What changed in this filing

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Item 1. Business

2022-08-25 compared with 2021-08-25 · 142 added, 135 removed, 209 unchanged (57% of the section changed)

Jack Henry & Associates, Inc.

("JKHY") is a well-rounded financial technology company.

JKHY was founded in 1976 as a provider of core information processing solutions for banks.

Today, the Company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for nearly 8,400 financial institutions and diverse corporate entities.

JKHY provides its products and services through three primary business brands:

• Jack Henry Banking is a leading provider of integrated data processing systems to nearly 1,000 banks ranging from de novo to multi-billion-dollar institutions with assets of up to $50 billion.

Today, the Company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for over 7,800 financial institutions and diverse corporate entities.

JKHY provides its products and services primarily to financial institutions:

• Core bank integrated data processing systems are provided to over 950 banks ranging from de novo to multi-billion-dollar institutions with assets of up to $50 billion.

The number of banks we serve has decreased in the last year due to acquisitions and mergers within the banking industry, which are discussed further under the heading "Industry Background" in this Item 1.

Our banking solutions support both on-premise and private cloud operating environments with three functionally distinct core processing platforms and more than 140 integrated complementary solutions.

• Symitar is a leading provider of core data processing solutions for credit unions of all sizes, with over 700 credit union customers.

Symitar markets one flagship core processing platform and more than 100 integrated complementary solutions that support both on-premise and private cloud operating environments.

• ProfitStars is a leading provider of highly specialized core agnostic products and services for financial institutions.

ProfitStars' more than 100 integrated complementary solutions offer highly specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions.

ProfitStars’ products and services enhance the performance of traditional financial services organizations of all asset sizes and charters, and non-traditional diverse corporate entities with over 8,300 customers, comprised of over 1,600 of our core customers included in our bank and credit union customers listed above, as well as nearly 6,700 non-core customers.

Our products and services provide our customers solutions that can be tailored to support their unique growth, service, operational, and performance goals.

Our solutions also enable financial institutions to offer the high-demand products and services required by their customers to compete more successfully, and to capitalize on evolving trends shaping the financial services industry.

• Core credit union data processing solutions are provided to credit unions of all sizes, with a growing client base of nearly 720 credit union customers.

There is one flagship core processing platform and more than 100 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 financial institutions.

There are more than 100 complementary solutions that offer highly specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions.

These products and services enhance the performance of traditional financial services organizations of all asset sizes and charters, and non-traditional diverse corporate entities with over 7,800 customers, comprised of nearly 1,650 of our core customers included in our bank and credit union customers listed above, as well as over 6,150 other non-core customers.

Our products and services provide our customers with solutions that can be tailored to support their unique growth, service, operational, and performance goals.

Our well-rounded solutions also enable financial institutions to offer the high-demand products and services required by their customers to compete more successfully, and to capitalize on evolving trends shaping the financial services industry.

We are committed to exceeding our customers’ service-related expectations.

We measure and monitor customer satisfaction using formal annual surveys and online surveys initiated each day randomly by routine support requests.

We measure and monitor customer satisfaction using annual surveys and randomly-generated online surveys initiated each day by routine support requests.

We believe the results of this extensive survey process confirm that our service consistently exceeds our customers’ expectations and generates excellent customer retention rates.

We also focus on establishing long-term customer relationships, continually expanding and strengthening those relationships with cross sales of additional products and services, earning new traditional and nontraditional clients, and ensuring each product offering is highly competitive.

The majority of our revenue is derived from support and services provided to our on-premise customers that are typically on a one-year contract, private cloud services for our hosted customers that are typically on a seven-year or greater contract, and recurring electronic payment solutions that are also generally on a contract term of seven years or greater.

We also focus on establishing long-term customer relationships, continually expanding and strengthening those relationships with cross sales of additional products and services, earning new financial and non-financial clients, and ensuring our product offerings are highly competitive.

The majority of our revenue is derived from support and services provided by our private cloud services for our hosted customers that are typically on a seven-year or greater contract, recurring electronic payment solutions that are also generally on a contract term of seven years or greater, and to our on-premise customers that are typically on a one-year contract.

Less predictable software license fees, paid by customers 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.

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• Do the right thing

• Do whatever it takes, and

• Do whatever it takes

We recognize that our associates and their collective contribution are ultimately responsible for JKHY’s past, present, and future success.

Recruiting and retaining high-quality employees is essential to our ongoing growth and financial performance, and we believe we have established a corporate culture that sustains high levels of employee satisfaction.

Recruiting and retaining high-quality employees is essential to our ongoing growth and financial performance, and we believe we have established an organizational culture that sustains high levels of employee engagement.

For further discussion of our human capital considerations, see "Human Capital" below.

COVID-19 Impact and Response

Since its outbreak in early 2020, COVID-19 has rapidly spread and continues to represent a public health concern.

Since its outbreak in early calendar 2020, COVID-19 has rapidly spread and continues to represent a public health concern.

The health, safety, and well-being of our employees and customers is of paramount importance to us.

2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions.

March 2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions.

We offered remote working as a recommended option to employees whose job duties allowed them to work off-site, and we suspended all non-essential business travel.

This company-wide recommendation extended until July 1, 2021, at which point we began transition to a return to our facilities and normalization of travel activities.

