Jack Henry & Associates 10-Q 2023-09-30

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, 2023

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 Principal 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 27, 2023, the Registrant had 72,828,202 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, 2023, and June 30, 2023 (Unaudited)			4
			Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2023 and 2022 (Unaudited)			5
			Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended September 30, 2023 and 2022 (Unaudited)			6
			Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2023 and 2022 (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			26
PART II			OTHER INFORMATION			26
ITEM 1.			Legal Proceedings			26
ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds			26
ITEM 5.			Other Information			26
ITEM 6.			Exhibits			27
			Signatures			28

In this report, all references to "Jack Henry," 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, 2023, 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-loo

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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 fiscal quarter ended September 30, 2023.

OVERVIEW

Jack Henry & Associates, Inc. is a well-rounded financial technology company and is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions. Our solutions consist of integrated data processing systems solutions to U.S. banks ranging from de novo to multi-billion-dollar institutions with assets up to $50 billion, core data processing solutions for credit unions 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. Our integrated solutions are available for on-premise installation and delivery in our private and public cloud.

Our two primary revenue streams are "services and support" and "processing." Services and support includes: "private and public cloud" revenue, which predominantly includes contracts with terms of seven years or longer at inception; "product delivery and services" revenue, which includes revenue from the sales of licenses, implementation services, deconversions, consulting, and hardware; and "on-premise support" revenue, composed of maintenance contracts primarily with annual terms. Processing revenue includes: "remittance" revenue from payment processing, remote capture, and ACH transactions; "card" revenue, including card transaction processing and monthly fees; and "transaction and digital" revenue, which includes transaction and mobile processing. 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 2024, total revenue increased 8%, or $42,166, compared to the same quarter in fiscal 2023. Total revenue less deconversion and acquisition revenues of $4,136 and $1,945, respectively, for the current fiscal quarter and less deconversion revenues of $4,518 for the prior fiscal year first quarter also results in an increase of 8%, or $40,603, quarter over quarter. This increase was primarily driven by growth in data processing and hosting, card, Jack Henry digital, including Banno, payment processing, hardware, and software usage/subscription revenues.

Operating expenses increased 13%, or $50,189, for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Total operating expenses less deconversion expenses of $381, acquisition-related expenses of $4,182, and voluntary employee departure incentive payment (VEDIP) program expenses of $16,443 for the current fiscal quarter, and less deconversion expenses of $653 and removing the effects of the gain on disposal of assets, net, of $6,176 for the prior fiscal year first quarter, results in an increase of 6%, or $23,661, quarter over quarter. This increase was primarily driven by higher personnel costs, including commissions expenses, and higher direct costs as revenues increased.

Operating income decreased 6% for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Total operating income less deconversion operating income of $3,755 plus an acquisition operating loss of $2,237 and VEDIP program expenses of $16,443 for the current fiscal quarter, and less deconversion operating income of $3,865 and removing the effects of the gain on disposal of assets, net, of $6,176 for the prior fiscal year first quarter, results in an increase of 13%, or $16,943, quarter over quarter. This increase was primarily driven by revenue growth partially offset by increased operating expenses detailed above.

We move into the second quarter of fiscal 2024 with significant portions of our business continuing to come from recurring revenues and our sales pipeline remaining 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, 2023, follows. On August 31, 2022, the Company acquired all of the equity interest in Payrailz, LLC ("Payrailz"). Payrailz ("acquisition") related revenue and operating expenses mentioned in the discussion below are for the first two months of the quarter ended September 30, 2023.

Discussions compare the current fiscal year's three months ended September 30, 2023, to the prior fiscal year's three months ended September 30, 2022.

REVENUE

Services and Support			Three Months Ended September 30,												% Change
			2023						2022
Services and Support			$	342,205					$	320,149					7		%
Percentage of total revenue			60		%				60		%

Services and support revenue increased 7% for the first quarter of fiscal 2024 compared to the same quarter a year ago. Reducing services and support revenue for deconversion revenue from each quarter, which was $4,136 for the current fiscal quarter and $4,518 for the prior fiscal year quarter and acquisition revenue of $2 for the current fiscal quarter also results in growth of 7% quarter over quarter. This increase was primarily driven by growth in data processing and hosting revenues, as new customers are added and existing customers migrate from on-premise to outsourcing, and increased hardware and software usage/subscription revenues.

Processing			Three Months Ended September 30,												% Change
			2023						2022
Processing			$	229,163					$	209,053					10		%
Percentage of total revenue			40		%				40		%

Processing revenue increased 10% for the first quarter of fiscal 2024 compared to the same quarter last fiscal year. Reducing processing revenue for acquisition revenue of $1,943 for the current fiscal quarter results in growth of 9% quarter over quarter. This increase was primarily driven by growth in card revenue from expanding transaction volumes, Jack Henry digital, including Banno, as active users increased and volumes expanded, other processing revenues, and remote capture and ACH revenue.

