Jack Henry & Associates, Inc.
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ITEM 1. BUSINESS
Jack Henry & Associates, Inc.® is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. For nearly 50 years, we have provided technology solutions to help banks and credit unions innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,400 financial institutions and diverse corporate entities with people-inspired innovation, personal service, and insight-driven solutions.
Mission Statement
We strengthen the connections between people and their financial institutions through technology and services that reduce the barriers to financial health.
This mission has always been part of the foundation on which Jack Henry was built. Our founders, Jack Henry and Jerry Hall, were committed to their community and believed they could help financial institutions better serve the needs of their accountholders by using more innovative technology and services.
Since our founding in 1976, much has changed, but our commitment to supporting community and regional banks and credit unions remains unwavering. We continue to be guided by our founding philosophy: do the right thing, do whatever it takes, and have fun.
Who We Serve
We provide products and services primarily to community and regional banks and credit unions (see "Our Industry" below):
•Core bank integrated data processing systems are provided to over 950 banks. Our banking solutions support both on-premise and private cloud operating environments with functionality for core processing platforms and integrated complementary solutions.
•Core credit union data processing solutions are provided to credit unions of all sizes, with a client base of approximately 715 credit unions. We offer a flagship core processing platform and integrated complementary solutions that support both on-premise and private cloud operating environments.
•Non-core highly specialized core-agnostic products and services are also provided to banks and credit unions. We offer complementary solutions that include highly specialized financial performance, imaging and payment solutions, information security and risk management, retail delivery, and online and mobile functionality. These products and services enhance the performance of traditional banks and credit unions of all asset sizes and charters, and non-traditional diverse corporate entities. In total, we serve approximately 1,670 bank and credit union core clients and over 5,710 non-core clients.
Our products and services provide our clients with solutions that can be tailored to support their unique growth, service, operational, and performance goals. Our well-rounded solutions also enable banks and credit unions to offer the high-demand products and services required by their accountholders to compete more successfully and to capitalize on evolving trends shaping the financial services industry.
We are committed to exceeding our clients’ expectations. We measure and monitor their satisfaction using a variety of surveys, such as an annual survey on the client's anniversary date and randomly-generated online surveys initiated each day by routine support requests to ensure feedback is received throughout the year. The survey results are analyzed and provided to operational areas to ensure our service consistently exceeds our clients’ expectations. We believe this process ensures we understand the Voice of the Customer which contributes to our excellent retention rates.
We are focused on establishing long-term client relationships, continually expanding and strengthening those relationships. We do so with cross sales of additional products and services that support our clients' strategy, earning new financial and non-financial clients, and ensuring our product offerings are highly competitive.
The majority of our support and services revenue is derived from our private and public cloud services for our hosted clients that are typically on a six-year contract, recurring electronic payment solutions that are generally on a contract term of six years, and our on-premise clients that are typically on a one-year contract. Less predictable software license fees, paid by clients implementing our software solutions on-premise, and hardware sales, including all non-software products that we re-market in order to support our software systems, complement our primary revenue sources. Information regarding the classification of our business into four separate segments is set forth in Note 14 to the consolidated financial statements (see Item 8).
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We recognize that our associates and their collective contributions are ultimately responsible for Jack Henry's past, present, and future success. Recruiting and retaining high-quality associates is essential to our ongoing growth and financial performance, and we believe we have established an organizational culture that sustains high levels of associate engagement. For further discussion of our human capital considerations, see "Human Capital" below.
Our Industry
Our core banking solutions generally serve commercial banks and savings institutions with up to $55 billion and above in assets and are designed to be capable of serving institutions with up to $150 billion in assets. We complete annual, third-party testing to validate this capability each August. According to the Federal Deposit Insurance Corporation (“FDIC”), there were approximately 4,440 commercial banks and savings institutions in the $55 billion and under asset range as of December 31, 2024, and we currently support over 950 of these banks with one of our three core information processing platforms and a significant number of complementary/payment products and services.
Our core credit union solutions serve credit unions of all asset sizes. According to America's Credit Unions ("ACU") (formerly Credit Union National Association), there were 4,550 domestic credit unions as of December 31, 2024, and we currently support approximately 715 of these credit unions with one flagship core information processing platform and a significant number of complementary/payment products and services.
Our non-core solutions serve banks and credit unions of all asset sizes and charters and other diverse corporate entities. We support these organizations with specialized solutions for generating additional revenue and growth, increasing security, mitigating operational risks, and controlling operating costs.
The FDIC reports the number of commercial banks and savings institutions declined 13% from the end of calendar year 2019 to the end of calendar year 2024, due mainly to mergers and acquisitions. Although the number of banks continued to decline at a 3% compound annual rate during this period, aggregate assets increased at a compound annual rate of 5% and totaled $24.1 trillion as of December 31, 2024. There were six new bank charters issued in calendar year 2024 and six issued in the 2023 calendar year. Comparing calendar years 2024 to 2023, the number of transactions of FDIC-insured banks acquiring or merging with other banks or credit unions decreased 18%.
ACU reports the number of credit unions declined 15% from the end of calendar year 2019 to the end of calendar year 2024. Although the number of credit unions declined at a 3% compound annual rate during this period, aggregate assets increased at a compound annual rate of 8% and totaled $2.3 trillion as of December 31, 2024.
