Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates
Thank you, Greg, and good morning, everyone.
Our continued focus on serving our community and regional financial institution clients and delivering shareholder values led to another quarter of solid revenue and earnings growth. I will start with the details driving our fourth quarter and full year results, then conclude with the fiscal '25 guidance.
Q4 GAAP revenues increased 5% and non-GAAP revenue increased 6%, a continuation of the consistently solid performance. Full year growth was 7% on both a GAAP and non-GAAP basis. Fourth quarter deconversion revenue of approximately $7 million, which we pre-released, was down approximately $8 million, reflecting minimal financial institution consolidation of our clients. Full year deconversion revenue of $17 million, $15 million less than the prior year, was consistent with guidance.
Now let's look more closely at the detail. GAAP services and support revenue increased 2% while non-GAAP increased 4%. For the year, the increase was a healthy 5% for GAAP and 6% on a non-GAAP basis. Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenues, partly offset by decreases in deconversion, implementation, and maintenance fee revenue. We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter, 10% for the year. This reoccurring revenue contributor is 31% of our total revenue and has long been a key double-digit growth engine.
Shifting to processing revenue, which is 42% of total revenue and another key component of our long-term growth model. We saw robust performance with 9% growth on both a GAAP and non-GAAP basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital, and payment processing revenue. Completing commentary on revenue, I would highlight the total reoccurring revenue exceeded 91%.
Next, moving to expenses. Beginning with the cost of revenue, which increased 6% on both a GAAP and non-GAAP basis for the quarter and 7% for GAAP versus 6% for non-GAAP for the full fiscal year. Drivers for the quarter included higher direct costs, higher personnel costs, and increased internal licenses and fee.
Next, R&D expense increased 4% on both a GAAP and non-GAAP basis for the quarter. The quarterly increase was primarily due to increased consulting with other professional services, net of capitalization, and a higher cloud consumption cost, net of capitalization. For the year, R&D expense increased 4% on GAAP basis and 3% for non-GAAP.
Ending with SG&A expense for the quarter, on a GAAP basis, it increased 6% and 13% on a non-GAAP basis. The quarter's GAAP increase was due to higher personnel costs and increased professional services. The non-GAAP quarterly increase was impacted by the one-time expense from the write-off of capitalized software development related to internal software tools. Without this one-time expense, the quarter increase would have been 8%. Full year SG&A expense increased 18% on a GAAP basis and 10% non-GAAP.
The primary GAAP impacts were the $16 million in one-time costs related to the voluntary early departure incentive program, VEDIP, and a prior period $5 million gain on asset sales. The non-GAAP increase is driven primarily by higher personnel costs. We remain focused on generating compounding margin expansion. While the quarter results delivered 22 basis points decrease in non-GAAP margin to 22%, full year margin expansion was 60 basis points on a non-GAAP margin of 23%.
Non-GAAP margin benefited from the focused process improvements, and disciplined management of our workforce. These strong quarterly results produced a fully diluted GAAP earnings per share of $1.38, up 3%. Fiscal '24 fully diluted EPS was $5.23, up 4%. Facing a $0.37 headwind from previously mentioned VEDIP, a gain on asset disposal prior year, and lower deconversion revenue.
Breaking down the results into three operating segments, we are pleased to see positive performance across the board. Our core segment revenue increased 4% for the quarter on a non-GAAP basis against a tough comp. Non-GAAP operating margin increased 171 basis points. Core continues to benefit from private cloud trends and strong cost control. Full year non-GAAP revenue was 7% and the associated margin increased 135 basis points.
Payments segment quarterly revenue increased 8% on a non-GAAP basis. The segment had impressive non-GAAP operating margin growth of 183 basis points. Revenue growth was due to continuing growth in their EPS business and strong card growth from fraud and card-related services with lower [Phonetic] growth consistent with U.S. consumer spending trends. Margin benefited from focused cost management, and for the full year, non-GAAP revenue growth was 7% with 124 basis points of margin expansion.
Finally, complementary segment, quarterly non-GAAP revenue increased 6% with 75 basis points of margin contraction. Margin contraction was due to direct support costs, amortization, and licenses and fees. Fiscal year non-GAAP revenue increased 8% with two basis points of margin expansion. Full year growth continued to reflect digital solution demand and beneficial overall product mix.
Now let's turn to our review of cash flow and capital allocation. Fiscal '24 operating cash flow was $568 million, $186 million increase over the prior period. Excluding proceeds from sale of assets, free cash flow was $336 million, significantly more than the $175 million generated last year. Free cash flow conversion was 88%. Our commentary entering this year included an elevated level of cash tax payments based on the negative 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 approximate $29 million overpayment last fiscal year.
Our consistent dedication to value creation resulted in a trailing 12-month return on invested capital of 20%. Additionally, I would highlight other notable return on capital metrics for the year, including $28 million in share repurchases, more than offsetting annual dilution, $125 million in debt reduction, and $156 million in dividends.
Heading into a new fiscal year, I will conclude with guidance. As you are aware, yesterday's press release included fiscal 2025 full year GAAP guidance along with an enhanced transparency reconciliation to non-GAAP guidance metrics. While the press release also includes a fiscal '25 non-GAAP EPS metric, this is not intended to be a new guidance metric. The purpose is to provide additional clarity on our numbers, for example, current acquisition year-over-year comparison. And it should be noted that a 24% tax rate is used.
Deconversion guidance will continue to follow the methodology introduced in fiscal '24, and for fiscal '25, deconversion revenue guidance is $16 million. Full year GAAP and non-GAAP revenue guidance is 7% to 8%. Based on the above revenue growth that generates sustainable accretive sources of margin, we're guiding to an annual non-GAAP margin expansion of 25 to 40 basis points. All of the above are aligned with our near-term targets as the business operates -- operations remain healthy and consistent.
Full year tax rate estimate for fiscal '25 is 24%. The above guidance metric results in a full year guidance for GAAP EPS of $5.78 to $5.87 per share, a growth of 11% to 12%. Fiscal '23 has lower-than-expected free cash flow conversion due to a cash tax overpayment, which resulted in fiscal '24 having a better-than-expected conversion metric. Absent further legislative action, fiscal '25 will be a reversion to the expected trend-line resulting from the expiration tax benefits in Section 174. As such, our full year expectation for free cash flow conversion is 65% to 75%.
Our current view has a cadence of fiscal '25 non-GAAP revenue and margin increasing sequentially throughout the year. This increase in cadence will result in a strong second half that will be more pronounced than typical. Consequently, Q1 is expected -- expectation for non-GAAP revenue growth is approximately 5.25% and non-GAAP margin to contract approximately 100 bps. This is due to slower growth rates on on-premise annual maintenance and card processing.
An additional factor is several long-term software usage contracts closing in Q1 of the prior year, which delivered significant allocation of license fees in that same quarter. The rest of the year improved strongly with limited risk, resulting in the full year guidance remaining consistent with our near-term target. As a reminder, we see fluctuations in quarterly results relating to software usage license components along with the timing of implementation. Therefore, the correct performance indicator for our business is the consistently strong fiscal year financial results.
In conclusion, Q4 and full year results reflect strong performance and achievement of our targeted goal. We entered fiscal '25 with positive momentum and expect to drive impressive revenue growth and margin expansion. We remain exceptionally positive about demand for our solutions and the strength of our clients, resulting in superior shareholder value creation. We appreciate the contributions of our dedicated associates that drove these strong results and our investors for their ongoing confidence.
Drew, please open the line for questions.
