Jack Henry & Associates, Inc. Reports Fourth Quarter and Full Year Fiscal 2025 Results

Fourth quarter summary:

•     GAAP revenue increased 9.9% and GAAP operating income increased 23.9% for the fiscal three months ended June 30, 2025, compared to the prior fiscal year quarter.

•     Non-GAAP adjusted revenue increased 7.5% and non-GAAP adjusted operating income increased 14.8% for the fiscal three months ended June 30, 2025, compared to the prior fiscal year quarter.1

▪     GAAP EPS was $1.75 per diluted share for the fiscal three months ended June 30, 2025, compared to $1.38 per diluted share in the prior fiscal year quarter.

Fiscal year summary:

•     GAAP revenue increased 7.2% and GAAP operating income increased 16.2% for the fiscal year ended June 30, 2025, compared to the prior fiscal year.

•     Non-GAAP adjusted revenue increased 6.5% and non-GAAP adjusted operating income increased 9.8% for the fiscal year ended June 30, 2025, compared to the prior fiscal year.1

▪     GAAP EPS was $6.24 per diluted share for the fiscal year ended June 30, 2025, compared to $5.23 per diluted share in the prior fiscal year.

▪     Cash and cash equivalents were $102.0 million at June 30, 2025, and $38.3 million at June 30, 2024.

▪     Debt outstanding related to credit facilities was zero at June 30, 2025, and $150.0 million at June 30, 2024.

Full year fiscal 2026 guidance (Dollars In millions):3

Monett, MO, August 19, 2025 - Jack Henry & Associates, Inc. (Nasdaq: JKHY), a leading financial technology provider, today announced results for fiscal fourth quarter and full fiscal year ended June 30, 2025.

1 See tables below on page 4 reconciling non-GAAP financial measures to GAAP.

2See table below on page 14 reconciling net income to non-GAAP EBITDA.

3 The full fiscal year guidance assumes no acquisitions or dispositions will be made during fiscal year 2026.

4Operating margin is calculated by dividing operating income by revenue.

5 See tables below on page 9 reconciling fiscal year 2026 GAAP to non-GAAP guidance.

Revenue, operating expenses, operating income, and net income for the fiscal three months and fiscal year ended June 30, 2025, compared to the fiscal three months and fiscal year ended June 30, 2024, were as follows:

•Services and support revenue increased for the fiscal three months ended June 30, 2025, primarily driven by growth in data processing and hosting revenue within cloud of 11.8%, higher deconversion revenue by $13,802, and an increase in consulting, work order, and release revenues of 11.9%. Processing revenue increased for the fiscal three months ended June 30, 2025, primarily driven by growth in card revenue of 6.7%, higher transaction and digital revenue of 16.4%, and an increase in payment processing revenues of 10.0%.

•Services and support revenue increased for the fiscal year ended June 30, 2025, primarily driven by growth in data processing and hosting revenue within cloud of 12.0%, higher deconversion revenue by $17,351, and increased consulting, work order, and release revenues of 9.6% partially offset by a decrease in license and hardware revenues of 25.2%. Processing revenue increased for the fiscal year ended June 30, 2025, primarily driven by growth in card revenue of 6.6%, higher transaction and digital revenue of 13.0%, and an increase in payment processing revenues of 9.4%.

•For the fiscal three months ended June 30, 2025, core segment revenue increased 10.3%, payments segment revenue increased 7.9%, complementary segment revenue increased 12.9%, and corporate and other segment revenue increased 5.3%. For the fiscal three months ended June 30, 2025, core segment non-GAAP adjusted revenue increased 6.8%, payments segment non-GAAP adjusted revenue increased 5.8%, complementary segment non-GAAP adjusted revenue increased 11.0%, and corporate and other non-GAAP adjusted segment revenue increased 5.2% (see revenue lines of segment break-out tables on pages 5 and 6 below for a reconciliation of GAAP segment revenue to non-GAAP adjusted segment revenue).

