Jack Henry & Associates Inc at Bank of America Electronic Payments Symposium Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Lots of good stuff to talk about at Jack Henry. And I wanted to just kind of lead off, thinking -- kind of reflecting on -- you're just about at the one-year mark since you took over as CEO. You've been with the company a very long time. But talk about how you're building on the success of your predecessor, priorities for the balance of fiscal '25 which, hard to believe, is coming to a close pretty soon. And then, just as we start to look into fiscal '26, we'll kind of start top down there with just your top of agenda items.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right. So you got a full plate.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Yeah, for sure. So I wanted to kind of take your temperature on kind of the overall backdrop, because coming out of November elections, it felt like awesome environment for banks and felt like you're going to see deregulation, you're going to see a strong US economy. And now in the last few weeks, obviously, consumer confidence kind of fading a bit, a lot of tariff uncertainty, uncertainty around growth. So I'm just wondering, are you guys seeing any impact of that uncertainty either on customer decision-making in your core banking business or in card transactions within your issuer processing business? Anything worth calling out?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. Well, that's certainly good to hear because there's a lot of speculation out there across the economy. How are you guys thinking about the M&A landscape just for the banking industry for the remainder of this fiscal year and into next? I mean, do you get the sense that any of this macro uncertainty could complicate or stall out M&A plans among the banks?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Understood. So let's spend some time just talking about the line of sight that Jack Henry has into this fiscal year's revenue. I know that's been a big topic since the beginning of the fiscal year. And you reiterated guidance on the last earnings call. The ramp in growth between the first half and second half is obviously higher than in kind of a traditional typical year. So just remind us what the drivers of that are. And I guess, more importantly, sitting here today with three-plus months left in the fiscal year, how do you feel about the visibility on what you need to do in both Q3 and Q4?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right. You'll have a better sense of where within that range you're going to land.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay, that sounds like the confidence level on getting somewhere into the range is still high.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right, okay. Okay, got it. Core takeaways -- in a typical year, you target 50 to 55, and it seems like clockwork, you guys pretty much get there. You have a great sales force. This year, you had 17 in the first half and not that it's always going to be perfectly ratable, but naturally, that raises the question of how do you do kind of roughly double that level in the second half. So anything around leading indicators or just pipeline or specific feedback from your sales force that tells you, yeah, we still feel good about that very much?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Yes. I mean, I guess just thinking through that even one step further, I mean, at some point, does it make sense for Jack Henry to talk about like some kind of like bookings dollar number, just so people can see like average contract size or anything along those lines? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 5:00PM, JKHY.OQ - Jack Henry & Associates Inc at Bank of America Electronic Payments Symposium

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. Yes. I mean, are you seeing more like, I guess, I'll call it, like upfront attach rate? In other words, when you first win a core, that those customers are taking more modules upfront?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. I want to hit on competitive landscape in core banking. We actually had a note out on this yesterday from some recent checks that we've been doing. And part of what we talked about in our note was a recent ABA survey that came out. And I mean, not to toot your horn just because you're sitting here, but you guys did really well actually in that survey. I recommend everyone check it out. It's actually got a lot of detail in it. So I'm curious just to get your take on the overall lay of the land because as you've already articulated, Jack Henry is moving upmarket, right? You're winning deals of an asset size that in the past, you did much less of. Conversely, we have others talking about having more success in -- from their perspective is more down market. So is it fair to say that there is more competitive overlap, if you will, among some of the bigger traditional vendors than there was historically? What's your take on that?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : That price-based competition that you referenced and maybe in some cases, like you said, bordering on irrational. Has that dynamic intensified over the past 6 to 12 months?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 5:00PM, JKHY.OQ - Jack Henry & Associates Inc at Bank of America Electronic Payments Symposium

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right. Okay. Got it. All right. So let's switch gears a little bit. I want to flash back to your Investor Day, which I guess it was six months ago, it feels longer.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : September, yes. And you guys gave an algorithm for pretty consistent margin expansion. And this past quarter, margins were definitely a bright spot in the quarter. So how are you thinking about balancing growth with margin expansion for the balance of this year? And then just more generally and structurally, what are some of the margin levers that you have at your disposal? How do you and Mimi think about that?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Really? Wow.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Maybe the lawyers, they don't worry about --

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. I mean, since you brought up AI, I mean, I'm curious how you're integrating it into your products? I mean, does it become a revenue driver? I mean, clearly, you're seeing some efficiency benefits on the margin side, but --

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Yes, okay. Great. So I want to come back to the topic of complementary solutions. And you touched on a couple of them. There's Financial Crimes Defender, there's Banno, et cetera. I guess which kind of have the most momentum in the market right now? And are there any others that are kind of coming down the pike that you'd say like, hey, keep an eye on this one a year from now?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Great. Great to hear. So yes, I do want to talk about Moov, and you guys announced that also back at your Investor Day, right? So maybe for those who are a little less familiar, talk about kind of the SMB strategy broadly, and the partnership with Moov that's underneath that.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. Interesting. Yes. So they -- I mean the FI should be incented to push it? I mean, is there any rev share back to that?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right. So it's deposit gathering. It's customer stickiness and --

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. Yes. So the incentives are aligned, right?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Yes. So let's just say that you hit this target. You've rolled it out to all 1,000 Banno clients by September I think you said is the goal. Can that start to move the needle on revenue in fiscal 2026? Do you think?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. It is a big statement.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : More volume for them, right?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : That's great. So are you or have you done any kind of like Salesforce retraining to --? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 5:00PM, JKHY.OQ - Jack Henry & Associates Inc at Bank of America Electronic Payments Symposium

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Coming with that mindset.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Right. And then it sounds like the next evolution is almost more like a small business, like a bundle, right? And will help you with your cash flow management and will go beyond the point of sale.

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Okay. All right. Well, we'll look forward to that. Where are we in the transition -- in the cloud transition going both on-prem, private cloud, private to public? I know that's been a journey. You mentioned it at the outset as one of your priorities. How far along are we? When are we done?

Question: Jason Kupferberg - BofA Global Research (US) - Analyst : Yes. Okay. All right. So we'll continue watching for that. Last topic, we have 1.5 minutes left. Capital allocation.