What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-08-28 compared with 2025-08-25 · 120 added, 118 removed, 192 unchanged (55% of the section changed)

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is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,300 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 solutions serve over 7,200 clients and consist of integrated data processing systems solutions to banks ranging from de novo to multi-billion-dollar institutions with up to $55 billion in assets, core data processing solutions for credit unions of all sizes, and 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.

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Our support infrastructure and strict standards provide service levels that generate high levels of client satisfaction and retention.

We consistently measure client satisfaction using a variety of surveys, such as an annual survey on the client's anniversary date and randomly-generated surveys initiated each day by routine support requests.

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

Dedicated surveys are also used to grade specific aspects of our client experience, including product implementation, education, and consulting services.

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

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

"faster payments" revenues from electronic payment services, "card" revenues, including card transaction processing and monthly fees;

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

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We have four reportable segments:

Core, Payments, Complementary, and Corporate and Other.

Core, Payments, Complementary, and Corporate Services (which prior to the third quarter of fiscal 2026 was referred to as Corporate and Other).

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

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In fiscal 2026, total revenue increased 7.1% or $169,051, compared to fiscal 2025.

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.

Reducing total revenue for deconversion revenue of $42,830 in the current fiscal year and $33,905 in the prior fiscal year and for acquisition revenue of $5,193 in the current fiscal year and revenue related to a contract change of $15,874 in the prior fiscal year, results in a 7.3% increase, or $170,807.

This increase was mainly driven by non-acquisition-related growth in data processing and hosting within cloud revenue as new clients were added and volumes expanded, card processing revenue primarily from monthly service and risk management fees, Jack Henry digital and transaction revenue as active monthly users and volumes increased, and faster payments and payment processing revenues from expanding volumes and new client revenue.

Operating expenses increased 5.7%, or $102,733, in fiscal 2026 compared to fiscal 2025.

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.

Reducing total operating expenses for deconversion costs of $12,878 in the current fiscal year and $6,242 in the prior fiscal year and for acquisition costs of $8,152 and a gain on assets of $6,829 in the current fiscal year and costs related to a contract change of $13,516 in the prior fiscal year, results in a 6.1% increase, or $108,291.

This increase was primarily due to higher personnel costs including increases in compensation costs during the trailing twelve months, increased direct costs generally commensurate with growth in the related lines of revenue, and higher amortization of capitalized software.

As we move into fiscal 2027 we continue to be 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.

We believe 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 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, 2026 compared to the fiscal year ended June 30, 2025 follows.

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In the fiscal year ended June 30, 2026, services and support revenue increased 6.3% compared to the prior fiscal year.

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.

Reducing total services and support revenue by deconversion revenue for each year, which totaled $42,830 in fiscal 2026 and $33,905 in fiscal 2025 and by revenue related to a contract change of $15,874, services and support revenue grew 7.1%.

This increase was primarily driven by growth in data processing and hosting revenue within private and public cloud revenue, higher consulting, work orders and release fees revenue, a rise in implementation revenue, and increased license and hardware revenue partially offset by the decrease in software usage revenue.

Processing Revenue Year Ended June 30, %

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

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

"faster payments" revenues from electronic payment services, "card" fees, including card transaction processing and monthly fees;

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

Processing revenue increased 8.2% for the fiscal year ended June 30, 2026, compared to the fiscal year ended June 30, 2025.

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.

This increase was mainly driven by growth in card revenue from monthly service and risk management fees, improvement in Jack Henry digital and transaction revenue from a higher number of active users on our digital platform, and a rise in faster payments revenue.

OPERATING EXPENSES

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Cost of revenue for fiscal 2026 increased 5.4% compared to fiscal 2025.

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.

Reducing total cost of revenue for deconversion costs of $7,420 in the current fiscal year and $3,517 in the prior fiscal year and for acquisition costs in the current fiscal year of $6,225 and costs related to a contract change in the prior fiscal year of $13,516 results in a 5.7% increase.

