jkhy-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______________ to ________________

Commission file number 0-14112

JACK HENRY & ASSOCIATES, INC.

(Exact name of registrant as specified in its charter)


Delaware						43-1128385
(State or Other Jurisdiction of Incorporation)						(I.R.S. Employer Identification No.)

663 Highway 60, P.O. Box 807, Monett, MO 65708

(Address of Principal Executive Offices)

(Zip Code)

417-235-6652

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock ($0.01 par value)	JKHY	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ”accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

As of January 26, 2024, the Registrant had 72,867,678 shares of Common Stock outstanding ($0.01 par value).

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		Page Reference

PART I	FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Balance Sheets as of December 31, 2023, and June 30, 2023 (Unaudited)	4

	Condensed Consolidated Statements of Income for the Three and Six Months Ended December 31, 2023 and 2022 (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended December 31, 2023 and 2022 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2023 and 2022 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	29

ITEM 4.	Controls and Procedures	30

PART II	OTHER INFORMATION	30

ITEM 1.	Legal Proceedings	30



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

ITEM 5.	Other Information	30

ITEM 6.	Exhibits	31

	Signatures	32

In this report, all references to “Jack Henry,” the “Company,” “we,” “us,” and “our,” refer to Jack Henry & Associates, Inc., and its wholly owned subsidiaries.

FORWARD LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may appear throughout this report, including without limitation, in Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “seek,” “anticipate,” “estimate,” “future,” “intend,” “plan,” “strategy,” “predict,” “likely,” “should,” “will,” “would,” “could,” “can,” “may,” and similar expressions. Forward-looking statements are based only on management’s current beliefs, expectations and assumptions regarding the future of the Company, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, in particular, those included in Item 1A, “Risk Factors” of such report, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Any forward-looking statement made in this report speaks only as of the date of this report, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands, Except Share and Per Share Data)

	December 31, 2023		June 30, 2023

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	26,709	$	12,243
Receivables, net	270,551		361,252
Income tax receivable	—		7,523
Prepaid expenses and other	179,304		169,178
Deferred costs	77,703		77,766

Total current assets	554,267		627,962
PROPERTY AND EQUIPMENT, net	204,846		205,664
OTHER ASSETS:
Non-current deferred costs	174,821		161,465
Computer software, net of amortization	581,756		565,714
Other non-current assets	353,248		322,698
Customer relationships, net of amortization	61,142		65,528
Other intangible assets, net of amortization	19,099		19,998
Goodwill	804,797		804,797
Total other assets	1,994,863		1,940,200
Total assets	$	2,753,976	$	2,773,826
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,729	$	19,156
Accrued expenses	174,084		172,629

Accrued income taxes	14,417		—

Deferred revenues	196,794		331,974
Total current liabilities	404,024		523,759
LONG-TERM LIABILITIES:
Non-current deferred revenues	72,406		67,755
Deferred income tax liability	227,899		244,431
Debt, net of current maturities	255,000		275,000
Other long-term liabilities	70,260		54,371
Total long-term liabilities	625,565		641,557
Total liabilities	1,029,589		1,165,316
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued	—		—
Common stock - $0.01 par value; 250,000,000 shares authorized; 104,181,060 shares issued at December 31, 2023; 104,088,784 shares issued at June 30, 2023	1,042		1,041
Additional paid-in capital	601,790		583,836
Retained earnings	2,973,673		2,855,751
Less treasury stock at cost 31,323,119 shares at December 31, 2023; 31,194,351 shares at June 30, 2023	(1,852,118)		(1,832,118)
Total stockholders' equity	1,724,387		1,608,510
Total liabilities and equity	$	2,753,976	$	2,773,826

See notes to condensed consolidated financial statements.

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In Thousands, Except Per Share Data)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022

REVENUE	$	545,701	$	505,314	$	1,117,069	$	1,034,516

EXPENSES
Cost of Revenue	320,979		304,589		643,981		602,849
Research and Development	35,478		36,561		72,370		69,554
Selling, General, and Administrative	70,277		56,788		149,051		114,013

Total Expenses	426,734		397,938		865,402		786,416

OPERATING INCOME	118,967		107,376		251,667		248,100

INTEREST INCOME (EXPENSE)
Interest Income	5,121		1,240		9,866		1,392
Interest Expense	(3,865)		(3,406)		(8,062)		(4,982)
Total Interest Income (Expense)	1,256		(2,166)		1,804		(3,590)

INCOME BEFORE INCOME TAXES	120,223		105,210		253,471		244,510

PROVISION FOR INCOME TAXES	28,258		24,435		59,827		57,186

NET INCOME	$	91,965	$	80,775	$	193,644	$	187,324

Basic earnings per share	$	1.26	$	1.11	$	2.66	$	2.57
Basic weighted average shares outstanding	72,838		72,962		72,854		72,929

Diluted earnings per share	$	1.26	$	1.10	$	2.65	$	2.56
Diluted weighted average shares outstanding	72,984		73,144		72,999		73,141

See notes to condensed consolidated financial statements.