OPERATING EXPENSES

Cost of Revenue			Three Months Ended September 30,												% Change
			2023						2022
Cost of Revenue			$	323,002					$	298,261					8		%
Percentage of total revenue			57		%				56		%

Cost of revenue for the first quarter of fiscal 2024 increased 8% over the prior fiscal year first quarter. Reducing cost of revenue for deconversion costs from each quarter, which were $270 for the current fiscal year quarter and $411 for the prior fiscal year quarter, and for acquisition costs of $3,334 from the current fiscal year quarter, results in a 7% increase quarter over quarter. This increase was primarily due to higher direct costs, consistent with increases in the related revenue, higher personnel costs, including benefits expenses, and increased internal licenses and fees. Cost of revenue increased 1% compared to the prior fiscal year quarter as a percentage of total revenue.

Research and Development			Three Months Ended September 30,												% Change
			2023						2022
Research and Development			$	36,892					$	32,993					12		%
Percentage of total revenue			6		%				6		%

Research and development expense increased 12% for the first quarter of fiscal 2024 over the prior fiscal year first quarter. Reducing research and development expense for acquisition costs of $656 for the current fiscal quarter, results in a 10% increase quarter over quarter. This increase was primarily due to an increase in personnel costs, net of capitalization, including benefits expenses primarily resulting from a 2% headcount increase in the trailing twelve months, partially related to Jack Henry Platform. Research and development expense for the quarter remained consistent compared to the prior fiscal year quarter as a percentage of total revenue.

Selling, General, and Administrative			Three Months Ended September 30,												% Change
			2023						2022
Selling, General, and Administrative			$	78,774					$	57,225					38		%
Percentage of total revenue			14		%				11		%

Selling, general, and administrative expense increased 38% in the first quarter of fiscal 2024 over the same quarter in the prior fiscal year. Reducing selling, general, and administrative expense for deconversion costs from each quarter, which were $111 for the current fiscal year quarter and $243 for the prior fiscal year quarter, for acquisition costs of $192 and VEDIP program expenses of $16,443 for the current fiscal year quarter, and removing the effect of the gain on disposal of assets, net, of $6,176 in the prior fiscal year quarter, results in a 2% decrease quarter over quarter. This decrease was primarily due to a continued focus on controlling costs. Selling, general, and administrative expense increased 3% as a percentage of total revenue this fiscal quarter versus the prior fiscal year quarter.

INTEREST INCOME (EXPENSE)			Three Months Ended September 30,												% Change
			2023						2022
Interest Income			$	4,745					$	152					3,022		%
Interest Expense			$	(4,197)					$	(1,576)					166		%

Interest income fluctuated due to changes in interest earned on balances during the first quarter of fiscal 2024 compared to the same quarter a year ago. Interest expense increased when compared to the prior fiscal year quarter due to recent increases in prevailing interest rates and amounts borrowed. There was a $245,000 outstanding balance under the credit and term loan facilities at September 30, 2023, and $245,000 outstanding balance under the credit facility at September 30, 2022.

PROVISION FOR INCOME TAXES			Three Months Ended September 30,												% Change
			2023						2022
Provision for Income Taxes			$	31,569					$	32,750					(4)		%
Effective Rate			23.7		%				23.5		%

NET INCOME			Three Months Ended September 30,												% Change
			2023						2022
Net income			$	101,679					$	106,549					(5)		%
Diluted earnings per share			$	1.39					$	1.46					(4)		%

Net income decreased 5% to $101,679, or $1.39 per diluted share, for the first quarter of fiscal 2024 compared to $106,549, or $1.46 per diluted share, in the same quarter of fiscal 2023. Net income decreased primarily due to VEDIP program expenses partially offset by the organic growth in our lines of revenue and a decrease in the provision for income taxes in the first quarter of fiscal 2024 compared to the same quarter last fiscal year.

REPORTABLE SEGMENT DISCUSSION

The Company is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions.

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 the other three segments, as well as operating expenses not directly attributable to the other three segments, except for items that are deemed unassigned and excluded from any segment.

Immaterial adjustments have been made between segments to reclassify revenue and cost of revenue that was recognized for the three months ended September 30, 2022. These reclasses were made to be consistent with the current allocation of revenue and cost of revenue by segment. Revenue reclassed for the three months ended September 30, 2022, from Core to Complementary and Corporate and Other was $351 and $1,457, respectively, from Payments to Complementary and Corporate and Other was $6 and $1, respectively, from Complementary to Corporate and Other was $293, and from Corporate and Other to Complementary was $2. Cost of revenue reclassed for the three months ended September 30, 2022, from Core to Corporate and Other was $1,636, from Payments to Complementary and Corporate and Other was $91 and $511, respectively, and from Complementary to Corporate and Other was $423.