Individual decisions on returning to the office were manager-coordinated and based on conversations with specific teams and departments.

A large number of our employees requested to remain fully remote or participate in a hybrid approach where they would split their time between remote and in-person working.

We have not required employees who return to our facilities to receive vaccinations, but we have provided information on vaccine providers, as well as hosted on-site COVID-19 vaccination clinics at several of our facilities for our employees and their families.

On August 3, 2021, we reimplemented our company-wide recommendation for remote work and are encouraging a cautious approach to business travel based on the spread of the Delta variant and increased infection rates.

For those employees who are at our facilities, we have introduced enhanced sanitation procedures and we require face masks for both vaccinated and unvaccinated employees.

As of August 15, 2022, the majority of our employees were continuing to work remotely either full time or in a hybrid capacity.

We have announced that our official return-to-office date is September 6, 2022, though employees have been permitted to voluntarily return to the office since May 2, 2022.

Individual decisions on returning to the office will be manager-coordinated and based on conversations with specific teams and departments.

A large number of our employees have requested to remain fully remote or participate in a hybrid approach where they would split their time between remote and in-person working.

While our business travel is normalizing, we do not expect it to return to pre-pandemic levels and continue to encourage a cautious approach to business travel activities.

We work closely with our customers who are scheduled for on-site visits to ensure their needs are met while taking necessary safety precautions when our employees are required to be at a customer site.

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We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic.

Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been curtailed, we have not yet experienced significant disruption to our operations.

Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been limited, we have not yet experienced significant disruption to our operations.

We believe our technological capabilities are well positioned to allow our employees to work remotely without materially impacting our business.

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the duration, severity and recurrence of the outbreak, including the onset of variants of the virus;

the speed and effectiveness of vaccine and treatment developments;

the speed of economic recovery;

the effectiveness of vaccines against new variants;

the development and effectiveness of treatments;

the effect on the economy generally;

the potential impact to our customers, vendors, and employees;

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Industry Background

Jack Henry Banking primarily serves commercial banks and savings institutions with up to $50 billion in assets.

According to the Federal Deposit Insurance Corporation (“FDIC”), there were approximately 4,950 commercial banks and savings institutions in this asset range as of December 31, 2020.

Jack Henry Banking currently supports nearly 1,000 of these banks with its core information processing platforms and complementary products and services.

Symitar serves credit unions of all asset sizes.

According to the Credit Union National Association (“CUNA”), there were more than 5,200 domestic credit unions as of December 31, 2020.

Symitar currently supports over 700 of these credit unions with core information processing platforms and complementary products and services.

ProfitStars serves financial services organizations of all asset sizes and charters and other diverse corporate entities.

ProfitStars currently supports over 8,300 institutions with specialized solutions for generating additional revenue and growth, increasing security, mitigating operational risks, and controlling operating costs.

Our core banking solutions serve commercial banks and savings institutions with up to $50 billion in assets.

According to the Federal Deposit Insurance Corporation (“FDIC”), there were approximately 4,790 commercial banks and savings institutions in this asset range as of December 31, 2021, and we currently support over 950 of these banks with one of our three core information processing platform and complementary products and services.

Our core credit union solutions serve credit unions of all asset sizes.

According to the Credit Union National Association (“CUNA”), there were more than 5,000 domestic credit unions as of December 31, 2021, and we currently support nearly 720 of these credit unions with one flagship core information processing platform and complementary products and services.

Our non-core solutions serve financial services organizations of all asset sizes and charters and other diverse corporate entities.

We currently support over 7,800 institutions 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 18% from the beginning of calendar year 2016 to the end of calendar year 2021, due mainly to mergers.

Although the number of banks declined at a 4% compound annual rate during this period, aggregate assets increased at a compound annual rate of 9.0% and totaled $23.7 trillion as of December 31, 2021.

There were six new bank charters issued in calendar year 2020, compared to thirteen in the 2019 calendar year.

There were nine new bank charters issued in calendar year 2021, compared to six in the 2020 calendar year.

Comparing calendar years 2021 to 2020, the number of mergers decreased 2%.

CUNA reports the number of credit unions declined 15% from the beginning of calendar year 2016 to the end of calendar year 2021.

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 9% and totaled $1.9 trillion as of December 31, 2020.

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 10% and totaled $2.1 trillion as of December 31, 2021.

Community and mid-tier banks and credit unions are important in the communities and to the consumers they serve.

Bank customers and credit union members rely on these institutions to provide personalized, relationship-based service and competitive financial products and services available through the customer’s delivery channel of choice.

Institutions are recognizing that attracting and retaining customers/members in today’s highly competitive financial industry and realizing near-term and long-term performance goals are often technology dependent.

Institutions are recognizing that attracting and retaining customers and members in today’s highly competitive financial industry and realizing near-term and long-term performance goals are often technology dependent.

Financial institutions must implement technological solutions that enable them to:

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Mission Statement

Our mission is to provide quality solutions and industry-leading service to our customers while fostering our culture that is personally, professionally, and financially rewarding to our employees and increasing the value of our stockholders' investments.

We strengthen the connections between people and their financial institutions through technology and services that reduce the barriers to financial health.

Purpose Statement

To empower people and communities to gain the financial freedom to move forward.

