Jack Henry & Associates 10-Q 2021-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______________ to ________________

Commission file number 0-14112

JACK HENRY & ASSOCIATES, INC.

(Exact name of registrant as specified in its charter)

Delaware						43-1128385
(State or Other Jurisdiction of Incorporation)						(I.R.S Employer Identification No.)

663 Highway 60, P.O. Box 807, Monett, MO 65708

(Address of Principle Executive Offices)

(Zip Code)

417-235-6652

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol			Name of each exchange on which registered
Common Stock ($0.01 par value)			JKHY			Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ”accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

As of October 28, 2021, the Registrant had 74,041,032 shares of Common Stock outstanding ($0.01 par value).

TABLE OF CONTENTS

						Page Reference
PART I			FINANCIAL INFORMATION
ITEM 1.			Condensed Consolidated Balance Sheets as of September 30, 2021 and June 30, 2021 (Unaudited)			4
			Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2021 and 2020 (Unaudited)			5
			Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended September 30, 2021 and 2020 (Unaudited)			6
			Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2021 and 2020 (Unaudited)			7
			Notes to Condensed Consolidated Financial Statements (Unaudited)			8
ITEM 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			19
ITEM 3.			Quantitative and Qualitative Disclosures about Market Risk			26
ITEM 4.			Controls and Procedures			26
PART II			OTHER INFORMATION			26
ITEM 1.			Legal Proceedings			26
ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds			27
ITEM 6.			Exhibits			28
			Signatures			29

In this report, all references to "Jack Henry," “JKHY,” the “Company,” “we,” “us,” and “our,” refer to Jack Henry & Associates, Inc., and its wholly owned subsidiaries.

FORWARD LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements may appear throughout this report, including without limitation, in Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “seek,” “anticipate,” “estimate,” “future,” “intend,” “plan,” “strategy,” “predict,” “likely,” “should,” “will,” “would,” “could,” “can,” “may,” and similar expressions. Forward-looking statements are based only on management’s current beliefs, expectations and assumptions regarding the future of the Company, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, those discussed in our Annual Report on Form 10-K for the year ended June 30, 2021, in particular, those included in Item 1A, “Risk Factors” of such report, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Any forward-looking statement made in this report speaks only as of the date of this report, and the Company expressly disclaims any obligatio

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This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q for the quarter ended September 30, 2021.

OVERVIEW

Jack Henry & Associates, Inc. ("JKHY") is a leading provider of technology solutions and payment processing services primarily for financial services organizations. Its solutions are marketed and supported through three primary brands. Jack Henry Banking® provides innovative solutions to community and regional banks. Symitar® provides industry-leading solutions to credit unions of all sizes. ProfitStars® offers highly specialized solutions to financial institutions of every asset size, as well as diverse corporate entities outside of the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JKHY's integrated solutions are generally available for on-premise installation and delivery in our private cloud.

Our two primary revenue streams are "services and support" and "processing." Services and support includes: "private and public cloud" fees (formerly known as "outsourcing and cloud" fees - see Note 3 to the condensed consolidated financial statements) that predominantly have contract terms of seven years or longer at inception; "product delivery and services" revenue, which includes revenue from the sales of licenses, implementation services, deconversion fees, consulting, and hardware; and "on-premise support" revenue (formerly known as "in-house support" revenue - see Note 3 to the condensed consolidated financial statements), composed of maintenance fees which primarily contain annual contract terms. Processing revenue includes: "remittance" revenue from payment processing, remote capture, and ACH transactions; "card" fees, including card transaction processing and monthly fees; and "transaction and digital" revenue, which includes transaction and mobile processing fees. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.

All amounts in the following discussion are in thousands, except per share amounts.

COVID-19 Impact and Response

Since its outbreak in early 2020, COVID-19 has rapidly spread and continues to represent a public health concern. The health, safety, and well-being of our employees and customers is of paramount importance to us. In March 2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions. We offered remote working as a recommended option to employees whose job duties allowed them to work off-site, and we suspended all non-essential business travel. This company-wide recommendation extended until July 1, 2021, at which point we began transition to a return to our facilities and normalization of travel activities. Individual decisions on returning to the office were manager-coordinated and based on conversations with specific teams and departments. A large number of our employees requested to remain fully remote or participate in a hybrid approach where they would split their time between remote and in-person working. We have not required employees who return to our facilities to receive vaccinations, but we have provided information on vaccine providers, as well as hosted on-site COVID-19 vaccination clinics at several of our facilities for our employees and their families. On August 3, 2021, we reimplemented our company-wide recommendation for remote work based on the spread of the Delta variant and increased infection rates. For those employees who are at our facilities, we have introduced enhanced sanitation procedures and we require face masks for both vaccinated and unvaccinated employees. As of November 5, 2021, the majority of our employees were continuing to work remotely either full time or in a hybrid capacity. While our business travel has increased in recent months, we continue to encourage a cautious approach to business travel activities. On November 4, 2021, the Occupational Safety and Health Administration announced a new emergency temporary standard that requires employers with 100 or more employees, which includes Jack Henry, to require employees to either receive a COVID-19 vaccination or else undergo regular testing. We are developing our plan to comply with this new standard.

