Tyler Technologies, Inc. (NYSE:TYL) Q3 2023 Earnings Call Transcript

Joshua Reilly: Yes. Thanks for taking my question. Nice job on the quarter here. Our checks indicated that the MicroPact business had a pretty strong pipeline coming into Q3 here, which makes sense with the fiscal year-end for the federal government. Can you just give some more color on how these deals closed and how — anything to note on the cross-sell into the NIC state contracts that might be adjacent with the MicroPact business? And is there any more of these deals that potentially fell into the fourth quarter? Thank you.

Lynn Moore: Yeah, I’ll start. I didn’t quite hear all that, Brian. So I’ll let you jump in. But yes, so our platform solutions, Q3 is normally their strongest quarter. They had that really strong deal with the National Guard Bureau. There was a fairly significant license deal that slipped and probably got pushed to 2024, and it was really around some uncertainty with the federal government funding as Q3 was coming to a close and the move of some funds to what the Feds consider to be more mission critical. The number of deals that we’re doing and the pipeline of deals that we’re doing at Federal continues to grow, but there still are some very large deals that can swing quarter-to-quarter. A lot of times, once that sort of window passes in Q3, there’s still a volume of deals that happen in Q4, Q1, Q2,– but the sense of urgency is probably not quite the same as it is as you get into late Q2 and into Q3.

Brian Miller: Yes. And on the cross-sell, the opportunities with our application platform, the formerly called MicroPact entellitrak product, remains one of the strongest opportunities and one of the areas where we’re seeing the most activity in terms of leveraging the digital solutions state contracts to sell that into those states. And we had a couple of deals this quarter that we mentioned in the prepared remarks in different applications. I think in Louisiana and Indiana, where we’ve seen progress. And we’ve seen a number of those deals since the acquisition of NIC and that continues to be an opportunity that we’re pursuing actively.

Lynn Moore: Yeah. I mean, the synergy between what we do at federal and the state market is really strong. As Brian mentioned, we’re seeing more pipeline there. And really because when you think about the state government and what they’re doing, a lot of what they’re doing is case management. And our application platform really sort of serves those modernization needs. Less expensive, it’s nimbler, it’s built for government. It’s enhanced by our mobility, our D&I, our payments. So we do see that synergy, and I think it’s something that’s going to become more of a focus for us as we look into 2024 and 2025.

Joshua Reilly: Thanks guys. Nice job on the quarter.

Operator: Thank you for your question. Our next question is from the line of Rob Oliver with Baird.

Rob Oliver: Great. Hi, thanks. Good morning. In the prepared remarks, you called out the Naperville, Illinois win in public safety. And it sounds like that was a cross-sell on Courts & Justice. So just curious if that’s a path you guys are — you called out because you’re seeing success there. Obviously, the Tyler One vision, those being tied together would make a lot of sense. But is that a go-to-market play that you see driving increased wins for public safety in the future here? Thank you.

Lynn Moore: I do. I think we talk about it with our Connected Communities vision and sort of the leverage and power we can create between our public safety and our enterprise justice visions. It was a really good win. It was a good win because it was a very competitive deal. As you’d imagine, it was a license deal of over $1 million. So those are always going to be competitive. And I think part to your point as well, we actually did a smaller deal in California this past quarter. That was with Ameriposta County Sheriff’s Office out in California, and that was really leveraging the enterprise justice contract to bring Tyler corrections there. Important deal because we hadn’t really had a win in California in a little bit of time and leveraging our relationship with — on the Courts & Justice side and leveraging that contract was something that got us in the door, and I think an opportunity to expand not only in that department, but also in California.