What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-08-26 compared with 2023-08-24 · 127 added, 154 removed, 707 unchanged (28% of the section changed)

42 unchanged sentences

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

1 unchanged sentence

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - estimating variable consideration and identification of and accounting for performance obligations

Revenue Recognition - estimating variable consideration

As discussed in Notes 1 and 2 to the consolidated financial statements, the Company recorded revenue of $2.216 billion for the year ended June 30, 2024.

The Company enters into contracts with its customers, which frequently contain multiple performance obligations and variable contract consideration.

The amount of revenue recognized is based on the consideration the Company expects to receive in exchange for transferring goods and services to the customer.

The Company’s contracts with its customers frequently contain some component of variable consideration.

The Company enters into contracts with its clients that may include multiple types of goods and services.

The amount of revenue recognized is based on the consideration the Company expects to receive in exchange for transferring goods and services to the client.

The Company’s contracts with its clients frequently contain some component of variable consideration.

Management estimates variable consideration in its contracts primarily using the expected value method, based on both historical and current information.

Where appropriate, the Company may constrain the estimated variable consideration included in the transaction price in the event of a high degree of uncertainty as to the final consideration amount.

At contract inception, management assesses the solutions and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a solution or service (or bundle of solutions or services) that is distinct - that is, if the solution or service is separately identifiable from other items in the arrangement and if the customer can benefit from the solution or service on its own or together with other resources that are readily available.

The Company recognizes revenue when or as it satisfies each performance obligation by transferring control of a solution or service to the customer.

Significant judgment in revenue recognition for these customer contracts include, where relevant, (i) the estimation of variable consideration, principally, the varying volume of transactional activity over long-term contracts, and (ii) the identification of and accounting for all performance obligations.

The principal considerations for our determination that performing procedures relating to the estimation of variable consideration and the identification of and accounting for performance obligations is a critical audit matter are significant judgment by management to estimate the variable consideration, principally, the varying volume of transactional activity and the identification of and accounting for all performance obligations in a contract.

This in turn resulted in significant audit effort, a high degree of auditor judgment and subjectivity in performing our audit procedures and in evaluating the audit evidence obtained.

At contract inception, management assesses the solutions and services promised in its contracts with clients and identifies a performance obligation for each promise to transfer to the client a solution or service (or bundle of solutions or services) that is distinct - that is, if the solution or service is separately identifiable from other items in the arrangement and if the client can benefit from the solution or service on its own or together with other resources that are readily available.

The Company recognizes revenue when or as it satisfies each performance obligation by transferring control of a solution or service to the client.

Significant judgment is used in the estimate of variable consideration of client contracts that are long-term and include varying transactional volumes.

The principal considerations for our determination that performing procedures relating to the estimation of variable consideration is a critical audit matter are significant judgment by management to estimate the variable consideration, principally, the varying volume of transactional activity.

This in turn resulted in a high degree of auditor judgment, subjectivity, and effort in performing our audit procedures and in evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including the estimation of variable consideration and identification of and accounting for each performance obligation.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including the estimation of variable consideration.

The procedures also included, among others, evaluating and testing management’s process for determining the variable consideration and testing the reasonableness of management’s estimation of variable consideration.

Testing the estimation of variable consideration included evaluating the terms and conditions of the long-term contracts and the related significant assumptions used in the estimate of the variable consideration, principally, the use of historical transaction volumes to estimate the varying volume of transactional activity.

The procedures for testing the performance obligations and variable consideration included evaluation of the terms and conditions for a sample of contracts.

The procedures for testing variable consideration included evaluation of the terms and conditions for a sample of contracts.

/s/ PricewaterhouseCoopers LLP

50 unchanged sentences

Deferred costs 85,784 77,766

Assets held for sale — 20,201

Total current assets 632,018 627,962

13 unchanged sentences

Accrued expenses 200,770 172,629

Notes payable and current maturities of long-term debt — 67

Current maturities of long-term debt

Deferred revenues 317,730 331,974

49 unchanged sentences

Balance, beginning of year $ 2,855,751 $ 2,636,342 $ 2,412,496

Cumulative effect of ASU 2016-13 adoption — — ( 493 )

Net income 381,816 366,646 362,916

36 unchanged sentences

Computer software developed ( 167,175 ) ( 166,120 ) ( 148,239 )

Proceeds from investments — — 5,000

Purchase of investments ( 8,646 ) ( 1,000 ) ( 5,000 )

22 unchanged sentences

Jack Henry was founded in 1976 as a provider of core processing solutions for banks.

Today, the Company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for over 7,500 financial institutions and diverse corporate entities.

Today, the Company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for approximately 7,500 financial institutions and diverse corporate entities.

CONSOLIDATION

7 unchanged sentences

The Company generates "Processing" revenue through processing of remittance transactions, card transactions and monthly fees, and digital transactions.

Significant Judgments Used in the Application of the Guidance

Identification of performance obligations

The Company enters into contracts with customers that may include multiple types of goods and services.

At contract inception, the Company assesses the solutions and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a solution or service (or bundle of solutions or services) that is distinct - that is, if the solution or service is separately identifiable from other items in the arrangement and if the customer can benefit from the solution or service on its own or together with other resources that are readily available.

