What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-08-25 compared with 2024-08-26 · 100 added, 100 removed, 210 unchanged (49% of the section changed)

4 unchanged sentences

Jack Henry & Associates, Inc.

is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,170 full-time and part-time associates nationwide, and is a leading provider of technology solutions and payment processing services primarily to community and regional financial institutions.

Our solutions serve approximately 7,500 clients and consist of integrated data processing systems solutions to banks ranging from de novo to multi-billion-dollar institutions with assets up to $50 billion, core data processing solutions for credit unions of all sizes, and non-core highly specialized core-agnostic products and services that enable financial institutions of every asset size and charter, and diverse corporate entities outside the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs.

is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,240 full-time and part-time associates nationwide, and is a leading provider of technology solutions and payment processing services primarily to community and regional banks and credit unions.

Our solutions serve approximately 7,400 clients and consist of integrated data processing systems solutions to banks ranging from de novo to multi-billion-dollar institutions with assets up to $55 billion, core data processing solutions for credit unions of all sizes, and non-core highly specialized core-agnostic products and services that enable banks and credit unions of every asset size and charter, and diverse corporate entities outside the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs.

Our integrated solutions are available for on-premise installation and delivery in our private and public cloud.

9 unchanged sentences

Our two primary revenue streams are "services and support" and "processing." Services and support includes:

"private and public cloud" fees that predominantly have contract terms of six years at inception;

"product delivery and services" revenue, which includes revenue from the sales of licenses, implementation services, deconversion fees, consulting, and hardware;

and "on-premise support" revenue, composed of maintenance fees which primarily contain annual contract terms.

Processing revenue includes:

"remittance" revenue from payment processing, remote capture, and ACH transactions;

"card" fees, including card transaction processing and monthly fees;

and "transaction and digital" revenue, which includes transaction and mobile processing fees.

"private and public cloud" revenues that predominantly have contract terms of six years at inception;

"product delivery and services" revenues, which include revenues from the sales of licenses, implementation services, deconversions, consulting, and hardware;

and "on-premise support" revenues, composed of maintenance fees that primarily contain annual contract terms.

Processing includes:

"remittance" revenues from payment processing, remote capture, and ACH transactions;

"card" revenues, including card transaction processing and monthly fees;

and "transaction and digital" revenues, which include transaction and mobile processing revenues.

We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.

1 unchanged sentence

Core, Payments, Complementary, and Corporate and Other.

The respective segments include all related revenues along with the related cost of sales.

The respective segments include all related revenues along with the related cost of revenue.

A detailed discussion of the major components of the results of operations follows.

1 unchanged sentence

FISCAL 2025 COMPARED TO FISCAL 2024

On August 31, 2022, the Company acquired all of the equity interest in Payrailz.

Excluded Payrailz related revenue and operating expenses that are mentioned in the discussion below are for the first two months only of fiscal year ended June 30, 2024, since the first two months of fiscal year ended June 30, 2023, do not include Payrailz.

In fiscal 2025, total revenue increased 7.2% or $159,745, compared to fiscal 2024.

Reducing total revenue for deconversion revenue of $16,554 in the current fiscal year and $31,775 in the prior fiscal year, and for Payrailz related revenue of $1,945 in the current fiscal year, results in a 7.4% increase, or $151,117.

This increase was

primarily driven by growth in data processing and hosting within cloud revenue as new clients were added and volumes expanded, card processing revenue from expanded fraud detection and prevention services and the addition of new/add-on services, digital (including Banno) revenue as active monthly users and volumes increased, payment processing revenue from expanding volumes and new client revenue, and growth in remote capture and ACH revenue.

Reducing total revenue for deconversion revenue of $33,905 in the current fiscal year and $16,554 in the prior fiscal year, results in a 6.5% increase, or $142,394.

This increase was mainly driven by growth in data processing and hosting within cloud revenue as new clients were added and volumes expanded, card processing revenue primarily from expanded fraud detection and prevention risk management services and monthly service fees, digital revenue as active monthly users and volumes increased, and payment processing revenue from expanding volumes and new client revenue.

