Earnings call transcript Q2 2023

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Operator

Hello, and welcome to today's Tyler Technologies Second Quarter 2023 Conference Call.

Your host for today's call is Lynn Moore, President and CEO of Tyler Technologies. [Operator Instructions]

As a reminder, this conference is being recorded today, July 27, 2023. I would like to turn the call over to Hala Elsherbini, Tyler's Senior Director of Investor Relations. ahead. go Please

Hala Elsherbini

on and additional Lynn give and is guidance. questions. Colby, additional take Officer; our With After of call. Brian with will will statement, Thank some details have and Moore, welcome then our today I Officer. Financial Lynn our Executive will review safe then President me harbor your annual comments Miller, Lynn some you, Chief to the and and results to and our Brian the comments, we'll our provide our quarter an update end Chief

safe considered management During prospects, this future concerning conference provide materially make Private Act call, the the include these company's under uncertainties, information Securities subject certain the of may revenues, historical differ provision XXXX of could expenses risks harbor other and projections forward-looking to from may information Reform which are than and results, that results to and profits. are and projections. actual Litigation cause future statements statements statements Such

refer reconciliation about including release. revenues. recurring website A under understanding information, Financials bookings, provided We've GAAP the comparisons to the non-GAAP risks. filings those XX-K more Investor supplemental Form earnings for is results of section quarterly earnings you our believe industry. our information and our in on SEC in we of facilitate we to schedules backlog also that other have our information the measures our release, in with included measures peers of and Also, would non-GAAP software Relations We posted on our tab and with

year deck comparisons we Please we prepared relate specify Lynn? on tab, call we note the today of Events slide otherwise. that and On posted our an last growth period Presentations remarks. corresponding earnings to the unless will make all supplement the to summary

Lynn Moore

quarter Hala. across exceeded key strong delivered exceptionally expectations that Thanks, performance Tyler results second our measures.

the first the revenues time. new for million for total $XXX a mark reached also quarterly milestone surpassing We

results Tyler of of organization execution and Our one the level foundation long-term reflect our strategy. collaborative our across is approach growth high a that

with Total as grew It's mix in organically contract was revenue Recurring SaaS shift double-digit comprised software even deals our QX growth to quarterly with X.X% XX%. our revenue growth. new gratifying software growth SaaS continue to XX.X% new XX% to revenue revenues the our of achieve and XX% almost value. organic comprising accelerate, of contract

year transition revenues year, of or Most organically XX% start license XX%, quarter where tenth SaaS recurring the XXXX more. importantly, replaced grew our we significant consecutive the of revenue decline is revenue. the cloud SaaS growth in At our valuable a pivotal in characterized SaaS as long-term of by revenue

sustained the adoption our year, on accelerated growth drive margin coupled position cloud pace improvement. our us heightened long-term efforts well halfway the Now to optimization operating with and focus of migration and through cloud

margins last operating better declined of transitions, expected from because cloud this While operating margins were year than quarter as efficiencies. our due to planned

unmatched and in migration leading indicators transaction unified pre-COVID or with our sales of strengths our asset, Key We deliver client upsell as above in environment, on of our performance demos an continue is reflect see higher highs. our sector. payment wins, to demand to at cross-sell position capture what results increasing public the robust the solution. is through and base drive focus our generally a installed leveraging competitive on-premises volumes and to and activity clients Overall, as high prioritize such number hyper to market-leading cloud that our largest RFPs we

algorithm. solutions, software strategy our in our addition continued division Solutions our In tremendous unified value to payment Digital to their to prove growth

Cook for with deals, a signed contract we traffic court quarter, including second the payment During new payments. County, Illinois XXX

Illinois, our our renewals signed state New Idaho, and and of and Jersey Wisconsin West extensions contracts Virginia, in of Connecticut, Kentucky. in enterprise state also enterprise We agreements

