The paragraph is an introduction to the Jack Henry First Quarter 2025 Earnings Conference Call. Vance Sherard, the Vice President of Investor Relations, introduces the participants: President and CEO Greg Adelson, and CFO and Treasurer Mimi Carsley. Greg will discuss business and industry insights, while Mimi will cover financial results and guidance from the recent press release. The call includes forward-looking statements subject to risks and uncertainties detailed in the company's 10-K and the press release. Non-GAAP financial measures will also be discussed, with reconciliations provided in the press release. Greg Adelson then begins by expressing satisfaction with the company's solid financial performance in the first quarter.

The paragraph outlines three key takeaways from the company's recent quarter. Firstly, their financial performance exceeded expectations with a non-GAAP revenue growth of 5.3% and a lower-than-expected margin contraction. They remain confident in achieving their full-year guidance. Secondly, their sales performance continued strongly with record sales attainment, including six competitive core wins and successful transitions of existing clients to their private cloud. Lastly, their client conference in Phoenix was highly successful, generating numerous sales leads with a significant attendance of nearly 2,600 clients and prospects. The paragraph concludes by mentioning their inclusion in national Best Places to Work rankings.

The article highlights the company's achievements and progress across various segments. It secured high rankings in prominent lists, such as placing 16th on News Week's top 200 Most Loved Workplaces and 11th on IDC's 2024 FinTech rankings. The company continues to excel in its Payments and Complementary segments, signing new clients for debit and credit processing and expanding its presence on platforms like Zelle, RTP, and FedNow. Its Financial Crimes Defender contracts and faster payment fraud modules are seeing significant growth, with numerous installations and implementations underway. The Banno digital solution segment also experienced substantial growth, signing new clients and increasing registered users on the platform by 20% compared to the previous year.

The paragraph discusses two technology surveys sponsored by Jack Henry, one targeting their clients and another co-sponsored with Bank Director. Both surveys revealed similar findings, with a significant number of respondents planning to increase technology budgets, focusing on improving operational efficiency, attracting customers, and growing deposits. Jack Henry's recent event, Jack Henry Connect, was well-received, featuring over 2,400 clients and 130 prospects. The event showcased their open technology approach with 250 fintech exhibitors. The conference highlighted their progress in technology modernization, specifically their cloud-native, API-first platform, which is operational with domestic and international wires, data broker, and entitlement.

The paragraph discusses Jack Henry's progress and future plans, including beta testing of exception processing and general ledger, and the goal to launch a digital retail and commercial deposit-only core by 2026. Feedback from a recent CEO forum suggests attendees are optimistic about the economy and are investing in technology. Highlights include the launch of a new SMB solution in May 2025, aimed at enhancing relationships with SMB customers through advanced features. The company is optimistic about future demand and receives positive feedback on its culture, service, and technology. An Annual Shareholder Meeting will be held soon, with a webcast option available.

In the paragraph, Mimi Carsley provides an overview of the financial performance for the first quarter, highlighting a 5% increase in both GAAP and non-GAAP revenue, aligning with the company's expectations. She notes a flat performance in deconversion revenue and a 4% increase in services and support revenue, driven mainly by data processing and hosting. Despite lower license and hardware revenues, cloud offerings saw an 11% growth. Processing revenue, constituting 41% of total revenue, grew by 7%. Overall, recurring revenue made up 93% of the total, with enterprise fee revenue growing by 9% and constituting 71% of total revenue. Excluding hardware, non-key revenue grew by 1%.

In the article's seventh paragraph, the company reports an increase in several expenses for the quarter, such as cost of revenue rising 6% and R&D expenses growing by 8%, mainly due to personnel costs. SG&A expenses decreased over 15% on a GAAP basis due to one-time costs from the previous year, but increased 7% on a non-GAAP basis. Despite a 89-basis point decrease in non-GAAP margins to 25% for the quarter, the company remains focused on annual margin expansion. The quarter saw a 17% increase in fully diluted GAAP earnings per share, driven partly by one-time expenses in Q1 of fiscal '24. The company's Core segment experienced a 5% revenue increase, with significant growth in key revenues but a 4% decrease in non-key revenues. The Payments segment also saw a 6% revenue increase and a 103-basis point rise in non-GAAP operating margin, credited to growth in card-related risk management and faster payments solutions.

