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Item 1. Business

2024-08-26 compared with 2023-08-24 · 159 added, 172 removed, 148 unchanged (69% of the section changed)

Jack Henry & Associates, Inc.® is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve.

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 more than 48 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 over 7,500 financial institutions and diverse corporate entities with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health.

We empower approximately 7,500 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 philosophy has always been part of our foundation and the roots 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 people and businesses using more modern technology and services.

While much has changed since we opened for business in 1976, we continue to be focused on helping community and regional financial institutions, and we are guided by our founding principles:

This philosophy has always been part of the foundation on which Jack Henry was built.

Since our founding in 1976, much has changed, but our commitment to supporting community and regional financial institutions remains unwavering.

We continue to be guided by our founding principles:

do the right thing, do whatever it takes, and have fun.

We provide products and services primarily to community and regional financial institutions:

• Core bank integrated data processing systems are provided to 940 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 "Our Industry" in this Item 1.

Our banking solutions support both on-premise and private cloud operating environments with functionally distinct 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 over 710 credit union customers.

We provide products and services primarily to community and regional financial institutions (see "Our Industry" below):

• Core bank integrated data processing systems are provided to over 940 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 720 credit unions.

We offer a flagship core processing platform and integrated complementary solutions that support both on-premise and private cloud operating environments.

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

In total, we serve over 7,500 customers, over 1,650 of our core customers included in our bank and credit union customers listed above, and nearly 5,880 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’ expectations.

We measure and monitor customer satisfaction using a variety of surveys, such as an annual survey on the customer's anniversary date and randomly-generated online surveys initiated each day by routine support requests to ensure feedback is received throughout the year.

The results of our survey process provide assurance that our service consistently exceeds our customers’ expectations and, we believe, contribute to our excellent customer retention rates.

We are focused on establishing long-term customer relationships, continually expanding and strengthening those relationships 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 revenue is derived from support and services provided by our private and public 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 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.

In total, we serve over 1,660 bank and credit union core clients and over 5,870 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 financial institutions 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).

We recognize that our associates and their collective contribution are ultimately responsible for Jack Henry'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 an organizational culture that sustains high levels of employee engagement.

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 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 4,660 commercial banks and savings institutions in this asset range as of December 31, 2022, and we currently support 940 of these banks with one of our three core information processing platforms and complementary products and services.

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

Our systems are designed to be capable of serving institutions with up to $100 billion in assets, and we complete annual, third-party testing to validate this capability each August.

According to the Federal Deposit Insurance Corporation (“FDIC”), there were approximately 4,540 commercial banks and savings institutions in the less than $50 billion asset range as of December 31, 2023, and we currently support over 940 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 the Credit Union National Association (“CUNA”), there were more than 4,850 domestic credit unions as of December 31, 2022, and we currently support over 710 of these credit unions with one flagship core information processing platform and complementary products and services.

According to America's Credit Unions ("ACU") (formerly Credit Union National Association), there were approximately 4,700 domestic credit unions as of December 31, 2023, and we currently support approximately 720 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 financial services organizations of all asset sizes and charters and other diverse corporate entities.

We currently support over 7,500 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 17% from the beginning of calendar year 2017 to the end of calendar year 2022, 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 6% and totaled $23.6 trillion as of December 31, 2022.

There were 15 new bank charters issued in calendar year 2022, compared to 10 in the 2021 calendar year.

Comparing calendar years 2022 to 2021, the number of mergers decreased 19%.

CUNA reports the number of credit unions declined 15% from the beginning of calendar year 2017 to the end of calendar year 2022.

We currently support financial 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 15% from the beginning of calendar year 2018 to the end of calendar year 2023, 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 6% and totaled $23.7 trillion as of December 31, 2023.

There were six new bank charters issued in calendar year 2023, compared to 15 in the 2022 calendar year.

Comparing calendar years 2023 to 2022, the number of transactions of FDIC-insured banks acquiring or merging with other banks or credit unions decreased 20%.

ACU reports the number of credit unions declined 14% from the beginning of calendar year 2018 to the end of calendar year 2023.

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 $2.3 trillion as of December 31, 2023.

Community and mid-tier banks and credit unions are vitally important to the communities, consumers, and businesses 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.

