Jack Henry & Associates, Inc. (NASDAQ:JKHY) Q2 2024 Earnings Call Transcript February 7, 2024 8:45 AM ET Company Participants Vance Sherard - Vice President Investor Relations David Foss - Chairman & Chief Executive Officer Greg Adelson - President & Chief Operating Officer Mimi Carsley - Chief Financial Officer & Treasurer Conference Call Participants John Davis - Raymond James Nik Cremo - UBS Jason Kupferberg - BofA David Togut - Evercore ISI Vasu Govil - KBW Kartik Mehta - Northcoast Research Cris Kenned ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number 0-14112 JACK HENRY & ASSOCIATES, INC. (Exact name of registrant as specified in its charter) Delaware 43-11283 ...

Jack Henry & Associates, Inc. (NASDAQ:JKHY) Q1 2024 Earnings Conference Call November 8, 2023 8:45 AM ET Company Participants Vance Sherard - Vice President Investor Relations David Foss - Chairman & Chief Executive Officer Greg Adelson - President & Chief Operating Officer Mimi Carsley - Chief Financial Officer & Treasurer Conference Call Participants Tyler DuPont - Bank of America David Togut - Evercore ISI Vasu Govil - KBW Kartik Mehta - Northcoast Research John Davis - Raymond James Dominick Gabriele - ...

Part I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) The company provides technology solutions and payment processing services primarily to US financial institutions - The company provides technology solutions to over **7,500 financial institutions** and diverse corporate entities[13](index=13&type=chunk) Customer Base Overview | Customer Type | Number Served | Asset Range (Banks) | | :--- | :--- | :--- | | Core Banks | 940 | Up to $50 billion | | Core Credit Unions | Over 710 | All sizes | | Non-Core Customers | Nearly 5,880 | All sizes and charters | - The company's fundamental business strategy is to generate **organic revenue and earnings growth**, augmented by strategic acquisitions and a long-term technology modernization strategy[30](index=30&type=chunk)[33](index=33&type=chunk) - In fiscal year 2023, the company **acquired Payrailz, LLC**, a provider of cloud-native digital payment capabilities, to enhance its technology modernization strategy[32](index=32&type=chunk) Research and Development Expenses (in millions) | Fiscal Year | R&D Expense | Capitalized Software | | :--- | :--- | :--- | | 2023 | $142.7 | $166.1 | | 2022 | $121.4 | $148.2 | | 2021 | $109.0 | $128.3 | - The company's primary competitors for core solutions include **Fidelity National Information Services, Inc. (FIS), Fiserv, Inc., and Finastra**[61](index=61&type=chunk) - As of June 30, 2023, the company had approximately **7,120 full-time and part-time employees**[73](index=73&type=chunk) [Risk Factors](index=15&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces operational, business, and regulatory risks including data security, competition, and industry consolidation - **Data security breaches**, system failures, or other cyber incidents could damage the company's reputation and business[85](index=85&type=chunk) - The company's business is subject to risks from failures of its technological infrastructure or outsourcing facilities, which could lead to **service interruptions and loss of customers**[88](index=88&type=chunk) - **Intense competition** from a variety of vendors could lead to decreased demand or price reductions, potentially lowering margins and income[92](index=92&type=chunk) - The financial services industry is subject to extensive and complex government regulation, and failure to comply could **increase costs and impose constraints on operations**[97](index=97&type=chunk) - **Consolidation and failures of financial institutions** are expected to continue, reducing the number of current and potential customers[104](index=104&type=chunk) - The company's growth may be affected if it is unable to find or **successfully integrate suitable acquisitions**[105](index=105&type=chunk)[106](index=106&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the SEC - None[114](index=114&type=chunk) [Properties](index=21&type=section&id=ITEM%202.