Additionally, few synergies strategic and compelling a in continue deals through like that to illustrate influenced materialize by quarter of and markets. insights the highlight our these I'd offerings and acquisition Solutions, second to disbursements successes. our Financial from deals data provide state business Rapid and federal

growing our the in public We've safety in momentum World acquired since best seen we performance half XXXX. first with market New sales

Highway we During deployment an the solutions. second for agreements organizations Police and with Oregon Missouri for police marquee quarter, a and on-premises signed for X contracts the CAD the cloud license These State mobility Patrol. state State enterprise deployment include

of $X.X third Solutions existing Additionally, million Bureau largest platform, formerly United eCitations enforcement solution Harris to with opportunity with of We solution mobile a entellitrak with custom a county eCrash cross-sell in the States, client for Digital division ARR. selected want the County, and an Tyler's Elections, Texas, Michigan Tyler's applications. replace application

added West public and Charleston, state for outdoor licensing XX enterprise also Tyler their to their enterprise Wyoming our justice X with of solution. our enterprise the for solution solution ERP their migrate We in Georgia, agreement Illinois the Cab Virginia cloud, $X.X platform clients County, control including safety solution; and to contracts on-premises enterprise under ARR. for the signed solutions State million

Brian provide the for annual our on like guidance for detail and I'd XXXX. more to quarter Now for the results

Brian Miller

Digital in Total Lynn. up of year's second which our COVID-related from $XX.X which XXXX NIC, included Solutions million was in excludes growth, for $XXX.X quarter revenues also all division, Thanks, Organic COVID-related revenues million, the quarter XX.X%. X.X%. were formerly at ended revenue initiatives of revenues Last XXXX.

and grew transaction an XX.X% organic $XXX.X rose revenues Within revenues to our increased transaction million. On XX% basis, $XXX.X organically million revenues XX.X%. SaaS revenues Subscriptions and to XX%. XX.X% grew grew subscriptions,

an to of mix software contract deals QX comprising new declined year. continued XX% revenue shift SaaS new XX% value SaaS last compared to software License our XX.X% as with contract at accelerated pace our to

the absence contract COVID-related revenue SaaS, approximately added arrangements with on-premises of a We existing due clients rose but new services of XX total to declined organically. converted Professional and X.X% XX.X% $XX revenues value SaaS XXX to million.

with a XX contract total of million. conversions, we last approximately of on-premises SaaS year, and new QX arrangements $XXX In added XXX value had

a quarter, titling As a vehicle for year's a we signed SaaS contract million motor Jersey. digital in New reminder, in last solution $XX second

Our was XX.X% XX.X%. up recurring approximately revenue total $X.XX and annualized grew billion organically

employee of were again in by seen pressured to the and the the levels quarter first related above acceleration half health planned remain the cloud margins in year. with decline expenses the also the grow and during the We've once associated about the the of revenues. of benefits new business for balance Operating we year, and well license increases next cautious future year in shift

margins operating previously trough stated, margin return expect a the in in we trajectory expansion As we to and XXXX XXXX. of to

margin have margins. paid In merchant on impact under merchant meaningful overall QX, business our As from and fees we the our fees in also we prior payments interchange quarters, revenue discussed model gross $XX a the out XXX those our quarter approximately revenues and points have been of approximately cost would fees If of million. revenues, non-GAAP higher. were operating of consolidated basis netted for both

up of capitalization the basis, flow million, last and rules. our free status to were million tax Both negative the million Section $XXX at Section related negative cash approximately be mainly forma pro XXX On cash flow XXX due excluding from a quarter flows would and million, incremental cash to current cash over approximately this IRC taxes, $XX.X year. $XX.X year-to-date XX% cash respectively, free operations payments of $XX

cash million cash and ended end investments approximately $XXX approximately We of net tax We but elevated did half due with to flow prioritize in expect not cash QX to year. trailing in total the outstanding of leverage we second pay debt down and accelerates payments, debt QX and of as of debt to continue $XXX the term our X.XXx pro forma at the EBITDA. million quarter payments XX-month

billion. Our midpoint guidance and The implies be updated XXXX is organic of will billion follows: guidance our expect We approximately growth of $X.XXX total as revenues X%. between $X.XX

