Financial Data and Key Metrics Changes - The payments segment constitutes 37% of total revenue, with core and complementary segments each making up roughly one-third of total revenue [7][21] - The company reported a growth rate of approximately 10% in its key revenue, which accounts for 76% of overall revenue [28][29] - The company is targeting a headcount increase of less than 1.5% while maintaining a growth rate of 6-7% [97][100] Business Line Data and Key Metrics Changes - The payments business, which includes card services, is performing well, with card transactions making up 60% of the payments segment [19][72] - The pay center business, which focuses on real-time payments, is growing the fastest among the payment services [73] - The bill pay and remote deposit capture businesses are experiencing steady growth in the mid to lower single digits [74] Market Data and Key Metrics Changes - The company has about 40% of all real-time payment customers live in the market, indicating a strong position in the fast-growing payments sector [73] - Consumer confidence is waning, impacting debit transactions, which make up 90% of the card business [20] Company Strategy and Development Direction - The company is focusing on the SMB market, aiming to provide solutions that enhance deposit growth and customer retention [63][64] - A tech modernization strategy is in place, with a goal to transition clients from on-premise to private and public cloud solutions [41][50] - The company is rationalizing its product offerings, aiming to streamline operations and improve efficiency [102] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic challenges affecting consulting and hardware sales, leading to a slowdown in non-key revenue [11][12] - The company is optimistic about its core business growth and competitive wins, particularly in larger institutions [29][90] - Regulatory changes are expected to facilitate faster acquisition approvals, which could positively impact the market environment [92] Other Important Information - The company has a strong succession planning process, which has facilitated a smooth transition in leadership [8] - The company is ahead of schedule in delivering a full deposit-only core in the public cloud, expected to be available by next year [44][51] Q&A Session Summary Question: How is the macro environment affecting the business? - Management indicated that macro challenges have led to a pullback in consulting services and hardware sales, impacting non-key revenue [11][12] Question: What is the outlook for core business growth? - The core business is expected to continue growing at close to 10%, with a strong pipeline of competitive wins [28][29] Question: How does the company plan to address the SMB market? - The company is developing solutions that provide instantaneous approval and multiple settlement windows to enhance SMB offerings [63][66] Question: What is the strategy for transitioning to cloud services? - The company is focused on moving clients to private and public cloud solutions, with expected revenue lifts from these transitions [41][45] Question: How is the company managing costs in a slower environment? - The company is implementing business process automation and maintaining a cautious approach to headcount growth to manage costs effectively [97][100]

Company Overview - Jack Henry & Associates, Inc. is a financial technology company listed on Nasdaq under the ticker JKHY, providing technology solutions to financial institutions for over 48 years [2] - The company serves approximately 7,500 clients, focusing on innovation, personal service, and insight-driven solutions to enhance financial health [2] Upcoming Events - Greg Adelson, President & CEO of Jack Henry, will present at Bernstein's 41st Annual Strategic Decisions Conference on May 28th at 11:00 a.m. ET [1] - A live webcast of the presentation will be available, with a replay accessible on the company's investor relations website following the event [1]

Core Insights - SouthTrust Bank has selected Jack Henry to modernize its technology infrastructure, aiming to differentiate and streamline operations while pursuing growth [1][3] - The bank, founded in 1934, has $550 million in assets and is focused on expanding its presence in Houston and serving niche markets [2] - The partnership with Jack Henry will enhance customer service, boost efficiency, and integrate with third-party fintechs, while introducing modern digital banking capabilities [3][4] Company Overview - SouthTrust Bank has eight locations in South Texas and Houston, known for strong community ties and long-term customer relationships [2] - The bank aims to reach $2 billion in assets over the next decade, focusing on geographic expansion and organic growth [4] Technology Partnership - Jack Henry's core processing system will eliminate manual tasks and streamline workflows, enhancing the bank's operational efficiency [3] - The introduction of customer-facing products like the Jack Henry Digital Platform and services such as Zelle® and Apple Pay will attract customers [3][4] - Jack Henry emphasizes the importance of innovative and accessible tools for community banks to compete effectively [4] Strategic Goals - SouthTrust Bank's CEO highlighted the need for a technology provider that shares their vision for the future, indicating confidence in Jack Henry's capabilities [4] - The collaboration aims to empower SouthTrust Bank to deliver modern and user-friendly banking experiences to its communities [4]

