Jack Henry & Associates 10-Q 2024-12-31

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 December 31, 2024

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 January 24, 2025, the Registrant had 72,897,671 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 December 31, 2024, and June 30, 2024 (Unaudited)			4
			Condensed Consolidated Statements of Income for the Three and Six Months Ended December 31, 2024 and 2023 (Unaudited)			5
			Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended December 31, 2024 and 2023 (Unaudited)			6
			Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2024 and 2023 (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			28
ITEM 4.			Controls and Procedures			28
PART II			OTHER INFORMATION			29
ITEM 1.			Legal Proceedings			29
ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds			29
ITEM 5.			Other Information			29
ITEM 6.			Exhibits			30
			Signatures			31

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, 2024, 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 for

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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 December 31, 2024.

OVERVIEW

Jack Henry & Associates, Inc. is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,200 full-time and part-time associates nationwide, and is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions. Our solutions serve approximately 7,500 clients and 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.

Each of our solutions shares the fundamental commitment to provide high-quality business systems, service levels that consistently exceed client expectations, and integration of solutions and practical new technologies. The quality of our solutions, our high service standards, and the fundamental way we do business typically foster long-term client relationships, attract prospective clients, and have enabled us to capture substantial market share.

Through internal product development, disciplined acquisitions, and alliances with companies offering niche solutions that complement our proprietary solutions, we regularly introduce new products and services and generate new cross-sales opportunities. We provide compatible computer hardware for our on-premise installations and secure processing environments for our outsourced solutions in our private and public cloud. We perform data conversions, software implementations, initial and ongoing client training, and ongoing client support services.

We believe our primary competitive advantage is client service. Our support infrastructure and strict standards provide service levels that generate high levels of client satisfaction and retention. We consistently measure client satisfaction using a variety of surveys, such as an annual survey on the client's anniversary date and randomly-generated surveys initiated each day by routine support requests. Dedicated surveys are also used to grade specific aspects of our client experience, including product implementation, education, and consulting services.

Our two primary revenue streams are “services and support” and “processing.” Services and support includes: “private and public cloud” revenues that predominantly have contract terms of six years at inception; “product delivery and services” revenues, which include revenues from the sales of licenses, implementation services, deconversions, consulting, and hardware; and “on-premise support” revenues, composed of maintenance fees that primarily contain annual contract terms. Processing includes: "remittance” revenues from payment processing, remote capture, and ACH transactions; “card” revenues, including card transaction processing and monthly fees; and “transaction and digital” revenues, which include transaction and mobile processing revenues. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.

We have four reportable segments: Core, Payments, Complementary, and Corporate and Other. The respective segments include all related revenues along with the related cost of revenue.

A detailed discussion of the major components of the results of operations follows. All amounts in the following discussion are in thousands, except per share amounts.

RESULTS OF OPERATIONS

For the second quarter of fiscal 2025, total revenue increased 5.2%, or $28,147, compared to the same quarter in fiscal 2024. Total revenue less deconversion revenue of $69 for the current fiscal quarter and $4,882 for the prior fiscal year second quarter results in an increase of 6.1%, quarter over quarter. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting, card, payment processing, which is inclusive of PayCenter, and Jack Henry digital, which is inclusive of Banno.

Operating expenses increased 5.7%, or $24,112, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. Total operating expenses less deconversion operating expenses of $690 for the current fiscal quarter and $1,079 for the prior fiscal year second quarter results in an increase of 5.8%. This increase was primarily driven by higher personnel costs and direct costs.

Operating income increased 3.4%, or $4,035, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. Removing from total operating income the effects of deconversion operating loss of $622 for the current fiscal quarter and deconversion operating income of $3,803 for the prior fiscal year second quarter results in an increase of 7.3%, quarter over quarter. This increase was primarily driven by organic revenue growth partially offset by increased operating expenses detailed above.

The provision for income taxes increased 4.5%, or $1,278, for the second quarter of fiscal 2025, compared to the second quarter of fiscal 2024, primarily driven by the increase in income before income taxes. The effective tax rate for the current fiscal second quarter was 23.2% compared to 23.5% for the same quarter a year ago.