The paragraph discusses financial performance and expectations for the company. Margins benefited from lower costs and incentives, but a segment's margin contracted due to certain expenses, despite growth in hosting and digital revenue. Operating cash flow for the first quarter was $117 million, showing a decrease due to shifts in timing and higher maintenance collections in the previous year. The trailing 12 months free cash flow was $289 million, with a return on invested capital of 20%. Fiscal 2025 guidance metrics are reiterated, with a focus on non-GAAP EPS metrics and a 24% tax rate. The company expects financial performance to improve, anticipating a 6% growth in non-GAAP revenue in Q2 and a strong second half.

The paragraph discusses the company's financial outlook for the year, highlighting that while quarterly results may vary due to factors like software usage licenses and implementation timing, the strong fiscal year results are a better indicator of business performance. The company met expectations for Q1, setting up for a successful year aligned with long-term targets focused on profitable growth and margin expansion. Despite some deal closures being delayed to the second quarter due to hurricanes, the core revenue performance remains robust. The company acknowledges its employees’ contributions and investor confidence, and a question-and-answer session follows.

The paragraph discusses the company's approach to handling contracts during challenging times, highlighting their success in securing multibillion-dollar opportunities, including a $7 billion deal, with expectations of more to come. Mimi Carsley emphasizes strong demand across all segments, predicting steady revenue growth throughout the year, particularly in the second half. Greg Adelson notes that despite challenges like hurricanes, the company still achieved a record sales quarter, indicating strong core and complementary product performance. Andrew Schmidt inquires about the impact of consolidation on Jack Henry's revenue growth following an election, seeking clarification on this influence.

In the paragraph, Greg Adelson discusses the company's outlook for 2025, indicating that election results may not significantly impact their plans. The company is prepared with several acquisitions lined up for the latter half of the year and 2025, having already strengthened their conversion and migration teams based on client feedback and early knowledge of deals. Despite regulatory challenges, they hope for improvements in M&A approval timing, bolstered by their growth in both the banking and credit union sectors. Mimi Carsley agrees with Adelson's points.

The paragraph discusses the deconversion revenue outlook, suggesting that while M&A activity could potentially increase this revenue next year, it's challenging to predict due to the dependence on institutions' renewal cycles. The speaker advises not to anticipate additional changes this year, partly due to new administration turnover. When questioned by Vasu Govil about Banno retail wins, Greg Adelson highlights that there were 12 new wins in the quarter, which is slightly slower compared to previous quarters but not concerning. He attributes the slower pace to timing and a focus on integrating Banno with existing Core wins. Adelson also mentions the impending phase-out of the NetTeller platform to accelerate transitions and notes that the results are consistent with the previous year's first quarter. Additionally, efforts to extend Banno sales beyond their current base are mostly applicable to Banno rather than other products.

The paragraph discusses challenges faced with competitors in terms of openness and the costs and timing they impose. The company is exploring a new approach to bypass typical integration points, particularly for the Banno platform, which involves complex API integrations. They aim to leverage Moov to provide solutions outside the conventional base, although no timeline changes are planned. The focus is on improved productivity and success. Vasu Govil then inquires about the free cash flow conversion, and Mimi Carsley assures that the cash flow guide remains at 65-75%, despite noting a Q1 drop, emphasizing that the trailing 12 months is a better indicator due to payment timings.

In the paragraph, during a discussion about financial performance and competition, Greg Adelson addresses a question regarding competitive pressure in core processing for banks and credit unions. He acknowledges that while they don't win every deal, they remain successful and competitive, citing a recent $7 billion opportunity win and successful renewals. Regarding the economic outlook and potential margin expansion, Mimi Carsley notes that it's too early to predict any upside to their 25 to 40 basis point margin expansion target as they are just closing their first quarter, despite planning for substantial growth in the second half.

