Jack Henry(JKHY) - 2025 Q4 - Annual Report

PART I This part details the company's business operations, industry landscape, strategic initiatives, risk factors, and other statutory disclosures ITEM 1. BUSINESS Jack Henry & Associates, Inc. is a financial technology company that provides technology solutions and services to approximately 7,400 community and regional banks and credit unions - Jack Henry & Associates, Inc. strengthens connections between financial institutions and their clients, serving approximately 7,400 financial institutions and diverse corporate entities[13] - The company's core banking solutions serve over 950 banks, and core credit union solutions support approximately 715 credit unions[20][23] - The business strategy focuses on organic revenue and earnings growth, augmented by strategic acquisitions, and a long-term technology modernization strategy to provide public cloud-native solutions[30][33] - The Jack Henry Platform is a public cloud-native, API-first platform being developed as a modern alternative for existing core functions, leveraging public cloud advantages like high availability, rapid processing, and scalability[31] Who We Serve This section outlines the diverse financial institutions and corporate entities that the company serves with its technology solutions Our Industry This section describes the financial technology industry, highlighting market trends, competitive dynamics, and the company's position within it Business Strategy This section outlines the company's strategic pillars, including technology modernization, organic growth, and targeted acquisitions Technology Modernization Strategy This section details the company's strategy for modernizing its technology stack, emphasizing public cloud-native and API-first solutions Acquisition Strategy This section describes the company's approach to strategic acquisitions, aiming to enhance offerings and expand market reach Solutions This section details the comprehensive suite of core software systems, complementary products, and services provided to financial institutions Core Software Systems This section describes the company's foundational core processing systems for banks and credit unions Complementary Products and Services This section outlines the supplementary products and services that enhance the core offerings and address specific client needs Implementation and Training This section details the processes for system implementation and client training to ensure effective product adoption and utilization Support and Services This section describes the ongoing support and maintenance services provided to clients for their technology solutions Hardware Systems This section outlines the hardware systems offered or supported by the company as part of its integrated solutions Digital Products and Services This section details the company's digital banking products and services, including online and mobile solutions Payment Solutions This section describes the company's comprehensive payment processing solutions for financial institutions and their clients Research and Development This section highlights the company's investment in research and development to drive innovation and enhance its product portfolio Research and Development Expenses (in thousands) | Fiscal Year | R&D Expenses | | :---------- | :----------- | | 2025 | $162,771 | | 2024 | $148,256 | | 2023 | $142,678 | Capitalized Software (in thousands) | Fiscal Year | Capitalized Software | | :---------- | :------------------- | | 2025 | $172,445 | | 2024 | $167,175 | | 2023 | $166,120 | Sales and Marketing This section outlines the company's strategies for sales and marketing to attract new clients and expand market presence - International sales accounted for less than 1% of total revenue in fiscal years 2025, 2024, and 2023[65] Competition This section analyzes the competitive environment within the financial technology industry and the company's market position Intellectual Property, Patents, and Trademarks This section describes the company's efforts to protect its intellectual property, including patents and trademarks Regulatory Compliance This section details the company's commitment to regulatory compliance within the highly regulated financial services industry Government Regulation This section outlines the impact of government regulations on the company's operations and the financial services sector Human Capital This section describes the company's approach to human capital management, including talent attraction, development, and employee well-being - As of June 30, 2025, Jack Henry had approximately 7,240 full-time and part-time associates[77] Our Associates This section provides an overview of the company's workforce, emphasizing its value and contributions Talent Attraction and Engagement This section details the company's strategies for attracting, engaging, and retaining skilled talent Learning and Development This section outlines the company's programs for employee learning and professional development Wellness and Safety This section describes the company's initiatives to promote employee wellness and ensure a safe working environment Available Information This section indicates where the company's public filings and other relevant information are accessible ITEM 1A. RISK FACTORS The company faces various risks including data security breaches, operational failures, intense competition, and challenges in adapting to technological changes - Data security breaches, failures, or other incidents could damage the company's reputation and business, especially given its reliance on