Net income increased 6.4%, or $5,880, for the second quarter of fiscal 2025, compared to the second quarter of fiscal 2024. Removing from total net income the effects of deconversion net loss of $472 for the current fiscal quarter and deconversion net income of $2,890 for the prior fiscal year second quarter, results in a 10.4% increase quarter over quarter. This increase was primarily due to net organic growth in our lines of revenue for the second quarter of fiscal 2025 partially offset by higher operating expenses and the increased provision for income taxes compared to the same quarter last fiscal year.

For the six months ended December 31, 2024, total revenue increased 5.2%, or $57,760, compared to the same period in fiscal 2024. Total revenue less deconversion revenue of $3,766 for the current fiscal year period and $9,018 for the prior fiscal year period results in an increase of 5.7%, period over period. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting, card, Jack Henry digital, which is inclusive of Banno, and payment processing, which is inclusive of PayCenter.

Operating expenses increased 4.1%, or $35,149, for the six months ended December 31, 2024 compared to the same period in fiscal 2024. Total operating expenses less deconversion operating expenses of $892 for the current fiscal year period and $1,460 for the prior fiscal year period and less Voluntary Employee Departure Incentive Payment ("VEDIP") program expense of $16,443 for the prior fiscal year period results in an increase of 6.2%. This increase was primarily driven by higher direct costs, personnel costs, internal licenses and fees, and amortization. The VEDIP program, was a voluntary separation program for certain eligible employees conducted during July 2023 that included a VEDIP payment for the eligible employees who chose to participate in the program.

Operating income increased 9.0%, or $22,611, for the six months ended December 31, 2024 compared to the same period in fiscal 2024. Removing from total operating income the effects of deconversion operating income of $2,873 for the current fiscal year period and $7,558 for the prior fiscal year period and VEDIP program operating loss of $16,443 from the prior fiscal year period results in an increase of 4.2%, period over period. This increase was primarily driven by organic revenue growth partially offset by increased operating expenses detailed above.

The provision for income taxes increased 12.2%, or $7,316, for the six months ended December 31, 2024, compared to the same period in fiscal 2024, primarily driven by the increase in income before income taxes. The effective tax rate for the current and prior fiscal year periods remained consistent and was 23.6% for both periods.

Net income increased 12.1%, or $23,392, for the six months ended December 31, 2024, compared to the same period in fiscal 2024. Removing from total net income the effects of deconversion net income of $2,184 for the current fiscal year period and $5,744 for the prior fiscal year period and VEDIP program net loss of $12,497 for the prior fiscal year period results in a 7.2% increase period over period. This increase was primarily due to net organic growth in our lines of revenue for the six months ended December 31, 2024, partially offset by higher operating expenses and the increased provision for income taxes compared to the same period last fiscal year.

As we move into the third quarter of fiscal 2025, significant portions of our business continue to provide recurring revenue and our sales pipeline is also encouraging. Our clients continue to face regulatory and operational challenges which our products and services address, and in these times they have an even greater need for our solutions that directly address institutional profitability, efficiency, and security. We believe our strong balance sheet, access to extensive lines of credit, the strength of our existing product line, and an unwavering commitment to superior client service position us well to address current and future opportunities.

A detailed discussion of the major components of the results of operations for the three and six months ended December 31, 2024, follows.

Discussions compare the current fiscal year's three and six months ended December 31, 2024, to the prior fiscal year's three and six months ended December 31, 2023.

REVENUE

Services and Support			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Services and Support			$	323,027					$	311,992					3.5		%				$	679,706					$	654,197					3.9		%
Percentage of total revenue			56		%				57		%										58		%				59		%

Services and support revenue increased 3.5% for the second quarter of fiscal 2025 compared to the same quarter a year ago. Reducing services and support revenue for deconversion revenue from each quarter, which was $69 for the current fiscal year quarter and $4,882 for the prior fiscal year quarter, results in growth of 5.2% quarter over quarter. This increase was primarily driven by double-digit growth in data processing and hosting revenues as new and existing clients migrate to our private cloud and processing volumes expand.

Services and support revenue increased 3.9% for the six months ended December 31, 2024, compared to the same period in fiscal 2024. Reducing services and support revenue for deconversion revenue from each period, which was $3,766 for the current fiscal year period and $9,018 for the prior fiscal year period, results in growth of 4.8% period over period. This increase was primarily driven by double-digit growth in data processing and hosting revenues as new and existing clients migrate to our private cloud and processing volumes expand, partially offset by the decrease in license and hardware revenues, period over period.

