Plano-headquartered Tyler Technologies is joining the likes of Microsoft, Apple, Amazon, and Alphabet with its addition to Standard & Poor’s 500 Index, known as the S&P 500.
It’s a huge recognition—one that the company didn’t even know they were up for.
“We found out about Tyler’s inclusion in the S&P 500 through Dow Jones’ press release,” Brian Miller, executive vice president and chief financial officer at Tyler, told Dallas Innovates. “We didn’t know we were being considered, but it’s certainly an honor to not only be considered but to be recognized on the list.”
The company’s addition to the S&P 500 is a major milestone, Miller said. It’s also a rare feat for a tech company that devotes most of its business to the public sector, according to Government Technology. Tyler is the second company from the publication’s “GovTech 100 list to make the S&P 500 after Motorola Solutions,” the industry publication noted. With Tyler’s singular focus, the publication said the company could be the “first pure gov tech company” to make the S&P list.
Tyler Technologies specializes in creating essential software and technology for the public sector. Its solutions help school districts, as well as local, state, and federal governments, connect with their communities and other constituents.
The public sector innovator was previously included in the S&P MidCap 400 index, but with the addition to the S&P 500 it’s now a part of what’s been acknowledged as “the best single gauge of large-cap U.S. equities.” Basically a list, the S&P 500 is composed of 500 large enterprises. In Dallas-Fort Worth that includes AT&T, McKesson, Texas Instruments, American Airlines, Southwest Airlines, and others.
There is more than $9.9 trillion indexed or benchmarked to the index, with indexed assets consisting of about $3.4 trillion of this total, according to Dow Jones.
The inclusion on the S&P 500 is a milestone that reflects the company’s “consistent growth and expanding market capitalization over the last two decades,” Lynn Moore, president and CEO of Tyler said in a statement. “Tyler’s commitment to providing essential software and services to support the public sector remains stronger than ever.”
In addition to Tyler Technologies, California-based companies Bio Rad Technologies and Teledyne Technologies, were added to the index, S&P Dow Jones announced. Effective Monday, the companies replace Harley-Davidson, Nordstrom, and Alliance Data Systems on the S&P 500.
Tyler Technologies’ growth continues to propel
The new announcement reflects the increasing importance of the technology sector in the economy—and the application software industry that Tyler fits into.
As the largest company in the U.S. focused solely on providing software solutions to the public sector, Tyler has a broad footprint and quality products, Miller says. This allows the company to be “uniquely positioned” to help Tyler’s clients build a digital infrastructure that empowers communities.
The company’s focus on serving the public sector has helped it stand out as a leader in that space, he says.
“We have strong subject matter expertise—in fact, approximately one-third of our employees have held jobs in local government and schools,” Miller said. “We also have best-in-class products, and we work hard to develop sustainable client partnerships—some which span decades. With all these things working together, we have remained a dependable and financially strong company for many years.”
Tyler had a solid first quarter this year but is still anticipating some impact from the COVID-19 pandemic in the quarters to come. Miller says the company hasn’t yet seen meaningful cancellations but has started to have delays in procurement processes and longer sales cycles.
As a company that exclusively operates in the public sector, in which organizations are primarily focused right now on issues related to the pandemic, that was to be expected.
“We still expect to grow revenue this year, but likely in the mid-single digits,” Miller said. “We cannot speculate but should have a better idea of our annual revenue by our next quarterly earnings report.”
The news about the S&P 500 follows on the heels of Tyler announcing in February that it had passed $1 billion in annual revenue for the first time in its history. Tyler said it has had more than 32 consecutive quarters of double-digit revenue growth, attributable to acquisitions, new software solution development, and client growth that included all 50 states and several countries.
“A decade ago, when our revenues were less than $300 million, we said that we thought we could be a billion-dollar company at some point,” Miller says. “Now that we have surpassed that target, we believe that $2 billion in revenues is within our reach, and the acceleration of our move to the cloud will play a key role in achieving that.”
What Tyler did in the face of the COVID-19 pandemic
For the past 23 years, Tyler has steadily expanded and grown with the intent of becoming the operating system for local government. Though it has been around for much longer, Miller says that focus was sharpened in 1997 when the decision was made to exclusively serve the public sector software market.
Tyler has since expanded its reach to state, federal, and public sector agencies.
“Tyler entered new verticals through acquisitions, which requires a strong plan to assimilate each company into the Tyler family. Tyler has weathered economic downturns, including Y2K and the Great Recession,” Miller said. “Most recently through COVID-19, Tyler has learned new, innovative ways of doing business together with our clients as we identify the essential areas that we must continue to operate, even during a pandemic.”
The COVID-19 pandemic shed light on two major areas of opportunity: citizen engagement and data transparency.
Tyler has begun helping local governments connect with their constituents remotely through citizen self-service tools and remote court services. With data transparency, Tyler is starting to see governments looking to show constituents how their tax dollars are being spent and how they are serving their communities.
The pandemic has also highlighted the need for and benefits of connectivity and cloud services, which Miller says are priorities for Tyler. In fact, they were already part of the company’s roadmap. Tyler recently signed an agreement with Amazon Web Services, which allows the company to bring the most advanced cloud-native services to Tyler clients, improving the flow of information, and providing a better experience for clients.
“With Tyler’s singular focus on the public sector, we are a unique company. However, I believe that the trend of moving to the cloud is something that is becoming important for several industries,” he said. “Hosting critical software programs in the cloud means clients have ongoing regular upgrades, fewer concerns about needing onsite tech expertise, and improved business continuity.”
Tyler is constantly evolving to best serve its clients, through the method of delivery and solutions being offered. Coronavirus showed how vital disaster recovery plans are, so Tyler has worked to put those in place alongside clients so they can manage services online for their constituents.
“We have a strong team that is nimble and flexible in uncertain times, and that has helped us keep up with the pace of change,” Miller said. “Innovation is important, but we are careful not to innovate for innovation’s sake. We take an intentional approach to innovation, based on knowing our clients and anticipating their future needs.”
Tyler’s company culture in Plano
At its Plano headquarters, which is a former YMCA facility, Tyler has a workplace culture dedicated to employee well-being. There’s also a desire to cultivate young tech talent.
Tyler has a strong internship program offered year-round that gives students the hands-on opportunity to learn and grow in the tech industry. Tyler also each year holds the Maine App Challenge, which invites high school students in Maine to develop an app that solves a unique challenge. The top three winners are awarded a total of $10,000 in college scholarships.
Though the recent news is exciting to Tyler—especially the S&P 500—Miller says the company’s culture hinges on its clients.
While we shared the S&P 500 news internally with our employees, our focus has always been on serving the public through strong client relationships rather than focusing on stock performance,” he said. “We’re pleased with the news, of course, but we get more excited about client success stories, such as the news in American City & County magazine about our civic services solution helping El Cajon, California, face big city problems with a little city budget.”
For companies not yet on the list, this focus is incredibly important. Miller recommends others stay focused on executing their strategy, whatever it is, at the highest possible level.
“They should make sure they are serving all of their constituents—customers, employees, and shareholders,” he said. “And, manage their balance sheet and financial position prudently for the long term.”
Quincy Preston and Sophia Gonzalez contributed to this report. The story was updated with additional information on Tuesday, June 23 at 10:20 a.m.
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