We due on the of expect the $X.XX GAAP option effective activity and $X.XX stock diluted rate. may between vary GAAP be EPS significantly impact will tax to and

approximately non-GAAP EPS will $X expect approximately is debt We noncash $XX to $X.XX of Interest amortization million be discounts between million and and costs. of expected be diluted issuance $X.XX. expense including

details our in on earnings are posted earnings Other the and in deck website. guidance included our QX of our release

guidance conjunction around full for revenues. our the you transaction seasonality like remind year, In I'd our of the with to

primary Transaction year-over-year, grow number and decline they corporate expect in filings with fewer revenues quarter QX. QX we in tax with the are like coinciding and X QX outdoor and will in Transactions seasons are of seasons They deadlines the peak days in Historically, typically While revenues revenues deadlines. by and activity sequentially highest fourth days. low business at factors: around the at hunting business transaction transaction are and holidays. driven will again less a seasonal determine the

we'll the move for changes QX, to contractual of impact our see revenue a starting includes addition, a agreements enterprise payments. of model net that gross in state in from In one

to turn the Lynn. call like back I'd over Now to

Lynn Moore

Tyler X by first organic key was investor pillars in attended sustainable and first We vision to margin nearly where unveiled our in half expansion XXXX, expanded with was to and a date across cash of finished CAGR highly Connect our cash greater revenue highlighted attendees quarter conference driving stand-alone Brian. free and XX% margins flow or the Thanks, years, high our strategic business. operating performance successful our XXXX and we X quarter flow The toward XX%, X,XXX billion non-GAAP which excelled direction XXs. recurring our growth user and most of with free XX% of long-term event margins events: $X strong

website. or replay to virtually, or the didn't next attend you in on you our time of If access the and It's an and exciting Day our deliver empowered person financial growth, presentations growth pathway our Tyler's in future. era creation we by Investor to we achieve watch our clients a guided mid- value sector goals, powerful digitally sustained strategy public see algorithm support long-term clear and and to well-defined a invite

line to Now for the we'd open Q&A. like

Operator

Heckmann begin line Instructions] from Davidson. question the question-and-answer [Operator of Pete first comes from We will Your the D.A. session. now

Pete Heckmann

a strong? are the some dynamics ERP been companies Workday the that top business competitively. the interesting some historically where seen like on focused Tyler seeing talk changing there just tier. of big always you coming thought instances any and it But whether into Can you've has any horizontal bit of you maybe mid-tier ERP the was little I very about down players, really

Lynn Moore

sure, Yes, Pete.

Market the up. I market are right think strong demos are now. up, background, -- activity is ERP good. the RFPs is to really It's start

end, so really, is I competitive We there. on an we earnings solution call. that clients they a competing do than bet. of front. think when be well well more products rather fully Workday first is so having the more top in compete very and suite in you And larger end we that's them at suite long the integrated mentioned commented driven we're on may solution, from that And compete market. -- the we more where a a of point at deals deals. We that It very see the more think over as HR the best see quarter term

Pete Heckmann

dynamics the moved terms guess of of in-to-out some like the before to think migrations, be are of the any to into or will seems out terms there be around in the of products base then a cloud? that they has they continuing that's cloud software you maybe certain upgraded I it pace. customer And reluctant Okay. like need moving pockets areas certain where where been just hold be more could eventually can in either

Lynn Moore

little Yes. the one at of think right. -- conference. that bit about investor that's the That's No, a I we talked

One getting getting lines, we're the older hurdles to of migrated collapse. attacking trying something on our all people that's and of the, get and I upgraded some to guess, that them to version versions product them and is across consciously are cloud -- into

ahead than more a others. Some little divisions are

highlights through applications of a different have I really with because transition. out points, lot stages I've core sort But endpoints. who multiple going it beginning different It's in times versions think of through different cloud we multiple is said transitions, also there, single going not technology, are Tyler different different what is cloud a

of kind of plays -- certainly But different that points so are right and a that's lot in a moving all different key of products them And it's yes, now. factor parts. it's across