Processing			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Processing			$	250,821					$	233,709					7.3		%				$	495,123					$	462,872					7.0		%
Percentage of total revenue			44		%				43		%										42		%				41		%

Processing revenue increased 7.3% for the second quarter of fiscal 2025 compared to the same quarter last fiscal year. This increase was primarily driven by growth in card revenue primarily from monthly service and risk management fees, higher payment processing revenues, including PayCenter products — Zelle, RTP (Real Time Payments), and FedNow — from expanding volumes and new client revenue, and improvement in Jack Henry digital revenue (including Banno) from a higher number of active users and expanding volumes and from the

ramping up of add-on products. Deconversion revenue did not significantly affect processing revenue quarter over quarter.

Processing revenue increased 7.0% for the six months ended December 31, 2024 compared to the same period in fiscal 2024. This increase was primarily driven by growth in card revenue primarily from monthly service and risk management fees, improvement in Jack Henry digital revenue (including Banno) from a higher number of active users and expanding volumes and from the ramping up of add-on products, and higher payment processing revenues, including PayCenter products — Zelle, RTP, and FedNow — from expanding volumes and new client revenue. Deconversion revenue did not significantly affect processing revenue period over period.

OPERATING EXPENSES

Cost of Revenue			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Cost of Revenue			$	332,850					$	320,979					3.7		%				$	676,282					$	643,981					5.0		%
Percentage of total revenue			58		%				59		%										58		%				58		%

Cost of revenue for the second quarter of fiscal 2025 increased 3.7% over the prior fiscal year second quarter. Reducing cost of revenue for deconversion costs from each quarter, which were $240 for the current fiscal year quarter and $621 for the prior fiscal year quarter, results in a 3.8% increase quarter over quarter. This increase was primarily due to higher direct costs generally consistent with increases in the related lines of revenue and higher personnel costs, including an increase in employee headcount in the trailing twelve months. Cost of revenue decreased 1% as a percentage of total revenue compared to the prior fiscal year quarter.

Cost of revenue for the six months ended December 31, 2024, increased 5.0% compared to the same period in fiscal 2024. Reducing cost of revenue for deconversion costs from each period, which were $355 for the current fiscal year period and $891 for the prior fiscal year period, results in a 5.1% increase period over period. This increase was primarily due to higher direct costs generally consistent with increases in the related lines of revenue, higher personnel costs, including an increase in employee headcount in the trailing twelve months, and increased internal licenses and fees from increased deployments and pricing. Cost of revenue remained consistent as a percentage of total revenue compared to the prior fiscal year period.

Research and Development			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Research and Development			$	41,095					$	35,478					15.8		%				$	80,780					$	72,370					11.6		%
Percentage of total revenue			7		%				7		%										7		%				6		%

Research and development expense increased 15.8% for the second quarter of fiscal 2025 compared to the prior fiscal year second quarter. This increase was primarily due to higher personnel costs net of capitalization including an increase in employee headcount in the trailing twelve months. Deconversion and non-recurring costs did not significantly affect research and development expenses quarter over quarter. Research and development expense for the quarter increased remained consistent as a percentage of total revenue compared to the prior fiscal year quarter.

Research and development expense increased 11.6% for the six months ended December 31, 2024, compared to the same period in fiscal 2024. This increase was primarily due to higher personnel costs net of capitalization including an increase in employee headcount in the trailing twelve months. Deconversion costs did not significantly affect research and development expenses period over period. Research and development expense increased 1.0% as a percentage of total revenue compared to the prior fiscal year period.

Selling, General, and Administrative			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Selling, General, and Administrative			$	76,901					$	70,277					9.4		%				$	143,489					$	149,051					(3.7)		%
Percentage of total revenue			13		%				13		%										12		%				13		%

Selling, general, and administrative expense increased 9.4% in the second quarter of fiscal 2025 compared to the same quarter in the prior fiscal year. Reducing selling, general, and administrative expense for deconversion costs

from each quarter, which were $451 for the current fiscal year quarter and $458 for the prior fiscal year quarter results in a 9.5% increase quarter over quarter. This increase was primarily due to higher personnel costs, including benefits expenses from an increase in employee headcount in the trailing twelve months. Selling, general, and administrative expense remained consistent as a percentage of total revenue this fiscal quarter versus the prior fiscal year quarter.