Significant judgment is used in the identification and accounting for all performance obligations.

The Company enters into contracts with clients that may include multiple types of goods and services.

At contract inception, the Company assesses the solutions and services promised in its contracts with clients and identifies a performance obligation for each promise to transfer to the client a solution or service (or bundle of solutions or services) that is distinct - that is, if the solution or service is separately identifiable from other items in the arrangement and if the client can benefit from the solution or service on its own or together with other resources that are readily available.

Judgment is used in the identification and accounting for all performance obligations.

Determination of transaction price

The amount of revenue recognized is based on the consideration the Company expects to receive in exchange for transferring goods and services to the customer.

The Company’s contracts with its customers frequently contain some component of variable consideration.

The amount of revenue recognized is based on the consideration the Company expects to receive in exchange for transferring goods and services to the client.

The Company’s contracts with its clients frequently contain some component of variable consideration.

The Company estimates variable consideration in its contracts primarily using the expected value method, based on both historical and current information.

Where appropriate, the Company may constrain the estimated variable consideration included in the transaction price in the event of a high degree of uncertainty as to the final consideration amount.

Significant judgment is used in the estimate of variable consideration of customer contracts that are long-term and include uncertain transactional volumes.

Technology or service components from third parties are frequently included in or combined with the Company’s applications or service offerings.

Whether the Company recognizes revenue based on the gross amount billed to the customer or the net amount retained involves judgment in determining whether the Company controls the good or service before it is transferred to the customer.

This assessment is made at the performance obligation level.

Significant judgment is used in the estimate of variable consideration of client contracts that are long-term and include varying transactional volumes.

Allocation of transaction price

29 unchanged sentences

The Company evaluates goodwill for impairment of value on an annual basis as of January 1 and between annual tests if events or changes in circumstances indicate that it is more likely than not that the asset might be impaired.

PURCHASE OF INVESTMENT

At June 30, 2023, and 2022, the Company had $ 18,250 invested in the preferred stock of Automated Bookkeeping, Inc.

("Autobooks"), which represents a non-controlling share of the voting equity of Autobooks.

This investment was

recorded at cost and is included within other non-current assets on the Company's balance sheet.

The fair value of this investment has not been estimated, as estimation is not practicable due to limited investors which reduces available comparative information.

There have been no events or changes in circumstances that would indicate an impairment and no price changes resulting from observing a similar or identical investment.

PURCHASE OF INVESTMENTS

At June 30, 2024, and 2023, the Company had $ 25,750 and $ 18,250 , respectively, in non-current investments.

These investments were recorded at cost and are included within other non-current assets on the Company's balance sheet.

The fair values of these investments have not been estimated, as estimation is not practicable due to limited investors which reduces available comparative information.

There have been no events or changes in circumstances that would indicate an impairment and no price changes resulting from observing similar or identical investments.

An impairment and/or an observable price change would be an adjustment to recorded cost.

Fair value will not be estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

Fair values will not be estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair values of the investments.

Equity transactions are monitored quarterly to assess whether there are indicators that fair value may be below carrying value.

2 unchanged sentences

REPORTABLE SEGMENT INFORMATION

I n accordance with U.S.

In accordance with U.S.

GAAP, the Company's operations are classified as four reportable segments:

19 unchanged sentences

RECENT ACCOUNTING PRONOUNCEMENTS

Not Adopted at Fiscal Year End

In October of 2021, the FASB issued ASU No.

Recently Adopted Accounting Guidance

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

1 unchanged sentence

The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The Company adopted the ASU on July 1, 2023, and will apply it prospectively to business combinations occurring after that date.

The Company adopted the ASU effective July 1, 2023, and will apply it prospectively to business combinations occurring after that date.

Not Adopted at Fiscal Year End

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which improves the disclosures about a public entity's reportable segments through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is permitted.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures.

The ASU requires additional disclosure related to rate reconciliation, income taxes paid, and other disclosures to improve the effectiveness of income tax disclosures.

The ASU is effective for annual periods beginning after December 15, 2024, and applied on a prospective basis.

Early adoption and retrospective application is permitted.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

REVENUE AND DEFERRED COSTS

1 unchanged sentence

The Company generates revenue from data processing, transaction processing, software licensing and related services, professional services, and hardware sales.

The Company recognizes revenue when or as it satisfies each performance obligation by transferring control of a solution or service to the customer.

The Company recognizes revenue when or as it satisfies each performance obligation by transferring control of a solution or service to the client.

The following describes the nature of the Company’s primary types of revenue:

3 unchanged sentences

Amounts of revenue allocated to these services are recognized as those services are performed.

Customers are typically billed monthly for transactions processed during the month.

Clients are typically billed monthly for transactions processed during the month.

The Company evaluates tiered pricing to determine if a material right exists.

10 unchanged sentences

Product delivery and services revenue is generated primarily from software licensing and related professional services and hardware delivery.

Software licenses, along with any professional services from which they are not considered distinct, are recognized as they are delivered to the customer.

