Financial Performance - In Q4, non-GAAP revenue increased by 7.5% and non-GAAP operating margin was 23.2%, reflecting a margin expansion of 146 basis points year-over-year [8][9] - For the fiscal year, non-GAAP revenue reached $2.3 billion and non-GAAP operating income was $541.1 million, marking record revenue and operating income [9][25] - GAAP revenue for Q4 increased by 10%, while full year growth was 7% on a GAAP basis and 6% on a non-GAAP basis [25] Business Segment Performance - Core non-GAAP segment revenue increased by 7% for Q4, with operating margin increasing by 274 basis points [32] - Payments non-GAAP segment revenue grew by 6% for both Q4 and the full year, with non-GAAP margin expansion of 99 basis points [33] - Complementary segment non-GAAP quarterly revenue increased by 11%, with a margin expansion of 155 basis points [34] Market Dynamics - The company signed 51 new core deals in fiscal year 2025, including 31 banks and 20 credit unions, indicating strong sales momentum [11] - The company now hosts 77% of its core clients in its private cloud environment, reflecting a shift towards cloud solutions [11] - The company anticipates slight revenue headwinds from industry consolidation and renewal pricing pressure [9][10] Strategic Direction - The company is focused on technology innovation and execution to drive sales and maintain long-term positioning [9][23] - A strategic phased approach is being taken to support stablecoin solutions through banking clients, ensuring compliance with upcoming regulations [21][22] - The company aims to leverage its technology modernization strategy to enhance operational efficiency and reduce costs [20][89] Management Commentary - Management expressed confidence in the company's ability to achieve solid margin expansion and strong free cash flow metrics despite macroeconomic uncertainties [9][10] - The management highlighted the importance of maintaining a people-first culture and commitment to client service as key differentiators in the market [7][13] - Management noted that while there are short-term revenue headwinds from bank mergers and acquisitions, the long-term growth opportunities remain intact [66][68] Other Important Information - The company achieved a record operating cash flow of $642 million for fiscal year 2025, with free cash flow conversion at 90% [34] - The company has zero debt at fiscal year-end, providing flexibility for future capital deployment [35][109] - The annual customer conference, Jack Henry Connect, is expected to drive higher revenue in Q1 of fiscal year 2026 [40] Q&A Session Summary Question: Aggregate demand environment and implementation cycles - Management noted that demand remains strong with 51 core wins, and some implementation delays have improved compared to the previous quarter [44][46] Question: Revenue guidance range - Management explained that the wider guidance range allows for more operational flexibility in light of macroeconomic variables [48][50] Question: Fiscal 2026 revenue outlook by segment - Management expects solid growth in the core segment, slightly below long-term targets for payments, and strong growth in the complementary segment [55] Question: Impact of bank M&A on revenue outlook - Management indicated that while there are short-term impacts from bank M&A, the long-term growth opportunities remain solid [58][66] Question: Pricing pressure on renewals - Management acknowledged ongoing pricing pressure but emphasized their focus on improving renewal processes and maintaining competitiveness [76][78] Question: Progress of partnership with Move - Management reported that the partnership has exceeded expectations, with significant interest and excitement from Visa and MasterCard [80][82] Question: Margin expansion drivers - Management highlighted process improvement, efficiency, and cloud migration as key components driving margin expansion [87][89] Question: Free cash flow and capital allocation - Management expressed plans to increase share repurchases and remain open to M&A opportunities due to improved free cash flow and zero debt [109]

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]