Financial Performance - Revenue for the three months ended March 31, 2025, was $585,087,000, an increase of 8.6% compared to $538,562,000 for the same period in 2024[14] - Operating income for the three months ended March 31, 2025, was $138,740,000, representing a 23.7% increase from $112,099,000 in the prior year[14] - Net income for the three months ended March 31, 2025, was $111,108,000, up 27.5% from $87,099,000 for the same period in 2024[14] - Basic earnings per share for the three months ended March 31, 2025, increased to $1.53 from $1.20 in the same period last year, reflecting a 27.5% growth[14] - Net income for the nine months ended March 31, 2025, was $328,144,000, an increase from $280,743,000 in the same period of 2024, representing a growth of approximately 16.9%[19] - Total revenue for the nine months ended March 31, 2025, reached $1,759,916,000, compared to $1,655,631,000 for the same period in 2024, indicating a year-over-year increase of about 6.3%[40] - Diluted earnings per share for the nine months ended March 31, 2025, rose to $4.49 compared to $3.85 for the same period in 2024[80] - The company reported a segment income of $322,106,000 for Core Payments for the nine months ended March 31, 2025, indicating robust profitability in this segment[87] Assets and Liabilities - Total current assets decreased to $593,236,000 as of March 31, 2025, from $632,018,000 as of June 30, 2024[12] - Total liabilities decreased to $895,587,000 as of March 31, 2025, compared to $1,082,117,000 as of June 30, 2024[12] - Retained earnings increased to $3,287,370,000 as of March 31, 2025, from $3,081,690,000 as of June 30, 2024[12] - The company reported a total stockholders' equity of $2,036,431,000 as of March 31, 2025, up from $1,842,364,000 as of June 30, 2024[12] Expenses - Research and development expenses for the three months ended March 31, 2025, were $39,411,000, an increase of 9.9% from $35,993,000 in the same period last year[14] - Total expenses for the nine months ended March 31, 2025, were $1,346,899,000, with Selling, General, and Administrative expenses amounting to $209,839,000[86] - Research and Development expenses for the nine months ended March 31, 2025, totaled $120,192,000, highlighting the company's commitment to innovation[86] Cash Flow and Investments - Cash flows from operating activities for the nine months ended March 31, 2025, were $314,392,000, slightly down from $336,242,000 in 2024, reflecting a decrease of approximately 6.5%[19] - The company’s cash and cash equivalents at the end of the period were $39,870,000, an increase from $27,254,000 at the end of the previous year, showing a growth of about 46.4%[19] - The company’s net cash from investing activities for the nine months ended March 31, 2025, was $(176,317,000), compared to $(164,505,000) in 2024, reflecting an increase in cash outflow of approximately 7.1%[19] Dividends and Shareholder Returns - The company declared dividends of $0.58 per share for the three months ended March 31, 2025, compared to $0.55 per share in the same period in 2024[17] - The company declared a cash dividend of $0.58 per share on May 9, 2025, payable on June 18, 2025, to stockholders of record as of May 29, 2025[88] Taxation - The effective tax rate for the three months ended March 31, 2025, decreased to 21.7% from 23.7% in the prior year quarter[69] - For the nine months ended March 31, 2025, the effective tax rate decreased to 23.0% compared to 23.6% for the same period last fiscal year[70] - The company paid income taxes of $94,553 for the nine months ended March 31, 2025, compared to $70,686 for the same period in 2024[71] - As of March 31, 2025, the company had $22,851 of gross unrecognized tax benefits, with $20,735 potentially affecting the effective tax rate if recognized[71] Debt and Financing - The Company had $80,000 outstanding under the amended and restated credit facility as of March 31, 2025, up from $60,000 at June 30, 2024[64] - The Company entered into a term loan credit agreement with an outstanding balance of $90,000 as of March 31, 2025[65] - Interest paid by the Company during the nine months ended March 31, 2025, was $7,525, a decrease from $11,176 in the same period of 2024[68] - As of March 31, 2025, the company had $170,000,000 in outstanding debt with variable interest rates, with a potential increase in annual interest expense of $1,700,000 for a 1% rise in borrowing rates[152] Future Revenue Recognition - As of March 31, 2025, estimated revenue expected to be recognized in the future related to unsatisfied performance obligations totaled $7,412,480, with approximately 23% expected to be recognized over the next 12 months[46]