Software licenses, along with any professional services from which they are not considered distinct, are recognized as they are delivered to the client.

Hardware revenue is recognized upon delivery.

6 unchanged sentences

The fees for these services may be fixed or variable (based upon performing an unspecified quantity of services).

Software maintenance fees are typically billed to the customer annually in advance and recognized ratably over the maintenance term.

Software maintenance fees are typically billed to the client annually in advance and recognized ratably over the maintenance term.

Software usage is typically billed annually in advance, with the license delivered and recognized at the outset, and the maintenance fee recognized ratably over the maintenance term.

Accordingly, the Company utilizes the practical expedient which allows entities to disregard the effects of a financing component when the contract period is one year or less.

Taxes collected from customers and remitted to governmental authorities are not included in revenue.

The Company includes reimbursements from customers for expenses incurred in providing services (such as for postage, travel and telecommunications costs) in revenue, while the related costs are included in cost of revenue.

Taxes collected from clients and remitted to governmental authorities are not included in revenue.

The Company includes reimbursements from clients for expenses incurred in providing services (such as for postage, travel and telecommunications costs) in revenue, while the related costs are included in cost of revenue.

Disaggregation of Revenue

1 unchanged sentence

Refer to Note 14 – Reportable Segment Information for disaggregated revenue by type and reportable segment.

The majority of the Company’s revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.

The majority of the Company’s revenue is earned domestically, with revenue from clients outside the United States comprising less than 1% of total revenue.

Year Ended June 30,

7 unchanged sentences

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers.

The following table provides information about contract assets and contract liabilities from contracts with clients.

2024 June 30,

1 unchanged sentence

Contract Assets - Current

33,610 26,711

Contract Assets - Non-current

103,295 81,561

Contract Liabilities (Deferred Revenue) - Current

317,730 331,974

Contract Liabilities (Deferred Revenue) - Non-current

Contract assets primarily result from revenue being recognized when or as control of a solution or service is transferred to the customer, but where invoicing is contingent upon the completion of other performance obligations or payment terms differ from the provisioning of services.

71,202 67,755

Contract assets primarily result from revenue being recognized when or as control of a solution or service is transferred to the client, but where invoicing is contingent upon the completion of other performance obligations or payment terms differ from the provisioning of services.

The current portion of contract assets is reported within prepaid expenses and other in the consolidated balance sheet, and the non-current portion is included in other non-current assets.

Contract liabilities (deferred revenue) primarily relate to consideration received from customers in advance of delivery of the related goods and services to the customer.

Contract liabilities (deferred revenue) primarily relate to consideration received from clients in advance of delivery of the related goods and services to the client.

Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

7 unchanged sentences

Contract Costs

The Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with customers that are expected to be recovered.

These costs consist primarily of sales commissions, which are incurred only if a contract is obtained, and customer conversion or implementation-related costs.

The Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with clients that are expected to be recovered.

These costs consist primarily of sales commissions, which are incurred only if a contract is obtained, and client conversion or implementation-related costs.

Capitalized costs are amortized based on the transfer of goods or services to which the asset relates, in line with the percentage of revenue recognized for each performance obligation to which the costs are allocated.

10 unchanged sentences

valuation is based on significant inputs that are unobservable in the market and the Company's own estimates of assumptions that we believe market participants would use in pricing the asset.

Fair value of financial assets included in current assets is as follows:

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:

Estimated Fair Value Measurements Total Fair

9 unchanged sentences

Financial Liabilities:

Revolving credit facility

Credit facilities

$ — $ 275,000 $ — $ 275,000

14 unchanged sentences

The Company leases certain office space, data centers and equipment.

The Company’s leases have remaining terms of 1 to 10 years.

The Company’s leases have remaining terms of 3 months to 9 years.

Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion.

18 unchanged sentences

Due dates Future Minimum Rental Payments

2024 $ 11,424

Thereafter 17,667

1 unchanged sentence

interest ( 7,519 )

Present value of lease liabilities $ 50,269

Present value of lease liabilities - lessee

Future lease payments include $ 5,464 related to options to extend lease terms that are reasonably certain of being exercised.

At June 30, 2023, there were $ 22,674 in legally binding lease payments for a lease signed but not yet commenced.

The commencement date of the lease is October 1, 2023 and has a term of 96 months.

At June 30, 2024, there were no material legally binding lease payments for leases signed but not yet commenced.

On September 30, 2023, the Company entered into an agreement with a third party to sublease a portion of its Elizabethtown, Kentucky facility.

The commencement date of the sublease was October 1, 2023, and has a term of 57 months.

Sublease income for the fiscal year ended June 30, 2024, was $ 550 , and is included within revenue on the Company's condensed consolidated statements of income.

There have been no indications of impairment related to the underlying right-of-use asset.

Minimum Sublease Payments

At June 30, 2024, the future total minimum sublease payments to be received were as follows:

Due Dates (fiscal year) Future Minimum Sublease Receipts

Total sublease receipts - lessor

PROPERTY AND EQUIPMENT

14 unchanged sentences

(2) Fully depreciated at June 30, 2023.