Despite continued industry consolidation, Jack Henry net core footprints increased year-over-year from calendar year 2023 to calendar year 2024 in both bank and credit union client bases. Furthermore, the average assets under management for our banking core clients grew from $1.26 billion to $1.29 billion, and the average assets under management for our credit union core clients grew from $1.17 billion to $1.20 billion.
Community and regional banks and credit unions are vitally important to the communities, consumers, and businesses they serve as well as to the local economies where they operate. Bank and credit union accountholders rely on these institutions to provide personalized, relationship-based service and competitive financial products and services available through the accountholders' delivery channel of choice. Institutions are recognizing that attracting and retaining accountholders in today’s highly competitive financial industry and realizing near-term and long-term performance goals are often technology dependent. Banks and credit unions must implement technological solutions that enable them to:
•Offer digital strategies that provide the convenience-driven services required in today’s financial services industry.
•Maximize performance with accessible, accurate, and timely business intelligence information.
•Provide the high-demand products and services needed to successfully compete with traditional and non-traditional competitors created by convergence within the financial services industry.
•Foster growth and efficiency through delivering accountholders exceptional user experiences.
•Expand existing accountholder relationships and strengthen exit barriers by cross selling additional products and services.
•Capitalize on new revenue, and deposit and loan portfolio growth opportunities.
•Increase operating efficiencies and reduce operating costs.
•Protect mission-critical information assets and operational infrastructure.
•Protect accountholders with various security tools from fraud and related financial losses.
•Maximize the day-to-day use of technology and return on technology investments.
•Ensure full regulatory compliance.
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Jack Henry’s extensive product and service offerings help diverse banks and credit unions meet business challenges and capitalize on opportunities. We strive to get to know our clients, understand their strategies and challenges, and provide innovative solutions that help them achieve short- and long-term success.
Business Strategy
Our fundamental business strategy is to generate organic revenue and earnings growth augmented by strategic acquisitions. Our strategy for the next three to five years is to enable banks and credit unions to win on exceptional user experience and trust through open, innovative technology, data-driven insights, and service, resulting in greater growth and efficiency. We intend to execute this strategy by:
•Providing community and regional banks and credit unions with core processing systems that provide excellent functionality and support on-premise and private cloud delivery environments with identical functionality.
•Expanding each core client relationship by cross-selling complementary/payment products and services that enhance the functionality provided by our core processing systems.
•Delivering non-core highly specialized core-agnostic complementary/payment products and services to banks and credit unions, including institutions not utilizing one of our core processing systems, and diverse corporate entities.
•Developing and deploying a long-term technology modernization strategy to provide public cloud-native solutions that provide clients with greater flexibility, optionality, open integration, speed to market, and other benefits.
•Upholding a company-wide commitment to service that consistently exceeds our clients’ expectations and generates high levels of retention.
•Carrying out a large client strategy that focuses on deep engagement with banks and credit unions to align objectives, optimize revenue streams, and foster collaborative growth and innovation through continuous engagement and commitment to excellence.
•Growing our market share of services to small and medium-sized businesses offering features through banks and credit unions.
•Building, maintaining, and enhancing a protected environment and tools that help our clients and Jack Henry protect accountholder data, assets, and comply with regulations.
•Maintaining a disciplined acquisition strategy.
Technology Modernization Strategy
Our public cloud-native technology modernization strategy seeks to enable our bank and credit union clients to innovate faster, differentiate themselves in the markets they serve, and meet the evolving needs of their accountholders.
The Jack Henry PlatformTM is the centerpiece of this strategy and operates as a single public cloud-native, API-first platform, which we are developing into a fully functional modern alternative for existing core functions. The platform includes services like wire transfers, a centralized data hub for reporting and analysis, exception item processing, general ledger, deposit servicing, and entitlements. These services can be combined with other Jack Henry public cloud-native solutions, such as digital banking, digital payments, and fraud detection, as well as third-party provider solutions on a single, unified platform.
The Jack Henry Platform leverages public cloud advantages, including high system availability, rapid processing, modern security standards, easily deployable upgrades, and scalability.
Acquisition Strategy
We have a disciplined approach to acquisitions and have been successful in supplementing our organic growth with 35 strategic acquisitions since the end of fiscal year 1999. We continue to explore acquisitions that have the potential to:
•Expand our suite of complementary/payment products and services.
•Provide products and services that can be sold to both existing core and non-core clients as well as outside our core base to new clients.
•Accelerate our internal development efforts for technology modernization.
•Provide selective opportunities to sell outside our traditional markets in the financial services industry.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q for the fiscal quarter ended March 31, 2026.
OVERVIEW
Jack Henry & Associates, Inc. is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,300 full-time and part-time associates nationwide, and is a leading provider of technology solutions and payment processing services primarily to community and regional banks and credit unions. Our solutions serve approximately 7,400 clients and consist of integrated data processing systems solutions to U.S. banks ranging from de novo to multi-billion-dollar institutions with up to $55 billion and above in assets, core data processing solutions for credit unions of all sizes, and non-core highly specialized core-agnostic products and services that enable banks and credit unions of every asset size and charter, and diverse corporate entities outside the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. Our integrated solutions are available for on-premise installation and delivery in our private and public cloud.