%20PROPERTIES) The company owns and leases significant office space across the US and operates five aircraft to service customers - The company owns approximately **802,000 square feet** of office space and leases approximately **477,000 square feet**[115](index=115&type=chunk) [Legal Proceedings](index=21&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in routine legal proceedings that are not expected to have a material adverse effect - Management does not expect current lawsuits to have a **material adverse effect** on the company's consolidated financial statements[117](index=117&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company - None[118](index=118&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock (JKHY) trades on Nasdaq, with a history of dividends and no recent share repurchases - The company's common stock is traded on the Nasdaq Global Select Market under the symbol **'JKHY'**[120](index=120&type=chunk) - The company has **paid quarterly dividends every quarter since fiscal 1991**[120](index=120&type=chunk) Issuer Purchases of Equity Securities (Quarter Ended June 30, 2023) | Period | Total Number of Shares Purchased | Average Price of Share | Maximum Number of Shares that May Yet Be Purchased Under the Plans | | :--- | :--- | :--- | :--- | | April 1 - April 30, 2023 | — | $ — | 3,796,265 | | May 1 - May 31, 2023 | — | $ — | 3,796,265 | | June 1 - June 30, 2023 | — | $ — | 3,796,265 | | **Total** | **—** | **$ —** | **3,796,265** | 5-Year Cumulative Total Return Comparison | Year | JKHY | S&P 500 | S&P Composite 1500 Software & Services | | :--- | :--- | :--- | :--- | | 2018 | 100.00 | 100.00 | 100.00 | | 2019 | 103.86 | 110.42 | 120.01 | | 2020 | 144.24 | 118.70 | 153.51 | | 2021 | 129.62 | 167.13 | 204.88 | | 2022 | 144.28 | 149.39 | 171.21 | | 2023 | 135.69 | 178.66 | 222.19 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) FY2023 revenue grew 7% to $2.08 billion, with net income up 1%, impacted by acquisition costs and tax law changes [Results of Operations (FY2023 vs FY2022)](index=24&type=section&id=7.1%20Results%20of%20Operations) FY2023 revenue rose 7% to $2.08 billion, driven by services and processing, while net income grew 1% to $366.6 million Fiscal 2023 vs. 2022 Performance Summary (in thousands, except per share data) | Metric | FY 2023 | FY 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,077,702 | $1,942,884 | 7% | | Operating Income | $480,688 | $474,619 | 1% | | Net Income | $366,646 | $362,916 | 1% | | Diluted EPS | $5.02 | $4.94 | 2% | - Excluding deconversion fees and revenue from the newly acquired Payrailz, the company's **revenue grew by 8%** ($147.8 million)[138](index=138&type=chunk) Revenue Breakdown (in thousands) | Revenue Stream | FY 2023 | FY 2022 | % Change | | :--- | :--- | :--- | :--- | | Services and support | $1,214,701 | $1,156,365 | 5% | | Processing | $863,001 | $786,519 | 10% | Operating Expenses Breakdown (in thousands) | Expense Category | FY 2023 | FY 2022 | % Change | | :--- | :--- | :--- | :--- | | Cost of Revenue | $1,219,062 | $1,128,614 | 8% | | Research and Development | $142,678 | $121,355 | 18% | | Selling, General, and Administrative | $235,274 | $218,296 | 8% | [Reportable Segment Discussion](index=27&type=section&id=7.2%20Reportable%20Segment%20Discussion) All four segments reported revenue growth, led by Corporate and Other (23%) and supported by solid gains in Payments and Complementary Segment Revenue and Cost of Revenue (FY 2023 vs. 2022, in thousands) | Segment | Revenue (2023) | Revenue % Change | Cost of Revenue (2023) | Cost of Revenue % Change | | :--- | :--- | :--- | :--- | :--- | | Core | $656,164 | 5% | $283,531 | 8% | | Payments | $767,339 | 7% | $423,474 | 10% | | Complementary | $583,893 | 7% | $239,044 | 6% | | Corporate and Other | $70,306 | 23% | $273,013 | 7% | - During fiscal 2023, the **Remit product was transferred** from the Complementary segment to the Payments segment, leading to reclassification of prior year data for comparability[157](index=157&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=7.3%20Liquidity%20and%20Capital%20Resources) Cash decreased due to the Payrailz acquisition and lower operating cash flow, funded by increased debt facilities - Cash and cash equivalents decreased to **$12.2 million** at June 30, 2023, from $48.8 million at June 30, 2022[165](index=165&type=chunk) - Net cash provided by operating activities **decreased by 24% to $381.6 million** in FY2023, largely due to increased cash income tax payments related to IRC Section 174 law changes[165](index=165&type=chunk)[301](index=301&type=chunk) - The company used **$229.6 million for the acquisition of Payrailz** and $166.1 million for capitalized software development[166](index=166&type=chunk) - In August 2022, the company entered into a new five-year, **$600 million unsecured credit agreement**, and in May 2023, it entered into a **$180 million term loan agreement**[176](index=176&type=chunk)[178](index=178&type=chunk) [Critical Accounting