The change in property and equipment in accrued liabilities was an increase of $ 3,969 and a decrease of $ 4,097 for the fiscal years ended June 30, 2023, and 2022, respectively.

The change in property and equipment in accrued liabilities was an increase of $ 723 and $ 3,969 for the fiscal years ended June 30, 2024, and 2023, respectively.

These amounts were excluded from capital expenditures on the statements of cash flows.

No material impairments of property and equipment were recorded in the fiscal years ended June 30, 2024, 2023, or 2022.

During fiscal 2022, the Company received an offer to purchase one of its facilities and management committed to sell the facility.

At June 30, 2022, this facility's assets were classified as assets held for sale by the Company in the amount of $ 20,201 , and were not included in property and equipment, net.

The sale of this facility was completed during fiscal 2023.

Total assets held for sale by the Company at June 30, 2023, were $ 0 .

The carrying amount of goodwill for the fiscal years ended June 30, 2024, and 2023, by reportable segments, is as follows:

34 unchanged sentences

Computer software includes the unamortized cost of commercial software products developed or acquired by the Company, which are capitalized and amortized over useful lives generally ranging from 5 to 15 years.

Amortization expense for computer software totaled $ 123,210 , $ 105,036 , and $ 99,305 for the fiscal years ended June 30, 2023,

2022, and 2021, respectively.

Amortization expense for computer software totaled $ 137,958 , $ 123,210 , and $ 105,036 for the fiscal years ended June 30, 2024, 2023, and 2022, respectively.

There were no material impairments in fiscal years ended June 30, 2024, 2023, and 2022.

9 unchanged sentences

2029 37,707 7,776 1,002 46,485

The Company had no outstanding short-term debt and $ 275,000 outstanding long-term debt at June 30, 2023, related to credit facilities.

The Company had $ 67 outstanding short-term debt and $ 115,000 outstanding long-term debt at June 30, 2022.

The Company had $ 90,000 outstanding current maturities of long-term debt and $ 60,000 outstanding long-term debt at June 30, 2024, related to credit facilities.

The Company had no outstanding current maturities of long-term debt and $ 275,000 outstanding long-term debt at June 30, 2023.

Credit facilities

On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement that replaced the prior credit facility described below.

On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement that replaced a prior credit facility that was entered into on February 10, 2020.

The credit agreement allows for borrowings of up to $ 600,000 , which may be increased to $ 1,000,000 by the Company at any time until maturity.

The credit agreement bears interest at a variable rate equal to (a) a rate based on an adjusted Secured Overnight Financing Rate ("SOFR") term rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the Prime Rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50 % per annum and (iv) the Adjusted Term SOFR Screen Rate (without giving effect to the Applicable Margin) for a one month Interest Period on such day for Dollars plus 1.0 %), plus an applicable percentage in each case determined by the Company's leverage ratio.

The credit agreement is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit agreement.

The credit agreement is guaranteed by certain subsidiaries of the Company and is subject to various

financial covenants that require the Company to maintain certain financial ratios as defined in the credit agreement.

As of June 30, 2024, the Company was in compliance with all such covenants.

The amended and restated credit facility terminates August 31, 2027 .

There was $ 95,000 outstanding under the amended and restated credit facility at June 30, 2023.

On June 30, 2022, there was a $ 115,000 outstanding balance on the prior credit facility that was entered into on February 10, 2020.

The prior credit facility was a five-year senior, unsecured revolving credit facility.

The prior credit facility allowed for borrowings of up to $ 300,000 , which could be increased by the Company to $ 700,000 at any time until maturity.

The prior credit facility bore interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the U.S.

Bank prime rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50 % and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0 %), plus an applicable percentage in each case determined by the Company's leverage ratio.

The prior credit facility was guaranteed by certain subsidiaries of the Company and was subject to various financial covenants that required the Company to maintain certain financial ratios as defined in the prior credit agreement.

As of June 30, 2022, the Company was in compliance with all such covenants.

The prior credit facility's termination date was February 10, 2025 .

There was $ 60,000 and $ 95,000 outstanding under the amended and restated credit facility at June 30, 2024, and June 30, 2023, respectively.

Term loan facility

4 unchanged sentences

The term loan credit agreement has a maturity date of May 16, 2025 .

There was $ 180,000 outstanding under the term loan at June 30, 2023.

There was $ 90,000 and $ 180,000 outstanding under the term loan at June 30, 2024, and June 30, 2023, respectively.

Other lines of credit

14 unchanged sentences

Contract and service revenues $ 21,985 $ 18,186

Expense reserves and accruals (bad debts, compensation, and payroll tax) 14,023 15,382

Expense reserves and accruals (bad debts and compensation)

16,123 14,023

Leasing liabilities 14,755 12,462

18 unchanged sentences

Research and development credit ( 2.6 ) % ( 2.3 ) % ( 2.0 ) %

Changes to prior year uncertain tax positions

0.6 % — % — %

Other (net) 0.5 % 0.3 % ( 0.1 ) %

23.3 % 22.7 % 23.2 %

As of June 30, 2023, the Company has $ 63 of gross federal net operating loss (“NOL”) pertaining to the acquisition of Goldleaf Financial Solutions, Inc.

which is expected to be utilized after the application of IRC Section 382.

