Jack Henry & Associates, Inc. Reports Third Quarter Fiscal 2025 Results

Third quarter summary: GAAP revenue increased 8.6% and GAAP operating income increased 23.8% for the fiscal three months ended March 31, 2025, compared to the prior fiscal year quarter. Non-GAAP adjusted revenue increased 7.0% and non-GAAP adjusted operating income increased 17.6% for the fiscal three months ended March 31, 2025, compared to the prior fiscal year quarter.1 GAAP EPS was $1.52 per diluted share for the fiscal three months ended March 31, 2025, compared to $1.19 per diluted share in the prior fiscal year quarter. Fiscal year-to-date summary: GAAP revenue increased 6.3% and GAAP operating income increased 13.5% for the fiscal year-to-date period ended March 31, 2025, compared to the prior fiscal year-to-date period. Non-GAAP adjusted revenue increased 6.1% and non-GAAP adjusted operating income increased 8.2% for the fiscal year-to-date period ended March 31, 2025, compared to the prior fiscal year-to-date period.1 GAAP EPS was $4.49 per diluted share for the fiscal year-to-date period ended March 31, 2025, compared to $3.85 per diluted share in the prior fiscal year-to-date period. Cash and cash equivalents were $39.9 million at March 31, 2025, and $27.3 million at March 31, 2024. Debt outstanding related to credit facilities was $170 million at March 31, 2025, and $250 million at March 31, 2024. Full year fiscal 2025 guidance (Dollars In millions):2 Current GAAP Low High Revenue $2,353 $2,370 Operating margin3 23.5 % 23.7 % EPS $6.00 $6.09 Non-GAAP4 Adjusted revenue $2,331 $2,342 Adjusted operating margin 23.0 % 23.1 % , /PRNewswire/ -- Jack Henry & Associates, Inc. (Nasdaq: JKHY), a leading financial technology provider, today announced results for fiscal third quarter ended March 31, 2025. Fiscal Year 2025 Third Quarter Earnings Key Call Outs Balance Sheet and Cash Flow Review 1 See tables below on page 4 reconciling non-GAAP financial measures to GAAP. 2 The full fiscal year guidance assumes no acquisitions or dispositions are made during fiscal year 2025. 3 Operating margin is calculated by dividing operating income by revenue. 4 See tables below on page 9 reconciling fiscal year 2025 GAAP to non-GAAP guidance. 5 See table below on page 14 reconciling net income to non-GAAP EBITDA. According to Greg Adelson, President and CEO, "Our third quarter results reflect solid overall performance. We continued to see strong growth in key revenue areas such as public and private cloud as well as processing. We are successfully winning deals with larger financial institutions through our unwavering focus on culture, service, innovation, strategy, and execution. We are making significant progress with our technology modernization and our small & medium-sized business (SMB) strategies. We remain confident in the demand environment, our robust sales pipeline, and our long-term financial performance." Operating ResultsRevenue, operating expenses, operating income, and net income for the three and nine months ended March 31, 2025, compared to the three and nine months ended March 31, 2024, were as follows: Revenue (Unaudited, dollars in thousands) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change 2025 2024 2025 2024 Revenue Services and Support $ 330,792 $ 305,017 8.5 % $ 1,010,498 $ 959,214 5.3 % Percentage of Total Revenue 56.5 % 56.6 % 57.4 % 57.9 % Processing 254,295 233,545 8.9 % 749,418 696,417 7.6 % Percentage of Total Revenue 43.5 % 43.4 % 42.6 % 42.1 % REVENUE $ 585,087 $ 538,562 8.6 % $ 1,759,916 $ 1,655,631 6.3 % Services and support revenue increased for the three months ended March 31, 2025, primarily driven by growth in data processing and hosting revenue within cloud of 12.0% and higher deconversion revenue by $8,801, partially offset by the decrease in license and hardware revenues of 35.0%. Processing revenue increased for the three months ended March 31, 2025, primarily driven by growth in card revenue of 8.1%, transaction and digital revenue of 14.6%, and payment processing revenue of 10.4%. Services and support revenue increased for the nine months ended March 31, 2025, primarily driven by growth in data processing