Estimates](index=31&type=section&id=7.4%20Critical%20Accounting%20Estimates) Management applies significant judgment to estimates for revenue recognition, software capitalization, and acquisition accounting - Significant judgment is required for **revenue recognition**, including identifying performance obligations and estimating variable consideration in long-term customer contracts[184](index=184&type=chunk)[185](index=185&type=chunk) - **Capitalization of software development costs** involves significant judgment in determining when technological feasibility is met and estimating useful lives for amortization[191](index=191&type=chunk) - **Purchase accounting for acquisitions** requires estimates for the fair values of assets and liabilities acquired, which impacts the amount of goodwill recorded[195](index=195&type=chunk)[196](index=196&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are credit risk and interest rate risk on its $275 million of variable-rate debt - The company is exposed to interest rate risk on its **$275 million of outstanding variable-rate debt** as of June 30, 2023[198](index=198&type=chunk) - A hypothetical **1% increase in the borrowing rate** would increase the company's annual interest expense by **$2.75 million**[198](index=198&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements, auditor's report, and management's report on internal controls [Auditor and Management Reports](index=35&type=section&id=8.1%20Auditor%20and%20Management%20Reports) The independent auditor issued an unqualified opinion, identifying revenue recognition as a critical audit matter - The independent auditor, PricewaterhouseCoopers LLP, issued an **unqualified opinion** on the financial statements and internal controls[206](index=206&type=chunk) - The audit identified **Revenue Recognition as a Critical Audit Matter** due to the significant judgment required by management[214](index=214&type=chunk)[215](index=215&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of June 30, 2023[220](index=220&type=chunk) [Consolidated Financial Statements](index=38&type=section&id=8.2%20Consolidated%20Financial%20Statements) The financial statements show revenue growth, an expanded balance sheet from acquisitions, and reduced cash from operations Consolidated Statements of Income (in thousands) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **REVENUE** | **$2,077,702** | **$1,942,884** | **$1,758,225** | | OPERATING INCOME | $480,688 | $474,619 | $398,719 | | INCOME BEFORE INCOME TAXES | $474,574 | $472,267 | $397,725 | | **NET INCOME** | **$366,646** | **$362,916** | **$311,469** | | Diluted earnings per share | $5.02 | $4.94 | $4.12 | Consolidated Balance Sheets (in thousands) | | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Total current assets | $627,962 | $613,524 | | **Total assets** | **$2,773,826** | **$2,455,564** | | Total current liabilities | $523,759 | $543,830 | | Total long-term liabilities | $641,557 | $530,111 | | **Total liabilities** | **$1,165,316** | **$1,073,941** | | **Total stockholders' equity** | **$1,608,510** | **$1,381,623** | Consolidated Statements of Cash Flows (in thousands) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $381,559 | $504,631 | $462,129 | | Net cash from investing activities | ($409,673) | ($196,344) | ($162,250) | | Net cash from financing activities | ($8,430) | ($310,492) | ($462,232) | | **NET CHANGE IN CASH** | **($36,544)** | **($2,205)** | **($162,353)** | [Notes to Consolidated Financial Statements](index=42&type=section&id=8.3%20Notes%20to%20Consolidated%20Financial%20Statements) The notes detail revenue disaggregation, acquisition accounting for Payrailz, debt structure, and subsequent events - As of June 30, 2023, the estimated revenue expected to be recognized in the future from remaining performance obligations is **$5.9 billion**[267](index=267&type=chunk) - The acquisition of Payrailz on August 31, 2022, had a final purchase price of **$230.2 million**, resulting in **$117.3 million of goodwill** allocated to the Payments segment[323](index=323&type=chunk)[326](index=326&type=chunk) - Total outstanding debt as of June 30, 2023, was **$275 million**, consisting of $95 million from a revolving credit facility and $180 million from a term loan[293](index=293&type=chunk)[294](index=294&type=chunk)[296](index=296&type=chunk) - Subsequent to year-end, the Board declared a cash dividend of $0.52 per share and initiated a voluntary separation program with an expected cost of **$17-18 million**[340](index=340&type=chunk)[341](index=341&type=chunk) [Controls