Operating expenses increased 4.7%, or $80,421, in fiscal 2025 compared to fiscal 2024.

Reducing total operating expenses for deconversion costs of $3,408 in the current fiscal year and $4,261 in the prior fiscal year, and for VEDIP related costs of $16,443 and Payrailz related expenses of $4,182, in the current fiscal year, and excluding the impact of the gain on sale of assets, net, of $4,567 in the prior fiscal year, results in a 6.6% increase, or $104,798.

The VEDIP program was a Company voluntary separation program offered to certain eligible associates beginning in July 2023.

This increase was primarily due to higher personnel costs, increased direct costs consistent with increases in the related revenue, and internal licenses and fees from price increases and higher deployments in the current fiscal year.

We move into fiscal 2025 following strong performance in fiscal 2024.

Significant portions of our business continue to provide recurring revenue and our sales pipeline is also encouraging.

Our clients continue to face regulatory and operational challenges which our products and services address, and in these times, they have an even greater need for our solutions that directly address institutional profitability, efficiency, and security.

We believe our strong balance sheet, access to extensive lines of credit, the strength of our existing product line and an unwavering commitment to superior client service position us well to address current and future opportunities.

Reducing total operating expenses for deconversion costs of $6,242 in the current fiscal year and $3,408 in the prior fiscal year and for VEDIP related costs of $16,443 in the prior fiscal year, results in a 5.5% increase, or $94,031 (The VEDIP program was a Company voluntary separation program offered to certain eligible associates who chose to participate in the program from July through December 2023, including immaterial payments that continued into calendar 2024).

The increase in operating expenses was primarily due to higher direct costs generally commensurate with increases in the related lines of revenue, higher personnel costs including increases in compensation costs during the trailing twelve months, and higher internal licenses and fees from price increases and more deployments in the current fiscal year.

As we move into fiscal 2026 – our 50 th year in business – we are excited and confident about our future, and we remain well-positioned to deliver durable, consistent growth and attractive results for our shareholders.

Technology spending by financial institutions remains strong, and there is clear demand for our differentiated and innovative technology solutions.

We have a very healthy sales pipeline and a proven ability to attract and win deals, especially with larger financial institutions.

Our unwavering focus on culture, service, innovation, strategy, and execution continues to set us apart in the market and will enable us to drive continued industry-leading revenue growth with strong margin expansion, benefiting our associates, clients, and shareholders.

A detailed discussion of the major components of the results of operations for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 follows.

7 unchanged sentences

In the fiscal year ended June 30, 2025, services and support revenue increased 6.7% compared to the prior fiscal year.

Reducing total services and support revenue by deconversion revenue for each year, which totaled $16,554 in fiscal 2024 and $31,775 in fiscal 2023, and for Payrailz related revenue of $2 from the current fiscal year, services and support revenue grew 6.5%.

This increase was primarily driven by higher data processing and hosting within cloud revenue, primarily from organic growth including the addition of new and migrating clients and expanding volumes.

Reducing total services and support revenue by deconversion revenue for each year, which totaled $33,905 in fiscal 2025 and $16,554 in fiscal 2024, services and support revenue grew 5.4%.

This increase was primarily driven by higher data processing and hosting within cloud revenue as new clients were added and volumes expanded and increased consulting, work order, and release revenues, partially offset by the decrease in license and hardware revenues, year over year.

Processing Revenue Year Ended June 30, %

6 unchanged sentences

Processing revenue increased 7.9% for the fiscal year ended June 30, 2025, compared to the fiscal year ended June 30, 2024.

Reducing total processing revenue by Payrailz related revenue of $1,943 from the current fiscal year, processing revenue grew 8.6%.

This increase was driven by growth in card processing primarily from expanded fraud detection and prevention services and growth in the addition of new/add-on services, digital revenue (including Banno) through growth in active monthly users and increased volumes as well as the introduction and ramping up of new add-on products, payment processing revenues as new clients increased and the active user base and transaction volumes expanded, and higher remote capture and ACH revenues.

