hit the public windshield.”

“We like where we sit with that. It’s an unfortunate reality of the business that’s out there,” he said. “So, certainly, it’s a higher awareness factor. We see that as an opportunity again. And I think we are positioned with Sage to capitalize on that.”