Q4 2024 Jack Henry & Associates Inc Earnings Call

Good morning, and welcome to the Jack Henry fourth quarter 'twenty 'twenty four earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: Good morning and welcome to the Jack Henry Fourth Quarter 2024 Earnings Conference Call.

Good morning and welcome to the Jack Henry Fourth Quarter 2024 Earnings Conference Call.

Operator: Good morning, and welcome to the Jack Henry IV quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signify conference specialist by pressing the star key followed by zero.

All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Raymond James.

Operator: And I think there'll be other opportunities to move from the private cloud to the public cloud over time too. So we can't just focus only on what we'll be moving to the private cloud because at the same time we're winding that down, we'll have opportunities to move customers from the private cloud to the public cloud around the same time frame.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

After today's presentation, there will be an opportunity to ask questions.

Operator: After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

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Operator: To ask a question, you may press star then one on your telephone keypad.

Operator: Please note, this event is being recorded.

Please note this event is being recorded.

Please note this event is being recorded.

Vance Sherard: I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star then two.

Operator: Please go ahead.

Operator: I'm sorry if I cut you off, but my follow-up was around, sort of a follow-up to Kartik's, question around segment outlook.

Vance Sherard: I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations.

I would now like to turn the conference over to Vance short Vice.

Vance Short: Didn't Investor Relations. Please go ahead.

Unknown Executive: Thank you, group.

Vance Short: Thank you Bruce.

Vance Sherard: Please note this event is being recorded.

Vance Sherard: Hey, good morning, guys.

Vance Sherard: If I compare fiscal year 24 results to your normalized guide, it looks like core came in a little ahead, whereas complementary and payments were a little below the normalized guide. I know you had cited some softness in maintenance, which I think flows through core.

Vance Short: Good morning, and thank you for joining us for the Jack Henry fourth quarter, and full year 2024 earnings call.

Please go ahead.

Vance Sherard: Good morning, and thank you for joining us for the Jack Henry IV quarter in full year of 2024 earnings call. Joining me on the call today is president and CEO Greg Adelson and Mimi Carsley, CFO and Treasurer. After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business in the industry.

Vance Sherard: Could we expect more of a normalized annual cadence of revenue growth next year, you know, more with core coming in the 6% to 7% range and payment complementary in the 8% to 9% range?

Speaker Change: Joining me on the call today is president and CEO, Greg Adelson, and Muni heartedly CFO and treasurer.

Speaker Change: After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results.

Speaker Change: Observations related to our business in the industry.

Vance Sherard: Mimi will then provide commentary around the financial results and fiscal 25 guidance included in the press release issued yesterday that is available from the Investor Relations section of the Jack Henry website.

Vance Sherard: Yes, Jack, this is Mimi.

Speaker Change: Mimi will then provide commentary around the financial results and fiscal 'twenty guidance included in the press release issued yesterday is available from the Investor Relations section of the Jack Henry website.

Vance Sherard: We will then open the lines for Q&A. As a reminder, this call includes certain forward-looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends, or results. Like any statement about the future, these are subject to multiple factors that can cause actual results or events to differ materially from those which we anticipate to the multiple risks and uncertainties. The company undertakes no obligation to update or revise these statements.

Speaker Change: We will then open the lines for Q&A.

Vance Sherard: I think our intention for the growth algorithm is to have an indicator, it's not a precision.

Speaker Change: As a reminder, this call includes certain forward looking statements, including remarks or responses to questions concerning future expectations events objectives strategies trends or results.

Speaker Change: Like any statement about the future. These are subject to multiple factors that could cause actual results or events to differ materially from those which we anticipate due to multiple risks and uncertainties.

Speaker Change: The company undertakes no obligation to update or revise these statements for a summary of these risk factors and additional information. Please refer to yesterday's press release and the sections in our 10-K titled risk factors and forward looking statements.

Vance Sherard: For summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10-K entitled risk factors and forward-looking statements.

Vance Sherard: On this call, we will discuss certain non-gap financial measures, including non-gap revenue and non-gap operating income. The reconciliations for non-GAAP financial measures are in yesterday's press release.

On this call, we will discuss certain non-GAAP financial measures, including non-GAAP revenue and non-GAAP operating income the reconciliations for non-GAAP financial measures are in yesterday's press release.

Vance Sherard: I will now turn the call over to Greg. Thank you, Vance.

Vance Sherard: Thank you, Drew.

Vance Sherard: I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations.

Vance Sherard: Greg, I wanted to circle

Vance Sherard: And so I do think, you know, the beauty of it is we have a whole portfolio.

Speaker Change: I will now turn the call over to Greg.

Good morning, and thank you for joining us for the Jack Henry fourth quarter and full year 2024 earnings call.

Vance Sherard: Please go ahead.

Vance Sherard: back to core wins.

Vance Sherard: And so sometimes they counterbalance each other in different ways.

Greg Adelson: Thank you Vince and Hello, everyone. I appreciate all of you joining this morning's call. We're very pleased to report strong sales and financial performance in the fourth quarter and for all of fiscal 2024, I want to especially thank all of our associates for your hard work dedication and unwavering commitment has significantly contributed to it.

Gregory Adelson: Hello, everyone. I appreciate all of you joining this morning's call. We are very pleased to report strong sales and financial performance in the fourth quarter and for all of fiscal 2024. I want to especially thank all of our associates for your hard work, dedication, and unwavering commitment that significantly contributed to these outstanding results.

Vance Sherard: Thank you, Drew.

Vance Sherard: I think you called out 15 or greater than a billion in assets versus five just a year ago.

Vance Sherard: Good morning and thank you for joining us for the Jack Henry Fourth Quarter and full year 2024 earnings call.

Greg Adelson: These outstanding results.

Vance Sherard: Just curious where that stacks up historically.

Vance Sherard: So the great year, this year, core had higher than the growth algorithm, right, that somewhat, compensated for the lower complementary payments.

Gregory Adelson: I will begin with a summary of what I believe are the three main takeaways, and then provide additional detail on all areas of our business. We produce record revenue and operating income for fiscal 24, with 2.2 billion in revenue and 489.4 million in operating income. Our sales team said an all-time record for sales booking for both the fourth quarter and the fiscal year that included 22 competitive core wins of the quarter and 57 for the fiscal year. We signed 15 new core contracts this fiscal year with financial institutions that had over $1 billion in assets compared to only 5 in fiscal 2023.

Vance Sherard: Joining me on the call today is President & CEO Greg Adelson and Mimi Carsley, CFO & Treasurer.

Vance Sherard: You have the question of what happens with the economy and geopolitical and election, and a lot of other issues.

Greg Adelson: I will begin with a summary of what.

Greg Adelson: I believe are the three main takeaways and then provide additional detail on all areas of our business.

After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business and the industry.

Vance Sherard: Has it always kind of been in the low to mid-single digits, and now we had a big step up?

Vance Sherard: So I think in general, we still expect that the growth algorithm holds, but it's illustrative, on like any given year, they could, you know, plus and minus a little bit and jobs at each other.

Mimi will then provide commentary around the financial results and Fiscal 25 guidance included in the press release issued yesterday that is available from the Investor Relations section of the Jack Henry website.

We produced record revenue and operating income for fiscal 'twenty, four with $2 2 billion in revenue and $489 4 million and operating income.

We will then open the lines for Q&A.

Vance Sherard: And then also, you called out that your average client is larger today.

Vance Sherard: Got it.

Greg Adelson: Our sales team set an all time record for sales bookings for both the fourth quarter and the fiscal year that included 22 competitive core wins of the quarter and 57 for the fiscal year.

Vance Sherard: Any context behind that, like it's X percent bigger than it was five years ago or any color to help us contextualize the kind of moving up market?

Vance Sherard: Thank you.

As a reminder, this call includes certain forward-looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends, or results. Like any statement about the future, these are subject to multiple factors that can cause actual results or events to differ materially from those which we anticipate due to multiple risks and uncertainties.

We signed 15, new core contracts this fiscal year with financial institutions that have over $1 billion in assets compared to only five in fiscal 2023.

Vance Sherard: Joining me on the call today is President and CEO Greg Adelson and Mimi Carsley, CFO and Treasurer.

Vance Sherard: Yeah, for sure.

Vance Sherard: You're welcome.

Gregory Adelson: This was a direct result of our technology modernization strategy and execution, one Jack Henry initiative, and several new innovative solutions.

Greg Adelson: This was a direct result of our technology modernization strategy and execution, one Jack Henry initiative, and several new innovative solutions.

Vance Sherard: After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business and the industry.

Vance Sherard: So, I appreciate the question, JD.

Vance Sherard: The next question comes from Dave Koning with Baird.

Gregory Adelson: Now for more detail on each of these takeaways. For the fourth quarter, total revenue increased 5% and increased 6% on a non-GAAP basis. For the fiscal year, total revenue increased 7% on a gap and non-gap basis. Operating income increased 1% for the quarter and increased 5% on a non-GAAP basis. For the fiscal year, operating income increased 2% and increased 10% on a non-GAAP basis. As I mentioned, the fourth quarter was the highest quarter for sales bookings in the history of the company, and we set a new record for sales bookings for the fiscal year. I am very proud of the remarkable year by our sales team.

Greg Adelson: Now for more detail on each of these takeaways.

Vance Sherard: Mimi will then provide commentary around the financial results and Fiscal 25 guidance included in the press release issued yesterday that is available from the Investor Relations section of the Jack Henry website.

Vance Sherard: So, I'll start with the first one.

Vance Sherard: Please go ahead.

The company undertakes no obligation to update or revise these statements.

Vance Sherard: We will then open the lines for Q&A.

Vance Sherard: Yeah.

For the fourth quarter total revenue increased 5% and increased 6% on a non-GAAP basis.

For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10-K entitled Risk Factors and Forward-Looking Statements.

Vance Sherard: As a reminder, this call includes certain forward-looking statements including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends, or results. Like any statement about the future, these are subject to multiple factors that can cause actual results or events to differ materially from those which we anticipate due to multiple risks and uncertainties.

For the fiscal year total revenue increased 7% on a GAAP and non-GAAP basis.

Vance Sherard: The company undertakes no obligation to update or revise these statements.

Vance Sherard: For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10-K entitled Risk Factors and Forward-Looking Statements.

On this call, we will discuss certain non-GAAP financial measures, including non-GAAP revenue and non-GAAP operating income. The reconciliations for non-GAAP financial measures are in yesterday's press release.

Greg Adelson: Operating income increased 1% for the quarter increased 5% on a non-GAAP basis.

Vance Sherard: On this call, we will discuss certain non-GAAP financial measures including non-GAAP revenue and non-GAAP operating income. The reconciliations for non-GAAP financial measures are in yesterday's press release.

Vance Sherard: I will now turn the call over to Greg.

Greg Adelson: For the fiscal year operating income increased 2% and increased 10% on a non-GAAP basis.

Gregory Adelson: I will now turn the call over to Greg.

Gregory Adelson: Thank you, Vance, and hello, everyone.

Gregory Adelson: Hey, thanks, guys.

Greg Adelson: As I mentioned in the fourth quarter was the highest quarter for sales bookings in the history of the company and we set a new record for sales bookings for the fiscal year.

Gregory Adelson: And I guess my question is a little similar just on, you know, what normalized growth, is.

Gregory Adelson: Thank you, Vance.

Gregory Adelson: I appreciate all of you joining this morning's call.

Gregory Adelson: I guess if Q1 is 5.25%, the rest of the year has to average around 8.25% to hit the midpoint, of the range.

Very proud of the remarkable year by our sales team.

Gregory Adelson: The 15 core clients signed with over 1 billion in assets also was a new fiscal year record. Of those clients, 10 are banks and 5 are credit unions. Over the past 4 years, we have continued to see an increase in the average asset size of our core clients. Average assets for our bank clients have increased to 1.35 billion, a 27% increase over the past 4 years. Average assets for our credit union clients have increased to 1.27 billion, a 34% increase over the past 4 years. In addition to the 22 competitive core takeaways in the quarter, we resigned one long-term client with about 6 billion in assets that had provided the termination notice to us a little more than 2 years ago.

Gregory Adelson: We are very pleased to report strong sales and financial performance in the fourth quarter and for all of Fiscal 2024.

Gregory Adelson: So, yeah, 15 is by far a historical number for us.

Gregory Adelson: And I guess that's a little above normal.

Greg Adelson: The 15 core clients signed with over $1 billion in assets also with the new fiscal year record of those clients 10 are banks and five or credit unions.

Gregory Adelson: So, five last year was more on the, average.

Gregory Adelson: And I guess, are any segments, you know, going to outsize kind of accelerate from Q1, or is it really just getting all segments in that 8% range kind of the rest of the year?

Gregory Adelson: So, we would typically be in the four to six ranges, something like that, on an average year.

Gregory Adelson: Yeah, Dave, I would say in general, and we don't, we're not going to get color quarter, by quarter at this point as we live into the year.

Greg Adelson: Over the past four years, we have continued to see an increase in the average asset size of our core clients average assets for our bank clients have increased to 1.35 billion% to 27% increase over the past four years.

Greg Adelson: Average assets for our credit Union clients have increased to 127 billion% to 34% increase over the past four years.

Greg Adelson: In addition to that 'twenty two competitive core takeaways in the quarter. We re signed one long term client with about 6 billion in assets that had provided the termination notice to us a little more than two years ago.

Gregory Adelson: That client never de-converted to the competing core platform. They have now resigned with us for multiple years and multiple new solutions.

Greg Adelson: Never deemed converted to the competing core platform.

Greg Adelson: Now re sign with us for multiple years and multiple new solutions.

Gregory Adelson: While this contract is not in our new core with numbers, it is noteworthy that they decided their best choice was to stay with Jack Henry for multiple more years. For the quarter, we also signed 15 contracts to move existing in-house core clients to our private cloud environment. We finished fiscal 24 with 44 existing clients agreeing to move to our private cloud. We now host 73% of our core clients in our private cloud.

Greg Adelson: This contract is not in our new core <unk> numbers. It is noteworthy that they decided their best choice was to stay with Jack Henry for multiple more years.

Greg Adelson: For the quarter. We also signed 15 contracts to move existing in house core clients to our private cloud environment.

Gregory Adelson: So, 15 is a big step up for us.

Gregory Adelson: And again, I think a lot of it is what I had mentioned earlier on, I believe it was Andrew's question, and was around just kind of what we've been doing on our level of execution and showing the innovation that we have.

Greg Adelson: We finished fiscal 'twenty four with 44 existing clients agreeing to move to our private cloud, we now have 73% of our core clients and our private cloud.

Gregory Adelson: Several of our complimentary and payment solutions also experience extremely high demand, with our digital suite leading the way. For the quarter, we signed 45 new clients to our Banal retail platform as well as 50 new Banal business deals. For the fiscal year, we closed 179 new banal retail contracts and 164 new banal business contracts. Banal continues to experience exceptional growth. We currently have 12.2 million registered banal users as compared to 3.2 million at the same time in 2020. We have 924 banal retail clients, and up, those 147 are live with banal business, and another 81 are in various stages of implementation.

Greg Adelson: Several of our complementary and payment solutions, often experienced extremely high demand with our digital suite, leading the way.

Speaker Change: For the quarter, we signed 45, new clients to our banner retail platform as well as 50, new banjo business deals for the fiscal year, we closed a 179% a ban on our retail contracts and 164, new banner business contracts.

Speaker Change: Vantiv continues to experience exceptional growth.

Speaker Change: We currently have $12 2 million registered banner users as compared to $3 2 million at the same time in 2020.

Speaker Change: We have 924 banner retail clients and of those 147 are live with ban on business and another 81 are in various stages of implementation.

Gregory Adelson: We also continue to see increasing success with our card processing solution, citing 21 new card processing clients this quarter and 56 for the fiscal year. We received 16 new Financial Crimes Defender contracts in Q4 and 52 for the fiscal year. In addition, we signed 53 new contracts for the Financial Crimes Defender Faster Payment Fraud Module for the quarter and 134 for the fiscal year. This real-time solution is designed to help mitigate fraud in Zell, FedNow, and real-time payment transactions. As of June 30th, we have 52 Financial Crimes installations completed and another 115 in various stages of implementation.

Speaker Change: We also continue to see increasing success with our card processing solution, signing 21, new card processing clients this quarter and 56 for the fiscal year.

Speaker Change: We received 16, new financial crimes defender contracts in Q4, and 52 for the fiscal year.

Speaker Change: In addition, we signed 53, new contracts with a financial crimes defender faster payment fraud module for the quarter and 134 for the fiscal year. This real time solution is designed to help mitigate fraud in zelle, but now and real time payment transactions.

Speaker Change: As of June 30, we had 52 financial crime installations completed and another 115 in various stages of implementation.

Gregory Adelson: We also have 22 faster payment modules installed and 154 and various stages of implementation.

Speaker Change: We also have 22 faster payment modules installed in 154 in various stages of implementation.

Gregory Adelson: I am asked regularly why I believe we continue to see significantly more new competitive core wins than are competition. Why I believe there are many reasons I've tried to boil down to three primary things. First are associates. We have a happy and engaged workforce, and we believe that leads to having a do-whatever-it-takes attitude with our clients. Our associate engagement scores are well above the industry benchmark and be consistently when best workplace awards each year. We are pleased to recently receive recognition in three national publications. US News & World Report's best companies to work for, Time Magazine's best midsize companies, and Newsweek's greatest workplace.

Speaker Change: I am asked regularly why I believe we continue to see significantly more new competitive core wins that our competition.

Gregory Adelson: I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space. So, I think that has helped us a lot.

Gregory Adelson: We think that we want to call out something, a trend we're seeing will certainly be transparent, on that.

Speaker Change: I believe there are many reasons I've tried to boil down to three primary things.

Gregory Adelson: I agree with your math that we expect it to sequentially grow throughout the year, with, the second half being stronger than the first half.

Speaker Change: First our associates, we have a happy and engaged workforce and we believe that leads to having a do whatever it takes attitude with our clients. Our associate engagement scores are well above the industry benchmark and we consistently win best workplace awards each year.

Gregory Adelson: So I think Q1 is more pronounced, that's why we gave the color with more specificity.

Speaker Change: We are pleased to recently receive recognition in three national publications U S News and World Report's best companies to work for time magazine's best mid sized companies and Newsweek's greatest workplace.

Gregory Adelson: Second are service quality, which is a direct result of our engaged and dedicated associates. We have long been known for providing exceptional customer service, and this year was no exception. In fiscal year 2024, our client satisfaction score when rating the engagement with a client service represented average 4.74 per month on a five-point scale. On that scale, a meets expectation is 3.0 and extremely satisfied is 5.0. You have to have a lot of fives to average a 4.74.

Speaker Change: Second our service quality, which is a direct result of our engaged and dedicated associates.

Speaker Change: We have long been known for providing exceptional customer service and this year was no exception.

Good morning and welcome to the Jack Henry IV Quarter 2024 earnings conference call.

Operator: Good morning and welcome to the Jack Henry IV Quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Gregory Adelson: But I would say Q2 overall is going to be a higher growth than Q1.

Speaker Change: Fiscal year 2020 for our client satisfaction score when raising the engagement with our client service represented representative averaged $4 74 per month on a five point scale.

Speaker Change: All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Gregory Adelson: And I think that is pretty fair to say across the board, across all of the segments.

Speaker Change: On that scale meets expectation is 3.0 and extremely satisfied is 5.0, you have to have a lot of fives to average of $4 74.

Gregory Adelson: Yeah.

Speaker Change: After today's presentation, there will be an opportunity to ask questions.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Speaker Change: To ask a question, you may press star then one on your telephone keypad.

Gregory Adelson: Okay.

Speaker Change: To withdraw your question, please press star then two.

Gregory Adelson: The third theme is technology innovation. We continue to invest in technology to help our clients remain vibrant financial institutions in the markets they serve. We are executing our technology modernization strategy while bringing new leading edge solutions to the market before our competition.

Speaker Change: The third theme is technology innovation, we continue to invest in technology to help our clients remained vibrant financial institutions in the markets. They serve.

Gregory Adelson: Thank you.

Speaker Change: Please note this event is being recorded.

Operator: Please note this event is being recorded.

Gregory Adelson: And maybe one, just I guess one follow-up question, net interest income, if we look, at the interest income, less interest expense was a positive $5 million or so in the quarter. It was better than it's been in a while.

Speaker Change: I would now like to turn the conference over to Vance Sherard, vice president, investor relations.

Vance Sherard: I would now like to turn the conference over to Vance Sherard, vice president, investor relations. Please go ahead. Thank you, group.

Gregory Adelson: But you have a net debt position.

Gregory Adelson: So I'm wondering how you get a pretty sizable net interest income, you know, when you have, a debt position and if that's sustainable.

Speaker Change: We are executing our technology modernization strategy, while bringing new leading edge solutions to the market before our competition.

Speaker Change: Please go ahead.

Vance Sherard: Good morning and thank you for joining us for the Jack Henry IV Quarter in full year of 2024 earnings call. Joining me on the call today is president and CEO Greg Adelson and Mimi Carsley, CFO and Treasurer. After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business in the industry. Mimi will then provide commentary around the financial results and fiscal 25 guidance included in the press release issue yesterday that is available from the investor relations section of the Jack Henry website.

Gregory Adelson: A couple of final items. We are looking forward to our annual client conference, Jack Henry Connect, in October. This is a great opportunity every year for us to meet with prospects, clients, and partners. Last year, 17 of our new core wins were with prospects who attended the conference.

Speaker Change: A couple of final items, we're looking forward to our annual client conference Jack Henry connect in October. This is a great opportunity every year for us to meet with prospects clients and partners.

Speaker Change: Thank you, group.

Speaker Change: Good morning and thank you for joining us for the Jack Henry IV Quarter in full year of 2024 earnings call.

Speaker Change: Last year 17 of our new core wins or with prospects who attended the conference.

Gregory Adelson: As I reflect back on fiscal 2024, I want to again thank Dave Foss for his outstanding leadership as CEO for the past eight years. I am honored and humbled to take over as CEO and excited to log with our entire leadership team about the opportunities ahead. We are executing on our strategy, and our associate engagement and client satisfaction scores are consistently strong. Technology spending by financial institutions remains robust, and there's clear demand for our differentiated and innovative technology, as validated by our strong quarter and fiscal year. We are very well positioned for future success.

As I reflect back on fiscal 2024, I want to again, thank Dave Foss for his outstanding leadership as CEO for the past eight years.

Gregory Adelson: I want to especially thank all of our associates for your hard work, dedication, and unwavering commitment that significantly contributed to these outstanding results.

Gregory Adelson: To your second question, yeah, I think I had referenced over four years, I can't tell you over five, but over four, we had grown our banking assets by 27 percent and our credit union assets by 34 percent. And those were over the last four years.

Gregory Adelson: Good question, Dave.

Gregory Adelson: I will begin with a summary of what I believe are the three main takeaways and then provide additional detail on all areas of our business.

Gregory Adelson: So, that is an aggregation of a few things.

Gregory Adelson: So how we get that interest income and the impact it has on net interest, as you did call out, we do have the debt.

I am honored and humbled to take over as CEO and excited along with our entire leadership team about the opportunities ahead.

Gregory Adelson: One, the continued growth of our customers and what we've been able to do to help them grow, deposit growth, obviously some things, you know, may have been helped through PPP at the time, but the reality is their assets continue to grow.

Gregory Adelson: We've been paying it down pretty significantly this year, and we expect that to continue for 25.

Vance Sherard: We will then open the lines for Q and A. As a reminder, this call includes certain forward looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results. Like any statement about the future, these are subject to multiple factors that can cause actual results or events to differ materially from those which we anticipate to the multiple risk and uncertainties. The company undertakes no obligation to update or revise these statements.

Speaker Change: We are executing on our strategy and our associate engagement and client satisfaction scores are consistently strong.

Gregory Adelson: Some of the products that we provide, you know, Bano and products like that definitely have a really big impact on deposit growth.

Gregory Adelson: And then, of course, some of it is the wins that we've had as well.

Speaker Change: Technology spending by financial institution remains robust and there is clear demand for our differentiated and innovative technology as validated by our strong quarter and fiscal year.

Gregory Adelson: We produced record revenue and operating income for Fiscal 2024 with $2.2 billion in revenue and $489.4 million in operating income. Our sales team set an all-time record for sales booking for both the fourth quarter and the fiscal year that included 22 competitive core wins in the quarter and 57 for the fiscal year.

Gregory Adelson: Okay, that's super helpful.

Gregory Adelson: We signed 15 new core contracts this fiscal year with financial institutions that have over $1 billion in assets compared to only 5 in Fiscal 2023.

Gregory Adelson: This was a direct result of our technology modernization strategy and execution, one, Jack Henry initiative, and several new innovative solutions. Now for more detail on each of these takeaways.

Speaker Change: We are very well positioned for future success.

Gregory Adelson: I look forward to seeing and speaking with many of you on our Investor Day in Dallas on September 5th. We have an exciting agenda that will have several of our new business leaders available for a meet and greet as well.

Speaker Change: I look forward to seeing and speaking with many of you at our Investor day in Dallas on September 5th we have an exciting agenda and we will have several of our new business leaders available for a meet and greet as well.

Vance Sherard: For summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10K entitled risk factors and forward looking statements. On this call, we will discuss certain non-gap financial measures, including non-gap revenue and non-gap operating income. The reconciliations for non-gap financial measures are in yesterday's press release.

Mimi Carsley: With that, I will turn it over to Mimi for more specifics on our financials.

Gregory Adelson: But we do have, we administer cash settlement balances, and as part of that administrative services, we get some of the revenue from those cash settlement accounts. Through negotiations we've had with partners and the like, we've been able to increase the yield in those accounts. Now, that does have some correlation to interest rate environments, depending on what the Fed does in 25.

With that I will turn it over to <unk> for more specifics on our financials.

Gregory Adelson: For the fourth quarter, total revenue increased 5% and increased 6% on a non-GAAP basis.

Gregory Adelson: And Mimi, I want to drill in on free cash flow a little bit.

Gregory Adelson: But overall, I would say that it's sustainable. It is subject to some interest rate sensitivity, but it is sustainable.

Mimi Carsley: Thank you, Greg. Good morning, everyone. Our continued focus on serving our community and regional financial institution clients and delivering shareholder values led to another quarter of solid revenue and earnings growth. I will start with the details, driving our fourth quarter and total year results, then conclude with the fiscal 25 guidance. 34 Gap revenue increased 5% and non-GAAP revenue increased 6%. Continuation of the consistently solid performance. Full year growth was 7% on both a gap and non-gap basis. Fourth quarter deconversion revenue of approximately 7 million, which we pre-release, was down approximately 8 million for reflecting minimal financial institution consolidation of our clients.

<unk>: Thank you, Greg and good morning, everyone.

And hello, everyone.

Speaker Change: Our continued focus on serving our community and regional financial institution clients and delivering shareholder value led to another quarter of solid revenue and earnings.

Speaker Change: I will start with the details driving our fourth quarter and full year results then can clear the fiscal 'twenty guide.

I appreciate all of you joining this morning's call.

Gregory Adelson: For the fiscal year, total revenue increased 7% on a GAAP and non-GAAP basis.

Gregory Adelson: Obviously, much better in the fourth quarter, I think, at least we expected, and for the full year relative to your initial outlook.

Gregory Adelson: Gotcha.

Vance Sherard: I will now turn the call over to Greg. Thank you, Vance.

Gregory Adelson: Operating income increased 1% for the quarter and increased 5% on a non-GAAP basis. For the fiscal year, operating income increased 2% and increased 10% on a non-GAAP basis. As I mentioned, the fourth quarter was the highest quarter for sales bookings in the, history of the company, and we set a new record for sales bookings for the fiscal year.

Speaker Change: Joining me on the call today is president and CEO Greg Adelson and Mimi Carsley, CFO and Treasurer.

Greg Adelson: Hello, everyone. I appreciate all of you joining this morning's call. We are very pleased to report strong sales and financial performance in the fourth quarter and for all of fiscal 2024. I want to especially thank all of our associates for your hard work, dedication and unwavering commitment that significantly contributed to these outstanding results. I will begin with a summary of what I believe are the three main takeaways and then provide additional detail on all areas of our business.

Gregory Adelson: I am very proud of the remarkable year by our sales team. The 15 core clients signed with over $1 billion in assets also was a new fiscal year record. Of those clients, 10 are banks and 5 are credit unions. Over the past four years, we have continued to see an increase in the average asset size, of our core clients. Average assets for our bank clients have increased to $1.35 billion, a 27% increase over the, past four years. Average assets for our credit union clients have increased to $1.27 billion, a 34% increase, over the past four years.

Greg Adelson: After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business in the industry.

Speaker Change: Q4, GAAP revenue increased 5% and non-GAAP revenue increased 6%.

Mimi Carsley: Mimi will then provide commentary around the financial results and fiscal 25 guidance included in the press release issue yesterday that is available from the investor relations section of the Jack Henry website.

We're very pleased to report strong sales and financial performance in the fourth quarter, and for all of fiscal 2024.

Speaker Change: Anyways, you know they consistently solid performance.

I want to especially thank all of our associates for your hard work, dedication, and unwavering commitment that significantly contributed to these outstanding results.

Speaker Change: Well, you're right it was 7% and that's a GAAP and non-GAAP basis.

Speaker Change: Fourth quarter, Deconversion revenue, approximately $7 million, which we pre released.

Speaker Change: We will then open the lines for Q and A.

Speaker Change: Down approximately $8 million, reflecting minimal financial institution consolidation of our clients.

Speaker Change: As a reminder, this call includes certain forward looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results. Like any statement about the future, these are subject to multiple factors that can cause actual results or events to differ materially from those which we anticipate to the multiple risk and uncertainties.

Greg Adelson: We produce record revenue and operating income for fiscal 24 with 2.2 billion in revenue and 489.4 million in operating income. Our sales team set an all-time record for sales bookings for both the fourth quarter and the fiscal year that included 22 competitive core wins of the quarter and 57 for the fiscal year. We signed 15 new core contracts this fiscal year with financial institutions that have over $1 billion in assets compared to only five in fiscal 2023.

Mimi Carsley: Full year deconversion revenue was 17 million, 15 million less than the prior year, and was consistent with diet.

Speaker Change: Well, you're deconversion revenue 17 million 18 million less than the prior year with consistent with guidance.

Speaker Change: The company undertakes no obligation to update or revise these statements.

Mimi Carsley: Now it's both more closely at the details. YACS services and support revenue increased 2% while non-GAAP increased 4%. For the year, the increase was a healthy 5% for gas and 6% on a non-GAAP basis. Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenue, partly offset by decreases in deconversion implementation and maintenance being revenue. We continue to experience impressive growth in our private and public cloud operands, which increased 11% in the quarter, 10% for the year. It's reoccurring revenue contributor is 31% of our total revenue, and it's long been a key double digit growth engine.

I will begin with a summary of what I believe are the three main takeaways and then provide additional detail on all areas of our business.

Gregory Adelson: In addition to the 22 competitive core takeaways in the quarter, we re-signed one long-term, client with about $6 billion in assets that had provided the termination notice to us a little more than two years ago. That client never deconverted to the competing core platform. They have now re-signed with us for multiple years and multiple new solutions.

Gregory Adelson: But if I adjust out the $29 million of overpayment in 23 that I guess you got back in 24, I still get free cash flow conversion, around 80%.

Gregory Adelson: Thanks, guys.

Speaker Change: Now, let's look more closely at the detail yeah.

Gregory Adelson: While this contract is not in our new core win numbers, it is noteworthy that they decided, their best choice was to stay with Jack Henry for multiple more years.

Gregory Adelson: So, maybe just help me kind of walk from the 80 to the call it mid point of 70 that you're talking about for we're expecting in fiscal 25.

We produce record revenue and operating income for Fiscal 24 with $2.2 billion in revenue and $489.4 million in operating income. Our sales team set an all-time record for sales bookings for both the fourth quarter and the fiscal year that included 22 competitive core wins in the quarter and 57 for the fiscal year.

Gregory Adelson: Happy to.

Speaker Change: <unk> services and support revenue increased 2%, while non-GAAP increased 4% for.

We signed 15 new core contracts this fiscal year with financial institutions that have over $1 billion in assets, compared to only 5 in fiscal 2023. This was a direct result of our technology modernization strategy and execution, one Jack Henry initiative, and several new innovative solutions. Now for more detail on each of these takeaways.

Gregory Adelson: Thank you.

Speaker Change: For the year, the increase was a healthy 5% yeah.

Speaker Change: For summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10K entitled risk factors and forward looking statements.

Speaker Change: 6% on a non-GAAP basis.

Gregory Adelson: The next question comes from James Faucette with Morgan Stanley.

Speaker Change: Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue.

Gregory Adelson: Please go ahead.

Greg Adelson: This was a direct result of our technology modernization strategy and execution, one Jack Henry initiative and several new innovative solutions. Now for more detail on each of these takeaways. For the fourth quarter total revenue increased 5% and increased 6% on a non-gap basis. For the fiscal year total revenue increased 7% on a gap and non-gap basis. Operating income increased 1% for the quarter and increased 5% on a non-gap basis. For the fiscal year operating income increased 2% and increased 10% on a non-gap basis.

Speaker Change: Hosting revenue, partly offset by decreases in the emerging implementation and maintenance fee revenue.

Gregory Adelson: Hey, good morning.

Speaker Change: We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter, 10% for the year.

Gregory Adelson: For the quarter, we also signed 15 contracts to move existing in-house core clients to, our private cloud environment. We finished fiscal 24 with 44 existing clients agreeing to move to our private cloud. We now host 73% of our core clients in our private cloud.

Gregory Adelson: Thanks for the time this morning.

Speaker Change: On this call, we will discuss certain non-gap financial measures, including non-gap revenue and non-gap operating income. The reconciliations for non-gap financial measures are in yesterday's press release.

Gregory Adelson: I wanted to just ask a quick follow-up question on a couple of points.