Brian Miller

X us And cloud. year, cloud the public of a of Patrol And flips higher deals probably and on-prem the is and to I'll new percentage that customers terms had a changing. we've that in this adoption public area State of X cloud coming is new the in of then seeing customers. of to continuous QX safety the add the in move that existing public quarter. the safety towards that, of just clients safety our Wyoming this But migration both We're first lags to

Pete Heckmann

to That’s I’ll I good Okay. queue. back it. appreciate get hear. the in

Operator

VanVliet Matthew of line the from comes question next Your BTIG. from

Matthew VanVliet

a bookings we of the the anything a the think on could I business guess Were look SaaS weighted? sort timing I wonder as bit or cadence the SaaS and the perspective? especially quarter? at of through maybe they throughout little the if bookings, help strength back-end you us more of from

organic there of is a a the second to quarters some number have here. seen in then best of we seem part And growth

about maybe what there. So just into essentially the business maintaining the think performing of maybe midpoint for of is guidance midpoint didn't guidance you well. revenue why went But raise sort the the year, the of on the process

Brian Miller

Yes. bookings been I’d has say the cadence normal. pretty of

back-end be probably within focused generally the tend the that different obviously bookings typically software the – terribly businesses, of be a They the Our We in to the are tend not some of spread get things to than at but quarter, quarter, are push they on quarter. some private have to loaded. throughout end businesses sector.

quarter. this I think anything So there’s don’t unusual

be it As to continues market of we a a with robust activity. pretty said, lot

part big narrow year. in not early we’re typically, of guidance, range. through that the revenue the the of terms did the making We In changes

confident our expectations are, and haven’t It’s where timing. around around end the top but changed. the more So bottom really more end the

This little hasn’t planned the few maybe than quarter, much year, narrow. of year there in to changed deals full that then were for earlier happened the really a our a outlook we but

Operator

line from Your Terry from Securities. the Tillman of next question comes Truist

Terry Tillman

move unified account the first you Lynn, is taking we seen top that into keep these new back like beyond just you've deals kind goodness maybe, And around side more in XXX just could payment into now out -- cases payment payments I'm we half in bit more for of and use of around you called synergy terms deals. in where does and synergies? disbursements. building far? and of terms of as see on little can confidence kind And curious XQ building look How revenue XXX revenue you a of question so on

Lynn Moore

Yes. question. Terry, good that's a

plan. is I internal where to an area outbeat continues it our think payments even

of to more with It's involved a so quarter. And sales, It's in something deal. that's after get going every push outpace is my continue. to we lot we expectation also quarter inside that which continues also it's that the involved, our

add revenues We're pretty X We've to relates and acquisition. lot that pretty early. it of months deals what really a As X wouldn't have of the good we to are Rapid, got works lot We've traction. Rapid got some the that in deals still that without road. really we're Rapid going exciting into a down the months, that extra are are

we deal. grow. now entire would I'm It's So where is we are expect with that really pushed throughout I'm payments excited right being to something continue Rapid about where sales excited that's the about are. I our channel, to and

Brian Miller

billing are change solution solution. so replacing we're time an payments the there is It utility or Or lag And the I They the payments X, new deal provider often to place? be some may quarter out the and there start a those payments time for would -- might be period hitting that incumbent be point income that might revenues typically the a a sign the statement. longer. time from new of like associated take to implementation it with a we

those is that when system implemented. start payments so new And

fact the area, in to bodes a continuing see of we're but instant. new is revenue well signed, an So for deals number that growth it future that growing

Terry Tillman

you it. deal guess, follow-up exposure all that -- queue back question, call then large I'll Brian, kind maybe, Got lumpiness a the was in that I just good in out it of the to and get is have.