Community and regional financial institutions are vitally important to the communities, consumers, and businesses they serve as well as to the local economies where they operate.

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.

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• Protect mission-critical information assets and operational infrastructure.

• Protect customers/members with various security tools from fraud and related financial losses.

• 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.

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Jack Henry’s extensive product and service offerings help diverse financial institutions meet business challenges and capitalize on opportunities.

We strive to get to know our customers, understand their strategies and challenges, and provide innovative solutions that help them achieve short- and long-term success.

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

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

• Providing non-core highly specialized core-agnostic complementary products and services to financial institutions, including institutions not utilizing one of our core processing systems, and diverse corporate entities.

• Providing community and regional financial institutions 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 financial institutions, 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.

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

• Building, maintaining, and enhancing a protected environment and tools that help our clients and us protect customer data, assets, and comply with regulations.

• Capitalizing on our acquisition strategy.

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

• 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.

Acquisition Strategy

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We continue to explore acquisitions that have the potential to:

• Expand our suite of complementary products and services.

• Provide products and services that can be sold to both existing core and non-core customers and outside our base to new customers.

• Accelerate our internal development efforts.

• 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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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.

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 clients, repurchases of our stock, and continued payment of dividends.

Our most recent acquisition was:

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• 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, fraud and risk management and protection, account origination, and item and document imaging solutions.

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.

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

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 client support.

• 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, fraud and risk management and protection, account origination, and item and document imaging solutions.

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

Our credit union solution also has state-of-the-art functional capabilities.

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Our credit union solution can be delivered on-premise, through our private cloud, or through our partner private cloud delivery models.

Each is backed by our company-wide commitment to provide exceptional personal service.

• 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.

Each is backed by our company-wide commitment to provide exceptional client support.

• Our non-core solutions for financial institutions and diverse corporate entities 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/payment 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.

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.

We strive to develop and maintain functionally robust, integrated solutions that are supported with high service levels, regularly updating and improving those solutions using an interactive customer enhancement process;

ensuring compliance with relevant regulations;

updated with proven advances in technology;

and consistent with Jack Henry’s reputation as a premium solution and service provider.

We are committed to developing and maintaining modern and integrated solutions supported by high service levels.

We continuously update and improve these solutions through an interactive client enhancement process, ensuring compliance with relevant regulations, and incorporating proven advances in technology.

Our goal is to uphold our Company's reputation as a premium solution and service provider.

Core Software Systems

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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.

These core systems are available for on-premise installation at client 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.

• SilverLake System ® , a robust system primarily designed for commercial-focused banks that currently serves 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 460 banks, and now automates nearly 10% of the domestic banks with assets less than $50 billion.

This system is in use by approximately 490 banks, and now serves nearly 11% of the domestic banks with assets less than $50 billion.

• CIF 20/20 ® , a parameter-driven, easy-to-use system that now supports approximately 280 banks ranging from de novo institutions to those with assets of $5 billion.

• Core Director®, a cost-efficient system with point-and-click operation that now supports approximately 180 banks ranging from de novo institutions to those with assets of over $2 billion.

• Core Director ® , a cost-efficient system with point-and-click operation that now supports over 170 banks ranging from de novo institutions to those with assets of over $2 billion.

Core credit union platform is:

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

It has been implemented by over 710 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.

It has been implemented by approximately 720 credit unions with assets ranging from $20 million to $30 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 core system.

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

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

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.

On-premise customers generally license our core software systems under a standard license agreement that provides a fully paid, nonexclusive, nontransferable right to use the software on a single computer at a single location.

Customers can eliminate the significant up-front capital expenditures required by on-premise installations and the responsibility for operating information and transaction processing infrastructures by leveraging our private cloud environment for those functions.

Our core private cloud services are provided through a highly resilient data center

configuration across multiple physical locations.

On-premise clients generally license our core software systems under a standard license agreement that provides a fully paid, nonexclusive, nontransferable right to use the software on a single computer at a single location.

Clients can eliminate the significant up-front capital expenditures required by on-premise installations and the responsibility for operating information and transaction processing infrastructures by leveraging our private cloud environment for those functions.

Our core private cloud services are provided through a highly resilient data center configuration across multiple physical locations.