Speaker Change: I will now turn the call over to Greg.

Speaker Change: It's reoccurring revenue contributor at 31% of our total revenue and it has long been a key double digit growth engine.

Gregory Adelson: First, on your customers and their priorities, given where we are in the deposit cycle and the prospect of a return to loan growth next year with lower interest rates, et cetera, how have you seen, if at all, your customers change prioritization in terms of where they're looking to invest between deposit attraction and retention tools versus lending?

Gregory Adelson: Have you seen any change in your customers' focus and priorities right now?

Speaker Change: Thank you, Vance.

Mimi Carsley: It came to processing revenue, which is 42% of total revenue and another key component of our long-term growth model. We've done robust performance with 9% growth on both the GAAP and non-GAAP basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue.

Speaker Change: Do you think the processing revenue, which is 42% of total revenue and another key component of our long term growth model.

Gregory Adelson: Several of our complimentary and payment solutions also experienced extremely high demand with, our digital suite leading the way.

Gregory Adelson: Yeah, that's a great question, James.

Greg Adelson: Hello, everyone.

Gregory Adelson: For the quarter, we signed 45 new clients to our Bano retail platform, as well as 50, new Bano business deals.

Gregory Adelson: I have a couple of different reference points for you, too.

Gregory Adelson: For the fiscal year, we closed 179 new Bano retail contracts and 164 new Bano business, contracts. Bano continues to experience exceptional growth.

Gregory Adelson: I know North Coast Research did their own survey, and then, of course, we do our annual benchmark survey that we have. Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one. The one thing that I will reference from our benchmark survey is this, which is that in 2023, growing deposits was 43 percent.

For the fourth quarter, total revenue increased 5% and increased 6% on a non-gap basis.

Gregory Adelson: We currently have 12.2 million registered Bano users as compared to 3.2 million at the, same time in 2020.

Gregory Adelson: It's still number one, but 43 percent of the CEOs named that as their number one.

Speaker Change: He's got a robust performance with 9% Brett and doesn't yeah.

Greg Adelson: I appreciate all of you joining this morning's call.

Greg Adelson: As I mentioned the fourth quarter was the highest quarter for sales bookings in the history of the company and we set a new record for sales bookings for the fiscal year. I am very proud of the remarkable year by our sales team. The 15 core client with over 1 billion in assets also was a new fiscal year record of those clients 10 or banks in five or credit unions. Over the past four years we have continued to see an increase in the average asset size of our core clients.

Gregory Adelson: This year, it was 54 percent, so significant growth in both of those numbers, but again, same as a priority.

Speaker Change: GAAP basis for the quarter and for the year.

Gregory Adelson: We have 924 Bano retail clients, and of those, 147 are live with Bano business, and another, 81 are in various stages of implementation.

Gregory Adelson: The other two, just since you asked, have really kind of stayed fairly consistent, which is improvement operational efficiency and growing loans, but both of those have gone up slightly from 2023 to 2024, but again, those are typically the top three.

Consistent with recent results.

Gregory Adelson: We also continue to see increasing success with our card processing solution, signing, 21 new card processing clients this quarter and 56 for the fiscal year.

Gregory Adelson: You can throw a fraud as a really close number four for priorities.

Greg Adelson: We are very pleased to report strong sales and financial performance in the fourth quarter and for all of fiscal 2024.

Speaker Change: Nearly drivers included increased card J, Jill and payment processing revenue.

Greg Adelson: I want to especially thank all of our associates for your hard work, dedication and unwavering commitment that significantly contributed to these outstanding results.

Gregory Adelson: We received 16 new Financial Crimes Defender contracts in Q4 and 52 for the fiscal year. In addition, we signed 53 new contracts for the Financial Crimes Defender Faster Payment, Fraud Module for the quarter and 134 for the fiscal year. This real-time solution is designed to help mitigate fraud in Zelle, FedNow, and real-time, payment transactions.

Gregory Adelson: Great, appreciate that.

Mimi Carsley: Completing commentary on revenue, I would highlight the total recurring revenue exceeded 91%.

Completing commentary on revenue I wouldn't highlight the total recurring revenue exceeded 91%.

Gregory Adelson: As of June 30th, we have 52 financial crime installations completed and another 115 in, various stages of implementation.

Gregory Adelson: Yeah, happy to J.D.

Gregory Adelson: Greg, I wanted to follow up on a comment you made in terms of implementation cues and wondering how those are trending broadly.

Gregory Adelson: We also have 22 faster payment modules installed and 154 in various stages of implementation.

Gregory Adelson: Rick Cashel is one of my favorite topics, so let me give you a little, bit more of the waft color there because I think there's two major components.

Greg Adelson: Average assets for our bank clients have increased to 1.35 billion, a 27% increase over the past four years. Average assets for our credit union clients have increased to 1.27 billion, a 34% increase over the past four years. In addition to the 22 competitive core takeaways in the quarter, we resigned one long term client with about 6 billion in assets that had provided the termination notice to us a little more than two years ago.

Mimi Carsley: Next, moving to expenses. Beginning with the cost of revenue, which increased 6% on both the GAAP and non-GAAP basis for the quarter and 7% for gas versus 6% for non-GAAP of growth as clear. Drivers to the quarter included a higher direct cost, higher personnel cost, and increased internal licenses and fees. Next, R&D expense increased 4% on both the gap and non-gap basis for the quarter. The quarterly increase is primarily due to increase consulting and other professional services, net capitalization, and a higher cloud consumption cost net capitalization. So the year R&D expense increased 4% on gapfaces and 3% for non-gap.

For the fiscal year, total revenue increased 7% on a gap and non-gap basis. Operating income increased 1% for the quarter and increased 5% on a non-gap basis. For the fiscal year, operating income increased 2% and increased 10% on a non-gap basis.

Speaker Change: Next moving to expenses.

Gregory Adelson: I am asked regularly why I believe we continue to see significantly more new competitive, core wins than our competition. While I believe there are many reasons, I have tried to boil it down to three primary, themes.

Gregory Adelson: If you take the 88% that we just released for the full year versus the prior year of 55, there's two components that overstated the FY24 conversion. One is, as we just talked about, that $29 billion of essentially an overpayment in FY23 taxes.

Gregory Adelson: How are you thinking about the puts and takes between the margin expansion you're delivering right now versus potential for additional resource allocation to speed up those implementations broadly?

As I mentioned, the fourth quarter was the highest quarter for sales bookings in the history of the company, and we set a new record for sales bookings for the fiscal year. I'm very proud of the remarkable year by our sales. The 15 core clients signed with over $1 billion in assets also is a new fiscal year record. Of those clients, 10 are banks and 5 are credit unions.

Speaker Change: Beginning with the cost of revenue, which increased 6% and GAAP and non-GAAP basis for the quarter.

Over the past four years, we have continued to see an increase in the average asset size of our core clients. Average assets for our bank clients have increased to $1.35 billion, a 27% increase over the past four years. Average assets for our credit union clients have increased to $1.27 billion, a 34% increase over the past four years.

Gregory Adelson: First, our associates.

Gregory Adelson: No, that's a great question, one that we address on a regular basis with our team.

Gregory Adelson: We have a happy and engaged workforce and we believe that leads to having a do-whatever-it-takes, attitude with our clients. Our associate engagement scores are well above the industry benchmark and we consistently, win Best Workplace Awards each year.

Gregory Adelson: We work through that on a regular basis, so there's a lot of short business cases that we do, but the reality is if we can implement the revenue faster, we absolutely find ways to do that.

Gregory Adelson: We are pleased to recently receive recognition in three national publications, U.S. News, and World Report's Best Companies to Work For, Time Magazine's Best Midsize Companies, and Newsweek's Greatest Workplace.

Gregory Adelson: Second, our service quality, which is a direct result of our engaged and dedicated associates.

Speaker Change: <unk> seven per cent for GAAP versus 6% for non-GAAP.

Speaker Change: It's clear.

In addition to the 22 competitive core takeaways in the quarter, we re-signed one long-term client with about $6 billion in assets that had provided the termination notice to us a little more than two years ago. That client never deconverted to the competing core platform. They've now re-signed with us for multiple years and multiple new solutions.

Speaker Change: Drivers for the quarter included a higher direct cost higher personnel cost and increased internal licenses.

While this contract is not in our new core win numbers, it is noteworthy that they decided their best choice was to stay with Jack Henry for multiple more years.

For the quarter, we also signed 15 contracts to move existing in-house core clients to our private cloud environment. We finished Fiscal 24 with 44 existing clients agreeing to move to our private cloud. We now host 73% of our core clients in our private cloud.

Several of our complimentary and payment solutions also experience extremely high demand with our digital suite leading the way.

Next R&D expense increased 4% on both a GAAP and non-GAAP basis for the quarter.

Speaker Change: The increase was primarily due to increased consulting and other professional services net of cannibalization.

Greg Adelson: That client never de-converted to the competing core platform. They've now resigned with us for multiple years and multiple new solutions. While this contract is not in our new core with numbers, it is noteworthy that they decided their best choice was to stay with Jack Henry for multiple more years. For the quarter, we also signed 15 contracts to move existing in-house core clients to our private cloud environment. We finished fiscal 24 with 44 existing clients agreeing to move to our private cloud.

Speaker Change: Higher cloud consumption.

Net of capitalization.

Speaker Change: For the year R&D expense increased 4% on GAAP basis, and 3% for non-GAAP.

Mimi Carsley: Ending with SGNA expense for the quarter on a GAAP basis, it increased 6% and 13% on a non-GAAP basis. The quarter's gap increase was due to higher personnel costs and increased professional services. The non-gap quarterly increase was impacted by the one-time expense from the right office capital specialized software development related to internal software tools. The doubt that one-time expense, the quarter increase, would have been 8%; full year SGNA expense increased 18% on a GAAP basis and 10% non-GAAP. The primary gap impacts were the 16 million in one-time costs related to the voluntary, early departures and a program.

Speaker Change: Anything with SG&A expense for the quarter on a GAAP basis increased 6% and 13% on a non-GAAP basis.

Speaker Change: Quarter that increase was due to higher personnel cost and increased professional sorry.

Speaker Change: non-GAAP quarterly increase was impacted by the one time expense from the write off of capitalized software development related to internal software tool.

Greg Adelson: We now host 73% of our core clients in our private cloud. Several of our complimentary and payment solutions also experience extremely high demand with our digital suite leading the way. For the quarter, we signed 45 new clients to our banal retail platform as well as 50 new banal business deals. For the fiscal year, we closed 179 new banal retail contracts and 164 new banal business contracts. Banal continues to experience exceptional growth.

Speaker Change: Without this one time expense a quarter increase would have been eight first act.

Speaker Change: Full year SG&A expense increased 18% on a GAAP basis, and 10% non-GAAP and.

Speaker Change: The primary GAAP impact of $16 million in one time costs related to the voluntary early departure incentive program Egypt.

Mimi Carsley: Be good. At a prior period, $5 million gain on average, the non-GAAP increase is driven primarily by a higher personnel cost. We remain focused on generating compounding margin expansion. While the quarter results deliver 22 points decreased and non-GAAP margin is 22%, full year margin expansion was 60 basis points on a non-GAAP margin of 23%. Non-GAAP margin benefits from the focused process improvement and discipline management of our workforce. These strong quarterly results produced a fully-deleted gap earnings per share of $1.38, up to 3%. This cost 24 fully-deleted ETFs was $5.23 of 4%. Beating a 37% headwind from previously mentioned VDIP, gain on average exposure prior year and lower G conversion rate.

Speaker Change: Prior period 5 million dollar gain on asset sale.

Speaker Change: The non-GAAP increase is driven primarily by higher personnel costs.

Greg Adelson: We currently have 12.2 million registered banal users as compared to 3.2 million at the same time in 2020. We have 924 banal retail clients and up those 147 are live with banal business and another 81 are in various stages of implementation. We also continue to see increasing success with our card processing solution, citing 21 new card processing clients this quarter and 56 for the fiscal year. We received 16 new Financial Crimes Defender Contracts in Q4 and 52 for the fiscal year.

Gregory Adelson: We have long been known for providing exceptional customer service and this year was no exception. In fiscal year 2024, our client satisfaction score when rating the engagement with a client, service representative averaged 4.74 per month on a five-point scale. On that scale, a meet expectation is 3.0 and extremely satisfied is 5.0. You have to have a lot of fives to average a 4.74.

Speaker Change: We remain focused on generating compounding margin expansion.

Gregory Adelson: The third theme is technology innovation. We continue to invest in technology to help our clients remain vibrant financial institutions, in the markets they serve. We are executing our technology modernization strategy while bringing new leading-edge solutions, to the market before our competition.

Gregory Adelson: A couple of final items.

Speaker Change: The quarter results delivered 22 basis points decrease in non-GAAP margins, 22%.

Gregory Adelson: We are looking forward to our annual client conference, Jack Henry Connect, in October. This is a great opportunity every year for us to meet with prospects, clients, and partners. Last year, 17 of our new core wins were with prospects who attended the conference.

Gregory Adelson: As I reflect back on fiscal 2024, I want to again thank Dave Voss for his outstanding, leadership as CEO for the past eight years.

Gregory Adelson: I am honored and humbled to take over as CEO and excited along with our entire leadership, team about the opportunities ahead.

Speaker Change: Full year margin expansion of 60 basis points on a non-GAAP margin 23%.

Gregory Adelson: We are executing on our strategy and our associated engagement and client satisfaction scores, are consistently strong.

Speaker Change: non-GAAP margin benefiting from the focused process improvement and disciplined management of our workforce.

Gregory Adelson: Technology spending by financial institution remains robust and there is clear demand for, our differentiated and innovative technology as validated by our strong quarter and fiscal year.

Speaker Change: These strong quarterly results produced fully diluted GAAP earnings per share of $1 38 up three.

Speaker Change: 3%.

Greg Adelson: In addition, we signed 53 new contracts for the Financial Crimes Defender Faster Payment Fraud Module for the quarter and 134 for the fiscal year. This real-time solution is designed to help mitigate fraud in Zell, FedNow and real-time payment transactions. As of June 30th, we have 52 Financial Crimes installations completed and another 115 and various stages of implementation. We also have 22 faster payment modules installed and 154 in various stages of implementation.

Speaker Change: Fiscal 'twenty four fully diluted EPS was $5 23, that's up 4%.

Speaker Change: Anything that's 30 Athens that headwind from previously mentioned beat it and gain on asset disposal prior year and lower conversion rate.

Mimi Carsley: Breaking down the results into three operating segments, we are pleased to see positive performance across the board. A course segment revenue increased 4% to a quarter on a non-GAAP basis against a tough cost. Non-GAAP operating margin increased 171 basis points. Core continues to benefit from private cloud trends and strong cost growth. Full year non-GAAP revenue was 7% and associated margin increased 135 basis points. Payment segment quarterly revenue increased 8% on a non-GAAP basis. The segment had impressive non-GAAP operating margin growth of 183 basis points. Revenue growth was due to continuing growth in our EPS business and strong card growth from fraud and card-related services, with lower growth consistent with US consumer spending trend.

Speaker Change: Breaking down the results into three operating segments. We are pleased to see positive performance across the board.

For the quarter, we signed 45 new clients to our Bano retail platform, as well as 50 new Bano business deals.

For the fiscal year, we closed 179 new Bano retail contracts and 164 new Bano business contracts.

Banner continues to experience exceptional growth. We currently have 12.2 million registered Bano users as compared to 3.2 million at the same time in 2020.

Speaker Change: Our core segment revenue increased 4% for the quarter on a non-GAAP basis against a tough comp.

Speaker Change: non-GAAP operating margin increased 171 basis points.

Speaker Change: Core continues to benefit from private cloud trends and strong Pos.

Greg Adelson: I am asked regularly why I believe we continue to see significantly more new competitive core wins that are competition. Why I believe there are many reasons I've tried to boil down to three primary things. First are associates. We have a happy and engaged workforce and we believe that leads to having a do-whatever it takes attitude with our clients. Our associate engagement scores are well above the industry benchmark and be consistently when best workplace awards each year.

Speaker Change: Well.

Speaker Change: Full year non-GAAP revenue was 7% and associated margin increased 135 basis points.

Greg Adelson: I will begin with a summary of what I believe are the three main takeaways and then provide additional detail on all areas of our business.

Speaker Change: In that segment quarterly revenue increased 8% on a non-GAAP basis.

Speaker Change: The segment had impressive non-GAAP operating margin growth of 183 basis points.

Speaker Change: Revenue graduate due to continuing growth in your EPS business and strong card growth from fraud and card related services with Larry Brekke, consistent U S consumer spending trend.

Greg Adelson: We are pleased to recently receive recognition in three national publications. US News & Worlds reports best companies to work for, tied magazines best midsize companies and Newsweek's greatest workplace. Second are service quality which is a direct result of our engaged and dedicated associates. We have a long been known for providing exceptional customer service and this year was no exception. In fiscal year 2024, our client satisfaction score when rating the engagement with a client service represented average 4.74 per month on a five-point scale.

Speaker Change: Yeah.

Mimi Carsley: Margin benefited from focus cost management, and for the full year, non-GAAP revenue growth was 7% with 124 basis points of margin expansion. Finally, complimentary segment quarterly non-GAAP revenue increased 6% with 75 basis points of margin contraction. Margin contraction was due to direct support growth, ammonization, and licenses and fees. Disco year, non-gap revenue increased, 8% with two basis points of margin expansion. Will Year's Road continue to reflect digital solution demands and beneficial overall projects?

Margin benefited from focused cost management.

Speaker Change: And for the full year non-GAAP revenue growth was 7% with 124 basis points of margin expansion.

Speaker Change: Finally complementary segment quarterly non-GAAP revenue increased 6% to 75 basis points of margin contraction.

Greg Adelson: On that scale, a meets expectation is 3.0 and extremely satisfied is 5.0. You have to have a lot of fives to average a 4.74. The third theme is technology innovation. We continue to invest in technology to help our clients remain vibrant financial institutions in the markets they serve. We are executing our technology modernization strategy while bringing new leading edge solutions to the market before our competition.

Speaker Change: Margin contraction was due to direct support cost amortization and licenses and fees.

Speaker Change: Fiscal year, non-GAAP revenue increased 8% with two basis points of margin expansion.

Speaker Change: Full year growth continued.

Speaker Change: Digital solution demand and beneficial overall product mix.

Mimi Carsley: Now let's turn to our view of cash flow and capital allocation. Disco 24 operating cash flow with $568 million, $186 million increase over the prior period. Excluding proceeds from sale of assets, 3 cash flow with $336 million, the significantly more than $175 million generated last year. 3 cash flow conversion was 88%. Our commentaries entering this year included an elevated level of cash tax payments based on the negative Section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact. The net result was lower cash taxes, equating to an approximate $29 million overpayment last fiscal year.

Gregory Adelson: The other thing is the collection timing of our annual maintenance.

Gregory Adelson: Sometimes it is a reflection on the actual product.

Speaker Change: Now, let's turn to or do you have cash flow and capital allocation.

Gregory Adelson: Sometimes it's a reflection of the complimentary or payment product that was sold with the core, and so sometimes those don't get implemented until the core is implemented, so you have some of those timing delays.

We have 924 Bano retail clients, and of those, 147 are live with Bano Business, and another 81 are in various stages of implementation.

Speaker Change: It's about 24 operating cash flow was $568 million $186 million increase over the prior period.

Speaker Change: Excluding proceeds from sale of assets free cash flow was $336 million significantly more than 175 million generated last year.

Greg Adelson: A couple of final items. We are looking forward to our annual client conference, Jack Henry Connect in October. This is a great opportunity every year for us to meet with prospects, clients and partners. Last year, 17 of our new core wins were with prospects who attended the conference. As I reflect back on fiscal 2024, I want to again thank Dave Foss for his outstanding leadership as CEO for the past eight years.

Speaker Change: Free cash flow conversion was 88%.

We also continue to see increasing success with our card processing solution, signing 21 new card processing clients this quarter and 56 for the fiscal year.

Speaker Change: Commentary entering this year included an elevated level of cash tax payments based on the negative section 174 impact.

We received 16 new financial crimes defender contracts in Q4 and 52 for the fiscal year. In addition, we signed 53 new contracts for the Financial Crimes Defender Faster Payment Fraud Module for the quarter and 134 for the fiscal year. This real-time solution is designed to help mitigate fraud in Zelle, FedNow, and real-time payment transactions.

As of June 30th, we have 52 financial crime installations completed and another 115 in various stages of implementation.

We also have 22 Faster Payment Modules installed and 154 in various stages of implementation.

I am asked regularly why I believe we continue to see significantly more new competitive core wins than our competition. Well, I believe there are many reasons.

Speaker Change: Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact.

I've tried to boil it down to three primary things.

Speaker Change: The net result was lower cash taxes, equating to an approximate 29 million over a minute.

Greg Adelson: I am honored and humbled to take over as CEO and excited to log with our entire leadership team about the opportunities ahead. We are executing on our strategy and our associate engagement and client satisfaction scores are consistently strong. Technology spending by financial institution remains robust and there's clear demand for our differentiated and innovative technology as validated by our strong quarter in fiscal year. We are very well positioned for future success.

Speaker Change: Last fiscal year.

Mimi Carsley: Our consistent dedication to value creation resulted in a trail in 12 months, return on invested capital 20%. Additionally, I would highlight other notable return on capital metrics for the year, including 28 million Jeerie purchases, more than offsetting annual division, 125 million in debt reduction, and 156 million in dividend.

Speaker Change: Our consistent dedication to value creation resulted in a trailing 12 month return on invested capital of 20%.

First, our associates.

We have a happy and engaged workforce, and we believe that leads to having a do-whatever-it-takes attitude with our clients. Our associate engagement scores are well above the industry benchmark and we consistently win best workplace awards each year. We are pleased to recently receive recognition in three national publications. U.S. News & World Report's Best Companies to Work For, Time Magazine's Best Midsize Companies, and Newsweek's Greatest Workplaces.

Second, our service quality, which is a direct result of our engaged and dedicated associates. We have long been known for providing exceptional customer service, and this year was no exception. In fiscal year 2024, our client satisfaction score when rating the engagement with a client service representative averaged 4.74 per month on a five point scale. On that scale, a meets expectation is 3.0 and extremely satisfied is 5.0.

Speaker Change: Additionally, I would highlight other notable return on capital metrics for the year, including 28 million share repurchases more than offsetting any observation.

Speaker Change: We produce record revenue and operating income for fiscal 24 with 2.2 billion in revenue and 489.4 million in operating income. Our sales team set an all-time record for sales bookings for both the fourth quarter and the fiscal year that included 22 competitive core wins of the quarter and 57 for the fiscal year.

Speaker Change: Wondering 25 million in debt reduction and 156 million in dividends.

Greg Adelson: I look forward to seeing and speaking with many of you on our investor day in Dallas on September 5th. We have an exciting agenda that will have several of our new business leaders available for a meet and greet as well.

Gregory Adelson: And this year, as you know, those invoices go out in the late spring, early summer.

Gregory Adelson: Core in particular is, as I described, it's a 12 to 18-month process.

Speaker Change: Yeah.

Mimi Carsley: Getting into a new fiscal year, I will conclude with guidance. As you were aware, yesterday's pressure release included fiscal 2025 foliar gas guidance, and longed with an enhanced transparency of reconciliation to non-gas guidance metrics. Will the pressure release also include the fiscal 25 non-gas ETF metrics? This is not intended to be a new guidance metric. The purpose is to provide additional clarity on our numbers, for example, current acquisition year-ever-year comparison, and it should be noted that a 24% tax rate is used. Deconversion guidance will continue to follow the methodology introduced in fiscal 24, and for fiscal 25, deconversion rated guidance is 16 million.

Gregory Adelson: We start collecting on them in the June, July timeframe.

You have to have a lot of fives to average a 4.74.

Speaker Change: Heading into a new fiscal year I will conclude with guidance.

Speaker Change: As you're aware in yesterday's press release included fiscal 2025 earlier gas guidance, along with an enhanced transparency reconciliation non-GAAP guidance metrics.

The third theme is technology innovation.

Gregory Adelson: And just depending on in any given year, how many people pay them, you know, as soon as they get them versus, you know, in July, sometimes in a given year, that shifts the timing of that collection impacting free cash flow.

Gregory Adelson: So this year, I would say there was probably about $60 million of timing collection related benefits to the free cash flow conversion in FY24.

Gregory Adelson: So if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is, you know, in line with where we think for FY25, hopefully a little better than that, as we get in our guidance range.

Mimi Carsley: With that, I will turn it over to Mimi for more specifics on our financials. Thank you, Greg. Good morning, everyone. Our continued focus on serving our community and regional financial institution clients in delivering shareholder values led to another quarter of a solid revenue and earnings growth.

Gregory Adelson: But that is the math.

Speaker Change: We signed 15 new core contracts this fiscal year with financial institutions that have over $1 billion in assets compared to only five in fiscal 2023. This was a direct result of our technology modernization strategy and execution, one Jack Henry initiative and several new innovative solutions. Now for more detail on each of these takeaways.

Gregory Adelson: Okay.

Speaker Change: Well the press release that includes a fiscal 'twenty non-GAAP EPS metric.

Speaker Change: Not intended to be a new guidance metric.

Gregory Adelson: No, very helpful.

Gregory Adelson: Thanks, guys.

Speaker Change: Purpose is to provide additional clarity on our numbers for example, current acquisition year over year comparison.

Mimi Carsley: I will start with the details, driving our fourth quarter and total year results, then conclude with the fiscal 25 guidance. 34 gap revenue increased 5% and non-gap revenue increased 6%. Continuation of the consistently solid performance. Full year growth was 7% on both a gap and non-gap basis. Fourth quarter de-conversion revenue of approximately 7 million, which we pre-release, was down approximately 8 million for reflecting minimal financial institution consolidation of our clients. Full year de-conversion revenue was 17 million, 15 million less than the prior year, was consistent with diet.

Gregory Adelson: Thank you.

Speaker Change: And it should be noted that a 24% tax rate.

Gregory Adelson: The next question comes from Will Nance with Goldman Sachs.

Speaker Change: For the fourth quarter total revenue increased 5% and increased 6% on a non-gap basis.

Speaker Change: He conversion guidance will continue to follow the methodology introduced in fiscal 'twenty four and for fiscal 'twenty Fi Deconversion revenue guidance is 16 million.

Speaker Change: For the fiscal year total revenue increased 7% on a gap and non-gap basis.

Mimi Carsley: Foliar gas and non-gas revenue guidance is 78%. Based on the above revenue growth that generates sustainable and creative sources of margin, we're guiding to an annual non-gas margin expansion of 25 to 40 basis points. All of the above are aligned with our near-term targets as the business operations remain healthy and consistent. Foliar tax rate estimates for fiscal 25 to 24%. The above guidance metrics results in a foliar guidance for gas EPS of $5.78 to $5.87 per share, the growth of 11 to 12%. Fiscal 23 has lowered and expected three cash low conversion due to a cash tax over payment, which resulted in fiscal 24 having a better than expected conversion.

Speaker Change: Hello, Your GAAP and non-GAAP revenue guidance is 7% 8%.

Speaker Change: Based on that that revenue growth to generate sustainable accretive sources of margin, we're guiding to an annual non-GAAP margin expansion of 25 to 40 basis points.

Speaker Change: Yeah.

Speaker Change: All of the above are aligned with our near term targets the business great operations remained healthy and consistent.

Speaker Change: Operating income increased 1% for the quarter and increased 5% on a non-gap basis. For the fiscal year operating income increased 2% and increased 10% on a non-gap basis.

Mimi Carsley: Now let's look more closely at the details. Jack services and support revenue increased 2% will non-gap increase 4%. For the year, the increase was a healthy 5% for gap and 6% on a non-gap basis. Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenue partly offset by decreases in de-conversion implementation and maintenance being revenue. We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter 10% for the year.

Speaker Change: As I mentioned the fourth quarter was the highest quarter for sales bookings in the history of the company and we set a new record for sales bookings for the fiscal year. I am very proud of the remarkable year by our sales team.

Speaker Change: Full year tax rate estimate for fiscal 'twenty, 524%.

Speaker Change: The 15 core client with over 1 billion in assets also was a new fiscal year record of those clients 10 or banks in five or credit unions.

Speaker Change: The above guidance metrics resulted in a full year guidance for GAAP EPS of $5 78 to $5 87 per share rate of 11% to 12%.

Speaker Change: Over the past four years we have continued to see an increase in the average asset size of our core clients. Average assets for our bank clients have increased to 1.35 billion, a 27% increase over the past four years. Average assets for our credit union clients have increased to 1.27 billion, a 34% increase over the past four years.

Speaker Change: It's still 23 had lower than expected free cash flow conversion I do go out cash tax overpayments, which resulted in fiscal 'twenty or having a better than expected conversion metrics.

Speaker Change: In addition to the 22 competitive core takeaways in the quarter, we resigned one long term client with about 6 billion in assets that had provided the termination notice to us a little more than two years ago.

Mimi Carsley: Ascent further legislative action, Disco 25 will be a reversion to the suspected trend line resulting from the expiration tax benefits in Section 174. As such, a flow year expectation for free cash flow conversion is 65 to 75 percent. Our current view has a cadence of fiscal 25 non-GAAP revenue and margins increasing sequentially throughout the year. This increasing cadence will result in a strong second half that will be more pronounced than typical. Consequently, key one is expected expectation for non-gap revenue growth is approximately 5 and a quarter percent and non-gap margin to contract approximately 105. This is due to slower growth rates on on-premise annual maintenance and card growth rates.

Speaker Change: Accident or their legislative action is still 25 will be a reversion to the expected trend line, resulting from the expiration of tax benefits infection once than before.

Speaker Change: That client never de-converted to the competing core platform. They've now resigned with us for multiple years and multiple new solutions.

Mimi Carsley: It's reoccurring revenue contributor is 31% of our total revenue, and it's long been a key double digit growth engine. It came to processing revenue, which is 42% of total revenue, and another key component of our long-term growth model. We've done robust performance with 9% growth on both the gap and non-gap basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue.

Speaker Change: As such our full year expectation for free cash flow conversion is 65% to 75%.

Speaker Change: While this contract is not in our new core with numbers, it is noteworthy that they decided their best choice was to stay with Jack Henry for multiple more years.

Speaker Change: Our current U S. A cadence of fiscal 25, non-GAAP revenue and margin increasing sequentially throughout the year.

Speaker Change: For the quarter, we also signed 15 contracts to move existing in-house core clients to our private cloud environment.

Speaker Change: Increasing cadence will results in a strong second half it would be more pronounced than typical.

Speaker Change: Consequently, Q1 as expected expectation for non-GAAP revenue growth is approximately 40% and non-GAAP margin to contract approximately 100 pets.

Speaker Change: We finished fiscal 24 with 44 existing clients agreeing to move to our private cloud. We now host 73% of our core clients in our private cloud. Several of our complimentary and payment solutions also experience extremely high demand with our digital suite leading the way.

Speaker Change: For the quarter, we signed 45 new clients to our banal retail platform as well as 50 new banal business deals.

Mimi Carsley: Completing commentary on revenue, I would highlight the total recurring revenue exceeded 91%.

Speaker Change: This is due to lower growth rate on on premise annual maintenance and card processing.

Speaker Change: For the fiscal year, we closed 179 new banal retail contracts and 164 new banal business contracts. Banal continues to experience exceptional growth.

Mimi Carsley: Next, moving to expenses. Beginning with the cost of revenue, which increased 6% on both the gap and non-gap basis for the quarter, and 7% from gap versus 6% for non-gap of growth as clear. Drivers to the quarter included a higher direct cost, higher personnel cost, and increased internal licenses and fees. Next, R&D expense increased 4% on both the gap and non-gap basis for the quarter. The quarterly increase is primarily due to increase consulting and other professional services, net capitalization, and a higher cloud consumption cost net capitalization.

Mimi Carsley: An additional factor is several long-term software usage contracts closing in Q1 at the prior year, which delivered significant allocation of license fees in that same quarter. The rest of the year improved strongly, with limited risk, resulting in a full-year guidance remaining consistent with our near-term targets. As a reminder, we see fluctuations in quarterly results relating to software usage license components, along with the timing of implementation.

And then additional factor is several long term software usage contracts closing in Q1 of the prior year, which delivered significant allocation licensees in that same quarter.

Speaker Change: We currently have 12.2 million registered banal users as compared to 3.2 million at the same time in 2020.

Speaker Change: The rest of the year improved strongly with limited rate, resulting in the full year guidance remaining consistent with our near term target.

Speaker Change: As a reminder, we see fluctuations in quarterly results relating to software usage license component.

Speaker Change: Along with its finding that implementation.

Mimi Carsley: Therefore, the correct performance indicator for our business is the consistently strong fiscal year financial results. In conclusion, Q4 and full-year results reflect strong performance and achievement of our targeted goals. We enter fiscal 25 with positive momentum and expect to drive impressive revenue growth in margin expansion. We remain exceptionally positive about demand for our solutions and the strength of our client, resulting in career, shareholder value creation. We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing confidence.

Therefore that correct performance indicator for our business is the consistent strong fiscal year financial results.

Mimi Carsley: So the year R&D expense increased 4% on gap basis and 3% for non-gap. Ending with SGNA expense for the quarter on a gap basis, it increased 6% and 13% on a non-gap basis. The quarter gap increase was due to higher personnel costs and increased professional services. The non-gap quarterly increase was impacted by the one-time expense from the right office capitalized software development related to internal software tools. The doubt that one-time expense the quarter increase would have been 8%.

Speaker Change: In conclusion, Q4, and full year results reflect strong performance and achievement of our targeted goal.

Gregory Adelson: We are very well positioned for future success.

Gregory Adelson: Please go ahead.

Gregory Adelson: I look forward to seeing and speaking with many of you at our Investor Day in Dallas, on September 5th. We have an exciting agenda and we'll have several of our new business leaders available, for a meet and greet as well.

