Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates
Thanks, Dave. Good morning, everyone. As Dave shared, Jack Henry had a successful third quarter and I will call out the details driving those results and our outlook for the remainder of the year. For both the third quarter and first nine months of our fiscal year, total revenue was up 6% on a GAAP basis, and solidly up 8% on a non-GAAP basis.
Now onto the third quarter details. On a GAAP basis, services and support revenue increased 3% in both the third quarter and year-to-date. Consistent with trends over the past two quarters, services and support were negatively impacted as deconversion revenue decreased $11 million for the quarter and $31 million year-to-date. This remains in line with the limited broader market activity, acquisition activity in our space.
With only a couple of months left, we are projecting approximately $20 million in deconversion revenue this fiscal year. However, forecasting deconversion activity is always challenging given the limited advanced notice and general uncertainty of M&A. Our private and public cloud offerings show robust growth this quarter, growing 11% and 10% year-to-date. Product delivery and services decreased 10% in the quarter, 11% year-to-date, impacted by lower deconversion revenue and convert merge activity offset by higher license and hardware revenue.
On a non-GAAP basis, services and support revenue grew 8% for the quarter and 7% year-to-date, which serves to highlight the consistent strength of our business model. Processing revenue increased 11% on a GAAP basis for the quarter and 10% year-to-date. On a non-GAAP basis, the growth was 10% for the quarter and 9% year-to-date. The increases were driven by the higher card volumes and services, plus robust digital demand.
Now reviewing costs. Cost of revenue was up 9% in the third quarter and 8% year-to-date. Quarterly drivers included increased card processing costs consistent with card revenue growth, higher personnel cost, and amortization expense. These drivers are consistent across our year-to-date results.
Research and development expense increased 13% during the quarter, mostly due to higher personnel costs and license fees furthering innovation. Year-to-date, these expenses increased 19%, based on the same factors. SG&A rose 9% for the quarter, driven by increases in personnel-related costs.
Year-to-date, the increase was 8% driven by personnel, travel, professional services costs, partly offset by the gain on sale of assets earlier this year. We remain focused on actions involving facility rationalization, headcount, and travel controls, procurement wins, and other expense management. Collectively, these efforts are helping offset inflationary pressures and driving positive operational results.
Despite the decline in net income primarily related to deconversion revenue and partially offset by a lower tax rate, we delivered fully diluted earnings per share of $1.12 for the quarter. Thanks to our hard-working and dedicated associates, GAAP and non-GAAP results for the third quarter and nine months of the year are consistent with internal expectations and set us up for a strong conclusion to FY '23.
As a reminder, for transparency the impact from the gain on sale of assets, the Payrailz acquisition, and deconversion revenue are shown as part of the non-GAAP adjustments in the press release.
Turning our attention to cash flow. Year-to-date, operating cash flow was $207 million, down from $301 million in the same period last year due to lower deconversion revenue and the timing of taxes. The tax payments were significant -- as significant outflow at $64 million in the quarter related to a change in the timing of the deductibility of development expenses.
Free-cash flow, which is operating cash flow less capex and cap software, plus proceeds from the sale of assets was $82 million year-to-date. Excluding this previously discussed tax payments and keeping year-to-date deconversion revenue flat, free cash flow would have been approximately $163 million.
While balancing repurchase activities with maintaining a conservative balance sheet, we've repurchased 151,000 shares during the quarter. We also returned capital to shareholders through a dividend of $0.52 per share, representing a 6% increase. Our capital allocation priorities remain consistent. We're focused on maintaining ample liquidity, investing in our business to fuel growth, evaluating acquisitions, paying dividends, and opportunistically repurchasing our stock. This consistent dedication to value creation resulted in a trailing 12-month return on invested capital of 20.1%.
With that, let's review our outlook for the completion of our fiscal year. The press release included updated full-year GAAP guidance. The GAAP guidance remains inclusive of the Payrailz acquisition, gain on asset sales and deconversion revenue. We expect the year-to-date trends to continue for the remainder of the fiscal year, impacting GAAP results. Most significantly, assuming continued minimal consolidation in our customer base, deconversion revenue will remain muted. Considering year-to-date activity, we expect approximately $20 million of annual deconversion revenue representing a $5 million increase from our previous guidance provided on the last call.
To be transparent, on our August full-year earnings call, we will outline our new approach to providing guidance for deconversion revenue. While the integration of Payrailz continues to meet our expectations, there have been third-party implementation delays impacting FY '23 revenue, amounting to a shortfall of $3 million. This revenue remains in our pipeline, we remain confident in the strategic value and financial performance trajectory.
We expect full-year GAAP revenue growth for fiscal '23 to be between 5.5% to 5.9%. With respect to full-year GAAP EPS, we expect $4.85 to $4.87 per share, with improvement driven from positive impacts from a modestly higher expected deconversion revenue, lower tax rate, partly offset by a slight increase in Payrailz dilution. Non-GAAP guidance remains unchanged due to the continued impressive and consistent performance of our business model.
So in closing, we delivered another quarter of strong operational and financial results and remain solidly optimistic about the conclusion of this fiscal year. We thank all of our investors for their continued confidence in Jack Henry.
Debbie, will you please open the call for questions?