This increase was primarily due to higher personnel costs, including compensation and benefit costs, partially related to trailing twelve month headcount growth, higher direct costs generally consistent with increases in related lines of revenue, as well as higher amortization of capitalized software and increased internal licenses and fees.

Cost of revenue decreased 1% as a percentage of total revenue for fiscal 2026 compared to fiscal 2025.

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Research and development expenses for fiscal 2026 increased 8.4% compared to fiscal 2025.

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.

Reducing total research and development costs for acquisition costs in the current fiscal year of $1,803 results in a 7.3% increase.

This increase was mainly due to higher personnel costs, including compensation and benefit costs, partially related to trailing twelve month headcount growth.

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

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Selling, general, and administrative expenses for fiscal 2026 increased 5.7% compared to fiscal 2025.

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.

Reducing total selling, general, and administrative expense for deconversion costs from each year, which totaled $5,457 in fiscal 2026 and $2,725 in fiscal 2025, a gain on assets of $6,829 and acquisition costs of $124 in the current fiscal year, results in a 7.2% increase.

This increase was primarily due to higher personnel costs, including increased medical costs due to second-half fiscal 2026 normalization trends and higher compensation tied to trailing twelve month headcount growth.

Selling, general, and administrative expenses remained consistent as a percentage of total revenue for fiscal 2026 compared to fiscal 2025.

INTEREST INCOME AND EXPENSE Year Ended June 30, %

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Interest expense $ (5,387) $ (10,438) (48.4)%

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

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.

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

Interest expense decreased in fiscal 2026 mainly due to the timing and amounts of borrowed and repaid balances ending the current fiscal year with $40,000 remaining debt outstanding.

PROVISION FOR INCOME TAXES Year Ended June 30, %

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Effective rate 23.0% 22.2%

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.

The increase in the Company's effective tax rate in fiscal 2026 compared to fiscal 2025 was primarily due to investment tax credit benefits recognized in fiscal 2025 that did not recur in fiscal 2026, as well as differences in the tax effects of stock-based compensation between the two periods.

NET INCOME Year Ended June 30, %

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The diluted earnings per share increase fiscal year over fiscal year was 11.9%.

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 .

This increase was primarily due to non-acquisition-related growth in our lines of revenue partially offset by higher operating expenses and increased provision for income taxes in fiscal 2026 compared to fiscal 2025 .

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 banks and credit unions.

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

Core, Payments, Complementary, and Corporate and Other.

Core, Payments, Complementary, and Corporate Services (formerly “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 accountholder 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.

The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services, online and mobile bill pay solutions, money movement and embedded payment capabilities, 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, fraud/anti-money laundering (“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.

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.

The Corporate Services segment includes revenue and direct costs from hardware and other products and services and our technology infrastructure costs.

The Company's Chief Executive Officer, who is also the Company's chief operating decision maker ("CODM"), regularly evaluated segment performance and made strategic decisions on the allocation of resources to them based on various factors, including performance against trend, budget, and forecast for the fiscal years ended June 30, 2026 , 2025, and 2024.

The CODM also used reportable segment revenue, costs of revenue, and segment income to evaluate segment performance and allocate resources.

The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the CODM.

During the fiscal year ended June 30, 2026, the Company realigned a product from the Corporate Services segment to the Complementary segment.

As a result of this realignment, adjustments were made during the fiscal year ended June 30, 2026, to reclassify related revenue and cost of revenue recognized for the fiscal years ended June 30, 2025 and 2024, from the Corporate Services segment to the Complementary segment.

Revenue reclassed for the fiscal years ended June 30, 2025 and 2024, was $13,209 and $12,402, respectively .

Cost of revenue reclassed for the fiscal years ended June 30, 2025 and 2024, was $2,970 and $2,840, respectively.

Immaterial adjustments have been made between segments during the fiscal year ended June 30, 2026, to reclassify revenue and cost of revenue that was recognized for the fiscal years ended June 30, 2025 and 2024.