We continue to invest in technology to help our clients remain vibrant financial institutions in the markets they serve. We are executing our technology modernization strategy while bringing new leading edge solutions to the market before our competition.

Speaker Change: We entered fiscal 'twenty by the positive momentum and expect to drive impressive revenue growth and margin expansion.

Gregory Adelson: Hey, guys.

A couple of final items.

Speaker Change: We remain exceptionally positive about the demand for our solutions and the strength of our client, resulting in superior shareholder value creation.

We are looking forward to our annual client conference, Jack Henry Connect, in October. This is a great opportunity every year for us to meet with prospects, clients, and partners. Last year, 17 of our New Corps wins were with prospects who attended the conference.

As I reflect back on fiscal 2024, I want to again thank Dave Foss for his outstanding leadership as CEO for the past eight years.

I am honored and humbled to take over as CEO and excited along with our entire leadership team about the opportunities ahead.

Speaker Change: We appreciate the contributions of our dedicated associates. They drove these strong results and our investors for their ongoing confidence.

Operator: Drew, please open the line for questions. Certainly, we will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Gregory Adelson: With that, I will turn it over to Mimi for more specifics on our financials.

Gregory Adelson: Most times, maybe a little longer on a couple, but most of the time than that.

Speaker Change: <unk>. Please open the line for questions.

Mimi Carsley: Full year SGNA expense increased 18% on a gap basis and 10% non-gap. The primary gap impacts were the $60 million in one-time costs related to the voluntary early departures and a program. Be good. At a prior period, $5 million gain on average, the non-gap increase is driven primarily by higher personnel costs.

Gregory Adelson: Appreciate you taking the question.

Gregory Adelson: But for our other products, so let's just take Financial Crimes Defender, we've already increased our resources on that this year to work through our installation cues and get that down into smaller numbers to ensure that we continue to keep our customers happy.

Speaker Change: Certainly we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press star.

We are executing on our strategy and our associate engagement and client satisfaction scores are consistently strong.

Technology spending by financial institution remains robust and there's clear demand for our differentiated and innovative technology as validated by our strong quarter and fiscal years. We are very well positioned for future success.

I look forward to seeing and speaking with many of you at our Investor Day in Dallas on September 5th. We have an exciting agenda and we'll have several of our new business leaders available for a meet and greet as well.

Mimi Carsley: With that, I will turn it over to Mimi for more specifics on our finances.

Mimi Carsley: Thank you, Greg.

Speaker Change: Then too.

Operator: At this time, we will pause momentarily to assemble our roster.

Good morning, everyone.

Mimi Carsley: I just wanted to follow up on the 1Q guidance and sort of the trajectory over the course of the year.

Mimi Carsley: This concludes our question and answer session.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Mimi Carsley: We remain focused on generating compounding margin expansion. While the quarter results deliver 22-based points decreased and non-gap margins 22%, full year margin expansion was 60 basis points on a non-gap margin of 23%. Non-gap margin benefit from the focused process improvement and discipline management of our workforce. These strong quarterly results produced a fully-deleted gap earnings per share of $1.38 up to 3%. This cost 24 fully-deleted ETFs was $5.23 of 4%. Beating a 30% headwind from previously mentioned VDIP gained on average exposure prior year and lower G conversion rate.

Andrew Schmidt: The first question comes from Andrew Schmidt with City. Please go ahead.

Speaker Change: The first question comes from Andrew Schmidt with Citi. Please go ahead.

Our continued focus on serving our community and regional financial institution clients and delivering shareholder values led to another quarter of solid revenue and earnings growth.

Mimi Carsley: Thank you, Greg, and good morning, everyone.

Mimi Carsley: I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance.

Mimi Carsley: I would like to turn the conference back over

Mimi Carsley: Our continued focus on serving our community and regional financial institution clients, and delivering shareholder values led to another quarter of solid revenue and earnings growth.

Mimi Carsley: I will start with the details driving our fourth quarter and full year results, then conclude with the fiscal 25 guidance. Q4 gap revenue increased 5% and non-gap revenue increased 6%, a continuation of the consistently solid performance. Full year growth was 7% on both a gap and non-gap basis. Fourth quarter deconversion revenue of approximately $7 million, which we pre-released, was down approximately $8 million, reflecting minimal financial institution consolidation of our clients. Full year deconversion revenue of $17 million, $15 million less than the prior year, was consistent with guidance.

Andrew Schmidt: Hi, Greg. Hi, Mimi. Thanks for taking my questions.

Andrew Schmidt: Hi, Greg and Jamie Thanks for taking my questions.

Andrew Schmidt: I guess just to drill down on the fourth or fourth complementary performance, and I know you're right; fiscal year metrics are the best way to look at the business. But is there anything for the fourth quarter that affected revenues that are timing shifts, or perhaps some of the things you called out for the fiscal first quarter that impacted results, or was it truly kind of tough cops? Thank you very much.

Andrew Schmidt: I guess just to drill down on the fourth quarter for complementary performance and I know you're right fiscal year.

Speaker Change: Metrics are the best way to look at the business, but was there anything.

Speaker Change: For the fourth quarter or is that affected revenues, there timing shifts or perhaps <unk>.

Speaker Change: Some of the things you called out for the fiscal.

Speaker Change: First quarter that impacted results or was it truly kind of tough comps. Thank you very much.

Mimi Carsley: Now let's look more closely at the details.

Mimi Carsley: I think you kind of just touched on that.

Mimi Carsley: to Vance Sherard for any closing remarks.

Mimi Carsley: Gap services and support revenue increased 2% while non-gap increased 4%.

Mimi Carsley: But I think you also referenced processing on the payment side.

Mimi Carsley: Thank you, Drew.

Mimi Carsley: For the year, the increase was a healthy 5% for gap and 6% on a non-gap basis. Services and support growth during the quarter was the result of volume increases, in data processing and hosting revenue and consulting revenue, partly offset by decreases in deconversion, implementation, and maintenance fee revenue.

Gregory Adelson: Morning Andrew, I appreciate the question. Although I was really, just as you just mentioned, the importance of looking at our year on a year long basis rather than the quarters, they don't see any trends. And I think structurally looking to you that we would call out, I think it was mostly just you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outside. And so I think it's just a matter of this quarter playing out in that pattern. Got it, appreciate that.

Speaker Change: Good morning, Andrew I appreciate the question, although I would reiterate just as you just mentioned the importance of looking at our year on it on a year long basis, rather than the orders. They don't see any trends and I think structurally will continue we would call out I think it was mostly.

I will start with the details deriving our fourth quarter and full year results, then conclude with the fiscal 25 guidance. Q4 Gap Revenue Increase 5% and Non-Gap Revenue Increase 6% A Continuation of the Consistently Valid Performance, Full year growth was 7% on both a GAAP and non-GAAP basis.

Fourth quarter deconversion revenue of approximately $7 million, which we pre-released, is down approximately $8 million, reflecting minimal financial institution consolidation of our client.

Full year deconversion revenue is $17 million, $15 million less than the prior year, which is consistent with guidance.

Now let's look more closely at the details.

Gas services and support revenue increased 2%, while non-gas increased 4%.

For the year, the increase was a healthy 5% for gas and 6% on a non-gas basis.

Mimi Carsley: We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter, 10% for the year. This reoccurring revenue contributor is 31% of our total revenue, and has long been a key double-digit growth engine.

Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenue, partly offset by decreases in deconversion, implementation, and maintenance fee revenue.

We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter, 10% for the year.

This reoccurring revenue contributor is 31% of our total revenue and has long been a key double-digit growth engine.

Sticking to processing revenue, which is 42% of total revenue, and another key component of our long-term growth model.

We found robust performance with 9% growth on both a gap and non-gap basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue. Completing commentary on revenue, I would highlight the total reoccurring revenue exceeded 91%.

Mimi Carsley: Shifting to processing revenue, which is 42% of total revenue, and another key component of our long-term growth model, we saw robust performance with 9% growth on both a gap and non-gap basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue.

Next, moving to expenses. Beginning with the cost of revenue, which increased 6% on both a GAAP and non-GAAP basis for the quarter, and 7% for GAAP versus 6% for non-GAAP for the whole fiscal year. Drivers to the quarter included higher direct costs, higher personnel costs, and increased internal licenses and fees.

Finally, complimentary segment, quarterly non-GAAP revenue increased 6% with 75 basis points of margin contraction. Margin contraction was due to direct support costs, amortization, and licenses emptied.

Mimi Carsley: Completing commentary on revenue, I would highlight the total reoccurring revenue exceeded 91%.

Next, R&G expense increased 4% on both a GAAP and non-GAAP basis for the quarter. The quarterly increase was primarily due to increased consulting and other professional services, netted capitalization, and a higher cloud consumption cost, netted capitalization.

Fiscal year non-debt revenue increased 8% with two basis points of margin expansion.

Mimi Carsley: Next, moving to expenses, beginning with the cost of revenue, which increased 6% on both a gap and non-gap basis for the quarter and 7% for gap versus 6% for non-gap for the full fiscal year. Drivers for the quarter included higher direct costs, higher personnel costs, and increased internal licenses and fees.

For the year, R&D expense increased 4% on gap basis and 3% for non-gap.

Mimi Carsley: Breaking down the results into the three operating segments we are pleased to see positive performance across the board. Of course, segment revenue increased 4% to the quarter on a non-gap basis. Non-gap operating margin increased 171 basis points. Core continues to benefit from private cloud trends and strong cost growth. Full year non-gap revenue was 7% and associated margin increased 135 basis points. In its segment, quarterly revenue increased 8% on a non-gap basis.

Mimi Carsley: Next, R&D expense increased 4% on both a gap and non-gap basis for the quarter. The quarterly increase was primarily due to increased consulting, and other professional services, net capitalization, and a higher cloud consumption cost, net capitalization.

Ending with SG&A expense for the quarter on a gap basis, it increased 6% and 13% on a non-gap basis. A quarter gap increase is due to higher personnel costs and increased professional service.

Mimi Carsley: For the year, R&D expense increased 4% on GAAP basis and 3% for non-GAAP.

The non-GAP quarterly increase was impacted by the one-time expense from the write-off of capitalized software development related to internal software tools. Without this one-time expense, the quarter increase would have been 8%. Full year SG&A expense increased 18% on a GAAP basis and 10% non-GAAP.

Mimi Carsley: Ending with SG&A expense for the quarter on a GAAP basis, it increased 6% and 13% on a non-GAAP basis. The quarter GAAP increase was due to higher personnel costs and increased professional services. The non-GAAP quarterly increase was impacted by the one-time expense from the write-off of capitalized software development related to internal software tools.

The primary gap impacts were the $16 million in one-time costs related to the Voluntary Early Departure Incentive Program, VDIP, and a prior period $5 million gain on assets.

Mimi Carsley: Without this one-time expense, the quarter increase would have been 8%. Full year SG&A expense increased 18% on a GAAP basis and 10% non-GAAP. The primary GAAP impacts were the $16 million in one-time costs related to the Voluntary Early Departure Incentive Program, VDIP, and a prior period $5 million gain on asset sales.

The non-GAAP increase is driven primarily by higher personnel costs.

Mimi Carsley: The non-GAAP increase is driven primarily by higher personnel costs.

We remain focused on generating compounding margin expansion.

While the quarter results delivered 22 base points decrease in non-GAAP margins to 22%.

Speaker Change: <unk> just you always have to look at what is the installation is what's going on what's going on with that shift.

Full Year Margin Expansion with 60 Basis Points on a Non-Gap Margin of 23%. Non-Gap Margin benefit from the focused process improvement and disciplined management of our work.

These strong quarterly results produced a fully diluted gas earnings per share of $1.38 up 3%.

Fiscal 24 fully diluted EPS was $5.23, up 4%. Facing a $0.37 headwind from previously mentioned VDIP, a gain on asset disposal prior year, and lower deconversion rates.

Breaking down the results into three operating segments, we are pleased to see positive performance across the board. Our core segment revenue increased 4% to the quarter on a non-gap basis against a tough comp. Non-deaf operating margin increased 171 basis points.

CORE continues to benefit from private cloud training and strong cost control.

Full-year non-GAAP revenue was 7%, and the associated margin increased 135 basis points.

Payment segment quarterly revenue increased 8% on a non-gap basis. The segment had an impressive non-GAAP operating margin growth of 183 basis points.

Ed: I'm Ed to outsourcing and so I think it's just a matter of this quarter playing out.

Revenue growth was due to continuing growth in their EPS business and strong card growth from broad and card-related services, with lower growth consistent with U.S. consumer spending trends.

Margin benefited from focused cost management.

Mimi Carsley: Please don't forget that our Investor Day is fast approaching. It will take place on Thursday, September 5th in Dallas, starting at 1 p.m. Central Time.

And for the full year, non-GAAP revenue growth was 7%, with 124 basis points of margin.

Speaker Change: Yes.

Speaker Change: Got it appreciate that and maybe I could ask a question on just the new wind side step.

Mimi Carsley: So maybe can you just drill down on sort of expectations, I guess, maybe stripping around, stripping out the annual license impact?

Mimi Carsley: You can join us via webcast, or if you'd like to attend in person, please let us know, and we will get you the specifics.

Andrew Schmidt: And maybe I could ask a question on just the new wind side, you know, step up in, you core signed above 1 billion in assets. It's pretty bright spot. What, you know, obviously there's multiple factors that drive that, but is it possible to still that down, is it product, is it through to market focus, you know, what's striving the move up market, I know that's been a team in the past several years, but it seems like you're making faster progress towards that shifting towards higher asset size institution, so love to get some more color there.

Speaker Change: Step up in new core side above $1 billion in assets, it's pretty bright spot.

Speaker Change: What you know obviously, there's multiple factors that drive that but is it possible to still back down is it product.

Mimi Carsley: The segment had impressive non-gap operating margin growth of 183 basis points. Revenue growth was due to continuing growth in our EPS business and strong card growth from fraud and card related services with lower growth consistent with US consumer spending trend. Margin benefited from focus cost management and for the full year non-gap revenue growth was 7% with 124 basis points of margin and expansion. Finally, complimentary segment quarterly non-gap revenue increased 6% with 75 basis points of margin contraction.

Speaker Change: Is it sort of market focus whats driving the move up market I know that's been a theme in the past several years, but it seems like youre, making faster progress towards shifting towards higher asset size institution. So we'd love to get some more color. There. Thank you very much.

Speaker Change: We have 924 banal retail clients and up those 147 are live with banal business and another 81 are in various stages of implementation. We also continue to see increasing success with our card processing solution, citing 21 new card processing clients this quarter and 56 for the fiscal year.

Gregory Adelson: Thank you very much.

Speaker Change: We received 16 new Financial Crimes Defender Contracts in Q4 and 52 for the fiscal year. In addition, we signed 53 new contracts for the Financial Crimes Defender Faster Payment Fraud Module for the quarter and 134 for the fiscal year. This real-time solution is designed to help mitigate fraud in Zell, FedNow and real-time payment transactions.

Mimi Carsley: We remain focused on generating compounding margin expansion. While the quarter results delivered 22 basis points decrease in non-GAAP margin to 22%, full year margin expansion was 60 basis points on a non-GAAP margin of 23%. Non-GAAP margin benefited from the focused process improvement and disciplined management of our workforce.

Mimi Carsley: You know, what are the kind of embedded assumptions around the payment segment in 1Q?

Mimi Carsley: In addition to Investor Day, during the coming weeks, we will be traveling to attend various investor events in the U.S, and Europe.

Speaker Change: Sure Andrew This is Greg so yes. Thanks for the question I think.

Will your growth continue to perplex digital solution demand and beneficial overall product?

Gregory Adelson: Sure, Andrew, this is Greg. So yeah, thanks for the question. I think, you know, as I tried to reference a little bit in the script, but, you know, more importantly, it is about our level of execution. We're hearing this on a regular basis that, you know, I think you know this and most people do that we do provide to our clients what our roadmaps are and we show what we're going to be doing and when we're going to be doing it. And I think there's a level of trust and belief and sort of the more that we're executing, the more that our technology innovation is getting out there and they're seeing the results. It is providing a really an opportunity for us to get in front of these larger customers.

Mimi Carsley: These strong quarterly results produced a fully diluted GAAP earnings per share of $1.38 up 3%.

Mimi Carsley: Can we expect that kind of 80% level to continue into next year?

Mimi Carsley: We'd like to take this opportunity to thank all Jack Henry & Associates for their hard work and dedication, which has led to our outstanding results.

Now let's turn to our view of cash flow and capital allocation.

Speaker Change: I tried to reference a little bit in the in the script, but more importantly, it is about our level of execution. We're hearing this on a regular basis that.

Mimi Carsley: Fiscal 24 fully diluted EPS was $5.23 up 4%. Facing a $0.37 headwind from previously mentioned VDIP, gain on asset disposal prior year, and lower deconversion rates.

Fiscal 24 operating cash flow was $568 million, $186 million increase over the prior period. Including proceeds from sale of assets, free cash flow was $336 million, significantly more than the $175 million generated last year.

Mimi Carsley: Breaking down the results into the three operating segments, we are pleased to see positive performance across the board. Our core segment revenue increased 4% to the quarter on a non-GAAP basis against a tough comp. Non-GAAP operating margin increased 171 basis points. Core continues to benefit from private cloud trends and strong cost control. Full year non-GAAP revenue was 7% and associated margin increased 135 basis points. Payment segment quarterly revenue increased 8% on a non-GAAP basis. The segment had impressive non-GAAP operating margin growth of 183 basis points.

Mimi Carsley: And then maybe just talk about, you know, drivers of the acceleration of the course of the year, outside of some of the annual fees that you just said on.

Mimi Carsley: Revenue growth was due to continuing growth in our EPS business and strong card growth from fraud and card-related services with lower growth consistent with U.S. consumer spending trends.

Mimi Carsley: Margin benefited from focused cost management and for the full year non-GAAP revenue growth was 7% with 124 basis points of margin expansion.

Speaker Change: As of June 30th, we have 52 Financial Crimes installations completed and another 115 and various stages of implementation.

Mimi Carsley: Finally, complimentary segment, quarterly non-GAAP revenue increased 6% with 75 basis points of margin contraction. Margin contraction was due to direct support costs, amortization, and licenses emptied.

Mimi Carsley: Yeah.

Speaker Change: You know this and most people do that we do provide to our clients what our Roadmaps are and we show what we're going to be doing and where we're going to be doing and I think theres a level of trust and belief and so the more that we're executing the more that our technology innovation is getting out there and they are seeing the <unk>.

Mimi Carsley: Fiscal year non-debt revenue increased 8% with two basis points of margin expansion.

Mimi Carsley: Fiscal year growth continued to reflect digital solution demands and beneficial overall product, mix.

Mimi Carsley: Now let's turn to our review of cash flow and capital allocation. Fiscal 24 operating cash flow was $568 million, $186 million increase over the prior period. Including proceeds from sale of assets, free cash flow was $336 million, significantly, more than the $175 million generated last year. Free cash flow conversion was 88%.

Mimi Carsley: Our commentary entering this year included an elevated level of cash tax payment based, on the negative Section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen, the impact. The net result was lower cash taxes equating to an approximate $29 million overpayment, last fiscal year.

Speaker Change: We also have 22 faster payment modules installed and 154 in various stages of implementation.

Mimi Carsley: Margin's attraction was due to direct support growth, ammonization, and lightens this entry. This Go-Year non-debt revenue increased 8% with two basis points of margin expansion. Go-Year's growth continued to reflect digital solution demands and beneficial overall commitment.

Mimi Carsley: Our consistent dedication to value creation resulted in a trailing 12-month return on, invested capital of 20%. Additionally, I would highlight other notable return on capital metrics for the year, including, 28 million share repurchases, more than offsetting annual dilution, $125 million in debt reduction, and $156 million in dividends.

Mimi Carsley: Heading into a new fiscal year, I will conclude with guidance. As you are aware, yesterday's press release included fiscal 2025 full-year gas guidance, along with an enhanced transparency reconciliation to non-gas guidance metrics.

Mimi Carsley: Will, I appreciate the question.

Mimi Carsley: And I would say this year we gave probably a little bit more, color than we have in past years, only because of the way we think the pattern will play out.

Mimi Carsley: We don't die to a quarterly.

Mimi Carsley: We manage the business on an annual basis.

Speaker Change: I am asked regularly why I believe we continue to see significantly more new competitive core wins that are competition.

Mimi Carsley: But in an effort to make sure, people weren't surprised by the way the Q1 might play out, we wanted to give a little bit more specificity there.

Mimi Carsley: I think if you look at the number of the drivers, you know, we expect a modest, you know, Q1 from a payments perspective, but that's coming off the payments usually grows throughout the year.

Mimi Carsley: So that's usually just your typical restart from an annual basis.

Mimi Carsley: The other thing to look at is we had a very strong first half in hardware this past year in FY24.

Speaker Change: Why I believe there are many reasons I've tried to boil down to three primary things.

Speaker Change: <unk>.

Speaker Change: And it's providing a really an opportunity for us to get in front of these larger customers.

Speaker Change: First are associates.

Mimi Carsley: Now, let's turn to our view of cashflow and capital allocation. This Go-24 operating cashflow was $568 million, $186 million increase over the prior period. Excluding proceeds from sale of assets, 3 cashflow was $336 million, significantly more than $175 million generated last year. 3 cashflow conversion was 88%. Our commentary entering this year included an elevated level of cash tax payments based on the negative section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact.

Andrew Schmidt: First of all, and then second of all, you know, as we mentioned, our associates and our client service reputation continues to truly shine, especially at a time when maybe it's not in the rest of the industry. So those have been big, and then, you know, I think we've also hired some really good and talented sales individuals that have come with experience and selling into these larger institutions, and that's continued to help us as well. But I think it's a combination of all those things that are coming to fruition and allowing us to be successful. Got it.

Speaker Change: First of all and then second of all.

Speaker Change: We have a happy and engaged workforce and we believe that leads to having a do-whatever it takes attitude with our clients. Our associate engagement scores are well above the industry benchmark and be consistently when best workplace awards each year. We are pleased to recently receive recognition in three national publications. US News & Worlds reports best companies to work for, tied magazines best midsize companies and Newsweek's greatest workplace.

Speaker Change: As we mentioned our associates and our client service reputation continues to truly shine, especially at a time when maybe it's not in the rest of the industry. So those have been big and then I think we've also hired some really good and talented sales individuals that have come with.

Speaker Change: <unk> and selling into these larger institutions and.

Speaker Change: And that has continued to help us as well, but I think it's a combination of all those things that are coming to fruition and allowing us to be successful.

Mimi Carsley: Thank you for joining us today, and Drew, will you please provide the replay number?

Speaker Change: Yes.

Speaker Change: Got it. Thank you very much Greg I appreciate the comments.

Unknown Executive: Thank you very much, Greg. Appreciate the comments.

Speaker Change: Sure.

Unknown Executive: Sure.

Vasundhara Govil: The next question comes from Vasu. Goville with KBW. Please go ahead.

Mimi Carsley: The net result was lower cash taxes, equating to an approximate $29 million over payment last fiscal year. Our consistent dedication to value creation resulted in a trail in 12 months, return on invested capital 20%. Additionally, I would highlight other notable return on capital metrics for the year, including 28 million jeerie purchases, more than offsetting annual delusions, 125 million in debt reduction, and 156 million in dividend.

Speaker Change: The next question comes from Vasu <unk> with K B W. Please go ahead.

Mimi Carsley: Yes, sir.

Mimi Carsley: The replay number for today's call is 877-344-7529, and the access code is 719-2153.

Mimi Carsley: That will be available in about one hour.

Mimi Carsley: The conference has now concluded.

Mimi Carsley: While the press release also includes a fiscal 2025 non-gas ETF metric, this is not intended, to be a new guidance metric.

Mimi Carsley: So that from just the nature of the cycle of hardware sales, our clients, the new hardware, that comes out, we think that probably FY25 may not be as robust as the very strong first half of FY24.

Vasundhara Govil: Hi, thanks for taking my question. For us, one for you, Greg, just as you've taken over the reins, any sort of strategic changes that you're envisioning for the company that the company might need, and where are you focusing more of your efforts at this point. Yeah, no, I mean, fortunately, I took over for an individual that did a pretty good job.

Vasu: Hi, Thanks for taking my question.

First one for you Greg just as they've taken over the reins any sort of strategic changes that you were envisioning for the company that the company might need and where are you focusing more of your athletes at this point.

Mimi Carsley: The purpose is to provide additional clarity on our numbers, for example, current acquisition, year-over-year comparisons.

Mimi Carsley: So I think that's some of the things.

Greg Adelson: Yeah, No I mean unfortunately.

Mimi Carsley: And it should be noted that a 24% tax rate is used.

Mimi Carsley: And then as you mentioned, the very important, software and usage contracts, and particularly the software and licensing part of that.

Mimi Carsley: Deconversion guidance will continue to follow the methodology introduced in fiscal 2024. And for fiscal 2025, deconversion revenue guidance is $16 million.

Mimi Carsley: As we see more people over time, you know, those renewals and how that reseller works.

Mimi Carsley: Full-year gas and non-gas revenue guidance is 7% to 8%. Based on the above revenue growth that generates sustainable accretive sources and margins, we're guiding to an annual non-gas margin expansion of 25 to 40 basis points. All of the above are aligned with our near-term targets as the business operations remain, healthy and consistent.

Mimi Carsley: Last year, we just saw a wave of first half renewals that we think the pattern this year will be a little less than the first half that we wanted to call that out.

Speaker Change: Took over for an individual that did a pretty good job.

Mimi Carsley: Full-year tax rate estimate for fiscal 2025 is 24%.

Mimi Carsley: The above guidance metric results in a full-year guidance for gas EPS of $5.78 to $5.87 per, share, a growth of 11% to 12%.

Mimi Carsley: Fiscal 23 has lower-than-expected free cash flow conversions due to a cash-tax overpayment, which resulted in fiscal 24 having a better-than-expected conversion method.

Mimi Carsley: What are the most important drivers for growth?

Greg Adelson: Uh huh.

Gregory Adelson: So not being significant, I mean, we've been able to really make a very, what I would say, a very smooth transition. And so, you know, we're focused on some things that I've talked about, you know, obviously the execution of the tech modernization strategy and what we've been doing with One Jack Henry continues. I've talked a little bit, and we'll talk a lot more at the investor day about our SMB strategy and where we're going with that. So there's a lot of excitement behind that that will be unveiling. And then there's a couple of things that we talked around product rationalization and really looking at things primarily in the complimentary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things.

Mimi Carsley: Accent further legislative action, Fiscal 25 will be a reversion to the expected trendline resulting from the expiration tax benefits in Section 174.

Mimi Carsley: But we're working with our clients today because of the fraud modules that we've been able to create with Financial Crimes Defender.

Greg Adelson: Nothing significant I mean, we've been able to really make a very what I would say a very smooth transition.

Mimi Carsley: And I referenced a lot of those sales.

Mimi Carsley: We're working with our clients on the use cases to be able to do SIN.

Mimi Carsley: Getting into a new fiscal year, I will conclude with guidance. As you were aware yesterday's press release included fiscal 2025 foliar gas guidance, and longed with an enhanced transparency of reconciliation to non-gas guidance metrics. Will the press release also include the fiscal 25 non-gas ETF metrics? This is not intended to be a new guidance metric. The purpose is to provide additional clarity on our numbers, for example, current acquisition year-ever-year comparison, and it should be noted that a 24% tax rate is used.

Mimi Carsley: And once the SIN capabilities get out and we get some more leverage with that and some things that get changed, I think with a few of the use cases in particular, I think there's some real upside in that particular group as well.

Greg Adelson: And so we're focused on some things that I've talked about.

Mimi Carsley: So as Mimi referenced, it isn't all about CARD.

Mimi Carsley: Obviously, CARD is the biggest driver.

Greg Adelson: Obviously, the execution of the tech modernization strategy and what we've been doing with one Jack Henry continues.

Greg Adelson: A little bit and we will talk a lot more at the Investor day about our SMB strategy.

Greg Adelson: Where we're going with that so there's a lot of excitement behind that but we'll be unveiling.

Greg Adelson: And then there was a couple of things that we've talked around product rationalization and really looking at things primarily in the complementary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things a lot of them are very small.

Gregory Adelson: A lot of them are very small, but again, just making sure we stay focused on things that really do move the needle.

Mimi Carsley: Deacon version guidance will continue to follow the methodology introduced in fiscal 24. And for fiscal 25, de-conversion revenue guidance is 16 million. The year gas and non-gas revenue guidance is 78%. Based on the above revenue growth that generates sustainable and creative sources of margin, we're guiding to an annual non-gas margin extension of 25 to 40 basis points. All of the above are aligned with our near-term targets as the business operations remain healthy and consistent.

Greg Adelson: But again, just making sure we stay focused on the things that really do move the needle, but I wouldn't say anything else really outside of that.

Gregory Adelson: But I would say anything else, really, outside of that. And just staying true to who we are as a company and our leaders.

Greg Adelson: And just staying true to who we are as a company.

Greg Adelson: Our leadership team.

Mimi Carsley: But there's a few of the ancillary solutions within payments that I think have some upside over the next, you know, couple of years.

Mimi Carsley: That's very helpful color. And then a quick one for you, Mimi, just on the payment segment. It was good to see the acceleration in revenue growth there. I know you called out broad related services.

Mimi: That's very helpful color and then a quick one for you Mimi just on the payments side. When it was good to see the acceleration in revenue growth. There I know you called out fraud related services I guess, just maybe if you could put a finer point on whether all of the acceleration was these value added services because I think the debit numbers, we saw from visa Mastercard property <unk>.

Mimi Carsley: I guess just maybe if you could define a point on whether all of the acceleration with these value added services, could I think said debit numbers we saw from the Mastercard with pretty consistent sequentially? Yeah, the payments segmented at 8.4% growth for two years. 4. And more importantly, the 6.7% growth for the whole year; it was a big year for payments, especially given throughout the year some economic uncertainty around the strength of the US consumer. We're seeing the trends from that, you know, being in line with our expectation. Still healthy, but not over and superant from a spending perspective.

Sequentially.

Mimi Carsley: Got it.

Mimi: Yeah. The statement is made and the.

Mimi Carsley: Foliar tax rate estimate for fiscal 25 to 24%. The above guidance metrics results in a foliar guidance for gas EPS of $5.78 to $5.87 per share, the growth of 11 to 12%, fiscal 23 has lowered and expected three cash low conversion due to a cash tax over payment, which resulted in fiscal 24 having a better than expected conversion. Ascent Further Legislative Action, Disco 25 will be a reversion to the suspected trend line resulting from the expiration tax benefits in Section 174.

Bradford Tibor: At eight 4% Bradford Tibor and more importantly, the six 7% growth in full year. It was a big year for payments, especially given throughout the year some economic uncertainty around the strength of the U S. Consumer we're seeing the trends from from that you know being in line with our expectation.

Speaker Change: Still healthy, but not over exuberant from a spending perspective, the nice thing about our payments business. It's not just the cards. We have other businesses, we have that the ETF business. We had the pain center of business. Those are doing quite well, we're seeing a lot of demand, especially as the continuation of real time payments excitement.

Mimi Carsley: The nice thing about our payments business is not just art. We have other businesses. We have the TPS business. We have the pay center business. Those are doing quite well. We're seeing a lot of man, especially as the continuation of real-time payments, excitement, the broad solutions that are helping people feel comfortable in going to these newer solutions. So those two businesses are doing quite well from the processing and the remit business that we're all has been healthy. Within card, as you mentioned, we do have a whole portfolio of complementary services that surround the card transaction.

Speaker Change: The broad solutions that are helping people feel more comfortable in going to these newer solution. So those two businesses are doing quite well from a processing at the remit business overall has been healthy.

Mimi Carsley: As such, a flow year expectation for free cash flow conversion is 65 to 75 percent. Our current view has a cadence of fiscal 25 non-gap revenue and margins increasing to quench the rate throughout the year. This increase in cadence will result in a strong second half, it will be more pronounced than typical. Consequently, key 1 is expected expectation for non-gap revenue growth is approximately 5 and a quarter percent, and non-gap margin to contract approximately 105.

Speaker Change: With a card as you mentioned, we do have a whole portfolio of complementary services that surround the card transactions.

Mimi Carsley: And we're continuing to see nice demand for those services. So that's really helping us from a total portfolio perspective.

Speaker Change: And we're continuing to see nice demand for their services, so that's really helping us.

Speaker Change: From a from a total portfolio perspective.

Mimi Carsley: Thank you, for attending today's presentation.

Unknown Executive: Thank you very much. Welcome.

Speaker Change: Thank you very much.

Speaker Change: You're welcome.

Mimi Carsley: That's great, Keller.

Mimi Carsley: You may now disconnect.

Jason Kupferberg: The next question comes from Jason Cuperberg with Bank of America. Please go ahead.

Mimi Carsley: [music]

Speaker Change: The next question comes from Jason Kupferberg with Bank of America. Please go ahead.

Mimi Carsley: This is due to slower growth rates on on-premise annual maintenance and card growth rates. An additional factor is several long-term software usage contracts closing in Q1 at the prior year, which delivered significant allocation of license fees in that same quarter. The rest of the year improved strongly with limited risk resulting in a full-year guidance remaining consistent with our near-term targets. As a reminder, we see fluctuations in quarterly results relating to software usage license components, along with the timing of implementation.

Mimi Carsley: I appreciate you taking the questions this morning.

Jason Kupferberg: Good morning, guys. I just wanted to start on the margin side. I know that you comfortably beat your initial fiscal 24 guidance on the margin line. The initial fiscal 25 guide calls for less margin expansion than in 2024. So is this reflective of some ongoing conservatism or where there's some transitory tailwind plaster? You don't expect to recur. I know you're starting off the year down about 100 basis points in Q1, but just want to get a little bit more color on the margin outlook, please. I appreciate you bringing up that important point. Margin expansion is, you know, one of the key elements that we are focused on as a management team. We're quite disciplined as we think about the cost of the organization and you have building for scale feature success.