-- if of there the But $XX So software just down out, back contract been that And anniversary call demand year-over-year. you anything million out It to sounds mean in I'm and large little deal there's the robust year's year-to-date, curious, big XQ? like compared year is we it deal, there like last XQ the last was you bit was maybe in deals into value smaller a like kind then should a I quarter XQ? and activity.

Brian Miller

on And than deal, the from Missouri and Yes, large X I million it we other in more Highway side we our were the elections. license had a was was biggest Control of worth comp and -- deals tough an million year, contract $X.X guess, perspective. the SaaS bookings Bureau that This one deal Michigan deal. total a then value $X

Last year, a deal, had the we deal. Jersey which million $XX was New

we we don't tax anything million Montreal. $XX deal a approached had that And license system in size also that have the deal So this with year.

of deals say, were just I'd more, there much year. was So kind year a normal. large last number This of

In QX, I comp we sort believe don't have issue. of a meaningful

And very the total I SaaS think which a was that deal million was year -- in north have we deal. QX, deal. a our a on supervision deal, And did $XX biggest of statewide a SaaS a the have license deal contract million. was $XX Department State did $X.X we we with value million large of side, had last

So comp the quarter. difficult a those SaaS will side make on for next

Lynn Moore

Yes.

mega divisions their I activity. all think this while their and there, across board, what's quarter, in in are pipeline the and and in is what really plan sales no huge Terry, there were interesting our seeing their they're deals of outperforming

-- So but across an and revenue just this is and really both typically, standpoint always execution the puts a really strong there's takes, quarter a from standpoint. board,

Brian Miller

quarter. a these we're positioned the We mega time very like time. tax, in for time areas and lumpiness Courts & not along about those, well to from where but long Justice They of to talked they're We've those win come of product some -- here deals. every

they lumpiness, bookings. create SaaS do So it's some or whether license

Terry Tillman

Understood. Good look into XQ. Thanks.

Operator

from the from comes of Goldman Gabriela question Sachs. next Borges line Your

Gabriela Borges

a better of color, activity up to relative now of being pipeline of customer Would of conversion the to great words, comment or quality versus Tyler I think is on these how to much wanted demos highs. RFPs love about And top maybe funnel you that on pre-COVID for worse? the reason specific and activity at some little this of get how changing the is at follow to above RFPs the could that and history? initiatives? be other do rates there In any or think demos bit

Lynn Moore

Yes, Gabriela.

the but across up from and hangover little function And of I really is the just demos our units. a just bit I RFPs think COVID, been think it's all the a business across market. it -- seeing there's probably we're of board, still of

we're which for As it doing increase being units know business just the that, are now. even to going generally at I market it's quality more think certain But public rates. of bit a is I speaking, probably selective, healthy win where a think right there RFPs, relates our example, I little to we're actually safety.

Brian Miller

our is of it of I us contracts the demos is think not and ability. both, but major and RFPs presence, I a those without combination to a strength talk state Tyler's place through some We the opportunities and more customer a and the broader stimulus our but RFPs. see number market, the of about also take NIC but growing of strength relationships see the the leverage factor for think factor, there, sooner opportunities ability our deals of the

in that sole or source RFP So process. deals formal bypass that

well. So that's a for us as positive

Operator

next from Reilly line Josh Needham. the of comes from question Your

Josh Reilly

quarter versus items? you in Maybe operating how higher Nice margin and line the here give can the impacting drove margin quarter-over-quarter? And what some that is of quarter. migration the term the gross color job was expense increase Subscription cloud near on here. maintenance gross us on some

Brian Miller

our our business. we to a our Well, recurring continue aspects they’re I efficiencies business, certainly number impacting operating SaaS and but of see think revenues around of

efficient managing continuing We’re be levels. around staffing our very to

Digital operate NIC reformer around the business from been We’re to changes seeing made gains, there efficiency efficiently. that the for some Solutions that more example, have of

continue revenues as margins as expect that the expand. we should SaaS So to grow,

seeing also we’re and around there. we unit operations efficiencies more customers costs per add our better cloud, improved as AWS public think I

cloud around our pressure we’ve gains we on talked though things because the margins operations around costs we as data we exit those. certainly scale we even of centers, the the – proprietary seeing So bubble are to those until continue are transition, about, efficiency seeing