Separately, as of June 30, 2023, the Company has state NOL and tax credit carryforwards with a tax-effected value of $ 128 and $ 1,824 , respectively.

The federal and state loss and credit carryover have varying expiration dates, ranging from fiscal 2024 to 2043.

As of June 30, 2024, the Company has state NOL and tax credit carryforwards with a tax-effected value of $ 110 and $ 2,045 , respectively.

The state loss and credit carryover have varying expiration dates, ranging from fiscal 2025 to 2044.

Based on state tax rules which restrict utilization of these losses and tax credits, the Company believes it is more likely than not that $ 108 of these losses and tax credits will expire unutilized.

1 unchanged sentence

The Company paid income taxes, net of refunds, of $ 106,966 , $ 145,862 , and $ 60,553 in fiscal 2024, 2023, and 2022, respectively.

The increase in cash taxes paid in the current fiscal year is the result of law changes that were included in the Tax Cuts and Jobs Act of 2017 that are effective in the current fiscal year.

The law changes require the capitalization of software development and research and development costs (IRC 174 costs) for tax purposes.

At June 30, 2024, the Company had $ 19,077 of gross unrecognized tax benefits, $ 17,222 of which, if recognized, would affect its effective tax rate.

At June 30, 2022, the Company had $ 8,990 of unrecognized tax benefits, $ 8,066 of which, if recognized, would affect its effective tax rate.

At June 30, 2023, the Company had $ 12,005 of gross unrecognized tax benefits, $ 10,453 of which, if recognized, would affect its effective tax rate.

The Company had accrued interest and penalties of $ 3,351 and $ 1,872 related to uncertain tax positions at June 30, 2024, and 2023, respectively.

15 unchanged sentences

Additions for prior year tax positions 4,672

Reductions for prior year tax positions ( 350 )

Reductions related to expirations of statute of limitations ( 1,524 )

1 unchanged sentence

federal income tax returns for fiscal 2021 and all subsequent years remain subject to examination as of June 30, 2024, under statute of limitations rules.

state income tax returns that remain subject to examination as of June 30, 2023, under the statute of limitation rules varies by state jurisdiction from fiscal 2016

through 2019 and all subsequent years.

state income tax returns that remain subject to examination as of June 30, 2024, under the statute of limitation rules varies by state jurisdiction from fiscal 2016 through 2019 and all subsequent years.

The Company anticipates that potential changes due to lapsing statutes of limitations and examination closures could reduce the unrecognized tax benefits balance by $ 3,000 — $ 7,000 within twelve months of June 30, 2024.

1 unchanged sentence

The Company sells its products to banks, credit unions, and financial institutions throughout the United States and generally does not require collateral.

Billings to customers are typically due 30 days from date of billing.

Billings to clients are typically due 30 days from date of billing.

Reserves are maintained for potential credit losses.

Customer-related risks are moderated through the inclusion of credit mitigation clauses in the Company's contracts and through the monitoring of timely payments.

Client-related risks are moderated through the inclusion of credit mitigation clauses in the Company's contracts and through the monitoring of timely payments.

In addition, some of the Company’s key solutions are dependent on technology manufactured by third parties.

4 unchanged sentences

The total income tax benefits from equity-based compensation for the fiscal years ended June 30, 2024, 2023, and 2022, were $ 4,495 , $ 5,115 , and $ 4,252 , respectively.

These income tax benefits included income tax net excess benefits from stock option exercises and restricted stock vestings of $ 1,109 , $ 652 , and $ 719 for the fiscal years ended June 30, 2023, 2022, and 2021, respectively.

On November 10, 2015, the Company adopted the 2015 Equity Incentive Plan ("2015 EIP") for its employees and non-employee directors.

These income tax benefits included income tax net shortfalls from stock option exercises and restricted stock vestings of $ 184 for the fiscal year ended June 30, 2024, and income tax net excess benefits from stock option exercises and restricted stock vestings of $ 1,109 and $ 652 for the fiscal years ended June 30, 2023, and 2022, respectively.

On November 10, 2015, the Company adopted the 2015 Equity Incentive Plan ("2015 EIP") for its associates and non-employee directors.

The plan allows for grants of stock options, stock appreciation rights, restricted stock shares or units, and performance shares or units.

1 unchanged sentence

Stock option awards

Under the 2015 EIP, terms and vesting periods of the stock options are determined by the Compensation Committee of the Board of Directors when granted.

The options granted under this plan are exercisable beginning three years after grant at an exercise price equal to 100% of the fair market value of the stock at the grant date.

Under the 2015 EIP, terms and vesting periods of the stock options are determined by the Human Capital & Compensation Committee of the Board of Directors when granted.

The options granted under this plan are

exercisable beginning three years after grant at an exercise price equal to 100% of the fair market value of the stock at the grant date.

The options terminate upon surrender of the option, ninety days after termination of employment, upon the expiration of one year following notification of a deceased optionee, or 10 years after grant.

