Technology
Information Technology Services
$12.38B
7K
Jack Henry & Associates, Inc., a financial technology company that connects people and financial institutions through technology solutions and payment processing services that reduce the barriers to financial health. It operates through four 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 svervices. The Complementary segment provides additional software, hosted processing platforms, and services, including digital/mobile banking, treasury services, online account opening, fraud/anti-money laundering, and lending/deposit solutions. The Corporate and Other segment offers hardware and other products. The company offers specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions to financial services organizations and corporate entities. Its core banking platform offerings include SilverLake system, CIF 20/20, and Core Director, as well as core credit union platform under the Symitar name. In addition, the company provides digital products and services and electronic payment solutions; hardware systems; implementation, training, and support services; and software licensing and related services, as well as professional services, and data centers. Jack Henry & Associates, Inc. was founded in 1976 and is headquartered in Monett, Missouri.
Key insights and themes extracted from this filing
Total revenue increased 7.2% year-over-year to $2,375,288K in fiscal 2025 from $2,215,543K in fiscal 2024. After adjusting for deconversion revenue, the increase was 6.5%, primarily fueled by growth in data processing and hosting within cloud services, expanded card processing, and increased digital and payment processing volumes.
Net income grew 19.4% to $455,748K in fiscal 2025 from $381,816K in fiscal 2024, while diluted earnings per share increased 19.3% to $6.24 from $5.23. This strong growth was attributed to organic revenue expansion and a decrease in one-time severance expenses, partially offset by higher operating expenses.
Cost of revenue decreased by 2% as a percentage of total revenue, moving from 59% in fiscal 2024 to 57% in fiscal 2025. Similarly, selling, general, and administrative expenses decreased 1% as a percentage of total revenue, indicating improved operational efficiency and profitability.
The company's core business strategy emphasizes organic revenue and earnings growth, augmented by strategic acquisitions. The Jack Henry Platform, a public cloud-native, API-first platform, is central to enabling clients to innovate faster and differentiate, supporting new digital banking, payments, and fraud detection solutions.
Jack Henry has a track record of 35 strategic acquisitions since FY1999, with the most recent being Payrailz, LLC in fiscal 2023, which expanded cloud-native digital payment capabilities. The company continues to explore acquisitions that align with its strategic direction and accelerate organic growth.
Management notes a 'very healthy sales pipeline' and a 'proven ability to attract and win deals, especially with larger financial institutions.' The company's commitment to service, innovation, and client satisfaction, measured through various surveys, contributes to excellent retention rates, fostering long-term client relationships and cross-sell opportunities.
Management concluded that the Company's internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework. PricewaterhouseCoopers LLP also audited and affirmed the effectiveness of internal control over financial reporting, indicating strong governance and operational integrity.
Research and development expenses increased 9.8% to $162,771K in fiscal 2025, primarily due to higher personnel costs and internal license fees, demonstrating management's 'continuing commitment to the development of strategic products' and client-driven enhancements.
Despite a 13% decline in commercial banks and 15% in credit unions from 2019-2024 due to M&A, Jack Henry's net core footprints increased year-over-year from calendar 2023 to 2024 in both bank and credit union client bases, indicating successful adaptation and client acquisition in a consolidating market.
The company highlights increasing sophistication of cyber threats, including those enabled by AI, which could lead to data breaches, reputational harm, and litigation. The use of AI/ML in products introduces evolving legal, regulatory, and operational risks such as accuracy issues and unintended biases.
The number of commercial banks and credit unions has steadily decreased over recent decades due to mergers and acquisitions, a trend expected to continue. This consolidation may reduce the number of current and potential clients, negatively impacting results if acquired entities are not Jack Henry clients.
The financial services industry is subject to extensive and complex federal and state regulation. New data privacy and cybersecurity laws, particularly a 'fragmented regulatory landscape,' require significant resources for compliance, potentially increasing expenses and diverting resources from growth opportunities.
Jack Henry emphasizes client service as its primary competitive advantage, with a comprehensive support infrastructure and strict standards leading to high client satisfaction and retention. This focus helps maintain long-term client relationships and market share against competitors.