Selling, general, and administrative expense decreased 3.7% in the six months ended December 31, 2024, compared to the same quarter in 2024. Reducing selling, general, and administrative expense for deconversion costs from each period, which were $538 for the current fiscal year period and $569 for the prior fiscal year period and for VEDIP program expense of $16,443 in the prior fiscal year period, results in an 8.3% increase period over period. This increase was primarily due to higher personnel costs, including benefits expenses from an increase in employee headcount in the trailing twelve months. Selling, general, and administrative expense decreased 1.0% as a percentage of total revenue this fiscal year period versus the prior fiscal year period.

INTEREST INCOME (EXPENSE)			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Interest Income			$	7,159					$	5,121					39.8		%				$	15,506					$	9,866					57.2		%
Interest Expense			$	(2,780)					$	(3,865)					(28.1)		%				$	(5,605)					$	(8,062)					(30.5)		%

Interest income increased due to higher interest-earning balances for the three and six months ended December 31, 2024, compared to the three and six months ended December 31, 2023. Interest expense decreased when compared to the prior fiscal year quarter primarily due to a decrease in average outstanding debt period over period. There was a $150,000 outstanding balance under the revolving credit and term loan facilities at December 31, 2024, and $255,000 outstanding balance under the revolving credit and term loan facilities at December 31, 2023.

PROVISION FOR INCOME TAXES			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Provision for Income Taxes			$	29,536					$	28,258					4.5		%				$	67,143					$	59,827					12.2		%
Effective Rate			23.2		%				23.5		%										23.6		%				23.6		%

The effective tax rates for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, remained generally consistent with an effective tax rate of 23.2% of income before taxes for the current fiscal quarter and 23.5% of income before taxes for the prior year fiscal quarter. The effective tax rates for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, remained consistent with effective tax rates of 23.6% of income before taxes for both periods.

NET INCOME			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Net income			$	97,845					$	91,965					6.4		%				$	217,036					$	193,644					12.1		%
Diluted earnings per share			$	1.34					$	1.26					6.2		%				$	2.97					$	2.65					12.0		%

Net income increased 6.4% to $97,845, or $1.34 per diluted share, for the second quarter of fiscal 2025 compared to $91,965, or $1.26 per diluted share, in the same quarter of fiscal 2024. Removing from total net income the effects of deconversion net loss of $472 for the current fiscal quarter and net income of $2,890 for the prior fiscal year quarter, results in a 10.4% increase quarter over quarter. This increase was primarily due to net organic growth in our lines of revenue for the second quarter of fiscal 2025 partially offset by higher operating expenses and the increased provision for income taxes compared to the same quarter last fiscal year.

Net income increased 12.1% to $217,036, or $2.97 per diluted share, for the six months ended December 31, 2024 compared to $193,644, or $2.65 per diluted share, in the same quarter of fiscal 2024. Removing from total net income the effects of deconversion net income of $2,184 for the current fiscal year period and $5,744 for the prior fiscal year period, and the VEDIP program net loss of $12,497 for the prior fiscal year period, results in a 7.2% increase period over period. This increase was primarily due to net organic growth in our lines of revenue for the

second quarter of fiscal 2025 partially offset by higher operating expenses and the increased provision for income taxes compared to the same period last fiscal year.

REPORTABLE SEGMENT DISCUSSION

The Company 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.

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 digital/mobile banking, treasury services, online account opening, fraud/anti-money laundering ("AML") and lending/deposit solutions that can be integrated with the Company's 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 expenses not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast. Only revenue and costs of revenue are considered in the evaluation for each segment.

Immaterial adjustments have been made between segments to reclassify cost of revenue that was recognized for the three and six months ended December 31, 2023. These reclasses were made to be consistent with the current allocation of cost of revenue by segment. Cost of revenue reclassed for the three and six months ended December 31, 2023, from Complementary to Corporate and Other, was $1,198 and $2,515, respectively.