In the paragraph, Jason Kupferberg from Bank of America asks about the second-half revenue growth outlook, noting the need for around 9% growth to reach the midpoint of the full-year target. Mimi Carsley responds by expressing confidence for the second half, citing several factors: a lower hardware revenue drag in the second half compared to the first, ongoing strong cloud revenue growth, faster payment transactions, and improved card spending in the spring. She also mentions lower Q4 comparisons, new product ramps such as Defender, and increased digital adoption through the F&B strategy. These factors, along with implementation of prior sales, bolster confidence in achieving the second-half goals.

In the paragraph, Jason Kupferberg asks about the company's progress in securing core wins, referencing a target of 50 to 55 for the fiscal year and mentioning the impact of hurricanes on deal timelines. Greg Adelson responds positively, stating the company is on track, noting successes in the first quarter, including a significant $7 billion deal. He highlights the robust pipeline and expresses confidence in meeting their targets. Will Nance then questions about growth acceleration in the second half, probing if there are any considerations for growth rates moving into the next year. Mimi Carsley acknowledges the question but does not provide a detailed response in the given text.

The paragraph discusses the company's future growth plans and strategies. They mention that forecasting for FY '26 is currently difficult due to the time frame, but emphasize the ongoing development and implementation of new products, faster payment adoption, and cloud growth. Greg Adelson and Mimi Carsley discuss aiming for an 8% growth rate with new product launches and implementations. They acknowledge there's still much progress needed before offering more guidance but are optimistic due to a strong sales pipeline. Regarding capital allocation, they prioritize investing in growth through innovation, maintaining a consistent dividend policy, and continuing debt repayment throughout the year.

The paragraph discusses a company's strategy to improve its financial position by paying down debt and exploring options like share repurchases and mergers and acquisitions (M&A) when conditions are favorable. The speaker addresses a question about shifting focus away from lower-growth, less profitable businesses. The company is engaged in product rationalization, which is a multi-year process. They are considering potential divestitures of small businesses and have announced the discontinuation of some products, giving a two-year timeline for such changes. This repositioning aims to transition customers to higher-margin, more advanced products.

The paragraph discusses a strategic focus on addressing non-key revenue areas, indicating plans to sunset or divest certain aspects gradually over time to lessen their impact on overall performance. Mimi Carsley mentions that noticeable revenue changes are unlikely to happen in one quarter as the improvements will be gradual. Greg Adelson adds that these efforts will assist in tech modernization, cost containment, and ultimately support revenue growth and margin expansion. Dominick Gabriele inquires whether recent election results might influence clients' tech spending, suggesting potential for increased discretionary tech investments as a result of the election outcomes.

Greg Adelson discusses the positive feedback the company has received regarding their strategic direction, which remains unaffected by changes in the political environment. He notes potential future opportunities in mergers and acquisitions (M&A) and product acceleration. In response to Peter Heckmann's question, Adelson emphasizes the importance of their strategy to migrate core and non-core products to the public cloud, which resonates well with potential clients. This strategy is seen as a key differentiator from current competitors, particularly for multibillion-dollar institutions seeking unbundled core systems. Adelson highlights that their approach is well-received by prospects and current clients alike.

The paragraph discusses the strategies and innovations of Jack Henry, emphasizing their culture, service, and technological advancements in areas like Financial Crimes and Pay Center. Mimi Carsley highlights the importance of shared services and tech modernization, which enhance customer experience on the core platform. Greg Adelson underscores their open philosophy, allowing clients to choose the best products without extra charges typically imposed by competitors. Peter Heckmann inquires about their loan origination platform, and Greg Adelson indicates that more information will be revealed starting in 2025.