and hosting revenue within cloud of 12.1% and higher deconversion revenue by $3,549, partially offset by a decrease in license and hardware revenues of 30.7%. Processing revenue increased for the nine months ended March 31, 2025, primarily driven by growth in card revenue of 6.6% and transaction and digital revenue of 11.9%. Another driver was an increase in payment processing revenues. For the three months ended March 31, 2025, core segment revenue increased 8.4%, payments segment revenue increased 7.7%, complementary segment revenue increased 12.2%, and corporate and other segment revenue decreased 6.2%. For the three months ended March 31, 2025, core segment non-GAAP adjusted revenue increased 6.4%, payments segment non-GAAP adjusted revenue increased 7.0%, complementary segment non-GAAP adjusted revenue increased 9.6%, and corporate and other non-GAAP adjusted segment revenue decreased 6.6% (see revenue lines of segment break-out tables on pages 5 and 6 below for a reconciliation of segment non-GAAP adjusted revenue to GAAP segment revenue). For the nine months ended March 31, 2025, core segment revenue increased 5.9%, payments segment revenue increased 6.5%, complementary segment revenue increased 8.0%, and corporate and other segment revenue decreased 3.9%. For the nine months ended March 31, 2025, core segment non-GAAP adjusted revenue increased 5.8%, payments segment non-GAAP adjusted revenue increased 6.4%, complementary segment non-GAAP adjusted revenue increased 7.7%, and corporate and other non-GAAP adjusted segment revenue decreased 3.9% (see revenue lines of segment break-out tables on pages 7 and 8 below for a reconciliation of segment non-GAAP adjusted revenue to GAAP segment revenue). Operating Expenses and Operating Income (Unaudited, dollars in thousands) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change 2025 2024 2025 2024 Cost of Revenue $ 340,586 $ 328,224 3.8 % $ 1,016,868 $ 972,205 4.6 % Percentage of Total Revenue6 58.2 % 60.9 % 57.8 % 58.7 % Research and Development 39,411 35,993 9.5 % 120,192 108,363 10.9 % Percentage of Total Revenue6 6.7 % 6.7 % 6.8 % 6.5 % Selling, General, and Administrative 66,350 62,246 6.6 % 209,839 211,298 (0.7) % Percentage of Total Revenue6 11.3 % 11.6 % 11.9 % 12.8 % OPERATING EXPENSES 446,347 426,463 4.7 % 1,346,899 1,291,866 4.3 % OPERATING INCOME $ 138,740 $ 112,099 23.8 % $ 413,017 $ 363,765 13.5 % Operating Margin6 23.7 % 20.8 % 23.5 % 22.0 % Cost of revenue increased for the three months ended March 31, 2025, primarily due to higher direct costs generally consistent with increases in the related lines of revenue and increased internal licenses and fees, partially offset by a rise in labor cost deferral. Cost of revenue increased for the nine months ended March 31, 2025, primarily due to higher direct costs generally consistent with increases in the related lines of revenue, compensation increases in the trailing twelve months, higher internal licenses and fees from increased deployments and prices, a rise in amortization from capital development projects placed into service in the trailing twelve months, and increased cloud consumption fees, partially offset by a decrease in license and hardware costs consistent with the decrease in related lines of revenue and a rise in labor cost deferral. Research and development expense increased for the three and nine months ended March 31, 2025, primarily due to higher personnel costs (net of capitalization) from compensation increases and employee headcount additions in the trailing twelve months. For the nine months ended March 31, 2025, increased internal licenses and fees was also a contributor. Selling, general, and administrative expense increased for the three months ended March 31, 2025, primarily due to higher personnel costs from compensation increases related to a rise in employee headcount in the trailing twelve months. Selling, general, and administrative expense decreased for the nine months ended March 31, 2025, primarily due to the decrease in non-recurring personnel costs when compared to the prior fiscal year period, partially offset by an increase in recurring personnel costs from