Core			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Revenue			$	173,173					$	165,601					4.6		%				$	368,797					$	352,041					4.8		%
Cost of Revenue			$	70,739					$	69,370					2.0		%				$	152,159					$	145,296					4.7		%

Revenue in the Core segment increased 4.6% and cost of revenue increased 2.0% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Reducing Core revenue for deconversion revenue in both quarters, which totaled $(20) for the three months ended December 31, 2024, and $1,929 for the three months ended December 31, 2023, results in a 5.8% increase quarter over quarter. This increase was primarily driven by organic growth in data processing and hosting revenues as new and existing clients migrate to our private cloud and processing volumes expand, partially offset by a decrease in maintenance fees and software usage revenues. Reducing Core cost of revenue for deconversion costs in both quarters, which totaled $88 for the three months ended December 31, 2024 and $321 for the three months ended December 31, 2023, results in a 2.3% increase quarter over quarter. The Core cost of revenue increase was primarily due to higher direct costs generally consistent with increases in related lines of revenue. Core cost of revenue decreased 1% as a percentage of Core revenue for the second quarter of fiscal 2025 compared to the same quarter in fiscal 2024.

Revenue in the Core segment increased 4.8% and cost of revenue increased 4.7% for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Reducing Core revenue for deconversion revenue in both periods, which totaled $1,267 for the six months ended December 31, 2024, and $3,595 for the six months ended December 31, 2023, results in a 5.5% increase period over period. This increase was primarily driven by organic growth in data processing and hosting revenues as new and existing clients migrate to our private cloud and processing volumes expand, partially offset by a decrease in maintenance fees and software usage revenues. Reducing Core cost of revenue for deconversion costs in both periods, which totaled $125 for the six months ended December 31, 2024 and $425 for the six months ended December 31, 2023, results in a 4.9% increase period over period. The Core cost of revenue increase was primarily due to higher direct costs generally consistent with increases in related lines of revenue. Core cost of revenue remained consistent as a percentage of Core revenue for the six months ended December 31, 2024 compared to the same period in fiscal 2024.

Payments			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Revenue			$	214,836					$	203,839					5.4		%				$	426,758					$	403,195					5.8		%
Cost of Revenue			$	114,738					$	111,623					2.8		%				$	227,757					$	220,449					3.3		%

Revenue in the Payments segment increased 5.4% and cost of revenue increased 2.8% for the second quarter of fiscal 2025 compared to the equivalent quarter of the prior fiscal year. Reducing Payments revenue for deconversion revenue in both quarters, which totaled $34 for the second quarter of fiscal 2025 and $1,555 for the second quarter of fiscal 2024, results in a 6.2% increase quarter over quarter. This increase was primarily due to higher card revenue from an increase in volumes, higher payment processing revenues, including PayCenter products — Zelle, RTP, and FedNow — from an increase in volumes and new client revenue, and increased remote capture and ACH revenue. The Payments cost of revenue increase was primarily due to higher direct costs generally consistent with increases in lines of revenue. Deconversion costs did not significantly affect Payments cost of revenue quarter over quarter. Payments cost of revenue as a percentage of Payments revenue decreased 2% for the second quarter of fiscal 2025 compared to the same quarter in fiscal 2024.

Revenue in the Payments segment increased 5.8% and cost of revenue increased 3.3% for the six months ended December 31, 2024, compared to the equivalent period of the prior fiscal year. Reducing Payments revenue for deconversion revenue in both periods, which totaled $1,948 for the six months ended December 31, 2024 and $2,560 for the six months ended December 31, 2023, results in a 6.0% increase period over period. This increase was primarily due to higher card revenue from an increase in volumes, higher payment processing revenues, including PayCenter products — Zelle, RTP, and FedNow — from an increase in volumes and new client revenue, and increased remote capture and ACH revenue. The Payments cost of revenue increase was primarily due to higher direct costs generally consistent with increases in lines of revenue. Deconversion costs did not significantly affect Payments cost of revenue period over period. Payments cost of revenue as a percentage of Payments revenue decreased 1% for the six months ended December 31, 2024 compared to the same period in fiscal 2024.