processing sensitive information and the increasing sophistication of cyber-attacks, including those enabled by AI[90][91][94] - Operational failures in outsourcing facilities or insufficient technological infrastructure could lead to damage claims, increased regulatory scrutiny, and client loss[95] - The company operates in a competitive business environment, and failure to adapt products and services to rapid technological changes and market demands could result in client loss and inability to attract new business[98][100] - The increasing adoption of AI, ML, and generative AI into products introduces significant and evolving risks, including accuracy issues, unintended biases, and potential reputational harm or litigation due to evolving legal and regulatory landscapes[101] - Economic downturns, including increased inflation or interest rates, or specific conditions in the financial services industry (e.g., increased regulatory requirements for financial institutions), could reduce demand for the company's products and services[110] - Industry consolidation and failures of financial institutions continue to reduce the number of potential clients, which could negatively impact results of operations[111] Business and Operating Risks This section details the operational and business-specific risks, including cybersecurity, technology failures, and competitive pressures Regulatory and Compliance Risks This section outlines the risks associated with evolving regulatory landscapes and compliance requirements in the financial industry Economic Conditions Risks This section addresses risks stemming from broader economic conditions, such as inflation, interest rates, and industry-specific downturns Acquisition Risks This section describes the potential risks and challenges associated with integrating acquired businesses and realizing expected synergies Intellectual Property Risks This section details risks related to protecting the company's intellectual property and potential infringement claims General Risk Factors This section covers broad, overarching risks that could impact the company's overall business and financial performance ITEM 1B. UNRESOLVED STAFF COMMENTS No unresolved staff comments were reported for the company ITEM 1C. CYBERSECURITY Jack Henry maintains a robust cybersecurity program, integrating industry-standard frameworks and modern technology like AI/ML, to protect sensitive information - Jack Henry's cybersecurity program integrates industry-standard frameworks, policies, and procedures, supported by skilled professionals and investments in AI and machine learning, to safeguard sensitive information[122][123] - The company's systems and services are subject to regular reviews by federal regulatory agencies (FRB, FDIC, OCC, NCUA, CFPB) and annual SOC reviews by independent auditors[125] - In fiscal year 2025, no cybersecurity threats were identified that materially affected the company's business strategy, results of operations, or financial condition[128] - The Board of Directors, through its Risk and Compliance Committee, provides ultimate oversight of cybersecurity risks, with management responsible for identification, assessment, and mitigation[130][131] Cyber Risk Management and Strategy This section details the company's comprehensive strategy for managing cyber risks, including frameworks, technologies, and incident response CyberSecurity Governance and Oversight This section outlines the governance structure and oversight mechanisms for the company's cybersecurity program ITEM 2. PROPERTIES Jack Henry owns approximately 795,000 square feet of office space across five states and leases an additional 445,000 square feet in 13 states - The company owns approximately 795,000 square feet of office space in five states and leases approximately 445,000 square feet in 13 states[133] - Jack Henry owns five aircraft, primarily used for implementation, sales, and internal operations, especially for clients in communities without easily accessible commercial airline service[135] ITEM 3. LEGAL PROCEEDINGS The company is involved in routine legal proceedings and claims in the ordinary course of business, with management believing liabilities will not materially affect financial statements - Management believes that liabilities from current routine legal proceedings and claims are not expected to have a material adverse effect on the consolidated financial statements[136] ITEM 4. MINE SAFETY DISCLOSURES No mine safety disclosures are applicable to the company PART II This part includes information on the company's common stock, management's financial analysis, audited financial statements, and internal controls ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Jack Henry's common stock trades on the Nasdaq Global Select Market under "JKHY," with a history of quarterly dividends and no share repurchases in the last quarter - The Company's common stock is quoted on the Nasdaq Global Select Market under the symbol "JKHY"[3] - The Company has paid quarterly dividends since fiscal 1991 and does not currently foresee any changes in its dividend practices[140] - As of August 8, 2025, the Registrant had 72,871,385 shares of Common Stock outstanding[5] Issuer Purchases of Equity Securities (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares that May Yet Be Purchased Under the Plans | | :------------------------ | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :----------------------------------------------------------------- | | April 1 — April 30, 2025 | — | $— | — | 3,411,018 | | May 1 — May 31, 2025 | — | $— | — | 3,411,018 | | June 1 — June 