Jack Henry & Associates Inc at Stephens Investment Conference Transcript

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

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. I'm going to start with some high-level questions, and then we'll dive into the segments and some of the financial stuff. But as we're approaching year-end, could you touch on expectations for IT spend in '25? And if you're seeing any changes or nuances from a demand perspective?

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. And If I'm correct, that 6% to 10% is roughly in line with historical levels. But are you seeing any changes in prioritization of solutions and functions at all?

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. So I know you disclose non-GAAP results that exclude deconversion revenue, but your GAAP results are subject to variability with M&A and consolidation. So with that said, with the change of the administration, I wanted to see if you had any thoughts on M&A and consolidation in the bank market heading into next year?

Question: Charles Nabhan - Stephens Inc. - Analyst : It's a good segue into my next question, which is it's tough to say who's going to acquire who and what's going to happen over the next couple of years. But historically speaking, how has your client base fared under consolidation cycles? And I guess, secondly, you've moved upmarket a little bit within the bank space, and we could get to that a little later. But do you anticipate any changes in how your client base --

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. And as you move upmarket, and I know you're still serving the credit union and smaller bank space, are you seeing anything different from a competitive standpoint, either in the core space or in complementary or payments? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. And as we distance ourselves from zero interest rate, zero interest rates, are you seeing anything different in the private side of the market from a competitive standpoint?

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. All right. So I'm going to dive into the core segment. So been a steady grower for some time. If you could just remind us what the growth -- the normalized growth algorithm is for that business as well as touching on the in-to-out strategy, which is a starting point. I think it's one of the key drivers of that segment.

Question: Charles Nabhan - Stephens Inc. - Analyst : That's great. And you may have answered this question already with your description of the product set and some of the innovations you've had. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference But getting back to the idea of moving upmarket and selling into larger institutions, I wanted to double-click on the specific factors that have enabled you to move upmarket, whether it's something in your go-to-market approach or your product set. But if you could touch on some of the drivers, I think that would be helpful.

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. Okay. One of the questions we got coming out of the quarter, the pace of competitive takeaways was a little below trend. I know weather was a factor. But on a normal year, you'll average 50 to 55 takeaways. Could you talk about what happened during the quarter as well as your expectations for the rest of the year?

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. I want to switch gears to complementary. You had indicated that the normalized revenue growth rate is in the 8% to 9% range, which is obviously accretive to the overall pace. But underneath that all, I wanted to start with Banno. And for anybody that's attended the Investor Day, I personally find that to be one of the more interesting pieces listening to Ben talk about some of the innovation. But I guess just as a starting point, if you could just tell us about Banno, how that came to develop over the years as well as some of the more recent innovations and solutions there.

Question: Charles Nabhan - Stephens Inc. - Analyst : That's great. Could you talk about the opportunity outside of the base?

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. Okay. I want to touch on some of the other solutions within complementary as well. You talk a lot about Financial Crimes Defender. If you could touch on that one quickly, it seems to have gotten pretty good traction in the market. Any other key products for cross-sell you could touch on as well, I think it would be helpful.

Question: Charles Nabhan - Stephens Inc. - Analyst : Like nCino.

Question: Charles Nabhan - Stephens Inc. - Analyst : And this is a cloud-native solution just to be --

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. Okay. So that's a good segue into payments. One of the announcements out of the Investor Day was your partnership withh Moov. Could you maybe touch on that quickly and what that brings to the platform? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. I want to quickly touch on some financial items and open it up to Q&A. One, you touched on the 7% to 8% normalized or long-term growth target, which you've consistently been able to deliver on. But one question I get is, what could take Jack Henry to the next level beyond that 8%? I know you talked about some of the products and some of the innovation you have. But maybe just to put a finer point on some of that discussion, what could take Jack Henry to the next level?

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. I also want to touch on capital allocation and balance sheet. I know free cash flow gets a lot of attention. There's a lot of moving pieces with the deductibility of R&D. If you could just walk us through the expectations for free cash flow and how we should think about that.

Question: Charles Nabhan - Stephens Inc. - Analyst : 174. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. Let's just quickly touch on M&A. Can you just give us a sense for what you're seeing from a valuation standpoint as well as any specific areas that you would look to add inorganically to your product set?

Question: Charles Nabhan - Stephens Inc. - Analyst : Got it. And I know you touched on this quickly. I was going to ask about some of the product rationalization initiatives. But just to be clear, that is an area of priority and focus for the firm as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference

Question: Charles Nabhan - Stephens Inc. - Analyst : Great I'm going to stop there and see if anybody in the audience has any questions. Unidentified Participant Typically, what are the main reasons for competitive takeaways? What are your customers saying why they choose (inaudible)

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. Any other questions? Unidentified Participant (inaudible) that drives internal growth (inaudible) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 21, 2024 / 2:00PM, JKHY.OQ - Jack Henry & Associates Inc at Stephens Investment Conference

Question: Charles Nabhan - Stephens Inc. - Analyst : Great. Any other questions? Well, Greg, I really appreciate you and Vance joining us today and your participation. I want to thank everybody in the audience for listening in and joining us as well. Please feel free to reach out if you have any questions, and thanks again. Have a great day.