Jack Henry & Associates (JKHY) 8 Nov 232024 Q1 Earnings call transcript

Good morning, and welcome to the Jack Henry First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us for the Jack Henry First Quarter 2024 Earnings Call.

call Carsley, David Greg CFO and the and Board Adelson, on COO. Mimi CEO; and me today Foss, is: Chair President Joining Treasurer; and

Dave turn opening new our of solutions, updated on Greg the some guidance Dave Jack Henry. in call Mimi then I will my financial After and and thoughts will Payrailz results comments. his issued After key regarding and over the Relations section release remarks, available business initiatives at press to our Henry of concludes for industry state other provide is his about insight the from the comments, included Investor provide the will that Jack insight yesterday website. the additional

We will then open the Q&A. lines for

this or includes cause including Like expectations, call those statements. concerning undertakes future to any statements, forward-looking to could these responses The to events future, objectives, company the questions are reminder, or strategies, actual no or or anticipate remarks events, that risks uncertainties. certain multiple these subject statement As revise we trends factors to results. to update which a multiple and results from obligation materially differ about due

these yesterday's summary Factors sections risk additional a refer Statements. and to Forward-Looking and of For our XX-K please press information, the and Risk release factors in entitled

yesterday's release. operating and this reconciliations call, press On we for are will financial measures, income. The non-GAAP in financial discuss non-GAAP revenue non-GAAP including certain non-GAAP measures

call the turn now Dave. will to I over

Thank Good you, Vance. everyone. morning,

dive will this recently deeper into followed on innovative we've several joining a Vance launched, financial As performance. update mentioned, who Mimi, new is morning our to an me provide Greg by solutions take

of our company. operating growth pleased income report and I'm revenue another quarter to strong for

quarter. commitment the associates like to results that the I'd for work and always, our for into producing those went As all thank hard

quarter. prior fiscal as basis. were and to total the time, first revenue a the the of quarter At compared fees down on X% non-GAAP X% year both For increased same XXXX, GAAP deconversion

Turning segment the the in Revenue segments. the core GAAP X% to solid on for and basis. another quarter a business. quarter our by of both We had increased non-GAAP

again X% this segment performed X% quarter non-GAAP payments Our well, in posting increase increase on and basis. revenue very a a a

another increase businesses both in complementary GAAP solutions also and in our had X% a non-GAAP with quarter strong revenue. We

As have the normally sales discussed our extremely strong sales tends a is be our previously, quarter lightest fourth I because pipeline quarter first as is to the result. and depleted bookings quarter

quarter true. historical of so was As the June sales hold history company, the quarter you trend the to may that expected certainly recall, in the strongest we

ever takeaways This pipeline our confident XX fiscal us competitive another the takeaways year, In achieve are XX move to to cloud sales to was leaves This existing approximately fiscal XX private our first in-house strong this customers largest and start deals environment. however, competitive we well booked we core year. year. entering positioned the XX that a quarter, new to

debit success to continue We clients. our new X see and credit processing new solution, clients X processing this signing card quarter with

QX, in signing see with contracts new Business We for Banno clients also offering. digital to Banno XX XX including to suite success our new contracts continue our

platform, users million the digital our XX year, over growing QX, last the we than registered of QX on end That months. number users platform. users of at suite, about XX% of Speaking a we've increase on approximately so million is XX.X the we registered had experienced at more the XXX,XXX had past the month. X.X end now At per

the digital and September. of adoption success seen our in in Survey is published with with sales consistent suite Bank Director we've results the The continued Technology

And from a variety prioritization More responses of in XX% $XXX June Board bank July Director than regarding of their than surveyed received have and respondent greater spending members. million during and were they banks XX% assets. Bank As they the than do every technology more the CEOs topics. of and year, subscribers

year own increase Bank spring. the Responders respondents Study budgets over business grew as Priorities a Director with published capabilities consistent technology digital median and our top account Strategic with the bank's of said Benchmark of X digital survey to XX%. their business last opening, investments. their Most prior named spending That is lending payments level planned

technology Bank different serve as respondents serve the from boomers, interesting effectively of have the they it the respondent the ability XX% place use banks relates have items analysis serve of in was but said baby in necessary technology of XX% to One year's Gen by to to generational this Zers. groups. Fully place Director they the and technology their survey only to said

banking course, long way to that go. branch. all services generations a has initiative without innovative for -- banks expect to layer younger to Clearly, Of it's ever digital get a entering primarily the all conduct presentation to the the

solutions institutions All financial help experience of Jack our the improved door. offered this innovative bodes suite that well future for facilitate digital as Henry as other the digital through customer a by well front of an

$X billion than Digital XXX conference banking a couple in And held topics the billion at Indianapolis. attendees, $XX was of range. month client more our the all-time conference financial annual year. $XX an billion This to year, we this many one more of the is discussed prospects, hosted last the in our largest institution assets over Of XX in prospect record. than have with

