Thanks. Good morning, everybody. Thank you for joining us for day two of Baird's Global Consumer Technology and Services Conference. I'm Rob Oliver. I follow the SaaS and application software sector here at Baird, and it's my pleasure to have Brian Miller, the Chief Financial Officer from Tyler Technologies. Tyler is one of the most exciting companies we follow, a midcap top pick, really durable growth story. Brian's gonna start with a few slides, just very quickly to level set in case there are those who are new to the story, and then we'll dive in with some questions. We can make it interactive, so please don't hesitate to hit me with questions, and we'll try to squeeze in as much as we can. There will also be a breakout afterwards. So good morning, Brian. Thanks again. Good to see you. Morning, Rob. Good. Great. Thanks for having us. I'm just gonna run through just a couple of setup slides just to, for again, for those people who maybe aren't as familiar with Tyler. So we're an enterprise software company focused on the public sector vertical market. We work exclusively in the public sector, but we're very broad in the public sector in terms of the levels of government we serve, primarily local, but we have a presence in the state and federal spaces as well, and the breadth of products that we have. We provide a wide range of mission-critical software products that power the back office functions of government and also have a significant transaction-based business on top of those software products. We're a growth story, a long-term growth story. Our market, as you can imagine, is not the fastest moving market in the world, but a very consistent and stable market. So we have an ongoing shift towards SaaS and growing our recurring revenues. So our recurring revenues have had a 22% CAGR since 2018, and our SaaS revenue growth is in the 20s since 2019. And we still have a relatively small market share. We're the leader in this space, but still have a tremendous amount of runway. The market is very fragmented and we continue with high win rates to gain market share as new deals come along. We are the largest company exclusively providing software to the public sector. We're now about 83% recurring revenues, strong generator of free cash flow, and, very, very sticky customers, 98% gross retention, over a very long period of time. You see here across the bottom, sort of a summary of the products we have, from public admin, ERP, courts and justice, public safety, platform technologies, which includes our payments business, tax and appraisal, civic services, and K-12 schools. So a wide range of areas of government that we have software to address. So really, we've been in the software space since 1998. I joined the company in 1997, just as we were entering this space. So really for the first almost 20 years, we were building that base, both through organic growth and acquisitions, adding products, adding customer base. Then 2018 through 2022, 2022 was really as we started to make the transition to the cloud, and really a greater focus on integrating our products, and creating more of an integrated solution set and talking about the Connected Communities vision we have for governments being able to share data, work better within a given jurisdiction or across jurisdictions. And now, since last year, we really reached an inflection point in our cloud transition. First time that our cloud revenues are now greater than our on-prem revenues, and we're also reached the trough in the margins around that cloud transition. So now we're really at a point where growth is accelerating, margins are improving, and it's sort of the next stage of our growth. We had an investor day last June and set out midterm and long-term targets. Really, our goals are around driving that recurring revenue growth, improving our margins, and driving higher free cash flow. There's four basic pillars to that growth, leveraging our installed base. So we have this tremendous installed base that's taken decades to acquire. So big cross-sell and upsell opportunities there, and we'll continue to grow that through M&A. Expanding our TAM, particularly in building our presence in the state and federal markets, and again, both organic and using M&A to do that. Our cloud transition, there's a number of aspects around that that we'll talk about, I'm sure, but driving higher free cash flow and recurring revenue growth as we continue to execute on that cloud transition. And then growing our transactions business. We really expanded our presence in the payment space through the acquisition of NIC in 2021 and are still in the early stages of driving that payments business down into our software customer base. Our goals for 2030 that we set out were recurring revenue growth of 10%-12% between now and 2030. Total revenues approaching $4 billion, and these are all organic targets without M&A, and recurring revenue growing to more than 90% of our total. Margin expansion, we were at a 23% operating margin in 2023, and our target is for that to exceed 30% by 2030. And free cash flow. There have been some impacts around, cash taxes, that are affecting us in the short term, but right now our margin is in the high teens, and