Mimi Carsley: Sure.

Jason Kupferberg: Good morning, guys I just wanted to start on the margin side I know that you comfortably beat your initial crystal 24, our guidance on the margin line. The initial 25 guide calls for less margin expansion than in 2024. So is this reflective of some ongoing conservatism or were there some transitory tailwind last year you don't.

Mimi Carsley: The next question comes from Chris Kennedy with William Blair.

Speaker Change: We expect to recur I know youre, starting off the year down about 100 basis points in Q1, but.

Speaker Change: Just wanted to get a little bit more color on the margin outlook. Please.

Speaker Change: I appreciate you, bringing up that important point margin expansion is one of the key elements that we are focused on as a management team work or quite differently and if we think about the cost in the organization building first scale future success I would say there is a couple of things I don't think it's an excessive.

Mimi Carsley: Therefore, the correct performance indicator for our business is the consistently strong fiscal year financial results.

Mimi Carsley: In conclusion, Q4 and full-year results reflect strong performance and achievement of our targeted goal. We enter fiscal 20 by the positive momentum and expect to drive impressive revenue growth and margin expansion. We remain exceptionally positive about demand for our solutions and the strength of our client resulting in career, shareholder value creation. We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing confidence.

Mimi Carsley: I would say there's a couple of things I don't think it's an excessive conservatism. I think that's what we feel confident that the market and the model generate. But there are some headwinds as we leave FY24 into 25 that helps us in 24 change like the slowly backfill of the Egypt departures, particularly that's part of the reason why you'll see the die for Q1 a little bit weaker is that really helped us in Q1 of FY24, as well as we had a one time shift in the timing of our annual merit increased cycle. So those are some issues that create just kind of a grow over challenge next year.

Speaker Change: Fin services and I think that's what we feel confident that the market and the model generates.

Speaker Change: But there are some headwinds as we leave FY 'twenty four 'twenty five.

Speaker Change: That helps us in 'twenty four change like the exploding backfill of Egypt.

Speaker Change: Second are service quality which is a direct result of our engaged and dedicated associates.

Speaker Change: <unk>, particularly that's part of the reason why you'll see the guide for Q1, a little bit weaker is that really helped us in Q1 FY.

Operator: Drew, please open the line for questions. Certainly, we will now begin the question and answer session. To ask a question, you may press star than one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star than two. At this time, we will pause momentarily to assemble our roster.

Speaker Change: FY <unk> or as well as we had a one time shift given the timing of our annual merit increase cycle. So those those are some issues that create just kind of a grow over.

Speaker Change: Challenge next year, but in general we feel quite confident that the model continues.

Mimi Carsley: But in general, we feel quite confident that the model continues to produce margin expansion at a nice clip. So we're excited about the year guidance, and you know, we always aim and strive for more, but we want to put a number out there that we feel confident in our ability to deliver.

Speaker Change: Produce margin expansion at a nice clip.

Speaker Change: We're excited about the year guidance and we always aims and strive for more but we want to put a number out there, but we feel confident in our ability to deliver.

Andrew Schmidt: The first question comes from Andrew Schmidt with City. Please go ahead. Hi, Greg. Hi, Mimi. Thanks for taking my questions. I guess just to drill down on the fourth or fourth complementary performance, and I know you're right, fiscal year metrics are the best way to look at the business. But is there anything for the fourth quarter that affected revenues that are timing shifts, or perhaps some of the things you called out for the fiscal first quarter that impacted results or was it truly kind of tough cops? Thank you very much.

Jason Kupferberg: Okay, that's helpful.

Speaker Change: Okay. That's helpful. Just a follow up on the payments segment I wanted to hone in on our production a little bit I know on the issuer processing side things are pretty stable, but there'd be some softness and card production earlier in the year did you see some reversal of that what are you expecting perhaps 25 on the card production.

Mimi Carsley: Just to follow up on the payment segment, I'm going to hone in on card production a little bit. I know on the issue of processing side and some things are pretty stable, but there had been some softness and card production earlier in the year. Did you see some reversal of that? What are you expecting for F-25 on the card production side? Yeah, I think that was more of a one-time issue that we've worked through. It was not an issue in Q4. We don't expect it to be an issue going forward. It's resolved itself. Excellent.

Speaker Change: Hi.

Speaker Change: Yeah, I think that was more of a onetime issue that we've worked through it was not an issue in Q4, we don't expect it to be an issue that we bought it's resolved itself.

Mimi: Excellent. Thank you Mimi.

Mimi Carsley: Thank you, Mimi. You're welcome.

Mimi: Youre welcome.

Greg Adelson: Morning Andrew, I appreciate the question, although I was really, just as you just mentioned, the importance of looking at our year on a year long basis rather than the quarters, they don't see any trends and I think structurally looking to you that we would call out, I think it was mostly just you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outside. And so I think it was just a matter of this quarter playing out in that pattern.

John Davis: The next question comes from John Davis with Raymond James. Please go ahead.

Mimi: The next question comes from John Davis with Raymond James. Please go ahead.

Mimi Carsley: Please go ahead.

John Davis: Good morning, guys. Greg, I want to circle back to Coral Wins. He called out 15 or greater than a billion in assets versus five just a year ago. Just curious where that stacks up historically. Is it always kind of been in the low to mid single digits, and now we had a big step up? And then also you called out that your average client is larger today. Any context behind that, like it's X percent bigger than it was five years ago, or any color to help us contextualize the kind of moving up market. Yeah, for sure.

John Davis: Hey, Good morning, guys, Greg I wanted to circle back to its core wins I know you called out 15 were greater than $1 billion.

Assets versus five just a year ago, just curious where that stacks up historically is always kind of been a low to mid single digits and now we had a big step up and then also you've called out that your average client.

Speaker Change: Is larger today any context behind that like it's X percent bigger than it was five years ago or any color to help us contextualize the.

Greg Adelson: Got it, appreciate that. And maybe I could ask a question on just the new wind side, you know, step up in, you core signed above one billion in assets, it's pretty bright spot. What, you know, obviously there's multiple factors that drive that, but is it possible to still that down, is it product, is it through to market focus, you know, what's striving the move up market, I know that's been a team in the past several years, but it seems like you're you're making faster progress towards that shifting towards higher asset size institution, so enough to get some more color there, thank you very much.

Speaker Change: Kind of moving up market.

Yeah for sure. So I appreciate the question J D. So I'll start with your first one so yes <unk> is by far.

Mimi Carsley: Good morning.

Gregory Adelson: So I appreciate the question, JD. So I'll start with the first one. So, yeah, 15 is by far a historical number for us. So five last year was more on the average. So we would typically be in the four to six ranges, something like that on an average year. So 15 is a big step up for us. And again, I think a lot of it is what I had mentioned earlier on, I believe, was Andrew's question or was around just kind of what we've been doing on our level of execution and showing the innovation that we had.

Mimi Carsley: Thanks for taking the question.

Mimi Carsley: Clearly, new sales activity has been very strong, but you're going with larger institutions.

Speaker Change: Historical number for us so five last year was more on the average so we would typically be in the four to six range is something like that.

Speaker Change: On an average year. So 15 is a big step up for us and again I think a lot of it is what I had mentioned earlier.

Speaker Change: I believe it was Andrew's question was around.

Speaker Change: Just kind of what we've been doing on our level of execution and showing the innovation that we have I really truly believe that.

Greg Adelson: Sure, Andrew, this is Greg, so yeah, thanks for the question. I think, you know, as I tried to reference a little bit in the script, but you know more importantly, it is about our level of execution. We're hearing this on a regular basis that, you know, I think you know this and most people do that we do provide to our clients what our roadmaps are and we show what we're going to be doing and when we're going to be doing it.

Gregory Adelson: I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space. So I think that has helped us a lot to your second question. Yeah, I think I had referenced over four years. I can't tell you over five, but over four we had grown our banking assets by 27% and our credit being assets by 34%, and those were over the last four years. So that is an aggregation of a few things. One, the continued growth of our customers and what we've been able to do to help them grow deposit growth.

Speaker Change: We are now viewed in the industry as the innovative leader.

Speaker Change: Especially when it comes to core processors.

Speaker Change: This space. So I think that has helped US a lot to your second question, Yes, I think I had referenced over four years I can't tell you over five but over four we have grown our banking assets by 27% and our credit union assets by 34%.

Greg Adelson: And I think there's a level of trust and belief and sort of the more that we're executing the more that our technology innovation is getting out there and they're seeing the results and it's providing a really an opportunity for us to get in front of these larger customers. First of all, and then second of all, you know, as we mentioned our associates and our client service reputation continues to truly shine, especially at a time when when maybe it's not in the rest of the industry, so those have been big.

Speaker Change: Those were over the last four years. So that is an aggregation of a few things one the continued growth of our customers and what we've been able to do to help them grow deposit growth obviously some things.

Gregory Adelson: Obviously, some things, you know, may have been helped through PPP at the time, but the reality is their assets continue to grow; some of the products that we provide. You know, Bano and products like that definitely have a really big impact on deposit growth. And then, of course, some of it is the wins that we've had as well.

Speaker Change: We have a long been known for providing exceptional customer service and this year was no exception.

Speaker Change: May have been helped through PPP at the time, but the reality is their assets continue to grow some of the products that we provide.

Speaker Change: <unk> and products like that definitely have a really big impact on deposit growth and then of course some of it is the wins that we've had as well.

Speaker Change: In fiscal year 2024, our client satisfaction score when rating the engagement with a client service represented average 4.74 per month on a five-point scale. On that scale, a meets expectation is 3.0 and extremely satisfied is 5.0. You have to have a lot of fives to average a 4.74.

Greg Adelson: And then, you know, I think we've also hired some really good and talented sales individuals that have come with experience and selling into these larger institutions and that's continued to help us as well. But I think it's a combination of all those things that are coming to fruition and allowing us to be successful. Got it. Thank you very much, Greg. Appreciate the comments. Sure.

Unknown Executive: Okay, that's super helpful.

Free cash flow conversion was 88%. Our commentary entering this year included an elevated level of cash tax payment based on the negative Section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact. The net result was lower cash taxes equating to an approximate $29 million overpayment last fiscal year.

Speaker Change: Okay. That's super helpful. And then maybe I wanted to drill in on on free cash flow a little bit obviously much better in the fourth quarter.

Mimi Carsley: And Mimi, I want to drill in on free cash for a little bit. Obviously, much better in the fourth quarter. I think at least we expected it, and for the full year relative to your initial outlook. But if I adjust out the $29 million overpayment in 23, I guess you got back in 24, I still get free cash look conversion around 80%.

Mimi Carsley: As such, our full year expectation for free cash flow conversion is 65 to 75 percent.

Mimi Carsley: Our current view has a cadence of Fiscal 25 non-gap revenue and margin increasing sequentially throughout the year. This increasing cadence will result in a strong second half that will be more pronounced than typical.

Speaker Change: At least we expected and for the full year relative to your initial outlook, but if I adjust out the 20 $29 million of overpayment in 'twenty three that I guess, you got back in 'twenty four I still get free cash flow conversion of around 80%. So maybe just help me kind of walk from the 82 the call it midpoint of $70 you're talking about.

Mimi Carsley: Consequently, Q1 is expected expectation for non-gap revenue growth is approximately 5.25 percent and non-gap margin to contract approximately 150. This is due to slower growth rates on on-premise annual maintenance and card processing. As a reminder, we see fluctuations in quarterly results relating to software usage license components along with the timing of implementation.

Mimi Carsley: Therefore, the correct performance indicator for our business is the consistently strong fiscal year financial results.

Mimi Carsley: So maybe just helped me kind of walk from the 80 to the call at midpoint of 70 that you're talking about for more expecting and fiscal 25. Yeah, happy to, J.D. Rachel is one of my very topics, so let me give you a little bit more of the wall color there, because I think there's two major components. If you take the 88% that we just released for the whole year, there's versus the prior year 55. There's two components that overstated the FY24 conversion. One is, as we just talked about, that $29 million of essentially an overpayment in FY23 taxes.

Vasundhara Govil: The next question comes from Vasu, Goville with KBW. Please go ahead. Hi, thanks for taking my question. First one for you, Greg.

Speaker Change: For a more expecting in fiscal 'twenty five.

Speaker Change: Yeah happy to JV cash free cash flow is one of my favorite topics. So let me give you a little bit north of one color there because I think there's two major components.

Our consistent dedication to value creation resulted in a trailing 12-month return on invested capital of 20%. Additionally, I would highlight other notable return on capital metrics for the year, including $28 million in share repurchases, more than offsetting annual dilution, $125 million in debt reduction, and $156 million in debt recovery.

Speaker Change: The third theme is technology innovation.

Greg Adelson: Just as you've taken over the range, any sort of strategic changes that you're envisioning for the company that the company might need and where are you focusing more of your efforts at this point. Yeah, no, I mean, fortunately, I took over for an individual that did a pretty good job. So, not being significant. I mean, we've been able to really make a very, what I would say a very smooth transition. And so, you know, we're focused on some things that I've talked about.

Mimi Carsley: In conclusion, Q4 and full year results reflect strong performance and achievement of our targeted goal.

Mimi Carsley: We entered Fiscal 25 with positive momentum and expect to drive impressive revenue growth and margin expansion. We remain exceptionally positive about demand for our solutions and the strength of our clients resulting in superior shareholder value creation.

Mimi Carsley: We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing confidence.

Speaker Change: If you take the 88% that we.

Heading into a new fiscal year, I will conclude with guidance. As you are aware, yesterday's press release included fiscal 2025 full-year gas guidance, along with an enhanced transparency reconciliation to non-gas guidance measure.

Speaker Change: This release for the full year.

While the press release also includes a fiscal 25 non-GAS ETF metric, this is not intended to be a new guidance metric. The purpose is to provide additional clarity on our numbers, for example, current acquisition year-over-year comparison.

And it should be noted that a 24% tax rate is, Deconversion guidance will continue to follow the methodology introduced in Fiscal 24, and for Fiscal 25, Deconversion Revenue Guidance is $16 million.

Speaker Change: Versus the prior year of 55, there's two components that overstated, the FY 'twenty or conversion one is as we just talked about that 29.

So your GAAP and non-GAAP revenue guidance is 7 to 8 percent.

Based on the above revenue growth that generates sustainable accretive sources of margin, we're guiding to an annual non-gap margin expansion of 25 to 40 days.

Speaker Change: Dollars have essentially an overpayment in FY2023 tax at the other thing is the collection timing of our annual meeting this year.

All of the above are aligned with our near-term targets as the business operations remain healthy and consistent.

Mimi Carsley: The other thing is the collection timing of our annual maintenance. And this year, as you know, those invoices go out in the late spring or the summer. We start collecting on them in the June, July timeframe. And just depending on in any given year, how many people pay them, you know, as soon as they get them versus, you know, in July, sometimes in a given year, that shift, the timing of that collection and impacting. Free cash flow. So this year, I would say there was probably about $60 million of the timing collection-related benefit for the free cash flow conversion in FY24, so if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is, you know, in line with where we think for FY25, hopefully a little better than that, as we get in our guidance range.

Speaker Change: We continue to invest in technology to help our clients remain vibrant financial institutions in the markets they serve. We are executing our technology modernization strategy while bringing new leading edge solutions to the market before our competition.

Greg Adelson: You know, obviously the execution of the tech modernization strategy and what we've been doing with one Jack Henry continues. I've talked a little bit and we'll talk a lot more at the investor day about our SMB strategy and where we're going with that. So, there's a lot of excitement behind that that will be unveiling. And then there's a couple things that we talked around product rationalization and really looking at things primarily in the complimentary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things.

Full Year Tax Rate Estimate for Fiscal 25 is 24%.

The above guidance metric results in a full year guidance for GAAP EPS of $5.78 to $5.87 per share, with a growth of 11% to 12%.

Fiscal 23 has lower-than-expected free cash flow conversion due to a cash-tax overpayment, which resulted in Fiscal 24 having a better-than-expected conversion method.

Absent further legislative action, Fiscal 25 will be a reversion to the expected trendline, resulting from the expiration of tax benefits in Section 174. As such, our full year expectation for free cash flow conversion is $65 to $75 billion.

Speaker Change: As you can get those invoices go out in the late spring early summer we start collecting on them in the June July timeframe, and just depending on in any given year. How many people pay then you know as soon as they get done versus in July sometimes any given year that ship.

Speaker Change: A couple of final items.

Greg Adelson: A lot of them are very small, but again, just making sure we stay focused on the things that really do move the needle. But I would say anything else really outside of that and just staying true to who we are as a company and our leaders. That's very helpful color.

Speaker Change: The timing of that collection of impacting free cash flow. So this year I would say there is probably about $60 million of timing and collection related benefit to the free cash flow conversion in FY 'twenty four.

Speaker Change: So if you adjust both of those roughly talking probably a 65% free cash flow conversion, which is in line with where we think for FY 'twenty by hopefully a little better than that as we get into our guidance range, but that is that it's been out.

Mimi Carsley: And then a quick one for you, Mimi, just on the payment segment, it was good to see the acceleration in revenue growth there. I know you called out broad related services.

Mimi Carsley: But, but that is, that is the math. Okay, no, very helpful.

Mimi Carsley: Drew, please open the line for questions.

Speaker Change: Okay, no very helpful. Thanks, guys.

Unknown Executive: Thanks, guys. Thank you.

Speaker Change: Thank you.

Mimi Carsley: I guess just maybe if you could define a point on whether all of the acceleration with these value added services, could I think said debit numbers, we saw from the mastercard, but pretty consistent sequentially. Yeah, the payment segment at 8.4% growth for Q4, and more importantly, the 6.7% growth for the full year, it was a big year for payment, especially given throughout the year some economic uncertainty around the strength of the US consumer.

Will Nance: The next question comes from Will Nance with Goldman Sachs. Please go ahead.

Will Nance: The next question comes from will Nance with Goldman Sachs. Please go ahead.

Mimi Carsley: Certainly.

Mimi Carsley: We will now begin the question and answer session.

Will Nance: Hey, guys, appreciate you taking the question. I just wanted to follow up on the one queue guidance and sort of the trajectory over the course of the year. I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance. I think he's kind of just touched on that, but I think you also referenced processing on the payment side. So maybe can you just drill down on sort of expectations? I guess maybe stripping around stripping out the annual license impact. You know, what are the kind of embedded assumptions around the payment segment in one queue, who we expect that kind of 8% level to continue into next year, and then maybe just talk about, you know, drivers of the acceleration of the course of the year outside of some of the annual, the annual fees that you, that you just sit on.

Will Nance: Hey, guys I. Appreciate you taking the question I just wanted to follow up on the <unk> guidance and sort of the trajectory over the course of the year I know there are some kind of seasonal impact that typically hit the first quarter around the annual maintenance I think is kind of just touched on that but I think you also referenced processing on the payments side. So maybe can you just drill down on sort of.

Our current view has a cadence of fiscal 25 non-debt revenue and margin increasing sequentially throughout the year. This increase in cadence will result in a strong second half that will be more pronounced than typical.

Consequently, Q1 is expected expectation for non-GAAP revenue growth is approximately 5.25%, and non-GAAP margin to contract approximately $100,000. This is due to slower growth rates on on-premise annual maintenance and card dropouts. An additional factor is several long-term software usage contracts closing in Q1 of the prior year, which delivered significant allocation of license fees in that same quarter.

Speaker Change: Expectations, I guess, maybe stripping around stripping out the annual license impact.

Mimi Carsley: We're seeing the trends from that, you know, being in line with our expectation, still healthy but not over-exuberant from a spending perspective. The nice thing about our payments business is not just art, we have other businesses, we have the TPS business, we have the pay center business. Those are doing quite well, we're seeing a lot of ran, especially as the continuation of real-time payments, the broad solutions that are helping people feel comfortable in going to these newer solutions.

What are the kind of embedded assumptions around the payments segment in <unk> should we expect that kind of 8% level to continue into next year and then maybe just talk about drivers of the acceleration of the course of the year outside of some of the annual.

Annual fees.

Speaker Change: If at all.

Mimi Carsley: Yeah, really appreciate the question. I would say this year we gave probably a little bit more color than we have in past years, only because of the way we think the pattern will play out. We don't die to a quarterly; we manage the business on an annual basis. But in an effort to make sure that people work surprise by, by the way, the Q1 might play out. We wanted to give a little bit more specificity there. I think if you look at the summer of the drivers, you know, we expect a modest, you know, Q1 from a payments perspective, but that's coming off the payments usually grows throughout the year.

Yeah, well I appreciate the question I would say this year, we gave probably a little bit more color than we have in past years only because of the way. We think that pattern will play out we don't guide to quarterly we manage the business on an annual basis.

The rest of the year improved strongly, with limited risk, resulting in the full year guidance remaining consistent with our near-term targets. 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 for a business is the consistently strong fiscal year financial result.

In conclusion, Q4 and full year results reflect strong performance and achievement of our targeted goals.

We enter Fiscal 25 with positive momentum and expect to drive impressive revenue growth and margining. We remain exceptionally positive about demand for our solutions and the strength of our clients, resulting in superior shareholder value creation.

We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing.

Operator: Drew, please open the line for questions.

Andrew Schmidt: The first question comes from Andrew Schmidt with Citi.

Certainly.

We will now begin the question and answer session.

To ask a question, you may press star, then 1, on your telephone keypad.

If you're using a speakerphone, please pick up your handset before pressing the key.

To withdraw your question, please press star then 2.

Mimi Carsley: So those two businesses are doing quite well from the processing and the remit business that we're all has been healthy. Within card, as you mentioned, we do have a whole portfolio of complementary services that surround the card trend action, and we're continuing to see nice demand for those services. So that's really helping us from a total portfolio perspective.

Please go ahead.

At this time, we will pause momentarily to assemble our roster.

Mimi Carsley: Thank you very much. Welcome.

Speaker Change: In an effort to make sure that people weren't surprised by.

Speaker Change: Bye bye the way that you want might play out we wanted to give a little bit more specificity there.

Speaker Change: I think if you look at the cover of the drivers.

Speaker Change: Yeah, we expect a modest Q1 from a payments perspective, but that's coming off the payments usually grows throughout the year. So that's usually just your typical restart from an annual basis. The other thing to look at is we have very strong.

Jason Kupferberg: The next question comes from Jason Kupferberg with Bank of America. Please go ahead. Good morning guys, I just wanted to start on the margin side. I know that you comfortably beat your initial fiscal 24 guidance on the margin line, the initial fiscal 25 guide calls for less margin expansion than in 2024. So is this reflective of some ongoing conservatism or were there some transitory tailwind plaster, you don't expect to recur. I know you're starting off the air down about 100 basis points in Q1, but just want to get a little bit more color on the margin outlook, please.

Mimi Carsley: So that's usually just your typical restart from an annual basis. The other thing to look at is we have very strong in hardware that's past year and FY24. So that from just the nature of the cycle of hardware sales, the clients, the new hardware that comes out. We think that probably FY25 may not be as robust as the very strong first half of FY24. So I think that's some of the things. And then, as you mentioned, that very important software usage contrast, and particularly the software licensing part of that. As you see more people over time, you know, those renewals and how that reseller works.

Speaker Change: And hardware this past year in FY 'twenty, one so that from a J.

Speaker Change: Just the nature of the cycle of hardware sales.

Speaker Change: The our clients the new hardware that comes out.

They probably FY 'twenty five.

Speaker Change: May not be as robust as it is the very strong first half of FY 'twenty or.

So I think that some of the things and then as you mentioned that very important software usage contrast, and particularly the operating licensing part of that.

Jason Kupferberg: I appreciate you bringing up that important point margin expansion is one of the key elements that we are both on as a management team where we're quite disciplined as we think about the cost of the organization. And you are building for scale feature success. I would say there's a couple of things I don't think it's an excessive conservatism. I think that's what we feel confident that the market and the model generate.

Speaker Change: As we see more people.

Speaker Change: Over time.

Speaker Change: The renewal and how that reseller, where last year, we just saw a wave of first half renewals.

Mimi Carsley: Last year, we just saw a wave of first half renewals that we think the pattern this year will be a little less than the first half that we wanted to call that out.

Speaker Change: That we think the pattern this year will be a little less in the first half that we wanted to call that out.

Mimi Carsley: Yep, that's all. That's all super helpful.

Jason Kupferberg: But there are some headwinds as we leave FY 24 into 25 that helps us in 24 change like the slowly backfill of the Egypt departures, particularly that's part of debris. And why you'll see the die for Q1 a little bit weaker is that really helped us in Q1 of FY 24 as well as we had a one time shift in the timing of our annual merit increased cycle. So those those are some issues that create just kind of the grow over challenge next year.

Speaker Change: Yes, that's all that's all Super helpful. And then maybe just more big picture on the payments segment got a lot of questions on just what the building blocks for growth there.

Gregory Adelson: Hi, Greg and Mimi.

Gregory Adelson: And then maybe just more big picture on the payment segment, got a lot of questions on just what the building blocks for growth there. You know, knowing that it's your processing is a big part of that business. It's been a lot of discussion around, you know, the kind of domestic, debit transaction trends, kind of more broadly and just what the growth as it was there. I guess in a world where debit transactions are growing six, you know, what do you see kind of the most important driver for growing?

Speaker Change: Knowing that issuer processing is a big part of that business.

Speaker Change: It's been a lot of discussion around the kind of domestic debit transaction trends kind of more broadly than just what the growth adds over there I guess.

Speaker Change: Where debit transactions are growing six.

Speaker Change: What is what do you see as kind of the most important driver for growing.

Gregory Adelson: More in line with sort of how you friend belong from targets in the segment, you call that enterprise payments that believe today just, you know, what in your mind are kind of the big building blocks to get to the second targets there.

Speaker Change: More in line with sort of how you framed belongs on targets in the segment.

Speaker Change: You called out enterprise payments I believe today just.

Jason Kupferberg: But in general, we just quite confident that the model continues to produce margin expansion at a nice clip. So we're excited about the year guidance and you know, we always aim and strive for more. But we want to put a number out there that we deal confident our ability to deliver.

Speaker Change: What in your mind are kind of the big building blocks to get to the <unk>.

Speaker Change: <unk> targets there.

Gregory Adelson: Sure, hey, well, this is Greg.

Sure Hey, well this is Greg I'll take that one so I think theres a couple of things I think EPS has theres. Some from some things that we're doing in that product base that could have some some additional growth, but I think the most of it is going to come from really the other two payment groups. So as you know what we're doing with our bill pay and turning that into more of a.

Thanks for taking my questions.

Gregory Adelson: I'll take that one. So I think there's a couple things. I think EPS has, you know, there's some, some things that we're doing in that product base that could have some additional growth, but I think the most of it is going to come from really the other two payment groups.

I guess just to drill down on the fourth quarter board complimentary performance, and I know, you're right, fiscal year, you know, metrics are the best way to look at the business.

Mimi Carsley: Okay, that's helpful. Just to follow up on the payment segment, I'm going to hone in on card production a little bit. I know in the issue of processing side and some things are pretty stable, but there had been some softness and card production earlier in the year. Did you see some reversal of that? What are you expecting for F-25 on the card production side? Yeah, I think that was more of a one-time issue that we've worked through. It was not an issue in Q4. We don't expect it to be an issue going forward. It's resolved itself. Excellent. Thank you Mimi. You're welcome.

Gregory Adelson: So, as you know, what we're doing with our bill pay and turning that into more of a bill management solution with the Pay Rails acquisition and what we've done to combine the back end of the I Pay solution, the Very and the front end of the Pay Rail solution and kind of rolling that out and what we call Journey to One. And that will be, you know, is continuing to get completed and executed on time. We'll have that done by the end of the fiscal year, but the reality is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that.

Speaker Change: Bill Bill management solution with the <unk> acquisition, and what we've done to combine the backend of the IP solution that vary in the front end of the pay rail solution and kind of rolling that out in what we call journey to one and that will be continuing to get completed and executed on.

Speaker Change: Time will have that done by the end of the fiscal year, but the reality is is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that.

John Davis: The next question comes from John Davis with Raymond James. Please go ahead. Good morning, guys. Greg, I want to circle back to CORE wins. He called out 15 or greater than a billion in assets versus five just a year ago. Just curious where that stacks up historically is it always kind of been in the low to mid-single digits and now we had a big step up. And then also you called out that your average client is larger today.

Gregory Adelson: And so there's some opportunities there. And the other big one comes from the pay center application and what we've done today on the receive side where, you know, we have roughly over 300 institutions on all three of those faster payment rails today, including the Fed Now. And which is roughly about 40% of the RTP clients that are live and roughly about 30% of the Fed Now clients, but we're working with our clients today because of the fraud modules that we've been able to create with Financial Crimes Defender and I referenced a lot of those sales.

Speaker Change: And so there's some opportunities there and the other big one comes from the pace in our application and what we've done today on the receive side, where we have roughly over 300 institutions on all three of those faster payment rails today, including the fed now.

Speaker Change: We are looking forward to our annual client conference, Jack Henry Connect in October. This is a great opportunity every year for us to meet with prospects, clients and partners. Last year, 17 of our new core wins were with prospects who attended the conference.

Speaker Change: As I reflect back on fiscal 2024, I want to again thank Dave Foss for his outstanding leadership as CEO for the past eight years.

John Davis: Any context behind that like it's X percent bigger than it was five years ago or any color to help us contextualize the kind of moving up market. Yeah, for sure. So I appreciate the question, JD. So I'll start with the first one. So yeah, 15 is by far a historical number for us. So five last year was more on the average. So we would typically be in the four to six ranges, something like that on an average year.

Speaker Change: I am honored and humbled to take over as CEO and excited to log with our entire leadership team about the opportunities ahead.

Speaker Change: And which is roughly about 40% of the.

Speaker Change: We are executing on our strategy and our associate engagement and client satisfaction scores are consistently strong.

Speaker Change: RTP clients that are alive, and roughly about 30% of the fed now clients, but we're working with our clients today because of the fraud modules that we've been able to create.

Speaker Change: With the financial crimes defender and I referenced a lot of those sales.

Gregory Adelson: We're working with our clients on the use cases to be able to do send, and once the send capabilities get out and we get some more leverage for that and some things to get changed. I think with a few of the use cases in particular, I think there's some real upside in that particular group as well.

Speaker Change: We're working with our clients on the use cases to be able to do soon and once the same capabilities get out and we get some more.

Speaker Change: Leverage of that and some things that could change I think with a few of the use cases in particular I think there's some real upside in that particular group as well so.

John Davis: So 15 is a big step up for us. And again, I think a lot of it is what I mentioned earlier on I believe was Andrew's questioner and was around just kind of what we've been doing on our level of execution and showing the innovation that we had. I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space.

Gregory Adelson: So, as Mimi referenced, it isn't all about card. Obviously, card is the biggest driver, but there's a few of these of the ancillary solutions within payments that I think have some some some upside over the next, you know, a couple of years. That's great. I appreciate your second question.

As Mimi referenced it isn't all about card obviously card is the biggest driver, but theres a few of these of the ancillary solutions within payments that I think have some some some upside over the next couple of years.

Speaker Change: Technology spending by financial institution remains robust and there's clear demand for our differentiated and innovative technology as validated by our strong quarter in fiscal year. We are very well positioned for future success.

Speaker Change: Got it that's great color I appreciate you taking the questions. This morning.

Unknown Executive: Sure.

Speaker Change: Sure.

Gregory Adelson: To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: The next question comes from Chris Kennedy with William Blair. Please go ahead.

Christopher Kennedy: The next question comes from Chris Kennedy with William Blair.

Gregory Adelson: If you're using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: I look forward to seeing and speaking with many of you on our investor day in Dallas on September 5th. We have an exciting agenda that will have several of our new business leaders available for a meet and greet as well.

John Davis: So I think that has helped us a lot to your second question. Yeah, I think I had referenced over four years. I can't tell you over five, but over four we had grown our banking assets by 27% and our credit being assets by 34% and those were over the last four years. So that is an aggregation of a few things. One, the continued growth of our customers and what we've been able to do to help them grow deposit growth.

Christopher Kennedy: Please go ahead. Good morning. Thanks for taking the question. Clearly, new sales activity has been very strong, but you're going with larger institutions.

Gregory Adelson: To withdraw your question, please press star then 2.

Gregory Adelson: Is there any impact on kind of the timeline to implementation of some of these newer wins?

Chris Kennedy: Good morning, Thanks for taking the question clearly new sales activity has been very strong, but youre going with larger institutions is there any impact on kind of the timeline to implementation of some of these newer wins.

Gregory Adelson: At this time, we will pause momentarily to assemble our roster.

Speaker Change: With that, I will turn it over to Mimi for more specifics on our financials.

Mimi Carsley: Thank you, Greg.

Gregory Adelson: Is there any impact on kind of the timeline to implementation of some of these newer wins?

Gregory Adelson: The first question comes from Andrew Schmidt with Citi.

Gregory Adelson: No, Chris, I'll take that.

Speaker Change: Good morning, everyone.

Gregory Adelson: No, Chris, I'll take that. This is great.

Chris Kennedy: No Chris I'll take that this is Greg so no I mean typical.

Mimi Carsley: Our continued focus on serving our community and regional financial institution clients in delivering shareholder values led to another quarter of a solid revenue and earnings growth. I will start with the details, driving our fourth quarter and total year results, then conclude with the fiscal 25 guidance. 34 gap revenue increased 5% and non-gap revenue increased 6%.

Gregory Adelson: So no, I mean, difficult, and it just as a reminder really for everybody that typically, when we win these new core deals, it's usually a 12 to 18 month process. So depending on who that institution is, really what the timeline is of their existing contract, you know, some clients like to get out ahead of their termination window. And so there's negotiations and things that they place. And then there's a kind of a wait-and-see period for not wait-and-see but wait period for for that implementation. But we're still in that 12 to 18-month typical window for the for those implementation.