and Procedures](index=61&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023 - The CEO and CFO concluded that the company's **disclosure controls and procedures are effective** to provide reasonable assurance that required information is reported in a timely manner[344](index=344&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the fourth quarter of fiscal 2023[346](index=346&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees](index=62&type=section&id=ITEMS%2010,%2011,%2012,%2013%20AND%2014) Required information on directors, compensation, and governance is incorporated by reference from the company's proxy statement - Information required by Items 10, 11, 12, 13, and 14 is omitted from this report and will be **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Stockholders[350](index=350&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=63&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K report - This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including various agreements, compensation plans, and required CEO/CFO certifications[357](index=357&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk) [Form 10-K Summary](index=67&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company has elected not to provide a Form 10-K summary - None[367](index=367&type=chunk)

Jack Henry & Associates, Inc. (NASDAQ:JKHY) Q4 2023 Earnings Conference Call August 16, 2023 8:45 AM ET Company Participants Vance Sherard - VP of IR David Foss - Chairman and CEO Mimi Carsley - CFO and Treasurer Gregory Adelson - President and COO Conference Call Participants Peter Heckmann - D.A. Davidson Nik Cremo - Credit Suisse Rayna Kumar - UBS Dan Perlin - RBC Capital Vasu Govil - KBW Jason Kupferberg - Bank of America John Davis - Raymond James Dominick Gabriele - Oppenheimer Cristopher Kennedy - Wi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number 0-14112 JACK HENRY & ASSOCIATES, INC. (Exact name of registrant as specified in its charter) Delaware 43-112838 ...

PART I [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, showing revenue growth but declining net income due to acquisition costs [Condensed Consolidated Balance Sheet Highlights (in thousands)](index=4&type=section&id=ITEM%201.%20Financial%20Statements) | Account | Dec 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | | Total Assets | $2,578,277 | $2,455,564 | | Total Liabilities | $1,067,287 | $1,073,941 | | Total Stockholders' Equity | $1,510,990 | $1,381,623 | [Condensed Consolidated Statement of Income Highlights (in thousands, except per share data)](index=4&type=section&id=ITEM%201.%20Financial%20Statements) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $505,314 | $493,896 | $1,034,516 | $981,952 | | Operating Income | $107,376 | $125,662 | $248,100 | $259,257 | | Net Income | $80,775 | $95,670 | $187,324 | $197,783 | | Diluted EPS | $1.10 | $1.30 | $2.56 | $2.68 | [Condensed Consolidated Statement of Cash Flows Highlights (in thousands)](index=4&type=section&id=ITEM%201.%20Financial%20Statements) | Cash Flow Activity | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $190,711 | $197,351 | | Net cash from investing activities | ($301,192) | ($101,052) | | Net cash from financing activities | $87,457 | ($118,171) | | Net Change in Cash | ($23,024) | ($21,872) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, revenue disaggregation, the Payrailz acquisition, credit facility, and remaining performance obligations - The company is a financial technology provider serving approximately **7,800** financial institutions and corporate entities with solutions for transaction processing, business automation, and information management[20](index=20&type=chunk) [Disaggregation of Revenue (in thousands)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) | Revenue Type | Three Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Services & Support | $290,700 | $610,849 | | Processing | $214,614 | $423,667 | | **Total Revenue** | **$505,314** | **$1,034,516** | - As of December 31, 2022, the company has estimated future revenue from remaining performance obligations totaling **$5.65 billion**, with approximately **25%** expected to be recognized in the next 12 months[44](index=44&type=chunk) - On August 31, 2022, the company acquired Payrailz, LLC for a final purchase price of **$230.2 million** to expand its digital payment solutions, resulting in **$117.3 million** of goodwill[79](index=79&type=chunk)[82](index=82&type=chunk) - The company entered into a new five-year, **$600 