we're looking for that to be in the high twenties and, and to generate more than $1 billion in free cash flow by 2030. So that's, that's my setup, and we can move on. Great. Yeah, exciting. Appreciate that. So Brian, you guys are coming off of a very strong Q1, and sort of took up the guide a little bit, and sort of uncharacteristic of you guys to kind of, you know, raise this early in the year. So maybe talk a little bit about what you're seeing in your end market right now, what the conditions are at local municipal government, and what gave you the confidence to put a slightly higher number out there. Yeah, we did outperform, I think, both the street expectations and our internal expectations, by a fairly wide margin in the first quarter, and did raise our outlook for the full year based on that. In general, the backdrop's really good in our space. We've talked about really for several quarters now, it being a very, very active market. Leading indicators, like the number of RFPs we're responding to, the number of demos we're doing, are certainly well back to pre-COVID levels, in most cases, are well exceeding those, so really pretty close to all-time highs in terms of activity. The budget backdrops are. They vary, you know, from place to place and different levels of government, but generally, it's a pretty strong budget backdrop. Local governments often are funded. Property taxes are a significant part of local government funding, and property taxes aren't under a lot of pressure right now. Property values remain pretty high. You know, just the broader revenue sources, things like licensing and permitting and sales taxes, I mean, just most of their revenue sources are pretty strong. So we're seeing a lot of activity in the market. There's also a big push for digital modernization, and they have the funds to do that. And then it's also supported by the ARPA funds, the stimulus funds from post-COVID. They've got until the end of 2026 to spend those funds. A lot of those have been allocated internally but haven't yet been spent. So that's at least somewhat of a tailwind that we think will continue through the next couple of years, to kinda give them confidence in their budgets. Budgets, a lot of governments have June year-ends, so new budgets will go into place July first, and the indications we generally see are that those budgets are very similar to last year. So, it appears to be continuing to be a strong, strong, active market for us. You mentioned the push for digital modernization among your customers. It's a different journey, if you will, than with for-profit companies and enterprises. Very different and perhaps, you know, longer, and you've got to be more patient, but talk about where we are right now in that drive to modernization. I mean, I've followed you guys a long time. It does seem like while there's still people who are, you know, "Over my dead body cloud," there's many more that are willing to step up and kind of embrace future technology. So where are we at this moment? Yeah, and government, not surprisingly, generally lags behind the public sector in terms of adopting technology, you know, change in general. Governments obviously are not profit-motivated, they're not ROI-driven, they don't have competition. So those things that often motivate private sector enterprises to be more innovative or, and often use technology to do that, don't really apply to government. In general, governments do want to provide better service to the citizens. There's certainly a demand or a desire on the part of citizens to have government provide better service. People want a more consumer-like experience when they work with government, and that's often not the case. So governments often use software solutions for a lot longer than you'd see in the private sector. So, often, we're replacing a system that isn't a few years old, that's often decades old. So probably the average system we replace is 20 years or more, and it's not uncommon that we see systems that are 30 and 40 years old. So that's kind of the core demand, the basic, "This system is about to die, and I have to replace it." And that's kind of the normal driver. But I think we are seeing more and more of a push, especially post-COVID, where people have to do more things online, want to do more things online, and the existing systems don't necessarily support that. Government's trying to support remote work. That wasn't something that most governments were very good at adopting or adapting to. So, so a lot of those things are driving a little bit faster pace of adoption of new technology. Governments in general are facing a shortage of workers. Lost a lot of workers during COVID and really have struggled to rebuild their workforces. So they have to do all these functions, they have to build utilities and run a 911 system, and run the courts and the jails, but they're trying to do those things with fewer resources, and so technology is one of the ways they look to do that. They've also been slow to embrace the cloud, but we're really seeing that change much more rapidly. And it's taken, you know. I talked about our cloud transition, sort of being a long-term journey for us, but, it's really accelerated in the