We also provide image item processing services from two host/archive sites and several key entry and balancing locations throughout the country.

We print and mail customer statements for financial institutions from three regional printing and rendering centers.

Customers electing to outsource their core processing typically sign contracts for seven or more years that include "per account" fees and minimum guaranteed payments during the contract period.

We support the dynamic business requirements of our core bank and credit union clients with ongoing enhancements to each core system, the regular introduction of new integrated complementary products, the ongoing integration of practical new technologies, and regulatory compliance initiatives.

We also serve each core customer as a single point of contact, support, and accountability.

We print and mail customer/member statements for financial institutions from three regional printing and rendering centers.

Clients electing to outsource their core processing typically sign contracts for six years that include "per account" fees and minimum guaranteed payments during the contract period.

We are dedicated to meeting the evolving business needs of our core bank and credit union clients by continuously enhancing each core system, introducing new integrated complementary products regularly, integrating practical new technologies, and adhering to regulatory compliance initiatives.

Additionally, we serve as a single point of contact for each core client for support and accountability.

Complementary Products and Services

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 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 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.

We regularly introduce 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.

Our 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.

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

We have more than 140 complementary/payment products and services that are targeted to our core banks and more than 100 targeted to credit unions.

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

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

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

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

Our Industry Research department solicits client guidance on the business solutions they need, evaluates available solutions and competitive offerings, and manages the introduction of new product offerings.

Our new complementary/payment products and services are developed internally, acquired, or provided through strategic alliances.

Implementation and Training

Most of our core bank and credit union customers contract with us for implementation and training services in connection with their systems and additional complementary products.

Most of our core bank and credit union clients contract with us for implementation and training services in connection with their systems and additional complementary products.

A complete core system implementation typically includes detailed planning, project management, data conversion, and testing.

Our experienced implementation teams travel to customer facilities or work remotely with clients to help manage the implementation process and ensure that all data is transferred from the legacy system to the Jack Henry system.

Our experienced implementation teams travel to client facilities or work remotely with clients to help manage the implementation process and ensure that all data is transferred from the legacy system to the Jack Henry system.

Our implementation fees are fixed or hourly based on the core system being installed.

We also provide extensive initial and ongoing education to our customers.

We have a comprehensive training program that supports new customers with basic training and longtime customers with continuing education.

The training enables financial institutions to maximize the use of our core and complementary solutions, learn about ongoing system enhancements, and understand dynamic year-end legislative and regulatory requirements.

We also provide extensive initial and ongoing education to our clients.

We have a comprehensive training program that supports new clients with basic training and longtime clients with continuing education.

The training enables financial institutions to maximize the use of our core and complementary solutions, learn about ongoing system enhancements, and understand evolving legislative and regulatory requirements.

Support and Services

We serve our customers as a single point of contact and support for the complex solutions we provide.

We serve our core clients as a single point of contact and support for the complex solutions we provide.

Our comprehensive support infrastructure incorporates:

• Exacting service standards.

• High service standards.

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

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• Highly effective change management and control processes.

• Best practices methodology developed and refined through the company-wide, day-to-day experience supporting over 7,500 diverse clients.

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

• Best practices methodology developed and refined through the company-wide, day-to-day experience.

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

These support services are typically priced at approximately 20% of the respective product’s software license fee.

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

Annual software support fees typically are 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.

The subsequent years' service fees generally increase as client assets

increase and as additional complementary products are purchased.

Annual software support fees typically are 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.

Most support contracts automatically renew unless the customer or Jack Henry gives notice of termination at least 30 days prior to contract expiration.

High levels of support are provided to our private cloud customers by the same support infrastructure utilized for on-premise customers.

Most support contracts automatically renew unless the client or Jack Henry gives notice of termination at least 30 days prior to contract expiration.

High levels of support are provided to our private cloud clients by the same support infrastructure utilized for on-premise clients.

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

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Our software systems operate on a variety of hardware platforms.

We have established remarketing agreements with IBM Corporation, and many other hardware providers that allow Jack Henry to purchase hardware and related maintenance services at a discount and resell them directly to our customers.

We currently sell IBM Power Systems™;

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

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

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

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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 banks and credit unions attractive, fast, native applications for their customers and members and cloud-based, core-connected back-office tools for their employees.