Complementary			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Revenue			$	160,937					$	152,466					5.6		%				$	332,639					$	313,833					6.0		%
Cost of Revenue			$	63,384					$	62,825					0.9		%				$	129,352					$	123,783					4.5		%

Revenue in the Complementary segment increased 5.6% and cost of revenue increased 0.9% for the second quarter of fiscal 2025 compared to the equivalent quarter of the prior fiscal year. Reducing Complementary revenue for deconversion revenue in both quarters, which totaled $60 for the second quarter of fiscal 2025 and $1,355 for the second quarter of fiscal 2024, results in a 6.5% increase quarter over quarter. This increase was primarily driven by organic growth in hosting revenues as new and existing clients continued to migrate to our private cloud and processing volumes expanded and increased Jack Henry digital revenue (including Banno) as the number of active users increased and volumes expanded and from the ramping up of add-on products. Reducing Complementary cost of revenue for deconversion costs in both quarters, which totaled $99 for the second quarter of fiscal 2025 and $249 for the second quarter of fiscal 2024, results in a 1.1% increase quarter over quarter. Complementary cost of revenue as a percentage of Complementary revenue decreased 2% for the second quarter of fiscal 2025 compared to the same quarter in fiscal 2024.

Revenue in the Complementary segment increased 6.0% and cost of revenue increased 4.5% for the six months ended December 31, 2024 compared to the equivalent period of the prior fiscal year. Reducing Complementary revenue for deconversion revenue in both periods, which totaled $533 for the six months ended December 31, 2024 and $2,806 for the six months ended December 31, 2023, results in a 6.8% increase period over period. This increase was primarily driven by organic growth in hosting revenues as new and existing clients continued to migrate to our private cloud and processing volumes expanded and increased Jack Henry digital revenue (including Banno) as the number of active users increased and volumes expanded and from the ramping up of add-on products. Reducing Complementary cost of revenue for deconversion costs in both quarters, which totaled $159 for the six months ended December 31, 2024 and $367 for the six months ended December 31, 2023, results in a 4.7% increase period over period. This increase was primarily due to higher amortization of capitalized software from capital software development projects and increased personnel costs, including benefits, from an increase in employee headcount in the trailing twelve months. Complementary cost of revenue as a percentage of Complementary revenue remained consistent for the six months ended December 31, 2024, compared to the same period in fiscal 2024.

Corporate and Other			Three Months Ended December 31,												% Change						Six Months Ended December 31,												% Change
			2024						2023												2024						2023
Revenue			$	24,902					$	23,795					4.7		%				$	46,635					$	48,000					(2.8)		%
Cost of Revenue			$	83,989					$	77,161					8.8		%				$	167,014					$	154,453					8.1		%

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 4.7% for the second quarter of fiscal 2025 compared to the equivalent quarter of the prior fiscal year. Reducing Corporate and Other revenue for deconversion revenue in both quarters, which totaled $(5) for the second quarter of fiscal 2025 and $43 for the second quarter of fiscal 2024, results in a 4.9% increase quarter over quarter. The Corporate and Other revenue increase was primarily due to higher processing and subscription revenues 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 second quarter of fiscal 2025 increased 8.8% when compared to the prior fiscal year quarter. This increase was primarily due to increased direct costs, higher personnel costs, including an increase in headcount in the trailing twelve months, and increased cloud consumption costs, quarter over quarter. Deconversion costs did not significantly affect Corporate and Other cost of revenue quarter over quarter.

Revenue in the Corporate and Other segment decreased 2.8% for the six months ended December 31, 2024, compared to the equivalent period of the prior fiscal year. The Corporate and Other revenue decrease was primarily due to lower hardware revenue partially offset by higher software usage and subscription revenue and increased processing fee revenue. Deconversion revenue did not significantly affect Corporate and Other revenue period over period.

The cost of revenue in the six months ended December 31, 2024, increased 8.1% when compared to the prior fiscal year period. This increase was primarily due to increased direct costs higher personnel costs, including an increase in headcount in the trailing twelve months, and increased cloud consumption costs, period over period. Deconversion costs did not significantly affect Corporate and Other cost of revenue period over period.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to $25,653 at December 31, 2024, from $38,284 at June 30, 2024.