million** senior unsecured credit agreement on August 31, 2022, replacing its prior facility, with **$275 million** outstanding as of December 31, 2022[61](index=61&type=chunk)[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial results, noting revenue growth but a decline in net income due to increased operating expenses and reduced deconversion fees [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q2 FY2023 saw a 2% revenue increase to **$505.3 million** but a 15% operating income decrease to **$107.4 million**, primarily due to higher costs and lower deconversion fees - Q2 FY2023 revenue increased **2%** YoY, with a **6%** increase when excluding deconversion fees and acquisition revenue[102](index=102&type=chunk) - Q2 FY2023 operating income decreased **15%** YoY, but increased **4%** when excluding deconversion fees, acquisition operating loss, and gain on asset disposal[104](index=104&type=chunk) - Q2 FY2023 net income decreased **16%** YoY, but increased **5%** after adjustments for deconversion fees and acquisition impacts[106](index=106&type=chunk) - A rapid slowdown in financial institution merger and acquisition activity led to a significant decrease in deconversion fee revenue, impacting the quarter's results[112](index=112&type=chunk) [Reportable Segment Discussion](index=26&type=section&id=Reportable%20Segment%20Discussion) This section details the performance of the company's four segments, highlighting varied revenue growth rates and impacts from deconversion fees and conference timing [Segment Revenue and Cost of Revenue (Q2 FY2023 vs Q2 FY2022, in thousands)](index=26&type=section&id=Reportable%20Segment%20Discussion) | Segment | Revenue (Q2'23) | Revenue (Q2'22) | % Change | Cost of Revenue (Q2'23) | Cost of Revenue (Q2'22) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Core | $155,390 | $154,878 | 0% | $68,324 | $64,554 | 6% | | Payments | $191,487 | $185,505 | 3% | $108,071 | $96,966 | 11% | | Complementary | $142,295 | $136,540 | 4% | $59,270 | $55,982 | 6% | | Corporate & Other | $16,142 | $16,973 | (5)% | $68,924 | $65,323 | 6% | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased due to significant investing activities, including the Payrailz acquisition and software development, funded by a new **$600 million** credit facility - Cash provided by operating activities for the first six months of fiscal 2023 was **$190.7 million**, a **3%** decrease from the prior year[142](index=142&type=chunk) - Cash used in investing activities totaled **$301.2 million**, primarily for the Payrailz acquisition (**$229.6 million**) and software development (**$81.0 million**)[143](index=143&type=chunk) - The company entered a new **$600 million** credit facility and had an outstanding balance of **$275 million** as of December 31, 2022, primarily to fund the Payrailz acquisition[152](index=152&type=chunk)[154](index=154&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are credit risk and interest rate risk on its **$275 million** variable-rate debt, with a 1% rate increase costing **$2.75 million** annually - The company is exposed to interest rate risk on its **$275 million** of outstanding variable-rate debt[158](index=158&type=chunk) - A **1%** increase in the borrowing rate would increase annual interest expense by approximately **$2.75 million**[158](index=158&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective to provide reasonable assurance of timely and accurate reporting[159](index=159&type=chunk) - No changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company's internal controls were identified during the quarter[160](index=160&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings not expected to materially affect its consolidated financial statements - Current lawsuits are not expected to have a material adverse effect on the company's financial statements[161](index=161&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details stock repurchase activity, noting no shares were repurchased during the quarter, with **3,947,713** shares remaining under authorization [Issuer Purchases of Equity Securities (Quarter Ended Dec 31, 2022)](index=30&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) | Period | Total Number of Shares Purchased | Average Price of Share | Maximum Number of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | Oct 2022 | — | — | 3,947,713 | | Nov 2022 | — | — | 3,947,713 | | Dec 2022 | — | — | 3,947,713 | | **Total** | **—** | **—** | **3,947,713** | [Exhibits](index=31&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements in XBRL format - The report includes CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and financial data in XBRL format[165](index=165&type=chunk)