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

Revenue reclassed for the fiscal years ended June 30, 2025 and 2024, from the Core segment to the Complementary segment, was $6,353 and $5,471, respectively.

Revenue reclassed for the fiscal year ended June 30, 2024, from the Core segment to the Corporate Services segment, was $5.

Cost of revenue reclassed for the fiscal years ended June 30, 2025 and 2024, from the Core segment to the Complementary segment, was $1,864 and $1,768, respectively.

Cost of revenue reclassed for the fiscal years ended June 30, 2025 and 2024, from the Core segment to the Corporate Services segment, was $269 and $277, respectively.

Core Year Ended June 30,

2026 % Change 2025

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In fiscal 2026, revenue in the Core segment increased 4.8% compared to fiscal 2025.

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 revenue within cloud.

Reducing total Core revenue by deconversion revenue from both fiscal years, which totaled $16,605 in fiscal 2026 and $14,765 in fiscal 2025 and by revenue related to a contract change of $15,874 in the prior fiscal year, Core segment revenue increased 7.1%.

This increase was primarily driven by non-acquisition-related increases in our data processing and hosting revenue within cloud and a rise in consulting, work orders, and release revenue.

Cost of revenue in the Core segment increased 3.3% for fiscal 2026 compared to fiscal 2025.

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.

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

Reducing total Core cost of revenue by deconversion costs from both fiscal years, which totaled $4,566 in fiscal 2026 and $2,096 in fiscal 2025 and by costs related to a contract change of $13,516 in the prior fiscal year, Core segment cost of revenue increased 7.4%.

This increase was primarily due to higher personnel costs, including compensation and benefit costs, partially related to trailing twelve month headcount growth.

Core segment cost of revenue remained consistent as a percentage of revenue for fiscal 2026 compared to fiscal 2025.

Payments Year Ended June 30,

2026 % Change 2025

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In fiscal 2026, revenue in the Payments segment increased 7.2% compared to fiscal 2025.

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.

Reducing total Payments revenue by deconversion revenue from both fiscal years, which totaled $13,660 in fiscal 2026 and $11,159 in fiscal 2025 and by acquisition revenue of $5,193 in the current fiscal year, Payments segment revenue increased 6.4%.

This increase was primarily driven by growth within card revenue and faster payments and payment processing revenues.

Cost of revenue in the Payments segment increased 4.2% for fiscal 2026 compared to fiscal 2025.

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.

Reducing total Payments cost of revenue by deconversion cost of revenue from both fiscal years, which totaled $717 in the current fiscal year and $288 in the prior fiscal year and by acquisition cost of revenue of $5,854 in the current fiscal year, Payments segment cost of revenue increased 2.8%.

This increase was primarily due to increased direct costs related to growth in the card, faster payments, and payment processing revenue lines and higher personnel costs, including compensation and benefit costs, partially related to trailing twelve month headcount growth.

Payments segment cost of revenue decreased 2% as a percentage of revenue for fiscal 2026 compared to fiscal 2025.

Complementary

Complementary Year Ended June 30,

2026 % Change 2025

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Reducing total Complementary revenue by deconversion revenue from both fiscal years, which totaled $12,219 in fiscal 2026 and $7,709 in fiscal 2025, Complementary segment revenue increased 7.7%.

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

This increase was primarily driven by non-acquisition-related revenue increases in hosting within cloud and digital revenue.

Cost of revenue in the Complementary segment increased 6.3% for fiscal 2026 compared to fiscal 2025.

Reducing total Complementary cost of revenue by deconversion costs from both fiscal years, which totaled $2,119 in fiscal 2026 and $1,119 in fiscal 2025, Complementary segment cost of revenue increased 6.0%.

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.

This increase was primarily due to higher direct costs related to the non-acquisition-related growth in hosting within cloud and digital revenue lines and higher

personnel costs, including compensation and benefit costs, partially related to trailing twelve month headcount growth.

Complementary segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2026 compared to fiscal 2025.