higher commissions expense and compensation increases related to a rise in employee headcount in the trailing twelve months . Net Income (Unaudited, in thousands, except per share data) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change 2025 2024 2025 2024 Income Before Income Taxes $ 141,908 $ 114,165 24.3 % $ 426,087 $ 367,635 15.9 % Provision for Income Taxes 30,800 27,066 13.8 % 97,943 86,892 12.7 % NET INCOME $ 111,108 $ 87,099 27.6 % $ 328,144 $ 280,743 16.9 % Diluted earnings per share $ 1.52 $ 1.19 27.6 % $ 4.49 $ 3.85 16.8 % Effective tax rates for the three months ended March 31, 2025, and 2024, were 21.7% and 23.7%, respectively. Effective tax rates for the nine months ended March 31, 2025, and 2024, were 23.0% and 23.6%, respectively. According to Mimi Carsley, CFO and Treasurer, "Our third quarter results included strong growth in key areas of our revenue, led by public and private cloud at 12% and processing at nearly 9%. Those results were tempered by mostly non-recurring contraction in some of our non-key revenue areas, including licenses and hardware, leading to overall non-GAAP revenue growth of 7%. That strong revenue growth and our disciplined approach to controlling costs led to non-GAAP operating income growth of over 17%." 6 Operating 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. Impact of Non-GAAP AdjustmentsThe tables below show our revenue, operating income, and net income for the three and nine months ended March 31, 2025, compared to the three and nine months ended March 31, 2024, excluding the impacts of deconversions and the VEDIP program expense.* (Unaudited, dollars in thousands) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change 2025 2024 2025 2024 GAAP Revenue** $ 585,087 $ 538,562 8.6 % $ 1,759,916 $ 1,655,631 6.3 % Adjustments: Deconversion revenue (9,644) (843) (13,410) (9,861) NON-GAAP ADJUSTED REVENUE** $ 575,443 $ 537,719 7.0 % $ 1,746,506 $ 1,645,770 6.1 % GAAP Operating Income $ 138,740 $ 112,099 23.8 % $ 413,017 $ 363,765 13.5 % Adjustments: Operating (income) loss from deconversions (6,851) 6 (9,724) (7,552) VEDIP program expense* — — — 16,443 NON-GAAP ADJUSTED OPERATING INCOME $ 131,889 $ 112,105 17.6 % $ 403,293 $ 372,656 8.2 % Non-GAAP Adjusted Operating Margin*** 22.9 % 20.8 % 23.1 % 22.6 % GAAP Net Income $ 111,108 $ 87,099 27.6 % $ 328,144 $ 280,743 16.9 % Adjustments: Net (income) loss from deconversions (6,851) 6 (9,724) (7,552) VEDIP program expense* — — — 16,443 Tax impact of adjustments**** 1,645 (1) 2,334 (2,133) NON-GAAP ADJUSTED NET INCOME $ 105,902 $ 87,104 21.6 % $ 320,754 $ 287,501 11.6 % *The VEDIP program expense for the fiscal nine months ended March 31, 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 March 31, 2025, and 2024 which was $9,644 for the current fiscal year quarter and $843 for the prior fiscal year quarter, results in non-GAAP adjusted services and support revenue growth of 5.6% quarter over quarter. There were no non-GAAP adjustments to processing revenue for the three months ended March 31, 2025, or 2024. Reducing services and support revenue by deconversion revenue for the nine months ended March 31, 2025, and 2024, which was $13,410 for the current fiscal year period and $9,861 for the prior fiscal year period, results in non-GAAP adjusted services and support revenue growth of 5.0% period over period. There were no non-GAAP adjustments to processing revenue for the nine months ended March 31, 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 three and nine months ended March 31, 2025, and 2024. The tax rate for non-GAAP adjustment items takes a broad look at our 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. Three Months Ended March 31, 2025 (Unaudited, dollars in thousands) Core Payments Complementary Corporate and Other Total GAAP REVENUE $ 180,725 $ 217,449 $ 167,442 $ 19,471 $ 585,087 Non-GAAP adjustments* (4,838) (2,394) (2,324) (88) (9,644) NON-GAAP ADJUSTED REVENUE 175,887 215,055 165,118 19,383 575,443 GAAP COST OF REVENUE 75,258 116,266 67,836 81,226 340,586 Non-GAAP adjustments* (1,240) (109) (519) (5) (1,873) NON-GAAP ADJUSTED COST OF REVENUE 74,018 116,157 67,317 81,221 338,713 