Jack Henry & Associates, Inc. (NASDAQ:JKHY) Q2 2023 Earnings Conference Call February 8, 2023 8:45 AM ET Company Participants Vance Sherard - CFA, Investor Relations David Foss - Board Chair and Chief Executive Officer Mimi Carsley - Chief Financial Officer and Treasurer Greg Adelson - President and Chief Operating Officer Conference Call Participants Vasundhara Govil - Keefe, Bruyette, & Woods, Inc. David Togut - Evercore ISI Kartik Mehta - Northcoast Research John Davis - Raymond James James Faucette - Mo ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) This section details the company's financial performance, management's analysis, market risk exposures, and internal control effectiveness for the quarter [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) The company's Q1 FY2023 financial statements reflect an 8% revenue increase to **$529.2 million** and a 4% net income rise to **$106.5 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.58 billion** by September 30, 2022, primarily due to the Payrailz acquisition, with liabilities at **$1.12 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | June 30, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$2,578,460** | **$2,455,564** | | Cash and cash equivalents | $31,970 | $48,787 | | Computer software, net | $534,488 | $410,957 | | Goodwill | $804,155 | $687,458 | | **Total Liabilities** | **$1,117,322** | **$1,073,941** | | Debt, net of current maturities | $245,000 | $115,000 | | **Total Stockholders' Equity** | **$1,461,138** | **$1,381,623** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 FY2023 revenue grew 8% to **$529.2 million**, operating income rose 5% to **$140.7 million**, and net income increased 4% to **$106.5 million** Statement of Income Summary (in thousands, except per share data) | Metric | Q1 FY2023 (ended Sep 30, 2022) | Q1 FY2022 (ended Sep 30, 2021) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$529,202** | **$488,056** | **8.4%** | | Operating Income | $140,723 | $133,595 | 5.3% | | **Net Income** | **$106,549** | **$102,114** | **4.3%** | | Diluted EPS | $1.46 | $1.38 | 5.8% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 FY2023 operating cash flow increased to **$136.8 million**, investing activities used **$249.6 million** for acquisitions, and financing provided **$95.9 million** Cash Flow Summary (in thousands) | Cash Flow Category | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $136,831 | $106,549 | | Net cash from investing activities | ($249,594) | ($46,451) | | Net cash from financing activities | $95,946 | ($66,839) | | **Net Change in Cash** | **($16,817)** | **($6,741)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue recognition, the **$229.6 million** Payrailz acquisition, and segment performance, showing growth in both Services & Support and Processing revenue - As of September 30, 2022, the company has estimated future revenue from remaining performance obligations totaling **$5.64 billion**, with approximately **26%** expected to be recognized in the next 12 months[45](index=45&type=chunk) - On August 31, 2022, the company acquired Payrailz for **$229.6 million** in cash, funded by its revolving line of credit, to expand its digital financial management solutions[76](index=76&type=chunk)[77](index=77&type=chunk) - The Payrailz acquisition resulted in the recognition of **$116.7 million** in goodwill, allocated to the Payments segment, and **$119.9 million** in identifiable intangible assets, primarily computer software[78](index=78&type=chunk)[79](index=79&type=chunk) Revenue by Type (in thousands) | Revenue Type | Q1 FY2023 | Q1 FY2022 | | :--- | :--- | :--- | | Services & Support | $320,149 | $297,494 | | Processing | $209,053 | $190,562 | | **Total Revenue** | **$529,202** | **$488,056** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported an 8% revenue increase for Q1 FY2023, with operating expenses up 10%, and the Payrailz acquisition funded by increased credit facility borrowings [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 FY2023 total revenue grew 8%, driven by Services and Support (8%) and Processing (10%), while operating expenses increased 10% - Total revenue increased by **8%** (**$41.1 million**) in Q1 FY2023 compared to Q1 FY2022, primarily from growth in private/public cloud, card processing, and transaction/digital revenues[94](index=94&type=chunk) - Operating