Corporate and Other

Corporate Services Year Ended June 30,

2026 % Change 2025

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Cost of Revenue $ 362,500 8.0% $ 335,700

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 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.

Revenue in the Corporate Services segment increased 18.3% for fiscal 2026 compared to fiscal 2025.

This increase was mainly due to increased license and hardware revenue, growth in processing fees revenue, and a rise in subscriptions revenue within on-premise support.

Deconversion revenue, acquisition revenue, and/or revenue related to a contract change did not significantly affect Corporate Services revenue year over year.

Cost of revenue for the Corporate Services segment includes direct costs from hardware and other products and services and our technology infrastructure costs and increased 8.0% for fiscal 2026 compared to fiscal 2025.

Reducing total Corporate Services cost of revenue by deconversion cost of revenue from both fiscal years, which totaled $18 in fiscal 2026 and $14 in fiscal 2025 and acquisition cost of revenue of $371 in the current fiscal year, Corporate Services segment cost of revenue increased 7.9%.

This increase was primarily related to higher personnel costs, including increased medical costs from second-half normalization trends and higher compensation tied to trailing twelve month headcount growth, a rise in internal licenses and fees, and increased direct costs related to hardware.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents increased to $101,953 at June 30, 2025, from $38,284 at June 30, 2024.

The following table summarizes net cash from operating activities in the statement of cash flows:

The Company's cash and cash equivalents decreased to $12,056 at June 30, 2026, from $101,953 at June 30, 2025.

The following table summarizes net cash from operating activities in the consolidated statements of cash flows:

Net income $ 502,776 $ 455,748

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Change in receivables (29,268) 15,056

Change in deferred revenue (25,559) (10,797)

Change in deferred revenues 9,099 (25,559)

Change in other assets and liabilities (94,943) (35,354)

Net cash provided by operating activities $ 761,960 $ 641,504

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.

Cash provided by operating activities for fiscal 2026 increased 18.8% compared to fiscal 2025, primarily due to the change in deferred income taxes fiscal year over fiscal year.

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

Cash used in investing activities for fiscal 2026 totaled $277,738 and included:

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capital expenditures on facilities and equipment of $67,103, 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.

$42,390 for an acquisition;

$13,721 for the purchase of investments;

and $4,108 for the purchase and development of internal use software.

These expenditures were partially offset by $32,827 of proceeds from the sale of assets and proceeds from investments of $1,000.

Cash used in investing activities for fiscal 2025 totaled $232,163 and included:

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capital expenditures on facilities and equipment of $53,358, 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.

$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.

Financing activities used cash of $574,119 for fiscal 2026 and included:

$164,644 for dividends paid to stockholders;

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.

$448,173 for the purchase of treasury shares and $170,405 for dividends paid to stockholders.

These expenditures were partially offset by borrowings and repayments on our credit facilities which netted to borrowings of $40,000 and $4,459 of net cash inflow related to stock-based compensation.

Financing activities used cash in fiscal 2025 of $345,672 and included $164,644 for dividends paid to stockholders;

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At June 30, 2026, the Company had contractual obligations of $2,177,592, including operating lease obligations, and $2,135,981 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.

Included in off-balance sheet contractual purchase obligations were a renewing customer agreement, server and cloud enrollment agreement, and a volume licensing agreement that were signed in June 2026 and together added $94,146 to contractual obligations spread evenly over the next three fiscal years beginning in fiscal 2027.

Contractual obligations exclude $24,905 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.

On September 30, 2025, the Company acquired substantially all the assets of Victor for $42,390 paid in cash.

The primary reason for the acquisition was to expand the Company's capabilities in the Payments-as-a-Service market.

Victor is a cloud-native, API-first provider of direct-to-core embedded payments solutions.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing significant changes to U.S.

federal income tax law.