Business Strategy

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• Expanding each core customer relationship by cross-selling complementary products and services that enhance the functionality provided by our core information processing systems.

• Providing highly specialized core agnostic complementary products and services to financial institutions, including institutions not utilizing a Jack Henry core operating system, and diverse corporate entities.

• Providing non-core highly specialized core-agnostic complementary products and services to financial institutions, including institutions not utilizing a JKHY core operating system, and diverse corporate entities.

• Maintaining a company-wide commitment to customer service that consistently exceeds our customers’ expectations and generates high levels of customer retention.

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• Provide selective opportunities to sell outside our traditional markets in the financial services industry.

We have completed three acquisitions in the last 3 years.

After 46 years in business, we have very few gaps in our product line, so it is increasingly difficult to find proven products or services that would enable our clients and prospects to better optimize their business opportunities or solve specific operational issues.

In addition, we see few acquisition opportunities that would expand our market or enable our entry into adjacent markets within the financial services industry that are fairly priced or that we could assimilate into our company without material distractions.

We have a solid track record of executing acquisitions from both a financial and operational standpoint and we will continue to pursue acquisition opportunities that support our strategic direction, complement and accelerate our organic growth, and generate long-term profitable growth for our shareholders.

While we seek to identify appropriate acquisition opportunities, we will continue to explore alternative ways to leverage our cash position and balance sheet to the benefit of our shareholders, such as continued investment in new products and services for our customers, repurchases of our stock, and continued payment of dividends.

Our most recent acquisitions were:

We have a solid track record of executing acquisitions from both a financial and operational standpoint, and we will continue to pursue acquisition opportunities that support our strategic direction, complement and accelerate our organic growth, and generate long-term profitable growth for our stockholders.

While we seek to identify appropriate acquisition opportunities, we will continue to explore alternative ways to leverage our cash position and balance sheet to the benefit of our stockholders, such as continued investment in new products and services for our customers, repurchases of our stock, and continued payment of dividends.

Our most recent acquisition was:

Fiscal Year Company or Product Name Products and Services

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("Geezeo") Provider of technology solutions and next-generation financial management capabilities primarily for the financial services industry

2019 BOLTS Technologies, Inc.

("BOLTS") Developer of boltsOPEN, a digital account opening solution

2019 Agiletics, Inc.

("Agiletics") Provider of escrow, investment, and liquidity management solutions for banks serving commercial customers

Our proprietary solutions are marketed through three primary business brands:

• Jack Henry Banking supports commercial banks with information and transaction processing platforms that provide enterprise-wide automation.

• Our core banking solutions support commercial banks with information and transaction processing platforms that provide enterprise-wide automation.

We have three functionally distinct core bank processing systems and more than 140 fully integrated complementary solutions, including business intelligence and bank management, retail and business banking, digital and mobile internet banking and electronic payment solutions, risk management and protection, and item and document imaging solutions.

Our banking solutions have state-of-the-art functional capabilities, and we can re-market the hardware required by on-premise use of each software system.

Our core banking solutions have state-of-the-art functional capabilities, and we can re-market the hardware required by on-premise use of each software system.

Our banking solutions can be delivered on-premise or through our private cloud delivery model and are backed by a company-wide commitment to provide exceptional personal service.

Jack Henry Banking is a recognized market leader, currently supporting nearly 1,000 banks with its technology platforms.

• Symitar supports credit unions of all sizes with an information and transaction processing platform that provides enterprise-wide automation.

We are a recognized market leader, currently supporting over 950 banks with our technology platforms.

• Our core credit union solutions support credit unions of all sizes with an information and transaction processing platform that provides enterprise-wide automation.

Our solution includes one flagship core processing system and more than 100 fully integrated complementary solutions, including business intelligence and credit union management, member and member business services, digital and mobile internet banking and electronic payment solutions, risk management and protection, and item and document imaging solutions.

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Our credit union solution can be delivered on-premise or through our private cloud delivery model, and is backed by our company-wide commitment to provide exceptional personal service.

Symitar currently supports over 700 credit union customers.

• ProfitStars is a leading provider of specialized products and services assembled primarily through our focused diversification acquisition strategy.

These core agnostic solutions are compatible with a wide variety of information technology platforms and operating environments and offer more than 100 fully-integrated complementary solutions, including proven solutions for generating additional revenue and growth, increasing security and mitigating operational risks, and/or controlling operating costs.

ProfitStars’ products and services enhance the performance of financial services organizations of all asset sizes and charters, and diverse corporate entities.

Profitstars has over 8,300 customers, including nearly 6,700 non-core customers.

We currently support nearly 720 credit union customers.

• Our non-core solutions for financial institutions are specialized products and services assembled primarily through our focused diversification acquisition strategy.

These core-agnostic solutions are compatible with a wide variety of information technology platforms and operating environments and offer more than 100 complementary solutions, including proven solutions for generating additional revenue and growth, increasing security and mitigating operational risks, and/or controlling operating costs.

Our non-core products and services enhance the performance of financial services organizations of all asset sizes and charters, and diverse corporate entities.

We have over 7,800 customers, including over 6,150 unique non-core customers.

These distinct products and services can be implemented individually or as solution suites to address specific business problems or needs and enable effective responses to dynamic industry trends.