Each of our solutions shares the fundamental commitment to provide high-quality business systems, service levels that consistently exceed client expectations, and integration of solutions and practical new technologies. The quality of our solutions, our high service standards, and the fundamental way we do business typically foster long-term client relationships, attract prospective clients, and have enabled us to capture substantial market share.
Through internal product development, disciplined acquisitions, and alliances with companies offering niche solutions that complement our proprietary solutions, we regularly introduce new products and services and generate new cross-sales opportunities. We provide compatible computer hardware for our on-premise installations and secure processing environments for our outsourced solutions in our private and public cloud. We perform data conversions, software implementations, initial and ongoing client training, and ongoing client support services.
We believe our primary competitive advantage is client service. Our support infrastructure and strict standards provide service levels that generate high levels of client satisfaction and retention. We consistently measure client satisfaction using a variety of surveys, such as an annual survey on the client's anniversary date and randomly-generated surveys initiated each day by routine support requests. Dedicated surveys are also used to grade specific aspects of our client experience, including product implementation, education, and consulting services.
Our two primary revenue streams are “services and support” and “processing.” Services and support includes: “private and public cloud” revenues that predominantly have contract terms of six years at inception; “product delivery and services” revenues, which include revenues from the sales of licenses, implementation services, deconversions, consulting, and hardware; and “on-premise support” revenues, composed of maintenance fees that primarily contain annual contract terms. Processing includes: "remittance” revenues from payment processing, remote capture, and ACH transactions; “card” revenues, including card transaction processing and monthly fees; and “transaction and digital” revenues, which include transaction and mobile processing revenues. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.
We have four reportable segments: Core, Payments, Complementary, and Corporate Services. The respective segments include all related revenues along with the related cost of revenue.
A detailed discussion of the major components of the results of operations follows. All amounts in the following discussion are in thousands, except per share amounts.
RESULTS OF OPERATIONS
For the third quarter of fiscal 2026, total revenue increased 8.7%, or $51,158, compared to the same quarter in fiscal 2025. Total revenue less deconversion revenue of $18,665 and acquisition revenue of $1,651 for the current fiscal quarter and less deconversion revenue of $9,644 and revenue related to a contractual change of $1,201 for the prior fiscal year third quarter results in an increase of 7.3% quarter over quarter. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting within private and public cloud, Jack Henry digital and transaction, card, and faster payments.
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Operating expenses increased 7.8%, or $34,851, for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Total operating expenses less deconversion operating expenses of $4,030 and operating expenses for the acquired company of $2,484 for the current fiscal quarter and less operating expenses related to deconversion operating expenses of $2,794 and a contractual change of $992 for the prior fiscal year third quarter results in an increase of 7.3% quarter over quarter. This increase was primarily driven by higher personnel costs and increased direct costs, quarter over quarter.
Operating income increased 11.8%, or $16,307, for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Total operating income less the impact of deconversion operating income of $14,635 and an operating loss for the acquired company of $833 for the current fiscal quarter and less deconversion operating income of $6,851 and operating income related to a contractual change of $209 for the prior fiscal year third quarter results in an increase of 7.3%, quarter over quarter. This increase was primarily driven by organic revenue growth, partially offset by increased operating expenses detailed above tempered by our disciplined approach to controlling costs, quarter over quarter.
The provision for income taxes increased 15.7%, or $4,847, for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. This increase was primarily driven by the increase in income before income taxes. The effective tax rate for the current fiscal quarter was 22.5% compared to 21.7% for the same quarter a year ago.
Net income increased 10.6%, or $11,786, for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The total net income increase, quarter over quarter, was lower when adjusted for the impact of deconversion net income and a net loss for the acquired company in the current fiscal quarter and the net income related to deconversion net income and a contractual change in the prior fiscal year third quarter. The increase, excluding these one-time items, was primarily driven by net organic growth in our lines of revenue for the third quarter of fiscal 2026 partially offset by commensurate higher operating expenses detailed above that were tempered by our disciplined approach to controlling costs and the increased provision for income taxes.
For the fiscal nine months ended March 31, 2026, total revenue increased 8.0%, or $140,400, compared to the same period in fiscal 2025. Total revenue less deconversion revenue of $33,504 and revenue for the acquired company of $3,595 for the current fiscal year period and revenue from a contractual change of $14,672 and deconversion revenue of $13,410 for the prior fiscal year period results in an increase of 7.6%, period over period. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting within private and public cloud, card, Jack Henry digital and transaction, and faster payments.
Operating expenses increased 4.1%, or $55,157, for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total operating expenses less deconversion operating expenses of $8,167, the impact of the gain on assets, net, of $6,829, and operating expenses for the acquired company of $5,413 for the current fiscal year period and less operating expenses related to a contractual change of $12,494 and deconversion operating expenses of $3,686 for the prior fiscal year period results in an increase of 4.9%, period over period. This increase was primarily driven by higher personnel costs and higher direct costs, period over period.
Operating income increased 20.6%, or $85,243, for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total operating income less deconversion operating income of $25,337, the impact of the gain on assets, net, of $6,829, and an operating loss for the acquired company of $1,817 for the current fiscal year period and deconversion operating income of $9,724 and operating income related to a contractual change of $2,178 for the prior fiscal year period results in an increase of 16.7%, period over period. This increase was primarily driven by organic revenue growth, partially offset by increased operating expenses detailed above tempered by our disciplined approach to controlling costs.
