Earnings call transcript: Jack Henry beats Q4 2025 estimates, stock surges

Jack Henry & Associates Inc. (JKHY) reported its fourth-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $1.75, compared to the forecasted $1.55. This 12.9% surprise contributed to a 2.38% increase in the stock price, closing at $160.63, although it dipped slightly in pre-market trading. The company also reported a revenue of $615.37 million, exceeding the anticipated $601.33 million.

Key Takeaways

• Jack Henry’s Q4 EPS of $1.75 exceeded forecasts by 12.9%.
• Revenue reached $615.37 million, beating expectations by 2.33%.
• Stock price rose by 2.38% post-earnings announcement.
• The company reported a record operating cash flow of $642 million.
• Continued strong performance in digital banking solutions.

Company Performance

Jack Henry demonstrated robust financial health in Q4 2025, with a 7.5% increase in non-GAAP revenue. The company’s focus on digital transformation and cloud solutions has bolstered its competitive position, as evidenced by its expanding client base and innovative product offerings. The firm’s strong balance sheet is reflected in its minimal debt-to-equity ratio of 0.11 and impressive return on equity of 22%. Get detailed insights into Jack Henry’s financial health with a comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $615.37 million, up 2.33% from forecasts.
• Earnings per share: $1.75, up 12.9% from forecasts.
• Non-GAAP operating margin expanded to 23.2%.
• Full-year non-GAAP revenue reached $2.3 billion.
• Free cash flow conversion rate stood at 90%.

Earnings vs. Forecast

Jack Henry’s Q4 results surpassed expectations, with EPS of $1.75 against a forecast of $1.55, marking a 12.9% surprise. Revenue also exceeded estimates, coming in at $615.37 million versus the expected $601.33 million. This performance reflects the company’s strategic focus on innovation and operational efficiency.

Market Reaction

Following the earnings announcement, Jack Henry’s stock rose by 2.38% to $160.63, reflecting investor optimism. However, pre-market trading saw a slight decline of 2.21%, with shares priced at $157.08. This movement aligns with broader market trends and reflects cautious investor sentiment amid macroeconomic uncertainties.

Outlook & Guidance

For fiscal 2026, Jack Henry projects GAAP revenue growth of 4.2% to 5.4% and non-GAAP growth of 5.8% to 7%. The company anticipates a GAAP EPS of $6.32 to $6.44, indicating 1-3% growth. Despite potential headwinds from industry consolidation, Jack Henry remains focused on expanding its digital and cloud-based offerings.

Executive Commentary

CEO Greg Adelson expressed confidence in the company’s technological innovation, stating, "We are confident that our technology innovation and execution will continue to drive our sales engine and position us very well for the long term." CFO Mimi Carsley highlighted the expectation of sustainable margin growth, adding, "We expect to again generate sustainable, accretive sources of margin."

Risks and Challenges

• Neobank competition and digital wallet alternatives may slow account growth.
• Macroeconomic uncertainty could impact lending volumes.
• Industry consolidation may present revenue headwinds.
• Pricing pressures in the market could affect margins.
• Dormant account management remains a challenge.

Q&A

During the earnings call, analysts inquired about the impact of bank mergers and pricing pressures. Executives addressed these concerns, emphasizing their strategy to leverage digital banking innovations and maintain market leadership. The company also discussed its approach to managing slower account growth trends, highlighting its focus on technology and efficiency improvements.

Full transcript - Jack Henry & Associates Inc (JKHY) Q4 2025:

Jamie, Conference Call Operator: Good morning, everyone, and welcome to the Jack Henry Fourth Quarter and Full Year twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please also note, today’s event is being recorded. At this time, I would like to turn the conference call over to Vance Sherard, Vice President, Investor Relations.

Please go ahead.

Vance Sherard, Vice President, Investor Relations, Jack Henry: Thank you, Jamie. Good morning, and thank you for joining the Jack Henry fourth quarter and fiscal twenty twenty five earnings call. Joining me today are Greg Adelson, President and CEO and Mimi Carsley, CFO and Treasurer. Following my opening remarks, Greg will share his comments on our quarterly and full year financial results, operational metrics, and the outlook for fiscal twenty twenty six. Mimi will then discuss the financial results and full year fiscal twenty twenty six guidance provided in yesterday’s press release, which is available in the Investor Relations section of the Jack Henry website.

Afterward, we will open the lines for a Q and A session. Please note that this call includes forward looking statements, which involve risks and uncertainties that could cause actual results to differ materially from our expectations. The company is not obligated to update or revise these statements. For a summary of risk factors and additional information that could cause actual results to differ materially from such forward looking statements, refer to yesterday’s press release and the Risk Factors and Forward Looking Statements sections in our 10 ks. During this call, we will discuss non GAAP financial measures such as non GAAP revenue and non GAAP operating income.

Reconciliations for these measures are included in yesterday’s press release. Now I will hand the call over to Greg.

Greg Adelson, President and CEO, Jack Henry: Thank you, Vance. Good morning, everyone. I appreciate each of you joining today’s call. I’d like to begin by thanking our associates for their hard work and dedication to our success. They consistently go above and beyond to take care of our clients.

That, combined with our unwavering focus on culture, service, innovation, strategy, and execution, continues to differentiate us in the market. I will share three main takeaways from the quarter and fiscal year and then we’ll provide additional detail about our overall business. First, our financial performance. Our fourth quarter and fiscal year twenty twenty five results reflect solid overall performance. In Q4, our non GAAP revenue increased 7.5% and our non GAAP operating margin was 23.2%, representing a strong 146 basis points of margin expansion over last year.

For the fiscal year, we again produced record revenue and operating income. Our non GAAP revenue was 2,300,000,000.0 and our non GAAP operating income was 5 and $41,100,000 As you saw in the press release, we shared guidance for fiscal year ’twenty six. We do anticipate some slight revenue headwinds from industry consolidation, the impact of renewal pricing pressure, and macroeconomic uncertainty. However, we remain committed and bullish on continuing to realize solid margin expansion growth along with strong free cash flow metrics for the year. We are confident that our technology innovation and execution will continue to drive our sales engine and position us very well for the long term.

Mimi will discuss more of the fiscal twenty six specifics in her comments. In addition, I want to communicate openly regarding the large bank merger that was recently announced and includes a Jack Henry core payment and complementary solution client. It has been speculated that Jack Henry’s technology would not be selected for the combined financial institution. After conversations with both parties, there has been no indication of an intent to terminate any agreements. If contract changes were to take place, they would happen in fiscal ’twenty seven and not in fiscal ’twenty six.

Second, continued industry leading sales momentum. For Q4, our sales team had an impressive 23 core wins, topping the 22 wins we had in ’4. For the full fiscal twenty five, we signed 51 new core deals, 31 banks and 20 credit unions. Additionally, we signed 37 contracts to move existing in house core clients to our private cloud, including 11 in q four. We now host 77% of our core clients in Jack Henry’s private cloud environment.