GAAP SEGMENT INCOME $ 105,467 $ 101,183 $ 99,606 $ (61,755) Segment Income Margin** 58.4 % 46.5 % 59.5 % (317.2) % NON-GAAP ADJUSTED SEGMENT INCOME $ 101,869 $ 98,898 $ 97,801 $ (61,838) Non-GAAP Adjusted Segment Income Margin** 57.9 % 46.0 % 59.2 % (319.0) % Research and Development 39,411 Selling, General, and Administrative 66,350 Non-GAAP adjustments unassigned to a segment*** (920) NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES 443,554 NON-GAAP ADJUSTED OPERATING INCOME $ 131,889 *Revenue non-GAAP adjustments for all segments were deconversion revenue. Cost of revenue non-GAAP adjustments for all segments were deconversion costs. **Segment income margin is calculated by dividing segment income by revenue for each segment. Non-GAAP adjusted segment income margin is calculated by dividing non-GAAP adjusted segment income by non-GAAP adjusted revenue for each segment. ***Non-GAAP adjustments unassigned to a segment were selling, general, and administrative deconversion costs. Three Months Ended March 31, 2024 (Unaudited, dollars in thousands) Core Payments Complementary Corporate and Other Total GAAP REVENUE $ 166,655 $ 201,919 $ 149,231 $ 20,757 $ 538,562 Non-GAAP adjustments* (1,291) (910) 1,366 (8) (843) NON-GAAP ADJUSTED REVENUE 165,364 201,009 150,597 20,749 537,719 GAAP COST OF REVENUE 72,153 109,848 64,219 82,004 328,224 Non-GAAP adjustments* (225) (95) (348) (3) (671) NON-GAAP ADJUSTED COST OF REVENUE 71,928 109,753 63,871 82,001 327,553 GAAP SEGMENT INCOME $ 94,502 $ 92,071 $ 85,012 $ (61,247) Segment Income Margin** 56.7 % 45.6 % 57.0 % (295.1) % NON-GAAP ADJUSTED SEGMENT INCOME $ 93,436 $ 91,256 $ 86,726 $ (61,252) Non-GAAP Adjusted Segment Income Margin 56.5 % 45.4 % 57.6 % (295.2) % Research and Development 35,993 Selling, General, and Administrative 62,246 Non-GAAP adjustments unassigned to a segment*** (178) NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES 425,614 NON-GAAP ADJUSTED OPERATING INCOME $ 112,105 *Revenue non-GAAP adjustments for all segments were deconversion revenue. Cost of revenue non-GAAP adjustments for all segments were deconversion costs. **Segment income margin is calculated by dividing segment income by revenue for each segment. Non-GAAP adjusted segment income margin is calculated by dividing non-GAAP adjusted segment income by non-GAAP adjusted revenue for each segment. ***Non-GAAP adjustments unassigned to a segment were selling, general, and administrative deconversion costs. Nine Months Ended March 31, 2025 (Unaudited, dollars in thousands) Core Payments Complementary Corporate and Other Total GAAP REVENUE $ 549,523 $ 644,207 $ 500,080 $ 66,106 $ 1,759,916 Non-GAAP adjustments* (6,105) (4,341) (2,857) (107) (13,410) NON-GAAP ADJUSTED REVENUE 543,418 639,866 497,223 65,999 1,746,506 GAAP COST OF REVENUE 227,417 344,023 197,188 248,240 1,016,868 Non-GAAP adjustments* (1,365) (180) (678) (5) (2,228) NON-GAAP ADJUSTED COST OF REVENUE 226,052 343,843 196,510 248,235 1,014,640 GAAP SEGMENT INCOME $ 322,106 $ 300,184 $ 302,892 $ (182,134) Segment Income Margin** 58.6 % 46.6 % 60.6 % (275.5) % NON-GAAP ADJUSTED SEGMENT INCOME $ 317,366 $ 296,023 $ 300,713 $ (182,236) Non-GAAP Adjusted Segment Income Margin 58.4 % 46.3 % 60.5 % (276.1) % Research and Development 120,192 Selling, General, and Administrative 209,839 Non-GAAP adjustments unassigned to a segment*** (1,458) NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES 1,343,213 NON-GAAP ADJUSTED OPERATING INCOME $ 403,293 *Revenue non-GAAP adjustments for all segments were deconversion revenue. Cost of revenue non-GAAP adjustments for all segments were deconversion costs. **Segment income margin is calculated by dividing segment income by revenue for each segment. Non-GAAP adjusted segment income margin is calculated by dividing non-GAAP adjusted segment income by non-GAAP adjusted revenue for each segment. ***Non-GAAP adjustments unassigned to a segment were selling, general, and administrative deconversion costs. Nine Months Ended March 31, 2024 (Unaudited, dollars in thousands) Core Payments Complementary Corporate and Other Total GAAP REVENUE $ 518,696 $ 605,115 $ 463,064 $ 68,756 $ 1,655,631 Non-GAAP