It is a complete, open digital banking platform that gives banks and credit unions attractive, fast, cloud-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.

• 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.

Electronic payment solutions provide our clients 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.

• JHA Card Processing Solutions™ ("CPS") supports full-service and in-house debit and credit card programs, as well as an Agent credit option, backed by a comprehensive suite of tools for 24/7 fraud mitigation, digital payments, full-service dispute management, plastics manufacturing and personalization, loyalty programs, data analytics, and ATM 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.

• Payrailz TM supports our technology modernization strategy by adding next generation digital payment capabilities to our payment’s ecosystem based on cloud native microservices.

Our new Money Movement payments platform includes native artificial intelligence ("AI"), Action Insights (which is predictive and proactive recommendations through AI), a flexible modern user experience, a layered security model, an automated fraud feature leveraging machine learning, and a modern and flexible administrative portal.

In addition to bill payment capabilities, we have a ‘pay a loan’ feature, an ‘open looped’ real-time person-to-person ("P2P") solution, and account-to-account ("A2A") transfer features.

• JHA PayCenter TM , provides our customer financial institutions with a single entry point to both Zelle® and Real Time Payments ("RTP") real-time networks and supports the Federal Reserve's FedNow®, which launched in July 2023.

• Enterprise Payment Solutions ("EPS") is a comprehensive payments engine, offering an integrated suite of remote deposit capture, Automated Clearing House ("ACH") and card transaction processing solutions, supporting tools for accounts receivable posting, risk management, reporting, and application interfaces ("APIs") for financial institutions, businesses, and fintechs of all sizes.

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

• Payrailz TM Payments Platform provides consumers and businesses with money movement options through their financial institutions’ digital platforms.

It supports our technology modernization strategy by providing next-generation, cloud-native digital payment capabilities to our payment ecosystem.

This money movement payments platform incorporates artificial intelligence ("AI") to make predictive and proactive recommendations, a flexible modern user experience, a layered security model, an automated fraud feature powered by machine learning, and a contemporary, adaptable administrative portal.

In addition to bill payment capabilities, we provide a 'pay a loan' feature, an 'open looped' real-time person-to-person ("P2P") solution, and account-to-account ("A2A") transfer features.

The array of money movement options maintains consumer and business engagement with the financial institution.

• JHA PayCenter TM , provides financial institutions with a single entry point to both Zelle ® and Real Time Payments ("RTP") networks, and the Federal Reserve's FedNow ® network.

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

Financial institutions can 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

We invest significant resources in ongoing research and development to develop new software solutions and services and enhance existing solutions with additional functionality and features required to ensure regulatory compliance.

We invest significant resources in ongoing research and development to build new software solutions and services and enhance existing solutions with additional functionality and features required to ensure regulatory compliance.

We enhance our core and complementary systems a minimum of once each year.

Product-specific enhancements are largely customer-driven with recommended enhancements formally gathered through focus groups, change control boards, strategic initiatives meetings, annual user group meetings, and ongoing customer contact.

We also continually evaluate and implement process improvements that expedite the delivery of new products and enhancements to our customers and reduce related costs.

Research and development expenses for fiscal 2023, 2022, and 2021 were $142.7 million, $121.4 million, and $109.0 million, respectively.

We recorded capitalized software in fiscal 2023, 2022, and 2021 of $166.1 million, $148.2 million, and $128.3 million, respectively.

Product-specific enhancements are largely client-driven with recommended opportunities formally gathered through focus groups, change control boards, strategic initiatives meetings, annual user group meetings, and ongoing client contact.

We also continually evaluate and implement process improvements that expedite the delivery of new products and enhancements to our clients and reduce related costs.

Research and development expenses (in thousands) for fiscal 2024, 2023, and 2022 were $148,256, $142,678, and $121,355, respectively.

We recorded capitalized software (in thousands) in fiscal 2024, 2023, and 2022 of $167,175, $166,120, and $148,239, respectively.

Sales and Marketing

We serve established, well-defined markets that provide ongoing sales and cross-sales opportunities.

We serve established, well-defined markets that provide ongoing sales and cross-sell opportunities.

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

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

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

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telemarketing;

customer/client newsletters;

client newsletters;

ongoing promotional campaigns;

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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.

