Jack Henry & Associates Inc at Robert W Baird Global Consumer, Technology & Services Conference Transcript

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

Question: David Koning - Robert W. Baird & Co. - Analyst : But maybe, Greg, you could kind of kick us off a little bit with your philosophy about running Jack Henry and what might be the differences from David Foss's leadership?

Question: David Koning - Robert W. Baird & Co. - Analyst : Great. Well, thanks for that. And maybe we can kick it off. What's changed over the last several years in terms of just how contracts are structured, right? I mean, I remember years it was often a five year contract. It seems like contracts no longer. Now what are just the dynamics now?

Question: David Koning - Robert W. Baird & Co. - Analyst : In how many complementary products as a core client typically have. And maybe how has that changed from 5, 10 years?

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. Okay. What makes Jack Henry special? You know, when we think of companies, there might be almost no companies in the country. It has such low attrition on right in what is it that has allowed your clients to just stick with you for decades in B, you tend to win more than your competitors? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:30PM, JKHY.OQ - Jack Henry & Associates Inc at Robert W Baird Global Consumer, Technology & Services Conference

Question: David Koning - Robert W. Baird & Co. - Analyst : great on. And then what about so for years that the shift to outsourcing has been a [shift] and we think maybe adding a percent or maybe a little more to revenue growth. So the shift from clients that took a license delivery where they would buy your software and then run it with a few of their own employees, move it two years, servers and novice and you doubled the contract value, right? So it's a really good shift. We're about 70% of the way there we're getting close to fully penetrated, how many years left? And then what is the next driver kind of that that comes after that?

Question: David Koning - Robert W. Baird & Co. - Analyst : In this the shift from your private cloud to the public cloud to 20% - 25% revenue, it is there actually a cost reduction.

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. Good. Well, in when we think of the business, I'm going to ask about Banno in a minute. We think two-thirds of it is just the bank technology to run kind of the software. The core point of that's core and half of its complementary products. Banno is kind of the gold star of the complementary product has been growing like a little fintech. Right? And kind of exploding maybe describe a little bit about how penetrated you are Banno, how much room for growth there is left? How fast maybe that's growing?

Question: David Koning - Robert W. Baird & Co. - Analyst : Are you getting the interest from non-core clients that want it?

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you, okay. Great. In one question, we've probably asked every year, people always wonder how in the world, do you guys grow 6% to 8%? So regularly in a consolidating market, right, banks were over 30,000 banks and credit unions. I think in the early 90s, they were maybe at [9,000.] So like how does that have?

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. Okay. So that's good. So if we move to payments. And remember, so the core client base we're running on the deposit accounts. That's a third of revenue than complementary products or a third. The last third is payments, right so this is where you're doing, debit processing, keep track of every debit site for a bank of bill pay, et cetera. Debit processing is the biggest part of payments rates like 60% of payments. How do you see the long run in that business with two kind of questions here. One is Master and Visa talked a little bit about decelerating volume growth and kind of towards retail. So that's little bit of a factor. But then also you have a pricing relationship with Fiserv. So maybe talk about those two parts of the business?

Question: David Koning - Robert W. Baird & Co. - Analyst : Yeah, sure. I often think of you guys is growing a little faster in debit just because a you have some of the smaller, less penetrated banks than the big money center banks on the coastal side. So that might help a little bit. And then just you tend to take a little bit of share over time anyway. So those two.

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. And I guess while we're on that topic quick and this goes back to some of the complementary products, but fraud was even called out in it's been called out at some points in your in your filings as a driver of growth on both some of the Yellow Hammer product. I think the debit processing for like is this growing well above normal and normal growth?

Question: David Koning - Robert W. Baird & Co. - Analyst : It sounds good. On enterprise payments, about 20% of the payments segment. What do you do that? I have covered the stock for about 20 years now, and that's the one part of the business. And obviously, what exactly is going on and maybe is this where you're talking about some of the SMB type payments?

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. And why does that? I know bill pay the bill pay part grows kind of low single digits, but that enterprise part of the ACH and some that actually that grows like 15% plus--

Question: David Koning - Robert W. Baird & Co. - Analyst : Got you. Okay. That's great. And then a couple of questions. I've got a few minutes of a couple of questions just on financials. As you're starting as CEO, now your fancy financial criteria like doing that.

Question: David Koning - Robert W. Baird & Co. - Analyst : Perfect, okay, this is good. So margins for the last five years or so have been pretty flattish between on between wage inflation, right? That create a little bit of a headwind. The original implementation of the First Data process. There were a lot of little headwinds. What do you see the next five years, like are those headwinds behind now and it's just leverage kicking in.

Question: David Koning - Robert W. Baird & Co. - Analyst : Yes, got you. And then maybe finally, just cash flow. Some investors have been, I guess, a little cautious on the stock cash with a couple of things. One, just the core cash flow, about 85% conversion to earnings. But then I think this year is a tax impact because even a little a little less than that, maybe talk through that a little. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:30PM, JKHY.OQ - Jack Henry & Associates Inc at Robert W Baird Global Consumer, Technology & Services Conference

Question: David Koning - Robert W. Baird & Co. - Analyst : Yeah, that's a great, a great review. Thanks so much. And yes, that's all the time we have. Please join me in thanking Jack Henry and Greg.