Additionally, and trade more fintechs than XXX our show, participated which open approach banking. accessibility third-party to the underscores in

in ongoing development modernization We've simply building Platform. strong now technology can only but a like our course, We institution. generate events new not Jack substantial also Henry education, and the present that financial strategy entire they Of relationship for wonderful a saw branded of that run platform of cloud-native the public opportunity leads. number as this interest solution our a single and sales

and demonstrate the the our platform Google generative well. one conference. from bank And the main talked of hosted functionality one AI of our Officer to an some use on of current Chief the the as about able stage we of to executive CEOs were In most at sessions, Technology highlight

normally XXX As CEO hosted year Henry annual we at do this by Connect, client Jack attended CEOs. our I forum, nearly

general formal for economy, a during enhance efficiencies the that survey continue conduct concerned capabilities, didn't attendees we are the feedback the their and while to position their they technology future. meeting, businesses digital the in Although to improve overall invest about was

During we placed last X the quarter, from XXX included were rankings. in up of list We be XXth Top Workplaces, proud national several spots workplace year. to Newsweek's Most Loved in

X We Greatest is earning stars, highest the possible Workplaces also made which rating. Newsweek's list,

we sector by company our U.S. a Additionally, named top were in

and News & World development. Report professional on balance, stability work/life based

culture engagement, energy, recognized that rankings the employees collaboration national be day. to these our client bring focus because and honored are We in people-first work our each they to reflect and

to we'll person Meeting once meet offer Next Annual conduct to our an with for people option in excited our again, Monett. We're to And remotely. shareholders. week, we'll be Shareholder observe able in

extremely and sales remain a move pipeline, employees, environment, company. the optimistic we our the forward, for interest remain running to committed And the disciplined to customers regarding shareholders. demand we approach to focus and expect I our solutions solid performance in executing. provide stability strong to and delivering we're our We the we're robust As strategies continue that

to that, turn With Greg. over it I'll

Thank you, Dave.

and technological a availability continue we our quarter. general strategic new priorities, of to in few both announce on solutions first As the to operational we're pleased the execute

cloud-native, on development technology of addition, modernization our strategy Jack and In API-first we the outstanding make our Platform. progress continue Henry to

currently platform update going February or We our on will beta those call. provide beta on an components in into

the had clients. As our for And August stages medium-sized banks Banno our we live solution outstanding. call, XX the and banking various clients available Business XX the for generally approximately mentioned SilverLake businesses we been and end At during response than additional September, now implementation. cloud-native more small- developed of of in is has

to generally Jack several available Henry end in for and clients year. by plan of currently the credit be customers of that We union are calendar the beta with base

anti-money laundering Financial SilverLake Crimes for We general September. platform, clients compliance availability fraud banking Defender, our real-time into our delivered in and

We laundering also Crimes to payment September. Zelle faster real-time Financial artificial money faster released intelligence fraud our The uses and for machine in fraud and real detect module in learning time. Defender module payment

XXX XXXX Defender than both additional We module. payments utilizing for real-time include plan and Financial We and for early more queue Crimes than late FedNow XX of in implementation RTP in XXXX more modules the clients Defender, to networks. currently which have release the our

we Financial to addition, launch Defender our remain December. late on Crimes track to in credit In union clients

August offering to almost on on go among FedNow connected Reserve's new we call, our now service cores PayCenter most the our the continue effort the support through live July network process, We Henry were requiring comprehensive to live we Jack on to launched clients our to implementation mentioned from the on provide and four also first when payment no network. all it providers FedNow As XX. Federal transactions instant have

FedNow on live queue. clients XX contracts than the over more have implementation in currently We with XXX

up network live expect mid-XXXX have We by send receive-only. XXXX. every the beginning is clients the to as expect XXX of to more early more set But capabilities to cases Today, for use add wanting see defined. to approximately become in we on customers client

network queue. over the on we implementation XXX matter have another of XXX comparison, live House's Clearing a clients and As The RTP in

XXXX, growth these with or When Tier accounts, We comparing transfers to from RTP payroll institutions from XX% continue transfers of our XXXX realized past bank and transaction September September to wallet see worker to tremendous the from we stemming payments. clients over the transaction growth digital have transactions gig year. a AXA majority X

a little more than year acquired since been Speaking Payrailz. a of it's payments, we

successfully and integrated strategy. into have of culture and the portions technology the technology We stack modernization our team large