Core			Three Months Ended September 30,												% Change
			2023						2022
Revenue			$	186,439					$	173,316					8		%
Cost of Revenue			$	75,927					$	70,604					8		%

Revenue in the Core segment increased 8% and cost of revenue increased 8% for the three months ended September 30, 2023, compared to the three months ended September 30, 2022. This increase was primarily driven by growth in data processing and hosting revenues. The cost of revenue increase was primarily driven by higher direct costs consistent with increases in revenue. Core segment deconversion costs did not significantly affect Core revenue or cost of revenue increases quarter over quarter. Cost of revenue remained consistent as a percentage of revenue for the first quarter of fiscal 2024 compared to the same quarter of fiscal 2023.

Payments			Three Months Ended September 30,												% Change
			2023						2022
Revenue			$	199,358					$	186,533					7		%
Cost of Revenue			$	108,826					$	100,553					8		%

Revenue in the Payments segment increased 7% and cost of revenue increased 8% for the first quarter of fiscal 2024 compared to the equivalent quarter of the prior fiscal year. Reducing Payments revenue for deconversion revenue in both quarters, which totaled $1,006 for the first quarter of fiscal 2024 and $1,435 for the first quarter of fiscal 2023 and for revenue from the acquisition of $1,945 from the current fiscal year first quarter, results in a 6% increase quarter over quarter. This increase was primarily due to higher card revenue, primarily from expanding transaction volumes, and higher remote capture and ACH revenue, primarily from expanding volumes and new customer revenue. Reducing Payments cost of revenue for deconversion costs in both quarters, which totaled $47 for the first quarter of fiscal 2024 and $64 for the first quarter of fiscal 2023, and for cost of revenue from acquisition of $3,314 from the current fiscal year first quarter, results in a 5% increase quarter over quarter. This increase was primarily due to higher direct costs, consistent with associated revenues, and higher personnel costs, including benefits expenses. Cost of revenue as a percentage of revenue increased 1% for the first quarter of fiscal 2024 compared to the same quarter of fiscal 2023.

Complementary			Three Months Ended September 30,												% Change
			2023						2022
Revenue			$	161,366					$	148,417					9		%
Cost of Revenue			$	62,275					$	58,105					7		%

Revenue in the Complementary segment increased 9% and cost of revenue increased 7% for the first quarter of fiscal 2024 compared to the equivalent quarter of the prior fiscal year. The revenue increase was primarily driven by higher Jack Henry digital revenue, as active users increased and volumes expanded, and hosting revenues, as new customers were added, and existing customers continued to migrate from on-premise to outsourcing. The cost of revenue increase was primarily due to increased direct costs consistent with associated revenues and higher personnel costs, including benefits expenses. Complementary segment deconversion costs did not significantly affect Complementary revenue or cost of revenue increases quarter over quarter. Cost of revenue as a percentage of revenue decreased 1% for the first quarter of fiscal 2024 compared to the same quarter of fiscal 2023.

Corporate and Other			Three Months Ended September 30,												% Change
			2023						2022
Revenue			$	24,205					$	20,936					16		%
Cost of Revenue			$	75,974					$	68,999					10		%

Revenue classified in the Corporate and Other segment includes revenues from other products and services and hardware not specifically attributed to the other three segments. Revenue in the Corporate and Other segment increased 16% for the first quarter of fiscal 2024 compared to the equivalent quarter of the prior fiscal year. This increase was primarily due to higher hardware revenues quarter over quarter. Corporate and Other segment deconversion revenue did not significantly affect Corporate and Other revenue increase quarter over quarter.

Cost of revenue for the Corporate and Other segment includes operating expenses not directly attributable to the other three segments. The cost of revenue in the first quarter of fiscal 2024 increased 10% when compared to the prior fiscal year quarter. Corporate and Other segment deconversion and acquisition costs did not significantly affect the Corporate and Other cost of revenue increase quarter over quarter.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents increased to $31,467 at September 30, 2023, from $12,243 at June 30, 2023.

