Jack Henry & Associates 10-Q 2022-09-30

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, 2022

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, 2022, the Registrant had 72,949,433 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, 2022, and June 30, 2022 (Unaudited)			4
			Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2022 and 2021 (Unaudited)			5
			Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended September 30, 2022 and 2021 (Unaudited)			6
			Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2022 and 2021 (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			25
ITEM 4.			Controls and Procedures			25
PART II			OTHER INFORMATION			25
ITEM 1.			Legal Proceedings			25
ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds			25
ITEM 6.			Exhibits			27
			Signatures			28

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 fiscal year ended June 30, 2022, 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 o

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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, 2022.

OVERVIEW

Jack Henry & Associates, Inc. ("JKHY") is a well-rounded financial technology company and is a leading provider of technology solutions and payment processing services primarily for financial services organizations. Its solutions consist of integrated data processing systems solutions to U.S. banks ranging from de novo to multi-billion-dollar institutions, core data processing solutions for credit union of all sizes, and non-core highly specialized core-agnostic products and services that enable financial institutions of every asset size and charter, and diverse corporate entities outside the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JKHY's integrated solutions are 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 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, 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.

RESULTS OF OPERATIONS

For the first quarter of fiscal 2023, total revenue increased 8%, or $41,146, compared to the same quarter in fiscal 2022. The increase was primarily driven by growth in private and public cloud, card processing, transaction and digital, remittance, software usage, and implementation revenues.

Operating expenses increased 10% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Increasing operating expenses for the net effects of deconversion fees of $653, acquisitions of $2,535, and the gain on disposal of assets, net, of $6,176, for the current fiscal quarter and reducing operating expenses for the effects of deconversion fees of $540 for the prior fiscal year quarter, results in an 11% increase for the first quarter of fiscal 2023 compared to the same quarter a year ago. This increase in operating expenses was primarily driven by higher personnel costs, increased direct costs in line with related revenue, and increased travel expenses.

Operating income increased 5% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Reducing operating income for the effects of deconversion fees of $3,865 for the current fiscal quarter and $3,184 for the prior fiscal year quarter and for the effects of acquisitions of $1,797 and the gain on disposal of assets, net, of $6,176 for the current fiscal quarter, results in a 2% increase for the first quarter of fiscal 2023 compared to the same quarter a year ago. This increase in operating income was primarily driven by increased revenue growth partially offset by increased operating expenses detailed above.

The provision for income taxes increased 5% for the first quarter of fiscal 2023 compared to the prior fiscal year first quarter. The effective tax rate for the first quarter of fiscal 2023 was 23.5% compared to 23.4% for the same quarter a year ago.

Due to the above changes, net income increased 4% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.

We move into the second quarter of fiscal 2023 with optimism following strong performance in the first quarter. 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 we believe they have a great 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, 2022, follows. Discussions compare the current fiscal year's three months ended September 30, 2022, to the prior fiscal year's three months ended September 30, 2021.

REVENUE

Services and Support			Three Months Ended September 30,												% Change
			2022						2021
Services and Support			$	320,149					$	297,494					8		%
Percentage of total revenue			60		%				61		%

Services and support revenue increased 8% for the first quarter of fiscal 2023 compared to the same quarter a year ago. Reducing services and support revenue for deconversion fee revenue from each quarter, which was $4,518 for the current fiscal quarter and $3,724 for the prior fiscal year quarter and for the effects of acquisitions of $24 for the current fiscal quarter, results in growth of 7% quarter over quarter. This increase was primarily driven by growth in cloud processing, software usage, and implementation fee revenues, as well as an increase in user group fee revenue. Growth in software usage reflects a continuing shift of customers to our time-based license model.

Processing			Three Months Ended September 30,												% Change
			2022						2021
Processing			$	209,053					$	190,562					10		%
Percentage of total revenue			40		%				39		%

Processing revenue increased 10% for the first quarter of fiscal 2023 compared to the same quarter last fiscal year. Reducing processing revenue for the effects of acquisitions of $714 for the current fiscal quarter, results in growth of 9% quarter over quarter. This increase was primarily driven by higher card processing and Jack Henry digital revenue, including Banno, as well as payment processing fees, including iPay, primarily due to expanding volumes, complemented by growth in the other processing revenue components, quarter over quarter.