adjustments* (4,885) (3,470) (1,440) (66) (9,861) NON-GAAP ADJUSTED REVENUE 513,811 601,645 461,624 68,690 1,645,770 GAAP COST OF REVENUE 217,449 330,297 188,002 236,457 972,205 Non-GAAP adjustments* (650) (193) (715) (4) (1,562) NON-GAAP ADJUSTED COST OF REVENUE 216,799 330,104 187,287 236,453 970,643 GAAP SEGMENT INCOME $ 301,247 $ 274,818 $ 275,062 $ (167,701) Segment Income Margin** 58.1 % 45.4 % 59.4 % (243.9) % NON-GAAP ADJUSTED SEGMENT INCOME $ 297,012 $ 271,541 $ 274,337 $ (167,763) Non-GAAP Adjusted Segment Income Margin 57.8 % 45.1 % 59.4 % (244.2) % Research and Development 108,363 Selling, General, and Administrative 211,298 Non-GAAP adjustments unassigned to a segment*** (17,190) NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES 1,273,114 NON-GAAP ADJUSTED OPERATING INCOME $ 372,656 *Revenue non-GAAP adjustments for all segments were deconversion revenues. Cost of revenue non-GAAP adjustments for all segments were deconversion costs. **Segment income margin is calculated by dividing segment income by revenue for each segment. Non-GAAP adjusted segment income margin is calculated by dividing non-GAAP adjusted segment income by non-GAAP adjusted revenue for each segment. ***Non-GAAP adjustments unassigned to a segment were VEDIP expenses of $16,443 and selling, general, and administrative deconversion costs of $747. The VEDIP program expense for the fiscal nine months ended March 31, 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, 2025. Fiscal year 2025 non-GAAP guidance excludes the impacts of deconversion revenue and related operating expenses and assumes no acquisitions or dispositions are made during the fiscal year. GAAP to Non-GAAP GUIDANCE (Dollars in millions, except per share data) Annual FY25 Low High GAAP REVENUE $ 2,353 $ 2,370 Growth 6.2 % 7.0 % Deconversions* $ 22 $ 28 NON-GAAP ADJUSTED REVENUE** $ 2,331 $ 2,342 Non-GAAP Adjusted Growth 6.0 % 6.5 % GAAP OPERATING EXPENSES $ 1,799 $ 1,808 Growth 4.2 % 4.7 % Deconversion costs* $ 5 $ 7 NON-GAAP ADJUSTED OPERATING EXPENSES** $ 1,794 $ 1,801 Non-GAAP Adjusted Growth 5.1 % 5.5 % GAAP OPERATING INCOME $ 554 $ 562 Growth 13.2 % 14.8 % GAAP OPERATING MARGIN 23.5 % 23.7 % NON-GAAP ADJUSTED OPERATING INCOME** $ 537 $ 541 Non-GAAP Adjusted Growth 9.0 % 9.8 % NON-GAAP ADJUSTED OPERATING MARGIN 23.0 % 23.1 % GAAP EPS*** $ 6.00 $ 6.09 Growth 14.8 % 16.5 % Non-GAAP EPS*** $ 5.83 $ 5.87 Growth 10.7 % 11.5 % *Deconversion revenue and related operating expenses are based on actual results for the nine months ended March 31, 2025, and estimates for the remainder of fiscal year 2025, based on the lowest actual recent historical results. See the Company's Form 8-K filed with the Securities and Exchange Commission on April 30, 2025. **GAAP to Non-GAAP revenue, operating expenses, and operating income may not foot due to rounding. ***The GAAP to Non-GAAP EPS reconciliation table is below on page 15. Balance Sheet and Cash Flow Review Cash and cash equivalents were $40 million at March 31, 2025, and $27 million at March 31, 2024. Trade receivables were $282 million at March 31, 2025, compared to $263 million at March 31, 2024. The Company had $170 million of borrowings at March 31, 2025 compared to $250 million of borrowings at March 31, 2024. Deferred revenue was $222 million at March 31, 2025, and $214 million at March 31, 2024. Stockholders' equity increased to $2,036 million at March 31, 2025, compared to $1,780 million at March 31, 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 also on page 14. See the Use of Non-GAAP Financial Information section below for the definitions of Free Cash Flow and ROIC. The following table summarizes net cash from operating activities: (Unaudited, in thousands) Nine Months Ended March 31, 2025 2024 Net income $ 328,144 $ 280,743 Depreciation 33,125 34,943 Amortization 120,136 114,270 Change in deferred income taxes (12,765) (15,325) Other non-cash expenses 22,411 22,677 Change in receivables 50,871 97,835 Change in deferred revenue (167,104) (185,784) Change in other assets and liabilities* (60,426) (13,117) NET CASH FROM OPERATING ACTIVITIES $ 314,392 $ 336,242 *For the nine months ended March 31, 2025, includes