Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates
Thank you, Greg, and good morning. Our continued focus on serving our community and regional financial institutional clients, delivering shareholder value led to another quarter of solid revenue and earnings growth. I'll start with the details driving our third quarter and year-to-date results, then conclude with our full-year guidance update. Q3 GAAP revenue increased 6% and non-GAAP revenue increased 7%, a continuation of consistently solid performance and keeping us on-track for a strong fiscal 2024. Year-to-date growth was 7% on a GAAP basis and stronger on non-GAAP at 8%. Deconversion revenue of approximately $800,000, which we pre-released last week, was down approximately $5.3 million, reflecting minimal financial institution consolidation of our clients. Year-to-date deconversion revenue is $9.9 million, $7.2 million less than the prior-period. Now let's look more closely at the details. GAAP services and support revenue increased 4%, while non-GAAP increased a more robust 6%. Year-to-date, the increase was 6% for GAAP and 7% on a non-GAAP basis.
Service and support growth during the quarter was the result of increases in data processing and hosting revenues. We continue to experience robust growth in our private and public-cloud offerings, which again increased 10% in the quarter and for the year-to-date. This reoccurring revenue contributor is 32% of our total revenue and has long been a key to double-digit growth engine. Shifting to processing revenue, which is 43% of total revenue and another key component of our long term growth model. We saw positive performance with 8% growth on both a GAAP and non-GAAP basis for the quarter and year-to-date delivered 9% for both. Consistent with recent results, drivers include positive demand for our digital solutions, card processing, other payment processing and other processing revenues. In closing out revenue commentary, I would like to highlight total reoccurring revenue exceeded 91%.
Next, moving to expenses. Beginning with cost of revenue, which increased 7% on both a GAAP and non-GAAP basis for the quarter and 7% for GAAP versus 6% for non-GAAP year-to-date. Drivers for the quarter included higher direct costs consistent with increases in related revenue, higher personnel costs and increased internal license and fees. Next, R&D increased 4% on both a GAAP and non-GAAP basis for the quarter. The increase is primarily due to cloud consumption costs net of capitalization. For the year-to-date, R&D increased 4% on a GAAP basis and 3% for non-GAAP. And lastly, on a GAAP basis, SG&A rose 7% for the quarter and 8% on a non-GAAP basis, primarily due to higher personnel costs. Year-to-date SG&A expense increased 23% on a GAAP basis and 9% on a non-GAAP basis. The primary GAAP differences are the $16.4 million in one-time related costs related to the voluntary early departure incentive program, VDIP in Q1 and prior-period $7.4 million gain on asset sales. For non-GAAP, the difference is primarily due to the higher personnel costs and absence of gain on-sale of assets.
We remain focused on generating compounding margin expansion and the quarter results delivered 30 basis-points of increased non-GAAP margin, which was 20.8%. Non-GAAP margin benefited from focused process improvements and disciplined management of our workforce while retaining key talent. These strong quarterly results produced a fully-diluted GAAP earnings per share of $1.19, up 7%. Separating results into the three operating segments, we're pleased to see across-the-board positive performance. Our core segment revenue increased 8% for the quarter on a non-GAAP basis with non-GAAP operating margins increasing 216 basis-points. We continue to benefit from private cloud trends and strong cost-control. Year-to-date non-GAAP revenue growth was 8% and the associated margin increased 124 basis-points. Payment segment revenue increased 6% on a non-GAAP basis. The segment had impressive non-GAAP operating margin growth of 121 basis-points. This was due to continuing growth in our EPS business and moderate card growth consistent with U.S. consumer spending trends and a slightly tough comp combined with a focused cost management.
Year-to-date non-GAAP revenue growth matched the quarter at 6% with 103 basis-points of margin expansion. And finally, complementary segment, non-GAAP revenue increased 8% with 33 basis-points of margin expansion. Year-to-date, non-GAAP revenue also increased 8% with 28 basis-points of margin expansion. Growth year-to-date reflects digital solution demand and beneficial overall product mix. Segment quarterly margins were impacted by moderate headwinds from direct support costs and license and fees. Let's now turn to a review of cash-flow and capital allocation. Year-to-date operating cash-flow was $336 million, $129 million increase over prior-period. Excluding proceeds from the sale of assets, free-cash flow was $172 million, significantly more than the $54 million last year. Our base-case entering the year included an elevated level of cash tax payments based on the Section 174 impact. Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact. The net result was lower cash taxes equating to an approximately $29 million over payment last fiscal year as well as improved cash tax outlook this fiscal year.
Our consistent dedication to shareholder value-creation resulted in a trailing 12-month return on invested capital of 19%. Additionally, I would highlight other notable return on capital metrics for the year-to-date period, including $20 million in share repurchase, offsetting annual dilution, $25 million in debt reduction and $116 million in dividends. With 3/4 of the year complete, we're nearing the conclusion of our fiscal year and therefore, I'll conclude with guidance changes. As you're aware, yesterday's press release included updated fiscal 2024 full-year GAAP guidance along with a reconciliation to non-GAAP metrics. As a reminder, we filed an 8-K on August 3 that described how starting in the current fiscal year, we're using a revised approach for deconversion guidance. While we reported third quarter deconversion revenue of approximately $800,000, we are reiterating our full-year deconversion guidance of $16 million.
We are reiterating both GAAP and non-GAAP revenue growth, but expect non-GAAP growth to potentially have a bias towards the lower-end of our 7.4% to 8.0 growth range. Due to the continued positive operational results and a focus on cost management, we now expect an increase in annual non-GAAP margin expansion of 45 basis-points to 50 basis-points compared to the 35 to 40 basis-points previously provided. The full-year tax-rate estimate remains at 23.5%. Incorporating the noted positive updates, full-year guidance for GAAP EPS is revised upward to $5.15 to $5.19 per share from the previous guidance of $5.09 to $5.13 per share. As a reminder, the guidance for deconversion revenue compared to actual fiscal 2023 deconversion revenue, the dip severance-related costs and non-reoccurring gain on asset sales results in approximate $0.37 headwind for GAAP EPS for fiscal 2024.
Due to the better than initially anticipated cash tax payments, improved margins and contributions from favorable net interest, our full-year guidance for free-cash flow conversion has increased to 70% to 75% from the previous commentary of 60%. In conclusion, Q3 results reflected continued momentum of the strong execution we've seen thus far this year, and we expect a solid finish for the remainder of the fiscal year. We remain exceptionally positive about our ability to deliver innovative and in-demand solutions, the resilience of our clients and our focus on execution and shareholder value-creation. We appreciate the contributions of our diligent and dedicated associates that drove these strong results and Jack Henry investors for their continued confidence. Before I turn the call-back over to Dave for closing remarks, while I haven't had the pleasure of working with Dave as long as others, I've cherished our time together. I want to thank Dave for giving me the opportunity to work for this amazing company for being so incredibly generous with his wisdom and support for so many small and meaningful pieces of guidance over the past two years. He is a role model of service, leadership and doing the right thing. We were fortunate to have him lead the Jack Henry Board, and I look-forward to this continued journey together. Dave?