Third, we continue to win larger new core deals. Over the past three years, the total assets of Nucor clients won has nearly tripled. We had 47 wins totaling 19,000,000,000 in assets in fiscal twenty three, 54 wins totaling $39,000,000,000 in fiscal ’twenty four, and 51 wins totaling $53,000,000,000 in fiscal ’twenty five. Of the 51 core wins this fiscal year, 16 were institutions that have over $1,000,000,000 in assets. In fiscal ’twenty four and ’twenty five combined, we won 31 core deals in this segment, as compared to only 16 in fiscal ’twenty two and ’twenty three combined.

Our strategy is also resonating with the 5 to 10,000,000,000 asset institutions as well. Of our 16 greater than 1,000,000,000 wins, we won four in the 5 to 10,000,000,000 segment after winning only one in fiscal year twenty four and none in fiscal year twenty two and twenty three. Now for more detail on our overall business, starting with some accolades for the team. We’re proud to have recently received recognition in three prominent publications, US News and World Report’s Best Companies to Work For, Time Magazine’s Best Midsize Companies, and Newsweek’s Greatest Workplaces. These awards are important because they reflect our people first culture and deep commitment to doing the right thing for our employees and ensuring they are valued.

I also want to recognize the tremendous effort of our team and our clients on the highly successful migration of Fedwire funds to ISO 20,022 on July 14. This was a major industry wide event for The United States payments infrastructure, aligning it with international standards and enhancing crucial capabilities such as fraud detection and data sharing. Related to the migration, we had five clients go live with a new wires component of our cloud native Jack Henry platform, including one of our largest credit union clients. They did this at the same time as the migration, and it went extremely well. This is a strong validation of our component strategy for easing concerns about large scale migrations and conversions.

Next, I will provide a few updates on specific products and new solutions that are part of our technology modernization and SMB strategies. Within our payment segment, we now have three seventy six clients on the Zelle platform, four fourteen clients using the real time payments network, and four zero one clients using FedNow. In our complementary segment, we added 18 new Financial Crimes Defender contracts in Q4 and forty seven for the fiscal year. In addition, we signed 66 new contracts for the Financial Crimes Defender Faster Payment Fraud module in Q4 and 01/1949 for the fiscal year. As a reminder, this module is a real time solution designed to help mitigate fraud in Zelle, FedNow, and RTP transactions.

As of June 30, we have 136 financial crimes installations completed and another 71 in various stages of implementation. We also have 85 faster payment modules installed and 189 in various stages of implementation. Our Banno digital platform continues to experience high demand. For the quarter, we signed 26 new clients to our VANO retail platform, as well as 39 new VANO business deals. For the full fiscal year, we closed 70 new VANO retail contracts and 106 VANO business contracts.

At the June, we had ten twenty three clients on the VANO platform, including three forty four live with VANO business. We finished Q4 with 14,300,000 registered users on the Banno platform, and when compared to ’24, we experienced a strong 17% increase over the past twelve months. With last week’s exciting announcement of the launch of TAP2Local, our merchant acquiring solution developed in collaboration with Move, we are leveraging the Banno platform as the primary source for delivering this innovative solution to the industry. TAP2Local is currently in closed beta testing with several financial institutions. It is on track to be rolled out to the ten twenty three banks and credit unions on the Battle platform over the next several months.

Unlike most other payment solutions for small businesses, Tap to Local is offered exclusively through financial institutions. The cloud native solution delivers many distinguishing features for merchants, including easy enrollment, the ability to accept debit and credit card payments directly through tap to pay on both iOS and Android devices, thus eliminating the need for traditional point of sale hardware and continuous account reconciliations to the accounting platform of their choice. Another solution that we recently launched with Move is Jack Henry Rapid Transfers. This cloud native solution enables both SMBs and consumers to quickly move funds between external accounts, eligible cards, and digital wallets to manage day to day transactions or personal finances. We are collaborating with both Visa and MasterCard to facilitate these transactions through their respective debit rails.

Rapid transfers is now available on the Banno digital platform, and we are in the process of enrolling more than 50 new clients. Now that we have closed key feature gaps with several competitors and have added advanced functionality that no other digital provider has totally as today, like Jack Henry Rapid Transfers and TAP to Local, we are winning larger competitive takeaways in the digital banking space than in previous quarters. Another indicator of our progress, VANO business was recently named the leading small business digital banking platform for strength and capabilities by Datos Insights, a prominent research firm. The ranking highlighted Banno businesses ease of use, open architecture, and excellent support. We also continue to make excellent progress on our technology modernization strategy.

We now have 20 components of the new cloud native Jack Henry platform live in various stages. While some of these are for internal use, eliminating duplicated development efforts across the company, several components are already benefiting our clients. These include the wire solution that I mentioned earlier, data hub, which provides a centralized hub for reporting and analysis, entitlements, which manages permissions and access rights for users and systems, and a new general ledger. All components are receiving very favorable reviews from our clients. We will promote all of our new technology at the Jack Henry Annual Conference, Jack Henry Connect in September.

This is a great opportunity every year for us to meet with our prospects, clients, and partners. Last year, 20 of our new core wins were with prospects who attended the Jack Henry Connect conference. Before I wrap up, I want to share an update on our stablecoin strategy. While there’s a lot of external hype around stablecoins, there are still significant industry hurdles to mainstream adoption, including regulations that must be developed over the next six to twelve months to implement the stablecoin legislation that passed in July, known as the Genius Act. Our plan is to take a strategic phased approach supporting stablecoin solutions through our banking credit union clients and not around them.

This allows us to ensure we do the things the right way while regulations are being written. Unlike many of our competitors, we already have the public cloud native platform and infrastructure needed for a successful stablecoin implementation. Today, our clients can securely integrate with a number of third party stablecoin providers using our open APIs. We are currently working on enabling stablecoins as a payments rail via our JHA pay center. We are also in discussions with regulated stablecoin issuers, digital asset infrastructure providers, and key players to explore additional strategic partnerships.

We will keep you informed as we have more updates. In closing, we are very well positioned for the future. Technology spending by financial institutions remains strong, and there’s clear demand for our differentiated and innovative technology solutions. We have a robust sales pipeline and a proven ability to attract and win new clients, including larger financial institutions. Our unwavering focus on culture, service, innovation, strategy and execution continues to set us apart.

These pillars will enable us to drive continued industry leading revenue growth with strong margin expansion, benefiting our associates, clients and shareholders. With that, I will turn it over to Mimi for more specifics on our financials.

Mimi Carsley, CFO and Treasurer, Jack Henry: Thank you, Greg, and good morning, everyone. The relentless dedication of our associates in serving our financial institution clients and delivering shareholder value led to another quarter of solid revenue and earnings growth. I will begin with fourth quarter and full year results, then conclude with our fiscal ’twenty six guidance. Q4 GAAP revenue increased 10%, and non GAAP revenue increased 8%, a continuation of consistently solid performance. Full year growth was 7% on a GAAP basis and 6% on a non GAAP basis.

Fourth quarter deconversion revenue of approximately $20,000,000 which we previously announced, was up approximately $14,000,000 reflecting the increasing pace of M and A activity among financial institutions. Full year deconversion revenue of $34,000,000 $17,000,000 more than the prior fiscal year exceeded guidance. Now let’s look more closely at the details. GAAP services and support revenue increased 11% for the quarter, while non GAAP increased 7%. For the year, the increase was a healthy 7% for GAAP and 5% on a non GAAP basis.

Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue, consulting work orders, and release revenue. The full year growth rate for services and support revenue was due to similar drivers, partially offset by lower hardware and license revenue. Private and public cloud offerings continued to drive impressive growth. Cloud revenue increased 11% in both the quarter and the year. This reoccurring revenue contributor is 32% of our total revenue and has a multi year track record of double digit growth.

Shifting to processing revenue, which is 43% of total revenue, and another strategic component of our long term growth model. We saw healthy performance with 9% non GAAP growth for the quarter, and GAAP growth of 9% for the quarter and 8% for the full year. Consistent with recent trends, quarterly drivers included increased card, digital, and payment processing revenue. Completing commentary on revenue, I would highlight total recurring revenue exceeded 91%. Next, moving to expenses.

Beginning with comps of revenue, which increased five percent on both a GAAP and non GAAP basis for the quarter and full year. Drivers for the quarter and full year were consistent and included higher direct costs and higher personnel costs. Next, R and D expense increased 7% on both a GAAP and non GAAP basis for the quarter and 10% for the year for both GAAP and non GAAP. The quarterly and full year increase was primarily due to the higher net personnel costs, increased internal license, and fees. Ending with SG and A expense for the quarter non GAAP GAAP basis increased 89% on a GAAP basis.

For the year, the increase was 7% on a non GAAP basis and 2% under GAAP. The quarterly increase was due to higher net personnel costs, increased professional services, and higher deconversion costs, partially offset by gain on assets versus previous loss on assets for the prior quarter year four. The full year increase included all of the previous factors plus higher travel and contract labor costs. We remain committed to generating annual compounding margin expansion. Q4 delivered 146 basis point increase in non GAAP margins 23, resulting in a notable 70 basis point non GAAP margin of 23% for the full year.

Non GAAP margin benefited from a continuing focus on cost management and leveraging existing workforce. For the year, headcount increased a net 72% to position, or 1%. For the last five years, excluding the PayRail’s acquisition, we’ve added less than 1% annually, showing a continued commitment to efficiency. These strong quarterly results produced a fully diluted GAAP earnings per share of $1.75 up 26%. Fiscal ’twenty five fully diluted EPS was $6.24 up 19%, benefiting from strong operational results and higher deconversion activity.

Breaking down the results into the three operating segments, we’re pleased to see positive performance across the board for both the quarter and the full year. Our core non GAAP segment revenue increased 7% for the quarter, with operating margin increasing a robust two seventy four basis points. We continue to gain benefits from product cloud trends and disciplined cost management. Full year non GAAP core segment revenue growth was 6%, and the associated margin increased 113 basis points. Payments non GAAP segment quarterly revenue increased 6%.

This segment again had strong non GAAP operating margin growth of 99 basis points. Full year non GAAP revenue growth was 6%, with non GAAP margin expansion of 109 basis points. Revenue growth was due to the continued growth in our card related services, EPS, and a large percent growth on faster payment, granted on a smaller dollar amount. Margin benefited from operational efficiencies and disciplined cost management. Finally, complementary segment non GAAP quarterly revenue increased an impressive 11%, with 155 basis points of margin expansion.

Fiscal year non GAAP revenue and margins strongly increased nine percent and one hundred and seventeen basis points, respectively. Both quarterly and full year revenue growth continued to reflect digital solution demand, beneficial product mix sales, sources from both core wins and non core financial institutions. Now, a review of cash flow and capital allocation. Fiscal ’twenty five operating cash flow was a record $642,000,000 a $73,000,000 increase over the prior fiscal year. Excluding proceeds from sale of assets in both fiscal years, free cash flow was $410,000,000 significantly more than the $336,000,000 the last year.

Full year free cash flow was positively impacted by timing of certain contract payments and tax payments unrelated to recent tax legislative changes. Free cash flow conversion was an impressive 90%, and I will provide more details when discussing the full year price. Our consistent dedication to value creation resulted in a trailing twelve month return on invested capital of 22%. Additionally, I would highlight other notable return of capital metrics for the year, including $35,000,000 in share repurchases, more than offsetting annual dilution, dollars 150,000,000 in debt reduction, and $165,000,000 in dividends. We’re pleased to announce zero debt at fiscal year end, providing us with maximum flexibility for future capital deployment.

For modeling purposes, our amortization of acquisition related intangibles was $6,000,000 for the fiscal quarter. Heading into a new fiscal year, I will conclude with guidance. As you’re aware, yesterday’s press release included fiscal twenty twenty six full year GAAP guidance. Deconversion guidance will continue to follow the conservative methodology introduced in fiscal ’twenty four. Fiscal ’twenty six deconversion revenue guidance is $16,000,000 And as we confirm more activity during the year, we will update the quarter outlook.

For the full year, revenue growth guidance is 4.2% to 5.4%. This is understated due to the conservative deconversion revenue guidance. Non GAAP revenue growth guidance is 5.8% to 7%. Based on the above revenue growth and our predominantly SaaS like operations, we expect to again generate sustainable, accretive sources of margin. We are guiding for the third year in a row to annual non GAAP margin expansion of 20 to 40 basis points.

All of the above are indicative that our business operations remain healthy and consistent. The full year GAAP tax rate estimate for fiscal ’twenty six is 23.75%. The above guidance metrics result in a full year outlook for GAAP EPS of $6.32 to $6.44 per share, a growth of 1% to 3%. As a reminder, due to the conservative deconversion of the new guidance at the beginning of the year, GAAP EPS growth is understated as a result. Fiscal ’twenty six is expected to have a strong free cash flow conversion due to recently passed tax legislation.

Highlights of the tax legislation include full expensing of R and D costs from Section 174 and bonus tax depreciation will have a meaningfully positive impact. We will be making an election in the coming months on how we will implement the tax law changes resulting in one of the following two scenarios. We could see a more significant impact in fiscal ’twenty six, with limited nonrecurring impact in fiscal ’twenty seven, or we could elect to take the benefit spread across the fiscal years ’twenty six and ’twenty seven. Overall, this legislation will allow for free cash flow conversion of approximately 85% to 100% in future years. Our current view has the cadence of fiscal ’twenty six non GAAP revenue being strongest in Q1, lower in Q2, and increasing on a reported basis for quarters three and four.

Our annual customer conference, JACHANY Connect, will be held in Q1 this year, partially driving higher revenue during that quarter and a lower performance in Q2. Absent the timing switch of this revenue growth in quarters one and two would result in the first March showing similar growth and Q4 showing moderate sequential increase. Our Jeff Henry Connect conference will revert back to Q2 in fiscal ’twenty seven and stay in that quarter for several years, ending this occasional timing mismatch. Consequently, Q1’s estimation for non GAAP revenue growth is approximately 7% to 7.5%. As a reminder, we see fluctuations in quarterly results relating to software usage license components, along with the timing of implementation.

Therefore, the correct performance indicator of our business is a consistently strong fiscal year financial result. In conclusion, Q4 and full year results reflect solid performance and meeting or exceeding provided guidance. We enter fiscal ’twenty six with positive momentum and high expectations to deliver on our full year guidance target. Demand for our solutions and the fiscal strength of our clients remain strong, which we expect to drive superior shareholder value. We appreciate the contributions of our dedicated associates that achieved these strong results and our investors for their ongoing confidence.