the change in prepaid cost of product and other of $(42,989), accrued expenses of $(23,436), and income taxes of $15,540. For the nine months ended March 31, 2024, includes the change in prepaid cost of product and other of $(60,520), income taxes of $30,938, and the change in accrued expenses of $20,265. The following table summarizes net cash from investing activities: (Unaudited, in thousands) Nine Months Ended March 31, 2025 2024 Capital expenditures (41,186) (34,347) Proceeds from dispositions — 900 Purchased software (3,833) (4,561) Computer software developed (130,298) (125,351) Purchase of investments (2,000) (1,146) Proceeds from investments 1,000 — NET CASH FROM INVESTING ACTIVITIES $ (176,317) $ (164,505) The following table summarizes net cash from financing activities: (Unaudited, in thousands) Nine Months Ended March 31, 2025 2024 Borrowings on credit facilities $ 255,000 $ 335,000 Repayments on credit facilities (235,000) (360,000) Purchase of treasury stock (35,052) (20,000) Dividends paid (122,464) (115,792) Net cash from issuance of stock and tax related to stock-based compensation 1,027 4,066 NET CASH FROM FINANCING ACTIVITIES $ (136,489) $ (156,726) Use of Non-GAAP Financial InformationGenerally 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), non-GAAP adjusted net income, and non-GAAP earnings per share (EPS).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, adjusted net income, and non-GAAP EPS 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.Quarterly Conference CallThe Company will hold a conference call on May 7, 2025, at 7:45 a.m. Central Time, and investors are invited to listen at www.jackhenry.com. A webcast replay will be available approximately one hour after the event at ir.jackhenry.com/corporate-events-and-presentations and will remain available for one year.About Jack Henry & Associates, Inc.®Jack HenryTM (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity — offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 48 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com. Statements made in this news release that are not historical facts 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. 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 the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise. Condensed Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change 2025 2024 2025 2024 REVENUE $ 585,087 $ 538,562 8.6 % $ 1,759,916 $ 1,655,631 6.3 % Cost of Revenue 340,586 328,224 3.8 % 1,016,868 972,205 4.6 % Research and Development 39,411 35,993 9.5 % 120,192 108,363 10.9 % Selling, General, and Administrative 66,350 62,246 6.6 % 209,839 211,298 (0.7) % EXPENSES 446,347 426,463 4.7 % 1,346,899 1,291,866 4.3 % OPERATING INCOME 138,740 112,099 23.8 % 413,017 363,765 13.5 % Interest income 5,899 6,499 (9.2) % 21,406 16,365 30.8 % Interest expense (2,731) (4,433) (38.4) % (8,336) (12,495) (33.3) % Interest Income (Expense), net 3,168 2,066 53.3 % 13,070 3,870 237.7 % INCOME BEFORE INCOME TAXES 141,908 114,165 24.3 % 426,087 367,635 15.9 % Provision for Income Taxes 30,800 27,066 13.8 % 97,943 86,892 12.7 % NET INCOME $ 111,108 $ 87,099 27.6 % $ 328,144 $ 280,743 16.9 % Diluted net income per share $ 1.52 $ 1.19 $ 4.49 $ 3.85 Diluted weighted average shares outstanding 73,013 73,031 73,058 73,010 Consolidated Balance Sheet Highlights (Unaudited) (In thousands) March 31, % Change 2025 2024 Cash and cash equivalents $ 39,870 $ 27,254 46.3 % Receivables 282,162 263,416 7.1 % Total assets 2,932,018 2,770,498 5.8 % Accounts payable and accrued expenses $ 201,389 $ 227,715 (11.6) % Current and long-term debt 170,000 250,000 (32.0) % Deferred revenue 221,828 213,945 3.7 % Stockholders' equity 2,036,431 1,779,931 14.4 % Calculation of Non-GAAP Earnings Before Income Taxes, Depreciation and Amortization (Non-GAAP EBITDA) Three Months Ended March 31, % Change Nine Months Ended March 31, % Change (Dollars in thousands) 2025 2024 2025 2024 Net income $ 111,108 $ 87,099 $ 328,144 $ 280,743 Net interest (3,168) (2,066) (13,069) (3,870) Taxes 30,800 27,066 97,943 86,893 Depreciation and amortization 51,013 50,083 153,261 149,214 Less: Net income before interest