Tyler Technologies, Inc.

Hello, and welcome to today's Tyler Technologies fourth quarter 2022 conference call. Your host for today's call is Lynn Moore, President and CEO of Tyler Technologies. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference is being recorded today, February 16, 2023. I would like to turn the call over to Hala El-Shabini, Tyler's Senior Director of Investor Relations. Please go ahead.

Thank you, Emma, and welcome to our call. With me today is Lynn Moore, our President and Chief Executive Officer, and Brian Miller, our Chief Financial Officer. After I give the safe harbor statement, Lynn will have some initial comments on our quarter, and then Brian will review the details of our results and provide our annual guidance. Lynn will end with some additional comments and then we'll take your questions. During this call, management may make statements that provide information other than historical information and may include projections concerning the company's future prospects, revenues, expenses, and profits. Such statements are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties which could cause actual results to differ materially from these projections. We would refer you to our Form 10-K and other SEC filings for more information on those risks. Also in our earnings release, we have included non-GAAP measures that we believe facilitate understanding of our results and comparisons with peers in the software industry. A reconciliation of GAAP to non-GAAP measures is provided in our earnings release. We have also posted on the investor relations section of our website under the financials tab schedules with supplemental information provided on this call, including information about quarterly bookings, backlogs, and recurring revenues. On the Events and Presentations tab, we posted an earnings summary slide deck to supplement our prepared remarks. Please note that all growth comparisons we make on the call today will relate to the corresponding period of last year unless we specify otherwise. Len?

Thanks, Ella. Our fourth quarter results marked a solid finish to an eventful year as public sector demand remains strong and SAS adoption continues at an accelerated pace. Total revenues grew 4.3% with organic growth excluding COVID related revenues of approximately 6% and organic revenue growth for the full year was solid at approximately 8.2%. Recurring revenues comprised nearly 83% of our quarterly revenues. On an organic basis, subscription revenue grew 14.3%, reflecting both our accelerating shift to the cloud and growth in transaction-based revenues. Most importantly, SaaS revenues, included in subscriptions, grew 19.3%. We achieved solid revenue growth even as the shift in new software contract mix continued to accelerate to SaaS from licenses. In Q4, 86% of our new software contract value was SaaS, compared to 77% in Q4 last year. In our digital solutions division, which is formerly known as NIC, we continue to execute on cross-selling opportunities. And in Q4, we signed a significant new contract with the Kansas Department of Revenue to provide our data and insights assessment connect solution, which will work with our enterprise assessment solution used statewide in Kansas. We also signed sell-through deals for our recreation dynamic solution with the Utah Division of Outdoor Recreation and the Mississippi Department of Wildlife, Fisheries, and Parks. Our Digital Solutions Division also signed notable SAS software agreements with the State of Nevada and the Alabama Alcohol Beverage Control Board. We also signed a payments processing contract with the Wisconsin Department of Motor Vehicles, which is our first payments opportunity in Wisconsin. Finally, Our Digital Solutions Division won a competitive rebid for our Master Enterprise Contract with the State of Colorado's Statewide Internet Portal Authority Board, as well as an extension of our Master Enterprise Contract with the State of Oklahoma. In other Tyler Divisions, we signed seven additional significant SAS deals, each for different product suites, and each with a total contract value greater than $2 million. Those include contracts with the Cypress Fairbanks Independent School District in Texas, for our student transportation solution, the cities of Prosper, Texas and Glendora, California for our enterprise ERP and enterprise permitting and licensing solutions, the Placer County Water Agency in California and the city of Helena, Montana for our enterprise ERP solution, the city of Albuquerque, New Mexico for our enterprise permitting and licensing solution, and Lucas County, Ohio for our enterprise justice solution. In addition to those deals, We signed 12 SAS deals in the quarter with contract values between $1 and $2 million each. In the fourth quarter, we signed 153 new payments deals worth more than $4.7 million in estimated annual recurring revenue across Tyler divisions other than Digital Solutions. The largest of those was an agreement to provide payment processing for the city of Milwaukee, Wisconsin, with estimated annual revenues of more than $1.2 million. For the full year 2022, we signed 571 new payments deals worth more than $13 million in annual recurring revenue, many of which we were able to pursue because of the new capabilities that came to us with NIC. More than 80% of those were sold to existing Tyler Software clients. New payments-only agreements typically have a lag of three to six months between signing and revenue generation, while payments agreements that are embedded in a broader solution, such as a new ERP sale, may have a period of six to 18 months from signing to revenue generation. In our justice group, we signed two notable multi-suite license deals in the quarter for our enterprise public safety, enforcement mobile, and data and insight solutions with Stearns County, Minnesota and Richland County, Ohio. We also signed two significant license contracts for our enterprise justice solution with Midland County, Texas and Kankakee County, Illinois. which also include our enterprise supervision solution. Now I'd like for Brian to provide more detail on the results for the quarter and our annual guidance for 23.