The company offers a well-rounded suite of core, payments, and complementary solutions available on-premise and via private/public cloud. The Jack Henry Platform leverages public cloud advantages like high availability and scalability, allowing clients to innovate faster and compete effectively.
The market for financial technology solutions is highly competitive, with Jack Henry competing against large vendors like Fidelity National Information Services, Fiserv, and Corelation, as well as numerous niche providers. Competitors may have advantages in size, client base, marketing resources, or exclusive IP rights.
The cost of revenue as a percentage of total revenue decreased from 59% in fiscal 2024 to 57% in fiscal 2025. This 2% reduction indicates improved efficiency in delivering products and services, despite an overall 4.7% increase in absolute cost of revenue.
Selling, general, and administrative expenses decreased by 1% as a percentage of total revenue, from 13% in fiscal 2024 to 12% in fiscal 2025. This suggests better control over overhead and sales-related costs relative to revenue growth.
Overall operating expenses increased 4.7% in fiscal 2025, or 5.5% when adjusted for deconversion and VEDIP costs. This rise was primarily driven by higher personnel costs, including increased compensation and headcount additions, and increased internal licenses and fees due to price increases and more deployments.
Research and development expenses rose 9.8% to $162,771K in fiscal 2025 from $148,256K in fiscal 2024. This increase reflects a 'continuing commitment to the development of strategic products' and ongoing efforts to upgrade and enhance existing offerings, indicating a strong focus on innovation.
The Jack Henry Platform is the 'centerpiece' of the technology modernization strategy, designed as a single public cloud-native, API-first solution. This platform aims to provide clients with greater flexibility, optionality, open integration, speed to market, and modern security standards, enhancing technological capabilities.
The Payrailz Payments Platform, acquired in fiscal 2023, leverages AI and machine learning for predictive recommendations and automated fraud detection. This integration into payment solutions demonstrates the company's efforts in digital transformation and enhancing security features with advanced technology.
Net cash provided by operating activities increased 12.9% to $641,504K in fiscal 2025 from $568,041K in fiscal 2024. This strong cash generation is primarily used to repay debt, pay dividends, repurchase stock, and fund capital expenditures, demonstrating healthy internal funding for capital allocation priorities.
The company repurchased $35,051K of treasury shares in fiscal 2025, up from $28,055K in fiscal 2024, and has remaining authority to repurchase up to 3,411,018 additional shares. This ongoing program reflects management's view on share value and commitment to returning capital to shareholders.
As of June 30, 2025, the Company had no outstanding debt, a significant improvement from $90,000K in current maturities and $60,000K in long-term debt at June 30, 2024. This debt reduction enhances financial flexibility and reduces interest expense, which decreased 36.3% YoY to $(10,438)K.
The company's 'people and culture strategy' focuses on attracting, engaging, and retaining associates, offering extensive learning and development programs, including technical training and leadership development. Comprehensive wellness and safety initiatives encompass mental, physical, emotional, financial, and environmental considerations, supported by various benefit plans and policies.
Business Innovation Groups (BIGs), open to all associates, are designed to 'foster a culture of inclusion and belonging' by providing input on business problems and offering education. As of June 30, 2025, over 1,770 unique associates participated in six active BIGs, demonstrating a commitment to diversity and associate engagement.
The Board of Directors, through its Risk and Compliance Committee, maintains ultimate oversight of cybersecurity risks, with the CISO reporting quarterly. This structure ensures that cybersecurity strategy, policy, engineering, operations, and threat detection are continuously monitored and managed, reflecting strong governance practices.
The number of commercial banks and savings institutions declined 13% and credit unions declined 15% from 2019 to 2024, primarily due to mergers and acquisitions. This trend is expected to continue, posing a challenge to the company's client base and requiring strategic adaptation.
Management notes that 'technology spending by financial institutions remains strong, and there is clear demand for our differentiated and innovative technology solutions.' This indicates a favorable market for the company's offerings, driven by institutions seeking to compete and meet evolving accountholder needs.
The financial services industry is subject to extensive and complex federal and state regulation, with new data privacy and cybersecurity laws creating an 'increasingly complex and fragmented regulatory landscape.' This environment necessitates continuous adaptation of products and services to ensure compliance, potentially increasing costs and operational complexity.