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
(In Thousands, Except Share and Per Share Data)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
PREFERRED SHARES:	—		—		—		—

COMMON SHARES:
Shares, beginning of period	104,144,549		103,953,128		104,088,784		103,921,724
Shares issued for equity-based payment arrangements	16,603		57,943		47,660		70,084
Shares issued for Employee Stock Purchase Plan	19,908		15,937		44,616		35,200
Shares, end of period	104,181,060		104,027,008		104,181,060		104,027,008

COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of period	$	1,041	$	1,040	$	1,041	$	1,039
Shares issued for equity-based payment arrangements	1		—		1		—
Shares issued for Employee Stock Purchase Plan	—		—		—		1
Balance, end of period	$	1,042	$	1,040	$	1,042	$	1,040

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	591,458	$	560,034	$	583,836	$	551,360

Tax withholding related to share-based compensation	(617)		(5,174)		(3,561)		(6,731)
Shares issued for Employee Stock Purchase Plan	2,616		2,884		6,035		6,686
Stock-based compensation expense	8,333		7,112		15,480		13,541
Balance, end of period	$	601,790	$	564,856	$	601,790	$	564,856

RETAINED EARNINGS:
Balance, beginning of period	$	2,919,567	$	2,707,182	$	2,855,751	$	2,636,342

Net income	91,965		80,775		193,644		187,324
Dividends	(37,859)		(35,745)		(75,722)		(71,454)
Balance, end of period	$	2,973,673	$	2,752,212	$	2,973,673	$	2,752,212

TREASURY STOCK:
Balance, beginning of period	$	(1,852,118)	$	(1,807,118)	$	(1,832,118)	$	(1,807,118)
Purchase of treasury shares	—		—		(20,000)		—
Balance, end of period	$	(1,852,118)	$	(1,807,118)	$	(1,852,118)	$	(1,807,118)

TOTAL STOCKHOLDERS' EQUITY	$	1,724,387	$	1,510,990	$	1,724,387	$	1,510,990

Dividends declared per share	$	0.52	$	0.49	$	1.04	$	0.98

See notes to condensed consolidated financial statements.

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)

	Six Months Ended
	December 31,
	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	193,644	$	187,324
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	23,765		24,766
Amortization	75,366		68,946
Change in deferred income taxes	(16,532)		(27,611)
Expense for stock-based compensation	15,480		14,544
(Gain)/loss on disposal of assets	213		(7,240)
Changes in operating assets and liabilities:
Change in receivables	90,702		102,672
Change in prepaid expenses, deferred costs and other	(52,969)		(39,042)
Change in accounts payable	277		(7,696)
Change in accrued expenses	15,463		(47,544)
Change in income taxes	23,792		47,025
Change in deferred revenues	(130,529)		(125,433)
Net cash from operating activities	238,672		190,711

CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired	—		(229,628)
Capital expenditures	(24,458)		(17,376)

Proceeds from dispositions	878		27,885

Purchased software	(2,971)		(1,027)
Computer software developed	(83,408)		(81,046)
Purchase of investment	(1,000)		—
Net cash from investing activities	(110,959)		(301,192)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities	220,000		365,000
Repayments on credit facilities and financing leases	(240,000)		(205,042)
Purchase of treasury stock	(20,000)		—
Dividends paid	(75,722)		(71,454)

Tax withholding payments related to share-based compensation	(3,561)		(6,731)
Proceeds from sale of common stock	6,036		5,684
Net cash from financing activities	(113,247)		87,457
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	14,466	$	(23,024)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	12,243	$	48,787
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	26,709	$	25,763

See notes to condensed consolidated financial statements.