The provision for income taxes increased 24.1%, or $23,560, for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. This increase was primarily driven by the increase in income before income taxes. The effective tax rate for the current fiscal year period was 23.7% compared to 23.0% for the same period a year ago.
Net income increased 19.3%, or $63,405, for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. The total net income increase, period over period, was lower when adjusted for the impact of the deconversion net income, a gain on assets, net, and a net loss for the acquired company in the current fiscal year period and deconversion net income and the net income related to a contractual change in the prior fiscal year period. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the nine months ended March 31, 2026, partially offset by commensurate higher operating expenses detailed above tempered by our disciplined approach to controlling costs and the increased provision for income taxes.
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As we move into the fourth quarter of fiscal 2026 – our 50th year in business – we are excited and confident about our future, and we remain well-positioned to deliver durable, consistent growth and attractive results for our stockholders. Technology spending by financial institutions remains strong, and there is clear demand for our differentiated and innovative technology solutions. We have a very healthy sales pipeline and a proven ability to attract and win deals, especially with larger financial institutions. Our unwavering focus on culture, service, innovation, strategy, and execution continues to set us apart in the market and will enable us to drive continued industry-leading revenue growth with strong margin expansion, benefiting our associates, clients, and stockholders.
A detailed discussion of the major components of the results of operations for the fiscal three and nine months ended March 31, 2026, follows.
Discussions compare the current fiscal year's three and nine months ended March 31, 2026, to the prior fiscal year's three and nine months ended March 31, 2025.
REVENUE
| Services and Support | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Services and Support | $ | 365,149 | $ | 330,792 | 10.4 | % | $ | 1,087,808 | $ | 1,010,498 | 7.7 | % | ||||||||||||||||||||
| Percentage of total revenue | 57 | % | 57 | % | 57 | % | 57 | % | ||||||||||||||||||||||||
Services and support revenue increased 10.4% for the third quarter of fiscal 2026 compared to the same quarter a year ago. Total services and support revenue less deconversion revenue of $18,665 for the current fiscal quarter and less deconversion revenue of $9,644 and services and support revenue related to a contractual change of $1,201 for the prior fiscal year third quarter, results in growth of 8.3%, quarter over quarter. This increase was primarily driven by growth in data processing and hosting revenues within private and public cloud as new and existing clients continue to migrate to our private cloud and processing volumes expand.
Services and support revenue increased 7.7% for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total services and support revenue less deconversion revenue of $33,504 for the current fiscal period and less services and support revenue for a contractual change of $14,672 and deconversion revenue of $13,410 for the prior fiscal year period, results in growth of 7.3%, period over period. This increase was primarily driven by growth in data processing and hosting revenues within private and public cloud as new and existing clients migrate to our private cloud and processing volumes expand as well as higher work order and consulting revenues.
| Processing | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Processing | $ | 271,096 | $ | 254,295 | 6.6 | % | $ | 812,508 | $ | 749,418 | 8.4 | % | ||||||||||||||||||||
| Percentage of total revenue | 43 | % | 43 | % | 43 | % | 43 | % | ||||||||||||||||||||||||
Processing revenue increased 6.6% for the third quarter of fiscal 2026 compared to the same quarter last fiscal year. Total processing revenue less processing revenue for the acquired company of $1,651 for the current fiscal quarter, results in growth of 6.0%, quarter over quarter. This increase was primarily driven by improvement in Jack Henry digital and transaction revenues from a higher number of active users and the ramping up of add-on products, growth in card revenue from monthly service and risk management fees, and higher faster payments revenue from expanding transactional volumes.
Processing revenue increased 8.4% for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total processing revenue less processing revenue for the acquired company of $3,595 for the current fiscal year period, results in growth of 7.9%, period over period. This increase was primarily driven by growth in card revenue primarily from monthly service and risk management fees, improvement in Jack Henry digital and transaction revenues from a higher number of active users and expanding volumes and the ramping up of add-on products, and higher faster payments revenue from expanding transactional volumes.
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OPERATING EXPENSES
| Cost of Revenue | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Cost of Revenue | $ | 363,922 | $ | 340,586 | 6.9 | % | $ | 1,063,476 | $ | 1,016,868 | 4.6 | % | ||||||||||||||||||||
| Percentage of total revenue | 57 | % | 58 | % | 56 | % | 58 | % | ||||||||||||||||||||||||
Cost of revenue for the third quarter of fiscal 2026 increased 6.9% over the prior fiscal year third quarter. Total cost of revenue less deconversion costs of $2,584 and cost of revenue for the acquired company of $1,612 for the current fiscal quarter and less deconversion costs of $1,873 and costs related to a contractual change of $992 for the prior fiscal year third quarter, results in a 6.5% increase, quarter over quarter. This increase was primarily due to higher personnel costs partially related to a headcount increase in the trailing twelve months, higher direct costs generally consistent with increases in the related lines of revenue, as well as increased amortization of intangible assets. Cost of revenue decreased 1% as a percentage of total revenue compared to the prior fiscal year third quarter.