Some of our current competitors have longer operating histories, larger customer bases, and greater financial resources.

The principal competitive factors affecting the market for technology solutions include product/service functionality, price, operating flexibility and ease-of-use, customer support, and existing customer references.

Some of our current competitors have longer operating histories, larger client bases, and greater financial resources.

The principal competitive factors affecting the market for technology solutions include product/service functionality, price, operating flexibility and ease-of-use, client support, and existing client references.

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.

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Fiserv, Inc.;

Corelation, Inc.;

and Finastra.

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Instead, we rely on a combination of contractual rights, copyrights, trademarks, and trade secrets to establish and protect our proprietary technology.

We generally enter into confidentiality agreements with our employees, consultants, resellers, customers, and potential customers.

We generally enter into confidentiality agreements with our associates, consultants, resellers, clients, and prospects.

Access to and distribution of our Company’s source code is restricted, and the disclosure and use of other proprietary information is further limited.

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Regulatory Compliance

We maintain a corporate commitment to address compliance issues and implement requirements imposed by federal regulators prior to the effective date of such requirements when adequate prior notice is given.

Our compliance program is coordinated by a team of compliance analysts and auditors with extensive regulatory agency and financial institution experience, and a thorough working knowledge of Jack Henry and our solutions.

Jack Henry maintains a corporate commitment to address compliance issues and implement requirements imposed by federal regulators prior to the effective date of such requirements when adequate prior notice is given.

Our compliance program is coordinated by a team of qualified compliance analysts and auditors with extensive regulatory agency and financial institution experience, knowledge and understanding of Federal consumer protection regulations, and a thorough working knowledge of Jack Henry 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 Banking Agencies (“FBA”) examination team and training sessions sponsored by various professional associations.

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

Upcoming regulatory changes also are presented to the Company’s development teams through monthly regulatory compliance meetings and the necessary product changes are included in the ongoing product development cycle.

We publish newsletters to keep our customers informed of regulatory changes that could impact their operations.

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

We have processes in place to inform internal stakeholders of new and revised regulatory requirements.

Upcoming regulatory changes also are presented to the Company’s development teams through periodic regulatory compliance meetings and the necessary product changes are included in the ongoing product development cycle.

We publish newsletters to keep our clients informed of regulatory changes that could impact their operations.

Periodically, client 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.

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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.

The compliance of Jack Henry’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.

Our customers are contractually responsible for assessing and determining what is required of them under these regulations and then we provide solutions that assist them in meeting their regulatory needs through our products and services.

Our products and services must comply with the extensive and evolving regulatory requirements applicable to our clients, 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.

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

Our clients are contractually responsible for assessing and determining what is required of them under these regulations and then we provide solutions that assist them in meeting their regulatory needs through our products and services.

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.

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However, operating as a service provider to financial institutions, Jack Henry’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.

Jack Henry is also subject to periodic examinations by the Consumer Financial Protection Bureau (“CFPB”), which provides supervision and enforcement related to federal consumer financial laws applicable to some products and services offered by our clients.

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

We provide 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 ® .

We provide data centers and electronic transaction processing through JHA Card Processing Solutions™, internet banking through NetTeller ® and Banno TM online solutions, bill payment through our Payrailz TM Payments Platform, 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 ® .

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

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

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 use industry standard policies and procedures to process and store 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 Jack Henry’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.

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

Our Employees

As of June 30, 2023, we had approximately 7,120 full-time and part-time employees.

Our employees are not covered by a collective bargaining agreement and there have been no labor-related work stoppages.

Our Associates

As of June 30, 2024, Jack Henry had approximately 7,170 full-time and part-time associates.

Our associates are not covered by a collective bargaining agreement and there have been no labor-related work stoppages.

Talent Attraction and Engagement

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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.

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

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

We continue to concentrate efforts on assuring that all our associates feel like they belong at Jack Henry.

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

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

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, 2023, we had over 1,840 unique associates participating in seven active BIGs, with six focused on inclusion for specific communities — women, people of color, remote employees, LGBTQ+, veterans, and people with disabilities — and one focused on environmental and sustainability topics.

While BIGs allow employees 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 increase belongingness and to advance diversity, inclusion, understanding, and innovation throughout the Company.