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Core software systems primarily consist of the integrated applications required to process deposit, loan, and general ledger transactions, and to maintain centralized customer/member information.

Jack Henry Banking markets three core software systems to banks and Symitar markets one core software system to credit unions.

These core systems are available for on-premise installation at customer sites, or financial institutions can choose to leverage our private cloud environment for ongoing information processing.

Jack Henry Banking’s three core banking platforms are:

• SilverLake®, a robust system primarily designed for commercial-focused banks with assets ranging from $500 million to $50 billion.

Our core banking solutions consist of three software systems marketed to banks and our core credit union solution consists of one software system marketed to credit unions.

These core systems are available for on-premise

installation at customer sites, or financial institutions can choose to leverage our private cloud environment for ongoing information processing.

Core banking platforms are:

• SilverLake System®, a robust system primarily designed for commercial-focused banks with assets ranging from $1 billion to $50 billion.

Some progressive smaller banks and de novo (start-up) banks also select SilverLake.

This system is in use by over 400 banks, and now automates over 8% of the domestic banks with assets less than $50 billion.

This system is in use by nearly 450 banks, and now automates over 9% of the domestic banks with assets less than $50 billion.

• CIF 20/20®, a parameter-driven, easy-to-use system that now supports approximately 332 banks ranging from de novo institutions to those with assets of $4 billion.

• Core Director®, a cost-efficient system with point-and-click operation that now supports nearly 200 banks ranging from de novo institutions to those with assets of $2 billion.

Symitar’s core credit union platform is:

• Episys®, a robust system designed specifically for credit unions.

It has been implemented by over 700 credit unions with assets ranging from $3 million to $25 billion, and according to National Credit Union Administration data, is the system implemented by more credit unions with assets exceeding $25 million than any other alternative core system.

Core credit union platform is:

• Symitar® (formerly known as Episys®), a robust system designed specifically for credit unions.

It has been implemented by nearly 720 credit unions with assets ranging from $3 million to $35 billion, and according to National Credit Union Administration ("NCUA") data, is the system implemented by more credit unions with assets exceeding $25 million than any other alternative core system.

Customers electing to install our solutions on-premise license the proprietary software systems.

The majority of these customers pay ongoing annual software maintenance fees.

We re-market the hardware and peripheral equipment that is required by on-premise use of our software solutions;

We re-market the hardware, hardware maintenance, and peripheral equipment that is required by on-premise use of our software solutions;

and we perform software implementation, data conversion, training, ongoing support, and other related services.

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We have more than 140 complementary products and services that are targeted to our core banks and more than 100 targeted to credit union customers.

Many of these are selectively sold by our ProfitStars division to financial services organizations that use other core processing systems.

Many of these are selectively sold to financial services organizations that use other core processing systems.

These complementary solutions enable core bank and credit union clients to respond to evolving customer/member demands, expedite speed-to-market with competitive offerings, increase operating efficiency, address specific operational issues, and generate new revenue streams.

The highly specialized solutions sold by ProfitStars enable diverse financial services organizations and corporate entities to generate additional revenue and growth opportunities, increase security and mitigate operational risks, and control operating costs.

The highly specialized solutions enable diverse financial services organizations and corporate entities to generate additional revenue and growth opportunities, increase security and mitigate operational risks, and control operating costs.

JKHY regularly introduces new products and services based on demand for integrated complementary solutions from our existing core clients, and based on the growing demand among financial services organizations and corporate entities for specialized solutions capable of increasing revenue and growth opportunities, mitigating and controlling operational risks, and/or containing costs.

The Company’s Industry Research department solicits customer guidance on the business solutions they need, evaluates available solutions and competitive offerings,

and manages the introduction of new product offerings.

The Company’s Industry Research department solicits customer guidance on the business solutions they need, evaluates available solutions and competitive offerings, and manages the introduction of new product offerings.

JKHY’s new complementary products and services are developed internally, acquired, or provided through strategic alliances.

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• Exacting service standards;

• Trained support staff available 24 hours a day, 365 days a year;

• Trained support staff available up to 24 hours a day, 365 days a year;

• Assigned account managers;

• Sophisticated support tools, resources, and technology;

• Broad experience converting diverse banks and credit unions to our core platforms from every competitive platform;

• Broad experience converting diverse banks and credit unions to our core platforms from competitive platforms;

• Highly effective change management and control processes;

• A best practices methodology developed and refined through the company-wide, day-to-day experience supporting nearly 8,400 diverse clients.

• A best practices methodology developed and refined through the company-wide, day-to-day experience supporting over 7,800 diverse clients.

Most on-premise customers contract for annual software support services, and this represents a significant source of recurring revenue for JKHY.

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The subsequent years' service fees generally increase as customer assets increase and as additional complementary products are purchased.

Annual software support fees are typically billed during June and are paid in advance for the entire fiscal year, with pro-ration for new product implementations that occur during the fiscal year.

Annual software support fees are typically billed during June and are paid in advance for the entire fiscal year, with proration for new product implementations that occur during the fiscal year.

Hardware support fees also are usually paid in advance for entire contract periods which typically range from one to five years.

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However, these support fees are included as part of monthly private cloud fees.

JKHY regularly measures customer satisfaction using formal annual surveys and more frequent online surveys initiated randomly by routine support requests.