•For the fiscal year ended June 30, 2025, core segment revenue increased 7.0%, payments segment revenue increased 6.8%, complementary segment revenue increased 9.2%, and corporate and other segment revenue decreased 1.8%. For the fiscal year ended June 30, 2025, core segment non-GAAP adjusted revenue increased 6.0%, payments segment non-GAAP adjusted revenue increased 6.2%, complementary segment non-GAAP adjusted revenue increased 8.5%, and corporate and other non-GAAP adjusted segment revenue decreased 1.9% (see revenue lines of segment break-out tables on pages 7 and 8 below for a reconciliation of GAAP segment revenue to non-GAAP adjusted segment revenue).

•Cost of revenue increased for the fiscal three months and fiscal year ended June 30, 2025, primarily due to higher direct costs generally consistent with increases in related lines of revenue and higher personnel costs, including compensation increases in the trailing twelve months.

•Research and development expense increased for the fiscal three months and fiscal year ended June 30, 2025, primarily due to higher personnel costs (net of capitalization), including compensation increases and employee headcount additions in the trailing twelve months.

•Selling, general, and administrative expense increased for the fiscal three months ended June 30, 2025, primarily due to higher personnel costs, including compensation increases and employee headcount additions in the trailing twelve months, and increased professional services, partially offset by the gain on sale of assets in the current fiscal year quarter compared to the loss on sale of assets in the prior fiscal year quarter. Selling, general, and administrative expense increased for the fiscal year ended June 30, 2025, primarily due to higher personnel costs, excluding severance, including compensation increases and employee headcount additions in the trailing twelve months, and increased professional services, partially offset by the decrease in severance this fiscal year compared to last fiscal year.

•Effective tax rates for the fiscal three months ended June 30, 2025, and 2024, were 20.2% and 22.5%, respectively. Effective tax rates for the fiscal year ended June 30, 2025, and 2024, were 22.2% and 23.3%, respectively.

6Operating margin is calculated by dividing operating income by revenue. Operating margin plus operating expense components as a percentage of total revenue may not equal 100% due to rounding.

The tables below show our revenue, operating income, and net income for the fiscal three months and fiscal year ended June 30, 2025, compared to the fiscal three months and fiscal year ended June 30, 2024, excluding the impacts of deconversions and the VEDIP program expense.*

*The VEDIP program expense for the fiscal year ended June 30, 2024, was related to a Company voluntary separation program offered to certain eligible employees beginning in July 2023.

**GAAP revenue is comprised of services and support and processing revenues (see page 2). Reducing services and support revenue by deconversion revenue for the three months ended June 30, 2025, and 2024 which was $20,495 for the current fiscal year quarter and $6,693 for the prior fiscal year quarter, results in non-GAAP adjusted services and support revenue growth of 6.7% quarter over quarter. There were no non-GAAP adjustments to processing revenue for the fiscal three months ended June 30, 2025, or 2024.

Reducing services and support revenue by deconversion revenue for the fiscal year ended June 30, 2025, and 2024, which was $33,905 for the current fiscal year and $16,554 for the prior fiscal year, results in non-GAAP adjusted services and support revenue growth of 5.4% year over year. There were no non-GAAP adjustments to processing revenue for the fiscal year ended June 30, 2025, or 2024.

***Non-GAAP adjusted operating margin is calculated by dividing non-GAAP adjusted operating income by non-GAAP adjusted revenue.

****The tax impact of adjustments is calculated using a tax rate of 24% for the fiscal three months and fiscal year ended June 30, 2025, and 2024. The tax rate for non-GAAP adjustment items takes a broad look at the Company's recurring tax adjustments and applies them to non-GAAP revenue that does not have its own specific tax impacts.

The tables below show the segment break-out of revenue and cost of revenue for each period presented, as adjusted for the items above, and include a reconciliation to non-GAAP adjusted operating income presented above.

*Revenue non-GAAP adjustments for all segments were deconversion revenues. Cost of revenue non-GAAP adjustments for all segments were deconversion costs.