Speaker Change: As a reminder, really for everybody that typically when we win these new core deals. It's usually a 12 to 18 month process.

Mimi Carsley: Continuation of the consistently solid performance.

John Davis: Obviously, some things may have been helped through PPP at the time, but the reality is their assets continue to grow some of the products that we provide. Bano and products like that definitely have a really big impact on deposit growth. And then of course, some of it is the wins that we've had as well.

Speaker Change: So depending on.

Speaker Change: Who that institution is really what the timeliness is of their existing contract some clients like to get out ahead of their their termination of window and so theres negotiations and things that take place and then there's a kind of a wait and see period for not wait and see but wait period.

Greg Adelson: Okay, that's super helpful.

Mimi Carsley: And Mimi, I want to drill in on free cash for a little bit. Obviously much better in the fourth quarter. I think at least we expected it and for the full year relative to your initial outlook. But if I adjust out the $29 million of over payment in 23 that I guess you got back in 24, I still get free cash look conversion around 80%. So maybe just helped me kind of walk from the 80 to the call at midpoint of 70 that you're talking about for more expecting in fiscal 25.

Speaker Change: For for that implementation, but we're still in that 12 to 18 months typical window for the for those implementation. So really anything that we just sold those 22 arent going to see for the most part are going to see any real revenue for Jack Henry in this fiscal year.

Mimi Carsley: Full year growth was 7% on both a gap and non-gap basis.

Speaker Change: Fourth quarter de-conversion revenue of approximately 7 million, which we pre-release, was down approximately 8 million for reflecting minimal financial institution consolidation of our clients.

Gregory Adelson: So really anything that we just sold those 22, you know, aren't going to see for the most part are going to see any real revenue for Jack Henry in this fiscal year. Obviously, the ones we sold last year, and many reference an increasing opportunity for us in our quarters over time. And some of that is a byproduct of the timing of some of those implementations. But, but we're not seeing anything today that has extended beyond what we had typically seen in the past.

Speaker Change: Full year de-conversion revenue was 17 million, 15 million less than the prior year, was consistent with diet.

Speaker Change: Obviously, the ones, we sold last year and mainly referenced.

Speaker Change: An increasing opportunity for us in our quarters.

Speaker Change: Over time, if some of that is a byproduct of the timing of some of those implementations, but but we're not seeing anything today that is extended beyond what we had typically seen in the past.

Speaker Change: Now let's look more closely at the details.

Mimi Carsley: Yeah, happy to, J.D. Cat, Rachel is on my very topic, so let me give you a little bit more of the wall color there, because I think there's two major components. If you take the 88% that we just released for the whole year, there's versus the prior year 55, there's two components that overstated the FY24 conversion. One is, as we just talked about, that $29 million of essentially an overpayment in FY23 taxes.

Speaker Change: Jack services and support revenue increased 2% will non-gap increase 4%.

Speaker Change: For the year, the increase was a healthy 5% for gap and 6% on a non-gap basis. Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenue partly offset by decreases in de-conversion implementation and maintenance being revenue.

Gregory Adelson: This is great.

Speaker Change: Yes.

Mimi Carsley: Great, thanks for that, and then just a quick one on return on the invested capital. Obviously, it's very high, but it has come down over the last couple of years. Any thoughts on kind of the long term opportunity with that metric.

Speaker Change: Great. Thanks for that and then just a quick one on return.

Speaker Change: On invested capital obviously, it is very high but it has come down over the last couple of years any thoughts on kind of the long term opportunity with that metric. Thank you.

Speaker Change: We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter 10% for the year.

Mimi Carsley: Thank you. Great. Yeah, I've started being a disciplined capital allocator. We're being really thoughtful around that. I think the ROIC, well, 20% is an enviable number and something we're quite proud of. It has come down a little bit just based on the map of as we had to take on the debts for the payroll acquisition. We're now paying that down. We pay down that substantially this past year. So as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive ROIC.

Speaker Change: Right.

Speaker Change: That's part of being a disciplined capital allocator.

Speaker Change: It's reoccurring revenue contributor is 31% of our total revenue, and it's long been a key double digit growth engine.

Mimi Carsley: The other thing is the collection timing of our annual maintenance. And this year, as you know, those invoices go out in the late spring or the summer, we start collecting on them in the June, July timeframe. And just depending on in any given year, how many people pay them, you know, as soon as they get them, versus, you know, in July, sometimes in a given year, that shift, the timing of that collection and collecting free cash flow.

Speaker Change: Being really thoughtful around that I think the our NYSE, while 20% is a enviable number in it.

Speaker Change: We're quite proud of.

Speaker Change: It has come down a little bit just based on the math.

Speaker Change: As we had to take on new debt for the Paypal acquisition, we're now paying that down we paid down not substantially this past year.

Speaker Change: As we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities that will drive our ROE I see.

Mimi Carsley: So this year, I would say there was probably about $60 million of timing collection related benefits in the free cash flow conversion in FY24. So if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is, you know, in line with where we think for FY25, hopefully a little better than that as we get in our guidance range, but that is, that is the math. Okay, no, very helpful.

Mimi Carsley: So it's just the very tail end of working through that process. So we expect us to continue on a positive trend and an upward trend. Great.

Speaker Change: So it should the very tail end of working through that process.

Will Nance: Thanks, guys.

Speaker Change: So we expect that to continue on a positive trend in an upward trend.

Speaker Change: Great. Thank you.

Unknown Executive: Thank you. Welcome.

Speaker Change: Welcome.

Gregory Adelson: Please go ahead.

Kartik Mehta: The next question comes from Cartic Meta with North Coast Research. Please go ahead.

Speaker Change: The next question comes from Kartik Mehta with Northcoast Research. Please go ahead.

Mimi Carsley: Thank you.

Gregory Adelson: Hi, Greg.

Kartik Mehta: Good morning, Greg. Great.

Kartik Mehta: Hey, good morning, Greg.

But was there anything for the fourth quarter that affected revenues there, timing shifts, or perhaps the, you know, some of the things you called out for the fiscal, you know, first quarter that impacted results?

Or was it, you know, truly kind of tough cops?

Will Nance: The next question comes from Will Nance with Goldman Sachs. Please go ahead. Hey, guys, appreciate you taking the question. I just wanted to follow up on the one queue guidance and sort of the trajectory over the course of the year. I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance. I think he's kind of just touched on that, but I think you also referenced processing on the payment side.

Greg I wanted to just get your perspective on the core business I know the poker should each year, but.

Kartik Mehta: I wanted to just get your perspective on the core business. I know, you know, the focus should be the year, but after saying that I'm going to talk about the portal. So, apologize for that. A fourth quarter, maybe a little bit lower than expectations, but I'm wondering, you know, as you look at that 5.25, considering all the core, where you've had. Is that a business that you think segment that continues to grow, kind of in line with the overall revenue flow for the company? Yeah. Thanks for the question, for sure. I mean, I think, you know, as we, as we have articulated throughout, I mean, it is a full year of business for us and how we manage the business.

Speaker Change: After saying that I am talking about the quarterly so apologize for that.

Will Nance: So maybe can you just drill down on sort of expectations? I guess maybe stripping around stripping out the annual license impact. What are the kind of embedded assumptions around the payment segment in one queue, can we expect that kind of 8% level to continue into next year? And then maybe just talk about, you know, drivers of the acceleration of the course of the year outside of some of the annual, the annual fees that you just set on.

Third quarter, maybe a little bit lower than expectations, but I'm wondering as you look at FY 'twenty five considering all the core willing to pad.

Gregory Adelson: So, no, I mean, typical and it just is a reminder really for everybody that typically when we win these new core deals, it's usually a 12 to 18 month process.

Speaker Change: It came to processing revenue, which is 42% of total revenue, and another key component of our long-term growth model.

Speaker Change: That a business that you think.

Speaker Change: <unk> segment that continues to grow kind of in line with the overall.

Speaker Change: We've done robust performance with 9% growth on both the gap and non-gap basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue. Completing commentary on revenue, I would highlight the total recurring revenue exceeded 91%.

Speaker Change: Revenue growth.

Speaker Change: A company.

Speaker Change: Next, moving to expenses.

Gregory Adelson: Hi, Mimi.

Gregory Adelson: So depending on who that institution is, really what the timeliness is of their existing contract, you know, some clients like to get out ahead of their termination window. And so there's negotiations and things that take place.

Thank you very much.

Gregory Adelson: Thanks for taking my questions.

Speaker Change: Yeah, Hey, Kartik yeah. Thanks for the question.

Speaker Change: Beginning with the cost of revenue, which increased 6% on both the gap and non-gap basis for the quarter, and 7% from gap versus 6% for non-gap of growth as clear. Drivers to the quarter included a higher direct cost, higher personnel cost, and increased internal licenses and fees.

Speaker Change: Sure I mean, I think as we as we have articulated throughout I mean, it is a it's a full year business for us and how we manage the business.

Gregory Adelson: You know, it was a little tougher comp, you know, from last year compared to this particular one, but there is no concern on what we're doing, where we're going with that particular business. And so the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing and technology, modernization in general. So, you know, I mean, the short answer to your question, Cardic, is it is just as a full year game for us.

Speaker Change: Next, R&D expense increased 4% on both the gap and non-gap basis for the quarter. The quarterly increase is primarily due to increase consulting and other professional services, net capitalization, and a higher cloud consumption cost net capitalization.

Speaker Change: It was a little tougher comp from.

Speaker Change: From last year compared to this particular one.

Speaker Change: But there is there is no concern on what we're doing where we're going with that particular business.

Speaker Change: So the year R&D expense increased 4% on gap basis and 3% for non-gap. Ending with SGNA expense for the quarter on a gap basis, it increased 6% and 13% on a non-gap basis. The quarter gap increase was due to higher personnel costs and increased professional services.

Greg Adelson: Yeah, will I appreciate the question and I would say this year we gave probably a little bit more color than we have in past years, only because of the way we think the pattern will play out. We don't die to a quarterly, we manage the business on an annual basis, but in an effort to make sure that people work surprise by the way that you one might play out, we wanted to give a little bit more specificity there.

Speaker Change: So the significance of the core wins the significance of the products that we're bringing it there on the significance of what we're doing in technology modernization in general so.

Speaker Change: The non-gap quarterly increase was impacted by the one-time expense from the right office capitalized software development related to internal software tools.

Speaker Change: I mean, the short answer to your question Kartik is.

Speaker Change: Just as a full year game for us that's really what it is and got it. This is me if I can just add on you know did tremendous fourth quarter that Graeme talked about the fact that for the South I mean, that's at the very end of our year. So if you think about that cycle for readiness for implementation on the client side.

Mimi Carsley: That's really what it is. And cardic, this is mainly if I just add on, you know, the tremendous fourth quarter of the grid talked about the staff said for the bail. I mean, that's just the very end of our year. So, you think about that cycle for readiness for implementation on the client side when you'll start to see that revenue, you know, is not an FY25 picture for the core. Makes sense.

Gregory Adelson: I guess just to drill down on the fourth quarter board complementary performance.

Gregory Adelson: And I know you're right.

Gregory Adelson: Fiscal year metrics are the best way to look at the business.

Speaker Change: The doubt that one-time expense the quarter increase would have been 8%.

Greg Adelson: I think if you look at the summer of the drivers, you know, we expect a modest, you know, key one from a payments perspective, but that's coming off the payments usually grows throughout the year. So that's usually just your typical restart from an annual basis. The other thing to look at is we have very strong in hardware this past year in FY24, so that from just the nature of the cycle of hardware sales, the appliance, the new hardware that comes out, we think that probably FY25 may not be as robust as the very strong first half of FY24.

Gregory Adelson: And then there's a kind of a wait and see period for not wait and see, but wait period for that implementation.

Gregory Adelson: But we're still in that 12 to 18 month typical window for those implementations.

Speaker Change: When youll start to see that revenue.

Speaker Change: Full year SGNA expense increased 18% on a gap basis and 10% non-gap. The primary gap impacts were the $60 million in one-time costs related to the voluntary early departures and a program.

Speaker Change: No it's not an FY 'twenty five picture.

Speaker Change: For the core.

Speaker Change: Be good.

Speaker Change #100: And then just on.

Gregory Adelson: And then just on a pricing, I know, you know, there's always a competitive industry, and whenever you have rules, pricing gets competitive. But just in general, any change in the environment in the last three, six months that you've noticed.

Speaker Change #101: On pricing I know, there's always a competitive industry and whenever you have renewals pricing gets competitive.

Gregory Adelson: But is there anything for the fourth quarter that affected revenues there, timing shifts, or perhaps some of the things you called out for the fiscal first quarter that impacted results?

Speaker Change #102: In general any change in the environment in the last six months.

Gregory Adelson: Or was it truly kind of tough cops?

That you've noticed.

Gregory Adelson: Thank you very much.

Gregory Adelson: I'll take that. Yeah, I mean, not necessarily. I think.

Speaker Change #103: I'll take that.

Speaker Change #104: I mean not necessarily.

Speaker Change #105: Thank you.

Gregory Adelson: You know, our competition has continued to kind of do what they typically do and kind of how they quote go to battle. And so we haven't seen anything significantly change there. Some of their stories are changing, and some of their approaches are changing, but in reality it is really about what had you done for me. And so, you know, as you can imagine, it's in 22 competitive core wins. A lot of those came from the normal players out there that you would know. And so it's really about our ability to execute, our ability to service, our reputation for doing that, our consistency of how we go about things, the consistency of our team.

Speaker Change: At a prior period, $5 million gain on average, the non-gap increase is driven primarily by higher personnel costs.

Greg Adelson: So I think that's some of the things and then as you mentioned that very important software usage contrast and particularly the software licensing part of that as you see more people over time, you know, those renewals and how that reseller works last year, we just saw a wave of first half renewals. That we think the pattern this year will be a little less than the first half that we wanted to call that out. Yep, that's all, that's all super helpful.

Gregory Adelson: Good morning, Andrew.

Speaker Change #106: Our competition has continued to kind of do what they typically do and how they they quote go to battle.

Gregory Adelson: I appreciate the question, although I would reiterate, just as you just, mentioned, the importance of looking at our year on a year-long basis rather than the quarters.

Speaker Change #106: And so we haven't seen anything significantly changed there.

Some of their stories are changing in some of their approaches are changing.

Speaker Change #106: But in reality it is really about what have you done for me.

Speaker Change: We remain focused on generating compounding margin expansion. While the quarter results deliver 22-based points decreased and non-gap margins 22%, full year margin expansion was 60 basis points on a non-gap margin of 23%. Non-gap margin benefit from the focused process improvement and discipline management of our workforce.

Speaker Change #106: So as you can imagine within 22 competitive core wins.

Gregory Adelson: So really anything that we just sold, those 22, you know, aren't going to see, for the most part, aren't going to see any real revenue for Jack Henry in this fiscal year.

Gregory Adelson: Obviously, the ones we sold last year and Mimi referenced an increasing opportunity for us in our quarters over time.

Gregory Adelson: And some of that is a byproduct of the timing of some of those implementations.

Speaker Change #106: A lot of those came from the normal players out there that you would you would know.

Greg Adelson: And then maybe just more big picture on the payment segment, got a lot of questions on just what the building blocks for growth there. You know, knowing that it's your processing is a big part of that business, it's been a lot of discussion around, you know, the kind of domestic, debit transaction trends, kind of more broadly and just what the growth as it was there. I guess in a world where debit transactions are growing six, you know, what is, what do you see kind of the most important driver for growing?

Speaker Change #106: And so so it's really about our ability to execute our ability to service our reputation for doing that.

Speaker Change #106: Our consistency of how we go about things.

Speaker Change #106: The consistency of our team.

Gregory Adelson: You know, our turnover rate, you know, is very low at the company. And so you just get a consistency with that. So it, you know, again, the short answer for you, Kartik, is, I don't feel that there's anything significantly changing out the marketplace other than, you know, some of the stories that they go with it.

Speaker Change #106: Our turnover rates.

Speaker Change #106: It's very low at the company.

Speaker Change #106: And so you just get a consistency with that so it.

Kartik Mehta: Again, the short answer 40, Kartik is I don't feel that.

Gregory Adelson: I don't see any trends, and I think structurally we'll continue, we would call out.

Gregory Adelson: But we're not seeing anything today that has extended beyond what we had typically seen in the past.

Greg Adelson: More in line with sort of how you friend belong from targets in the segment, you call that enterprise payments that believe today, just, you know, what in your mind are kind of the big building blocks to get to the second targets there. Sure, hey, well, this is Greg. I'll take that one. So I think there's a couple of things. I think EPS has, you know, there's some, some things that we're doing in that product base that could have some additional growth, but I think the most of it is going to come from really the other two payment groups.

Kartik Mehta: There's anything significantly changing out in the marketplace other than some of the stories that go with it.

Unknown Executive: Perfect. Thank you both.

Gregory Adelson: Great, thanks for that.

Perfect. Thank you both I really appreciate it.

Unknown Executive: I really appreciate it. Okay.

Speaker Change: These strong quarterly results produced a fully-deleted gap earnings per share of $1.38 up to 3%.

Kartik Mehta: Sure.

Gregory Adelson: I think it was mostly just, you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outsourcing, and so I think it was just a matter of this quarter playing out in that pattern.

Gregory Adelson: And then just a quick one on return on invested capital.

Speaker Change: This cost 24 fully-deleted ETFs was $5.23 of 4%.

Kartik Mehta: Yes.

Peter Heckmann: The next question comes from Peter Heckman with the Davidson. Please go ahead.

Speaker Change: Beating a 30% headwind from previously mentioned VDIP gained on average exposure prior year and lower G conversion rate.

Kartik Mehta: The next question comes from Peter Heckmann with D. A Davidson. Please go ahead.

Speaker Change: Breaking down the results into the three operating segments we are pleased to see positive performance across the board. Of course, segment revenue increased 4% to the quarter on a non-gap basis. Non-gap operating margin increased 171 basis points.

Gregory Adelson: Got it.

Gregory Adelson: Obviously it's very high, but it has come down over the last couple of years.

Peter Heckmann: Hello, good morning. I wanted to follow up on Banner a little bit and just see, I mean, 927 on Banner retail. I think he said, "That's really impressive." And can you talk about how many clients you still might have on Net Teller or maybe your mobile digital banking product. And how do you think about, you know, the growth of Banner? Wants you substantially upgraded most of your clients from the older systems. Yeah, so it's a great question, Pete. So not to get, you know, in the minutia, but just 924. Just want to make sure we have our numbers right.

Peter Heckmann: Hello, Good morning.

Morning, Andrew.

Peter Heckmann: Wanted to follow up on ban or a little bit.

Speaker Change: Core continues to benefit from private cloud trends and strong cost growth.

Greg Adelson: So as you know, what we're doing with our bill pay and turning that into more of a bill, a bill management solution with the pay rails acquisition and what we've done to combine the back end of the I pay solution, the very and the front end of the pay rail solution and kind of rolling that out and what we call journey to one. And that will be, you know, is continuing to get completed and executed on time.

Speaker Change #108: And just see.

Speaker Change #109: See I mean 927 on D&O retail I think you said thats really impressive in and can you talk about how many.

Gregory Adelson: Appreciate that.

Gregory Adelson: Any thoughts on kind of the long-term opportunity with that metric?

Gregory Adelson: And then maybe I could ask a question on just the new wind, side, you know, step up in new core signed above $1 billion in assets, it's a pretty bright spot.

Gregory Adelson: Thank you.

Speaker Change #110: Clients, you still might have on a net Taylor.

Gregory Adelson: What, you know, obviously there's multiple factors that drive that, but is it possible to still that down?

Gregory Adelson: Is it product?

Speaker Change #110: Or maybe your your mobile digital banking product and how do you think about the growth of banner. Once you substantially upgraded most of your clients from the older systems.

Speaker Change: Full year non-gap revenue was 7% and associated margin increased 135 basis points.

Gregory Adelson: Is it go-to-market focus?

Speaker Change: In its segment, quarterly revenue increased 8% on a non-gap basis. The segment had impressive non-gap operating margin growth of 183 basis points.

Greg Adelson: We'll have that done by the end of the fiscal year, but the reality is is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that. And so there's some opportunities there. And the other big one comes from the pay center application and what we've done today on the receive side where, you know, we have roughly over 300 institutions on all three of those faster payment rails today, including the Fed now.

Gregory Adelson: You know, what's driving the move-up market?

Speaker Change #110: Yes.

Speaker Change #111: Good question Pete.

Pete: Got to get in the minutia, but just is 924 just want to make sure we have our numbers right.

Gregory Adelson: So 924 and so, you know, that continues to be a huge opportunity for us, you know, and there's a lot of runway still in the credit union space, right. So and the bank and say, but really in the credit union space where we have been attacking that part of our core business. So there's still a lot of us. I mean, you think about that we have roughly 1,700 for clients. So there's still a lot of runway within our own base. But of course, we're working on outside the base strategy as well. And so we're working with some of our competitors to get what we need to make that successful.

Gregory Adelson: I know that's been a theme in the past several years, but it seems like you're making faster progress towards shifting towards higher asset size institutions, so we'd love to get some more color there.

Speaker Change #113: So 924, and so that continues to be a huge opportunity for us.

Speaker Change #113: And Theres a lot of runway still in the credit Union space right, So and the banking space, but really in the credit Union space, where we have been attacking that part of our core business. So theres still a lot of upside when you think about that we have roughly 1700 for clients. So theres still a lot of runway within our own.

Gregory Adelson: Thank you very much.

Gregory Adelson: Sure.

Gregory Adelson: Andrew, this is Greg.

Greg Adelson: And which is roughly about 40% of the RTP clients that are live and roughly about 30% of the Fed now clients, but we're working with our clients today because of the fraud modules that we've been able to create with financial crimes defender and I referenced a lot of those sales. We're working with our clients on the use cases to be able to do send and once the send capabilities get out and we get some more leverage for that and some things to get changed.

Speaker Change #113: Base, but of course, where we're working on outside the base strategy as well and so we're working with some of our.

Speaker Change #113: Competitors to to get what we need to make that successful.

Gregory Adelson: Sometimes not as easy as we had hoped to make that happen, but the reality is we're making a lot of progress. And we still expect to do what we said we were going to do, which is get that out of the latter part of this fiscal year or the second half of the calendar year. So that's still on point to answer your question around that tower. I don't know exactly, but you know, it's roughly a couple of hundred left on the net seller platform. Okay. All right.

I appreciate the question, although I would reiterate, just as you just mentioned, the importance of looking at our year on a year-long basis rather than the quarters.

Speaker Change #113: Sometimes it's not as easy as we had hoped.

I don't see any trends that I think structurally will continue that we would call out.

I think it was mostly just, you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outsourcing.

Got it.

Speaker Change #113: To make that happen, but the reality is we're making a lot of progress and we still expect it to do what we said we were going to do which is get that out the latter part of this.

And so I think it was just a matter of this quarter playing out in that pattern.

Appreciate that.

is it go-to-market focus?

And maybe I could ask a question on just the new wind side, you know, step up in new core signed above $1 billion in assets.

You know, what's driving the move-up market?

It's pretty bright spot.

What, you know, obviously, there's multiple factors that drive that, but is it possible to still that down?

Is it product?

I know that's been a theme in the past several years, but it seems like you're making faster progress towards shifting towards higher asset size institutions.

Greg Adelson: I think with with a few of the use cases in particular, I think there's some real upside in that particular group as well. So as Mimi referenced, it isn't all about card. Obviously card is the biggest driver, but there's a few of these of the ancillary solutions within payments that I think have some some some upside over the next, you know, a couple of years. That's great. I appreciate your second question.

So we'd love to get some more color there.

Thank you very much.

Speaker Change #113: This fiscal year or the second half of the of the calendar year.

Sure.

Andrew, this is Greg.

Gregory Adelson: So, yeah, thanks for the question.

Gregory Adelson: Yeah, as part of being a disciplined capital allocator, we're being really thoughtful around that.

Speaker Change: Revenue growth was due to continuing growth in our EPS business and strong card growth from fraud and card related services with lower growth consistent with US consumer spending trend.

So, those have been big.

So, yeah, thanks for the question.

And then, you know, I think we've also hired some really good and talented sales individuals that have come with experience in selling into these larger institutions, and that's continued to help us as well.

I think, you know, as I tried to reference a little bit in the script, but, you know, more importantly, it is about our level of execution.

Speaker Change #113: So that's still so on the point to answer your question around net seller.

We're hearing this on a regular basis that, you know, I think you know this, and most people do, that we do provide to our clients what our roadmaps are, and we show what we're going to be doing and when we're going to be doing it. And I think there's a level of trust and belief.

And so, the more that we're executing, the more that our technology innovation is getting out there, and they're seeing the results, and it's providing a really an opportunity for us to get in front of these larger customers, first of all.

Speaker Change: Margin benefited from focus cost management and for the full year non-gap revenue growth was 7% with 124 basis points of margin and expansion.

And then, second of all, you know, as we mentioned, our associates and our client service reputation continues to truly shine, especially at a time when maybe it's not in the rest of the industry.

Speaker Change #114: I don't know exactly but its roughly a couple of hundred left on the net seller platform.

Speaker Change #115: Okay, Alright, that's helpful and then.

Speaker Change: Finally, complimentary segment quarterly non-gap revenue increased 6% with 75 basis points of margin contraction.

Unknown Executive: That's helpful.

Speaker Change: Margin's attraction was due to direct support growth, ammonization, and lightens this entry.

Gregory Adelson: And then just in terms of MNA, clearly the face of MNA is slowed, and just curious like how much of that is, you know, Jack Henry's three solutions is largely filled out and there's no longer any holes. But are there other effects that you know, to the extent that like the industry is less fragmented. There's not as many small players or valuation, you know, how are all those playing into the yellow criminals. Yeah, I think you hit on all of them. I think it is a combination of much of what you described. You know, we continue to look at opportunities that make sense.

Speaker Change #116: Just in terms of M&A clearly the pace of M&A has slowed and just curious like how much of that is Eva Jack Henry's.

Christopher Kennedy: Sure. The next question comes from Chris Kennedy with William Blair. Please go ahead.

Speaker Change #117: Suite of solutions, because as you know largely filled out and there's no longer any holes.

Greg Adelson: Good morning. Thanks for taking the question. Clearly new sales activity has been very strong, but you're going with larger institutions. Is there any impact on kind of the timeline to implementation of some of these newer wins? No, Chris, I'll take that. This is great.

Speaker Change: This Go-Year non-debt revenue increased 8% with two basis points of margin expansion.

But are there other effects that you have to them.

Speaker Change #118: Did that like they did it.

Speaker Change #119: The industry is less fragmented there's not as many small players or valuation how are all those play into that outlook.

Speaker Change: Go-Year's growth continued to reflect digital solution demands and beneficial overall commitment.

Outlook for M&A.

Gregory Adelson: I think, you know, as I, described the reference a little bit in the script, but, you know, more importantly, it is about our level of execution.

Speaker Change: Now, let's turn to our view of cashflow and capital allocation.

Gregory Adelson: We're hearing this on a regular basis that, you know, I think you know this and most people do, that we do provide to our clients what our road maps are, and we show what we're going to be doing and when we're going to be doing, and I think there's a level of trust and belief, and so the more that we're executing, the more that our technology innovation is getting out there and they're seeing the results, and it's providing a really an opportunity for us to get in front of these larger customers, first of all, and then second of all, you know, as we mentioned, our associates and our client service reputation continues to truly shine, especially at a time when maybe it's not in the rest of the industry, so those have been big, and then, you know, I think we've also hired some really good and talented sales individuals that have come with experience in selling into these larger institutions, and that's continued to help us as well, but I think it's a combination of all those things that are coming to fruition and allowing us, to be successful.

Speaker Change #120: Yeah, I think you hit on all of them I think it is a combination of much of what you described.

But I think it's a combination of all those things that are coming to fruition and allowing us to be successful.

Speaker Change: This Go-24 operating cashflow was $568 million, $186 million increase over the prior period.

Speaker Change: Excluding proceeds from sale of assets, 3 cashflow was $336 million, significantly more than $175 million generated last year. 3 cashflow conversion was 88%.

Greg Adelson: So no, I mean, difficult and it just as a reminder really for everybody that typically when we win these new core deals, it's usually a 12 to 18 month process. So depending on on who that institution is, really what the timeline is is of their existing contract, you know, some clients like to get out ahead of their their termination window. And so there's negotiations and things that they place. And then there's a kind of a wait and see period for not wait and see but wait period for for that implementation.

Got it.

Gregory Adelson: Got it.

Speaker Change #120: We continue to look at opportunities that makes sense. The differences is that really are.

Gregory Adelson: The difference is, is that really our approach hasn't changed; just what we're looking for has changed. So when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native. And so we don't have to rewrite the technology once an acquisition takes place. Obviously, Pay Rails was one of those examples where it was already public cloud native. Looking to your point about gaps. We don't, we don't have the gaps that we had, you know, many years ago, and again, maybe the opposite of where we want to focus, which is about that product rationalization, where we're looking at things that just don't make sense as they once did maybe 10 years ago.

Gregory Adelson: Thank you very much, Greg.

Speaker Change: Our commentary entering this year included an elevated level of cash tax payments based on the negative section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact. The net result was lower cash taxes, equating to an approximate $29 million over payment last fiscal year.

Thank you very much, Greg.

Our approach Hasnt changed just what we're looking for has changed so when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native.

Gregory Adelson: I appreciate the comments.

Appreciate the comments.

Gregory Adelson: Sure.

Sure.

Speaker Change #120: And so we don't have to rewrite the.

Speaker Change #120: Technology once an acquisition takes place obviously pay rail was one of those examples where it was already public cloud native.

Gregory Adelson: I think the ROIC, while 20% is an enviable number and something we're quite proud of, it has come down a little bit just based on the math as we had to take on the debt for the payrolls acquisition. We're now paying that down. We've paid down that substantially this past year.

Gregory Adelson: So as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive ROIC.

Greg Adelson: But we're still in that 12 to 18 month typical window for the for those implementation. So really anything that we just sold those 22, you know, aren't going to see for the most part are going to see any real revenue for Jack Henry in this fiscal year. Obviously, the ones we sold last year and many reference an increasing opportunity for us in our quarters over time. And some of that is a byproduct of the timing of some of those implementations. But, but we're not seeing anything today that has extended beyond what we had typically seen in the past.

Speaker Change #121: Looking to your point about gas, we don't we don't have the gas that we had many years ago and again, maybe the opposite of where we want to focus which is about that product rationalization, where we're looking at things that just don't make sense as they once did maybe 10 years ago.

Gregory Adelson: And so we're looking at that. But I think when you look at the opportunities in front of us, public cloud native number one, number two is, do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more, or in some of the things that we're doing to roll out in our. I would say the key products of digital enterprise account opening broad things a lot of that line. Those are really where we're focused with me. Okay, good stuff.

Speaker Change #122: And so we're looking at that but I think when you look at the opportunities in front of US public cloud Native number one number two is do they helped us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more or in some of the things that we're doing to rollout.

Mimi Carsley: Great, thanks for that.

Mimi Carsley: And then just a quick one on return on invested capital, obviously it's very high, but it has come down over the last couple of years, any thoughts on kind of the long term opportunity with that metric. Thank you. Great. Yeah, I've started being a disciplined capital allocator. We're being really thoughtful around that. I think the ROIC, well, 20% is an enviable number and something we're quite proud of. It has come down a little bit just based on the math of as we had to take on the debts for the payroll acquisition.

Speaker Change #122: In our.

Speaker Change #122: I would say the key products of digital enterprise account opening fraud.

Speaker Change #122: Things along with that line those are really where our focus will be.

Gregory Adelson: The next question comes from Vasu Govil with KBW.

Speaker Change #123: Okay. Good stuff I look forward to seeing a few weeks.

Unknown Executive: I'll look forward to seeing you a few weeks.

Unknown Executive: Okay, thanks.

Steve: Okay. Thanks, Steve.

Charles Nabhan: The next question comes from Charles, not Hunt with Stevens.

Charles <unk>: The next question comes from Charles <unk> with Stephens. Please go ahead.

Vasundhara Govil: The next question comes from Vasu Govil with KBW.

Vasundhara Govil: Please go ahead.

Speaker Change: Our consistent dedication to value creation resulted in a trail in 12 months, return on invested capital 20%. Additionally, I would highlight other notable return on capital metrics for the year, including 28 million jeerie purchases, more than offsetting annual delusions, 125 million in debt reduction, and 156 million in dividend.

Charles Nabhan: Please go ahead. Good morning, and thank you for taking my question. You had mentioned that roughly 73% of your clients are now in the public cloud. I think that's up from 69% at the investor day last year. My question is how much runway is left to move your client base to the cloud. And if you could talk about what that could mean for revenue uplift. I think you had cited two times revenue uplift in the past from additional cross sell, as well as some margin benefits, as well. Any commentary around that would be helpful.

Please go ahead.

Gregory Adelson: Hi, thanks for taking my question.

Gregory Adelson: Hi.

Gregory Adelson: So it's just the very tail end of working through that process.

Charles <unk>: Good morning, and thank you for taking my question you had mentioned that roughly 73% of your clients are now in the public cloud I think that's up from 69% at the Investor Day last year. My question is how much runway is left to move your client base to the cloud and if you could talk about what that could mean for.

Speaker Change: Getting into a new fiscal year, I will conclude with guidance.

First one for you, Greg, just as you've taken over the reins, any sort of strategic changes that you're envisioning for the company that the company might need?

Gregory Adelson: Thanks for taking my question.

And where are you focusing more of your efforts?

Yeah, no, I mean, fortunately, I took over for an individual that did a pretty good job.

Speaker Change: As you were aware yesterday's press release included fiscal 2025 foliar gas guidance, and longed with an enhanced transparency of reconciliation to non-gas guidance metrics.

Mimi Carsley: We're now paying that down. We pay down that substantially this past year. So as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive our ROIC. So it's just the very tail end of working through that process. So we expect us to continue on a positive trend and an upward trend.