Cost of revenue for the fiscal nine months ended March 31, 2026, increased 4.6% compared to the same period in fiscal 2025. Total cost of revenue less deconversion costs of $4,616 and cost of revenue for the acquired company of $4,116 for the current fiscal year period and deconversion costs of $2,228 and costs related to a contractual change of $12,494 for the prior fiscal year period, results in a 5.2% increase, period over period. This increase was primarily due to higher personnel costs partially related to a headcount increase in the trailing twelve months, higher direct costs generally consistent with increases in the related lines of revenue, as well as higher amortization of intangible assets. Personnel cost increases were tempered by the impact of lower-than-normal medical claims earlier in the fiscal year. Cost of revenue decreased 2% as a percentage of total revenue compared to the prior fiscal year period.
| Research and Development | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Research and Development | $ | 45,110 | $ | 39,411 | 14.5 | % | $ | 126,615 | $ | 120,192 | 5.3 | % | ||||||||||||||||||||
| Percentage of total revenue | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||||||||||||||||
Research and development expense increased 14.5% for the third quarter of fiscal 2026 compared to the prior fiscal year third quarter. Total research and development costs less research and development costs for the acquired company of $841 for the current fiscal quarter, results in a 12.3% increase, quarter over quarter. This increase was primarily due to higher personnel costs (net of capitalization) partially related to a headcount increase in the trailing twelve months.
Research and development expense increased 5.3% for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total research and development costs less research and development costs for the acquired company of $1,213 for the current fiscal year period, results in a 4.3% increase, period over period. This increase was primarily due to higher personnel costs (net of capitalization) partially related to a headcount increase in the trailing twelve months. Research and development expense remained consistent as a percentage of total revenue compared to the prior fiscal year third quarter and prior fiscal year period.
| Selling, General, and Administrative | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Selling, General, and Administrative | $ | 72,166 | $ | 66,350 | 8.8 | % | $ | 211,965 | $ | 209,839 | 1.0 | % | ||||||||||||||||||||
| Percentage of total revenue | 11 | % | 11 | % | 11 | % | 12 | % | ||||||||||||||||||||||||
Selling, general, and administrative expense increased 8.8% in the third quarter of fiscal 2026 compared to the same quarter in the prior fiscal year. Total selling, general, and administrative expense less deconversion costs of $1,446 and costs for the acquired company of $30 for the current fiscal quarter and deconversion costs of $920 for the prior fiscal year third quarter results in an 8.0% increase, quarter over quarter. This increase was primarily due to higher personnel costs partially related to a headcount increase in the trailing twelve months. Selling, general, and administrative expense remained consistent as a percentage of total revenue compared to the prior fiscal year third quarter.
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Selling, general, and administrative expense increased 1.0% in the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025. Total selling, general, and administrative expense less deconversion costs of $3,551, costs for the acquired company of $84, and the impact of the gain on assets, net, of $6,829 for the current fiscal year period and deconversion costs of $1,458 for the prior fiscal year period, results in a 3.3% increase, period over period. This increase was primarily due to higher personnel costs partially related to a headcount increase in the trailing twelve months. Personnel cost increases were tempered by the impact of lower-than-normal medical claims earlier in the fiscal year. Selling, general, and administrative expense decreased 1% as a percentage of total revenue compared to the prior fiscal year period.
INTEREST INCOME | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Interest Income | $ | 4,869 | $ | 5,899 | (17.5) | % | $ | 18,194 | $ | 21,406 | (15.0) | % | ||||||||||||||||||||
| Interest Expense | $ | (1,375) | $ | (2,731) | (49.7) | % | $ | (3,402) | $ | (8,336) | (59.2) | % | ||||||||||||||||||||
Interest income and interest expense decreased due to lower interest-earning and credit line balances, respectively, for the fiscal three and nine months ended March 31, 2026, compared to the fiscal three and nine months ended March 31, 2025.
| PROVISION FOR INCOME TAXES | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Provision for Income Taxes | $ | 35,647 | $ | 30,800 | 15.7 | % | $ | 121,503 | $ | 97,943 | 24.1 | % | ||||||||||||||||||||
| Effective Rate | 22.5 | % | 21.7 | % | 23.7 | % | 23.0 | % | ||||||||||||||||||||||||
The provision for income taxes increased 15.7% for the third quarter of fiscal 2026, compared to the third quarter of fiscal 2025. The effective tax rate for the current fiscal quarter was 22.5% compared to 21.7% for the same quarter a year ago. The increase in the Company's effective tax rate was primarily due to tax benefits from the purchase of investment tax credits during the prior fiscal year, combined with growth in current year operating income, which diluted the relative impact of tax benefits that were relatively consistent year over year.