Operator

line from Saket Your from the comes next question Barclays. Kalia of

Saket Kalia

Day for quarter. think, the I you. out revenue to the about in see Great Great. Analyst know think, talked XX% SaaS here, CAGR that plus Okay. at I maybe that's the recently, continue just I grow 'XX. we to to Brian,

this bit is, should should growth in years? think question sort around a target. we curious Just a medium think maybe of this different context of of the revenue pretty about continuing of you the shape range about long-term quarter's maybe in just in we how next this couple little So term? Or the the over that kind think steady SaaS about of

Brian Miller

Yes.

now I think, think that I actually of through CAGR Day, from Investor in talked kind high-teens we the over about period XXXX. collectively

we'll time, wind customers and to those the will and I right the about over customers now next mean, we see talked accelerate cadence on-prem down then that expect our to from certainly we over. from to years, few for and flips that So the bump years a we'll as growth next convert over the the few continue

teens. So from it continue we expect to think we'll see are near future. more in flips benefit for those But I'd growth the that. and moves getting I ultimately, But the range to this higher this into see

Saket Kalia

maybe you a your And then point trend? of think to this customer if from housekeeping just revenue how be in of going made it. more impact one you Or just payments little remarks, prepared here should in one-off? Really could we Got question. is business bit think in to gross in QX that net do a is Could in is switch about? having And into a you this the I QX. on fit a Brian, of much that a dig interesting

Brian Miller

Yes.

gave to our little and a majority vast state about is year. basis. at think expect happens of guidance we X about customer our customer model, business we on to year, gross by state the that million for more a a the the case. that impact changing second that and impact $XX.X hit talked in or the the It so really of that QX. on of probably we half year, will to continue I The $XX.X this midyear, is – a start we when million that in that’s There that’s around at estimated actually full be

the to for set assume merchant the around risk that a Customers and responsibility have prefer having going interchange fees willing to accept payments and that pay some predictability prefer fees are are There and certainty percentage they’re We states case are that’s our model. as But seen the this the gross this we there vast business on net there we really that changes be I model majority with been – we’ve and would their think processing. interchange to again, those the merchant payments year. X around sometimes would for had expect generally the and us that customers of year. the continue the generally,

Operator

question Alek comes line from Wolfe next Research. Your the of Zukin from

Ethan Park

This is have Alek Park Zukin. I on X parts Ethan here.

XXXX. a Just works. about to Day. versus internal a shape rest Analyst you into just year comment through we at how expectations of first, coming year environment as to a on How relative and talk of kind a perform the a of bit can bit look the little and year your this just about just the SaaS ago did and of And out in that it the about the think quarter, trending question just then the about

Brian Miller

Yes, the our demand highs. remarks, environment, generally or or as growing of kind we pre-COVID said above the at stable prepared is in

of and don’t robust and see throughout very of now. similar demand seen this So what Day a that very coming environment out changing right we’ve to signs really year Investor

stable level. So at high a

the a very but plan year, value number generally, respect we’re With long – of last similar is say I’d to is to the higher. flips performing flips, dollar

in most doing early And will customers flips be to think flip. customers that especially the of I days, So case, that. continue seeing are the bigger the we

We’re small on today. the end

side, court larger that quarter customers. We’re We seeing talked large more county larger a of system. couple in about Georgia a the were on the with a this

our we’ve of As said, customers public flip. safety seen couple I first

our year. generally, say, migrations with expectations are line the I’d those in for So

Operator

from question comes Michael Securities. the Your of line Wells Fargo from next Turrin