During fiscal 2024, there were no options granted, forfeited, or exercised, and at June 30, 2024, 12 options were outstanding at a weighted average exercise price of $ 87.27 with an aggregate intrinsic value of $ 920 .

During fiscal 2022, there were no options granted or forfeited, and 10 options were exercised at a weighted average exercise price of $ 87.27 with a total intrinsic value of $ 1,005 .

At June 30, 2022, 12 options were outstanding at a weighted average exercise price of $ 87.27 .

During fiscal 2023, there were no options granted, forfeited, or exercised, and at June 30, 2023, 12 options were outstanding at a weighted average exercise price of $ 87.27 .

During fiscal 2022, there were no options granted or forfeited, and 10 options were exercised at a weighted average exercise price of $ 87.27 with a total exercise intrinsic value of $ 1,005 .

At June 30, 2022, 12 options were outstanding at a weighted average exercise price of $ 87.27 .

All remaining options were granted on July 1, 2016.

At June 30, 2024, there was no compensation cost yet to be recognized related to outstanding options.

All of the options are currently exercisable, with a weighted average remaining contractual term (remaining period of exercisability) of 2 years as of June 30, 2024.

Restricted stock unit and performance unit awards

7 unchanged sentences

Vested ( 71 ) 145.50

( 55 ) 189.33

Outstanding July 1, 2022 303 166.50

5 unchanged sentences

Outstanding June 30, 2024 325 $ 189.68 $ 53,953

1 Granted includes restricted stock unit awards and performance unit awards at 100% achievement.

1 Granted includes restricted stock unit awards and performance unit awards with market conditions at 100% achievement.

2 Forfeited includes restricted stock unit awards and performance unit awards forfeited for service requirements not met and performance unit awards not settled due to underachievement of performance measures.

1 unchanged sentence

The restricted stock unit awards were valued at the weighted average fair value of the non-vested units based on the fair market value of the Company’s equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period, consistent with the methodology for calculating compensation expense on such awards.

Of the remaining performance unit awards granted in fiscal 2023, 17 of these performance unit awards were valued at grant by estimating 100% payout at release and using the fair market value of the Company equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period.

24 of the performance unit awards granted in fiscal 2024 were valued at grant by estimating 100% payout at release and using the fair market value of the Company equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period.

The payout at release of approximately half of these performance unit awards will be determined based on the Company's compound annual growth rate ("CAGR") for revenue (excluding adjustments) for the three-year vesting period compared against goal thresholds as defined in the award agreement.

The performance payout at release of the other half of these performance unit awards will be determined based on the expansion of the Company's non-GAAP operating margin over the three-year vesting period compared against goal thresholds as defined in the award agreement.

25 of the performance unit awards were valued at grant using a Monte Carlo pricing model as of the measurement date customized to the specific provisions of the Company’s plan design.

35 of the performance unit awards have market conditions and were valued at grant using a Monte Carlo pricing model as of the measurement date

customized to the specific provisions of the Company’s plan design.

The remaining 4 performance unit awards had other performance targets.

Per the Company's award vesting and settlement provisions, the performance unit awards that utilized a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return ("TSR") in comparison to the custom peer group ("Compensation Peer Group") comprised of the Standard & Poor's 1500 Software & Services Index ("S&P 1500 S&S Index") participant companies and other participants approved by the Compensation Committee of the Company's Board of Directors for fiscal years 2023 and 2022.

For fiscal year 2021, TSR was in comparison to two separate groups—a custom peer group approved by the Human Capital and Compensation Committee and the Standard & Poor's 1500 Information Technology Index ("S&P 1500 IT Index") participants.

Per the Company's award vesting and settlement provisions, the performance unit awards that utilized a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return ("TSR") in comparison to the compensation peer group made up of participants approved by the Human Capital & Compensation Committee of the Company's Board of Directors for fiscal year 2024.

For fiscal years 2023 and 2022, TSR was in comparison to the compensation peer group comprised of the Standard & Poor's 1500 Software & Services Index ("S&P 1500 S&S Index") participant companies and other participants approved by the Human Capital & Compensation Committee of the Company's Board of Directors.

TSR is defined as the change in the stock price through the performance period plus dividends per share paid during the performance period, all divided by the stock price at the beginning of the performance period.

The weighted average assumptions used in the Monte Carlo pricing model to estimate fair value at the grant dates for performance unit awards are as follows:

The Monte Carlo inputs used in the model to estimate fair value at the measurement date and resulting values for these performance unit awards are as follows:

Year Ended June 30,

7 unchanged sentences

Beginning average percentile rank for TSR 74 % 71 % 65 %

S&P 1500 IT Index:

Volatility 25.2 %

Risk free interest rate 0.11 %

Annual dividend based on most recent quarterly dividend $ 1.72

Dividend yield 1.0 %

Beginning average percentile rank for TSR 30 %

1 For fiscal 2023 and 2022, S&P 1500 S&S Index participants were included in the compensation peer group.

At June 30, 2023, there was $ 21,661 of compensation expense, excluding forfeitures, that has yet to be recognized related to non-vested restricted stock unit awards, which will be recognized over a weighted-average remaining contractual term of 1.01 years.