The provision for income taxes increased 24.1% for the nine months ended March 31, 2026, compared to the same period a year ago. The effective tax rate for the current fiscal year-to-date period was 23.7% compared to 23.0% for the same period a year ago. The increase in the effective tax rate was primarily due to differences in the tax impacts of stock-based compensation between the two periods, tax benefits from the purchase of investment tax credits during the prior fiscal year, and growth in current year operating income, which diluted the relative impact of tax benefits that were relatively consistent year over year.
| NET INCOME | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Net income | $ | 122,894 | $ | 111,108 | 10.6 | % | $ | 391,549 | $ | 328,144 | 19.3 | % | ||||||||||||||||||||
| Diluted earnings per share | $ | 1.71 | $ | 1.52 | 12.2 | % | $ | 5.41 | $ | 4.49 | 20.4 | % | ||||||||||||||||||||
Net income increased 10.6% to $122,894, or $1.71 per diluted share, for the third quarter of fiscal 2026 compared to $111,108, or $1.52 per diluted share, in the same quarter of fiscal 2025. The total net income increase, quarter over quarter, was lower when adjusted for the impact of deconversion net income and a net loss for the acquired company in the current fiscal quarter and deconversion net income and net income related to a contractual change in the prior fiscal year third quarter. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the third quarter of fiscal 2026 partially offset by commensurate higher operating expenses detailed above that were tempered by our disciplined approach to controlling costs, as well as the increased provision for income taxes.
25
Net income increased 19.3% to $391,549, or $5.41 per diluted share, for the fiscal nine months ended March 31, 2026, compared to $328,144, or $4.49 per diluted share, in the same period of fiscal 2025. The total net income increase, period over period, was lower when adjusted for the impact of deconversion net income, the gain on assets, net, and a net loss for the acquired company in the current fiscal year period and deconversion net income and the net income related to a contractual change in the prior fiscal year period. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the nine months ended March 31, 2026, partially offset by commensurate higher operating expenses detailed above, tempered by our disciplined approach to controlling costs and lower than normal medical claims earlier in the fiscal year, as well as the increased provision for income taxes.
REPORTABLE SEGMENT DISCUSSION
The Company is a well-rounded financial technology company and is a leading provider of technology solutions and payment processing services primarily to community and regional banks and credit unions.
The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate Services. 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 accountholder 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, money movement and embedded payment capabilities, remote deposit capture processing, and risk management products and services. The Complementary segment provides additional software, hosted processing platforms, and services, including digital/mobile banking, treasury services, online account opening, fraud/AML and lending/deposit solutions that can be integrated with the Company's Core solutions, and many can be used independently. The Corporate Services segment includes revenue and direct costs from hardware and other products and services and our technology infrastructure costs.
The Company's Chief Executive Officer, who is also the Company's CODM, regularly evaluated segment performance and made strategic decisions on the allocation of resources to the segments based on various factors, including performance against trend, budget, and forecast for the fiscal three and nine months ended March 31, 2026, and 2025. The CODM also used reportable segment revenue, costs of revenue, and segment income to evaluate segment performance and allocate resources. The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the CODM.
During the fiscal nine months ended March 31, 2026, the Company transferred a product from the Corporate Services segment to the Complementary segment due to better alignment with the Complementary segment. As a result of this transfer, adjustments were made during the fiscal three and nine months ended March 31, 2026, to reclassify related revenue and cost of revenue recognized for the fiscal three and nine months ended March 31, 2025, from the Corporate Services segment to the Complementary segment. Revenue reclassed for the fiscal three and nine months ended March 31, 2025, was $3,327 and $9,799, respectively. Cost of revenue reclassed for the fiscal three and nine months ended March 31, 2025, was $762 and $2,208, respectively.
Immaterial adjustments have been made between segments during the fiscal three and nine months ended March 31, 2026, to reclassify revenue and cost of revenue that was recognized for the fiscal three and nine months ended March 31, 2025. These reclasses were made to be consistent with the current allocation of revenue and cost of revenue by segment. Revenue reclassed for the fiscal three and nine months ended March 31, 2025, from the Core segment to the Complementary segment, was $1,673 and $4,575, respectively. Cost of revenue reclassed for the fiscal three and nine months ended March 31, 2025, from the Core segment to the Complementary segment, was $479 and $1,367, respectively. Cost of revenue reclassed for the fiscal three and nine months ended March 31, 2025, from the Core segment to the Corporate Services segment, was $66 and $200, respectively.
| Core | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Revenue | $ | 195,448 | $ | 179,052 | 9.2 | % | $ | 576,841 | $ | 544,948 | 5.9 | % | ||||||||||||||||||||
| Cost of Revenue | $ | 81,208 | $ | 74,713 | 8.7 | % | $ | 229,130 | $ | 225,850 | 1.5 | % | ||||||||||||||||||||
Revenue in the Core segment increased 9.2% and cost of revenue increased 8.7% for the fiscal three months ended March 31, 2026, compared to the fiscal three months ended March 31, 2025. Total Core revenue less Core deconversion revenue of $7,506 for the fiscal three months ended March 31, 2026, and less Core deconversion revenue of $4,838 and less Core revenue related to a contractual change of $1,201 for the fiscal three months
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ended March 31, 2025, results in a 8.6% increase, quarter over quarter. This increase was primarily driven by organic growth in our Core revenue lines including data processing and hosting within private and public cloud as new and existing clients continue to migrate to our private cloud and processing volumes expand. Total Core cost of revenue less Core deconversion costs of $1,971 for the fiscal three months ended March 31, 2026, and less Core deconversion costs of $1,240 and Core costs related to a contractual change of $992 for the fiscal three months ended March 31, 2025, results in a 9.3% increase, quarter over quarter. This increase was primarily due to higher Core direct costs generally consistent with increases in related Core lines of revenue and higher Core personnel costs partially related to a headcount increase in the trailing twelve months. Core cost of revenue remained consistent as a percentage of Core revenue for the third quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Core segment increased 5.9% and cost of revenue increased 1.5% for the fiscal nine months ended March 31, 2026, compared to the fiscal nine months ended March 31, 2025. Total Core revenue less Core deconversion revenue of $13,775 for the fiscal nine months ended March 31, 2026, and Core deconversion revenue of $6,105 and Core revenue related to a contractual change of $14,672 for the fiscal nine months ended March 31, 2025, results in a 7.4% increase, period over period. This increase was primarily driven by organic growth in our Core revenue lines including data processing and hosting within private and public cloud as new and existing clients migrate to our private cloud and processing volumes expand. Total Core cost of revenue less Core deconversion costs of $3,117 for the fiscal nine months ended March 31, 2026, and Core costs related to a contractual change of $12,494 and Core deconversion costs of $1,365 for the fiscal nine months ended March 31, 2025, results in a 6.6% increase, period over period. This increase was primarily due to higher Core personnel costs partially related to a headcount increase in the trailing twelve months, tempered by our disciplined approach to controlling costs and lower than normal medical claims earlier in the fiscal year. Core cost of revenue decreased 1% as a percentage of Core revenue for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025.