Michael Turrin

to a a I look tilt. down different with If what and TCV metrics, consistent term plus total the to the back they're subscription earlier, slightly a we but and contracts, more. the asked this go a bit. If wanted something mix of And was comparison very it's seen we that percent at recently. look as is question we've year-on-year at with

be initial out something Just looking wondering customer through at. deal And smaller might rising size? if impacts that bookings that flow if there's slightly in or backlog rates there thinking or call numbers anything are it's the into just of whether to a behavior, terms driving that then we're

maybe rest wanting there anything reconcile out metrics try and to of expect calibrate kind just if what to the those year? Just there's of on to call to

Brian Miller

don’t anything of around a mix lot in quarter Yes. be of and on deals note vary timing that. I the think things in what can just there’s when any happen what pipeline. The the to happens signed those given of depending

there’s I a call out So affecting. don’t think trend anything, to or condition that’s any macro

notable We if out bit to comparison continue we look changing metrics QX. that. a last happen but those there, anything exactly at really see will in it’s some and very deal think we there’s generally, grow what continue I’d expect to hard think of sizes I call in to over to But – the – don’t around or to skewed fundamentally large by anything that I predict to expect those time, I are year, deals. But don’t there’s think market QX

Lynn Moore

Yes.

there very would Appraisal of deals. and I I often there’s deals. that in tax couple areas that large sign a think generally, larger add business deal, has our some multiyear

Our we about Justice X and focusing deals what little the bookings why on large and the talking stopped different deals. We’ve a Courts makes metrics. some they – started cyclical. years. – for about very can The that’s & tax stuff numbers are And large has go. reason Justice, they That’s talked Enterprise it be appraisal come

given actually really plan I’d go of back our is to see solid sort has my out that’s and competitive comment earlier exciting pretty board to nature above today and in across well that demand there as QX, now. right really the the been performance position which as

Operator

comes ISI. question of from next line Evercore Materne Your from the Kirk

Kirk Materne

an I little and might just of that moving could for there's moving they're wondering, to talk to opportunity percentage a I incremental bit products have about of a it? discussion, cross-sell wondering share terms product when to you process sort meaning you all any you flips. customers when the the all, having from about that of they're revenue Lynn, in anything as associated was sort are off the if talk cloud. considering or that given if could come well was on Question with in has you that flips with along what opportunity if you go on-prem hang other cloud, thought of is

Lynn Moore

more No, And about add a That's solutions Yes. things. our you're a strategy. solutions, big I'd our call our as as well things to It's and actually we sales an good We upsells. opportunity other insight and that that's talk part of payment probably And cross-sells say point. like just right. opportunity. an data of upsell

So the newer we are version doors customers lot earlier of the talked of requires a about also which to for more opens that -- other a upgrade things to and modules how up and software, compatible. this

Kirk Materne

sector? cloud. days the percolate and of a And to customers the can as to take to you as super people about moving is of cloud, be Or cloud? move in the general, it all need talk about just start of in just sort to the public in AI at topic AI obviously, talking generative started for in terms to that early more discussion Has of to over still you advantage

Lynn Moore

early days. think standpoint, very the a is AI of from I concept customer

As you is pretty know, are probably our think And risk-averse. generally more on a base conservative, customer they wait-and-see pretty approach. I

not approach. not are around taking – a Tyler we’re at just sitting wait-and-see we Now

We our formed own AI. actively We task looking AI are at committee.

using already a bit of little AI. actively We’re

can at at some efficiency. our how can as lookin’ clients’ We're how improve competitiveness well it how improv’ efficiencies. of it internal about things our We’re as can improve at things our it looking

we’re on. But And even perspective, looking pretty early client’s perspective, from say, a a we’re So I now. that Tyler at they’re earlier would on. from right

Operator

Securities, line next CJS from question Charles Inc. of the from comes Your Strauzer

Charles Strauzer

Just a quick question.

importantly, every latest you Just it businesses. the the seems private so, your news any MOVEit high-profile like breach, that Have been from has And from data month in seen clients well? there's government the being opportunities as that? on business that you or impact data more impacting are breach, seeing and one the