30, 2025 | — | $— | — | 3,411,018 | | Total | — | $— | — | 3,411,018 | 5-Year Cumulative Total Return (Indexed to $100 on June 30, 2020) | Year | JKHY | S&P 500 | S&P Composite 1500 Software & Services | | :-------------------------- | :----- | :------ | :------------------------------------- | | 2020 (June 30) | 100.00 | 100.00 | 100.00 | | 2021 (June 30) | 89.86 | 140.79 | 133.46 | | 2022 (June 30) | 100.03 | 125.85 | 111.53 | | 2023 (June 30) | 94.07 | 150.51 | 144.74 | | 2024 (June 30) | 94.57 | 187.47 | 184.18 | | 2025 (June 30) | 103.95 | 215.89 | 215.90 | Issuer Purchases of Equity Securities This section details the company's share repurchase activities, including the number of shares bought back and remaining authorization Performance Graph This section illustrates the company's cumulative total return compared to selected market indices over a five-year period ITEM 6. [RESERVED] This item is reserved and contains no information ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Jack Henry & Associates, Inc. reported a 7.2% increase in total revenue for fiscal 2025 to $2,375,288 thousand, with net income growing 19.4% to $455,748 thousand and diluted EPS increasing by 19.3% to $6.24 Key Financial Highlights (Fiscal 2025 vs. 2024, in thousands except EPS) | Metric | FY2025 | FY2024 | % Change | | :------------------------- | :---------- | :---------- | :------- | | Total Revenue | $2,375,288 | $2,215,543 | 7.2% | | Operating Expenses | $1,806,573 | $1,726,152 | 4.7% | | Operating Income | $568,715 | $489,391 | 16.2% | | Net Income | $455,748 | $381,816 | 19.4% | | Diluted Earnings Per Share | $6.24 | $5.23 | 19.3% | - Revenue growth was primarily driven by data processing and hosting within cloud revenue, expanded fraud detection and prevention risk management services, increased digital revenue from active users and volumes, and growth in payment processing[155][159][161] - Operating expenses increased due to higher direct costs commensurate with revenue growth, increased personnel costs (including compensation), and higher internal licenses and fees[156][162][164][166] - Interest income increased by 11.0% due to higher interest earned on balances, while interest expense decreased by 36.3% due to the timing and amounts of borrowed and repaid balances, ending fiscal 2025 with no outstanding debt[167] - The effective tax rate decreased to 22.2% in fiscal 2025 from 23.3% in fiscal 2024, mainly due to differences in uncertain tax positions and a favorable state law change[168] Cash Flow Summary (in thousands) | Cash Flow Activity | FY2025 | FY2024 | % Change | | :------------------------- | :---------- | :---------- | :------- | | Net cash from operating | $641,504 | $568,041 | 12.9% | | Net cash from investing | $(232,163) | $(240,165) | (3.3%) | | Net cash from financing | $(345,672) | $(301,835) | 14.5% | | Cash & Equivalents, End | $101,953 | $38,284 | 166.3% | - The company had no outstanding debt at June 30, 2025, and was in compliance with all financial covenants under its credit facilities[187][189][303] - Total estimated future revenue from unsatisfied performance obligations as of June 30, 2025, was $7,710,750 thousand, with approximately 24% expected to be recognized in the next 12 months[276] OVERVIEW This section provides a high-level summary of the company's financial performance, strategic priorities, and future outlook RESULTS OF OPERATIONS This section analyzes the company's financial performance, detailing revenue streams, operating expenses, and net income drivers REVENUE This section provides a detailed breakdown of the company's revenue streams and their year-over-year performance Services and Support Revenue This section details revenue generated from the company's services and ongoing client support activities Processing Revenue This section outlines revenue derived from data processing, card processing, and other transaction-based services OPERATING EXPENSES This section analyzes the company's operating expenses, including cost of revenue, research and development, and selling, general, and administrative costs Cost of Revenue This section details the direct costs incurred in generating the company's revenue from products and services Research and Development This section outlines the company's expenditures on research and development activities to innovate and improve offerings Selling, General, and Administrative This section details the expenses related to sales, marketing, general corporate administration, and overhead INTEREST INCOME AND EXPENSE This section details the company's interest income earned and interest expense incurred during the period PROVISION FOR INCOME TAXES This section outlines the company's provision for income taxes, including the effective tax rate and contributing factors NET INCOME This section presents the company's net income and its drivers, reflecting overall profitability REPORTABLE SEGMENT DISCUSSION This section provides an analysis of the financial performance and key trends for each of the company's reportable business segments Core This section discusses the financial performance and strategic initiatives of the company's Core segment Payments This section discusses the financial performance and strategic initiatives of the company's Payments segment Complementary This section discusses the financial performance and strategic initiatives of the company's Complementary segment Corporate and Other This section covers corporate overhead, unallocated expenses, and other non-segment specific financial items LIQUIDITY AND CAPITAL RESOURCES This section analyzes the company's liquidity