| Payments | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Revenue | $ | 232,720 | $ | 217,449 | 7.0 | % | $ | 695,588 | $ | 644,207 | 8.0 | % | ||||||||||||||||||||
| Cost of Revenue | $ | 119,602 | $ | 116,266 | 2.9 | % | $ | 358,306 | $ | 344,023 | 4.2 | % | ||||||||||||||||||||
Revenue in the Payments segment increased 7.0% and cost of revenue increased 2.9% for the third quarter of fiscal 2026 compared to the same quarter last fiscal year. Total Payments revenue less Payments deconversion revenue of $5,923 and Payments revenue for the acquired company of $1,651 for the third quarter of fiscal 2026 and Payments deconversion revenue of $2,394 for the third quarter of fiscal 2025, results in a 4.7% increase, quarter over quarter. This increase was primarily due to higher Payments card revenue from an increase in volume and higher Payments faster payments revenue from expanding transactional volumes. Total Payments cost of revenue less Payments cost of revenue for the acquired company of $1,453 and Payments deconversion cost of revenue of $124 for the third quarter of fiscal 2026 and Payments deconversion cost of revenue of $108 for the third quarter of fiscal 2025, results in a 1.6% increase, quarter over quarter. This increase was primarily due to higher Payments personnel costs partially related to a headcount increase in the trailing twelve months and direct costs generally consistent with increases in Payments lines of revenue. Payments cost of revenue as a percentage of Payments revenue decreased 2% for the third quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Payments segment increased 8.0% and cost of revenue increased 4.2% for the fiscal nine months ended March 31, 2026, compared to the same period of the prior fiscal year. Total Payments revenue less Payments deconversion revenue of $10,804 and Payments revenue for the acquired company of $3,595 for the fiscal nine months ended March 31, 2026, and Payments deconversion revenue of $4,341 for the fiscal nine months ended March 31, 2025, results in a 6.5% increase, period over period. This increase was primarily due to higher Payments card revenue from an increase in volumes and higher Payments faster payments revenue from expanding transactional volumes. Total Payments cost of revenue less Payments cost of revenue for the acquired company of $3,862 and Payments deconversion costs of $413 for the fiscal nine months ended March 31, 2026, and Payments deconversion costs of $179 for the fiscal nine months ended March 31, 2025, results in a 3.0% increase, period over period. This increase was primarily due to higher direct costs generally consistent with increases in Payments lines of revenue. Payments cost of revenue as a percentage of Payments revenue decreased 1% for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025.
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| Complementary | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Revenue | $ | 187,489 | $ | 172,442 | 8.7 | % | $ | 563,414 | $ | 514,454 | 9.5 | % | ||||||||||||||||||||
| Cost of Revenue | $ | 72,192 | $ | 69,077 | 4.5 | % | $ | 213,717 | $ | 200,763 | 6.5 | % | ||||||||||||||||||||
Revenue in the Complementary segment increased 8.7% and cost of revenue increased 4.5% for the third quarter of fiscal 2026 compared to the same quarter last fiscal year. Total Complementary revenue less Complementary deconversion revenue of $5,054 for the third quarter of fiscal 2026 and Complementary deconversion revenue of $2,324 for the third quarter of fiscal 2025, results in a 7.2% increase, quarter over quarter. This increase was primarily driven by organic growth in Complementary hosting revenue as new and existing clients continue to migrate to our private cloud and processing volumes expanded and Complementary Jack Henry digital and transaction revenue from a higher number of active users and the ramping up of add-on products. Complementary cost of revenue less Complementary deconversion costs of $482 for the third quarter of fiscal 2026 and Complementary deconversion costs of $519 for the third quarter of fiscal 2025, results in a 4.6% increase, quarter over quarter. This increase was primarily driven by higher direct costs generally consistent with increases in related Complementary lines of revenue and increased amortization of Complementary intangibles from capital software development projects. Complementary cost of revenue as a percentage of Complementary revenue decreased 1% for the third quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Complementary segment increased 9.5% and cost of revenue increased 6.5% for the fiscal nine months ended March 31, 2026, compared to the equivalent period of the prior fiscal year. Total Complementary revenue less Complementary deconversion revenue of $8,632 for the fiscal nine months ended March 31, 2026, and Complementary deconversion revenue of $2,857 for the fiscal nine months ended March 31, 2025, results in an 8.4% increase, period over period. This increase was primarily driven by organic growth in Complementary hosting revenues as new and existing clients continued to migrate to our private cloud and processing volumes expanded and increased Complementary Jack Henry digital and transaction revenue as the number of active users increased and volumes expanded and from the ramping up of add-on products. Total Complementary cost of revenue less Complementary deconversion costs of $1,078 for the fiscal nine months ended March 31, 2026, and Complementary deconversion costs of $678 for the fiscal nine months ended March 31, 2025, results in a 6.3% increase, period over period. This increase was primarily driven by higher direct costs generally consistent with increases in related Complementary lines of revenue and increased amortization of Complementary intangibles from capital software development projects. Complementary cost of revenue as a percentage of Complementary revenue decreased 1% for the fiscal nine months ended March 31, 2026, compared to the same period in fiscal 2025.
