Jack Henry & Associates Q1 Earnings Call Highlights

Key Points

• Jack Henry reported record fiscal Q1 results: non-GAAP revenue rose 7% year over year to $682 million, operating margin expanded 102 basis points to 28%, and GAAP EPS increased 16% to $2.28.
• The company raised its fiscal 2027 revenue outlook, now expecting GAAP revenue growth of 6.0%–6.8% and non-GAAP revenue growth of 6.6%–7.4%; it forecasts GAAP EPS of $7.47–$7.51.
• Sales and technology demand strengthened: Jack Henry logged nine competitive core wins, cloud services revenue grew 11%, and demand for its security offerings accelerated. Payment volume across Zelle, RTP and FedNow rose 42% year over year.

Jack Henry & Associates NASDAQ: JKHY reported record first-quarter fiscal 2027 results, with non-GAAP revenue rising 7% year over year to $682 million and non-GAAP operating margin expanding 102 basis points to 28%.

President and CEO Greg Adelson said the company’s quarterly revenue growth exceeded the outlook discussed in August. GAAP revenue increased 9%, while fully diluted GAAP earnings per share rose 16% to $2.28, according to CFO and Treasurer Mimi Carsley.

Carsley said the company raised its full-year fiscal 2027 outlook following the stronger-than-expected start. Jack Henry now expects GAAP revenue growth of 6.0% to 6.8% and non-GAAP revenue growth of 6.6% to 7.4%. The company projected GAAP EPS of $7.47 to $7.51, representing growth of 7% to 8%.

Sales Activity and Client Engagement

Jack Henry recorded nine competitive core wins during the quarter, more than double the four won in the prior-year first quarter and above its five-year first-quarter average of six wins. Adelson said the company remains confident in its expectation for 58 to 65 new core wins in fiscal 2027.

The company said 63% of first-quarter core wins, excluding one nontraditional bank without a core card business, included core, digital and card solutions. Meanwhile, 89% of new core deals included the Banno digital platform.

Jack Henry also highlighted attendance at its annual Jack Henry Connect conference in October, which drew nearly 3,100 clients and prospects. The event included 141 prospect attendees representing 53 financial institutions, compared with 91 attendees representing 32 institutions a year earlier. Adelson said nearly 40% of the company’s 58 competitive core wins in fiscal 2026 came from prospects who attended the conference.

During the question-and-answer session, Adelson said the sales pipeline had grown significantly and included institutions using a range of competing providers. He said technology decisions are increasingly being influenced by cybersecurity, artificial intelligence and digital-transformation priorities.

Cloud, Payments and Security Products

Cloud services revenue increased 11% in the quarter and represented 31% of total revenue. Processing revenue, which accounted for 42% of total revenue, rose 11% on a GAAP basis and 10% on a non-GAAP basis, driven by card, digital and transaction revenue, as well as faster payments.

Jack Henry said recurring revenue represented 93% of total quarterly revenue.

Demand for the company’s Gladiator security and infrastructure offerings accelerated, with 367 solutions sold during the quarter, triple the volume recorded a year earlier. Adelson said the company had been preparing for higher cybersecurity demand through its planning, investments and work with technology partners.

The company has 30 AI-enabled products in the market and expects to introduce a large number of additional offerings over the next six months. Adelson said more than half of Jack Henry associates use at least one AI tool daily, and the company has seen development-output gains of up to 90% for certain key solutions. Jack Henry is also launching AI consulting services intended to help financial institutions establish governance frameworks, implementation roadmaps and adoption strategies.

In payments, transaction volume across Zelle, RTP and FedNow increased 42% year over year. Over the past year, client adoption of Zelle grew 25%, RTP adoption increased 28%, and FedNow adoption rose 30%, according to the company.

• Jack Henry signed 13 debit and/or credit card deals, compared with eight in the prior-year quarter.
• The company signed 32 new Financial Crimes Defender and faster-payment-module contracts.
• Financial Crimes Defender had 208 completed installations and 58 implementations in progress as of Sept. 30.
• Faster payment modules had 225 installations completed and 255 in progress.
• Banno recorded 25 signings, including 13 retail and 12 Banno Business contracts, up nearly 40% from a year earlier.

The Banno platform served more than 16.3 million registered users, up 11% year over year. Jack Henry also said its Rapid Transfers account-to-account money movement offering was live at more than 170 banks and credit unions, with another 140 institutions in onboarding.

Platform Strategy and Emerging Payment Rails

Adelson said Jack Henry is continuing to expand its cloud-native Jack Henry Platform, which connects the company’s core systems with newer capabilities. About 30 core components are now live on the platform, including wires, ledger and exceptions, and more than 100 clients have adopted at least one component.

The company plans to include the platform in every new core deal, with further details expected on its February earnings call. Adelson said the approach is intended to allow institutions to adopt cloud-native functions incrementally rather than requiring a full replacement of existing systems.

Jack Henry is also beta testing USDC capabilities with clients and has announced plans to integrate with Google Cloud Universal Ledger to enable tokenized deposits. Adelson said adoption of stablecoin and tokenized-deposit technology among community and regional institutions remains at an early stage.

Separately, the company expects Moov Money, Moov’s person-to-person payment product, to roll out in March 2027 through the Banno Digital Platform. The service is expected to allow consumers to send and receive funds using debit card rails through Visa and Mastercard without requiring both parties to use the same application.

Margins, Cash Flow and Outlook

First-quarter non-GAAP margin improvement reflected business-model leverage, AI-related efficiencies, strategic cost management and process improvements, Carsley said. Payment segment non-GAAP revenue increased 8%, while its operating margin expanded 189 basis points. Complementary segment revenue also increased 8%, with margin expansion of 209 basis points.

Core segment non-GAAP revenue increased 5%, though Carsley said growth excluding lower nonrecurring on-premise implementation and consulting revenue was 8.6%.

Operating cash flow rose 34% to $161 million, while free cash flow increased 19% to $83 million. The company reported trailing 12-month return on invested capital of 23%, compared with 22% a year earlier. During the quarter, Jack Henry repurchased 462,000 shares for $71 million and paid $43 million in dividends.

Jack Henry reiterated its expectation for 20 to 40 basis points of full-year non-GAAP margin expansion and maintained its fiscal 2027 free-cash-flow conversion outlook of 85% to 100%. The company increased its deconversion revenue guidance to $30 million, citing the pace of financial-institution merger activity, while noting that the annual impact of such revenue can vary materially.

About Jack Henry & Associates (NASDAQ:JKHY)

Jack Henry & Associates, Inc is a financial technology company that provides software, payment solutions and technology services to banks and credit unions. Its offerings are designed to support core banking operations, digital banking, account management, lending, payments, fraud prevention and other financial institution functions.

The company serves community and regional banks, credit unions and other financial services organizations in the United States. Its products are delivered through integrated platforms and services intended to help financial institutions manage daily operations, improve customer and member experiences, and connect with third-party financial technology providers.

Founded in 1976 and headquartered in Monett, Missouri, Jack Henry has expanded through internal development and acquisitions, including the 2004 acquisition of Symitar, a provider of core processing and related technology for credit unions.

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