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

			Six Months Ended
			December 31,
			2024						2023
Net income			$	217,036					$	193,644
Non-cash expenses			109,038						98,292
Change in receivables			49,811						90,702
Change in deferred revenue			(119,463)						(130,529)
Change in other assets and liabilities			(49,879)						(13,437)
Net cash provided by operating activities			$	206,543					$	238,672

Cash provided by operating activities for the first six months of fiscal 2025 decreased 13% compared to the same period last year primarily due to the decrease in the change in receivables period over period. We collected significantly more annual maintenance dollars in the fourth quarter of fiscal 2024 than we have historically collected in the fourth quarter, leaving less to be collected in the current fiscal period. 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 six months of fiscal 2025 totaled $119,800 and included: $85,803 for the ongoing enhancement and development of existing and new product and service offerings; capital expenditures on facilities and equipment of $29,469; $3,528 for the purchase and development of internal use software; and the purchase of investment of $2,000. Cash uses were partially offset by proceeds from investments of $1,000. Cash used in investing activities for the first six months of fiscal 2024 totaled $110,959 and included: $83,408 for the development of software; $24,458 for capital expenditures; $2,971 for the purchase and development of internal use software; and $1,000 for the purchase of investment. Cash uses were partially offset by proceeds from dispositions of $878.

Financing activities used cash of $99,374 for the first six months of fiscal 2025 and included: payments on credit facilities of $165,000; dividends paid to stockholders of $80,193; the purchase of treasury stock of $17,050; and a net cash outflow from the issuance of stock and tax withholding related to stock-based compensation of $2,131. Cash uses were partially offset by borrowings on credit facilities of $165,000. Financing activities used cash of $113,247 in the first six months of fiscal 2024 and included: repayments on credit facilities of $240,000; $75,722 for the payment of dividends; and the purchase of treasury stock of $20,000. Cash uses were partially offset by borrowings on credit facilities of $220,000 and $2,475 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 $29,469 and $24,458 for the six months ended December 31, 2024, and December 31, 2023, 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 2025 are expected to be approximately $68,000 and have been or will be funded from our credit facilities and cash generated by operations.

Contractual obligations are discussed in our Annual Report on Form 10-K for the year ended June 30, 2024. There have been no material contractual obligations added for the six months ended December 31, 2024.

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 December 31, 2024, there were 31,472 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,518 additional shares. The total cost of treasury shares at December 31, 2024, was $1,877,223, and the Company repurchased over 99 shares during the first six months of fiscal 2025. At June 30, 2024, there were 31,373 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,618 additional shares. The total cost of treasury shares at June 30, 2024, was $1,860,173 and the Company repurchased 129 shares during the first six months of fiscal 2024.

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 December 31, 2024, the Company was in compliance with all such covenants. The amended and restated credit facility terminates August 31, 2027. There was $60,000 outstanding under the amended and restated credit facility at December 31, 2024 and June 30, 2024.

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 December 31, 2024, the Company was in compliance with all such covenants. The term loan credit agreement has a maturity date of May 16, 2025. There was $90,000 outstanding under the term loan at December 31, 2024 and June 30, 2024.

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 1.0%. The credit line expires on April 30, 2025. There was no balance outstanding at December 31, 2024, or June 30, 2024.

On October 31, 2024, the Company entered into a discretionary line of credit demand note, which provides for funding of up to $50,000 and bears interest at the prime rate less 2.0%. The note does not constitute a committed line of credit. The line of credit renews annually. There was no balance outstanding at December 31, 2024.

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 clients 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 client base, we believe the credit risk associated with the extension of credit to our clients will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

We had $150,000 outstanding debt with variable interest rates as of December 31, 2024, and a 1% increase in our borrowing rate would increase our annual interest expense by $1,500.

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 December 31, 2024, 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 December 31, 2024:

			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)
October 1 — October 31, 2024			—						$	—					—						3,617,657
November 1 — November 30, 2024			99,393						171.33						99,393						3,518,264
December 1 — December 31, 2024			—						—						—						3,518,264
Total			99,393						$	171.33					99,393						3,518,264

(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 31,472,352 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 December 31, 2024, 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.

3.1.9 Restated Certificate of Incorporation of Jack Henry & Associates, Inc.

10.80 Jack Henry & Associates, Inc. 2006 Employee Stock Purchase Plan, as amended and restated on November 13, 2024.

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 December 31, 2024, and June 30, 2024, (ii) the Condensed Consolidated Statements of Income for the three and six months ended December 31, 2024, and 2023, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended December 31, 2024, and 2023, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2024, and 2023, 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:			February 7, 2025						/s/ Gregory R. Adelson
									Gregory R. Adelson
									Chief Executive Officer and President
Date:			February 7, 2025						/s/ Mimi L. Carsley
									Mimi L. Carsley
									Chief Financial Officer and Treasurer