At June 30, 2024, there was $ 21,655 of compensation expense that has yet to be recognized related to non-vested restricted stock unit and performance stock unit awards, which will be recognized over a weighted-average remaining contractual term of 1.02 years.

The fair values of restricted stock units and performance units at release totaled $ 16,544 , $ 24,931 , and $ 12,139 for the fiscal years ended June 30, 2024, 2023, and 2022, respectively.

15 unchanged sentences

EMPLOYEE BENEFIT PLANS

The Company established an employee stock purchase plan in 2006.

The plan allows the majority of employees the opportunity to directly purchase shares of the Company at 85 % of the closing price of the Company's stock on or around the fifteenth day of each month.

During the fiscal years ended June 30, 2023 , 2022, and 2021, employees

purchased 84 , 80 , and 80 shares under this plan at average prices of $ 146.79 , $ 147.36 , and $ 136.87 , respectively.

The Company established an employee stock purchase plan (the "Plan") in 2006.

On January 1, 2024, the Plan was amended and restated, and allows substantially all associates the opportunity to directly purchase shares of the Company at 85 % of the lesser of the fair market value, as defined by the Plan, of the Company's stock on the first trading day or on the last trading day of a three-month offering period, which represents an option.

Prior to January 1, 2024, the Plan allowed substantially all associates the opportunity to directly purchase shares of the Company at 85 % of the closing price of the Company's stock on or around the fifteenth day of each month.

During the fiscal years ended June 30, 2024 , 2023, and 2022, associates purchased 90 , 84 , and 80 shares under this plan at average prices of $ 137.78 , $ 146.79 , and $ 147.36 , respectively.

As of June 30, 2024, approximately 896 shares remained available for future issuance under the Plan.

The plan does not meet the criteria as a non-compensatory plan.

As a result, the Company records the total dollar value of the stock discount given to employees under the plan as expense.

The Company has a defined contribution plan for its employees:

The Plan is considered compensatory, and beginning January 1, 2024, compensation expense is determined based on the option's grant date fair value as estimated by applying the Black-Scholes option-pricing model and is recognized over the offering period.

Prior to January 1, 2024, the Company recorded the total dollar value of the stock discount given to associates under the plan as expense.

The Company has a defined contribution plan for its associates:

the 401(k) Retirement Savings Plan (the “Plan”).

The Plan is subject to the Employee Retirement Income Security Act of 1975 (“ERISA”) as amended.

Under the Plan, the Company matches 100 % of full-time employee contributions up to 5 % of eligible compensation.

In order to receive matching contributions, employees must be 18 years of age and be employed for at least six months .

Under the Plan, the Company matches 100 % of full-time associate contributions up to 5 % of eligible compensation.

In order to receive matching contributions, associates must be 18 years of age and be employed for at least six months .

The Company has the option of making a discretionary contribution;

4 unchanged sentences

The final purchase price, following customary post-closing adjustments to the extent actual closing date working capital, cash, debt, and unpaid seller transaction expenses exceeded or were less than the amounts estimated at closing, was $ 230,205 .

Pursuant to the merger agreement for the transaction, $ 48,500 of the purchase price was placed in an escrow account at the closing, consisting of $ 2,500 for any final purchase price adjustments owed by the sellers, which amount was released to the sellers on December 15, 2022, in connection with post-closing adjustments, and $ 46,000 for indemnification matters under the merger agreement.

Pursuant to the merger agreement for the transaction, $ 48,500 of the purchase price was placed in an escrow account at the closing, consisting of $ 2,500 for any final purchase price adjustments owed by the sellers, which amount was released to the sellers on December 15, 2022, in connection with post-closing purchase price adjustments, and $ 46,000 for indemnification matters under the merger agreement, which amount was released to the sellers on September 20, 2023.

The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was originally funded by our revolving line of credit (Note 7) and cash generated from operations.

Payrailz provides cloud-native, API-first, AI-enabled consumer and commercial digital payment solutions and experiences that enable money to be moved in the moment of need.

Management has completed a preliminary purchase price allocation and assessment of the fair value of acquired assets and liabilities assumed.

Management has completed a purchase price allocation and assessment of the fair value of acquired assets and liabilities assumed.

The recognized amounts of identifiable assets acquired, and liabilities assumed, based on their fair values as of August 31, 2022 , and taking into account the post-closing purchase price adjustment described above, are set forth below:

6 unchanged sentences

Net assets acquired $ 230,205

The amounts shown above include a measurement period adjustment made during the second quarter of fiscal 2023 related to a working capital adjustment.

The amounts shown above may change as management continues to evaluate the income tax implications of this business combination.

The goodwill of $ 117,339 arising from this acquisition consists largely of the growth potential, synergies, and economies of scale expected from combining the operations of the Company with those of Payrailz, together with the value of Payrailz's assembled workforce.

4 unchanged sentences

The fair value of current assets acquired included accounts receivable of $ 978 , none of which were expected to be uncollectible.

Costs incurred related to the acquisition of Payrailz during the fiscal year ended June 30, 2023, totaled $ 706 for administrative and professional services, travel, and other fees, and were expensed as incurred and reported within cost of revenue and selling, general, and administrative expense.

