Tyler Technologies, Inc. (“Tyler”) is a major provider of integrated
information management solutions and services for the public sector, with a
focus on local governments. We partner with clients to make local government
more accessible to the public, more responsive to the needs of citizens and
more efficient in its operations. We have a broad line of software solutions
and services to address the information technology (“IT”) needs
of major areas of operations for cities, counties, schools and other local government
entities. Most of our clients have our software installed in-house. For clients
who prefer not to physically acquire the software and hardware, most of our
software applications can be delivered as software as a service (“SaaS”),
which utilize the Tyler private cloud. We provide professional IT services to
our clients, including software and hardware installation, data conversion,
training and, at times, product modifications. In addition, we are the nation’s
largest provider of outsourced property appraisal services for taxing jurisdictions.
We also provide continuing client support services to ensure product performance
and reliability, which provides us with long-term client relationships and a
significant base of recurring maintenance revenue. In addition, we provide electronic
document filing (“e-filing”) solutions, which simplify the filing
and management of court documents.
The state and local government market is one of the largest and most decentralized
IT markets in the country, consisting of all 50 states, approximately 3,000
counties, 36,000 cities and towns and 13,900 school districts. This market is
also comprised of approximately 37,000 special districts and other agencies,
each with specialized delegated responsibilities and unique information management
requirements.
Traditionally, local government bodies and agencies performed state-mandated
duties, including property assessment, record keeping, road maintenance, law
enforcement, administration of election and judicial functions, and the provision
of welfare assistance. Today, a host of emerging and urgent issues are confronting
local governments, each of which demands a service response. These areas include
criminal justice and corrections, administration and finance, public safety,
health and human services, planning, regulatory and maintenance and records
and document management. Transfers of responsibility from the federal and state
governments to county and municipal governments and agencies in these and other
areas also place additional service and financial requirements on these local
government units. In addition, constituents of local governments are increasingly
demanding improved service and better access to information from public entities.
As a result, local governments recognize the increasing value of information
management systems and services to, among other things, improve revenue collection,
provide increased access to information, and streamline delivery of services
to their constituents. Local government bodies are now recognizing that “e-government”
is an additional responsibility for community development. From integrated tax
systems to integrated civil and criminal justice information systems, many counties
and cities have benefited significantly from the implementation of jurisdiction-wide
systems that allow different agencies or government offices to share data and
provide a more comprehensive approach to information management. Many city and
county governmental agencies also have unique individual information management
requirements, which must be tailored to the specific functions of each particular
office.
We provide a comprehensive and flexible suite of products and services that
addresses the information technology needs of cities, counties, schools and
other local government entities. We derive our revenues from five primary sources:
Sales of software licenses and royalties
Subscription-based arrangements
Software services
Maintenance and support
Appraisal services
We design, develop, market and support a broad range of software solutions to
serve mission-critical “back-office” functions of local governments.
Many of our software applications include Internet-accessible solutions that
allow for real-time public access to a variety of information or that allow
the public to transact business with local governments via the Internet. Our
software solutions and services are generally grouped in six major areas:
Financial Management and Education
Courts and Justice
Public Safety
Property Appraisal and Tax
Planning, Regulatory and Maintenance
Land and Vital Records Management
Each of our core software systems consists of several fully integrated applications.
For clients who acquire software for use in-house, we generally license our
systems under standard perpetual license agreements that provide the client
with a fully paid, nonexclusive, nontransferable right to use the software.
In some of the product areas, such as financial management and education and
property appraisal and tax, we offer multiple solutions designed to meet the
needs of different sized governments.
We also offer SaaS arrangements, which utilize the Tyler private cloud, for
clients who do not wish to maintain, update and operate these systems or to
make up-front capital expenditures to implement these advanced technologies.
For these clients, the software and client data are hosted at our data centers
or at third-party locations, and clients typically sign multi-year contracts
for these subscription-based services.
Historically, we have had a greater proportion of our annual revenues in the
second half of our fiscal year due to governmental budget and spending cycles
and the timing of system implementations for clients desiring to “go live”
at the beginning of the calendar year.
We provide a variety of professional IT services to clients who utilize our
software products. Virtually all of our clients contract with us for installation,
training, and data conversion services in connection with their implementation
of Tyler’s software solutions. The complete implementation process for
a typical system includes planning, design, data conversion, set-up and testing.
At the culmination of the implementation process, a data implementation team
is generally onsite at the client’s facility to ensure the smooth go-live
with the new system. Implementation fees are charged separately to clients on
either a fixed-fee or hourly charge basis, depending on the contract.
Both in connection with the installation of new systems and on an ongoing basis,
we provide extensive training services and programs related to our products
and services. Training can be provided in our training centers, onsite at clients’
locations, or at meetings and conferences and can be customized to meet clients’
requirements. The vast majority of our clients contract with us for training
services, both to improve their employees’ proficiency and productivity
and to fully utilize the functionality of our systems. Training services are
generally billed on an hourly or daily basis, along with travel and other expenses.
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