So nothing significant.

I mean, we've been able to really make a very, what I would say, a very smooth transition.

Speaker Change: Will the press release also include the fiscal 25 non-gas ETF metrics?

Kartik Mehta: Great. Thank you.

And so, you know, we're focused on some things that I've talked about, you know, obviously, the execution of the tech modernization strategy and what we've been doing with One Jack Henry continues.

I've talked a little bit, and we'll talk a lot more at the investor day about our SMB strategy, and where we're going with that.

So there's a lot of excitement behind that, that will be unveiling.

And then there's a couple things that we've talked around product rationalization and really looking at things, primarily in the complementary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things.

Speaker Change: This is not intended to be a new guidance metric. The purpose is to provide additional clarity on our numbers, for example, current acquisition year-ever-year comparison, and it should be noted that a 24% tax rate is used.

A lot of them are very small.

But again, just making sure we stay focused on the things that really do move the needle.

But I wouldn't say anything else really outside of that.

And just staying true to who we are as a company and our leadership.

Speaker Change #126: For for revenue uplift I think you had cited two times.

Speaker Change #127: Revenue uplift in the past from from additional cross sell as well as some margin benefits as well any commentary around that would be helpful.

Speaker Change: Deacon version guidance will continue to follow the methodology introduced in fiscal 24.

Speaker Change: And for fiscal 25, de-conversion revenue guidance is 16 million.

Gregory Adelson: First one for you, Greg, just as you've taken over the reins, any sort of strategic changes that you were envisioning for the company that the company might need, and where are you focusing more of your efforts at this point?

Gregory Adelson: So we expect that to continue on a positive trend and an upward trend.

Gregory Adelson: Sure, Chuck. I'll say, get me any kind of some commentary is. Yeah, I think so. It is up from from where we were. I don't know if you remember who was 69% but definitely up from where we are. So roughly, you know, we don't expect to get 100% of movement there. I would say that the 93-95% range is probably a reasonable number for us to think through. The other thing is that as we've kind of moved and as we've moved to the type of clients that are left in there, which tend to be, you know, a lot of the larger ones.

Chuck: Sure Chuck.

Gregory Adelson: Yeah, no.

Gregory Adelson: Great, thank you.

Gregory Adelson: I mean, fortunately, I took over for an individual that did a pretty good job, so nothing significant.

Chuck: Take it maybe can add some commentary is yes, I think so it is up from where we were I don't know if you remember was 69%, but definitely up from where we are so roughly you know we don't expect to get 100% of movement there.

Gregory Adelson: I mean, we've been able to really make a very, what I would say, a very smooth transition, and so, you know, we're focused on some things that I've talked about, you know, obviously the execution of the tech modernization strategy and what we've been doing with One Jack Henry continues.

Gregory Adelson: I've talked a little bit, and we'll talk a lot more at the investor day about our S&B strategy and where we're going with that, so there's a lot of excitement behind that that we'll be unveiling, and then there's a couple things that we've talked around, product rationalization and really looking at things primarily in the complementary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things.

Gregory Adelson: A lot of them are very small, but again, just making sure we stay focused on the things that really do move the needle, but I wouldn't say anything else really outside of that, and just staying true to who we are as a company and our leadership.

Speaker Change: The year gas and non-gas revenue guidance is 78%. Based on the above revenue growth that generates sustainable and creative sources of margin, we're guiding to an annual non-gas margin extension of 25 to 40 basis points.

Gregory Adelson: That's a very helpful color.

Greg Adelson: Welcome. The next question comes from Cartic Mehta with North Coast Research. Please go ahead. Good morning, Greg. Great. I wanted to just get your perspective on the core business. I know, you know, the focus should be here, but after saying that I'm going to talk about the portal. So apologize for that. A fourth quarter, maybe a little bit lower than expectations, but I'm wondering, you know, as you look at that, 5.25, considering all the core we've had.

Speaker Change #129: I would say that the $93, 95% range is probably yes.

Speaker Change: All of the above are aligned with our near-term targets as the business operations remain healthy and consistent.

Speaker Change: Foliar tax rate estimate for fiscal 25 to 24%.

Speaker Change #129: Reasonable.

Speaker Change #130: Number for us to to think through.

Speaker Change #130: Other thing is is that as we've kind of moved in as we move to the type of clients that are left in there, which which tend to be allowed the larger ones.

Speaker Change: The above guidance metrics results in a foliar guidance for gas EPS of $5.78 to $5.87 per share, the growth of 11 to 12%, fiscal 23 has lowered and expected three cash low conversion due to a cash tax over payment, which resulted in fiscal 24 having a better than expected conversion.

Gregory Adelson: You know, that number actually has kind of gone down. So it's more about 1.75% now than it was at the 2%, you know, through the years. And so still significant but down a little bit for continuing to stay focused. We still have several years of runway on that. So if you think about it, you know, there's a couple of hundred left, you really on each side. You know, and so if you were averaging somewhere in between 40 and 45 a year, you got, you know, 3, 4 or 5 years left based on that to get kind of to our numbers.

Speaker Change #130: That number actually has kind of gone down so it's more about 175% now than it was at the 2% through the years and so still significant but down a little bit, but we're continuing to stay focused we still have several years of runway on that.

Speaker Change: Ascent Further Legislative Action, Disco 25 will be a reversion to the suspected trend line resulting from the expiration tax benefits in Section 174.

Greg Adelson: Is that a business that you think segment that continues to grow kind of in line with the overall revenue flow for the company? Yeah, I think, yes. Thanks for the question for sure. I mean, I think, you know, as we, as we have articulated throughout, I mean, it is a, it's a full year of business for us and how we manage the business. You know, it was a little tougher comp, you know, from from from last year compared to this particular one, but there is there is no concern on what we're doing where we're going with that particular business.

Speaker Change: As such, a flow year expectation for free cash flow conversion is 65 to 75 percent.

Greg Adelson: And so the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing in technology, modernization in general. So, you know, I mean, the short answer to your question, cardic is, it is just as a full year game for us. That's really what it is. And cardic, this is mainly if I just add on, you know, the tremendous fourth quarter of the grid talked about the staff said for the bail.

Speaker Change #130: So if you think about it.

Speaker Change #131: There's a couple of hundred left really on each side.

Speaker Change: Our current view has a cadence of fiscal 25 non-gap revenue and margins increasing to quench the rate throughout the year. This increase in cadence will result in a strong second half, it will be more pronounced than typical.

Speaker Change #131: And so if you break we're averaging somewhere between 40% and 45, a year you got three or four or five years left based on on that do you get kind of to our numbers.

Gregory Adelson: But, but that will continue to be a focus and an opportunity. And I think there'll be other opportunities to move from the private cloud to the public cloud over time, too. So you know, we can't just focus only on what will be moving to the private cloud. Because at the same time, we're winding that down. We'll have opportunities to move customers from the private cloud to the public cloud around the same time.

Speaker Change #132: But that will continue to be a focus and an opportunity and I think there'll be other opportunities to move from the private cloud to the public cloud over time too. So we can't just focus only on what will be moving through the private clouds because at the same time, we're winding that down we will have opportunities to.

Speaker Change: Consequently, key 1 is expected expectation for non-gap revenue growth is approximately 5 and a quarter percent, and non-gap margin to contract approximately 105. This is due to slower growth rates on on-premise annual maintenance and card growth rates.

Speaker Change: An additional factor is several long-term software usage contracts closing in Q1 at the prior year, which delivered significant allocation of license fees in that same quarter.

Speaker Change: The rest of the year improved strongly with limited risk resulting in a full-year guidance remaining consistent with our near-term targets. As a reminder, we see fluctuations in quarterly results relating to software usage license components, along with the timing of implementation.

Speaker Change: Therefore, the correct performance indicator for our business is the consistently strong fiscal year financial results.

Speaker Change #132: Move customers from the private cloud public cloud around the same timeframe.

Speaker Change #133: Got it.

Speaker Change: In conclusion, Q4 and full-year results reflect strong performance and achievement of our targeted goal.

Greg Adelson: I mean, that's just the very end of our year. So, you think about that cycle for readiness for implementation on the client side when you'll start to see that revenue, you know, is not an FY25 picture for the core. Makes sense. And then just on a pricing, I know, you know, there's always a competitive industry and whenever you have rules, pricing gets competitive. But just in general, any change in the environment in the last three, six months that you've noticed.

Hum.

Mimi Carsley: I'm sorry if I cut you off, but my follow-up was around sort of a follow-up to Kartik's question around segment outlook.

Speaker Change #134: Hi, I'm, sorry, if I cut you off but.

Speaker Change: We enter fiscal 20 by the positive momentum and expect to drive impressive revenue growth and margin expansion.

Speaker Change #135: My follow up was around.

Speaker Change #136: Sort of a follow up to <unk> question around segment outlook, if I compare our fiscal year 'twenty for results to your normalized guide it looks like core came in a little ahead, whereas complimentary and payments were a little below.

Mimi Carsley: If I compare fiscal year 24 results to your normalized guide, it looks like core came in a little ahead, whereas complementary end payments were a little below the normalized guide and just putting aside quarterly cadence. I know you had cited some softness and maintenance. And such, I think, flows through core.

Speaker Change: We remain exceptionally positive about demand for our solutions and the strength of our client resulting in career, shareholder value creation.

Speaker Change: We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing confidence.

Speaker Change #137: The normalized guide and just putting aside quarterly cadence.

Speaker Change #138: I know you cited some softness in maintenance, which I think flows through core.

Speaker Change: Drew, please open the line for questions.

Mimi Carsley: Could we expect more of a normalized annual cadence of revenue growth next year, you know, more with core coming into 6% to 7% range and payment, complementary to 9% range? Yes, Jack, this is meaning I think our intention for the growth algorithm is to have an indicator; it's not a precision. And so I do think, you know, the beauty of it is we have a whole portfolio. And so sometimes they counterbalance each other in different ways. So the great year, this year, core has higher than the growth algorithms, right? That's somewhat compensated for the lower complementary payments.

Speaker Change #139: Should we expect.

Speaker Change #139: More of a normalized annual.

Speaker Change #139: Annual cadence of revenue growth next year.

Speaker Change: Certainly, we will now begin the question and answer session.

Greg Adelson: I'll take that. Yeah, I mean, not necessarily. I think. You know, our competition has continued to kind of do what they typically do and kind of how they they quote go to battle. And so we haven't seen anything significantly change there. You know, some of their stories are changing and some of their approaches are changing. But but in reality, it is really about what had you done for me. And so, you know, as you can imagine, it's in 22 competitive core wins.

Speaker Change: To ask a question, you may press star than one on your telephone keypad.

Speaker Change #140: More with core coming in the 6% to 7% range and payment complementary in the 8% to 9% range.

Speaker Change: If you're using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question, please press star than two.

Gregory Adelson: And then a quick one for you, Mimi.

Speaker Change #140: Yeah, Doug This is me.

Speaker Change #141: Thank you.

Speaker Change #142: Our intention for that growth algorithm is key to have an indicator. It is not a per station.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Andrew Schmidt with City.

Speaker Change #143: And so I do think.

Speaker Change: Please go ahead.

Speaker Change #144: The beauty of it is we have a whole portfolio and then sometimes they they counterbalance each other in different ways. So that the great year. This year, a quarter had higher than the growth algorithm right that's somewhat compensated for it.

Speaker Change: Hi, Greg.

Gregory Adelson: Just on the payment segment, it was good to see the acceleration in revenue growth there.

Speaker Change: Hi, Mimi.

Greg Adelson: There's a lot of those came from, you know, the normal players out there that you would, you would know. And so, so it's really about, you know, our ability to execute our ability to service our reputation for doing that, our consistency of how we go about things, the consistency of our team, you know, our turnover rates, you know, is very low at the company. And so you just get a consistency with that.

Speaker Change: Thanks for taking my questions.

Speaker Change #145: Our complementary.

Speaker Change #145: You had the question of what happens with the economy and geopolitical and election and a lot of other issues that I think in general we still expect that the growth algorithm holds.

Mimi Carsley: You have the question of what happens with the economy and geopolitical and election and a lot of other issues. I think in general, we still expect that the growth algorithm holds, but it's illustrative on like any given year, they could, you know, plus and less a little bit in jobs at each other. Got it.

But as illustrated on any given year, they could possibly get a little bit in jobs at each other.

Speaker Change: I guess just to drill down on the fourth or fourth complementary performance, and I know you're right, fiscal year metrics are the best way to look at the business.

Speaker Change #146: Got it thank you.

Unknown Executive: Thank you.

Speaker Change: But is there anything for the fourth quarter that affected revenues that are timing shifts, or perhaps some of the things you called out for the fiscal first quarter that impacted results or was it truly kind of tough cops?

Greg Adelson: So it, you know, again, the short answer for you, Kartik is, I don't feel that there's anything significantly changing out in the marketplace other than, you know, some of the stories that they go with. Perfect. Thank you both. I really appreciate it. Okay.

Gregory Adelson: You're welcome.

Unknown Executive: Welcome.

Speaker Change #147: Youre welcome.

Dave Koning: The next question comes from Dave Koning with Beard.

Dave Koning: The next question comes from Dave Koning with Baird. Please go ahead, yeah, Hey, Thanks, guys and I guess my question is a little similar just on you know what what normalized growth is I guess.

Gregory Adelson: I know you called out fraud-related services.

Gregory Adelson: The next question comes from Kartik Mehta with North Coast Research.

Dave Koning: Please go ahead. Yeah, hey, thanks, guys. And I guess my question is a little similar just on, you know, what normalized growth is, I guess if Q1 is 5.25%, the rest of the year has to average around 8.25% to hit the midpoint of the range. And I guess that's a little above normal.

Gregory Adelson: I guess just maybe if you could put a finer point on whether all of the acceleration was these value-added services, because I think the debit numbers we saw from Visa MasterCard were pretty consistent sequentially.

Gregory Adelson: Please go ahead.

Gregory Adelson: Yeah, the payment segment had an 8.4% growth for Q4, and more importantly, the 6.7% growth for the full year.

Gregory Adelson: It was a big year for payment, especially given throughout the year some economic uncertainty around the strength of the U.S. consumer.

Speaker Change: Thank you very much.

Peter Heckmann: The next question comes from Peter Heckman with the Davidson. Please go ahead. Hello, good morning. I wanted to follow up on Banner a little bit and just see any 927 on Banner retail. I think he said that's really impressive. And can you talk about how many clients he still might have on net teller or maybe your mobile digital banking product? And how do you think about, you know, the growth of Banner once you substantially upgraded most of your clients from the older systems?

Speaker Change #149: If Q1 is $5 two 5% the rest of the year has to average around $8 two 5% to hit the midpoint of the range and I guess, that's a little above normal and I guess or any segments.

Speaker Change: Morning Andrew, I appreciate the question, although I was really, just as you just mentioned, the importance of looking at our year on a year long basis rather than the quarters, they don't see any trends and I think structurally looking to you that we would call out, I think it was mostly just you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outside.

Speaker Change: And so I think it was just a matter of this quarter playing out in that pattern.

Dave Koning: And I guess are any segments, you know, going to outsize kind of accelerate from Q1, or is it really just getting all segments in that 8% range kind of the rest of the year. Yeah, Dave, I'm saying general, and we don't, we're not going to get color quarter by quarter at this point as we live into the year. We think that we want to call out something a trend we're seeing will certainly be transparent on that. I agree with your math that we expected to sequentially grow throughout the year, with second half things stronger than the first half.

Speaker Change #150: Outsize kind of accelerate from Q1 or is it really just getting all segments in that 8% range kind of the rest of the year.

Speaker Change: Got it, appreciate that.

Speaker Change: And maybe I could ask a question on just the new wind side, you know, step up in, you core signed above one billion in assets, it's pretty bright spot.

Gregory Adelson: We're seeing the trends from that being in line with our expectation, still healthy but not over-exuberant from a spending perspective.

Speaker Change #151: Yes, I can.

Speaker Change #152: Say in general and we don't we're not going to get color on quarter by quarter at this point as we move into the year, we think that.

Gregory Adelson: Within card, as you mentioned, we do have a whole portfolio of complementary services that surround the card transaction, and we're continuing to see nice demand for those services.

Gregory Adelson: So that's really helping us from a total portfolio perspective.

Speaker Change #152: We wanted to call out something a trend we're seeing we will certainly be transparent on that.

Speaker Change: What, you know, obviously there's multiple factors that drive that, but is it possible to still that down, is it product, is it through to market focus, you know, what's striving the move up market, I know that's been a team in the past several years, but it seems like you're you're making faster progress towards that shifting towards higher asset size institution, so enough to get some more color there, thank you very much.

Speaker Change #152: I agree with your math that we expected to sequentially grow throughout the year.

Speaker Change: Sure, Andrew, this is Greg, so yeah, thanks for the question.

Peter Heckmann: Yeah, so it's a great question, Pete. So not to get, you know, in the minutia, but just 924 just want to make sure we have our numbers right. So 924. And so, you know, that continues to be a huge opportunity for us. You know, and there's a lot of runway still in the credit union space, right? So and the bank and say, but really in the credit union space where we have been attacking that part of our core business.

Greg Adelson: I think, you know, as I tried to reference a little bit in the script, but you know more importantly, it is about our level of execution.

Speaker Change #152: Second half being stronger than the first half so I think Q.

Mimi Carsley: So I think you want is more pronounced. That's why we gave the color with more specificity, but I would say Q2 overall is going to be a higher growth than Q1. And I think that is pretty fair to say across the board across all of this segment. Yeah, okay.

Your line is more pronounced that's why we gave the color with more specificity.

Greg Adelson: We're hearing this on a regular basis that, you know, I think you know this and most people do that we do provide to our clients what our roadmaps are and we show what we're going to be doing and when we're going to be doing it.

Greg Adelson: And I think there's a level of trust and belief and sort of the more that we're executing the more that our technology innovation is getting out there and they're seeing the results and it's providing a really an opportunity for us to get in front of these larger customers.

But I would say Q2 overall is going to be.

Speaker Change #153: A higher growth in Q1, and I think that is pretty fair to say across the board across all of the segments.

Greg Adelson: First of all, and then second of all, you know, as we mentioned our associates and our client service reputation continues to truly shine, especially at a time when when maybe it's not in the rest of the industry, so those have been big.

Speaker Change: And then, you know, I think we've also hired some really good and talented sales individuals that have come with experience and selling into these larger institutions and that's continued to help us as well. But I think it's a combination of all those things that are coming to fruition and allowing us to be successful.

Speaker Change #154: Yeah, Okay. Thank you and maybe one just I guess one follow up question net interest income if we look at the interest income less interest expense was a positive $5 million or so in the quarter. It was better than it's been in a while.

Mimi Carsley: Thank you.

Dave Koning: And maybe one just, I guess, one follow-up question. Net interest income, if we look at the interest income less interest expense, was a positive 5 million or so in the quarter. It was better than it's been in a while, but you have a net debt position. So I'm wondering how you get a pretty sizable net interest income, you know, when you have a debt position and if that's sustainable.

Speaker Change: Got it.

Peter Heckmann: So there's still a lot of left side when you think about that we have roughly 1700 for clients. So there's still a lot of runway within our own base. But of course, we're working on outside the base strategy as well. And so we're working with some of our competitors to give what we need to make that successful. Sometimes not as easy as we had hoped to make that happen, but the reality is we're making a lot of progress.

Speaker Change: Thank you very much, Greg.

Speaker Change: Appreciate the comments.

Speaker Change #155: But you have a net debt position. So I'm wondering how you get a pretty sizeable net interest income you know when you have a deposition and if thats sustainable.

Speaker Change: Sure.

Mimi Carsley: Good question, Dave. So how do we get that interest income and the impact it has on net interest, as you did call out? Would you have the debt? We've been paying it down, you know, pretty significantly this year or pay down, and we expect that to continue for 25. But we do have; we administer cash stomach balances, and as part of that administrative services, we would, we get some of the revenue from those cash settlement accounts. Through negotiations we've had with partners in the life, we've been able to increase the yield in those accounts. Now that does have some correlation to interest rate environments, it's depending on what the Fed does in 25.

Dave Koning: Good question, Dave So how do we get that interest income and the impact. It has on net interest as you did call out would you have the debt we've been paying it down.

Vasu Goville: The next question comes from Vasu, Goville with KBW.

Speaker Change: Please go ahead.

Peter Heckmann: And we still expect it to do what we said we were going to do, which is get that out of the latter part of this fiscal year or the second half of the calendar year. So that's still on point. Answer your question around that tower. I don't know exactly, but you know, it's roughly a couple of hundred left on the net seller platform. Okay. All right. That's helpful. And then just in terms of MNA clearly the face of MNA is slowed and just curious like how much of that is you know, Jack Henry's three solutions is largely filled out.

You know pretty significantly this year and to pay down and we expect that to continue for 'twenty.

Speaker Change #156: But we do have we administer a cash settlement balances and it's part of that administrative services.

Speaker Change: Hi, thanks for taking my question.

Speaker Change: First one for you, Greg.

Speaker Change: Just as you've taken over the range, any sort of strategic changes that you're envisioning for the company that the company might need and where are you focusing more of your efforts at this point.

Speaker Change #157: We get some of the revenues from those are cash settled in at all.

Speaker Change #157: Three negotiations, we've had with partners and the like are we being able to increase the yield in those accounts.

Speaker Change: Yeah, no, I mean, fortunately, I took over for an individual that did a pretty good job.

Speaker Change: So, not being significant.

Speaker Change: I mean, we've been able to really make a very, what I would say a very smooth transition.

Speaker Change: And so, you know, we're focused on some things that I've talked about.

Speaker Change #157: Now that does have some correlation to interest rate environment that depending on what the fed does in 'twenty five.

Peter Heckmann: And there's no longer any holes, but are there other effects that you know, to the extent that like the the industry is less fragmented. There's not as many small players or or valuation, you know, how are all those playing into the yellow criminal. Yeah, I think you hit on all of them. I think it is a combination of much of what you describe. We continue to look at opportunities that make sense.

Mimi Carsley: But overall, I would say that is sustainable. It is subject to some interest rates, and it can be, but it is sustainable. Gotcha.

Speaker Change #157: But overall I would say that it's sustainable.

It is subject to some interest rate sensitivity, but it is sustainable.

Speaker Change #158: Got you thanks, guys.

Unknown Executive: Thanks, guys.

Unknown Executive: Happy day. Thank you.

Speaker Change #158: I began thinking.

James Fossette: The next question comes from James Fossette with Morgan Stanley. Please go ahead.

Speaker Change #158: The next question comes from James Faucette with Morgan Stanley. Please go ahead.

Gregory Adelson: Good morning, Greg.

James Fossette: Hey, good morning. Thanks for the time this morning. I wanted to just ask a quick follow-up question on a couple of points first on your customers and their priorities. Given where we are in the deposits, like one in the prospect of a return to loan growth next year with lower interest rates, et cetera. How have you seen, if at all, your customers change prioritization in terms of where they're looking to invest between deposited traction and retention tools versus lending? Are we seeing any change in your customers focused in priorities right now?

James Faucette: Hey, good morning, Thanks for the time this morning.

James Faucette: Wanted to just ask a quick follow up question on a couple of points.

Peter Heckmann: The difference is that really our approach hasn't changed just what we're looking for has changed. So when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native. And so we don't have to rewrite the technology once an acquisition takes place. Obviously, pay rails was one of those examples where it was already public cloud native looking to your point about gaps. We don't we don't have the gaps that we had, you know, many years ago.

Speaker Change #161: Points first.

Gregory Adelson: Greg, I wanted to just get your perspective on the core business.

Speaker Change #162: On your customers and their priorities given where we are in the deposit side, one and the prospect of a return to loan growth next year with lower interest rates et cetera.

Speaker Change: You know, obviously the execution of the tech modernization strategy and what we've been doing with one Jack Henry continues.

Speaker Change #163: How have you seen if at all your customers change prioritization in terms of where they are looking to invest between deposit attraction and retention tools versus lending are we seeing any change in in your customers' focus and priorities right now.

Gregory Adelson: I know the focus should be the year, but after saying that, I'm going to talk about the quarter, so I apologize for that.

Gregory Adelson: Fourth quarter may be a little bit lower than expectations.

Peter Heckmann: And again, maybe the opposite of where we want to focus, which is about that product rationalization where we're looking at things that just don't make sense as they once did maybe 10 years ago. And so we're looking at that. But I think when you look at the opportunities in front of us public cloud native number one number two is do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more.

Gregory Adelson: Yeah, that's a great question, James. And so I have a couple of different reference points for you, too. So I know North Coast Research did their own survey. And then, of course, we do our annual benchmark survey that we have. Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one. The one thing that I will reference from our benchmark survey is this: which is that from in 2023, growing deposits was 43%, still number one, but 43% of the CEOs named that as their number one this year was 54%.

Speaker Change #164: Yes, yes, that's a great question James So I have a couple of different reference points for you to so.

Speaker Change #165: No I know Northcoast research research did their own.

Speaker Change #165: A survey and then of course, we do our annual benchmark survey that we have both of them. We kind of showed the priorities being fairly the same as far as deposit growth being number one the one thing that I will reference from our benchmark survey is this which is that from in 2023 growing deposits was 40.

Speaker Change: I've talked a little bit and we'll talk a lot more at the investor day about our SMB strategy and where we're going with that.

Speaker Change: So, there's a lot of excitement behind that that will be unveiling.

Peter Heckmann: In some of the things that we're doing to roll out in our, I would say the key products of digital enterprise account opening broad things a lot of that line. Those are really where what our focus with me. Okay. Good stuff.

Speaker Change #165: 3%.

Speaker Change #165: It's still number one but 43% of the CEO is named that is their number one this year. It was 54% so significant growth in both of those numbers, but again same as a priority. The other two just since you asked have really kind of stayed fairly consistent which is improving operational.

Speaker Change: And then there's a couple things that we talked around product rationalization and really looking at things primarily in the complimentary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things.

Gregory Adelson: So significant growth in both of those numbers, but again, same as a priority. The other two, just since you asked, had really kind of stayed fairly consistent, which is improvement operational efficiency and growing loans, but both of those have gone up slightly from 2023 to 2024. But again, those are typically the top three, and you can throw fraud as a really close number for priorities.

Speaker Change: A lot of them are very small, but again, just making sure we stay focused on the things that really do move the needle.

Greg Adelson: I'll look forward to seeing you a few weeks. Okay.

Speaker Change: But I would say anything else really outside of that and just staying true to who we are as a company and our leaders.

Charles Nabhan: Thanks. The next question comes from Charles not hunt with Stevens. Please go ahead.

Speaker Change: That's very helpful color.

Speaker Change: And then a quick one for you, Mimi, just on the payment segment, it was good to see the acceleration in revenue growth there.

Greg Adelson: Good morning and thank you for taking my question. You had mentioned that roughly 73% of your clients are now in the public cloud. I think that's up from 69% at the the investor day last year. My question is how much runway is left to move your client base to the cloud. And if you could talk about what that could mean for for revenue uplift. I think you had cited you know two times revenue uplift in the past from from additional cross sell as well as you know some margin benefits as well.

Speaker Change #165: ANSI and growing loans.

Speaker Change #165: But both of those have gone up slightly from 2023 to 2024, but again those are typically the top three and you can throw fraud as a really close number four four core priorities.

Speaker Change: I know you called out broad related services.

Speaker Change: I guess just maybe if you could define a point on whether all of the acceleration with these value added services, could I think said debit numbers, we saw from the mastercard, but pretty consistent sequentially.

Gregory Adelson: Great, appreciate that.

Greg Adelson: Great I appreciate that and Greg I wanted to follow up on a comment you made in terms of implementation queues and how wondering how those are trending broadly in and how are you thinking about the puts and takes between the margin expansion, you're delivering right now versus the potential for additional resource allocation to disappear.

Gregory Adelson: But I'm wondering, as you look at FY25, considering all the core wins you've had, is that a business that you think that continues to grow in line with the overall revenue growth of the company?

Gregory Adelson: Yeah, hey, Kartik.

Gregory Adelson: And Greg, I wanted to follow up on a comment you made in terms of implementation cues and how, wondering how those are turning broadly. And how are you thinking about the puts and takes between the margin expansion you're delivering right now versus the potential for additional resource allocation. And to speed up those implementations broadly. No, it's a great question, one that we address, you know, on a regular basis with our team. So we do; we work through that on a regular basis. So there's a lot of, you know, short business cases that we do. But the reality is, if we can implement the revenue faster, we absolutely find ways to do that.

Greg Adelson: Any commentary around that would be helpful. Sure, Chuck. I'll take it maybe can add some commentary is yeah, I think so it is up from from where we were. I don't know if you remember who was 69% but definitely up from where we are. So roughly, you know, we don't expect to get 100% of movement there. I would say that you know the 93 95% range is probably a reasonable number for us to to think through.

Greg Adelson: Read up those implementations broadly.

Gregory Adelson: Yeah, thanks for the question.

Greg Adelson: No. That's a great question, one that we address on a regular basis with our team. So we do.

Greg Adelson: We work through that on a regular basis, so theres a lot of.

Speaker Change #166: Short business cases that we do but the reality is if we can implement the revenue faster.

Speaker Change #166: We absolutely find ways to do that sometimes it is a reflection on the actual product sometimes it's a reflection of.

Gregory Adelson: For sure.

Gregory Adelson: Sometimes it is a reflection on the actual products. Sometimes it's a reflection of the complimentary or payment product that was sold with the core. And so sometimes those don't get implemented until the core is implemented. So you have some of those timing delays core, in particular, is as I described. It's a 12 to 18-month process. Most times, maybe a little longer on a couple, but most of the time than that. But for our other products, so let's just take financial crimes offender. We've already increased our resources on that. This year to, you know, kind of work through our installation cues and get that down into smaller numbers to ensure that we continue to keep our customers happy.

Greg Adelson: The other thing is that as we've kind of moved and as we've moved to the type of clients that are left in there which which tend to be you know a lot of the larger ones. You know that number actually has kind of gone down so it's more about 1.75% now than it was at the 2% you know through the years. And so still significant but you know down a little bit for continuing to stay focused.

Gregory Adelson: I mean, I think, you know, as we have articulated throughout, I mean, it's a full year of business for us and how we manage the business.

Gregory Adelson: You know, it was a little tougher comp, you know, from last year compared to this particular one.

Gregory Adelson: But there is no concern on what we're doing, where we're going with that particular business.

Gregory Adelson: And so the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing in technology modernization in general.

Gregory Adelson: So, you know, I mean, the short answer to your question, Kartik, is it just is a full year game for us.

Speaker Change #166: The complementary or payment product that was sold with the core and so sometimes those don't get implemented until the core is implemented.

Gregory Adelson: That's really what it is.

Speaker Change #166: So you have some of those timing delays.

Speaker Change #166: Core in particular is as I described it's a 12 to 18 month process most times, maybe a little longer on a couple but most of time than that but for our other products. So let's just take financial crimes defender we've already increased our resources on that.

Greg Adelson: We still have several years of runway on that. So if you think about it, you know there's there's a couple of hundred left you really on each side. You know, and so if you were averaging somewhere between 40 and 45 the year you got you know three or four or five years left based on on that to get kind of to our numbers. But but that will continue to be a focus and an opportunity and I think there'll be other opportunities to move from the private cloud to the public cloud over time too.

Speaker Change #166: This year to kind of work through our installation teams and we get that down into smaller numbers.

Speaker Change #166: To ensure that we continue to keep our customers happy.

Gregory Adelson: Thank you very much.

Gregory Adelson: And Kartik, if I could just add on, you know, the tremendous fourth quarter that Greg talked about, the staff said for the sales.

Speaker Change #166: Yeah.

Unknown Executive: That's great. Thank you so much.

Speaker Change #167: That's great. Thank you so much.

Unknown Executive: Sure.

Speaker Change #167: Sure.

Vance Sherard: This concludes our question and answer session.

Speaker Change #167: This concludes our question and answer session I would like to turn the conference back over to Vance Gerard for any closing remarks.

That's a very helpful color.

Vance Sherard: I would like to turn the conference back over to Vance Sherard for any closing remarks. Thank you, Drew. Please don't forget that our Investor Day is fast approaching. It will take place on Thursday, September 5th in Dallas, starting at 1 p.m. Central time. You can join us via webcast, or if you'd like to attend in person, please let us know, and we will get you the specifics. In addition to Investor Day during the coming weeks, we will be traveling to attend various investor events in the US and Europe.

Gregory Adelson: I mean, that's at the very end of our year.

Gregory Adelson: So if you think about that cycle for readiness for implementation on the client side, when you'll start to see that revenue, you know, is not an FY25 picture for the core.

Greg Adelson: So you know we can't just focus only on what we'll be moving to the private cloud because at the same time we're winding that down. We'll have opportunities to move customers from the private cloud to the public cloud around the same time.

Vance Gerard: Thank you drew please don't forget that our Investor day is fast approaching it will take place on Thursday September 5th in Dallas, starting at one P M Central time.

And then a quick one for you, Mimi, just on the payment segment, it was good to see the acceleration in revenue growth there.

I know you called out broad-related services.

I guess just maybe if you could put a finer point on whether all of the acceleration was these value-added services, because I think the debit numbers we saw from Visa MasterCard were pretty consistent sequentially.

Gregory Adelson: You're welcome.

Gregory Adelson: Makes sense.

Yeah, the payments is segmented at 8.4% growth for Q4.

Gregory Adelson: And then just on pricing, I know, you know, there's always a competitive industry and whenever you have renewals, pricing gets competitive.

And more importantly, the 6.7% growth in full year, it was a big year for payments, especially given, you know, throughout the year, some economic uncertainty around the strength of the US consumer.

Gregory Adelson: But just in general, any change in the environment in the last three, six months that you've noticed?

Gregory Adelson: The next question comes from Jason Kupferberg with Bank of America.

Gregory Adelson: I'll take that.