Key provisions affecting the Company include the permanent restoration of immediate expensing for domestic research and development (“R&D”) expenditures, an election to deduct the unamortized balance of domestic R&D expenditures that were previously capitalized under the Tax Cuts and Jobs Act of 2017 (“TCJA”), and the reinstatement of 100% bonus depreciation for qualified property placed in service after January 19, 2025.

The legislation did not materially impact the effective tax rate in the current period, and the Company does not anticipate a material impact in future periods.

However, the Company had a significant reduction in cash tax payments and income taxes payable for the current fiscal year as well as a decrease in deferred tax assets related to the key provisions cited above.

All tax effects of the change in tax law on current or deferred tax balances have been recorded as a component of the income tax provision related to continuing operations.

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

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

During fiscal 2026, the Board of Directors authorized an increase of 5,000 shares to the existing share repurchase program.

At June 30, 2026, there were 34,527 shares in treasury stock and the Company had the remaining authority to repurchase up to 5,464 additional shares.

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Credit facilities

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 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.

On March 25, 2026, the Company entered into a five-year, revolving, unsecured credit agreement that replaced the prior credit agreement described below.

The credit agreement allows for borrowings of up to $1,000,000 and allows for additional revolving credit commitments and/or term loan commitments, pursuant to the terms and subject to certain limitations set forth in the credit agreement.

The credit agreement bears interest at a variable rate equal to, at the option of the Company, either (a) a rate based on adjusted Term Secured Overnight Financing Rate ("SOFR") rate or (b) an alternate base rate (the highest of (i) 0.0%, (ii) U.S.

Bank's prime rate, (iii) the Federal Funds Rate plus 0.50% and (iv) a one month adjusted Term SOFR rate plus 1.0%), plus an applicable percentage in each case determined based on 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, 2026, the Company was in compliance with all such covenants.

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.

Term loan facility

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 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.

The credit agreement terminates March 25, 2031.

There was $40,000 outstanding under the credit facility at June 30, 2026.

The credit agreement described above replaced a prior five-year senior, unsecured amended and restated credit agreement that was entered into on August 31, 2022.

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

The prior credit agreement 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) 0.0%, (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 prior 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 prior credit agreement.

The prior credit agreement's termination date was August 31, 2027.

There was no balance outstanding under the prior credit facility at June 30, 2025.

Other lines of credit

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.

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

The note did not constitute a committed line of credit.

The line of credit expired 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.

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

The line of credit expired on July 17, 2026.

There was no balance outstanding at June 30, 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

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.

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.

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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.

The Company adopted this ASU for the fiscal year ending June 30, 2026, with prospective application.

Additional information regarding the Company's income tax rate reconciliations, including the application of the provisions of ASU 2023-09 for the fiscal year ending June 30, 2026, is included in Note 8 to the consolidated financial statements.

Not Adopted at Fiscal Year End

In November 2024, the FASB issued ASU No.

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

In September 2025, the FASB issued ASU No.

2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which amends guidance related to the accounting for internal-use software development costs.

The amendments are intended to modernize the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to "development stages".

It also clarifies the criteria for capitalization, which begins when both of the following occur:

(1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended.

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

Early adoption is permitted as of the beginning of an annual reporting period.

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

CRITICAL ACCOUNTING ESTIMATES

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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

We generate revenue from data processing, transaction processing, software licensing and related services, professional services, and hardware sales.

Identification of performance obligations

We enter into contracts with clients that may include multiple types of goods and services.

At contract inception, we assess the solutions and services promised in our contracts with clients and identify 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.

We recognize revenue when or as we satisfy each performance obligation by transferring control of a solution or service to the client.

We generate revenue from data processing, transaction processing, professional services, and hardware sales.

Determination of transaction price

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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

The transaction price, once determined, is allocated between the various performance obligations in the contract based upon their relative standalone selling prices.

The standalone selling prices are determined based on the prices at which we separately sell each good or service.

For items that are not sold separately, we estimate the standalone selling prices using all information that is reasonably available, including reference to historical pricing data.

Contract costs

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

What changed 10-K

Item 7. Management’s Discussion and Analysis