Customers

We work closely with our customers who are scheduled for on-site visits to ensure their needs are met while taking necessary safety precautions when our employees are required to be at a customer site. Delays of customer system installations due to COVID-19 have been limited, and we have developed processes to handle remote installations when available. We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic. Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been curtailed, we have not yet experienced significant disruption to our operations. We believe our technological capabilities are well positioned to allow our employees to work remotely without materially impacting our business.

Financial impact

Despite the changes and restrictions caused by COVID-19, the overall financial and operational impact on our business has been limited and our liquidity, balance sheet, and business trends remain strong. We experienced positive operating cash flows during fiscal 2021 and the first three months of fiscal 2022, and we do not expect that to change in the near term. However, we are unable to accurately predict the future impact of COVID-19 due to a number of uncertainties, including further government actions; the duration, severity and recurrence of the outbreak, including the onset of variants of the virus; the speed and effectiveness of vaccine and treatment developments; the speed of economic recovery; the potential impact to our customers, vendors, and employees; and how the potential impact might affect future customer services, processing and installation-related revenue, and processes and efficiencies within the Company directly or indirectly impacting financial results. We will continue to monitor COVID-19 and its possible impact on the Company and to take steps necessary to protect the health and safety of our employees and customers.

RESULTS OF OPERATIONS

For the first quarter of fiscal 2022, total revenue increased 8%, or $36,256, compared to the same quarter in fiscal 2021. Total revenue less deconversion fee and acquisition and divestiture revenues of $3,724 and $106, respectively, for the current fiscal quarter and less deconversion fee and acquisition and divestiture revenues of $5,882 and $1,182, respectively, for the prior fiscal quarter, results in an increase of 9%, quarter over quarter. This increase was primarily driven by growth in support revenue, card, remittance, and transaction and digital processing revenues, partially offset by lower hardware revenue in our product delivery and services revenue line.

Operating expenses increased 6% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021, primarily due to increased direct costs related to our card payment processing platform and Jack Henry digital, higher personnel costs, and higher travel expenses related to an increase in business travel compared to the prior fiscal quarter, as travel began to pick up after the prior fiscal year's COVID-19 travel limitations (see "COVID-19 Impact and Response" section above).

Operating income increased 14% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021. Operating income less deconversion fee operating income of $3,184 and adjusted for acquisition and divestiture operating loss of $45 for the current fiscal quarter, and less deconversion fee and acquisition and divestiture operating income of $5,219 and $369, respectively, for the prior fiscal quarter, results in a 16% increase for the first quarter of fiscal 2022, quarter over quarter. This increase in operating income was primarily driven by revenue growth partially offset by increased operating expenses, as detailed above.

The provision for income taxes increased 19% for the first quarter of fiscal 2022 compared to the prior fiscal first quarter. The effective tax rate for the first quarter of fiscal 2022 was 23.4% compared to 22.4% for the same quarter a year ago. The increase in the effective tax rate was primarily due to a larger excess tax benefit received from share-based compensation in the prior fiscal quarter.

Due to the above changes, net income increased 12% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021.

We move into the second quarter of fiscal 2022 with optimism following strong performance in the first quarter, but with limited visibility of the future impact of the COVID-19 pandemic (see "COVID-19 Impact and Response" section above). Significant portions of our business continue to come from recurring revenues and our sales pipeline also remains encouraging. Our customers continue to face regulatory and operational challenges which our products and services address, and in these uncertain times, we believe they have an even greater need for our solutions that directly address institutional profitability, efficiency, and security. Our strong balance sheet, access to extensive lines of credit, the continued strength of our existing lines of revenue, and an unwavering commitment to superior customer service should position us well to address current and future opportunities.

A detailed discussion of the major components of the results of operations for the three months ended September 30, 2021 follows. Discussions compare the current fiscal year's three months ended September 30, 2021 to the prior fiscal year's three months ended September 30, 2020.