This increase was driven by growth in card from expanded fraud detection and prevention risk management services and monthly service fees, digital revenue as active monthly users and volumes increased, and payment processing revenue from expanding volumes and new client revenue.

OPERATING EXPENSES

3 unchanged sentences

Cost of revenue for fiscal 2025 increased 4.7% compared to fiscal 2024.

Reducing total cost of revenue for deconversion costs of $2,231 in the current fiscal year and $2,046 in the prior fiscal year, and for Payrailz related costs of $3,334 in the current fiscal year, results in a 6.3% increase.

This increase was driven by higher direct costs consistent with increases in the related revenue, higher internal licenses and fees from price increases and higher deployments in the current fiscal year, and increased personnel costs.

Cost of revenue remained consistent as a percentage of total revenue for fiscal 2024 compared to fiscal 2023.

Reducing total cost of revenue for deconversion costs of $3,517 in the current fiscal year and $2,231 in the prior fiscal year results in a 4.6% increase.

This increase was driven by higher direct costs consistent with increases in the related revenue and higher personnel costs including increases in compensation costs during the trailing twelve months.

Cost of revenue decreased 2% as a percentage of total revenue for fiscal 2025 compared to fiscal 2024.

Research and Development Year Ended June 30, %

4 unchanged sentences

Research and development expenses for fiscal 2025 increased 9.8% compared to fiscal 2024.

Reducing total research and development expenses for Payrailz related costs of $656 in the current fiscal year, results in a 3.4% increase.

This increase is primarily due to higher cloud consumption, net of capitalization, increased personnel costs, including Payrailz acquisition and Jack Henry Platform costs, net of capitalization.

Research and development expense remained consistent as a percentage of total revenue for fiscal 2024 compared to fiscal 2023.

This increase was primarily due to higher personnel costs including increased compensation costs and employee headcount additions in the trailing twelve months and internal license and fees expenses from price increases and more deployments in the current fiscal year.

The increase in this expense category for the current fiscal year reflects our continuing commitment to the development of strategic products.

Research and development expense remained consistent as a percentage of total revenue for fiscal 2025 compared to fiscal 2024.

Selling, General, and Administrative Year Ended June 30, %

3 unchanged sentences

Selling, general, and administrative expenses for fiscal 2025 increased 1.7% compared to fiscal 2024.

Reducing total selling, general, and administrative expense for deconversion costs from each year, which totaled $1,177 in fiscal 2024 and $2,216 in fiscal 2023, VEDIP program expenses of $16,443 and Payrailz related costs of $192 for the current fiscal year, and excluding the impact of the gain on sale of assets, net, of $4,567 for the prior fiscal year, results in a 9.7% increase.

This increase was primarily due to higher personnel costs, including a headcount increase in the trailing twelve months and higher commission expense.

Selling, general, and administrative expenses increased 2.0% as a percentage of total revenue for fiscal 2024 compared to fiscal 2023.

Reducing total selling, general, and administrative expense for deconversion costs from each year, which totaled $2,725 in fiscal 2025 and $1,177 in fiscal 2024 and VEDIP program expenses of $16,443 in the prior fiscal year, results in a 7.5% increase.

This increase was primarily due to higher personnel costs, excluding severance, including increased compensation and employee headcount additions in the trailing twelve months, increased travel expenses, and higher contract labor, partially offset by the gain on the sale of assets in the current fiscal year compared to the loss on the sale of assets last fiscal year.

Selling, general, and administrative expenses decreased 1% as a percentage of total revenue for fiscal 2025 compared to fiscal 2024.

INTEREST INCOME AND EXPENSE Year Ended June 30, %

2 unchanged sentences

Interest income increased over the prior fiscal year due to increased interest earned on balances fiscal year over fiscal year.

Interest expense increased in fiscal 2024 mainly due to the timing and amounts of borrowed balances and increases in interest rates.

