TYL
#I think for 2017 in e-filing, our expectation is mid-teens growth.
Pretty similar to the kind of growth we saw in e-filing in 2016.
So I think we grew roughly 15% in 2016 and it's growing somewhere around that same rate in 2017.
As you know, we have somewhat long lead times on some of these.
We have a number of e-filing arrangements that we have a lot of visibility over jurisdictions that are either already committed to doing e-filing with us but won't start until some point in the future.
Perhaps, when there's an existing case management implementation goes live.
There are a number of those in California, for example.
Others where they are currently doing e-filing but were rolling out across the state in a phased manner.
Or in places that are doing e-filing today but it is not mandatory and as they move to mandatory somewhere down the road, the volumes and the revenues will increase.
So we've talked about over the next three-to-five years expecting to grow that business.
We finished with e-filing revenues in 2016 just shy of $37 million.
To grow that with the visibility we have today going roughly double to around $75 million over the next four-to-five years.
To get there, we would look for that than to accelerate a bit from that level and grow more in the 20% range in the 2018, 2019, 2020 timeframe.
We do expect with some of the visibility we have for that growth rate to accelerate as some of these go lives happened in 2018, 2019.
Yes.
I would say our strategy, again, this is something you just want to put on the list of these incremental growth drivers over a long period of time.
Nothing explosive in the short term.
Leading with courts and justice.
We look at our products, everything is vertical, but some things are more vertical than others.
Those would be applications that exclusively work in the public sector.
So courts and justice, public safety, tax and appraisal.
Some of these applications.
Those hyper vertical applications that are exclusive to the public sector versus the enterprise apps like financial and human resources and others are likely the products we would move internationally with first.
So public safety for both of those reasons, being sub-vertical as well as being related to our courts and justice offering, if it becomes established in certain markets would be a candidate for that.
Right now we are obviously, very focused on the things we have been discussing on the call in terms of the current investments in those products and achieving higher market share and a broader footprint here in the states, but it certainly is a candidate down the road for international expansion.
It is primarily ---+ we will see how it shakes out.
I think it's primarily a one-time step-up.
We think increased our share in 2016 and 2017 it increases our shares by about 1.3%.
To the extent that we have a much larger stock option exercise gain it could increase that slightly, but I think it's going to be right around that rate.
So I don't think it moves as much as it moves the tax rate.
Sure.
It's two different things.
We've talked about expanding the breath of the product so to include incremental products that are either part of the core sale or add-on sales over time, but the larger driver would be the size of the jurisdictions that we are competitive in.
As <UNK> indicated earlier, New World has been mostly a mid-range player.
Not to say they haven't done smaller and larger deals, but that's been their sweet spot.
And the most significant growth in the addressable market would be from being able to move up into Tier 0, Tier 1 opportunities and down as well and broaden the size of that addressable market.
So this is a long-term initiative, but making progress on win rates and market share in a growing and larger footprint is our strategy.
Yes, no, there hasn't been.
Obviously, it's a distraction.
We've got a lot of customers.
We have hundreds of implementations underway at any given time.
Depending on how you measure it, 15,000 clients.
So it's a challenging business and there will be issues.
Normally, Tyler does an exceptional job on execution and getting through the challenges of implementations and customer issues.
These two have gotten a little hotter than what we normally experience and, unfortunately, a little more public.
We don't like to resolve customer issues publicly, but I think what we've said, you can go out and read, which really is that these are issues specifically associated with those particular accounts.
We don't believe we're the direct cause of those things.
We can be the solution to those issues or those accounts if they want us to be and so we are working with them to achieve those things.
But, no, it has not manifested itself in any affect on our new business that we can see in any meaningful way.
Obviously, there is a number of dynamics that affect every new business decision or customer situation, but it has not become a meaningful problem for us outside of those specific accounts.
It sounds like a big number.
I don't know that it is an enormous change in that market space other than to say it's healthy and it's growing.
We may be more aggressive in identifying opportunities.
We are broadening that footprint probably even ahead of our capabilities to be competitive in some of those spaces.
I think the data point is to establish that is a large and growing marketplace.
That we have a broader look at that market then we had in the past or they had in the past and so there is a substantial opportunity there.
It's probably modestly higher.
It has been steady, robust to some degree, not explosive.
Leading indicators would suggest that's at least stable if not modestly growing.
They have done a great job in improving their win rates and their competitive position.
So the challenge is, obviously, to sustain the growth rate they've had historically.
Again, win rates have allowed them to continue to do that and we continue to work with those products aggressively to try to sustain that.
Well, we normally wouldn't comment on the opportunities in the marketplace.
We announced on this call or we've talked about on this call Maine, which includes a 10-year e-file arrangement on a fixed-fee basis.
The numbers that <UNK> spoke of doubling the e-filing revenues in the coming four or five years really only includes things like Maine and things like other opportunities that we have high levels of visibility on.
But generally to answer your question, sure, there are opportunities out there, our expectation is that the majority of the marketplace will have paperless courthouses and e-filing and usually with a mandate on that in the coming year or so.
There is incremental opportunity beyond that, but generally we wouldn't comment on specific opportunities in the new business market.
Sure.
Dynamic royalties were about $432,000, and that compared to $319,000 last year's fourth quarter and then our direct royalties from our Dynamic's deals sold by us were $1.3 million.
Yes.
I guess leadership is a relative term, but for example, Odyssey's position in case management and electronic filing would be very strong and by anybody's definition a leadership position.
Our presence in jail, while it could be strong in certain markets, may not be anywhere near that level of market share in leadership.
So that would be an example.
It really speaks to our overall growth strategy.
So we see a little lower growth rate this year.
You could say that's a trend that core growth on a bigger base as we said just naturally it's going to decline over time.
We are not accepting of that.
This would be one of many areas where we say, hey, can we have the presence in jail that we have in case management.
Can we have the presence in other areas.
An inorganic example would be an Execu<UNK>e, obviously EnerGov a few years ago.
The whole white space initiative is to find these contiguous products and market spaces that we either have a smaller footprint or smaller presence and invest in those organically or in the case of an EnerGov or an Execu<UNK>e acquire something that we can then invest in.
Really even e-file was this way with Wisnet a number of years ago now and have an incremental catalyst to growth that takes what may be a natural core growth rate of 10% or 11% and get you back in the 13%, 14%, 15% growth range.
That's what that whole strategy is about.
Obviously, I wouldn't comment on a specific M&A opportunity, but generally I think I said earlier in the call, it's a rich environment right now and some of these white space initiatives that we are working on that we would love to do an acquisition on in a lot of cases is just richer than our taste.
We will always be opportunistic and disciplined and so my expectations would be that it would not be a real hot market in 2017.
That can change tomorrow with one deal, as you know, but as a general observation, it's a pretty rich market and I'd probably take the under if we were trying to put a historical number out there against that.
The President, we get asked about this.
We've seen some notes even that could suggest less investment or spending under a Trump administration.
I'd just remind everybody that everything we do is essential to local government and it's non-discretionary, they have to do it and we don't see a lot of changes, even in timing at this point in time.
So the answer to that would be, no, we haven't really seen any changes.
Great, well thank you all for joining us on the call today.
Appreciate all of your questions.
If there are any further questions, feel free to reach out to <UNK>, <UNK> or myself and we would be happy to work with you.
Thanks again and have a great day.