REVENUE

Services and Support															Three Months Ended September 30,												% Change
																					2021						2020
Services and Support																					$	297,494					$	280,997					6		%
Percentage of total revenue																					61		%				62		%

Services and support revenue increased 6% for the first quarter of fiscal 2022 compared to the same quarter a year ago. This revenue less deconversion fee revenue for the current fiscal quarter of $3,724 and less deconversion fee and acquisition and divestiture revenues for the prior quarter of $5,882 and $1,182, respectively, results in growth of 7%, quarter over quarter. This increase was primarily driven by growth in data processing and hosting fees as new customers were added and volumes continued to expand, as well as higher software usage fees for customers using on-premise products while outsourced core customers continued to shift to our term license model.

Processing															Three Months Ended September 30,												% Change
																					2021						2020
Processing																					$	190,562					$	170,803					12		%
Percentage of total revenue																					39		%				38		%

Processing revenue increased 12% for the first quarter of fiscal 2022 compared to the same quarter last fiscal year. The increase was driven by higher card, remittance, and Jack Henry digital processing revenues. All remittance revenue lines experienced expanding volumes during the current quarter compared to the prior fiscal quarter.

OPERATING EXPENSES

Cost of Revenue															Three Months Ended September 30,												% Change
																					2021						2020
Cost of Revenue																					$	276,636					$	262,929					5		%
Percentage of total revenue																					57		%				58		%

Cost of revenue for the first quarter of fiscal 2022 increased 5% over the prior fiscal year first quarter. This increase was primarily due to higher direct costs associated with our card processing platform, increased licenses and fees, and higher personnel costs, partially offset by lower hardware costs. Cost of revenue decreased 1% compared to the prior fiscal quarter as a percentage of total revenue.

Research and Development															Three Months Ended September 30,												% Change
																					2021						2020
Research and Development																					$	26,754					$	26,057					3		%
Percentage of total revenue																					5		%				6		%

Research and development expense increased 3% for the first quarter of fiscal 2022 over the prior fiscal year first quarter. The increase was primarily due to higher consulting fees, personnel costs, contract labor and licenses and fees partially offset by increased capitalized research and development costs, quarter over quarter. Research and development expense for the quarter decreased 1% compared to the prior fiscal quarter as a percentage of total revenue.

Selling, General, and Administrative															Three Months Ended September 30,												% Change
																					2021						2020
Selling, General, and Administrative																					$	51,071					$	45,226					13		%
Percentage of total revenue																					10		%				10		%

Selling, general, and administrative expense increased 13% in the first quarter of fiscal 2022 over the same quarter in the prior fiscal year. This increase was primarily due to higher personnel costs and higher travel expenses due to an increase in business travel compared to the prior fiscal quarter, which was during a period of broader COVID-19 travel limitations (see "COVID-19 Impact and Response" section above). Selling, general, and administrative expense remained consistent as a percentage of total revenue this fiscal quarter versus the prior fiscal quarter.

INTEREST INCOME (EXPENSE)															Three Months Ended September 30,												% Change
																					2021						2020
Interest Income																					$	7					$	68					(90)		%
Interest Expense																					$	(248)					$	(117)					112		%

Interest income fluctuated due to changes in invested balances and yields on invested balances during the first quarter of fiscal 2022 compared to the same period a year ago. Interest expense increased when compared to the prior fiscal quarter due to interest rate fluctuations, length of borrowing time, and amounts borrowed. There was a $65,000 outstanding balance under the credit facility at September 30, 2021 and no outstanding balance at September 30, 2020.

PROVISION FOR INCOME TAXES															Three Months Ended September 30,												% Change
																					2021						2020
Provision for Income Taxes																					$	31,240					$	26,323					19		%
Effective Rate																					23.4		%				22.4		%

The increase in effective tax rate for the first quarter of fiscal 2022 compared to the same quarter a year ago was primarily due to a larger excess tax benefit received from share-based compensation in the prior fiscal quarter.

NET INCOME

Net income increased 12% to $102,114, or $1.38 per diluted share, for the first quarter of fiscal 2022 compared to $91,216, or $1.19 per diluted share in the same quarter of fiscal 2021.

REPORTABLE SEGMENT DISCUSSION

The Company is a leading provider of technology solutions and payment processing services primarily for financial services organizations.