We believe this process confirms that we consistently exceed our customers’ service-related expectations.

JKHY regularly measures customer satisfaction using annual surveys and more frequent online surveys initiated randomly by routine support requests.

We believe the results of the surveys confirm that we consistently exceed our customers’ service-related expectations.

Hardware Systems

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We currently sell IBM Power Systems™;

Lenovo, Dell, and HP servers and workstations;

Lenovo, Dell, Hewlett Packard, and Cisco servers and workstations;

Canon, Digital Check, Epson, and Panini check scanners;

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Our main offering is the Banno Digital Platform.

It is an online and mobile banking platform that helps community financial institutions strategically differentiate their digital offerings from those of megabanks and other financial technology companies.

It is a complete, open digital banking platform that gives community financial institutions attractive, fast, native applications for their customers and members and cloud-based, core-connected back office tools for their employees.

Electronic Payment Solutions

It is an online and mobile banking platform that helps community and regional financial institutions strategically differentiate their digital offerings from those of megabanks and other financial technology companies.

It is a complete, open digital banking platform that gives

community financial institutions attractive, fast, native applications for their customers and members and cloud-based, core-connected back office tools for their employees.

Payment Solutions

Electronic payment solutions provide our customers with the tools necessary to be at the forefront of payment innovation with secure payment processing designed to simplify complex payment processing, attract profitable retail and commercial accounts, increase operating efficiencies, comply with regulatory mandates, and proactively mitigate and manage payment-related risk.

Jack Henry identifies four components of Electronic Payment Solutions:

• Card Services provides a comprehensive suite of Automated Teller Machine ("ATM"), debit/credit card transaction processing and fraud management solutions.

The card processing solutions include loyalty/rewards, fraud detection, cardholder alert and controls, and other key components that are fully integrated with JKHY's core and complementary solutions.

• Bill Pay and Mobile banking platforms are offered through our iPay and Banno product offerings.

iPay offers iPay Business Bill Pay™, a full suite of online financial management solutions designed to meet the distinct needs of small businesses, as well as iPay Consumer Bill Pay™, a solution that supports single or recurring payments, allows customers to receive full bills electronically, and easily integrates with any internet banking provider.

Banno Mobile™ offers a native mobile banking application for both iOS and Android that offers innovative and cost-effective mobile services that can be marketed with customer's own brand identity.

It allows customers to aggregate all of their account balances and transactional data from multiple financial institutions and empowers them with the convenience of anytime, anywhere account access.

• Faster Payments includes the development of JHA PayCenter, a payments hub that provides streamlined, secure payment capabilities for sending and receiving transactions instantly 24 hours a day, 365 days a year, through JKHY’s core and complementary solutions with direct connections to both Zelle and Real Time Payments ("RTP") real-time networks with plans to accommodate the Federal Reserve's network in 2023.

• Processing/Other includes Enterprise Payment Solutions ("EPS"), a comprehensive payments engine and one of the leading total payments solutions on the market today.

EPS offers an integrated suite of remote deposit capture, ACH and card transaction processing solutions, risk management tools, reporting capabilities, and more for financial institutions of all sizes.

EPS helps financial institutions succeed in today’s competitive market to increase revenue, improve efficiencies, better manage compliance, and enhance customer relationships.

Furthermore, Commercial Lending Solutions help financial institutions securely transition from a traditional lending portfolio (focused on real estate-based consumer lending) to a more fully diversified portfolio developed via commercial and industrial lending.

Our solutions also provide reliable ways to retain creditworthy business customers facing financial hurdles, while mitigating the risk of loan loss.

• JHA Card Processing Solutions ("CPS") supports full-service and in-house debit and credit card programs backed by a comprehensive suite of tools for fraud mitigation, digital payments, dispute management, plastics manufacturing and personalization, loyalty programs, data analytics, and terminal driving.

In addition, advisory services are offered to support a variety of needs including card portfolio growth, start-up program consultation, as well as customized fraud management;

all tailored to individual financial institution goals and concerns.

• Enterprise Payment Solutions ("EPS") is a comprehensive payments engine.

It offers an integrated suite of remote deposit capture, Automated Clearing House ("ACH"), and card transaction processing solutions, risk management tools, reporting capabilities, and more for financial institutions, businesses and FinTechs of all sizes.

EPS helps its clients succeed in today’s competitive market to increase revenue, improve efficiencies, better manage compliance, and enhance customer relationships.

• iPay Solutions TM provides consumers and businesses with money movement options through their financial institutions’ digital platforms including paying bills, sending money to anyone and transferring funds between their own accounts.

iPay’s extensive application programming interface ("API") and hosted interfaces allow for multiple levels of integration by digital platforms and financial institutions.

iPay provides financial institutions with services and tools to increase adoption, support end-users and monitor fraud.

The money movement options keep the consumers and businesses engaged with the financial institution.

• JHA PayCenter TM , provides our customer financial institutions with a single entry point to both Zelle and Real Time Payments ("RTP") real-time networks with plans to accommodate the Federal Reserve's FedNow in 2024, with testing to begin in 2023.

PayCenter manages the certification process and mandatory updates from the networks, simplifies integration with toolkits and provides fraud monitoring.