expense, taxes, depreciation and amortization attributable to eliminated one-time adjustments* (6,851) 6 (9,724) 8,892 NON-GAAP EBITDA $ 182,902 $ 162,188 12.8 % $ 556,555 $ 521,872 6.6 % *The fiscal third quarter 2025 and 2024 adjustments for net income before interest expense, taxes, depreciation and amortization were for deconversions. The fiscal year-to-date 2025 and 2024 adjustments were for deconversions in 2025 and deconversions and the VEDIP program expense in 2024 and were $(7,551) and $16,443, respectively. The VEDIP program expense for the fiscal nine months ended March 31, 2024, was related to a Company voluntary separation program offered to certain eligible employees beginning in July 2023. Calculation of Free Cash Flow (Non-GAAP) Nine Months Ended March 31, (In thousands) 2025 2024 Net cash from operating activities $ 314,392 $ 336,242 Capitalized expenditures (41,186) (34,347) Internal use software (3,833) (4,561) Proceeds from sale of assets — 900 Capitalized software (130,298) (125,351) FREE CASH FLOW $ 139,075 $ 172,883 Calculation of the Return on Average Shareholders' Equity March 31, (In thousands) 2025 2024 Net income (trailing four quarters) $ 429,217 $ 378,516 Average stockholder's equity (period beginning and ending balances) 1,908,181 1,659,120 RETURN ON AVERAGE SHAREHOLDERS' EQUITY 22.5 % 22.8 % Calculation of Return on Invested Capital (ROIC) (Non-GAAP) March 31, (In thousands) 2025 2024 Net income (trailing four quarters) $ 429,217 $ 378,516 Average stockholder's equity (period beginning and ending balances) 1,908,181 1,659,120 Average current maturities of long-term debt and financing leases (period beginning and ending balances) 45,000 1 Average long-term debt (period beginning and ending balances) 165,000 312,500 Average invested capital $ 2,118,181 $ 1,971,621 ROIC 20.3 % 19.2 % GAAP to Non-GAAP EPS Reconciliation Table FY25 Guidance GAAP EPS $6.00-$6.09 Excluded Activity, net of Tax: Deconversion* $0.17-$0.22 Non-GAAP EPS $5.83-$5.87 *We are not aware of any other discreet adjustments at this time. Deconversion revenue and related operating expenses are based on actual results for fiscal year-to-date 2025 and estimates for the remainder of fiscal year 2025, based on the lowest actual recent historical results. See the Company's Form 8-K filed with the Securities and Exchange Commission on April 30, 2025. FAQ for Analysts / Investors1. What caused the slowing of non-GAAP revenue growth in the 3rd quarter? Hardware revenue was down $4 million from the prior year quarter. Revenue growth would have been 7.8% overall had hardware revenue remained consistent. Growth in our key areas of revenue (Cloud and Processing revenue) grew at 9.8%, compared to 8.8% a year ago. 2. What are the key factors lowering annual non-GAAP revenue guidance? The outlook for hardware revenue is down as we are seeing customers delay large capital purchases, possibly due to economic uncertainty. Similar to hardware, we are seeing customers delaying the start of signed non-recurring projects and the implementation of post-core products. Given the recent decline in consumer sentiment, there is risk that we could see lower transaction volumes in the coming months. 3. What caused Core segment revenue growth for the 3rd quarter to lag behind Payments and Complementary? License and credit union hardware revenue was a drag on Core revenue growth in the 3rd quarter. However, growth in our key areas of revenue, like Cloud, outperformed the prior year's quarter. 4. What is driving the growth in operating margins? Growth in the key areas of our business has added new high incremental margin revenue, and we have been disciplined in our approach to compensation, headcount and infrastructure costs throughout the fiscal year. 5. What is the M&A outlook for Jack Henry financial institutions? We have seen an acceleration of merger activity, including acquisitions of financial institutions by Jack Henry customers. SOURCE Jack Henry & Associates, Inc. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Jack Henry & Associates, Inc. Reports Third Quarter Fiscal 2025 Results

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