The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services; online and mobile bill pay solutions; ACH origination and remote deposit capture processing; and risk management products and services. The Complementary segment provides additional software, hosted processing platforms, and services, including call center support, and network security management, consulting, and monitoring, that can be integrated with our core solutions and many can be used independently. The Corporate and Other segment includes revenue and costs from hardware and other products not attributed to any of the other three segments, as well as operating costs not directly attributable to the other three segments.

Core
															Three Months Ended September 30,												% Change
																					2021						2020
Revenue																					$	165,285					$	153,155					8		%
Cost of Revenue																					$	66,902					$	63,861					5		%

Revenue in the Core segment increased 8% and cost of revenue increased 5% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Core revenue less deconversion fee revenue for the first quarter of fiscal 2022 of $2,168 and less deconversion fee and acquisitions and divestiture revenues for the first quarter of fiscal 2021 of $2,052 and $1,182, respectively, results in a 9% increase, quarter over quarter. This increase was primarily driven by growth in data processing and hosting fee revenue. Cost of revenue decreased 1% as a percentage of revenue for the first quarter of fiscal 2022 compared to the same quarter of fiscal 2021.

Payments
															Three Months Ended September 30,												% Change
																					2021						2020
Revenue																					$	169,622					$	156,733					8		%
Cost of Revenue																					$	93,226					$	86,328					8		%

Revenue in the Payments segment increased 8% for the first quarter of fiscal 2022 compared to the equivalent quarter of the prior fiscal year. Payments revenue less deconversion fee revenue in both periods, which totaled $448 for the first quarter of fiscal 2022 and $1,847 for the first quarter of fiscal 2021, results in a 9% increase, quarter over quarter. This growth was primarily due to increased card and remittance fee revenue within processing. Cost of revenue increased 8%, quarter over quarter, primarily due to increased costs related to our card processing platform. Cost of revenue as a percentage of revenue remained consistent for the first quarter of fiscal 2022 compared to the same quarter of fiscal 2021.

Complementary
															Three Months Ended September 30,												% Change
																					2021						2020
Revenue																					$	141,481					$	130,355					9		%
Cost of Revenue																					$	55,485					$	52,024					7		%

Revenue in the Complementary segment increased 9% for the first quarter of fiscal 2022 compared to the equivalent quarter of the prior fiscal year. This growth was primarily driven by increased Jack Henry digital, hosting fee, and software usage revenues. Cost of revenue increased 7%, quarter over quarter, primarily due to higher personnel costs, amortization, and direct support costs. Cost of revenue as a percentage of revenue decreased 1% for the first quarter of fiscal 2022 compared to the same quarter of fiscal 2021.

Corporate and Other
															Three Months Ended September 30,												% Change
																					2021						2020
Revenue																					$	11,668					$	11,557					1		%
Cost of Revenue																					$	61,023					$	60,716					1		%

Revenue in the Corporate and Other segment increased 1% for the first quarter of fiscal 2022 compared to the equivalent quarter of the prior fiscal year. The quarter-over-quarter increase was primarily due to higher processing revenue partially offset by lower services and support revenue mainly from decreased hardware revenue. Revenue classified in the Corporate and Other segment includes revenue from other products and services and hardware not specifically attributed to any of the other three segments.

Cost of revenue for the Corporate and Other segment includes operating cost not directly attributable to any of the other three segments. Cost of revenue as a percentage of revenue decreased 2% in the first quarter of fiscal 2022 when compared to the prior fiscal quarter.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to $44,251 at September 30, 2021 from $50,992 at June 30, 2021.

The following table summarizes net cash from operating activities in the statement of cash flows:

			Three Months Ended
			September 30,
			2021						2020
Net income			$	102,114					$	91,216
Non-cash expenses			56,498						50,602
Change in receivables			53,404						77,439
Change in deferred revenue			(60,662)						(67,113)
Change in other assets and liabilities			(44,805)						(37,667)
Net cash provided by operating activities			$	106,549					$	114,477

Cash provided by operating activities for the first three months of fiscal 2022 decreased 7% compared to the same period last year. Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, and for capital expenditures.

Cash used in investing activities for the first three months of fiscal 2022 totaled $46,451 and included: $35,971 for the ongoing enhancements and development of existing and new product and service offerings; capital expenditures on facilities and equipment of $9,273; and $1,221 for the purchase and development of internal use software. Uses of cash were partially offset by proceeds from dispositions of $14. Cash used in investing activities for the first three months of fiscal 2021 totaled $31,188 and included: $31,451 for the development of software; capital expenditures of $4,478; and $1,374 for the purchase and development of internal use software. Uses of cash were partially offset by proceeds from dispositions of $6,115.

