Jack Henry & Associates Inc Q4 2025 Earnings Call Transcript

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

Question: Daniel Perlin - RBC Capital Markets Inc - Analyst : I wanted to kind of circle back maybe on the -- I guess, the aggregate demand environment, but coupled with kind of expectations around implementation cycles. So, very clearly, the demand -- you won 51 core, 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?

Question: Daniel Perlin - RBC Capital Markets Inc - Analyst : Got it. Okay. That's great to hear. And then Mimi, this is maybe nuanced a little bit, but like the revenue guidance range is a little bit wider. I think it's 120 basis points relate 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.

Question: Nikolai Cremo - UBS AG - Analyst : First, I just wanted to circle back to the fiscal 2026 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 '25 versus fiscal '24 was a little bit lower, so maybe a little slower to the complementary segment relative to the core segment. Thank you.

Question: Vasundhara Govil - Keefe Bruyette & Woods Inc - Analyst : I guess just the first one, you guys called out short-term revenue headwinds from bank M&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&A continues at an accelerated base, are we potentially looking at multiple years of maybe slightly softer top line growth than the 7% to 8% were used to seeing from you guys?

Question: Vasundhara Govil - Keefe Bruyette & Woods Inc - Analyst : I appreciate all the color and all the detail. That was very, very helpful. I guess just my quick follow-up. One of the other things you guys mentioned in the release is just the lower 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 what kind of change you've seen in the trend line? Any dimensionalization or what the magnitude of that changes and expectations going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2025 / 12:45PM, JKHY.OQ - Q4 2025 Jack Henry & Associates Inc Earnings Call

Question: James Faucette - Morgan Stanley & Co Ltd - Analyst : I wanted to just ask quickly on margin expansion for '26. Can 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, et cetera. But just wondering if you can get a little more detail on kind of what you think the key components are, et cetera.

Question: James Faucette - Morgan Stanley & Co Ltd - Analyst : Great. And then I wanted to just touch quickly on Banno and just dig in a little bit there. Wondering how as 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 core platforms.

Question: David Koning - Robert W. Baird & Co Inc - Analyst : And I guess, first of all, the change in contract with the third-party provider, that $16 million 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, but maybe describe that. And then are we right about $12 million in Q1 and then $16 million headwind starting in Q2?

Question: David Koning - Robert W. Baird & Co Inc - Analyst : Okay. That's great. And then, I guess, secondly, the gain that you're getting during '26, which quarter is that and just so we get the EPS cadence, correct?

Question: Will Nance - Goldman Sachs International - Analyst : I wanted to come back to the free cash flow topic. I mean 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, 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?

Question: Will Nance - Goldman Sachs International - Analyst : 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 sort 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2025 / 12:45PM, JKHY.OQ - Q4 2025 Jack Henry & Associates Inc Earnings Call And I'm just wondering if you could give an update or your kind of latest thinking on any opportunities internally to increase efficiencies any asset sales that you have contemplated or any thoughts on kind of cost savings and margin structure outlook as you're coming off a couple of years on the job.

Question: Ken Suchoski - Autonomous Research - Analyst : Could we revisit the quarterly cadence on non-GAAP revenue growth? And maybe we could touch on the cadence in the back half of fiscal year. Because I think there were some comments that fiscal 1Q would be in that 7% to 7.5% range. I think fiscal Q2, a little softer and then increasing on a reported basis for 3Q and 4Q. So I just wanted to confirm that's on a non-GAAP basis because I think the press release said fiscal 3Q is slightly weaker. So I'm just trying to figure out if that's relative to the full year or fiscal 2Q?

Question: Ken Suchoski - Autonomous Research - Analyst : 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. Could 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2025 / 12:45PM, JKHY.OQ - Q4 2025 Jack Henry & Associates Inc Earnings Call

Question: Dominick Gabriele, CFA - Oppenheimer & Co Inc - Analyst : Compass Point. I really appreciate the question. So I just wanted to go back to the account growth at your partners and you mentioned some neobanks there. Are there any other factors besides just maybe takeaways from what some may say traditional finance companies to neo banks, are there any other dynamics that play into why account growth could be slowing, say, 1% to 2% versus '23?

Question: Dominick Gabriele, CFA - Oppenheimer & Co Inc - Analyst : And certainly not a Jack Henry only issue. -- Sorry, go ahead.

Question: Dominick Gabriele, CFA - Oppenheimer & Co Inc - Analyst : Right. 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 growth over since this quarter was just so good -- on the revenue?