position, cash flows, and available capital resources to fund operations and growth Capital Requirements and Resources This section details the company's capital expenditure needs and the financial resources available to meet them Credit facilities This section describes the company's credit facilities, including terms, availability, and compliance with covenants Term loan facility This section outlines the details of the company's term loan facility, including outstanding balances and repayment terms Other lines of credit This section describes any other lines of credit available to the company for operational flexibility RECENT ACCOUNTING PRONOUNCEMENTS This section discusses the impact of recently issued and adopted accounting pronouncements on the company's financial reporting Recently Adopted Accounting Guidance This section details the accounting guidance that the company has recently adopted and its effects on financial statements Not Adopted at Fiscal Year End This section outlines new accounting guidance issued but not yet adopted by the company at fiscal year-end CRITICAL ACCOUNTING ESTIMATES This section highlights the critical accounting estimates and judgments that significantly impact the company's financial statements Revenue Recognition This section details the company's policies and estimates related to the recognition of revenue from contracts with customers Capitalization of software development costs This section describes the company's policies and estimates for capitalizing software development costs Purchase accounting This section outlines the company's accounting policies and estimates applied to business acquisitions ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed to credit risk from clients but believes it is not material, and with no outstanding variable-rate debt, it is not currently exposed to interest rate risk - The company is exposed to credit risk on credit extended to clients, but believes it will not have a material adverse effect due to controls and client creditworthiness[208][209] - As of June 30, 2025, the company had no outstanding debt with variable interest rates and is therefore not currently exposed to interest rate risk[209] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section presents the audited consolidated financial statements for Jack Henry & Associates, Inc. and its subsidiaries, along with accompanying notes and an unqualified audit opinion - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of June 30, 2025[215] Consolidated Statements of Income (in thousands, except per share data) | Metric | FY2025 | FY2024 | FY2023 | | :-------------------------------- | :---------- | :---------- | :---------- | | REVENUE | $2,375,288 | $2,215,543 | $2,077,702 | | Cost of Revenue | $1,360,747 | $1,299,477 | $1,219,062 | | Research and Development | $162,771 | $148,256 | $142,678 | | Selling, General, and Administrative| $283,055 | $278,419 | $235,274 | | Total Expenses | $1,806,573 | $1,726,152 | $1,597,014 | | OPERATING INCOME | $568,715 | $489,391 | $480,688 | | Total Interest Income (Expense) | $17,321 | $8,628 | $(6,114) |\ | INCOME BEFORE INCOME TAXES | $586,036 | $498,019 | $474,574 | | PROVISION FOR INCOME TAXES | $130,288 | $116,203 | $107,928 | | NET INCOME | $455,748 | $381,816 | $366,646 | | Basic earnings per share | $6.25 | $5.24 | $5.03 | | Diluted earnings per share | $6.24 | $5.23 | $5.02 | Consolidated Balance Sheets (in thousands) | Asset/Liability Category | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $101,953 | $38,284 | | Total current assets | $681,464 | $632,018 | | Property and equipment, net | $220,964 | $215,069 | | Total other assets | $2,141,542 | $2,077,394 | | Total assets | $3,043,970| $2,924,481| | Total current liabilities | $535,784 | $633,814 | | Total long-term liabilities | $377,354 | $448,303 | | Total liabilities | $913,138 | $1,082,117|\ | Total stockholders' equity | $2,130,832 | $1,842,364 | | Total liabilities and equity | $3,043,970| $2,924,481| Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | FY2025 | FY2024 | FY2023 | | :-------------------------------- | :---------- | :---------- | :---------- | | Net cash from operating activities| $641,504 | $568,041 | $381,559 |\ | Net cash from investing activities| $(232,163) | $(240,165) | $(409,673) |\ | Net cash from financing activities| $(345,672) | $(301,835) | $(8,430) |\ | NET CHANGE IN CASH AND CASH EQUIVALENTS| $63,669 | $26,041 | $(36,544) |\ | CASH AND CASH EQUIVALENTS, END OF PERIOD| $101,953 | $38,284 | $12,243 | Report of Independent Registered Public Accounting Firm This section presents the independent auditor's report, including their opinion on the financial statements and internal controls Management's Annual Report on Internal Control over Financial Reporting This section contains management's assessment of the effectiveness of the company's internal control over financial reporting Critical Audit Matters This section describes critical audit matters communicated by the auditor, highlighting areas of significant judgment Consolidated Statements of Income This section presents the company's consolidated statements of income for the reported fiscal periods Consolidated Balance Sheets This section presents the company's consolidated balance sheets, detailing assets, liabilities, and equity Consolidated Statements of Changes in Stockholders' Equity This section presents the consolidated statements of changes in stockholders' equity for the reported fiscal periods Consolidated Statements of Cash Flows This section presents the company's consolidated statements of cash flows, detailing