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

			Three Months Ended
			September 30,
			2023						2022
Net income			$	101,679					$	106,549
Non-cash expenses			46,094						34,139
Change in receivables			72,519						101,509
Change in deferred revenue			(66,322)						(65,130)
Change in other assets and liabilities			3,169						(40,236)
Net cash provided by operating activities			$	157,139					$	136,831

Cash provided by operating activities for the first three months of fiscal 2024 increased 15% compared to the same period last year primarily due to a lower decrease in accrued expenses and a lower increase in prepaid expenses partially offset by a lower decrease in trade receivables quarter over quarter. 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 2024 totaled $50,526 and included: $41,486 for the ongoing enhancement and development of existing and new product and service offerings; capital expenditures on facilities and equipment of $7,612; and $2,280 for the purchase and development of internal use software. Cash uses were partially offset by proceeds from the sale of assets of $852. 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 development of software; $7,737 for capital expenditures; and $408 for the purchase and development of internal use software. Cash uses were partially offset by proceeds from the sale of assets of $26,252.

Financing activities used cash of $87,389 for the first three months of fiscal 2024 and included payments on credit facilities of $165,000, dividends paid to stockholders of $37,863, and purchases of treasury stock of $20,000. Cash uses were partially offset by borrowings on credit facilities of $135,000 and $474 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. Financing activities used cash of $95,946 in the first three months of fiscal 2023 including repayments on credit facilities and financing leases of $150,022, and $35,709 for the payment of dividends. These uses of cash were partially offset by 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.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $7,612 and $7,737 for the three months ended September 30, 2023, and September 30, 2022, 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 2024 are expected to be approximately $77,000 and have been or will be funded from our credit facilities and cash generated by operations.

In July 2023, the Company conducted a voluntary separation program for certain eligible employees that includes a voluntary employee departure incentive payment (VEDIP) for the eligible employees who chose to participate in the program. The Company incurred related expenses of $16,443 in the first quarter of 2024 and will make payments associated with the program from July 2023 through December 2023.

On August 8, 2023, the Company entered into a contract to purchase fixed assets that added contractual spend obligations of $34,191 for the period of December 15, 2023, through June 30, 2025. This commitment is in addition to the commitments discussed in our Annual Report on Form 10-K for the year ended June 30, 2023.

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, 2023, there were 31,323 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,667 additional shares. The total cost of treasury shares at September 30, 2023, was $1,852,118, and the Company repurchased 129 shares during the first three months of fiscal 2024. At June 30, 2023, there were 31,194 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,796 additional shares. The total cost of treasury shares at June 30, 2023, was $1,832,118 and the Company repurchased no shares during the first three months of fiscal 2023.

Credit facilities

On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement that replaced a prior credit facility that was entered into on February 10, 2020. The credit agreement allows for borrowings of up to $600,000, which may be increased to $1,000,000 by the Company 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 (i) 0%, (ii) the Prime Rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (iv) 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, 2023, the Company was in compliance with all such covenants. The amended and restated credit facility terminates August 31, 2027. There was $65,000 and $95,000 outstanding under the amended and restated credit facility at September 30, 2023 and June 30, 2023, respectively.

Term loan facility

On May 16, 2023, the Company entered into a term loan credit agreement with a syndicate of financial institutions, with an original principal balance of $180,000. Borrowings under the term loan facility bear interest at a variable rate equal to (a) a rate based on an adjusted SOFR term rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the Prime Rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (iv) 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 0.75%), plus an applicable percentage in each case determined by the Company's leverage ratio. The term loan 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 term loan credit agreement. As of September 30, 2023, the Company was in compliance with all such covenants. The term loan credit agreement has a maturity date of May 16, 2025. There was $180,000 outstanding under the term loan at September 30, 2023 and June 30, 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 expires on April 30, 2025. There was no balance outstanding at September 30, 2023, or June 30, 2023.

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 interest 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, 2023, 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, 2023, there were no changes in the Company's 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, 2023:

			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, 2023			—						—						—						3,796,265
August 1 - August 31, 2023			107,227						$	155.59					107,227						3,689,038
September 1 - September 30, 2023			21,541						153.97						21,541						3,667,497
Total			128,768						$	155.32					128,768						3,667,497

(1) Total stock repurchase authorizations approved by the Company's Board of Directors as of May 14, 2021, were for 35,000,000 shares. Under these authorizations, the Company has repurchased and not re-issued 31,323,119 shares and has repurchased and re-issued 9,384 shares. These authorizations have no specific dollar or share price targets and no expiration dates.

Rule 10b-5(1) Trading Plans

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

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, 2023, and June 30, 2023, (ii) the Condensed Consolidated Statements of Income for the three months ended September 30, 2023, and 2022, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended September 30, 2023, and 2022, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2023, and 2022, 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, 2023						/s/ David B. Foss
									David B. Foss
									Chief Executive Officer and Board Chair
Date:			November 9, 2023						/s/ Mimi L. Carsley
									Mimi L. Carsley
									Chief Financial Officer and Treasurer