Core Insights - Jack Henry & Associates (JKHY) reported third-quarter fiscal 2025 GAAP earnings of $1.52 per share, exceeding the Zacks Consensus Estimate by 17.83% and reflecting a year-over-year increase of 27.7% [1] - The company's revenues for the quarter were $585.1 million, slightly missing the Zacks Consensus Estimate by 0.3%, but showing an 8.6% year-over-year growth [1] - After adjusting for deconversion revenues, non-GAAP revenues were $575.4 million, representing a 7% increase year over year [1] Revenue Breakdown - Revenues from Services and Support, which accounted for 56.5% of total revenues, were $330.8 million, up 8.5% year over year, but missed the consensus mark of $332 million [3] - Processing revenues, making up 43.5% of total revenues, reached $254.3 million, an 8.9% year-over-year increase, slightly surpassing the consensus estimate of $253 million [4] - Core segment revenues were $180.7 million, up 8.4% year over year, while Payments revenues increased by 7.7% to $217.4 million, and Complementary revenues rose 12.2% to $167.4 million [5] Profitability Metrics - Adjusted EBITDA for the third quarter was $182.9 million, reflecting a 12.8% year-over-year increase, with an adjusted EBITDA margin of 31.8%, up 160 basis points [6] - Adjusted operating income increased 17.6% year over year to $131.9 million, with an adjusted operating margin of 22.9%, up 210 basis points [6] Balance Sheet and Cash Flow - As of March 31, 2025, cash and cash equivalents were $39.9 million, up from $25.7 million as of December 31, 2024 [7] - Current and long-term debt increased to $170 million as of March 31, 2025, compared to $150 million as of December 31, 2024 [7] Guidance Update - The company lowered its fiscal 2025 GAAP revenue guidance to $2.37-$2.35 billion, down from the previous estimate of $2.39-$2.37 billion [8] - Non-GAAP revenue guidance was revised down to $2.34-$2.33 billion from $2.38-$2.35 billion [8] - GAAP earnings guidance for fiscal 2025 was raised to $6.09-$6.00 per share, while non-GAAP earnings guidance was adjusted to $5.87-$5.83 per share [10]

Financial Data and Key Metrics Changes - Non-GAAP revenue increased by 7% year-over-year, with a GAAP revenue increase driven by a notable uptick in deconversion revenue, which reached approximately $9.6 million for Q3 [7][25] - Non-GAAP operating margin expanded by 207 basis points to 23% [7][31] - Full-year deconversion revenue guidance was raised to a range of $22 million to $28 million, up from $16 million [36] Business Line Data and Key Metrics Changes - Key revenue, primarily from processing and cloud services, constituted 76% of total revenue for the quarter, growing at 9.8% compared to 8.8% in Q3 fiscal year 2024 [8][28] - Core segment revenue increased by 6% on a non-GAAP basis, with key revenue growing by 11% [32] - Payment segment non-GAAP revenue increased by 7%, driven by higher card and payment processing revenues [33] Market Data and Key Metrics Changes - The company secured 28 new core wins this fiscal year, including 11 in Q3, totaling $30 billion in assets [11] - Migration of existing customers to the private cloud saw 26 clients contracted this fiscal year, including seven in Q3, totaling $42 billion in assets [12] - The number of financial institutions using faster payment solutions like Zelle, RTP, and FedNow increased significantly, with Zelle users growing by 10% and FedNow by 96% [15] Company Strategy and Development Direction - The company is focused on winning larger competitive core deals, with a strong pipeline for Q4 [11][24] - Continued investment in technology modernization and new SMB solutions is a priority, with a closed beta for Jack Henry Rapid Transfers already initiated [18][20] - The company aims to enhance its service offerings to financial institutions, allowing them to recapture high-value deposits [19] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic concerns affecting non-strategic revenue, leading to a cautious revenue guidance adjustment [9][36] - Despite challenges, the company remains confident in its ability to deliver long-term profitable growth through compounding revenue growth and margin expansion [38] - The management expressed optimism regarding the overall demand for core business and key revenue products, despite some project delays [93] Other Important Information - The company reported a trailing twelve-month free cash flow of $300 million, resulting in a 71% conversion rate [35] - The annual strategy benchmark survey indicated that 76% of bank and credit union clients plan to increase technology spending over the next two years [21][22] Q&A Session Summary Question: Are you seeing similar restraints with modernized projects and cloud migration? - Management indicated that most delays are in non-recurring projects, with no significant delays in core migrations [41][42] Question: Can you provide context on M&A impacts for fiscal '26? - Management noted that while M&A activity has minimal impact in fiscal '25, it could have a meaningful impact in fiscal '26 [45][46] Question: What is the timeline for project delays? - Management confirmed that some projects are being pushed into the next fiscal year, but these are contractual commitments already signed [52][54] Question: How do you view competitive positioning after FIS's acquisition announcement? - Management believes their single platform for debit and credit processing remains a differentiator, and they are optimistic about their competitive stance [70][72] Question: What is the demand environment for core business? - Management reported a robust sales pipeline and strong demand for key revenue products, despite challenges in non-key revenue [93][95]