Interest expense decreased in fiscal 2025 mainly due to the timing and amounts of borrowed and repaid balances ending the current fiscal year with no remaining debt outstanding.

PROVISION FOR INCOME TAXES Year Ended June 30, %

1 unchanged sentence

Effective rate 22.2% 23.3%

The increase in the Company's effective tax rate in fiscal 2024 compared to fiscal 2023 was the result of changes in uncertain tax positions for periods open under the statute of limitations in the current fiscal year.

This increase is partially offset by greater benefits received from research and development tax credits during the current fiscal year.

The decrease in the Company's effective tax rate in fiscal 2025 compared to fiscal 2024 was the result of differences in the change in uncertain tax positions between the two periods as well as a favorable state law change in the current fiscal year.

NET INCOME Year Ended June 30, %

3 unchanged sentences

The diluted earnings per share increase fiscal year over fiscal year was 19.3%.

This increase was primarily due to growth in our lines of revenue and a reduction in the number of weighted average shares outstanding partially offset by higher operating expenses in fiscal 2024 compared to fiscal 2023 .

This increase was primarily due to organic growth in our lines of revenue and the decrease in one-time severance expenses related to VEDIP fiscal year over fiscal year, partially offset by higher operating expenses in fiscal 2025 compared to fiscal 2024 .

REPORTABLE SEGMENT DISCUSSION

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

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

Core, Payments, Complementary, and Corporate and Other.

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, ACH origination and remote deposit capture processing, and risk management products and services.

3 unchanged sentences

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

Immaterial adjustments between segments were made in fiscal 2025 to reclassify cost of revenue that was recognized in fiscal years 2024 and 2023.

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

Cost of revenue reclassed for the fiscal year ended June 30, 2024, from Complementary to Corporate and Other, was $4,922.

Cost of revenue reclassed for the fiscal year ended June 30, 2023, from Core and Complementary to Corporate and Other, was $64 and $5,206, respectively.

2025 % Change 2024

3 unchanged sentences

Reducing total Core revenue by deconversion revenue from both fiscal years, which totaled $14,765 in fiscal 2025 and $7,292 in fiscal 2024, Core segment revenue increased 6.0%.

This increase was primarily driven by organic increases in our data processing and hosting within cloud revenue.

This increase was primarily driven by organic increases in our data processing and hosting revenue within cloud.

Cost of revenue in the Core segment increased 3.5% for fiscal 2025 compared to fiscal 2024.

Reducing total Core cost of revenue by deconversion costs from both fiscal years, which totaled $2,096 in fiscal 2025 and $1,065 in fiscal 2024, Core segment cost of revenue increased 3.1%.

This increase was primarily due to increased direct costs associated with the organic growth in cloud revenue.

Deconversion and/or acquisition costs did not significantly affect Core cost of revenue fiscal year over fiscal year.

Core segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2025 compared to fiscal 2024.

3 unchanged sentences

In fiscal 2025, revenue in the Payments segment increased 6.8% compared to fiscal 2024.

Reducing total Payments revenue by deconversion revenue from both fiscal years, which totaled $5,836 in fiscal 2024 and $7,924 in fiscal 2023, and Payrailz related revenue from the current fiscal year of $1,945, Payments segment revenue increased 6.7%.

Reducing total Payments revenue by deconversion revenue from both fiscal years, which totaled $11,159 in fiscal 2025 and $5,836 in fiscal 2024, Payments segment revenue increased 6.2%.

This increase was primarily driven by growth within card revenue and payment processing within remittance revenue.

Cost of revenue in the Payments segment increased 4.1% for fiscal 2025 compared to fiscal 2024.

Reducing total Payments cost of revenue by deconversion costs from both fiscal years, which totaled $259 in fiscal 2024 and $303 in fiscal 2023 and Payrailz related costs from the current fiscal year of $3,314, Payments cost of revenue increased 4.3%.

This increase was primarily due to increased direct costs related to growth in the card and remittance revenue lines, and increased personnel costs, including benefits expenses.