Lynn Moore

to immune breaches. reality it. it’s the And mean an cybersecurity of of are clients our I business Yes. not unfortunate is world and doing

think for publicized, for more number those been fair are probably years. opportunities the are ones us. there’s couple a guess does the over It of there’s that My of is not. that even I create last

it into cybersecurity creates flip for to our people opportunities think It’s cloud. creating I offering. the example, opportunities around,

a flip decision last had a flip had lot security for year. pull it the year a cloud. them trying time, was client talk the trigger had and Arizona last to that didn’t to been they point that and the to for cloud and we in We We the for some about breach really to

that think part So our an to business. more into of again, environments. opportunities creates it’s doing secure But clients I for move also unfortunate

Operator

from comes William Your next of the line question Jonathan from Blair. Ho

Jonathan Ho

And wanted that? Just your Is margin additional expectations? prior to of some of details walk around around to increases. relative understand pressure out a employee seeing dynamics some sort your can the maybe maybe around you comments of some this or change through the

Lynn Moore

Last It's to rest year, the throughout probably trending below health budget. care health health of year, was best of they're Yes. This -- around employee as to And think continue modeling there's it's the that care. experiencing and just our level claims than it budget. We a relates it with employee budget care. flows were trying bit more little headcount, grapple higher model or this we it It's that go labor based the been But to as just not can. generally year. we've year year's We claims really practices. the around We do every higher. a on something ebbs I we're And we last year. our we're really costs our forward.

Brian Miller

There inflation, care up, more high health claims the to be is in I environment even than think general, in Yes. continues experience. side, the utilization on higher

the monitor continue our it. it’s we in dollars half million our we balance the expectations for the We believe to expectations But what several – in that adjusted is of have expense the of point would year guidance. – of year I first So our out it above were.

the but for of the SG&A – first – more even our that the also year, performance turned half our and so And I in makes see think the that especially throughout you But margins, positive. in side. we’ve

Operator

next from Your from of Research. Instructions] [Operator line question Northcoast comes Keith Housum the

Keith Housum

helping you how first share year. your contribute half do first Public but to having that's question you're to Is the segment Or a a gain, Safety market is guess, explain, best market in of the for having guys regarding -- the on something your you that? commentary the the success I there this Brian, there?

Lynn Moore

really things, year long their I'd activity a a say in in highest for is up. Proposals time. that seeing demos Market right are Keith. of couple a safety. We're it's strong seen in public level pace are now we've on

internal this to are. in really sort where some million done really excited of done the We've million $X.X range a we X good. is mean in at safety quarter position about haven't resets and which of deals we of range, while. competitive large kind we landed public I $X Our

about excited safety. is of things about done we've going where that public internally market the what's we're the to excited in capture some and We're So on market.

Brian Miller

the other continues in like product, investments Yes, of the last and acquisitions our our strong. some product think analytics to very position And very, mobile the improve. years. is We've enforcement competitive -- that made integration the data I made, capabilities several over with are we've

And those safety create platform, things platform very public position. & all to Justice improve integration a with market continue so to our the integrated strong that our Courts along of

Lynn Moore

Yes.

I’ll talked It’s also encouraging a more a going is cloud. Our mobility which not his of of the deals the about about it’s seeing slowly, highlighted I the but big been – talked is that I’m we that safety starting the remarks earlier. in sort in really mentioned to we but slowly to differentiator. lot think movement is And earlier, some fact crazy, are snails by public pace. embrace suggesting moving receptiveness, was think a platform, say market what’s Brian – I we

Operator

time. turn further have for over at I remarks. any further the call We will Lynn no questions now Moore this to back

Lynn Moore

for joining everybody, thanks, and Colby, Thanks, us today.

If you any Miller to day. a please contact or myself. feel Have have good further free questions, Brian

Operator

This concludes conference call. today's

now may You disconnect.

Tyler (TYL) 27 Jul 232023 Q2 Earnings call transcript