expenses increased **10%** year-over-year, driven by higher personnel costs, increased direct costs associated with revenue growth, and a rise in travel expenses[95](index=95&type=chunk) - Services and Support revenue grew **8%**, driven by cloud processing, software usage, and implementation fees, while Processing revenue grew **10%**, led by higher card processing and Jack Henry digital (Banno) revenue[100](index=100&type=chunk)[101](index=101&type=chunk) [Reportable Segment Discussion](index=24&type=section&id=Reportable%20Segment%20Discussion) All four segments reported revenue growth in Q1 FY2023, with Core up 6% to **$175.1 million** and Payments up 8% to **$186.5 million** Segment Revenue Performance (in thousands) | Segment | Q1 FY2023 Revenue | Q1 FY2022 Revenue | % Change | | :--- | :--- | :--- | :--- | | Core | $175,124 | $165,285 | 6% | | Payments | $186,540 | $172,591 | 8% | | Complementary | $148,350 | $137,778 | 8% | | Corporate and Other | $19,188 | $12,402 | 55% | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is strong with operating cash flow up 28% to **$136.8 million**, and a new **$600 million** credit facility funded the **$229.6 million** Payrailz acquisition - Cash provided by operating activities increased **28%** to **$136.8 million** for the first three months of fiscal 2023 compared to the prior year[116](index=116&type=chunk) - The company entered into a new five-year, **$600 million** senior unsecured credit agreement, which can be increased to **$1 billion**, with **$245 million** outstanding as of September 30, 2022[125](index=125&type=chunk) - The increase in borrowings was primarily to fund the acquisition of Payrailz for **$229.6 million** in cash[120](index=120&type=chunk)[121](index=121&type=chunk)[127](index=127&type=chunk) - No shares of common stock were repurchased during the quarter ended September 30, 2022, with remaining authority to repurchase up to **3.95 million** additional shares[123](index=123&type=chunk)[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risk is interest rate fluctuations on **$245 million** variable-rate debt, where a 1% increase raises annual interest expense by **$2.45 million** - The company is exposed to interest rate risk on its **$245 million** of outstanding variable-rate debt[131](index=131&type=chunk) - A **1%** increase in the borrowing rate would increase annual interest expense by approximately **$2.45 million**[131](index=131&type=chunk) [Controls and Procedures](index=27&type=section&id=ITEM%204.%20Controls%20and%20Procedures) CEO and CFO confirmed effective disclosure controls as of September 30, 2022, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[132](index=132&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[133](index=133&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, equity security sales, and exhibits [Legal Proceedings](index=27&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, but management anticipates no material adverse effect on its consolidated financial statements - The company states that any liabilities from current lawsuits are not expected to have a material adverse effect on its financial statements[134](index=134&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No equity securities were repurchased during Q1 FY2023, with remaining authority to repurchase up to **3.95 million** additional shares Issuer Purchases of Equity Securities (Quarter ended Sep 30, 2022) | Period | Total Number of Shares Purchased | Average Price of Share | Maximum Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | July 2022 | — | — | 3,947,713 | | August 2022 | — | — | 3,947,713 | | September 2022 | — | — | 3,947,713 | | **Total** | **—** | **—** | **3,947,713** | [Exhibits](index=29&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Amended and Restated Credit Agreement and CEO/CFO certifications - Key exhibits filed include the Amended and Restated Credit Agreement dated August 31, 2022, and certifications by the CEO and CFO[139](index=139&type=chunk)

Jack Henry & Associates, Inc. (NASDAQ:JKHY) Q1 2023 Earnings Conference Call November 9, 2022 8:45 AM ET Company Participants Vance Sherard - Vice President of Investor Relations David Foss - Chairman and CEO Mimi Carsley - CFO and Treasurer Greg Adelson - President and COO Conference Call Participants Vasundhara Govil - Keefe, Bruyette, & Woods, Inc. Rayna Kumar - UBS David Togut - Evercore ISI Nik Cremo - Credit Suisse Kartik Mehta - Northcoast Research Peter Heckmann - D.A. Davidson Dominick Gabriele ...