***Non-GAAP adjustments unassigned to a segment were VEDIP expenses of $16,443 and selling, general, and administrative deconversion costs of $1,177. The VEDIP program expense for the fiscal year ended June 30, 2024, was related to a Company voluntary separation program offered to certain eligible employees beginning in July 2023.

The table below shows our GAAP to non-GAAP guidance for the fiscal year ending June 30, 2026. Fiscal year 2026 non-GAAP guidance excludes the impacts of deconversion revenue and related operating expenses, the gain on sale of assets, and assumes no acquisitions or dispositions will be made during the fiscal year.

*Deconversion revenue and related operating expenses for fiscal year 2026 are based on the lowest actual recent historical results. See the Company’s Form 8-K filed with the Securities and Exchange Commission on August 3, 2023.

**GAAP to Non-GAAP revenue, operating expenses, and operating income may not foot due to rounding.

            

•Cash and cash equivalents were $102 million at June 30, 2025, and $38 million at June 30, 2024.

•Trade receivables were $318 million at June 30, 2025, compared to $333 million at June 30, 2024.

•The Company had no borrowings at June 30, 2025 compared to $150 million of borrowings at June 30, 2024.

•Deferred revenue was $363 million at June 30, 2025, and $389 million at June 30, 2024.

•Stockholders' equity increased to $2,131 million at June 30, 2025, compared to $1,842 million at June 30, 2024.

*See table below for Net Cash Provided by Operating Activities and on page 14 for Return on Average Shareholders’ Equity. Tables reconciling the non-GAAP measures Free Cash Flow and Return on Invested Capital (ROIC) to GAAP measures are on pages 14 and 15. See the Use of Non-GAAP Financial Information section below for the definitions of Free Cash Flow and ROIC.

**Free cash flow for fiscal year 2025 was higher than the expected range due to the timing of certain contractual payments and income tax amounts being made after the end of fiscal year 2025.

The following table summarizes net cash from operating activities:

*For the fiscal year ended June 30, 2025, the change in other assets and liabilities includes the change in prepaid cost of product and other of $(50,933), accrued expenses of $(3,115), and income taxes of $16,048. For the year ended June 30, 2024, the change in other assets and liabilities includes the change in prepaid cost of product and other of $(115,558), the change in accrued expenses of $37,292, and income taxes of $9,925.

The following table summarizes net cash from investing activities:

The following table summarizes net cash from financing activities:

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures, including adjusted revenue, adjusted operating income, adjusted segment income, adjusted cost of revenue, adjusted operating expenses, adjusted operating margin, adjusted segment income margin, non-GAAP earnings before interest, taxes, depreciation, and amortization (non-GAAP EBITDA), free cash flow, return on invested capital (ROIC), and non-GAAP adjusted net income.

We believe non-GAAP financial measures help investors better understand the underlying fundamentals and true operations of our business. Adjusted revenue, adjusted operating income, adjusted operating margin, adjusted segment income, adjusted segment income margin, adjusted cost of revenue, adjusted operating expenses, and adjusted net income eliminate one-time deconversion revenue and associated costs and the effects of the VEDIP program expense related to a Company voluntary separation program offered to certain eligible employees beginning in July 2023, which management believes are not indicative of the Company's operating performance. Such adjustments give investors further insight into our performance. Non-GAAP EBITDA is defined as net income attributable to the Company before the effect of interest expense, taxes, depreciation, and amortization, adjusted for net income before the effect of interest expense, taxes, depreciation, and amortization attributable to eliminated one-time deconversions and the VEDIP program expense. Free cash flow is defined as net cash from operating activities, less capitalized expenditures, internal use software, and capitalized software, plus proceeds from the sale of assets. ROIC is defined as net income divided by average invested capital, which is the average of beginning and ending long-term debt and stockholders’ equity for a given period. Management believes that non-GAAP EBITDA is an important measure of the Company’s overall operating performance and excludes certain costs and other transactions that management deems one time or non-operational in nature; free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions; and ROIC is a measure of the Company’s allocation efficiency and effectiveness of its invested capital. For these reasons, management also uses these non-GAAP financial measures in its assessment and management of the Company's performance.