Jamie, please open the line for questions.

Jamie, Conference Call Operator: Ladies and gentlemen, at this time, we’ll begin the question and answer session. Our first question today comes from Dan Perlin from RBC. Please go ahead with your question.

Dan Perlin, Analyst, RBC: Thanks. Good morning, everyone. I wanted to kind of circle back maybe on the aggregate demand environment, but coupled with kind of expectations around implementation cycles. So Greg, clearly the demand, you won 51 cores, so that’s very much on track with I think the expected run rate you guys have been putting up for a number of years. And it sounds like you’re talking about larger wins obviously.

I’m just wondering to try and reconcile that with maybe last quarter’s commentary around some large capital purchase delays and maybe some implementation cycles for non core projects. I’m wondering if those two are still kind of at odds with one another or has that gap closed a little bit?

Greg Adelson, President and CEO, Jack Henry: Yeah, Dan. Thanks for the question. Yeah, so a couple of things. So one, from the sales demand and our ability to continue to go up market, I think hopefully you were able to hear all my comments on that. So that’s definitely happening and definitely something that is a huge focus of ours.

From back to your question from last quarter, yes, some of that gap has significantly improved, I would say, mostly on the consulting side and things along that line. Some implementations still a little bit delayed, but nothing, I guess, to the same level they were last quarter. But if you remember, I also pointed out that there were some delays on some of our consulting engagement, especially around our Financial Crimes Defender solution and things like that, that have all now finally caught back up again. And as I indicated, that happens occasionally throughout the year. But because it was more pronounced and it would be part of the end of our quarter, it ended up pushing it into this fiscal year.

So that’s also part of that why I called it out.

Dan Perlin, Analyst, RBC: Got it. Okay. That’s great to hear. And then Mimi, just this is maybe nuanced a little bit, but like the revenue guidance range Think it’s 120 basis points relative to 100 for the past several years.

And so I’m just wondering what kind of drove that decision. I don’t think it’s a function of the deconversion revenue, but I just wanted to make sure I understood what was driving the wider range.

Mimi Carsley, CFO and Treasurer, Jack Henry: Thank you. Thanks for the question, Dan. Yeah, I think overall, as we set our budgeting process and we look at the macroeconomic variables that are beyond our control, and as we get to just larger total revenue size, having a 1% historical spread in the guidance, we felt was a little bit constricting. We wanted to make sure we’re very much committed to hitting the guidance and executing on that. So just giving us a little bit more flexibility as we collaborate with sales and operations, just to think about the risks and opportunities before us.

There’s not much I wouldn’t call into anything structurally different, just providing more operational flexibility.

Dan Perlin, Analyst, RBC: Yes. Completely prudent. Okay. Thank you so much.

Jamie, Conference Call Operator: Our next question comes from Nick Cremo from UBS. Please go ahead with your question.

Dan Perlin, Analyst, RBC: Hey, good morning. Thanks for taking my questions. First, I just wanted to circle back to the fiscal twenty twenty six revenue outlook. How should we think about growth between the various segments on a relative basis? I know that the payment segment was called out to have some headwinds, and it looks like the number of new Banno wins in fiscal ’twenty five versus fiscal ’twenty four was a little bit lower, so maybe a little slower in the complementary segment relative to the core segment.

Thank you.

Mimi Carsley, CFO and Treasurer, Jack Henry: Yeah. So as we think about ’26, I think some of it is going to be trends that are continuing recently. We expect that certainly core will remain solid again. Payments, relative to the long term growth algorithm, probably slightly below or towards the bottom end of that range of the near term target. And complementary, we actually expect solid growth for ’26, closer to the higher end of that growth algorithm range.

Dan Perlin, Analyst, RBC: Great. Thank you.

Jamie, Conference Call Operator: Our next question comes from Vasu Gobel from KBW. Please go ahead with your question.

Vasu Gobel, Analyst, KBW: Hi, thanks for taking my questions. I guess just the first one. You guys called out short term revenue headwinds from bank M and A. Any way to quantify how much that’s weighing on the 2026 outlook? And then, Greg, I know you called out the large bank merger you alluded to in your comments, not baked into this year’s outlook.

So are you saying that that’s going to be a headwind the following year, if not this year? And then more broadly, if bank M and A continues at an accelerated pace, are we potentially looking at multiple years of maybe slightly softer top line growth than the 7% to 8% we’re used to seeing from you guys?

Greg Adelson, President and CEO, Jack Henry: Yeah, so let me answer the middle question first. So what I am stating emphatically is that we have not received any guidance of what will happen. In fact, we’ve had really good conversations with both parties. And so there hasn’t been any indication that Jack Henry will not have an opportunity to either win the overall deal or continue to have additional products in the solution set that even if it is in our core. So all those conversations are under really actually happening now.

So short answer is yes. So I don’t expect anything in fiscal year ’twenty six. But I don’t know what will happen yet, and so what the impact will be. And again, as we reiterated several times, we don’t have any client that is a substantial amount of our revenue. So this client is actually a in house client.

So from a revenue perspective, it actually will probably have less impact than some of our outsourced clients if they were to leave. So isn’t as substantial as maybe some maybe project. Number two is that from a headwind standpoint and an M and A, it really is about the fact that we have if you look at the balance of what’s happened so far, it’s basically equal, almost in exact numbers, of how many have been Jack Henry to Jack Henry, and how many have been Jack Henry to have been acquired by competing core. But what ends up happening is, as you can imagine, a lot of the deconversion revenue is mostly predicated on how much time is left on the agreement. And so not every deal is actually equal.

You could have a deal that has less than a year. You got a deal that’s got five or six years. And that’s a more substantial impact. So even some of our Jack Henry to Jack Henry deals, because of the way the pricing was set up or the size of the actual acquisition, it didn’t hit the next level of the trigger for us to get an immediate impact on revenue growth. So it may stunt the growth for a short period of time.

But it isn’t a long term thing. So I guess most people are viewing this M and A market. You have to put all of those factors into play, meaning that not every loss or every win is created equal, depending on term. So again, so some of that based on what has happened is creating some short term revenue. And I think still as we stated last time and as I will continue to state, that I think it’s a balance.

If you look at over the last several years of the number, even when M and A was more prevalent a few years we continue to grow at pretty nice numbers. And if you look at what we’re guiding to the NAC right now, it’s still significantly higher than the competition is. And I continue to believe that that will only be advanced as we get through some of these short term headwinds.

Mimi Carsley, CFO and Treasurer, Jack Henry: If I could just add on to that relative to the third part of your question, we see no structural change in the long term opportunities for the company. The company is solid and extremely healthy. We expect, if we think about the three year tiger versus the algorithm targets, they’re still very much valid and intact. As Greg talked about it, we have a lot of exciting new opportunities before us that we think will leverage to future growth.

Greg Adelson, President and CEO, Jack Henry: Yeah, Vasu, if you don’t mind me just adding one other point, just in case it doesn’t come up. I think it’s really important that we also talked about some renewals and some of the pricing piece. Just to put this in perspective, we did from a renewal standpoint, we did 12% increase in overall renewals for the year. Some of those are actually predicated a little bit earlier than we would originally expect, because it is a Jack Henry to Jack Henry conversion or migration. And the particular acquiring entity wants to renew ahead of the game.