The Company's condensed consolidated statements of income for the fiscal year ended June 30, 2023, included revenue of $ 8,482 , and after-tax net loss of $ 18,672 , resulting from Payrailz's operations.

The accompanying consolidated statements of income for the fiscal year ended June 30, 2023, do not include any revenues and expenses related to this acquisition prior to the acquisition date.

The following unaudited pro forma consolidated financial information for the fiscal years ended June 30, 2023, and 2022, is presented as if this acquisition had occurred at the beginning of the prior period presented.

The pro forma net income includes estimated incremental amortization expense of $ 1,957 and $ 10,417 for the fiscal years ended June 30, 2023, and 2022, respectively.

In addition, this unaudited pro forma financial information is provided for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisition had actually occurred during this period, or the results that may be obtained in the future as a result of the acquisition.

Pro forma Pro forma

Revenue $ 2,079,329 $ 1,950,460

Net Income 364,066 343,626

REPORTABLE SEGMENT INFORMATION

The Company is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions.

The Company is a well-rounded financial technology company and is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions.

The Company’s operations are classified into four reportable segments:

1 unchanged sentence

The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information.

The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services, online and mobile bill pay solutions, and risk management products and services.

The Complementary segment provides additional software and services that can be integrated with the Company's core solutions or used independently.

The Corporate and Other segment includes revenue and costs from hardware and other products not attributable to the other three segments, as well as operating costs not directly attributable to the other three segments.

The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services, online and mobile bill pay solutions, ACH origination and remote deposit capture processing, and risk management products and services.

The Complementary segment provides additional software, hosted processing platforms, and services, including digital/mobile banking, treasury services, online account opening, AML, and lending/deposit solutions that can be integrated with the Company's Core solutions, and many can be used independently.

The Corporate and Other segment includes revenue and costs from hardware and other products not attributed to any of the other three segments, as well as operating expenses not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast.

Only revenue and costs of revenue are considered in the evaluation for each segment.

During fiscal 2023, the Company transferred a product, Remit, from the Complementary segment to the Payments segment, due to better alignment with the Payments segment.

As a result of this transfer, adjustments were made during fiscal 2023 to reclassify related revenue and cost of revenue for the fiscal years ended June 30, 2022, and 2021, from the Complementary to the Payments segment.

Revenue reclassed for the fiscal years ended June 30, 2022, and 2021, were $ 12,049 and $ 11,007 , respectively.

Cost of revenue reclassed for the fiscal years ended June 30, 2022, and 2021, were $ 2,059 and $ 1,982 , respectively.

Immaterial adjustments were made in fiscal 2023 to reclassify revenue that was recognized in fiscal 2022 from the Complementary to the Corporate and Other segment.

Immaterial adjustments were also made in fiscal 2023 to reclassify cost of revenue that was recognized in fiscal 2022 from the Complementary to the Payments and Corporate and Other segments.

These reclasses were made to be consistent with the current allocation of revenue and cost of revenue by segment.

Revenue reclassed for the fiscal year ended June 30, 2022, from Complementary to Corporate and Other was $ 4,917 .

Cost of revenue reclassed for the fiscal year ended June 30, 2022, from Complementary to Payments was $ 3,396 , and from Complementary to Corporate and Other was $ 403 .

Immaterial adjustments were made in fiscal 2023 to reclassify revenue that was recognized in fiscal 2021 from the Complementary to the Corporate and Other segment.

Immaterial adjustments were also made in fiscal 2023 to reclassify cost of revenue that was recognized in fiscal 2021 from the Complementary and Corporate and Other segments to the Payments segment.

Immaterial adjustments between segments were made in fiscal 2024 to reclassify revenue and cost of revenue that was recognized in fiscal 2023.

These reclasses were made to be consistent with the current allocation of revenue and cost of revenue by segment.

Revenue reclassed for the fiscal year ended June 30, 2021, from Complementary to Corporate and Other was $ 3,462 .

Cost of revenue reclassed for the fiscal year ended June 30, 2021, from Complementary to Payments was $ 2,523 , and from Corporate and Other to Payments was $ 789 .

Revenue reclassed for the fiscal year ended June 30, 2023, from Core to Corporate and Other was $ 7,119 , from Payments to Corporate and Other was $ 30 , and from Complementary to Corporate and Other was $ 307 .

Cost of revenue reclassed for the fiscal year ended June 30, 2023, from Core to Corporate and Other was $ 6,713 , from Payments to Corporate and Other was $ 2,594 , and from Complementary to Corporate and Other was $ 1,286 .

June 30, 2024

40 unchanged sentences

On August 23, 2024 , the Company's Board of Directors declared a cash dividend of $ 0.55 per share on its common stock, payable on September 27, 2024 , to stockholders of record on September 6, 2024 .

Voluntary departure incentive plan

In July 2023, the Company conducted a voluntary separation program for certain eligible employees.

The Company is expected to incur $ 17,000 to $ 18,000 in the fiscal 2024 quarter ending September 30, 2023, associated with this program.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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 8. Financial Statements and Supplementary Data