Company Performance - Jack Henry reported quarterly earnings of $1.52 per share, exceeding the Zacks Consensus Estimate of $1.29 per share, and up from $1.19 per share a year ago, representing an earnings surprise of 17.83% [1] - The company posted revenues of $585.09 million for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 0.30%, compared to $538.56 million in the same quarter last year [2] - Over the last four quarters, Jack Henry has surpassed consensus EPS estimates four times but has topped consensus revenue estimates only once [2] Market Context - Jack Henry shares have declined approximately 1.7% since the beginning of the year, while the S&P 500 has seen a decline of 3.9% [3] - The company's current Zacks Rank is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.46 on revenues of $612.98 million, and for the current fiscal year, it is $5.70 on revenues of $2.38 billion [7] - The outlook for the Computers - IT Services industry, to which Jack Henry belongs, is currently in the bottom 45% of over 250 Zacks industries, which may impact stock performance [8]

Financial Reporting - Jack Henry & Associates, Inc. reported deconversion revenue for the fiscal third quarter ended March 31, 2025[5] - The press release regarding financial results was issued on April 30, 2025[5] - The fiscal third quarter results are part of the company's ongoing financial disclosures[5] - The report complies with the requirements of the Securities Exchange Act of 1934[8] - No specific financial figures or performance metrics were disclosed in the provided content[5] Company Information - The company is listed on the Nasdaq Global Select Market under the ticker symbol JKHY[3] - The company has not indicated any changes in its status as an emerging growth company[4] - The address of the principal executive offices is located in Monett, MO[1] Management - The Chief Financial Officer and Treasurer, Mimi L. Carsley, signed the report[8] Product and Market Strategy - The document does not include any information on new products, technologies, or market strategies[5]

Core Insights - Jack Henry & Associates, Inc. reported solid overall performance in the third quarter of fiscal year 2025, with strong growth in key revenue areas such as public and private cloud and processing [5][12] - The company continues to focus on technology modernization and strategies for small and medium-sized businesses, maintaining confidence in demand and a robust sales pipeline [5] Financial Performance - For the three months ended March 31, 2025, GAAP revenue increased by 8.6% to $585.1 million compared to $538.6 million in the prior year [7][16] - Non-GAAP adjusted revenue for the same period increased by 7.0% to $575.4 million [16] - GAAP operating income rose by 23.8% to $138.7 million, while non-GAAP adjusted operating income increased by 17.6% to $131.9 million [7][16] - GAAP net income for the three months was $111.1 million, a 27.6% increase from $87.1 million in the prior year [11][16] Revenue Breakdown - Services and support revenue for the three months ended March 31, 2025, was $330.8 million, an increase of 8.5% year-over-year, driven by a 12.0% growth in data processing and hosting revenue within the cloud [6][14] - Processing revenue increased by 8.9% to $254.3 million, primarily due to growth in card revenue (8.1%), transaction and digital revenue (14.6%), and payment processing revenue (10.4%) [9][14] Guidance for Fiscal Year 2025 - The company provided full-year fiscal 2025 guidance, projecting GAAP revenue between $2,353 million and $2,370 million, with an operating margin of 23.5% to 23.7% and EPS between $6.00 and $6.09 [2][33] - Non-GAAP adjusted revenue guidance is set between $2,331 million and $2,342 million, with adjusted operating margin expectations of 23.0% to 23.1% [33] Balance Sheet and Cash Flow - Cash and cash equivalents increased to $39.9 million as of March 31, 2025, compared to $27.3 million a year earlier [7][36] - The company reduced its outstanding debt from $250 million to $170 million during the same period [7][36] - Stockholders' equity rose to $2,036 million from $1,780 million year-over-year [36]

Core Viewpoint - Jack Henry & Associates, Inc. (JKHY) is expected to report third-quarter fiscal 2025 results on May 5, with sales estimated at $586.14 million, reflecting an 8.84% growth year-over-year, and earnings per share projected at $1.30, indicating a 9.24% increase from the previous year [1][2]. Financial Performance - The company has consistently surpassed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 3.1% [2]. - The services and support revenues are estimated at $332.5 million, showing a 9% growth from the prior year [3]. - The Core segment's revenues are projected at $181.5 million, indicating an 8.9% increase year-over-year [4]. - Payments revenues are expected to reach $215.8 million, reflecting a 6.9% growth compared to the previous year [6]. - The Complementary segment is estimated to generate revenues of $164.9 million, suggesting a 10.5% increase from the year-ago quarter [6]. Growth Drivers - The anticipated results are supported by increasing demand for the Jack Henry Platform, which is a public cloud-native platform for financial institutions, and the company's technology modernization strategies [4]. - Strength in the Payments segment is attributed to robust card transaction solutions and growth in the Enterprise Payment Solutions business [5]. - Continued expansion in faster payments infrastructure, such as PayCenter, and strong sales across Financial Crimes Defender are also expected to contribute positively [5]. Challenges - Ongoing tariff wars, geopolitical tensions, and macroeconomic pressures may negatively impact JKHY's results in the upcoming quarter [7].