And so there’s some things that become a little bit more unplanned. But what I really wanted to emphasize was that in fiscal year twenty four, of all the renewals we did, it totaled $94,000,000,000 in assets. But for fiscal year ’twenty five, it totaled $223,000,000,000 in assets. So they were a lot of our larger clients. And so we were able to renew them.

Obviously, there’s some short term price compression. We sell them new products. So it takes a couple of years for those to get implemented and things along that line. But that’s part of the reason. And I would say that that’s probably a little more prevalent than even the deconversion component.

Vasu Gobel, Analyst, KBW: I appreciate all the color and all the detail. That was very, very helpful. I guess as my quick follow-up, one of the other things you guys mentioned in the release is just the slower account growth, and that is something we’ve heard from some of your peers as well. So hoping you can give more a little bit more color on, you know, what kind of change you’ve seen in the trend line, any dimensionalization of what the magnitude of that change is and expectations going forward?

Greg Adelson, President and CEO, Jack Henry: Yeah, it’s really started over the last several years in the credit union part of our market. And I think there’s a lot of reports that have actually shown that. And I think, yes, one or two of our competitors pointed it out as well on the banking side. I think some of it’s predicated on what’s happening with the neo banks and some lost accounts that are going there. Some of it also is predicated just on how pricing occurs.

Some of the institutions, as they change their deposit growth strategies and things along that line, sometimes they end up purging accounts that really growing or would be more what I would call dormant accounts. And so a lot of them change their strategies because they don’t want to pay for those. So there’s some of that from an organic growth, some of it going to neobanks. And that’s why we’ve been so focused on our SMB strategy to bring those deposits back into our financial institutions to allow that what’s going out to the stripes and the squares and into the chimes and others to be able to stay within our financial institutions. So again, that’s a big part of our overall strategy.

Vasu Gobel, Analyst, KBW: Thank you very much.

Jamie, Conference Call Operator: Our next question comes from Kartik Mehta from Northcoast Research. Please go ahead with your question.

Kartik Mehta, Analyst, Northcoast Research: Hey. Good morning, Greg and Mimi. Greg, I know just in the previous question, you talked a little bit about pricing pressure related to renewals. And I’m wondering, is the pricing pressure you’re seeing just related to factory renewing and that’s just the way business is done? Or are you seeing any incremental pricing pressure on new or renewals?

Greg Adelson, President and CEO, Jack Henry: Good question, Carter. Yeah, mean, it’s happening in both. I mean, there’s but I won’t say that it’s really that much it’s new. Pricing pressure on renewals is always I mean, there’s only a handful, as we’ve talked about before, roughly 100 opportunities a year where people really are making decisions. So those get to be pretty competitive out in the market as people start to talk through it.

Again, candidly, we’re as transparent as anybody in the industry by sharing the number of core wins. You don’t really hear our competitors do that. And I think we do it because we’ve been very successful and continue to do that and again continue to go up market. But the pricing pressure itself, there’s always it’s always going to occur. Everybody wants something for less.

But we’ve done a really good job. Honestly, one of the things that we were really focused on this year that I think will help us in the future is to really get more granular on how we look at renewals. So both the pricing approach, the timing of how we handle compression, even how we compensate our sales team. We changed all that in the back half of this last fiscal year. And we saw some of the improvements in the fourth quarter.

And that’ll continue. I think that’s going to help us with kind of our process and approach going forward. But there will always be pricing pressure because again everybody’s trying to go after the same 100 opportunities.

Kartik Mehta, Analyst, Northcoast Research: And just one follow-up, Greg. You know, your partnership with Move, I think it started obviously last fiscal year. And I’m wondering how it’s progressing in line kind of as opposed to your expectations. Is it going in line with your expectations? Or is it any different than you expected?

Greg Adelson, President and CEO, Jack Henry: Yeah. I appreciate the question. Because actually, it has exceeded my expectations. We were told a year ago when we actually announced this at Investor Day that it would take both Visa and MasterCard and Apple and others had told us it usually takes eighteen to twenty four months to get fully certified through all of the various things that we did it in ten months. Visa and MasterCard told us they’ve never seen that before.

They both have seen the transactions and they’ve seen the live demos and they’ve been blown away by what we’re able to do. So there is significant interest and excitement, and we will be blowing it out at Jack Henry Connect by really doing some really cool things on stage with our clients. We’re purposely holding off rolling this out until after Connect, But we planned, as I mentioned, to roll it out over the next two to three months to all 1,000 Vano clients. We’re already like I said, the people that are already having it have been very excited, and we’ve seen some numbers. Now it’ll take a few months for us to get some real traction and to have kind of a guide on what we’re seeing.

But both our development teams have candidly exceeded my expectations.

Kartik Mehta, Analyst, Northcoast Research: Thank you very much. Appreciate it.

Jamie, Conference Call Operator: Sure. Our next question comes from James Faucette from Morgan Stanley. Please go ahead with your question.

James Faucette, Analyst, Morgan Stanley: Hey, good morning, guys. Appreciate the time. I want to just ask quickly on margin expansion for 2016. You walk us through kind of what the key levers are? I know you guys always highlight, many including today, how you’ve been able to drive improved efficiencies through hiring, etcetera.

But just wondering if we can get a little more detail on kind of what you think the key components are, etcetera.

Mimi Carsley, CFO and Treasurer, Jack Henry: Thanks, James, for the question. It’s one of the metrics Greg and I monitor quite closely and hold in very high regard. We know that that’s a key part of the investor story, is that the nature of the business itself inherently lends itself to margin expansion. I would say it’s a couple of things. One is the continued culture around process improvement, efficiency.

Greg will probably talk a little bit more about what we’re doing in AI. But trying to, as I called out in some of my commentary, we really manage the headcount growth through that, both zero based budgeting, but looking for opportunities to drive efficiency throughout the organization, not just in shared services, but in product and development as well. So that’s a large part of it. One of our largest expense lines is just headcount. And so by keeping some of that headcount much tighter in the way we open new positions, the way we manage positions, we’ve been able to, over the last several years, deliver margin expansion.

But then there’s other structural trends that we see continuing. Greg mentioned the number of wins we have from a migration perspective. So continuing to move to private cloud helps us. We’re further in the journey of our public cloud migration. So from an infrastructure cost, we’re starting to see the plateaus of some of, for a while, we had some dual costs as we are migrating some of those products into the public cloud space.

So those are some of the drivers as a whole to margin expansion.

Greg Adelson, President and CEO, Jack Henry: Yeah, James, I’ll just add, just as Bing mentioned around AI. But we’ve had a significant focus on process improvement for years around here. Roughly 35% of our staff are green belts and trained in CADA in the classroom. We started that many years ago, and that continues today. We also take a very unique approach, I think, to how we handle both process improvement and AI initiatives by giving a mantra of doing more with the same instead of doing more with less.