JHAnywhere, a BIG formed previously to provide community and resources for the then minority of employees working remotely, was discontinued in July 2023 due to the proliferation of remote work resulting from the COVID-19 pandemic to the extent that such efforts became a company-wide focus that went beyond the capacity of a single BIG to support.

The Company remains focused on equipping all employees with the tools necessary to effectively communicate, collaborate, and build connections in a remote environment, including ensuring leaders have the skills needed to effectively lead dispersed teams.

We seek to actively listen to our employees throughout the year using a defined and continuous 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 jhDaily online news center, regular email communications, monthly Manager Forum events, quarterly employee update videos or all-employee town hall meetings delivered by senior management.

We are actively collaborating with our Business Innovation Groups ("BIGs") to foster a culture of belonging.

Their insights are crucial for sparking innovation and shaping strategies to attract and retain talent, ensuring our associates feel valued and connected.

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

As of June 30, 2024, we had over 1,740 unique associates participating in six active BIGs, with five focused on inclusion for specific communities — women, people of color, LGBTQ+, veterans, and people with disabilities — and one focused on environmental and sustainability topics.

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 associates.

They also provide education, training, and conversation opportunities to all associates to increase belongingness and innovation throughout the Company.

A significant portion of the Company’s associates work remotely on either a full-time or hybrid remote/office basis.

The Company remains focused on equipping all associates with the tools necessary to effectively communicate, collaborate, and build connections in a remote environment, including ensuring leaders have the skills needed to effectively lead dispersed teams.

We seek to actively listen to our associates throughout the year using a defined and continuous 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 associate concerns, benefit from associate perspectives, and better design and develop processes to support our Company culture.

Associates can learn about changes through our jhDaily online news center, regular email communications, monthly Manager Forum events, quarterly associate update videos, or all-associate town hall meetings delivered by senior management.

Training and Development

Our success depends not only on attracting and retaining talented employees, but also in developing our current employees and providing new opportunities for their growth.

We offer our employees numerous live and on-demand courses, resources, and training programs to help them build knowledge, improve skills, and develop their career at Jack Henry.

Our success depends not only on attracting and retaining talented associates, but also in developing our current associates and providing new opportunities for their growth.

We offer our associates numerous live and on-demand courses, resources, and training programs to help them build knowledge, improve skills, and develop their career at Jack Henry.

Learning opportunities include mandatory courses, such as security awareness, as well as recommended content in areas including leadership development;

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and diversity, equity, inclusion, and belonging.

Jack Tracks, an annual, company-wide virtual learning event, offers employees a large selection of curated topics such as technical and operational readiness, technology trends, company solutions, and industry trends.

Jack Tracks, an annual, company-wide virtual learning event, offers associates a large selection of curated topics such as technical and operational readiness, technology trends, company solutions, and industry trends.

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.

Career mobility and personal development resources are available to all employees through dedicated intranet sites.

Career mobility and personal development resources are available to all associates through dedicated intranet sites.

We continue to strengthen our leadership capacity by providing training on effective coaching practices to leaders of the Company.

We recognize and value the contribution of our employees who develop, improve, and support our technology solutions.

We recognize and value the contribution of our associates who develop, improve, and support our technology solutions.

Access to on-demand technical training libraries, customized learning plans, certification programs, and classes facilitated by external experts are available to advance their technical expertise.

When there is a critical skill need or where the technology landscape is rapidly changing, we provide unique learning solutions to align employees' development with our strategic initiatives.

When there is a critical skill

need or where the technology landscape is rapidly changing, we provide unique learning solutions to align associates' development with our strategic initiatives.

Wellness and Safety

We emphasize the safety and well-being of our employees as a top priority.

We define wellness comprehensively and include mental, physical, emotional, financial, psychological, and environmental considerations.

Our benefit plan offerings include supportive and 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 remote work, paid parental leave, military service leave, educational assistance, and bereavement leave policies.

We emphasize the safety and well-being of our associates as a top priority.

We define wellness holistically and include mental, physical, emotional, financial, psychological, and environmental considerations.

Our benefit plan offerings include supportive and dedicated campaigns that communicate directly to associates about financial wellness, mental health, healthful nutrition and exercise, and other wellness topics.

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

Available 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