Non-GAAP financial measures used by the Company may not be comparable to similarly titled non-GAAP measures used by other companies. Non-GAAP financial measures have no standardized meaning prescribed by GAAP and therefore, are unlikely to be comparable with calculations of similar measures for other companies.

Any non-GAAP financial measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Reconciliations of the non-GAAP financial measures to related GAAP measures are included.

1.)What are the opportunities and headwinds included in fiscal year 2026 non-GAAP revenue guidance?

•Recent industry consolidation continues to pressure short-term revenue growth, with deconversion outweighing new convert/merge activity. Several convert/merges are Jack Henry to Jack Henry thus limiting uplift in short-term revenue but securing long-term revenue opportunities.

•As previously discussed, in the first half of fiscal year 2025 we had several key large customer contracts that renewed with price compression that is contributing to the revenue headwinds in the short term but signifying long-term confidence in our solutions and technology direction.

•The industry has seen a slight slowing in the growth in the number of accounts for both banks and credit unions which impacts our contracts with account pricing.

•The Payments segment is under pressure from lower growth in risk management and third-party revenue.

•The restructure of a third-party agreement has resulted in a $16 million fiscal year-over-year revenue headwind, with $12 million of that coming in the first quarter. This restructuring has also resulted in a decrease of the related costs and the impact to margins is expected to be minimal. This has been adjusted for a consistent fiscal year-over-year comparison and is already contemplated in our fiscal year 2026 guidance (see page 9).

•We continue to gain market share in the industry through 51 new core wins in fiscal year 2025. We are also securing larger customers as they recognize the value of our technology roadmap along with the strategic partnerships and insight we provide.

2.)What is the expected quarterly cadence for non-GAAP revenue for Fiscal Year 2026?

•We expect the first quarter to be above the full year revenue guidance midpoint by approximately 100 bps.

•We expect the second quarter to be below the full year revenue guidance midpoint by approximately 100 bps.

◦Our largest client event, Connect, along with its revenue and expense is moving from the second quarter in fiscal year 2025 to the first quarter in fiscal year 2026.

◦Without this move the quarterly revenue cadence for the first half of fiscal year 2026 would be relatively consistent across the quarters.

▪Connect will revert to the second quarter of fiscal year 2027 and thereafter.

•The third quarter of fiscal year 2026 is expected to be slightly weaker, followed by a slightly stronger fourth quarter.

3.)What is the impact of recent federal tax legislation on free cash flow?

•Full expensing of research and development costs (IRC 174) and 100% "bonus" tax depreciation will have a meaningful favorable impact on free cash flow.

•We will be making an election in the coming months on how we will implement the tax law changes and depending upon that election there are two scenarios:

◦We could see a more significant impact in fiscal year 2026 with limited non-recurring impact in the future or,

◦We could elect to take the benefit spread across fiscal years 2026 and 2027.

•Overall this legislation will allow Jack Henry to produce historical levels of free cash flow conversion of approximately 85% to 100% in future years.

4.)What is impacting GAAP EPS growth for fiscal year 2026?

•Starting in fiscal year 2024, we altered our methodology for deconversion guidance, starting the year with conservative guidance for deconversion revenue and adjusting the guidance throughout the year based on contracted volume.

◦Decreased industry consolidation through the third quarter of fiscal year 2025 resulted in lower deconversion revenue, somewhat masking the effect of this change.

◦Industry consolidation increased during fourth quarter fiscal year 2025 continuing into fiscal year 2026.

◦We will continue to guide deconversion revenue conservatively at the beginning of each fiscal year and adjust the guidance quarterly, as necessary.

▪This approach is the primary driver of the lower fiscal year-over-year growth in EPS.

▪If deconversion revenue for fiscal year 2026 was flat compared to fiscal year 2025, it would add approximately $.16 to fiscal year 2026 GAAP EPS.