This increase was primarily due to increased direct costs related to growth in the card and remittance revenue lines, increased personnel costs including higher compensation costs in the trailing twelve months, and increased internal licenses and fees expense from more deployments and pricing in the current fiscal year.

Deconversion and/or severance costs did not significantly affect the Payments segment cost of revenue fiscal year over fiscal year.

Payments segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2025 compared to fiscal 2024.

5 unchanged sentences

Reducing total Complementary revenue by deconversion revenue from both fiscal years, which totaled $7,709 in fiscal 2025 and $3,217 in fiscal 2024, Complementary segment revenue increased 8.5%.

This increase was primarily driven by organic increases in digital revenue (including Banno) and hosting within cloud revenue.

This increase was primarily driven by organic increases in hosting and digital revenues within cloud and higher maintenance fee revenue.

Cost of revenue in the Complementary segment increased 5.5% for fiscal 2025 compared to fiscal 2024.

This increase was primarily due to higher direct costs related to the organic growth in the digital and hosting within cloud revenue lines, increased amortization of capitalized software, and higher internal licenses and fees.

Deconversion and/or acquisition costs did not significantly affect Complementary cost of revenue fiscal year over fiscal year.

Complementary segment cost of revenue increased 1% as a percentage of revenue for fiscal 2024 compared to fiscal 2023.

Reducing total Complementary cost of revenue by deconversion costs from both fiscal years, which totaled $1,119 in fiscal 2025 and $903 in fiscal 2024, Complementary segment cost of revenue increased 5.4%.

This increase was primarily due to higher direct costs related to the organic growth in the digital and hosting within cloud revenue lines, increased personnel costs including higher compensation costs in the trailing twelve months, and higher amortization of capitalized software.

Complementary segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2025 compared to fiscal 2024.

Corporate and Other

2 unchanged sentences

Cost of Revenue $ 338,401 6.1% $ 318,959

Revenue in the Corporate and Other segment increased 14.3% for fiscal 2024 compared to fiscal 2023.

Reducing total Corporate and Other revenue by deconversion revenue from both fiscal years, which totaled $209 in fiscal 2024 and $278 in fiscal 2023, Corporate and Other segment revenue increased 14.4%.

The increase was mainly due to increased hardware revenue and subscriptions and software usage within support revenues.

Revenue in the Corporate and Other segment decreased 1.8% for fiscal 2025 compared to fiscal 2024.

Reducing total Corporate and Other revenue by deconversion revenue from both fiscal years, which totaled $272 in fiscal 2025 and $209 in fiscal 2024, Corporate and Other segment revenue decreased 1.9%.

This decrease was mainly due to decreased hardware revenue, partially offset by increased processing fee revenue and software usage and subscription revenues within support.

Cost of revenue for the Corporate and Other segment includes operating expenses not directly attributable to any of the other three segments and increased 6.1% for fiscal 2025 compared to fiscal 2024.

This increase was primarily related to higher internal licenses and fees and personnel costs, including benefits expenses.

Deconversion and/or acquisition costs did not significantly affect Corporate and Other cost of revenue fiscal year over fiscal year.

This increase was primarily related to higher direct costs, increased personnel costs including increased compensation costs and employee headcount additions in the trailing twelve months, and higher cloud consumption costs.

Deconversion and/or severance costs did not significantly affect Corporate and Other cost of revenue fiscal year over fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

7 unchanged sentences

Net cash provided by operating activities $ 641,504 $ 568,041

Cash provided by operating activities for fiscal 2024 increased 48.9% compared to fiscal 2023, primarily due to higher than historical collections in fiscal 2024 of annual maintenance billings related to fiscal year 2025 and to an overpayment of income taxes in fiscal 2023, which led to lower cash taxes paid in fiscal 2024.

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

Cash provided by operating activities for fiscal 2025 increased 12.9% compared to fiscal 2024, primarily due to the increase in Net income and the net changes in prepaid expenses, deferred costs and other and accrued expenses within Change in other assets and liabilities fiscal year over fiscal year.

Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, and for capital expenditures.

2 unchanged sentences

capital expenditures on facilities and equipment of $53,358, mainly for the purchase of computer equipment;

$8,646 for purchase of investments;

and $7,130 for the purchase and development of internal use software.

These expenditures were partially offset by $904 of proceeds from asset sales.

Cash used in investing activities for fiscal 2023 totaled $409,673 and included:

payment for the acquisition of Payrailz of $229,628, $166,120 for the ongoing enhancements and development of existing and new product and service offerings;

capital expenditures on facilities and equipment of $39,179, mainly for the purchase of computer equipment;

$5,363 for the purchase and development of internal use software;

and $2,000 for the purchase of investments.

These expenditures were partially offset by proceeds from investments of $1,000 and $3 of proceeds from the sale of assets.

Cash used in investing activities for fiscal 2024 totaled $240,165 and included:

$167,175 for the ongoing enhancements and development of existing and new product and service offerings;

capital expenditures on facilities and equipment of $58,118, mainly for the purchase of computer equipment;

$8,646 for the purchase of investments;

and $7,130 for the purchase and development of internal use software.

These expenditures were partially offset by $904 of proceeds from the sale of assets.

1 unchanged sentence

$164,644 for dividends paid to stockholders;

borrowing and repayments on our credit facilities which netted to repayments of $125,000;

borrowings and repayments on our credit facilities which netted to repayments of $150,000;

and $35,051 for the purchase of treasury shares.

These expenditures were partially offset by $4,023 of net cash inflow related to stock-based compensation.

Financing activities used cash in fiscal 2023 of $8,430 and included $147,237 for dividends paid to stockholders and $25,000 for the purchase of treasury shares.

These expenditures were partially offset by borrowings and repayments on our revolving credit facility and financing leases which netted to borrowings of $159,940 at June 30, 2023, and $3,867 of net cash inflow related to stock-based compensation.

Financing activities used cash in fiscal 2024 of $301,835 and included $155,877 for dividends paid to stockholders;

borrowings and repayments on our revolving credit facility which netted to repayments of $125,000;

and $28,055 for the purchase of treasury shares.

These expenditures were partially offset by $7,097 of net cash inflow related to stock-based compensation.

Capital Requirements and Resources

5 unchanged sentences

We will continue to monitor and assess these needs going forward.

In July 2023, the Company conducted a voluntary separation program for certain eligible associates that included a VEDIP payment for the eligible associates who chose to participate in the program.

The Company made payments associated with the VEDIP program in the approximate amount of $16,443 from July 2023 through December 2023, including immaterial payments continuing into calendar 2024.

At June 30, 2025, the Company had contractual obligations of $1,700,611, including operating lease obligations, and $1,643,789 related to off-balance sheet contractual purchase obligations.

Included in off-balance sheet contractual purchase obligations was the strategic services agreement that offers full-service debit and credit card processing on a single platform to our customers.

This agreement was signed in fiscal 2017 and amended in May 2025 to add two additional service years and $213,053 to contractual obligations, bringing the total remaining purchase commitment at June 30, 2025 to $1,022,283 over the remaining term of the contract, which now extends to January 2038, subject to certain renewal terms.

Contractual obligations exclude $22,649 of liabilities for uncertain tax positions as we are unable to reasonably estimate the ultimate amount or timing of settlement.

On July 4, 2025, the President of the United States signed into law legislation referred to as “One Big Beautiful Bill Act” (H.R.

1), which enacts substantial changes to the federal income tax law.

The legislation includes several business-focused provisions, such as the restoration of immediate expensing for domestic research and development expenditures and the reinstatement of 100% bonus depreciation for qualified property placed in service after January 19, 2025.

The Act also permanently extends key provisions from the Tax Cuts and Jobs Act (TCJA).

As the legislation was enacted after the June 30, 2025, balance sheet date, the financial implications are not included in the current fiscal year's financial statements.