And that really enables our associates to have more of a focus, not thinking that they’re immediately going to lose their job because they came up with a great idea or better utilization of a tool. So that’s why we’ve been able to minimize the amount of headcount that we’ve had over the last several years with that focus, and that will continue. But we have a lot of things that we have going on, not only in development, but also things like HR and how we hire, our legal approach, finance. I mean, really all of our groups have really embraced the AI component. And then lastly, I think I mentioned this in my script, but around the work that we’re doing in our tech modernization platform has allowed us to lessen the amount of people we need in certain areas, because we’re not duplicating efforts anymore in building out the same things.

So I mentioned authorization or entitlements. Those used to be built in all the products individually. Now they’re built once and utilized across the organization.

James Faucette, Analyst, Morgan Stanley: Great. And then I wanted to just touch quickly on Banno and just dig in a little bit there. Wondering how has early transaction trended with Banno business? And can you update us on the go to market motion, particularly given some of the implications on the competition front with some of the competing four platforms?

Greg Adelson, President and CEO, Jack Henry: Yeah. Mean, so Banno Business, as I mentioned, just won a really nice award from Datos Insights. We’re starting to get a lot of the as I mentioned, I guess it was last year at Investor Day, but also throughout our meetings that we were kind of in a catch up mode with some of the key features with some of our key competitors. We’re almost there. And as a byproduct of that, we are starting to win some of those deals from them where we weren’t previously because we were behind on the business front.

So from a revenue standpoint, it’s obviously contributing to the growth of the Banno platform in general in our digital. But there’s other things that we’ve built as well that are helping to contribute as part of what we call add ons. And Banno business would be considered one of those. But I’ll be really, really frank with you, James, is that I think the things that we’re adding within TAP to Local and Jack Henry Rapid Transfers tied with the BANO business application is going to allow differentiate in the market because nobody has the TAP to local and Jack Henry rapid transfers at this point in time.

Jamie, Conference Call Operator: Thank you. Sure. Our next question comes from Dave Koenig from Baird. Please go ahead with your question.

Dave Koenig, Analyst, Baird: Yes. Hey, guys. Thanks so much. And I guess, first of all, the change in contract with the third party provider, that $16,000,000 headwind, that’s pretty big in context of I don’t think many of your clients are over 1%. So that’s close to 1% revenue headwind.

Maybe describe a little more. I assume it’s a reseller partner with revenue shares maybe going down a little bit. Maybe describe that. And then are we right about $12,000,000 in Q1 and then $16,000,000 headwind starting in Q2?

Mimi Carsley, CFO and Treasurer, Jack Henry: Yeah, I can answer that a little bit more, Dave. So in this instance, it was a contract renewed. We’re actually the reseller of the product. It’s a bundle of products. So essentially, the way I would think about it is the economic the net economic impact is unchanged.

So it’s just the revenues received as a royalty bundle under the contract. And you’re accurate in stating the $16,000,000 in totality. Dollars 12,000,000 of that will occur in Q1. And just for a little extra color, that’s within the core segment.

Dave Koenig, Analyst, Baird: Okay. Okay. Thank you. That’s great. And then I guess secondly, the gain that you’re getting during ’26, which quarter is that in just so we get the EPS cadence correct?

Mimi Carsley, CFO and Treasurer, Jack Henry: It’s mostly in Q1, but it’s a little bit across the year. We’ll give more color as the year goes on. It’s around some larger asset sales.

Dave Koenig, Analyst, Baird: Gotcha. Great. Thank you.

Mimi Carsley, CFO and Treasurer, Jack Henry: You’re welcome.

Jamie, Conference Call Operator: Our next from Will Nance from Goldman Sachs. Please go ahead with your question.

Will Nance, Analyst, Goldman Sachs: Hey, guys. Good morning. I wanted to come back to the free cash flow topic. And you’ve had several years where free cash flow was negatively impacted. And as you look out the next couple of years with a better cash flow outlook, just looking for your updated thoughts on capital allocation and if there’s anything that’s sort of top of mind for you as you kind of come into this new degree of flexibility on the free cash flow side.

Mimi Carsley, CFO and Treasurer, Jack Henry: Thanks for the question, Will. It’s certainly been a journey. Looking back three years, when we were at 55% free cash flow conversion and first hit with the legislative change, it’s quite the journey back to 90% that we are to get. And then guidance of that 85% to 100% in the future. So I think there is no reason that that 85% to 100% is not going to be where we consistently land year to year.

So we’re just excited to get this new legislative change kind of both from a certainty perspective that it’s not just short term, but just the clarity now to move forward and have strong cash flow. As to the second part of your question from a capital allocation, as I said in my comments, having a much stronger free cash flow position and zero debt, which is a pretty remarkable balance sheet from a fortitude perspective, does allow more flexibility. We think that our intention is to be able to increase the size of our share repurchases. We’ve had to constrain them over the last couple of years as we focus more on accretively taking down the debt. That now, as we have zero debt, if I had to say, we’d probably likely have the ability to ramp up share repurchases of at least $100,000,000 hopefully more, and still remain open to M and A opportunities.

And again, always looking to have strong growth in internal development effort as well.

Will Nance, Analyst, Goldman Sachs: Got it. That’s helpful. And then, Greg, I wanted to ask I recall when you took over the CEO role, a big part of your priorities centered around looking at some of the assets that you have from either a divestiture perspective or an efficiency perspective and trying to I’ll just say maybe clean house a little bit. And I’m just wondering if you could give an update or your latest thinking on any opportunities internally to increase efficiencies, any asset sales that you have contemplated or any thoughts on cost savings and margin structure outlook as you’re coming up on a couple of

Vance Sherard, Vice President, Investor Relations, Jack Henry0: years on the job? Thanks.

Greg Adelson, President and CEO, Jack Henry: Yeah, thanks for asking the question. And yeah, so that has absolutely still remained a priority. We had a couple assets that we are strongly considering that potentially could be part of a sale at this point. We’re still evaluating a couple of opportunities there. We have announced the end of life of nine different small very small products.

But we one of those that isn’t as small is our NetTeller product. So we have announced that to our clients. We have all but one of our very small cores. And there’s some specifics to why that particular core hasn’t been sunset yet. But our two bigger banking cores and our credit union core have been announced.

So that’s another big one. And that will continue. So we’re looking at opportunities. We again started the communications. But we give our customers roughly twenty four months as part of our end of life process.

And so we’ll transfer some of our assets over to newer products. Or we’ll just shut down some functionality that we were actually paying and investing in that we no longer do. That was also a big part of our budget process this year, where we approached all of our teams with the same light of, hey, we’re not going to be investing in some of these products that we’re at a point where we don’t think they’re going to be long term players for us. So appreciate the question. And that will continue.

And we can continue to update you on that. That’s great. Appreciate that, Greg. Thanks for taking the questions.

Jamie, Conference Call Operator: Our next question comes from Ken Zekauski from Autonomous Research. Please go ahead with your question.

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Hey, good morning. Thanks for taking the question. Can we just revisit the quarterly cadence on non GAAP revenue growth? And maybe we could touch on the cadence in the back half of fiscal 2026, because I think there were some comments that fiscal 1Q would be in that 7% to 7.5% range. I think fiscal 2Q a little softer and then increasing on a reported basis for 3Q and 4Q.

So just wanted to confirm that’s on a non GAAP basis because I think the press release said fiscal 3Q is slightly weaker. So we’re just trying to figure out if that’s relative to the full year or fiscal 2Q. Thank you.