Financial institutions are able to send and receive transactions instantly 24 hours a day, 365 days a year, through our core and complementary solutions.

• Payments as a Service (PaaS) ties together and further enhances the complete array of electronic payments functionality with a front end Payments Developers Experience Portal and back end data analytics.

Research and Development

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JKHY serves established, well-defined markets that provide ongoing sales and cross-sales opportunities.

The marketing and sales initiatives within the Jack Henry Banking and Symitar business lines are primarily focused on identifying banks and credit unions evaluating alternative core information and transaction processing solutions.

ProfitStars sells specialized core agnostic niche solutions that complement existing technology platforms to domestic financial services organizations of all asset sizes and charters.

Dedicated sales forces support each of JKHY’s three primary marketed brands.

The marketing and sales initiatives within the core business lines are primarily focused on identifying banks and credit unions evaluating alternative core information and transaction processing solutions.

Our non-core specialized core-agnostic niche solutions are sold to complement existing technology platforms to domestic financial services organizations of all asset sizes and charters.

Sales executives are responsible for the activities required to earn new customers in assigned territories, and regional account executives are responsible for nurturing customer relationships and cross selling additional products and services.

Our sales professionals receive base salaries and performance-based commission compensation.

Brand-specific sales support staff provide a variety of services, including product and service demonstrations, responses to prospect-issued requests-for-proposals, and proposal and contract generation.

Our marketing department supports all of our brands with lead generation and brand-building activities, including participation in state-specific, regional, and national trade shows;

Sales support staff provide a variety of services, including product and service demonstrations, responses to prospect-issued requests-for-proposals, and proposal and contract generation.

Our marketing

department supports sales with lead generation and brand-building activities, including participation in state-specific, regional, and national trade shows;

print and online advertising;

telemarketing;

customer newsletters;

customer/client newsletters;

ongoing promotional campaigns;

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JKHY also hosts annual national education conferences which provide opportunities to network with existing clients and demonstrate new products and services.

JKHY has sold select products and services primarily in Latin America and the Caribbean and Canada.

International sales accounted for less than 1% of JKHY’s total revenue in the fiscal 2021, 2020, and 2019.

JKHY has sold select products and services outside the United States, primarily in Latin America and the Caribbean and Canada.

International sales accounted for less than 1% of JKHY’s total revenue in each of fiscal 2022, 2021, and 2020.

The market for companies providing technology solutions to financial services organizations is competitive, and we expect that competition from both existing competitors and companies entering our existing or future markets will remain strong.

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For more than a decade there has been significant consolidation among providers of products and services designed for financial institutions, and this consolidation is expected to continue in the future.

Jack Henry Banking and Symitar compete with large vendors that provide information and transaction processing solutions to banks and credit unions, including Fidelity National Information Services, Inc.;

Our core solutions compete with large vendors that provide information and transaction processing solutions to banks and credit unions, including Fidelity National Information Services, Inc.;

Fiserv, Inc.;

and Finastra.

ProfitStars competes with an array of disparate vendors that provide niche solutions to financial services organizations and corporate entities.

Our non-core specialized solutions compete with an array of disparate vendors that provide niche solutions to financial services organizations and corporate entities.

Intellectual Property, Patents, and Trademarks

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JKHY’s compliance program is coordinated by a team of compliance analysts and auditors that possess extensive regulatory agency and financial institution experience, and a thorough working knowledge of JKHY and our solutions.

These compliance professionals leverage multiple channels to remain informed about potential and recently enacted regulatory requirements, including regular discussions on emerging topics with the Federal Financial Institutions Examination Council (“FFIEC”) examination team and training sessions sponsored by various professional associations.

These compliance professionals leverage multiple channels to remain informed about potential and recently enacted regulatory requirements, including regular discussions on emerging topics with the Federal Banking Agencies (“FBA”) examination team and training sessions sponsored by various professional associations.

JKHY has a process to inform internal stakeholders of new and revised regulatory requirements.

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Periodically, customer advisory groups are assembled to discuss significant regulatory changes.

Internal audits of our systems, networks, operations, business recovery plans, and applications are conducted and specialized outside firms are periodically engaged to perform testing and validation of our systems, processes,

plans and security.

The FFIEC conducts annual reviews throughout the Company and issues a Report of Examination.

The FBA conducts annual reviews throughout the Company and issues a Report of Examination.

The Board of Directors provides oversight of these activities through the Risk and Compliance Committee and the Audit Committee.

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All financial institutions are subject to substantial regulatory oversight and supervision.

Our products and services must comply with the extensive and evolving regulatory requirements applicable to our customers, including but not limited to those mandated by federal truth-in-lending and truth-in-savings rules, the Privacy of Consumer Financial Information regulations, usury laws, the Equal Credit Opportunity Act, the Fair Housing Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Bank Secrecy Act, the USA Patriot Act, the Gramm-Leach-Bliley Act, the Community Reinvestment Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Information regulations, usury laws, the Equal Credit Opportunity Act, the Fair Housing Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Bank Secrecy Act, the USA Patriot Act, the Gramm-Leach-Bliley Act, the Community Reinvestment Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The compliance of JKHY’s products and services with these requirements depends on a variety of factors, including the parameters set through the interactive design, the classification of customers, and the manner in which the customer utilizes the products and services.