last couple of years, and we see that continuing, as governments are now much more open for a variety of reasons to that move to the cloud. Now, generally, it's kinda not whether they're going to move to the cloud, but when. Got it. Yeah, let's take the opportunity now in, on that, to talk about the long-term targets that you set out last year. So, 10%-12% organic revenue growth. You said 75%-85% of customers would be in the cloud, and $1 billion in free cash flow, approximately, exiting 2030. What did those targets contemplate in terms of macro payments attach, cross-sell? Yeah, I mean, in general, this is the first time we've really kind of set out those long-term targets over that long of a horizon. But generally, they contemplate a kind of a normal macro backdrop, nothing spectacular, probably not as strong as we're currently seeing. But kind of a normal backdrop. And we're not immune to broader economic conditions, but we're pretty insulated. I mean, most of the things we do are solutions we provide are essential. Generally, when it's time for them to replace a system, it's a non-discretionary decision because it's an essential system that's at end of life. And now, as we're, you know, close to 85% recurring revenues, those are very, very stable. So, assuming that normal macro backdrop is, I think reasonable. Payments, we're looking for payments to grow slightly ahead of our overall growth rate. I think we said 10%-13% CAGR over the next seven years. I think that's certainly a place where we have an opportunity to outperform. We're in the early stages of driving that cross-sell, but we talked about the size of the TAM for payments just in our existing customer base, and it's very large. So, I think that's an area where we have an opportunity to outperform. And, what was the third? Payment, cross-sell. Cross-sell, y eah. Cross-sell is a big, big thing. I mean, we have this huge customer base. As you know, our average customer has two to three products from us, could have eight to 10 products from us. It's always been a part of our story, but it's something that, especially since the acquisition of NIC and the payments platform that we have now, and some of the other transaction-based revenue streams, as well as the opportunity to sell our Tyler software products at the state level through the NIC relationships. It's something that we're, I guess, much more intentional about today, and we've made a number of changes and initiatives within the company to make sure that we're doing everything we need to facilitate those cross-sells. And seeing some really good early, I guess I'd call them early successes. But cross-sell and upsell is certainly a big part of that sustained low double-digit growth. But it's also something we're very confident about. One of the takeaways for me coming out of your event at Indy, which there was no formal update to the financials, but you did have a management lunch, was how each division now is incentivizing and working more closely on this cross-sell motion. Let's talk a little bit about that in the context of the model transition. I think investors are used to a normal, like, sort of typical SaaS transitions that happen. Yours is different. You have a lot of products over three different buckets. You've got to get some customers ready for the cloud before they move to the cloud. So maybe talk about some of the ways that, you know, your model transition is unique and what you guys are doing now to prepare to hit those targets. Yeah, there are challenges and a lot of opportunities around our cloud transition, and it is a little bit different than probably some that investors have seen. It's been a long time. You know, we started—we traditionally were an on-premise license and maintenance model, and then, really almost 20 years ago, started offering products either in a subscription, really a hosted model, hosted at a Tyler data center or on-prem, and let customers decide. And we had a very, very gradual adoption over a number of years, and then 2019 was really kind of the point where we said: "We are cloud first, and we are gonna start pushing customers to the cloud," and did a number of things around that. We partnered with AWS to be our primary public cloud provider and launched a path to get to exit our data centers and move into the public cloud. Made a lot of investments in our products to optimize those to run more efficiently in the cloud. Incentivized salespeople to sell cloud over on-prem, and so that transition really accelerated, going from 50% of our new business in 2019 being in the cloud, to now, close to 90% of our new business in the cloud. Along the way, so most of our new business now comes in the cloud, but we've got a huge base of on-prem customers that are still using our solutions on-prem, and at the end of 2023, only about 15% of that customer base had migrated to the cloud. So, there's a revenue uplift as those customers move to the cloud, margin uplift, an opportunity to upsell and sell more products in conjunction with that move to the cloud. But as we drive those customers to the cloud, there are a couple things. One, and what I mentioned earlier, for a while, a lot of customers were reluctant to move and, you