OPERATING EXPENSES

Cost of Revenue			Three Months Ended September 30,												% Change
			2022						2021
Cost of Revenue			$	298,261					$	276,636					8		%
Percentage of total revenue			56		%				57		%

Cost of revenue for the first quarter of fiscal 2023 increased 8% over the prior fiscal year first quarter. Reducing cost of revenue for the effects of deconversion fees from each quarter, which were $411 for the current fiscal year quarter and $337 for the prior fiscal year quarter and increasing cost of revenue for the net effects of acquisitions of $1,539 from the current fiscal year quarter, results in a 7% increase quarter over quarter. This increase was primarily due to higher costs associated with our card processing third-party platform, higher personnel costs, increased internal licenses and fees, and increased amortization of intangible assets at September 30, 2022, compared to the same period a year ago. The increases in cost of revenue were primarily due to organic growth within our product lines. Cost of revenue decreased 1% compared to the prior fiscal year quarter as a percentage of total revenue.

Research and Development			Three Months Ended September 30,												% Change
			2022						2021
Research and Development			$	32,993					$	26,754					23		%
Percentage of total revenue			6		%				5		%

Research and development expense increased 23% for the first quarter of fiscal 2023 over the prior fiscal year first quarter. Reducing research and development expense for the effects of acquisitions of $332 for the current fiscal quarter, results in a 22% increase quarter over quarter. This increase was primarily due to an increase in personnel costs, net of capitalization, quarter over quarter. Research and development expense for the quarter increased 1% compared to the prior fiscal year quarter as a percentage of total revenue.

Selling, General, and Administrative			Three Months Ended September 30,												% Change
			2022						2021
Selling, General, and Administrative			$	57,225					$	51,071					12		%
Percentage of total revenue			11		%				10		%

Selling, general, and administrative expense increased 12% in the first quarter of fiscal 2023 over the same quarter in the prior fiscal year. Reducing selling, general, and administrative expense for the effects of deconversion fees from each quarter, which were $242 for the current fiscal year quarter and $202 for the prior fiscal year quarter and increasing selling, general, and administrative expense for the net effects of acquisitions and gain/loss of $5,512 for the prior fiscal year quarter, results in a 23% increase quarter over quarter. This increase was primarily due to higher travel expenses and personnel costs, increased consulting and other professional services, and an increase in meetings and trainings. Selling, general, and administrative expense increased 1% as a percentage of total revenue this fiscal quarter versus the prior fiscal year quarter.

INTEREST INCOME (EXPENSE)			Three Months Ended September 30,												% Change
			2022						2021
Interest Income			$	152					$	7					2,071		%
Interest Expense			$	(1,576)					$	(248)					535		%

Interest income fluctuated due to changes in invested balances and yields on invested balances during the first quarter of fiscal 2023 compared to the same period a year ago. Interest expense increased when compared to the prior fiscal year quarter due to interest rate fluctuations, length of borrowing time, and amounts borrowed. There was a $245,000 outstanding balance under the credit facility at September 30, 2022, and $65,000 outstanding balance at September 30, 2021. The increase in the outstanding balance was primarily due to funding the Payrailz acquisition on August 31, 2022.

PROVISION FOR INCOME TAXES			Three Months Ended September 30,												% Change
			2022						2021
Provision for Income Taxes			$	32,750					$	31,240					5		%
Effective Rate			23.5		%				23.4		%

The change in effective tax rate was minimal for the first quarter of fiscal 2023 compared to the same quarter a year ago.

NET INCOME			Three Months Ended September 30,												% Change
			2022						2021
Net income			$	106,549					$	102,114					4		%
Diluted earnings per share			$	1.46					$	1.38					6		%

Net income increased 4% to $106,549, or $1.46 per diluted share, for the first quarter of fiscal 2023 compared to $102,114, or $1.38 per diluted share in the same quarter of fiscal 2022.

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
			2022						2021
Revenue			$	175,124					$	165,285					6		%
Cost of Revenue			$	72,240					$	66,902					8		%

Revenue in the Core segment increased 6% and cost of revenue increased 8% for the three months ended September 30, 2022, compared to the three months ended September 30, 2021. This increase in Core revenue over the prior fiscal year quarter was primarily driven by the growth in cloud processing and software usage revenues. Cost of revenue increased 8% quarter over quarter primarily due to increased direct support costs and higher personnel costs. Cost of revenue increased 1% as a percentage of revenue for the first quarter of fiscal 2023 compared to the same quarter of fiscal 2022.