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We cannot predict the impact these regulations, any future amendments to these regulations or any newly implemented regulations will have on our business in the future.

JKHY is not chartered by the Office of the Comptroller of Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration or other federal or state agencies that regulate or supervise depository institutions.

However, operating as a service provider to financial institutions, JKHY’s operations are governed by the same regulatory requirements as those imposed on financial institutions, and subject to periodic reviews by FFIEC regulators who have broad supervisory authority to remedy any shortcomings identified in such reviews.

JKHY provides private cloud services through JHA OutLink Processing Services™ data Centers, electronic transaction processing through JHA Card Processing Solutions™, internet banking through NetTeller® and Banno online solutions, bill payment through iPay, network security monitoring and Hosted Network Solutions ("HNS") through our Gladiator® unit, cloud services through Hosted Partner Services and Enterprise Integration Services, and business recovery services through Centurion Disaster Recovery ® .

The private cloud services provided by JKHY are subject to examination by FFIEC regulators under the Bank Service Company Act.

JKHY is not chartered by the Office of the Comptroller of Currency ("OCC"), the Board of Governors of the Federal Reserve System, the FDIC, the NCUA or other federal or state agencies that regulate or supervise depository institutions.

However, operating as a service provider to financial institutions, JKHY’s operations are governed by the same regulatory requirements as those imposed on financial institutions, and subject to periodic reviews by FBA regulators who have broad supervisory authority to remedy any shortcomings identified in such reviews.

JKHY provides private cloud services through JHA OutLink Processing Services™ for banks and EASE Processing Services™ for credit unions.

JKHY provides data centers and electronic transaction processing through JHA Card Processing Solutions™, internet banking through NetTeller® and Banno TM online solutions, bill payment through iPay, network security monitoring and Hosted Network Solutions ("HNS") through our Gladiator® unit, cloud services through Hosted Partner Services and Enterprise Integration Services, and business recovery services through Centurion Disaster Recovery ® .

The private cloud services provided by JKHY are subject to examination by FBA regulators under the Bank Service Company Act.

These examinations cover a wide variety of subjects, including system development, functionality, reliability, and security, as well as disaster preparedness and business recovery planning.

Our private cloud services are also subject to examination by state banking authorities on occasion.

Information Security

We are committed to the protection and security of the sensitive information contained on our systems and accessed through our products and services.

Because threats to information security pose risks to our business and to our customers, we proactively make strategic investments in security and the infrastructure and procedural controls for our systems.

These investments enable a comprehensive set of security controls that are maintained and tested on a consistent basis.

Additional third-party reviews are performed throughout the organization, such as Payment Card Industry-Data Security Standard assessments, state and federal regulatory examinations, intrusion tests, and System and Organizations Controls ("SOC") 1 or SOC 2 reports.

The Board of Directors provides oversight of these activities through the Risk and Compliance Committee and the Audit Committee.

Information and Cybersecurity

In our increasingly interconnected environment, information is inherently exposed to a growing number of risks, threats, and vulnerabilities.

As a provider of products and services to financial institutions, we take extreme caution and due care in processing and storing sensitive, personally identifiable information securely.

We prioritize protecting our associates, clients, and their private data from the ever-evolving cyber threat environment and ensuring the resiliency of such information.

We have an established information and cybersecurity program maintained by a team of diverse, highly skilled cybersecurity professionals, as well as a portfolio of investments in modern technology including artificial intelligence and machine learning.

The program incorporates industry-standard frameworks, policies, and practices designed to protect the confidentiality and privacy of JKHY’s and our clients’ information.

Additionally, we maintain insurance that includes cybersecurity coverage.

In support of the program, our systems and services undergo regular reviews performed by the same regulatory agencies that review financial institutions:

Consumer Financial Protection Bureau ("CFPB"), Federal Reserve Board ("FRB"), FDIC, NCUA, and the OCC, among others.

Reviews such as those by the Federal Banking agencies (a regulatory group comprised of the FDIC, FRB, and the OCC) assess and identify security gaps or flaws in controls and monitor the effectiveness of our security program.

Critical services provided to our clients are subject to annual System and Organization Controls ("SOC") reviews by independent auditors.

SOC reports are made available to clients via the client communications portal.

Information and cybersecurity leadership reports to the Risk and Compliance Board committee and the full Board of Directors quarterly, on information security and cybersecurity matters.

Human Capital

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Our people and culture strategy focuses on attracting, engaging, and retaining qualified, diverse, and innovative talent at all levels of the Company.

We are a committed equal opportunity employer and all qualified candidates receive consideration for employment without regard to race, color, religion, national origin, age, disability, sex, sexual orientation, gender, gender identity, pregnancy, genetic information, or other characteristics protected by applicable law.

We are a committed equal opportunity employer and all qualified candidates receive consideration for employment without regard to race, color, religion, national origin, age, disability, sex,

sexual orientation, gender, gender identity, pregnancy, genetic information, or other characteristics protected by applicable law.

Beyond nondiscrimination compliance, we are committed to fostering a respectful, diverse, and inclusive workplace in which all individuals are treated with respect and dignity.

In 2020, our President and Chief Executive Officer, David Foss, signed the CEO Action for Diversity and Inclusion Pledge, joining nearly 2,000 other chief executives and presidents who have made a pledge to act on supporting a more inclusive workplace for employees, communities, and society at large.