Financing activities used cash of $66,839 for the first three months of fiscal 2022 and included $35,027 net repayment on the revolving credit facility and payments on financing leases, and $34,036 for the payment of dividends to stockholders. Uses of cash were partially offset by $2,224 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. Financing activities used cash of $101,314 in the first three months of fiscal 2021 and included: $65,873 for the purchase of treasury shares; $32,815 for the payment of dividends to stockholders; $2,598 from the issuance of stock and tax withholding related to stock-based compensation; and $28 for payments on financing leases.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $9,273 and $4,478 for the three months ended September 30, 2021 and September 30, 2020, respectively, were made primarily for additional equipment and the improvement of existing facilities. These additions were funded from cash generated by operations. Total consolidated capital expenditures on facilities and equipment for the Company for fiscal year 2022 are not expected to exceed $57,000 and will be funded from cash generated by operations.

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing line of credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At September 30, 2021, there were 29,793 shares in treasury stock and the Company had the remaining authority to repurchase up to 5,198 additional shares. The total cost of treasury shares at September 30, 2021 was $1,613,202. During the first three months of fiscal 2022, the Company repurchased no treasury shares. At June 30, 2021, there were 29,793 shares in treasury stock and the Company had authority to repurchase up to 5,198 additional shares.

Revolving credit facility

On February 10, 2020, the Company entered into a five-year senior, unsecured revolving credit facility. The credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $700,000. The credit facility bears interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the U.S. Bank prime rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit facility agreement. As of September 30, 2021, the Company was in compliance with all such covenants. The revolving credit facility terminates February 10, 2025. There was a $65,000 outstanding balance under the credit facility at September 30, 2021, and $100,000 outstanding balance at June 30, 2021.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line expires on April 30, 2023. There was no balance outstanding at September 30, 2021 and June 30, 2021.

Dollar amounts in this item are in thousands.

Market risk refers to the risk that a change in the level of one or more market prices, interest rates, indices, volatilities, correlations or other market factors such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are currently exposed to credit risk on credit extended to customers and at times are exposed to interest rate risk on outstanding debt. We do not currently use any derivative financial instruments. We actively monitor these risks through a variety of controlled procedures involving senior management.

Based on the controls in place and the credit worthiness of the customer base, we believe the credit risk associated with the extension of credit to our customers will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

We have $65,000 outstanding debt with variable interest rates as of September 30, 2021 and a 1% increase in our borrowing rate would increase our annual interest expense by $650.

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of our management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation (required in Exchange Act Rules 13a-15(b) and 15d-15(b)), the CEO and CFO concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 30, 2021, there were no changes in internal control over financial reporting which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

We are subject to various routine legal proceedings and claims arising in the ordinary course of our business. In the opinion of management, any liabilities resulting from current lawsuits are not expected, either individually or in the aggregate, to have a material adverse effect on our consolidated financial statements. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following shares of the Company were repurchased during the quarter ended September 30, 2021:

			Total Number of Shares Purchased						Average Price of Share						Total Number of Shares Purchased as Part of Publicly Announced Plans						Maximum Number of Shares that May Yet Be Purchased Under the Plans (1)
July 1 - July 31, 2021			—						$	—					—						5,197,713
August 1 - August 31, 2021			—						—						—						5,197,713
September 1 - September 30, 2021			—						—						—						5,197,713
Total			—						—						—						5,197,713

(1) Total stock repurchase authorizations approved by the Company's Board of Directors as of May 17, 2021 were for 35 million shares. The Company has repurchased 29,802,287 shares under these authorizations. The authorizations have no specific dollar or share price targets and no expiration dates.

3.2.8 Restated and Amended Bylaws attached as Exhibit 3.2.8 to the Company's Current Report on Form 8-K filed August 26, 2021.

31.1 Certification of the Chief Executive Officer.

31.2 Certification of the Chief Financial Officer.

32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

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101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

• Furnished with this quarterly report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at September 30, 2021 and June 30, 2021, (ii) the Condensed Consolidated Statements of Income for the three months ended September 30, 2021 and 2020, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended September 30, 2021 and 2020, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2021 and 2020, and (v) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

									JACK HENRY & ASSOCIATES, INC.
Date:			November 9, 2021						/s/ David B. Foss
									David B. Foss
									Board Chair, Chief Executive Officer and President
Date:			November 9, 2021						/s/ Kevin D. Williams
									Kevin D. Williams
									Chief Financial Officer and Treasurer