operating, investing, and financing activities Notes to Consolidated Financial Statements This section provides detailed explanatory notes accompanying the consolidated financial statements NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note describes the company's business operations and summarizes its significant accounting policies NOTE 2. REVENUE AND DEFERRED COSTS This note provides details on the company's revenue recognition policies and deferred costs NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS This note outlines the fair value measurements of the company's financial instruments NOTE 4. LEASES This note details the company's lease arrangements and related accounting treatment NOTE 5. PROPERTY AND EQUIPMENT This note provides information on the company's property and equipment, including depreciation policies NOTE 6. OTHER ASSETS This note details the composition and accounting for the company's other non-current assets NOTE 7. DEBT This note provides information on the company's debt obligations and credit facilities NOTE 8. INCOME TAXES This note details the company's income tax provision, deferred taxes, and effective tax rate NOTE 9. INDUSTRY AND SUPPLIER CONCENTRATION This note discusses concentrations in the company's industry and reliance on key suppliers NOTE 10. STOCK-BASED COMPENSATION This note details the company's stock-based compensation plans and related expenses NOTE 11. EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per share NOTE 12. EMPLOYEE BENEFIT PLANS This note describes the company's employee benefit plans, including retirement and deferred compensation NOTE 13. BUSINESS ACQUISITION This note provides details on any business acquisitions completed by the company during the period NOTE 14. REPORTABLE SEGMENT INFORMATION This note presents financial information for the company's reportable business segments NOTE 15. SUBSEQUENT EVENTS This note discloses significant events that occurred after the fiscal year-end ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No changes in or disagreements with accountants on accounting and financial disclosure were reported ITEM 9A. CONTROLS AND PROCEDURES Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[348] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025[350] Disclosure Controls and Procedures This section details management's conclusion on the effectiveness of the company's disclosure controls and procedures Management's Annual Report on Internal Control over Financial Reporting This section contains management's annual report on the effectiveness of internal control over financial reporting Changes in Internal Control over Financial Reporting This section reports any material changes in the company's internal control over financial reporting ITEM 9B. OTHER INFORMATION No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[351] ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS This item is not applicable to the company PART III This part provides information on the company's directors, executive compensation, security ownership, related party transactions, and auditor fees ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2025 Annual Meeting of Stockholders Proxy Statement - Information for this item is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[355] ITEM 11. EXECUTIVE COMPENSATION Information on executive compensation is incorporated by reference from the company's 2025 Annual Meeting of Stockholders Proxy Statement - Information for this item is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[356] ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information on security ownership and related stockholder matters is incorporated by reference from the company's 2025 Annual Meeting of Stockholders Proxy Statement - Information for this item is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[357] ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2025 Annual Meeting of Stockholders Proxy Statement - Information for this item is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[358] ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information on principal accountant fees and services is incorporated by reference from the company's 2025 Annual Meeting of Stockholders Proxy Statement - Information for this item is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[359] PART IV This part includes a list of exhibits, financial statement schedules, and the Form 10-K summary ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES This section lists the consolidated financial statements, financial statement schedules, and a comprehensive list of exhibits filed as part of the report - The report includes consolidated financial statements (Income, Balance Sheets, Stockholders' Equity, Cash Flows) and notes for fiscal years ended June 30, 2025, 2024, and 2023[361][363] - No financial statement schedules are included as the required information is presented in the consolidated financial statements or notes[361] - A comprehensive list of exhibits is provided, including corporate governance documents, equity incentive plans, credit agreements, and certifications[364][365] Financial Statements This section lists the consolidated financial statements included in the report for the specified fiscal periods Financial Statement Schedules This section addresses financial statement schedules, noting their inclusion or absence within the report Exhibits This section provides a comprehensive list of all exhibits filed as part of the annual report ITEM 16. FORM 10-K SUMMARY This item is not applicable and contains no information