know, maybe a little fearful of it or just didn't like the change, didn't fully understand what it meant for them. But that's really changed, you know, quite a bit in the last couple of years, and even at Connect, our user conference, a couple of weeks ago, a lot more, I mean, noticeable shift from a year ago in conversations with clients around their openness, not just their openness to moving to the cloud, but their desire to move to the cloud. But, as you said, we have a lot of products. We've got, often with a lot of products, we have a lot of versions of products. So we have a version sprawl, and that's happened over many years. So, as we move to the cloud, all the customers move generally to one version of the software. They're all on the same version, they upgrade at the same time. That certainly helps us from an efficiency standpoint. The costs, the development costs, the support costs around having multiple versions of multiple products is quite high. So we're in the process. You know, one of the gating items of the move to the cloud for our on-prem customers is, they need to upgrade to the current version of the software before they move to the cloud or when they move to the cloud. So we've been sunsetting older versions of products, encouraging clients to upgrade, and in some cases, mandating that they upgrade as we sunset some of the older versions. Made a lot of progress with that in the last couple of years, so we're putting more customers in position to be able to move to the cloud, along with their desire to move to the cloud increasing. So that provides us, you know, that's one of those drivers of margin uplift as we get through that version consolidation. But we expect to see that pace of flips continue to increase, and both in terms of the number of flips and also the size of flips. I'd say still more of our larger customers are still on-prem. It's a, you know, a little bit bigger task for them. But, so we expect that to accelerate, and as you said, we expect 75%-85% of that customer base to have migrated by 2030. Got it. One of the areas that's been. Well, it hasn't been a straight line, but I think it's fair to say now it's been a success story for you guys, is public safety. And that caught my attention at Indy. Just each time I'm at your event, I see the rise in interest in public safety moving to the cloud more quickly than you guys expected, which is a positive. On the other hand, one of the most competitive spaces you guys are in, with a lot of different people going after the dollars within public safety. Talk a little bit about your approach in public safety, what you guys are offering, and is the cloud move a competitive advantage for you guys, given the installed base you have with municipal ERP and courts and justice, and the ability to cross-sell public safety? Yeah, public safety has been a real bright spot for us in the last year. Public safety from the software perspective, for us, it's kinda two primary areas. It's computer-aided dispatch 911 systems, and police, fire, and ambulance records management systems. So all the maintaining all the records, arrest reports, and incident reports, all the paperwork that goes with that. And there are a bunch of ancillary products around that, things like mobile enforcement, so you know, digital traffic tickets and you know, using a device instead of carbon paper. So we have... And then we also have corrections, so we have jail systems, and then we are, by far, the dominant provider of court systems. So an adjacent market, different, different product set, but, but clearly adjacent. In the public safety, as you said, it's a competitive market. There are a lot of good competitors. Some of the bigger ones are, like, Motorola Solutions. Axon is sort of dipping into the software side. There's some cloud, I guess, sort of start-up or newer entrants in the space, Intergraph. So there, there's a wide range of, of, competitors there. We have invested pretty heavily in public safety since really, we acquired a business in that space in 2015. We have a really well-defined cloud strategy there. And public safety is a market that has been, of all of our product set, it's been the market that's been slowest to embrace the cloud, and really, for a long time, really resisted it. They really weren't comfortable putting a 911 system in the cloud. And it's just been a lot slower. So when we talk about 90% of our new business coming in the cloud, the biggest part of the 10% that's not in the cloud yet in terms of new customers, is public safety. That also has shifted pretty meaningfully in the last year. Just really in the last year. You know, I think probably three years ago, we had no new customers coming to us in the cloud. Last year, it grew, and by the fourth quarter, I think 45% of our new business was cloud. In the first quarter of this year, 75% of our new business was cloud. So I think it's a combination of our market being more open to the cloud, seeing some successes with other entities that have been in the cloud, and ransomware and cybersecurity is a big driver there, where public safety agencies or their peers have been hit by ransomware attacks and believe that their security can be more effective