Mimi Carsley, CFO and Treasurer, Jack Henry: Thank you for the questions, and the opportunity to clarify. It is on a non GAAP basis. That’s the way we manage the business. And you’re accurate in your summary of it, Q1 being the strongest, then Q2 a little weaker, and then increasing from three to four for the remainder of the year.

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Okay. That’s helpful. And then maybe just a higher level one on I know it was asked about earlier, but just on the pricing dynamics in the industry. I think you talked about one of your competitors becoming increasingly aggressive on pricing. Can you just talk about where they are pricing more aggressively, whether that’s on the core itself?

Or is it the surrounding solutions? And I’m curious, in your opinion, what changed in the industry that led to this? I know Jack Henry has typically commanded premium pricing versus peers. It’s a concentrated industry. So I’m just curious how you’re thinking about that.

Thank you.

Greg Adelson, President and CEO, Jack Henry: Yes. Ken, thanks for the question. So a couple of things. One, I would say that both of our primary competitors have had that approach, maybe one longer while the other one was a little bit distracted. That distraction is now more gone.

But most of the competitive pricing that we see is candidly in them keeping their own customers as we’re going after new core wins. We see some of that competitive pricing, obviously, in our own renewals, as I mentioned. But because we have a lot more leverage and the ability to showcase what we’ve done for those particular clients over whatever term of agreement they’ve been with us. We still demand or command the highest pricing in the industry. We hear that from consultants all the time that we still so there’s when you look at the overall pricing, even of the 51 core wins that we mentioned, I can guarantee we were never the lowest price in any of those 51.

So that is just part of it. But it ends up being a decision based on price sensitivity or technology innovation. And I tell CEOs of institutions all the time, you got to decide what’s more important. And do you want the long term growth and ability for us to take you into the future with what we’re doing with tech modernization and a lot of our innovative products like Tap to Local and others? Or do you want the short term win while others are trying to figure it out?

Obviously, you get a mixed bag. But as you know, we want our fair share and continue to win up market. But I would say the dynamic isn’t that much different. And it’s mostly on them protecting what they do have today.

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Great. Thanks, Craig. Thanks, Manny.

Jamie, Conference Call Operator: Sure. Our next question comes from Dominic Gabriel from Oppenheimer. Please go ahead with your question.

Vance Sherard, Vice President, Investor Relations, Jack Henry1: Hey, thanks, Compass Point. I really appreciate the question. So I just wanted to go back to the account growth at your partners and you mentioned neobanks there. Are there any other factors besides just maybe takeaways from what some may say traditional finance companies to neobanks? Are there any other dynamics that play into why account growth could be slowing, say 1% to 2% versus 23%?

Greg Adelson, President and CEO, Jack Henry: Yeah, I think a lot of it is it’s not just the neobanks. But as I mentioned before, it’s also some of the SMBs taking their products to other providers that are offering solution sets. I think I referenced this early on, or maybe it was even at Investor Day a year ago, that only about 16% of folks that have retail accounts at the community and regional banks actually have their business account there. So another reason why we’re continuing to really push our SMB strategy to keep those deposits and accounts at those institutions. But between neobanks, between digital wallets, between opportunities for folks to keep money and other places, dormant accounts, as I mentioned, where if those accounts if they’re paying for that particular account for a period of time, but there really isn’t any activity there, then they want to cancel that account.

So that slows the actual growth of what maybe we had experienced in years prior. I assume that’s very similar to what our competition is experiencing as well. But those are some of the high level things.

Mimi Carsley, CFO and Treasurer, Jack Henry: If I could add on too as well, this is not a Jack Henry specific, but things you’ll see across the industry. But until recently, you’re not seeing a ton of new car sales, which will lead to new loans and autos. With the housing market being frozen and not seeing a lot of transactions in real estate, And that’s been a national issue. Again, less mortgages, less account opening. So we’re seeing some of that tied to lending volumes as well.

Jamie, Conference Call Operator: We do not have a

Vance Sherard, Vice President, Investor Relations, Jack Henry1: Jack Henry only issue. Sorry, go ahead. Yeah.

Greg Adelson, President and CEO, Jack Henry: No, I’m sorry to interrupt you. I just was going to say, we also have a mixed bag of clients that have asset based pricing and some that have for account pricing. So it really depends. But as the customers get larger, and really dependent on whether they’re more business focused or retail focused, that has a stronger indicator of what type of pricing that we would have in place with them.

Vance Sherard, Vice President, Investor Relations, Jack Henry1: All right. No, thank you so much. Maybe just lastly, maybe the complementary business, really some pretty stunning growth this quarter. Maybe just talk about I know you said that it should you’re going to see a near high end of the range for that business. Could you just remind us what that range is?

And then how you think about the fourth quarter, grow over since this quarter was just so good? Thanks. On the revenue.

Mimi Carsley, CFO and Treasurer, Jack Henry: Yeah. So, Dom, it’s a great question. As you recall, the complementary segment is a whole portfolio of products. You have some anchor tenants like digital that continue to have impressive growth. Then you have other things like Financial Times Defender, which is really leading to some strong momentum.

And some of the broad related solutions as it relates to faster payments are also another driver of growth. So those trends, we think, are going to continue. And that’s why we expect to see that continuation for next year. If you think about that range, about 8% to 9%, just as a reminder from the growth algorithm perspective.

Greg Adelson, President and CEO, Jack Henry: Perfect. Thanks so much.

Mimi Carsley, CFO and Treasurer, Jack Henry: Of course.

Jamie, Conference Call Operator: Our next question comes from Chris Kennedy from William Blair. Please go ahead with

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Craig, just wanted to follow-up. I mean, it’s clear you’re excited about Banno for Business and TAP to Local. Can you just kind of give an update on the SMB strategy, kind of where you are relative to your initial expectations?

Greg Adelson, President and CEO, Jack Henry: Yeah, thanks for asking, Chris. Yeah, like I said, I’m extremely excited. And I would say we’re ahead of where I expected us to be, just because as we really got into building everything out, and we’re told it would be an eighteen to twenty four month process, but our team was able to complete it with move in ten months. So that is significantly ahead of where we thought we were going to be. And as I mentioned, we’re going to start rolling this out in a heavy, heavy way post our client conference in early September.

So early indications from the card associations and from the clients that have been in our closed beta have been tremendous. So excited is an understatement. Entire SMB strategy, we actually have a roadmap that we’ve created that will cover over the next eighteen to twenty four months of a variety of different activities that we will be adding to the overall solutions that some are actually kind of point to point solutions that we have today at Jack Henry that haven’t been positioned as well as maybe we should have in the past to put them in this SMB strategy. Others are things that we’re working, again, independently and with Move that we’ll be rolling out. But candidly, my big message to our team is that nobody’s going to care about the solution until the first one is successful.

So we are highly focused on making sure that that is the case.

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Great. Thanks for taking the question.

Jamie, Conference Call Operator: Sure. And our next question is from John O’Reaux James. Please go ahead with your question.