Gregory Adelson: Yeah, I mean, not necessarily.

Gregory Adelson: I think, you know, You know, our competition has continued to kind of do what they typically do and kind of how they quote, go to battle.

Speaker Change #169: Can join us via webcast or if you'd like to attend in person. Please let us know and we will get you. The specifics in addition to Investor day during the coming weeks, we will be traveling to attend various investor events in the U S and Europe we'd.

Gregory Adelson: And so we haven't seen anything significantly change there.

Gregory Adelson: You know, some of their stories are changing and some of their approaches are changing.

Gregory Adelson: Please go ahead.

Gregory Adelson: Perfect.

Gregory Adelson: But in reality, it is really about what have you done for me?

Gregory Adelson: Good morning, guys.

Gregory Adelson: And so, you know, as you can imagine, in 22 competitive core wins, a lot of those came from, you know, the normal players out there that you would know.

Gregory Adelson: And so it's really about, you know, our ability to execute, our ability to service, our reputation for doing that, our consistency of how we go about things, the consistency of our team.

We're seeing the trends from from that, you know, being in line with our expectation, still healthy, but not over exuberant from a spending perspective.

Gregory Adelson: You know, our turnover rates, you know, is very low at the company.

The nice thing about our payments business is not just CARD, we have other businesses, we have the EPS business, we have the PayCenter business, those are doing quite well, we're seeing a lot of demand, especially as the continuation of real time payments, excitement, the fraud solutions that are helping people feel more comfortable in in going to these newer solutions.

Speaker Change: Yeah, the payment segment at 8.4% growth for Q4, and more importantly, the 6.7% growth for the full year, it was a big year for payment, especially given throughout the year some economic uncertainty around the strength of the US consumer.

Mimi Carsley: I'm sorry if I cut you off, but my follow-up was around sort of a follow-up to Kartik's question around segment outlook. If I compare fiscal year 24 results to your normalized guide, it looks like core came in a little ahead whereas complementary end payments were a little below the normalized guide and just putting aside quarterly cadence. I know you had cited some softness and maintenance, which I think flows through core. Could we expect more of a normalized annual cadence of revenue growth next year, you know, more with core coming into six to seven percent range and payment complementary in the eight to nine percent range?

Gregory Adelson: And so you just get a consistency with that.

So those two businesses are are doing quite well from a processing and the remit business overall has been healthy.

Gregory Adelson: So, you know, again, the short answer for you, Kartik, is I don't feel that there's anything significantly changing out in the marketplace other than, you know, some of the stories that go with it.

Gregory Adelson: I just wanted to start on the margin side.

Gregory Adelson: Thank you both.

Within CARD, as you mentioned, we do have a whole portfolio of complimentary services that surround the CARD transaction.

Gregory Adelson: I know that you comfortably beat your initial fiscal 24 guidance on the margin line.

Gregory Adelson: I really appreciate it.

And we're continuing to see nice demand for those services.

Gregory Adelson: The initial fiscal 25 guide calls for less margin expansion than in 2024.

Gregory Adelson: So is this reflective of some ongoing conservatism, or were there some transitory tailwinds last year you don't expect to recur?

Gregory Adelson: Sure.

Vance Sherard: We'd like to take this opportunity to thank all Jack Henry Associates for their hard work and dedication, which has led to our outstanding results. Thank you for joining us today.

Gregory Adelson: I know you're starting off the year down to about 100 basis points in Q1, but just wanted to get a little bit more color on the margin outlook, please.

Speaker Change #170: We'd like to take this opportunity to thank all Jack Henry Associates for their hard work and dedication, which has led to our outstanding results. Thank.

Speaker Change: We're seeing the trends from that, you know, being in line with our expectation, still healthy but not over-exuberant from a spending perspective.

Gregory Adelson: I appreciate you bringing up that important point.

Gregory Adelson: The next question comes from Peter Heckman with D.A.

Gregory Adelson: Margin expansion is one of the key elements that we are focused on as a management team.

Gregory Adelson: Davidson.

Gregory Adelson: We're quite disciplined as we think about the cost of the organization and building for scale of future success.

So that's really helping us from a from a total portfolio perspective.

Drew: Thank you for joining us today and drew will you. Please provide replay number.

Gregory Adelson: I would say there's a couple of things.

Gregory Adelson: Please go ahead.

Thank you very much.

Operator: And Drew, will you please provide the replay number? Yes, sir. The replay number for today's call is 877-317-1344-7529, and the access code is 719-2153.

Gregory Adelson: I don't think it's an excessive conservatism.

Gregory Adelson: Hey, good morning.

Welcome.

Gregory Adelson: I think that's what we feel confident that the market and the model generates.

Gregory Adelson: Wanted to follow up on Bano a little bit and just see, I mean, 927 on Bano Retail, I think you said that's really impressive.

Jason Kupferberg: The next question comes from Jason Kupferberg with Bank of America.

Jason Kupferberg: But there are some headwinds as we leave FY24 into 25 that helped us in 24.

Jason Kupferberg: And can you talk about how many clients you still, clients you still might have on NetTeller or maybe your mobile digital banking product?

Please go ahead.

Jason Kupferberg: Things like the slowing backfills of the VDIP departures, particularly that's part of the reason why you'll see the guide for Q1 a little bit weaker, is that really helped us in Q1 of FY24, as well as we had a one-time shift in the timing of our annual merit increase last year.

Jason Kupferberg: And how do you think about, you know, the growth of Bano once you've substantially upgraded most of your clients from the older systems?

Thank you for joining us today, and Drew, will you please provide the replay number?

Jason Kupferberg: Okay, that's helpful.

Jason Kupferberg: So, not to get, you know, in the minutia, but just 924, just want to make sure we have our numbers right.

Mimi Carsley: Good morning, guys.

Drew: Yes, Sir.

Mimi Carsley: Those are some issues that create a grow-over challenge next year.

Mimi Carsley: Yeah, it's a great question, Pete.

Operator: Yes sir, the replay number for today's call is 877-344-7529 and the access code is 719-2153.

Operator: Just to follow up on the payment segment, I wanted to hone in, on card production a little bit.

Operator: So, 924.

I just wanted to start on the margin side.

Drew: The replay number for today's call is 87734475 to nine and the access code is 719 to 153 that.

Operator: But in general, we feel quite confident that the model continues to produce margin expansion at a nice clip.

Operator: I know on the issue of processing side, I'm thinking things are pretty stable, but there had been some softness in card production earlier in the year.

Operator: And so, you know, that continues to be a huge opportunity for us, you know, and there's a lot of runway still in the credit union space, right?

I know that you comfortably beat your initial Fiscal 24 guidance on the margin line.

Operator: We're excited about the year guidance.

Operator: Did you see some reversal of that?

Operator: So, and the banking space, but really in the credit union space where we have been attacking that part of our core business.

The initial Fiscal 25 guide calls for less margin expansion than in 2024.

Operator: We always aim and strive for more, but we want to put a number out there that we feel confident in our ability to deliver.

Operator: What are you expecting for F-25 on the card production side?

Operator: So, there's still a lot of upside.

So, is this reflective of some ongoing conservatism or were there some transitory tailwinds last year?

Operator: Yeah, I think that was more of a one-time issue that we've worked through.

Operator: When you think about that, we have roughly 1,700 core clients.

You don't expect to recur.

Operator: It was not an issue in Q4.

Operator: So, there's still a lot of runway within our own base.

I know you're starting off the year down about 100 basis points in Q1, but just wanted to get a little bit more color on the margin outlook, please.

Operator: We don't expect it to be an issue going forward.

Operator: But of course, we're working on outside the base strategy as well.

I appreciate you bringing up that important point.

Operator: It's resolved itself.

Operator: And so, we're working with some of our competitors to get what we need to make that successful.

Margin expansion is, you know, one of the key elements that we are focused on as a management team.

Operator: Excellent.

Operator: Sometimes not as easy as we had hoped to make that happen, but the reality is we're making a lot of progress and we still expect to do what we said we were going to do, which is get that out the latter part of this fiscal year or the second half of the calendar year.

We're quite disciplined as we think about the cost of the organization and yet building for scale of future success.

Operator: Thank you, Mimi.

Operator: So, that's still on point.

I would say there's a couple of things.

Operator: You're welcome.

Operator: To answer your question around NetTeller,

I don't think it's an excessive conservatism.

Operator: I don't know exactly, but, you know, it's roughly a couple of hundred left on the NetTeller platform.

I think that's what we feel confident that the market and the model generates.

Operator: Okay.

But there are some headwinds as we leave FY24 into 25 that helped us in 24.

Operator: All right.

Things like the slowing backfills of the Z-dip departures, particularly, that's part of the reason why you'll see the dive for Q1 a little bit weaker, is that really helped us in Q1 of FY24, as well as we had a one-time shift in the timing of our annual merit increase cycle.

Operator: That's helpful.

So, those are some issues that create just kind of a grow over challenge next year.

Operator: That will be available in about 1 hour.

That will be available in about one hour.

Operator: And then just in terms of M&A, clearly the pace of M&A has slowed.

But in general, we feel quite confident that the model continues to produce margin expansion at a nice clip.

Speaker Change #172: We'll be available in about one hour.

Operator: And just curious, like, how much of that is, you know, Jack Henry's suite of solutions is largely

So, we're excited about the year guidance and we always aim and strive for more, but we want to put a number out there that we feel confident in our ability to deliver, https://www.kartikmehta.com, Yeah, I think that was more of a one time issue that we've worked through.

Operator: filled out and there's no longer any holes.

It was not an issue in Q4.

Operator: The conference has now concluded. Thank you for attending today's presentation.

The conference has now concluded.

Speaker Change #173: The conference. The conference is now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: But are there other effects that, you know, to the extent that, like, the industry is less fragmented, there's not as many small players or valuation, you know, how are all those playing into the outlook for M&A?

We don't expect it to be an issue going forward.

Thank you for attending today's presentation.

Operator: Yeah, I think you hit on all of them.

It's resolved itself.

You may now disconnect.

Operator: I think it is a combination of much of what you described.

Excellent.

Operator: You know, we continue to look at opportunities that make sense.

Thank you, Mimi.

Operator: The difference is that really, our, you know, our approach hasn't changed, just what we're looking for has changed.

You're welcome.

Operator: You may now disconnect.

Operator: So when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native.

John Davis: The next question comes from John Davis with Raymond James.

John Davis: And so we don't have to rewrite the technology once an acquisition takes place.

Please go ahead.

Mimi Carsley: Yes, Jack, this is meaning I think our intention for the growth algorithm is to have an indicator, it's not a precision. And so I do think, you know, the beauty of it is we have a whole portfolio. And so sometimes they counterbalance each other in a different way. So the great year this year core had higher than the growth algorithm, right? That's somewhat compensated for the lower complementary payments. You have the question of what happens with the economy and geopolitical and election and a lot of other issues. I think in general, we still expect that the growth algorithm holds, but it's illustrative on like any given year, they could, you know, plus a little bit and jobs at each other. Got it.

John Davis: Obviously, PayRails was one of those examples where it was already public cloud native.

Gregory Adelson: Hey, good morning, guys.

Gregory Adelson: Looking to your point about gaps, we don't have the gaps that we had, you know, many years ago.

Greg, I want to circle back to core wins, I think you called out 15, or greater than a billion in assets versus five just a year ago.

Gregory Adelson: And again, maybe the opposite of where we want to focus, which is about that product rationalization, where we're looking at things that just don't make sense as they once did maybe 10 years ago.

Just curious where that stacks up historically, is it always kind of been in the low to mid single digits, and now we had a big step up.

Gregory Adelson: And so we're looking at that.

And then also, you can't you called out that your average client is larger today, any context behind that, like it's X percent bigger than it was five years ago, or any color to help us contextualize the kind of moving up market.

Speaker Change #173: [music].

Gregory Adelson: But I think when you look at the opportunities in front of us, public cloud native, number one.

Yeah, for sure.

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Gregory Adelson: Number two is, do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more, or in some of the things that we're doing to roll out in our, I would say the key products of digital enterprise account opening fraud, things along that line.

So, I appreciate the question, JD.

Gregory Adelson: Those are really where our focus would be.

So, I'll start with the first one.

Gregory Adelson: Okay, good stuff.

So, yeah, 15 is by far a historical number for us.

Gregory Adelson: I'll look forward to seeing you in a few weeks.

So, five last year was more on the average.

Gregory Adelson: Okay, thanks, Steve.

So, we would typically be in the four to six ranges, something like that on an average year.

Gregory Adelson: The next question comes from Charles Nudhunt with Stevens.

So, 15 is a big step up for us.

Gregory Adelson: Please go ahead.

And again, I think a lot of it is what I had mentioned earlier on, I believe it was Andrew's question and was around just kind of what we've been doing on our level of execution and showing the innovation that we have.

Speaker Change: The nice thing about our payments business is not just art, we have other businesses, we have the TPS business, we have the pay center business.

Dave Koning: Thank you.

Gregory Adelson: Good morning and thank you for taking my question.

I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space. So, I think that has helped us a lot.

Gregory Adelson: You had mentioned that roughly 73% of your clients are now in the public cloud. And I think that's up from 69% at the investor day last year.

To your second question, yeah, I think I had referenced over four years, I can't tell you over five, but over four, we had grown our banking assets by 27% and our credit union assets by 34%. And those were over the last four years.

Gregory Adelson: My question is, how much runway is left to move your client base to the cloud?

So, that is an aggregation of a few things.

Gregory Adelson: And if you could talk about what that could mean for revenue uplift.

One, the continued growth of our customers and what we've been able to do to help them grow, deposit growth.

Gregory Adelson: And I think you had, cited two times revenue uplift in the past from additional cross sell as well as some margin benefits as well.

Obviously, some things may have been helped through PPP at the time, but the reality is their assets continue to grow.

Speaker Change: Those are doing quite well, we're seeing a lot of ran, especially as the continuation of real-time payments, the broad solutions that are helping people feel comfortable in going to these newer solutions.

Gregory Adelson: Any commentary around that would be helpful.

Some of the products that we provide, Bano and products like that definitely have a really big impact on deposit growth.

Gregory Adelson: Sure, Chuck, I'll take it.

And then, of course, some of it is the wins that we've had as well.

Okay, that's super helpful.

And Mimi, I want to drill in on on free cash flow a little bit, obviously, much better for in the fourth quarter, I think, at least we expected and for the full year relative to your initial outlook.

But if I adjust out the 20, 29 million dollars of overpayment in 23 that I guess you got back in 24, I still get free cash flow conversion around 80%.

Speaker Change: So those two businesses are doing quite well from the processing and the remit business that we're all has been healthy.

So maybe just help me kind of walk from the 80 to the call it midpoint of 70 that you're talking about for we're expecting in fiscal 25.

Yeah, happy to J.B. Rick Cashel is one of my favorite topics.

So let me give you a little bit more of the walk-crawler there.

Because I think there's two major components.

If you take the 88% that we, just released for the full year versus the prior year of 55, there's two components that overstated the FY24 conversion. One is, as we just talked about, that $29 million of essentially an overpayment in FY23 taxes.

The other thing is the collection timing of our annual maintenance. And this year, as you know, those invoices go out in the late spring, early summer, we start collecting on them in the June-July timeframe, and just depending on, in any given year, how many people pay them, you know, as soon as they get them versus, you know, in July, sometimes in a given year, that shifts the timing of that collection impacting free cash flow.

Speaker Change: Within card, as you mentioned, we do have a whole portfolio of complementary services that surround the card trend action, and we're continuing to see nice demand for those services.

So this year, I would say there was probably about $60 million of timing collection-related benefits to the free cash flow conversion in FY24, so if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is, you know, in line with where we think for FY25, hopefully a little better than that as we get in our guidance range, but that is the math.

Okay, no, very helpful.

Thanks, guys.

Thank you.

William Nance: The next question comes from Will Nance with Goldman Sachs.

Speaker Change: So that's really helping us from a total portfolio perspective.

Please go ahead.

Gregory Adelson: Hey, guys.

I appreciate you taking the question.

I just wanted to follow up on the 1Q guidance and sort of the trajectory over the course of the year.

I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance.

I think you kind of just touched on that.

But I think you also referenced processing on the payment side.

Speaker Change: Thank you very much.

So maybe can you just drill down on sort of expectations, I guess maybe stripping around – stripping out the annual license impact.

What are the kind of embedded assumptions around the payment segment in 1Q?

Can we expect that kind of 8% level to continue into next year?

And then maybe just talk about drivers of the acceleration of the course of the year outside of some of the annual fees that you just mentioned.

Yeah, Will, I appreciate the question.

And I would say this year, we gave probably a little bit more color than we have in past years, only because of the way we think the pattern will play out.

We don't die to a quarterly, we manage the business on an annual basis.

But in an effort to make sure that people weren't surprised by the way the Q1 might play out, we wanted to give a little bit more specificity there.

I think if you look at the several of the drivers, you know, we expect a modest, you know, Q1 from a payments perspective, but that's coming off the payments usually grows throughout the year.

So that's usually just your typical restart from an annual basis.

The other thing to look at is we have very strong path in hardware this past year in FY 24.

Speaker Change: Welcome.

So that's from a just the nature of the cycle of hardware sales, the clients, the new hardware that comes out, we think that probably FY 25 may not be as robust as the very strong first half of FY 24.

So I think that's some of the things.

And then as you mentioned that very important software and usage contracts, and particularly the software and licensing part of that, as we see more people over time, you know, those renewals, and how that reseller works.

Last year, we just saw a wave of first half renewals, that we think the pattern this year will be a little less than the first half that we wanted to call that out.

Speaker Change: The next question comes from Jason Kupferberg with Bank of America.

Mimi Carsley: The next question comes from Dave Koning with Baird. Please go ahead. Yeah, hey, thanks guys. And I guess my question is a little similar just on, you know, what, what normalized growth is, I guess if Q1 is 5.25%. The rest of the year has to average around 8.25% to hit the midpoint of the range. And I guess that's a little above normal. And I guess are any segments, you know, going to outsize kind of accelerate from Q1. Or is it really just getting all segments in that 8% range kind of the rest of the year?

Yep, that's all, that's all super helpful.

And then maybe just more big picture on the payment segment, got a lot of questions on just what the building blocks for growth there.

You know, knowing that issuer processing is a big part of that business, and there's been a lot of discussion around, you know, the kind of domestic debit transaction trends, kind of more broadly, and just what the growth angle is there.

I guess, in a world where debit transactions are growing six, you know, what is, what do you see as kind of the most important driver for growing more in line with sort of how you frame the long term targets in the segment?

You called out enterprise payments, I believe, today, just, you know, What in your mind are kind of the big building blocks to get to?

Unknown Segment Targets, Sure.

Speaker Change: Please go ahead.

Hey, Will, this is Greg.

I'll take that one.

Jason Kupferberg: Good morning guys, I just wanted to start on the margin side. I know that you comfortably beat your initial fiscal 24 guidance on the margin line, the initial fiscal 25 guide calls for less margin expansion than in 2024.

So I think there's a couple of things.

Gregory Adelson: The next question comes from John Davis with

Gregory Adelson: Maybe you can add some commentary.

I think EPS has, you know, there's some things that we're doing in that product base that could have some additional growth, but I think the most of it is going to come from really the other two payment groups.

Speaker Change: So is this reflective of some ongoing conservatism or were there some transitory tailwind plaster, you don't expect to recur.

Gregory Adelson: Yeah, I think so it is up from, where we were.

So as you know, what we're doing with our bill pay and turning that into more of a bill management solution with the payrolls acquisition and what we've done to combine the back end of the I-PAYS solution and the front end of the payroll solution and kind of rolling that out in what we call Journey to One.

Gregory Adelson: I don't know if it remember it was 69%, but definitely up from where we are.

And that will be, you know, it's continuing to get completed and executed on time.

Gregory Adelson: So roughly, we don't expect to get 100% of movement there.

We'll have that done by the end of the fiscal year.

Gregory Adelson: I would say that the 93%, 95% range is probably a reasonable number for us to think through.

But the reality is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that.

Gregory Adelson: The other thing is, is that as we've kind of moved and as we've moved to the type of clients that are left in there, which tend to be a lot of the larger ones, that number actually has kind of gone down.

And so there's some opportunities there.

Gregory Adelson: So it's more about 1.75% now than it was at the 2% through the years.

And the other big one comes from the Pay Center application.

Gregory Adelson: And so still significant, but down a little bit.

And what we've done today on the receive side where, you know, we have roughly over 300 institutions on all three of those faster payment rails today, including the FedNow, which is roughly about 40% of the RTP clients that are live and roughly about 30% of the FedNow clients.

Gregory Adelson: But we're continuing to stay focused.

But we're working with our clients today because of the fraud modules that we've been able to create, with Financial Crimes Defender, and I referenced a lot of those sales.

Gregory Adelson: We still have several years of runway on that.

We're working with our clients on the use cases to be able to do SIN.

Gregory Adelson: So if you think about it, there's a couple of hundred left really on each side.

And once the SIN capabilities get out and we get some more leverage with that and some things that get changed, I think with a few of the use cases in particular, I think there's some real upside in that particular group as well.

Gregory Adelson: And so if we're averaging somewhere between 40 and 45 a year, you got three, four or five years, left based on that to get kind of to our numbers.

Speaker Change: I know you're starting off the air down about 100 basis points in Q1, but just want to get a little bit more color on the margin outlook, please.

So as Mimi referenced, it isn't all about CART.

Gregory Adelson: But that will continue to be a focus and an opportunity.

Obviously, CART is the biggest driver, but there's a few of the ancillary solutions within payments that I think have some upside over the next couple of years.

Got it.

It's great, Tyler.

I appreciate you taking the questions this morning.

Sure.

Speaker Change: I appreciate you bringing up that important point margin expansion is one of the key elements that we are both on as a management team where we're quite disciplined as we think about the cost of the organization.

Chris Kennedy: The next question comes from Chris Kennedy with William Blair.

Please go ahead.

Gregory Adelson: Good morning, thanks for taking the question.

Speaker Change: And you are building for scale feature success.

Clearly, new sales activity has been very strong, but you're going with larger institutions.

Is there any impact on kind of the timeline to implementation of some of these newer wins?

No, Chris, I'll take that.

This is great.

So, no, I mean, typical, and just as a reminder, really, for everybody, that typically when we win these new core deals, it's usually a 12 to 18-month process.

So, depending on who that institution is, really what the timeliness is of their existing contract, you know, some clients like to get out ahead of their termination window, and so there's negotiations and things that take place.

Speaker Change: I would say there's a couple of things I don't think it's an excessive conservatism.

And then there's a kind of a wait-and-see period for, not wait-and-see, but wait period for that implementation. But we're still in that 12 to 18-month typical window for those implementations.

So, really, anything that we just sold, those 22, you know, aren't going to see, for the most part, aren't going to see any real revenue for Jack Henry in this fiscal year.

Obviously, the ones we sold last year, and Mimi referenced an increasing opportunity for us in our quarters over time, and some of that is a byproduct of the timing of some of those implementations.

But we're not seeing anything today that has extended beyond what we had typically seen in the past.

Thanks for that.

And then just a quick one on return on invested capital.

Speaker Change: I think that's what we feel confident that the market and the model generate.

Mimi Carsley: Yeah, Dave, I'm saying general and we don't, we're not going to get color quarter by quarter at this point as we live into the year. We think that we want to call out something a trend we're seeing will certainly be transparent on that. I agree with your math that we expected to sequentially grow throughout the year with second half things stronger than the first half. So I think Q1 is more pronounced, that's why we gave the color with more specificity. But I would say Q2 overall is going to be a higher growth than Q1. And I think that is pretty fair to say across the board across all of this segment.

Obviously, it's very high, but it has come down over the last couple of years.

Any thoughts on kind of the long term opportunity with that metric?

Thank you.

Yeah, as part of being a disciplined capital allocator, we're being really thoughtful around that. I think the ROIC, while 20% is an enviable number and something we're quite proud of, it has come down a little bit just based on the math as we had to take on the debt for the pay rails acquisition. We're now paying that down. We've paid down that substantially this past year.

So as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive ROIC.

So it's just the very tail end of working through that process.

So we expect that to continue on a positive trend and an upward trend.

Great, thank you.

Speaker Change: But there are some headwinds as we leave FY 24 into 25 that helps us in 24 change like the slowly backfill of the Egypt departures, particularly that's part of debris.

Welcome.

Kartik Mehta: The next question comes from Kartik Mehta with North Coast Research.

Please go ahead.

Gregory Adelson: Good morning, Greg.

Greg, I wanted to just get your perspective on the core business.

I know, you know, the focus should be the year, but after saying that, I'm going to talk about the quarter, so I apologize for that.

Fourth quarter, maybe a little bit lower than expectations, but I'm wondering, you know, as you look at FY25, considering all the core wins you've had, is that a business that you think segment that continues to grow kind of in line with the overall revenue growth of the company?

Speaker Change: And why you'll see the die for Q1 a little bit weaker is that really helped us in Q1 of FY 24 as well as we had a one time shift in the timing of our annual merit increased cycle.

Yeah, hey Kartik.

Yeah, thanks for the question.

For sure.

I mean, I think, you know, as we, as we have articulated throughout, I mean, it is a, it's a full year of business for us and how we manage the business.

You know, it was a little tougher comp, you know, from, from, from last year compared to this particular one.

But there is, there is no concern on what we're doing, where we're going with that particular business.

And so the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing in technology modernization in general.

So, you know, I mean, the short answer to your question, Kartik, is it just is a full year game for us.

That's really what it is.

Speaker Change: So those those are some issues that create just kind of the grow over challenge next year.

And Kartik, this is Mimi, if I could just add on, you know, the tremendous fourth quarter that Greg talked about the staff said for the sales.

I mean, that's just the very end of our year.

So you think about that cycle for readiness for implementation on the client side.

When you'll start to see that revenue, you know, it's not an FY 25 picture for the Corps, makes sense.

And then just on pricing, I know, you know, there's always a competitive industry.

And whenever you have renewals, pricing gets competitive, but just in general, any change in the environment in the last three, six months that you've noticed?

I'll take that.

Speaker Change: But in general, we just quite confident that the model continues to produce margin expansion at a nice clip.

Yeah, I mean, not necessarily.

I think, You know, our competition has continued to kind of do what they typically do and kind of how they, they quote, go to battle.

And so we haven't seen anything significantly change there.

You know, some of their stories are changing and some of their approaches are changing.

But, but in reality, it is really about what have you done for me?

And so, you know, as you can imagine, within 22 competitive core wins, a lot of those came from, you know, the normal players out there that you would, you would know.

And so, so it's really about, you know, our ability to execute our ability to service our reputation for doing that.

Speaker Change: So we're excited about the year guidance and you know, we always aim and strive for more.

Our consistency of how we go about things.

The consistency of our team, you know, our turnover rates, you know, is very low at the company.

And so you just get a consistency with that.

So it, you know, again, the short answer for you, Kartik, is I don't feel that there's anything significantly changing out in the marketplace other than, you know, some of the stories that they go with.

Perfect.

Speaker Change: But we want to put a number out there that we deal confident our ability to deliver.

Mimi Carsley: Yeah, okay, thank you. And maybe one just I guess one follow up question, net interest income if we look at the interest income less interest expense was a positive 5 million or so in the quarter was better than it's been in a while. But you have a net debt position. So I'm wondering how you get a pretty sizable net interest income, you know, when you have a debt position and if that's sustainable.

Thank you both.

I really appreciate it.

Speaker Change: Okay, that's helpful.

Chair.

Peter Heckmann: The next question comes from Peter Heckman with D.A.

David.

Gregory Adelson: Please go ahead.

Hey, good morning, wanted to follow up on Bano a little bit.

And just see, I mean, 927 on Bano retail, I think you said, really impressive.

And can you talk about how many, Clients you still might have on NetTeller, or maybe your mobile digital banking product.

And how do you think about, you know, the growth of Bano once you've substantially upgraded most of your clients from the older system?

Yeah, it's a great question, Pete.

So not to get, you know, in the minutiae, but just 924, just want to make sure we have our numbers right.

So 924.

And so, you know, that continues to be a huge opportunity for us.

Speaker Change: Just to follow up on the payment segment, I'm going to hone in on card production a little bit.

You know, and there's a lot of runway still in the credit union space, right?

So, and the banking space, but really in the credit union space where we have been attacking that part of our core business.

So there's still a lot of upside when you think about that we have roughly 1,700 core clients.

Speaker Change: I know in the issue of processing side and some things are pretty stable, but there had been some softness and card production earlier in the year.

So there's still a lot of runway within our own base.

But of course, we're working on outside the base strategy as well.

And so we're working with some of our competitors to get what we need to make that successful.

I'm thanking and welcoming all of our speakers and we appreciate your engagement and attendees for participating in the presentation this evening.

As we approach the end of this session, a reminder, that my output is not on pause, but we are open for questions.

I'll run through the slides, which will be available for later during the contestants responding to the webinar.

If it's too hard for your questions today, I just know that we better prepare and effort for the next presented webinar.

There was one other thing that I wanted to point out, which is what you heard earlier this afternoon related to the Chatham Group and some of the comments that the members of the committee have raised.

Speaker Change: Did you see some reversal of that?

Mimi Carsley: Good question, Dave. So how do we get that interest income and the impact it has on net interest? As you did call out, would you have the debt we've been paying it down, you know, pretty significantly this year or pay down and we expect that to continue for 25? But we do have, we minister cash some of the balances and as part of that administrative services, we would we get some of the revenue from those cash settlement accounts, through negotiations we've had with partners in the life, we've been able to increase the yield and those accounts.

We're making progress on our exploration of what we believe works to improve the lives a bit.

But, we're making progress and we'll keep you informed in the meantime.

Speaker Change #100: What are you expecting for F-25 on the card production side?

I just want to say I want to make sure that you get up and ready for Saturday, or the day that you're scheduled to hear our presentations.

I want you to do that and for our book launch and guide and all of that.

But, again, as Roy mentioned, in a couple of our breaks on Saturday night our schedule is starting to move back from what we plan to do, which is build, Okay, all right, that's helpful.

And then, just in terms of M&A, clearly, the pace of M&A has slowed.

And just curious, like, how much of that is, you know, Jack Henry's suite of solutions is, you know, largely filled out, and there's no longer any holes.

But are there other effects that, you know, to the extent that, like, the industry is less fragmented, there's not as many small players or valuation, you know, how are all those playing into the outlook for M&A?

Yeah, I think you hit on all of them.

I think it is a combination of much of what you described.

You know, we continue to look at opportunities that make sense.

The difference is that really our approach hasn't changed, just what we're looking for has changed.

So when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native.

And so we don't have to rewrite the technology once an acquisition takes place.

Obviously, payrails was one of those examples where it was already public cloud native.

Looking to your point about gaps, we don't have the gaps that we had many years ago.

And again, maybe the opposite of where we want to focus, which is about that product rationalization, where we're looking at things that just don't make sense as they once did maybe 10 years ago.

And so we're looking at that.

But I think when you look at the opportunities in front of us, public cloud native, number one.

Number two is, do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more, or in some of the things that we're doing to roll out in our, I would say the key products of digital enterprise account opening fraud, things along that line.

Those are really where our focus would be.

Okay, good stuff.

I'll look forward to seeing you in a few weeks.

Okay, thanks, Steve.

Charles Nabhan: The next question comes from Charles Nabhan with Stevens.

Please go ahead.

Gregory Adelson: Good morning, and thank you for taking my question.

You had mentioned that roughly 73% of your clients are now in the public cloud, and I think that's up from 69% at the Investor Day last year.

My question is, how much runway is left to move your client base to the cloud?

And if you could talk about what that could mean for revenue uplift.

I think you had cited, you know, two times revenue uplift in the past from additional cross-sell as well as, you know, some margin benefits as well.

Any commentary around that would be helpful.

Sure, Chuck, I'll take it Mimi can add some commentary is.

Yeah, I think so it is up from from where we were.

I don't know if I remember it was 69% but definitely up from where we are.

So roughly, you know, we're we don't expect to get 100% of movement there.

I, you know, I would say that, you know, the 93 95% range is probably a reasonable, The other thing is that as we've kind of moved and as we've moved to the type of clients that are left in there, which tend to be a lot of the larger ones, that number actually has kind of gone down.

So it's more about 1.75% now than it was at the 2% through the years.

Mimi Carsley: Now that does have some correlation to interest rate environments, it's depending on what the Fed does in 25. But overall, I would say that it's sustainable. It is subject to some interest rates and it can be but it is sustainable. Gotcha. Thanks, guys. Happy day.

And so still significant, but down a little bit.

But we're continuing to stay focused.

We still have several years of runway on that.

So if you think about it, there's a couple of hundred left really on each side.

And so if we're averaging somewhere between 40 and 45 a year, you've got three, four, five years left based on that to get kind of to our numbers.

But that will continue to be a focus and an opportunity.

And I think there'll be other opportunities to move from the private cloud to the public cloud over time too. So we can't just focus only on what we'll be moving to the private cloud, because at the same time we're winding that down, we'll have opportunities to move customers from the private cloud to the public cloud around the same time frame.

Got it.

I'm sorry if I cut you off, but my follow-up was around sort of a follow-up to Kartik's question around segment outlook.

If I compare fiscal year 24 results to your normalized guide, it looks like core came in a little ahead, whereas complementary and payments were a little below the normalized guide.

And just putting aside quarterly cadence, I know you had cited some softness in maintenance, which I think flows through core.

Do we expect more of a normalized annual cadence of revenue growth next year, you know, more with core coming in the 6% to 7% range and payment complementary in the 8% to 9% range?

Yeah, Jack, this is Mimi.

I think, Our intention for the growth algorithm is to have an indicator.

It's not a precision.

And so I do think, you know, the beauty of it is we have a whole portfolio.

And so sometimes they counterbalance each other in different ways.

So the great year, this year, CORE has higher than the growth algorithm, right, that's somewhat compensated for the lower complementary payments.