Payments
			Three Months Ended September 30,												% Change
			2022						2021
Revenue			$	186,540					$	172,591					8		%
Cost of Revenue			$	101,155					$	94,582					7		%

Revenue in the Payments segment increased 8% for the first quarter of fiscal 2023 compared to the equivalent quarter of the prior fiscal year. Reducing Payments revenue for deconversion fee revenue in both periods, which totaled $1,435 for the first quarter of fiscal 2023 and $448 for the first quarter of fiscal 2022 and for revenue from acquisitions of $738 from the current fiscal year quarter, results in a 7% increase quarter over quarter. This Payments revenue growth was primarily due to increased card and remittance fee revenues within processing. Cost of revenue increased 7% quarter over quarter primarily due to increased costs related to our credit and debit card third-party processing platform in line with associated revenues and higher personnel costs. Cost of revenue as a percentage of revenue decreased 1% for the first quarter of fiscal 2023 compared to the same quarter of fiscal 2022.

Complementary
			Three Months Ended September 30,												% Change
			2022						2021
Revenue			$	148,350					$	137,778					8		%
Cost of Revenue			$	58,437					$	54,417					7		%

Revenue in the Complementary segment increased 8% for the first quarter of fiscal 2023 compared to the equivalent quarter of the prior fiscal year. This Complementary revenue growth was primarily driven by increased Jack Henry digital and cloud processing revenues. Cost of revenue increased 7% quarter over quarter primarily

due to increased direct support and personnel costs. Cost of revenue as a percentage of revenue remained consistent for the first quarter of fiscal 2023 compared to the same quarter of fiscal 2022.

Corporate and Other
			Three Months Ended September 30,												% Change
			2022						2021
Revenue			$	19,188					$	12,402					55		%
Cost of Revenue			$	66,429					$	60,735					9		%

Revenue in the Corporate and Other segment increased 55% for the first quarter of fiscal 2023 compared to the equivalent quarter of the prior fiscal year. The increase quarter over quarter was primarily due to higher user group and hardware revenues. Revenue classified in the Corporate and Other segment includes revenues 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 costs not directly attributable to any of the other three segments. The cost of revenue in the first quarter of fiscal 2023 increased 9% when compared to the prior fiscal year quarter primarily due to higher internal licenses and fees, personnel costs, and hardware costs.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to $31,970 at September 30, 2022, from $48,787 at June 30, 2022.

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

			Three Months Ended
			September 30,
			2022						2021
Net income			$	106,549					$	102,114
Non-cash expenses			34,139						56,498
Change in receivables			101,509						53,404
Change in deferred revenue			(65,130)						(60,662)
Change in other assets and liabilities			(40,236)						(44,805)
Net cash provided by operating activities			$	136,831					$	106,549

Cash provided by operating activities for the first three months of fiscal 2023 increased 28% compared to the same period last year. Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, for capital expenditures, and acquisitions.

Cash used in investing activities for the first three months of fiscal 2023 totaled $249,594 and included: $228,986 for an acquisition; $38,715 for the ongoing enhancements and development of existing and new product and service offerings; capital expenditures on facilities and equipment of $7,737; and $408 for the purchase and development of internal use software. This was partially offset by proceeds from the sale of assets of $26,252. Cash used in investing activities for the first three months of fiscal 2022 totaled $46,451 and included $35,971 for the development of software; capital expenditures of $9,273; and $1,221 for the purchase and development of internal use software. This was partially offset by proceeds from the sale of assets of $14.

Financing activities provided cash of $95,946 for the first three months of fiscal 2023, including borrowings on credit facilities of $280,000 and $1,677 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. This was partially offset by payments on credit facilities of $150,022 and dividends paid to stockholders of $35,709. Financing activities used cash of $66,839 in the first three months of fiscal 2022 including $35,027 for repayments on credit facilities and financing leases and $34,036 for the payment of dividends. This was partially offset by $2,224 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $7,737 and $9,273 for the three months ended September 30, 2022, and September 30, 2021, 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 2023 are not expected to exceed $64,000 and will be funded from cash generated by operations.

On August 31, 2022, the Company acquired all of the equity interest of Payrailz for $229,563 paid in cash. The purchase price is subject to a customary post-closing adjustment to the extent actual closing date working capital, cash, debt and unpaid seller transaction expenses exceeds or is less than the amount estimated at closing. Pursuant to the merger agreement for the transaction, $48,500 of the purchase price was placed in an escrow account at the closing for final purchase price adjustments and indemnification matters under the merger agreement.