Vance Sherard, Vice President, Investor Relations, Jack Henry2: Hey, good morning, guys. Greg, just want to take a big step back here. If we think about the ’26 revenue outlook, it’s about 100 basis points to the midpoint below what I think normalized growth. And you said you haven’t really seen you don’t consider any real structural changes in the Jack Henry growth rate. You’re winning larger banks, which I think would accelerate growth.

You called out the industry headwinds. Is there any change in guidance philosophy, understanding your first year a little bit below revenue. Just trying to think about the puts and takes. Are these industry headwinds more than 100 basis points and that’s offsetting some of the larger bank wins? Is there added conservatism?

Just trying to think through the puts and takes of the guide in ’26 versus how you think about normalized growth of Jack Henry.

Greg Adelson, President and CEO, Jack Henry: Yeah, it’s a great question. And so no, there isn’t anything, as we said, that’s structurally different. There isn’t anything that makes up 100 basis point of concern. What it is, is some level of us being there’s macro things that we’re still not sure about that we’re still kind of quote hedging on because we’re not really sure. But the bigger part is what we talked about with the renewals and the M and A activity.

So though we tend to win more than we lose, as I mentioned, it doesn’t really matter from that perspective. It’s really about the timing of the activity, the M and A activity, and what is left on that particular contract. Or if the Jack Henry deals happen, are they actually going to be accretive for us? Because some of them haven’t hit their next tier level of pricing through that acquisition. So all of those are parts of running the business and doing the day to day activity that we do.

But there isn’t anything in that. And to your point about us winning larger deals, a lot of those will start to come on in the back half of the year, the ones that we won last year. As I mentioned before, us winning these larger deals has really only happened over the last two fiscal years. So we’ll start to see the it takes anywhere from typically fifteen to twenty four months before core activity actually comes on board. Obviously, you get dragged along with other payment and complementary products with that as well.

So that’ll really start to happen from two fiscal years ago, or I guess fiscal year this should be from fiscal year ’twenty four happening at the back half of this year in fiscal year ’twenty five, and then ongoing. So that’s why we remain bullish on where we’re going, what we’re doing, the activities that we have related to SMB, and other tangential things like even stablecoin stuff that I mentioned before. So hopefully I answered your question, but I wanted to make sure I covered a couple of parts of that.

Vance Sherard, Vice President, Investor Relations, Jack Henry1: Yeah. The only thing I want to follow-up

Vance Sherard, Vice President, Investor Relations, Jack Henry2: on a little bit is, given a little bit more uncertainty this year, given the M and A environment, given some of the industry slowdowns, also you gave a wider range after missing kind of the initial guide last year. Is maybe a little bit more conservatism given a little bit more uncertainty coming into this year? Just any change in guidance philosophy in year two since you’ve taken over?

Greg Adelson, President and CEO, Jack Henry: No, no real I mean, not in philosophy at all. I mean, obviously, we did extend by a little bit from a 20 basis points perspective. But I mean, we’ve been talking about that. When you look at our company, 1% is $23,000,000 Half a percent is 11,500,000 There’s not a lot of flexibility in that range. So that was something that we looked at.

We’ll continue to look at to be candid in future years. But we thought we’d start off there and kind of go with that approach. But other than that, as Mimi articulated, and I’ve been trying to articulate here too, nothing else fundamentally has changed.

Vance Sherard, Vice President, Investor Relations, Jack Henry2: Okay. And then just one last quick one, if I can, on complementary. Now that Banno is product parity plus tap to local rapid transfers, where are we in kind of selling that outside the base? And then also maybe just quickly, complementary outside of Banno, what are the puts and takes there? What’s going well?

What’s maybe I know you’re some saying some products there. Just trying to think about kind of the ex Banno growth and also kind of where we are selling Banno outside the base. Thanks, guys.

Greg Adelson, President and CEO, Jack Henry: Yeah, I’m glad you asked that. I was prepared and was hoping somebody would ask me. If not, I was going to bring it up myself. Yeah, we’re very excited and very focused on continuing to work. As I mentioned before, we’ve taken a couple of different paths for outside the base.

I won’t get into all the specifics. There are opportunities like today, we can actually sell and we will sell tap to local and rapid transfers outside of the Jack Henry base. But we can do that today. We actually are also going to increase the TAM over the next couple of years by providing some opportunities for even our key digital competitors to sell that and for us to be part of the equation there. But by the end of this calendar year, our teams will start selling opportunities outside of the Jack Henry core base.

And with the belief that we could start implementing the latter part of our fiscal year. So in the May time frame, we would hope to have a couple of beta clients that would be live. But that is the approach. We’re actually taking two different approaches, and kind of doing them both using some of the technology that we’ve built on the platform, as well as technology that we’re building through core integrations with some outside providers. But all of that is in play specifically for Banno.

But other products will follow suit as well over time. But Banno will be the first one of the ones that are not outside the base today.

Vance Sherard, Vice President, Investor Relations, Jack Henry0: Great. Thanks, guys.

Greg Adelson, President and CEO, Jack Henry: Sure. Our

Jamie, Conference Call Operator: next question comes from Rayna Kumar from Oppenheimer. Please go ahead with your question.

Vance Sherard, Vice President, Investor Relations, Jack Henry3: Hi, everyone. This is Abigail on for Reyna. I just wanted to talk about hardware revenue, which faced some persistent headwinds in FY ’twenty five. What does this outlook look like as we enter FY 2026? And what’s the impact on guidance, do you think?

And then can you help us also look at the size and the decline in hardware revenue from delayed sales and implementations versus just the clients that are migrating to the cloud?

Mimi Carsley, CFO and Treasurer, Jack Henry: Sure. So Abigail, I would say as it pertains to the upcoming fiscal year ’twenty six, because we’ve had such headwinds in ’twenty five growth due to lower hardware sales, it’ll be less of an impact in ’twenty six. So we don’t expect a massive rebound by any means in hardware, but we don’t expect it to be as much of a material headwind because we’re going from a lower base of FY ’twenty five. And that is all built into the guidance. As to the latter half of your question, as we continue to see clients migrating from on premise to private cloud, there’s less hardware purchase needs in the future.

That said, most of the wins we get today are in the cloud. Very few new client wins are ever on premise. So we are not from a hardware demand perspective, I think those trends will continue because of it correlated to now being 77% private cloud.

Vance Sherard, Vice President, Investor Relations, Jack Henry3: Perfect. Super helpful. Thank you.

Mimi Carsley, CFO and Treasurer, Jack Henry: You’re welcome.

Jamie, Conference Call Operator: And ladies and gentlemen, with that we’ll conclude

James Faucette, Analyst, Morgan Stanley: I’ll the

Jamie, Conference Call Operator: call over to Vance Sharar for any closing remarks.

Vance Sherard, Vice President, Investor Relations, Jack Henry: Thank you, Jamie. In the remainder of our first quarter, we will host approximately 3,000 clients at our upcoming Jack Henry Connect Conference, and management will be participating in investor meetings across various U. S. Cities and internationally at the end of the month. We would like to thank all Jack Henry associates for their efforts and commitment, which contributed to another successful fiscal year.

Thank you for joining us today. Jamie, please provide the replay number.

Jamie, Conference Call Operator: The replay number for today’s call is (877) 344-7529, and the access code is three two zero ten and fifty four. The conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your lines.

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