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(In Thousands, Except Per Share Amounts)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Company

Jack Henry & Associates, Inc. and subsidiaries (“Jack Henry,” or the “Company”) is a well-rounded financial technology company. Jack Henry was founded in 1976 as a provider of core information processing solutions for banks. Today, the Company’s extensive array of products and services includes processing transactions, automating business processes, and managing information for approximately 7,500 financial institutions and diverse corporate entities.

Consolidation

The condensed consolidated financial statements include the accounts of Jack Henry and all of its subsidiaries, which are wholly owned, and all intercompany accounts and transactions have been eliminated.

Comprehensive Income

Comprehensive income for the three and six months ended December 31, 2023 and 2022, equals the Company’s net income.

Allowance for Credit Losses

The Company monitors trade and other receivable balances and contract assets and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience and other factors, including those related to current market conditions and events.

The following table summarizes allowance for credit losses activity for the three and six months ended December 31, 2023:


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
Allowance for credit losses - beginning balance	$	8,204	$	8,030	$	7,955	$	7,616

Current provision for expected credit losses	480		480		960		960
Write-offs charged against allowance	(552)		(325)		(783)		(390)
Recoveries of amounts previously written off	—		(1)		—		(2)

Allowance for credit losses - ending balance	$	8,132	$	8,184	$	8,132	$	8,184

Property and Equipment

Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Accumulated depreciation at December 31, 2023, totaled $464,879 and at June 30, 2023, totaled $466,711.

Intangible Assets

Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of those intangible assets with an indefinite life (such as goodwill), over an estimated economic benefit period, generally 3 to 20 years. Accumulated amortization of intangible assets totaled $1,201,636 and $1,149,913 at December 31, 2023, and June 30, 2023, respectively.

Purchase of Investment

At December 31, 2023, and June 30, 2023, the Company had an investment in the preferred stock of Autobooks, Inc. (“Autobooks”) of $18,250, which represented a non-controlling share of the voting equity as of that date. The total investment was recorded at cost and is included within other non-current assets on the Company's balance sheet. There have been no events or changes in circumstances that would indicate an impairment and no price changes resulting from observing a similar or identical investment. An impairment and/or an observable price change would be an adjustment to recorded cost. Fair value will not be estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

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Common Stock

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 borrowings on its existing line of credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At December 31, 2023, there were 31,323 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,667 additional shares. The total cost of treasury shares at December 31, 2023, was $1,852,118. During the first six months of fiscal 2024, the Company repurchased 129 shares. At June 30, 2023, there were 31,194 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,796 additional shares. The total cost of treasury shares at June 30, 2023, was $1,832,118 and the Company repurchased no shares during the first six months of fiscal 2023.

Income Taxes

Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expenses are recognized on the full amount of unrecognized benefits for uncertain tax positions. The Company's policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.

Interim Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to interim condensed consolidated financial statements, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes, which are included in its Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended June 30, 2023.

In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly in all material respects the financial position of the Company as of December 31, 2023, the results of its operations for the three and six months ended December 31, 2023 and 2022, changes in stockholders' equity for the three and six months ended December 31, 2023 and 2022, and its cash flows for the six months ended December 31, 2023 and 2022. The condensed consolidated balance sheet at June 30, 2023, was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.

The results of operations for the three and six months ended December 31, 2023, are not necessarily indicative of the results to be expected for the entire fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Accounting Policies

The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Form 10-K for the fiscal year ended June 30, 2023. For the three and six months ended December 31, 2023, there have been no new or material changes to the significant accounting policies discussed in the Company’s Form 10-K for the fiscal year ended June 30, 2023, that are of significance, or potential significance, to the Company.

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NOTE 2. 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 Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves the disclosures about a public entity's reportable segments through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The ASU requires additional disclosure related to rate reconciliation, income taxes paid, and other disclosures to improve the effectiveness of income tax disclosures. The ASU is effective for annual periods beginning after December 15, 2024, and applied on a prospective basis. Early adoption and retrospective application is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

NOTE 3. REVENUE AND DEFERRED COSTS

Revenue Recognition

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

Disaggregation of Revenue

The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note 11, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Company’s revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
Private and Public Cloud	$	168,733	$	153,130	$	332,222	$	302,129
Product Delivery and Services	63,013		58,594		123,852		116,117
On-Premise Support	80,246		78,976		198,123		192,603
Services and Support	311,992		290,700		654,197		610,849

Processing	233,709		214,614		462,872		423,667

Total Revenue	$	545,701	$	505,314	$	1,117,069	$	1,034,516

SEC Form 10-Q filed by Jack Henry & Associates Inc.