The paragraph discusses the integration and development of a single consumer and commercial platform, Loan Vantage, which now includes Enterprise Account Opening, previously known as OpenAnywhere. This product competes well with market leaders like nCino, and early adopters will begin using it in January 2025. The discussion moves to a question from Chris Kennedy regarding data brokering. Greg Adelson highlights their progress with the CFPB's 1033 rule, noting their Banno digital platform's elimination of screen scraping in favor of direct API integrations with major financial data aggregators like Finicity, Yodlee, and Plaid. Adelson emphasizes that this rule affects digital banking providers more than core providers and expresses their leading position in implementing this change.

The paragraph discusses a project by Jack Henry to consolidate various types of customer data—such as core, digital, payments, fraud, and lending data—into a single data repository accessible to both clients and third-party users. Currently in the early stages, the repository includes core and digital data, with plans to incorporate payments by the end of the year and fraud by the first quarter of 2025. The project aims to boost sales as more data types are integrated. Although significant revenue increases are not expected until 2026, the testing phase is progressing well. Following this, John Davis from Raymond James inquires about margin improvements, noting an expected 100 basis point increase in the latter half of the year. Mimi Carsley attributes this to revenue growth, easier comparisons, and headwinds like software usage and headcount changes impacting earlier margins.

In the paragraph, John Davis and Greg Adelson discuss the growth and revenue of Banno, a digital platform. While Banno Business contributes to growth, the 20% increase in users year-over-year is mainly driven by the retail platform. Even though Banno Business isn't a major contributor to this growth, the overall revenue growth in the digital sector has been consistent. The pricing for Banno Business is linked to retail customer numbers. As they increase business customer implementations and adoption activities, Banno's role may become more significant. A question from James Faucette addresses implementation queues and balancing margin expansion with resource allocation for faster implementations, to which Greg responds.

The paragraph discusses a company's monthly process of evaluating the balance between expediting revenue flow and maintaining operating margins, particularly in the context of financial crimes. It mentions the addition of new personnel to the Financial Crimes Defender Group and highlights the challenges of lengthy data transfer and Core implementation timelines. Additionally, an update is provided on the company's partnership with Moov, featuring significant progress and plans to deliver a new product to early adopter clients by May 2025. Furthermore, there is mention of the company's cloud migration efforts, noting that cloud revenue constitutes 30% and is growing at a low double-digit rate, with a significant portion of clients on the private cloud.

In the discussion, Greg Adelson and Mimi Carsley address the growth potential for cloud revenue, emphasizing the sustained runway for expansion over the next few years. They note that while the migration to the private cloud is significant at 73%, they don't expect to reach 100% as some customers prefer not to migrate. The transition is projected to continue at a steady pace, with larger clients increasingly making the move, providing a substantial impact on revenue. Adelson mentions the upcoming deposit-only Core in 2026 as a potential catalyst for further cloud migration, either from in-house systems to the public cloud or within cloud systems, highlighting prospects for continued growth.

The paragraph discusses a financial update from a company, highlighting anticipated revenue growth and performance across different segments. The clients and their growth play a crucial role in this revenue increase as the company scales alongside them. Non-GAAP revenue is expected to grow 6% in the second quarter, supported by improvements in the cards segment, although cloud and hardware are anticipated to experience slower quarters. Card processing growth decelerated from 8% to 5%, attributed to stable transaction volumes, increased faster payment spending, and slow but steady growth in bill pay. Overall, momentum from Q1 is expected to continue, with a stronger performance anticipated in the second half of the year.

The paragraph is part of a conference call discussing financial matters involving Jack Henry & Associates. David Koning inquires about the reasons for a delayed increase in interest income and whether it will remain stable throughout the year. Mimi Carsley explains that the increase was mainly due to the timing of negotiations with bank counterparts to secure better yields, which correlates with interest rates. She anticipates interest income to be stable for Q2, subject to the Federal Reserve's actions later in the year. The session concludes with Vance Sherard expressing gratitude to Jack Henry associates for their efforts and mentioning upcoming shareholder and investor events. The operator provides details for accessing a replay of the call.

This summary was generated with AI and may contain some inaccuracies.