Tyler Technologies, Inc. (NYSE:TYL) Q4 2022 Earnings Call Transcript

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Brian Miller: Yes, I think it was generally in line with our expectation. I don’t know that it was significantly varied from plan. I guess one other factor that plays into that is the lag between when we sign a SaaS deal and when we start to recognize revenues. And that can vary, but it can be typically the implementations are quicker or the time from signing to starting to recognize revenues is quicker on a SaaS deal than on an on-prem deal. But that can vary and that can typically be, say six months that can be longer. And so I think when I talk about timing, it’s more around the difference between when we signed something and when we’re starting to recognize revenues.

Lynn Moore: I’d say there’s two things around timing one is, just as Brian mentioned, yes in the old days, when you sign an on-prem license, you recognize the entire license upfront. On a SaaS deal, particularly when we’re doing multi suite, multi module deals, they’re generally going to start paying those when those particular modules or pieces go live. So you’ve got to delay from the time you sign to where you get first parts of the customer up live. But as you continue that implementation and other pieces go live, then you will get that build up. I say the other side is when you look at flips there’s things around flips that while long term, obviously provide really great long term value and the short term sometimes we’re providing some services, perhaps that discount or no charge.

There also might be some concessions depending on how long the customer has had their license and where they sit. And so to sort of incentivize the flip, there’s sometimes some sort of upfront concession, which can then create another lag factor before you get the full value of that flip.

Operator: Your next question comes from the line of Jonathan Ho with William Blair. Your line is now open.

Jonathan Ho: Hi, good morning. Just wanted to I guess, touch a little bit about cross sell activity which you spoke about quite a bit. Is there anything that we could expect to see either inflect or grow even more for 2023 as the NIC relationship has had a little bit more time to mature and with some of the new acquisitions.

Brian Miller: Yes, Jonathan, I mean, cross selling is one of our major mid to long term growth drivers. It’s something we’re talking about internally, as you look out over the next seven, eight years to about Tyler 2030. And things that can, quote, really move the needle. It’s these things like flips, its payments, it’s cross selling, it’s also a lot of other things that we do really well. And we’ve talked about areas of our business like supervision, where the where the market is good, where the TAM is good, and where we’re making really big gains there. But cross selling is something that we’re prioritizing across all of Tyler, where we’ve actually started some new sort of strategic account management approach within NIC and bringing other resources, getting even further exposure to our sales channels, our sales leads.

There are things that we will be working on in terms of internally around how we recognize revenue from cross sells, and how we incentivize things and structurally internally, things that we need to sort of clear out some of those barriers to sort of unleash that power even more. We’re pretty excited about it. I mean we had probably this past quarter, probably one of the best stories we’ve had in a long time in terms of both cross selling and sort of connected communities which was the Kansas Department of Revenue story that I mentioned in my opening remarks. This was a deal where this deal took place because of our DNI solution around assessments, and the fact that we had such a broad footprint and presence within the state of Kansas from our enterprise assessment.

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