Tyler Technologies, Inc. (TYL)

Tyler Technologies makes software for local government — courts, building permits, water bills.

The customer is a county, a city or a state court with neither the budget nor the people for in-house development. The product is highly specific: it must comply with a particular state's law, and that rules out general-purpose vendors.

Such a client does not leave: changing the system that registers court cases or bills property tax is a politically risky multi-year project. Revenue is almost entirely recurring, and the move to cloud added fees for processing residents' transactions. Risks: municipal budgets, the length of procurement procedures and the cost of migrating legacy systems. The company pays no dividend.