The Company is in the process of assessing the impacts of the new law and plans to incorporate updates in the financial results next fiscal year beginning in the quarter ending September 30, 2025.

The Board of Directors has authorized the Company to repurchase shares of its common stock.

Under this authorization, the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit facilities.

The share repurchase program does not include specific price targets or

timetables and may be suspended at any time.

The share repurchase program does not include specific price targets or timetables and may be suspended at any time.

At June 30, 2025, there were 31,580 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,411 additional shares.

2 unchanged sentences

At June 30, 2024, there were 31,373 shares in treasury stock and the Company had authority to repurchase up to 3,618 additional shares.

On August 31, 2022, the Company acquired all of the equity interest in Payrailz.

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 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 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.

Credit facilities

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.

On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement.

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 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 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.

As of June 30, 2025, the Company was in compliance with all such covenants.

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

The credit facility terminates August 31, 2027.

There was $0 and $60,000 outstanding under the amended and restated credit facility at June 30, 2025, and June 30, 2024, respectively.

1 unchanged sentence

On May 16, 2023, the Company entered into a term loan credit agreement with a syndicate of financial institutions, with an original principal balance of $180,000.

Borrowings under the term loan facility bear interest at a variable rate equal to (a) a rate based on an adjusted 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 0.75%), plus an applicable percentage in each case determined by the Company's leverage ratio.

The term loan 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 term loan credit agreement.

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

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

Borrowings under the term loan facility bore interest at a variable rate equal to (a) a rate based on an adjusted 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 0.75%), plus an applicable percentage in each case determined by the Company's leverage ratio.

The term loan credit agreement 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 term loan credit agreement.

The term loan credit agreement matured on May 16, 2025, and at the maturity date the Company was in compliance with all such covenants.

There was $0 and $90,000 outstanding under the term loan at June 30, 2025, and June 30, 2024, respectively.

We currently anticipate that we will be able to repay the remaining outstanding balance under the term loan prior to its maturity using cash generated by our operations or borrowings under our revolving credit facility.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1.0%.

The credit line was renewed in May 2019 and modified in May 2023 to extend the expiration to April 30, 2025.

The Company had an unsecured bank credit line which provided for funding of up to $5,000 and bore interest at the prime rate less 1.0%.

The credit line expired on April 30, 2025.

There was no balance outstanding at June 30, 2025, or 2024.

On October 31, 2024, the Company entered into a discretionary line of credit demand note, which provides for funding of up to $50,000 and bears interest at the prime rate less 2.0%.

The note does not constitute a committed line of credit.

The line of credit expires on October 31, 2025.

There was no balance outstanding at June 30, 2025.

On July 18, 2025, the Company entered into a new unsecured committed revolving line of credit facility with a commercial bank in the amount of $50,000, which bears interest at the prime rate less 1.0%.

The line of credit expires on July 17, 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

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

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.

2 unchanged sentences

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.

The Company adopted this ASU effective for the fiscal year ended June 30, 2025, with retrospective application of the additional segment information for the fiscal years ended June 30, 2024, and 2023.

Additional information regarding the Company's reportable segments is included in Note 14—Reportable Segment Information.

Not Adopted at Fiscal Year End

In December 2023, the FASB issued ASU No.

5 unchanged sentences

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

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the consolidated statements of income.

The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

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

CRITICAL ACCOUNTING ESTIMATES

7 unchanged sentences

An accounting estimate is considered critical if both:

(a) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (b) the impact of changes in the estimates and assumptions would have a material effect on the consolidated financial statements.

(a) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (b)

the impact of changes in the estimates and assumptions would have a material effect on the consolidated financial statements.

Revenue Recognition

8 unchanged sentences

Our contracts with our clients frequently contain some component of variable consideration.

We estimate variable consideration in our contracts primarily using the expected value method,

based on both historical and current information.

We estimate variable consideration in our contracts primarily using the expected value method, based on both historical and current information.

Where appropriate, we 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.

27 unchanged sentences

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 7. Management’s Discussion and Analysis