The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was funded by our revolving line of credit and cash generated from operations. Payrailz provides cloud-native, API-first, AI-enabled consumer and commercial digital payment solutions and experiences that enable money to be moved in the moment of need.

On September 29, 2022, the Company entered into an agreement with Twilio Inc., which added contractual spend obligations for the period October 1, 2022, through September 30, 2027, of $16,350. This commitment is in addition to the commitments discussed in our Annual Report on Form 10-K for the year ended June 30, 2022.

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, 2022, and June 30, 2022, there were 31,043 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,948 additional shares. The total cost of treasury shares at September 30, 2022, and June 30, 2022, was $1,807,118.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA made several changes to the U.S. tax code including, but not limited to, a 1% excise tax on net stock repurchases and tax incentives to promote clean energy. The Company does not expect the IRA to have a material impact on its financial statements.

Credit facilities

On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement. The credit agreement allows for borrowings of up to $600,000, which may be increased by the Company to $1,000,000 at any time until maturity. The credit agreement bears interest at a variable rate equal to (a) a rate based on an adjusted Secured Overnight Financing Rate ("SOFR") term rate or (b) an alternate base rate (the highest of (a) 0%, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Adjusted Term SOFR Screen Rate (without giving effect to the Applicable Margin) 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 agreement 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 agreement. As of September 30, 2022, the Company was in compliance with all such covenants. The amended and restated credit facility terminates August 31, 2027. There was $245,000 outstanding under the amended and restated credit facility at September 30, 2022.

On June 30, 2022, there was a $115,000 outstanding balance on the prior credit facility that was entered into on February 10, 2020. The prior credit facility was a five-year senior, unsecured revolving credit facility. The credit facility allowed for borrowings of up to $300,000, which could be increased by the Company to $700,000 at any time until maturity. The prior credit facility bore 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 prior credit facility was guaranteed by certain subsidiaries of the Company and was subject to various financial covenants that required the Company to maintain certain financial ratios as defined in the prior credit agreement. As of June 30, 2022, the Company was in compliance with all such covenants. The prior credit facility's termination date was February 10, 2025.

The increase in the outstanding credit facility balance of $130,000 at September 30, 2022, compared to June 30, 2022, was primarily due to the acquisition of Payrailz during the three months ended September 30, 2022. This borrowing is expected to contribute to the increase in interest expense during fiscal 2023.

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 was renewed in March 2021 and expires on April 30, 2023. At September 30, 2022, and June 30, 2022, no amount was outstanding.

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 had $245,000 outstanding debt with variable interest rates as of September 30, 2022, and a 1% increase in our borrowing rate would increase our annual interest expense by $2,450.

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, 2022, 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, 2022:

			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, 2022			—						—						—						3,947,713
August 1- August 31, 2022			—						$	—					—						3,947,713
September 1- September 30, 2022			—						—						—						3,947,713
Total			—						—						—						3,947,713

(1) Total stock repurchase authorizations approved by the Company's Board of Directors as of May 17, 2021, were for 35 million shares. Under these authorizations, the Company has repurchased and not re-issued 31,042,903 shares and has repurchased and re-issued 9,384 shares. These authorizations have no specific dollar or share price targets and no expiration dates.

10.72 Jack Henry & Associates, Inc. Executive Severance Plan, dated effective as of July 26, 2022 attached as Exhibit 10.72 to the Company’s Current Report on Form 8-K filed July 29, 2022.

10.73 Amended and Restated Credit Agreement, dated as of August 31, 2022 among Jack Henry & Associates, Inc., as Borrower, the lenders parties thereto, U.S. Bank National Association, as Administrative Agent, LC Issuer and Swing Line Lender, and certain other financial institutions as co-syndication agents and joint lead arrangers and joint book runners attached as Exhibit 10.73 to the Company’s Current Report on Form 8-K filed September 1, 2022.

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.

101.INS* XBRL Instance Document- the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

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, 2022, and June 30, 2022, (ii) the Condensed Consolidated Statements of Income for the three months ended September 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended September 30, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2022 and 2021, 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, 2022						/s/ David B. Foss
									David B. Foss
									Chief Executive Officer and Board Chair
Date:			November 9, 2022						/s/ Mimi L. Carsley
									Mimi L. Carsley
									Chief Financial Officer and Treasurer