You have the question of what happens with the economy and geopolitical and election and a lot of other issues that I think in general, we still expect that the growth algorithm holds.

But it's illustrative on like any given year, they could, you know, plus and minus a little bit and jobs at each other.

Got it, thank you.

Mimi Carsley: Thank you.

You're welcome.

Dave Koning: The next question comes from Dave Koning with Baird.

Please go ahead.

Mimi Carsley: Yeah, hey, thanks, guys.

And I guess my question is a little similar just on what normalized growth is.

James Faucette: The next question comes from James Fossette with Morgan Stanley. Please go ahead. Hey, good morning. Thanks for the time this morning. I wanted to just ask a quick follow-up question on a couple of points. First, on your customers and their priorities, given where we are in the deposits like one, in the prospect of a return to loan growth next year with lower interest rates, etc. How have you seen, if at all, your customers change prioritization in terms of where they're looking to invest between deposited traction and retention tools versus lending? Are we seeing any change in your customers focused in priorities right now?

I guess if Q1 is 5.25%, the rest of the year has to average around 8.25% to hit the midpoint of the range.

And I guess that's a little above normal.

And I guess, are any segments going to outsize, kind of accelerate from Q1?

Or is it really just getting all segments in that 8% range kind of the rest of the year?

Yeah, Dave, I would say in general, and we don't, we're not going to get color quarter by quarter at this point, as we live into the year, we think that we want to call out something, a trend we're seeing will certainly be transparent on that.

I agree with your math that we expected to sequentially grow throughout the year, with the second half being stronger than the first half.

So I think Q1 is more pronounced, that's why we gave the color with more specificity.

But I would say Q2 overall is going to be a higher growth than Q1.

And I think that is pretty fair to say across the board, across all of this.

Yeah, okay, thank you.

And maybe one, just I guess one follow up question, net interest income, if we look at the interest income, less interest expense was a positive 5 million or so in the quarter, it was better than it's been in a while.

But you have a net debt position.

So I'm wondering how you get a pretty sizable net interest income, you know, when you have a debt position, and if that's sustainable.

Good question, Dave.

So how we get that interest income and the impact it has on net interest, as you did call out, we do have the debt, we've been paying it down, you know, pretty significantly this year and a pay down, and we expect that to continue for for 25.

But we do have we administer cash settlement balances. And as part of that administrative services, we get some of the revenue from those cash settlement accounts.

Through negotiations, we've had with partners and the like, we've been able to increase the yield in those accounts.

Now that does have some correlation to interest rate environments, depending on what the Fed does in 25.

But overall, I would say that it's sustainable. It is subject to some interest rate sensitivity, but it is sustainable.

Gotcha.

Thanks, guys.

Happy Camp.

Thank you.

The next question comes from James Faucette with Morgan Stanley.

James Faucette: Please go ahead.

Speaker Change #100: Yeah, I think that was more of a one-time issue that we've worked through.

Gregory Adelson: Good morning, thanks for the time this morning.

Wanted to just ask a quick follow-up question on a couple of points.

First, on your customers and their priority.

Even where we are in the deposit cycle and the prospect of a return to loan growth.

How have you seen, if at all, your customers change?

Prioritization in terms of where they're looking to invest.

Positive Track.

Signing out, focus and priority.

Yeah, that's a great question, James.

And so I have a couple of different reference points for you too.

So I know, I know, North Coast Research did their own survey.

And then, of course, we do our annual benchmark survey that we have.

Speaker Change #101: It was not an issue in Q4.

Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one. The one thing that I will reference from our benchmark survey is this, which is that in 2023, growing deposits was 43 percent.

It's still number one, but 43 percent of the CEOs named that as their number one.

This year it was 54 percent.

So significant growth in both of those numbers, but again, same as a priority.

The other two, just since you asked, have really kind of stayed fairly consistent, which is improvement operational efficiency and growing loans. But both of those have gone up slightly from 2023 to 2024.

But again, those are typically the top three.

And you can throw fraud as a really close number four priority.

Speaker Change #101: We don't expect it to be an issue going forward.

Greg Adelson: Yes, that's a great question, James.

Great, appreciate that.

And Greg, I wanted to follow up on a comment you made.

Speaker Change #102: It's resolved itself.

Greg Adelson: I have a couple of different reference points for you too. I know North Coast Research did their own survey and then of course we do our annual benchmark survey that we have. Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one.

How are you thinking about...

Margin Expansion You're Delivering Right Now.

Potential for additional resource, No, that's a great question.

Speaker Change #102: Excellent.

One that we address, you know, on a regular basis with our team.

So we do, we work through that on a regular basis.

So there's a lot of, you know, short business cases that we do.

But the reality is, if we can implement the revenue faster, we absolutely find ways to do that.

Sometimes it is a reflection on the actual product.

Sometimes it's a reflection of the complimentary or payment product that was sold with the core.

And so sometimes those don't get implemented until the core is implemented. So you have some of those timing delays.

Core in particular is, as I described, it's a 12 to 18 month process.

Most times, maybe a little longer on a couple, but most of the time than that.

But for our other products, so let's just take Financial Crimes Defender.

Speaker Change #103: Thank you Mimi.

We've already increased our resources on that this year to, you know, kind of work through our installation queues and get that down into smaller numbers to ensure that we continue to keep our customers happy.

Great, thank you so much.

Sure.

This concludes our question and answer session.

Vance Sherard: I would like to turn the conference back over to Vance Sherard for any closing remarks.

Thank you, Drew.

Please don't forget that our Investor Day is fast approaching. It will take place on Thursday, September 5th in Dallas, starting at 1 p.m. Central Time.

Speaker Change #104: You're welcome.

Greg Adelson: The one thing that I will reference from our benchmark survey is this, which is that in 2023 growing deposits was 43%, still number one, but 43% of the CEO's name that is their number one. This year was 54%, so significant growth in both of those numbers, but again, same as a priority. The other two, just since you asked, have really kind of stayed fairly consistent, which is improvement operational efficiency and growing loans, but both of those have gone up slightly from 2023 to 2024. But again, those are typically the top three, and you can grow fraud as a really close number four for priorities.

You can join us via webcast or if you'd like to attend in person, please let us know and we will get you the specifics.

In addition to Investor Day, during the coming weeks, we will be traveling to attend various investor events in the U.S. and Europe.

We'd like to take this opportunity to thank all Jack Henry & Associates for their hard work and dedication, which has led to our outstanding results.

Speaker Change #105: The next question comes from John Davis with Raymond James.

Speaker Change #106: Please go ahead.

Speaker Change #107: Good morning, guys.

Greg Adelson: Great, appreciate that.

Speaker Change #108: Greg, I want to circle back to CORE wins.

Greg Adelson: And Greg, I wanted to follow up on a comment you made in terms of implementation, cues, and how, wondering how those are turning broadly, and how are you thinking about the put and takes between the margin expansion you're delivering right now, versus potential for additional resource allocation to speed up those implementations broadly? That's a great question, one that we address on a regular basis with our team. We work through that on a regular basis, so there's a lot of short business cases that we do, but the reality is, if we can implement the revenue faster, we absolutely find ways to do that.

John Davis: He called out 15 or greater than a billion in assets versus five just a year ago.

Speaker Change #110: Just curious where that stacks up historically is it always kind of been in the low to mid-single digits and now we had a big step up.

Speaker Change #111: And then also you called out that your average client is larger today.

Greg Adelson: Sometimes it is a reflection on the actual product, sometimes it's a reflection of the complimentary or payment product that was sold with the core, and so sometimes those don't get implemented until the core is implemented. So you have some of those timing delays core in particular, as I described, it's a 12 to 18 month process, and most times, maybe a little longer on a couple, but most of the time than that.

Speaker Change #112: Any context behind that like it's X percent bigger than it was five years ago or any color to help us contextualize the kind of moving up market.

Speaker Change #112: Yeah, for sure.

Greg Adelson: But for our other product, so let's just take financial crimes defender, we've already increased our resources on that this year to kind of work through our installation cues, and we get that down into smaller numbers to ensure that we continue to keep our customers happy.

Speaker Change #112: So I appreciate the question, JD.

Greg Adelson: That's great.

Speaker Change #112: So I'll start with the first one.

Operator: Thank you so much.

Speaker Change #112: So yeah, 15 is by far a historical number for us.

Vance Sherard: Sure.

Speaker Change #112: So five last year was more on the average.

Operator: This concludes our question and answer session.

Speaker Change #112: So we would typically be in the four to six ranges, something like that on an average year.

Vance Sherard: I would like to turn the conference back over to Vance Sherard for any closing remarks. Please let us know and we will get you the specifics. In addition to Investor Day during the coming weeks, we will be traveling to attend various investor events in the US and Europe.

Speaker Change #112: So 15 is a big step up for us.

Speaker Change #113: And again, I think a lot of it is what I mentioned earlier on I believe was Andrew's questioner and was around just kind of what we've been doing on our level of execution and showing the innovation that we had.

Speaker Change #114: I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space.

Vance Sherard: We'd like to take this opportunity to thank all Jack Henry Associates for their hard work and dedication, which has led to our outstanding results.

Speaker Change #114: So I think that has helped us a lot to your second question.

Operator: Thank you for joining us today.

Speaker Change #114: Yeah, I think I had referenced over four years.

Operator: And true, will you please provide the replay number? Yes, sir. The replay number for today's call is 877-344-7529. And the access code is 719-2153. That will be available in about one hour.

Speaker Change #115: I can't tell you over five, but over four we had grown our banking assets by 27% and our credit being assets by 34% and those were over the last four years.

Speaker Change #115: So that is an aggregation of a few things.

Speaker Change #115: One, the continued growth of our customers and what we've been able to do to help them grow deposit growth.

Operator: The conference has now concluded.

Speaker Change #115: Obviously, some things may have been helped through PPP at the time, but the reality is their assets continue to grow some of the products that we provide.

Operator: Thank you for attending today's presentation.

Speaker Change #116: Bano and products like that definitely have a really big impact on deposit growth.

Speaker Change #116: And then of course, some of it is the wins that we've had as well.

Operator: You may now disconnect.

Speaker Change #116: Okay, that's super helpful.

Speaker Change #116: And Mimi, I want to drill in on free cash for a little bit.

Speaker Change #117: Obviously much better in the fourth quarter.

Speaker Change #118: I think at least we expected it and for the full year relative to your initial outlook.

Speaker Change #119: But if I adjust out the $29 million of over payment in 23 that I guess you got back in 24, I still get free cash look conversion around 80%.

Speaker Change #120: So maybe just helped me kind of walk from the 80 to the call at midpoint of 70 that you're talking about for more expecting in fiscal 25.

J.D.: Yeah, happy to, J.D.

Speaker Change #122: Cat, Rachel is on my very topic, so let me give you a little bit more of the wall color there, because I think there's two major components.

Speaker Change #123: If you take the 88% that we just released for the whole year, there's versus the prior year 55, there's two components that overstated the FY24 conversion. One is, as we just talked about, that $29 million of essentially an overpayment in FY23 taxes.

Speaker Change #124: The other thing is the collection timing of our annual maintenance. And this year, as you know, those invoices go out in the late spring or the summer, we start collecting on them in the June, July timeframe. And just depending on in any given year, how many people pay them, you know, as soon as they get them, versus, you know, in July, sometimes in a given year, that shift, the timing of that collection and collecting free cash flow.

Speaker Change #125: So this year, I would say there was probably about $60 million of timing collection related benefits in the free cash flow conversion in FY24.

Speaker Change #125: So if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is, you know, in line with where we think for FY25, hopefully a little better than that as we get in our guidance range, but that is, that is the math.

Speaker Change #125: Okay, no, very helpful.

Speaker Change #125: Thanks, guys.

Speaker Change #125: Thank you.

Speaker Change #126: The next question comes from Will Nance with Goldman Sachs.

Speaker Change #127: Please go ahead.

Speaker Change #128: Hey, guys, appreciate you taking the question.

Will Nance: I just wanted to follow up on the one queue guidance and sort of the trajectory over the course of the year.

Speaker Change #130: I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance.

Speaker Change #130: I think he's kind of just touched on that, but I think you also referenced processing on the payment side.

Speaker Change #130: So maybe can you just drill down on sort of expectations?

Speaker Change #130: I guess maybe stripping around stripping out the annual license impact.

Speaker Change #131: What are the kind of embedded assumptions around the payment segment in one queue, can we expect that kind of 8% level to continue into next year?

Speaker Change #131: And then maybe just talk about, you know, drivers of the acceleration of the course of the year outside of some of the annual, the annual fees that you just set on.

Speaker Change #131: Yeah, will I appreciate the question and I would say this year we gave probably a little bit more color than we have in past years, only because of the way we think the pattern will play out.

Speaker Change #132: We don't die to a quarterly, we manage the business on an annual basis, but in an effort to make sure that people work surprise by the way that you one might play out, we wanted to give a little bit more specificity there.

Speaker Change #133: I think if you look at the summer of the drivers, you know, we expect a modest, you know, key one from a payments perspective, but that's coming off the payments usually grows throughout the year.

Speaker Change #133: So that's usually just your typical restart from an annual basis.

Speaker Change #133: The other thing to look at is we have very strong in hardware this past year in FY24, so that from just the nature of the cycle of hardware sales, the appliance, the new hardware that comes out, we think that probably FY25 may not be as robust as the very strong first half of FY24.

Speaker Change #134: So I think that's some of the things and then as you mentioned that very important software usage contrast and particularly the software licensing part of that as you see more people over time, you know, those renewals and how that reseller works last year, we just saw a wave of first half renewals.

Speaker Change #134: That we think the pattern this year will be a little less than the first half that we wanted to call that out.

Speaker Change #134: Yep, that's all, that's all super helpful.

Speaker Change #134: And then maybe just more big picture on the payment segment, got a lot of questions on just what the building blocks for growth there.

Speaker Change #135: You know, knowing that it's your processing is a big part of that business, it's been a lot of discussion around, you know, the kind of domestic, debit transaction trends, kind of more broadly and just what the growth as it was there.

Speaker Change #136: I guess in a world where debit transactions are growing six, you know, what is, what do you see kind of the most important driver for growing?

Speaker Change #136: More in line with sort of how you friend belong from targets in the segment, you call that enterprise payments that believe today, just, you know, what in your mind are kind of the big building blocks to get to the second targets there.

Speaker Change #137: Sure, hey, well, this is Greg.

Speaker Change #138: I'll take that one.

Speaker Change #139: So I think there's a couple of things.

Speaker Change #140: I think EPS has, you know, there's some, some things that we're doing in that product base that could have some additional growth, but I think the most of it is going to come from really the other two payment groups.

Speaker Change #141: So as you know, what we're doing with our bill pay and turning that into more of a bill, a bill management solution with the pay rails acquisition and what we've done to combine the back end of the I pay solution, the very and the front end of the pay rail solution and kind of rolling that out and what we call journey to one.

Speaker Change #141: And that will be, you know, is continuing to get completed and executed on time.

Speaker Change #141: We'll have that done by the end of the fiscal year, but the reality is is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that. And so there's some opportunities there.

Speaker Change #141: And the other big one comes from the pay center application and what we've done today on the receive side where, you know, we have roughly over 300 institutions on all three of those faster payment rails today, including the Fed now.

Speaker Change #142: And which is roughly about 40% of the RTP clients that are live and roughly about 30% of the Fed now clients, but we're working with our clients today because of the fraud modules that we've been able to create with financial crimes defender and I referenced a lot of those sales.

Speaker Change #142: We're working with our clients on the use cases to be able to do send and once the send capabilities get out and we get some more leverage for that and some things to get changed.

Speaker Change #142: I think with with a few of the use cases in particular, I think there's some real upside in that particular group as well.

Speaker Change #143: So as Mimi referenced, it isn't all about card.

Speaker Change #144: Obviously card is the biggest driver, but there's a few of these of the ancillary solutions within payments that I think have some some some upside over the next, you know, a couple of years.

Speaker Change #144: That's great.

Speaker Change #144: I appreciate your second question.

Speaker Change #144: Sure.

Speaker Change #144: The next question comes from Chris Kennedy with William Blair.

Speaker Change #145: Please go ahead.

Speaker Change #146: Good morning.

Speaker Change #147: Thanks for taking the question.

Speaker Change #148: Clearly new sales activity has been very strong, but you're going with larger institutions.

Speaker Change #149: Is there any impact on kind of the timeline to implementation of some of these newer wins?

Speaker Change #150: No, Chris, I'll take that.

Speaker Change #151: This is great.

Speaker Change #152: So no, I mean, difficult and it just as a reminder really for everybody that typically when we win these new core deals, it's usually a 12 to 18 month process.

Speaker Change #153: So depending on on who that institution is, really what the timeline is is of their existing contract, you know, some clients like to get out ahead of their their termination window.

Speaker Change #153: And so there's negotiations and things that they place.

Speaker Change #153: And then there's a kind of a wait and see period for not wait and see but wait period for for that implementation.

Speaker Change #153: But we're still in that 12 to 18 month typical window for the for those implementation.

Speaker Change #154: So really anything that we just sold those 22, you know, aren't going to see for the most part are going to see any real revenue for Jack Henry in this fiscal year.

Speaker Change #155: Obviously, the ones we sold last year and many reference an increasing opportunity for us in our quarters over time.

Speaker Change #156: And some of that is a byproduct of the timing of some of those implementations.

Speaker Change #156: But, but we're not seeing anything today that has extended beyond what we had typically seen in the past.

Speaker Change #156: Great, thanks for that.

Speaker Change #156: And then just a quick one on return on invested capital, obviously it's very high, but it has come down over the last couple of years, any thoughts on kind of the long term opportunity with that metric.

Speaker Change #156: Thank you.

Speaker Change #156: Great.

Speaker Change #156: Yeah, I've started being a disciplined capital allocator.

Speaker Change #157: We're being really thoughtful around that.

Speaker Change #158: I think the ROIC, well, 20% is an enviable number and something we're quite proud of.

Speaker Change #159: It has come down a little bit just based on the math of as we had to take on the debts for the payroll acquisition. We're now paying that down.

Speaker Change #160: We pay down that substantially this past year. So as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive our ROIC.

Speaker Change #160: So it's just the very tail end of working through that process.

Speaker Change #160: So we expect us to continue on a positive trend and an upward trend.

Speaker Change #160: Great.

Speaker Change #160: Thank you.

Speaker Change #160: Welcome.

Speaker Change #160: The next question comes from Cartic Mehta with North Coast Research.

Speaker Change #161: Please go ahead.

Speaker Change #162: Good morning, Greg.

Speaker Change #162: Great.

Speaker Change #163: I wanted to just get your perspective on the core business.

Speaker Change #164: I know, you know, the focus should be here, but after saying that I'm going to talk about the portal.

Speaker Change #164: So apologize for that.

Speaker Change #165: A fourth quarter, maybe a little bit lower than expectations, but I'm wondering, you know, as you look at that, 5.25, considering all the core we've had.

Speaker Change #165: Is that a business that you think segment that continues to grow kind of in line with the overall revenue flow for the company?

Speaker Change #165: Yeah, I think, yes.

Speaker Change #165: Thanks for the question for sure.

Speaker Change #165: I mean, I think, you know, as we, as we have articulated throughout, I mean, it is a, it's a full year of business for us and how we manage the business.

Speaker Change #166: You know, it was a little tougher comp, you know, from from from last year compared to this particular one, but there is there is no concern on what we're doing where we're going with that particular business.

Speaker Change #166: And so the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing in technology, modernization in general.

Speaker Change #166: So, you know, I mean, the short answer to your question, cardic is, it is just as a full year game for us.

Speaker Change #166: That's really what it is.

Speaker Change #167: And cardic, this is mainly if I just add on, you know, the tremendous fourth quarter of the grid talked about the staff said for the bail.

Speaker Change #167: I mean, that's just the very end of our year.

Speaker Change #168: So, you think about that cycle for readiness for implementation on the client side when you'll start to see that revenue, you know, is not an FY25 picture for the core.

Speaker Change #168: Makes sense.

Speaker Change #168: And then just on a pricing, I know, you know, there's always a competitive industry and whenever you have rules, pricing gets competitive.

Speaker Change #168: But just in general, any change in the environment in the last three, six months that you've noticed.

Speaker Change #168: I'll take that.

Speaker Change #168: Yeah, I mean, not necessarily.

Speaker Change #168: I think.

Speaker Change #169: You know, our competition has continued to kind of do what they typically do and kind of how they they quote go to battle.

Speaker Change #169: And so we haven't seen anything significantly change there.

Speaker Change #169: You know, some of their stories are changing and some of their approaches are changing.

Speaker Change #169: But but in reality, it is really about what had you done for me.

Speaker Change #169: And so, you know, as you can imagine, it's in 22 competitive core wins.

Speaker Change #170: There's a lot of those came from, you know, the normal players out there that you would, you would know.

Speaker Change #171: And so, so it's really about, you know, our ability to execute our ability to service our reputation for doing that, our consistency of how we go about things, the consistency of our team, you know, our turnover rates, you know, is very low at the company.

Speaker Change #171: And so you just get a consistency with that.

Speaker Change #171: So it, you know, again, the short answer for you, Kartik is, I don't feel that there's anything significantly changing out in the marketplace other than, you know, some of the stories that they go with.

Speaker Change #171: Perfect.

Speaker Change #171: Thank you both.

Speaker Change #171: I really appreciate it.

Speaker Change #171: Okay.

Speaker Change #171: The next question comes from Peter Heckman with the Davidson.

Speaker Change #172: Please go ahead.

Speaker Change #173: Hello, good morning.

Speaker Change #174: I wanted to follow up on Banner a little bit and just see any 927 on Banner retail.

Speaker Change #175: I think he said that's really impressive.

Speaker Change #176: And can you talk about how many clients he still might have on net teller or maybe your mobile digital banking product?

Speaker Change #177: And how do you think about, you know, the growth of Banner once you substantially upgraded most of your clients from the older systems?

Speaker Change #177: Yeah, so it's a great question, Pete.

Speaker Change #178: So not to get, you know, in the minutia, but just 924 just want to make sure we have our numbers right.

Speaker Change #179: So 924.

Speaker Change #179: And so, you know, that continues to be a huge opportunity for us.

Speaker Change #180: You know, and there's a lot of runway still in the credit union space, right?

Speaker Change #181: So and the bank and say, but really in the credit union space where we have been attacking that part of our core business.

Speaker Change #181: So there's still a lot of left side when you think about that we have roughly 1700 for clients.

Speaker Change #181: So there's still a lot of runway within our own base.

Speaker Change #181: But of course, we're working on outside the base strategy as well.

Speaker Change #182: And so we're working with some of our competitors to give what we need to make that successful.

Speaker Change #182: Sometimes not as easy as we had hoped to make that happen, but the reality is we're making a lot of progress.

Speaker Change #182: And we still expect it to do what we said we were going to do, which is get that out of the latter part of this fiscal year or the second half of the calendar year.

Speaker Change #182: So that's still on point.

Speaker Change #182: Answer your question around that tower.

Speaker Change #182: I don't know exactly, but you know, it's roughly a couple of hundred left on the net seller platform.

Speaker Change #182: Okay.

Speaker Change #182: All right.

Speaker Change #182: That's helpful.

Speaker Change #182: And then just in terms of MNA clearly the face of MNA is slowed and just curious like how much of that is you know, Jack Henry's three solutions is largely filled out.

Speaker Change #182: And there's no longer any holes, but are there other effects that you know, to the extent that like the the industry is less fragmented.

Speaker Change #183: There's not as many small players or or valuation, you know, how are all those playing into the yellow criminal.

Speaker Change #183: Yeah, I think you hit on all of them.

Speaker Change #183: I think it is a combination of much of what you describe.

Speaker Change #184: We continue to look at opportunities that make sense. The difference is that really our approach hasn't changed just what we're looking for has changed.

Speaker Change #185: So when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native.

Speaker Change #185: And so we don't have to rewrite the technology once an acquisition takes place.

Speaker Change #186: Obviously, pay rails was one of those examples where it was already public cloud native looking to your point about gaps.

Speaker Change #187: We don't we don't have the gaps that we had, you know, many years ago. And again, maybe the opposite of where we want to focus, which is about that product rationalization where we're looking at things that just don't make sense as they once did maybe 10 years ago. And so we're looking at that.

Speaker Change #188: But I think when you look at the opportunities in front of us public cloud native number one number two is do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more.

Speaker Change #188: In some of the things that we're doing to roll out in our, I would say the key products of digital enterprise account opening broad things a lot of that line.

Speaker Change #188: Those are really where what our focus with me.

Speaker Change #188: Okay.

Speaker Change #188: Good stuff.

Speaker Change #188: I'll look forward to seeing you a few weeks.

Speaker Change #188: Okay.

Speaker Change #188: Thanks.

Speaker Change #189: The next question comes from Charles not hunt with Stevens.

Speaker Change #190: Please go ahead.

Speaker Change #191: Good morning and thank you for taking my question.

Speaker Change #192: You had mentioned that roughly 73% of your clients are now in the public cloud.

Speaker Change #193: I think that's up from 69% at the the investor day last year.

Speaker Change #194: My question is how much runway is left to move your client base to the cloud.

Speaker Change #194: And if you could talk about what that could mean for for revenue uplift.

Speaker Change #195: I think you had cited you know two times revenue uplift in the past from from additional cross sell as well as you know some margin benefits as well.

Speaker Change #195: Any commentary around that would be helpful.

Speaker Change #195: Sure, Chuck.

Speaker Change #196: I'll take it maybe can add some commentary is yeah, I think so it is up from from where we were.

Speaker Change #197: I don't know if you remember who was 69% but definitely up from where we are.

Speaker Change #198: So roughly, you know, we don't expect to get 100% of movement there.

Speaker Change #198: I would say that you know the 93 95% range is probably a reasonable number for us to to think through.

Speaker Change #198: The other thing is that as we've kind of moved and as we've moved to the type of clients that are left in there which which tend to be you know a lot of the larger ones.

Speaker Change #198: You know that number actually has kind of gone down so it's more about 1.75% now than it was at the 2% you know through the years.

Speaker Change #198: And so still significant but you know down a little bit for continuing to stay focused.

Speaker Change #198: We still have several years of runway on that.

Speaker Change #198: So if you think about it, you know there's there's a couple of hundred left you really on each side.

Speaker Change #199: You know, and so if you were averaging somewhere between 40 and 45 the year you got you know three or four or five years left based on on that to get kind of to our numbers.

Speaker Change #199: But but that will continue to be a focus and an opportunity and I think there'll be other opportunities to move from the private cloud to the public cloud over time too.

Speaker Change #200: So you know we can't just focus only on what we'll be moving to the private cloud because at the same time we're winding that down. We'll have opportunities to move customers from the private cloud to the public cloud around the same time.

Speaker Change #200: I'm sorry if I cut you off, but my follow-up was around sort of a follow-up to Kartik's question around segment outlook.

Speaker Change #201: If I compare fiscal year 24 results to your normalized guide, it looks like core came in a little ahead whereas complementary end payments were a little below the normalized guide and just putting aside quarterly cadence. I know you had cited some softness and maintenance, which I think flows through core.

Speaker Change #201: Could we expect more of a normalized annual cadence of revenue growth next year, you know, more with core coming into six to seven percent range and payment complementary in the eight to nine percent range?

Speaker Change #201: Yes, Jack, this is meaning I think our intention for the growth algorithm is to have an indicator, it's not a precision.

Speaker Change #202: And so I do think, you know, the beauty of it is we have a whole portfolio.

Speaker Change #203: And so sometimes they counterbalance each other in a different way.

Speaker Change #204: So the great year this year core had higher than the growth algorithm, right?

Speaker Change #205: That's somewhat compensated for the lower complementary payments.

Speaker Change #205: You have the question of what happens with the economy and geopolitical and election and a lot of other issues.

Speaker Change #205: I think in general, we still expect that the growth algorithm holds, but it's illustrative on like any given year, they could, you know, plus a little bit and jobs at each other.

Speaker Change #205: Got it.

Speaker Change #205: Thank you.

Speaker Change #205: The next question comes from Dave Koning with Baird.

Speaker Change #205: Please go ahead.

Speaker Change #206: Yeah, hey, thanks guys.

Speaker Change #207: And I guess my question is a little similar just on, you know, what, what normalized growth is, I guess if Q1 is 5.25%.

Speaker Change #207: The rest of the year has to average around 8.25% to hit the midpoint of the range.

Speaker Change #208: And I guess that's a little above normal.

Speaker Change #208: And I guess are any segments, you know, going to outsize kind of accelerate from Q1.

Speaker Change #208: Or is it really just getting all segments in that 8% range kind of the rest of the year?

Speaker Change #209: Yeah, Dave, I'm saying general and we don't, we're not going to get color quarter by quarter at this point as we live into the year.

Speaker Change #210: We think that we want to call out something a trend we're seeing will certainly be transparent on that.

Speaker Change #211: I agree with your math that we expected to sequentially grow throughout the year with second half things stronger than the first half.

Speaker Change #212: So I think Q1 is more pronounced, that's why we gave the color with more specificity.

Speaker Change #212: But I would say Q2 overall is going to be a higher growth than Q1.

Speaker Change #212: And I think that is pretty fair to say across the board across all of this segment.

Speaker Change #212: Yeah, okay, thank you.

Speaker Change #212: And maybe one just I guess one follow up question, net interest income if we look at the interest income less interest expense was a positive 5 million or so in the quarter was better than it's been in a while.

Speaker Change #212: But you have a net debt position.

Speaker Change #213: So I'm wondering how you get a pretty sizable net interest income, you know, when you have a debt position and if that's sustainable.

Speaker Change #214: Good question, Dave.

Speaker Change #215: So how do we get that interest income and the impact it has on net interest?

Speaker Change #216: As you did call out, would you have the debt we've been paying it down, you know, pretty significantly this year or pay down and we expect that to continue for 25?

Speaker Change #217: But we do have, we minister cash some of the balances and as part of that administrative services, we would we get some of the revenue from those cash settlement accounts, through negotiations we've had with partners in the life, we've been able to increase the yield and those accounts.

Speaker Change #217: Now that does have some correlation to interest rate environments, it's depending on what the Fed does in 25.

Speaker Change #217: But overall, I would say that it's sustainable. It is subject to some interest rates and it can be but it is sustainable.

Speaker Change #217: Gotcha.

Speaker Change #217: Thanks, guys.

Speaker Change #217: Happy day.

Speaker Change #217: Thank you.

Speaker Change #218: The next question comes from James Fossette with Morgan Stanley.

Speaker Change #219: Please go ahead.

Speaker Change #220: Hey, good morning.

Speaker Change #221: Thanks for the time this morning.

James Fossette: I wanted to just ask a quick follow-up question on a couple of points.

Speaker Change #223: First, on your customers and their priorities, given where we are in the deposits like one, in the prospect of a return to loan growth next year with lower interest rates, etc.

Speaker Change #223: How have you seen, if at all, your customers change prioritization in terms of where they're looking to invest between deposited traction and retention tools versus lending?

Speaker Change #223: Are we seeing any change in your customers focused in priorities right now?

Speaker Change #223: Yes, that's a great question, James.

Speaker Change #223: I have a couple of different reference points for you too.

Speaker Change #224: I know North Coast Research did their own survey and then of course we do our annual benchmark survey that we have. Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one.

Speaker Change #225: The one thing that I will reference from our benchmark survey is this, which is that in 2023 growing deposits was 43%, still number one, but 43% of the CEO's name that is their number one.

Speaker Change #225: This year was 54%, so significant growth in both of those numbers, but again, same as a priority.

Speaker Change #225: The other two, just since you asked, have really kind of stayed fairly consistent, which is improvement operational efficiency and growing loans, but both of those have gone up slightly from 2023 to 2024.

Speaker Change #225: But again, those are typically the top three, and you can grow fraud as a really close number four for priorities.

Speaker Change #225: Great, appreciate that.

Speaker Change #226: And Greg, I wanted to follow up on a comment you made in terms of implementation, cues, and how, wondering how those are turning broadly, and how are you thinking about the put and takes between the margin expansion you're delivering right now, versus potential for additional resource allocation to speed up those implementations broadly?

Speaker Change #227: That's a great question, one that we address on a regular basis with our team.

Speaker Change #228: We work through that on a regular basis, so there's a lot of short business cases that we do, but the reality is, if we can implement the revenue faster, we absolutely find ways to do that.

Speaker Change #228: Sometimes it is a reflection on the actual product, sometimes it's a reflection of the complimentary or payment product that was sold with the core, and so sometimes those don't get implemented until the core is implemented.

Speaker Change #228: So you have some of those timing delays core in particular, as I described, it's a 12 to 18 month process, and most times, maybe a little longer on a couple, but most of the time than that.

Speaker Change #229: But for our other product, so let's just take financial crimes defender, we've already increased our resources on that this year to kind of work through our installation cues, and we get that down into smaller numbers to ensure that we continue to keep our customers happy.

Speaker Change #229: That's great.

Speaker Change #229: Thank you so much.

Speaker Change #229: Sure.

Speaker Change #229: This concludes our question and answer session.

Speaker Change #229: I would like to turn the conference back over to Vance Sherard for any closing remarks.

Speaker Change #230: Please let us know and we will get you the specifics.

Vance Sherard: In addition to Investor Day during the coming weeks, we will be traveling to attend various investor events in the US and Europe.

Speaker Change #232: We'd like to take this opportunity to thank all Jack Henry Associates for their hard work and dedication, which has led to our outstanding results.

Speaker Change #232: Thank you for joining us today.

Speaker Change #233: And true, will you please provide the replay number?

Speaker Change #233: Yes, sir.

Speaker Change #234: The replay number for today's call is 877-344-7529.

Speaker Change #235: And the access code is 719-2153.

Speaker Change #235: That will be available in about one hour.

Speaker Change #235: The conference has now concluded.

Speaker Change #235: Thank you for attending today's presentation.

Speaker Change #235: You may now disconnect.