We actively engage our Business Innovation Groups (“BIGs”) to develop attraction and retention practices that exemplify and advance a diverse, equitable, and inclusive culture.

Our BIGs are company-sponsored and employee-driven groups open to all employees.

We continue to concentrate efforts on diversity, equity, inclusion, and belonging and have hired employees in the human resources function to focus on this important area.

We seek nontraditional talent streams to help identify candidates from underrepresented groups, including through our internship program and our newly launched apprenticeship program.

Our internship program focuses on attracting college and university students to paid work in JKHY departments related to their studies, while our apprenticeship program offers paid training and work for candidates (either students or non-students) with little to no traditional experience in the field, such as learning computer coding.

Both our internship program and our apprenticeship program can lead to full-time employment.

We have sought to expand our sources for candidates for these programs, including by increasing our recruiting efforts at historically black colleges and universities and through relationships with non-profits that promote employment opportunities for veterans.

We continue to engage our Business Innovation Groups (“BIGs”) to develop attraction and retention suggestions and practices that advance a diverse, equitable, and inclusive culture.

Our BIGs are company-sponsored groups open to all employees.

As of June 30, 2022, we had approximately 1,700 unique associates participating in six active BIGs, with five focused on inclusion for specific communities — women, people of color, remote associates, LGBTQ+, and veterans — and one focused on environmental and sustainability topics.

While BIGs allow associates to connect and support each other, they also function to address bona fide business problems.

While BIGs allow associates to connect and support each other, they also function to assist us in addressing bona fide business problems through input and suggestions.

For example, these groups work with executive leadership to actively improve our talent attraction processes for prospective employees.

They also provide education, training, and conversation opportunities to all employees to advance diversity, inclusion, understanding, and innovation throughout the Company.

We seek to actively listen to our employees throughout the year using a defined listening strategy designed to gather regular feedback on well-being, engagement, leadership, culture and values, and other top of mind topics.

We seek to actively listen to our employees throughout the year using a defined and continual listening strategy designed to gather regular feedback on well-being, engagement, leadership, ethics, culture and values, and other top of mind topics.

These surveys allow us to respond to employee concerns, benefit from employee perspectives, and better design and develop processes to support our Company culture.

Employees can learn about changes through our quarterly employee update videos or all-employee town hall meetings delivered by senior management.

Based on periodic monitoring, we believe our voluntary attrition rate is low compared to competitive benchmarks.

We believe our strong retention rate demonstrates healthy engagement by our employees.

Training and Development

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We offer our employees numerous live and on-demand training programs and resources to help them build knowledge and improve skills.

These trainings include mandatory programs, such as security awareness, as well as recommended but optional programs, such as a recent training on mitigating unconscious bias that received a high level of participation and led many of our employees to take a personal pledge to support inclusion in the workplace.

Self-developer weeks specifically allow employees the opportunity to sign-up for curated courses covering topics such as technology trends and JKHY products and services.

Through our BIGs, we also offer opportunities for employees to advance their knowledge of diversity, equity, and inclusion matters.

These trainings include mandatory programs, such as security awareness, as well as recommended but optional programs in areas including leadership development;

technical skills;

and diversity, equity, and inclusion.

Jack Tracks, a three-week virtual development event, offers employees a large selection of curated topics such as future readiness, technology trends, and education on Company solutions.

Recognizing the importance of mentoring in career development, we host an internal mentorship marketplace, which allows prospective mentors and mentees to connect and self-initiate a mentoring relationship.

We also provide an internal mobility marketplace, which offers career coaching and tools for employees to create personalized development plans and build peer connections.

In fiscal 2020, we launched a targeted, four-week leadership development initiative for over 100 women at JKHY to address barriers to advancing in leadership roles they commonly encounter.

We also make career mobility and personal development plan resources available to all employees.

In fiscal 2022, we strengthened our leadership capacity by providing training on effective coaching practices to all leaders and offered a virtual summit for the Company’s most senior leaders focused on alignment to top priority business initiatives.

We recognize and value the contribution of our employees who develop, improve, and support our technology solutions and we provide additional development opportunities for them to advance their technical expertise.

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JKHY offers a competitive compensation and benefits package and supports dedicated campaigns that communicate directly to employees about financial wellness, mental health, healthful nutrition and exercise, and other wellness topics.

Employee well-being is further supported through policies such as paid parental leave, military service leave, educational assistance, and bereavement leave policies.

In response to the COVID-19 pandemic, we made impactful changes to our benefits program, including waiving all out-of-pocket expenses associated with COVID-19 for employees or dependents covered under Jack Henry’s medical plans.

We also shifted to a predominantly remote workforce to ensure the continued safety of our employees, clients, and communities.

Employee well-being is further supported through policies such as remote work, paid parental leave, military service leave, educational assistance, and bereavement leave policies.

For more information on our COVID-19 response, see “COVID-19 Impact and Response” above.

Available Information

JKHY’s Website is easily accessible to the public at www.jackhenry.com .

JKHY’s Website is easily accessible to the public at jackhenry.com .

The “Investors" portion of the Website provides key corporate governance documents, the code of conduct, an archive of press releases, and other relevant Company information.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business