Corporate Services | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Revenue | $ | 20,588 | $ | 16,144 | 27.5 | % | $ | 64,473 | $ | 56,307 | 14.5 | % | ||||||||||||||||||||
| Cost of Revenue | $ | 90,920 | $ | 80,530 | 12.9 | % | $ | 262,323 | $ | 246,232 | 6.5 | % | ||||||||||||||||||||
Revenue classified in the Corporate Services segment includes revenues from hardware and other products and services. Revenue in the Corporate Services segment increased 27.5% for the third quarter of fiscal 2026 compared to the same quarter last fiscal year. Total Corporate Services revenue less Corporate Services deconversion revenue of $182 for the third quarter of fiscal 2026 and Corporate Services deconversion revenue of $88 for the third quarter of fiscal 2025, results in a 27.1% increase, quarter over quarter. This increase was primarily due to the growth in Corporate Services hardware revenue and digital and transaction revenue, quarter over quarter. Cost of revenue for the Corporate Services segment includes direct costs from hardware and other products and services and our technology infrastructure costs. The Corporate Services cost of revenue in the third quarter of fiscal 2026 increased 12.9% when compared to the prior fiscal year quarter. Total Corporate Services cost of revenue less Corporate Services deconversion costs of $6 and Corporate Services cost of revenue for the acquired company of $159 for the third quarter of fiscal 2026 and Corporate Services deconversion costs of $5 for the third quarter of fiscal 2025, results in a 12.7% increase, quarter over quarter. This increase was primarily due to higher Corporate Services personnel costs partially related to a headcount increase in the trailing twelve months, tempered by our disciplined approach to controlling costs and lower than normal medical claims earlier in the fiscal year, a loss on Corporate Services assets, net, and higher Corporate Services internal licenses and fees, quarter over quarter.
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Revenue in the Corporate Services segment increased 14.5% for the fiscal nine months ended March 31, 2026, compared to the same period last fiscal year. Total Corporate Services revenue less Corporate Services deconversion revenue of $293 for the for the fiscal nine months ended March 31, 2026, and $107 for the fiscal nine months ended March 31, 2025, results in a 14.2% increase, period over period. This increase was primarily due to higher Corporate Services digital and transaction revenues and growth in Corporate Services software usage and subscription revenue. The Corporate Services cost of revenue in the fiscal nine months ended March 31, 2026, increased 6.5% when compared to the prior fiscal year period. Total Corporate Services cost of revenue less Corporate Services cost of revenue for the acquired company of $253 and Corporate Services deconversion costs of $7 for the for the fiscal nine months ended March 31, 2026 and Corporate Services deconversion costs of $5 for the fiscal nine months ended March 31, 2025, results in a 6.4% increase, period over period. This increase was primarily due to higher Corporate Services personnel costs partially related to a headcount increase in the trailing twelve months, tempered by our disciplined approach to controlling costs and lower than normal medical claims earlier in the fiscal year, higher Corporate Services internal licenses and fees, and a loss on Corporate Services assets, net, period over period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased to $20,573 at March 31, 2026, from $101,953 at June 30, 2025.
The following table summarizes net cash from operating activities in the statement of cash flows:
| Nine Months Ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income | $ | 391,549 | $ | 328,144 | |||||||
| Non-cash expenses | 280,559 | ||||||||||
Next expected filings
- ~2026-08-25 10-K expected by 2026-08-29 (in 2 days)
- ~2026-11-07 10-Q expected by 2026-11-08 (in 76 days)
- ~2027-02-06 10-Q expected by 2027-02-07 (in 167 days)
- ~2027-05-07 10-Q expected by 2027-05-08 (in 257 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-18 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-11 8-K Earnings Release; Financial Statements and Exhibits
- 2026-06-04 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-12 8-K Other Events; Financial Statements and Exhibits
- 2026-05-07 10-Q Quarterly Report
- 2026-05-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-03-26 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Financial Statements and Exhibits
- 2026-02-06 10-Q Quarterly Report
- 2026-02-03 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-27 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-14 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-11-07 10-Q Quarterly Report
- 2025-11-04 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-28 8-K Earnings Release; Financial Statements and Exhibits