if the system's hosted in the cloud. So we're seeing a you know really rapid move there. We're also pushing quite a bit more. And so that combination has accelerated that move. I think because we do have. You know, our products are, we've made a lot of investment in the cloud around our products in the last couple of years to be ready for that change. So competitively, I think we're positioned really well there. And I think the other strength we have is that we have these integrated solutions with courts and public safety. So we have a strong competitive set in public safety. We've got competitors in courts, but we're really the only company of any size that has both of those solution sets. So we can offer one integrated solution all the way from a 911 call, through an incident, an arrest, a jailing, a trial, all the way through probation, with one set of solutions. And with a lot of jurisdictions today, that would be eight or 10 different solutions, potentially from different vendors that is difficult to operate. Got it. Thanks. A few years ago, you guys acquired, and I see the only public company you've acquired. You've made many acquisitions over the years. I think it's like a core competency that you guys have. That opened up two opportunities for you, one in payments and one in state government. So I'd like to just touch on each of those. You know, how should we think about the opportunity for Tyler at state? What's the right way to think about it historically, having thought of you guys selling your software into state governments, and yet it seems there is an opportunity to get Tyler product in through some of the master enterprise agreements that exist within NIC? Yeah. NIC was a very complementary acquisition. They operated mostly at the state level. We operated mostly at the local level. We were mostly sort of back-end software. They were mostly front-end digital access to state governments. So they would build the websites, build the portals, provide access to a back-end system, like a motor vehicle registration system, to renew your license plates or your CPA license or you know, a wide range of government services. And often would sort of build custom interfaces and provide that access to government around these back-end systems, often which are homegrown legacy systems. But they didn't really build those core systems. Their business is a sort of unique business model in that it's totally self-funded. The state typically doesn't write them a check. It's funded by user fees. So if you renew your driver's license, you may pay a $5 service fee that goes to us, that funds all these services we provide, and then generally, we're also processing that payment and making money off of that. So, so very complementary. Tyler has a lot of software products that have applicability at the state level, but we typically, we didn't have a sales force focused on that. We didn't have those relationships. So it was a market that we had had limited exposure to. And so through these NIC master agreements and these deep relationships they have with 30 states, we have now the ability to, to drive more cross-selling, to be aware of opportunities sooner, to, often avoid a competitive process and sell Tyler software into the state, state governments. And that's something, again, we, we had a lot of sort of work to do to, to get that sales motion in place, build those relationships. But now it's, it's really well underway, and we're starting to see some, some really good successes across a wide range of Tyler products. The cross-sell going the other way is taking the NIC payment platform, which was almost entirely at the state level. NIC processing more than $50 billion a year in payments, so really deep strengths and functionality around their payment platform. So taking that and integrating it with our Tyler software products, so that we have an integrated payment solution around things like we provide utility billing systems, traffic ticket systems, licensing and permitting systems, property tax systems. All these things facilitate payments to governments, and now we can be the payment processor. By integrating that software or integrating that payments platform with our software, we actually provide more value to the customer. We can automate reconciliation processes, we can provide better reporting and analytics. So there's a value over, say, just a generic horizontal payment processor. We're in the very early stages of that, really seeing that attachment start to grow. I think we did something like 170 new payment deals with Tyler software customers in the fourth quarter. I think it was 280 in the first quarter. That adds. The first quarter payments deals added will add another $9 million of ARR. So we're starting to see that really attach well. So selling it back into our current software customers and selling it with new software deals. And then there's a whole other side of it around disbursements, which almost doubles the TAM there, that we're really just getting started in as well. Great. Lots of exciting things happening at Tyler. Unfortunately, we're out of time. Please join me in thanking Brian Miller. Brian, appreciate your time today. There will be a breakout-