AXA, and much payment capable continue more. additional while We PXP, building a execute payment, platform acceptance and to find, back-office BXB synergies premier of bill handling develop

well. for we support iPay, our payment part Henry one provides group operational for As as and strategy, product Jack of solution, that Payrailz legacy planned both our created bill have and

the cloud-native, either Payrailz we platform not and features API-first the well iPay a payment of Over of as single will additional finalize months, key solution will offered all today. in include new next the that as features XX both build-out

well be Jack several implementation XXX innovative Jack were Henry is Payrailz, have outside signed. sold Henry that I'm new clients solutions XX Platform the cores. that we report from strategy to as to our core to pleased of more finalized the components Specific when as live, in than competitive base? XX sell all now of of these going targeted to these another close each various A to stages that we solutions additional are asked, clients question have recently regularly and to

We they so have fraud and move solutions. cores payment a for Henry to the digital competitive and be the Jack our and strategy of of to core base will availability. bring available components we aligned to do being outside need best developed as mutual our Each value have go the will premier believe general real-time with is

year. these some start next of early expect solutions selling to We fiscal

to work to with operate On the the operational Jack that across on experience. about deliver side, a units in collaborating me industry. we've been is event One consistent Jack We it you've in while focused Investor provider annual detail enterprise transparency this our program business in talk Henry. Day ensuring We easiest highly full past the Henry at years. few with the core heard And call

of with and receive efforts our through validation associates. continue We tremendous meetings prospects, our consultants, clients to industry

industry-leading at to scores a survey across and that time where and our right service continue the to up happening Our move industry. not is

Furthermore, and responsive the the is include banking standard customer open and transparent the Those around work service, Henry fair by communication, the doing are of Association highest objectives data Core privacy. One Bankers open exceptional with protection and Platforms American aligned Committee. outlined we contracts, and Jack objectives

and Connect came all with prospects the hearing we in Henry clients in step our be are and we this excellence, execution after want in strategy, differentiator we We a technology client our In doing truly today them. our back work that wouldn't focus modernization forward. from to dedicated little from pep thank map a associates helping service and road strategy us I conference without coupled to our Jack talented with our for is are extra of industry. on our all closing, mid-October move our where

turn some on numbers. I detail will the things over for Mimi to now

good everyone. morning, Greg, you, and Thank

then our in Our the growing serving our institution regional value revenue conclude clients, growth. and our year community with details shareholder our and begin of on and and quarter business, solid led delivering full continued to positive first another guidance future I'll driving investing focus our update. earnings financial quarter with

we for We're to pre-released up fiscal healthy revenue down temperate consolidation. of $X.X by non-GAAP year was which establishing setting GAAP financial institutional revenue our revenue a us X%, XXXX. encouraged and increasing reflecting and $XXX,XXX, fantastic Deconversion week, start continued approximately a QX last million,

September are months reminder, XXXX results are X from excluded the but onwards, given included Payrailz As the XXXX, a both non-GAAP close financials, September X, Payrailz of in that and first acquisition, of QX X non-GAAP. GAAP results

more closely details. the look at let's Now

a support was hardware. basis, and X%. the software GAAP First, hosting, support increases services result and subscription processing and in and usage Services non-GAAP healthy and of on revenue data a increased and growth

We been a in public and offerings, continue to experience long XX% contributor growth engine. private in cloud has our This quarter. the which double-digit robust increased revenue growth

saw basis with results, revenue. X% on Consistent combination for Shifting We GAAP services to and volumes strong non-GAAP basis growth vigorous card XX% a performance period digital processing and higher a prior of growth drivers on quarter. a include the demand. with plus

revenue, and direct expenses. a I'll on and costs, personnel fees. GAAP include which internal X% to costs moving non-GAAP. on of increased basis Next, X% with higher begin cost and licenses benefit Drivers and

capitalization. basis, reflecting strategy, continued of personnel This in expense solution innovation, increased Henry Jack a the R&D including competitiveness benefits our and of XX% net our XX% GAAP technology maintaining is non-GAAP Next, basis support a modernization Platform. costs, higher and and on on

XX% to estimate to $XX primarily GAAP a in million voluntary $XX cost program. departure the the on basis, on Finally, incentive VEDIP. $XX.X based million SG&A one-time This related the the was lower for to participation final early the million than cost rose program, quarter, due the

adjusted a be are year. cost estate the all VEDIP commitment there ongoing costs gain million VEDIP and quarter. these in through will real SG&A X% divestures When costs quarter. to reminder, control. are decreased $X.X from one-time we our non-GAAP, additional to reflect the as this impact during P&L As year's adjusted And last move figures These no

GAAP in of increase quarterly on compounding share a quarter This margin delivered to focused conference strong into margin, points the was per produced And customer remain XX.X%. of the Connect QX results timing driven increase last results diluted our XXX We year. $X.XX. generating non-GAAP compared partially basis which expansion. fully was These QX by earnings shift

by by consistent pleased solid Breaking down we're performance non-GAAP three the segments. results, operating achieved the

non-GAAP Our GAAP migration We continued from operating non-GAAP XX%. X and and a to core points with basis segment increasing from tailwinds revenue growth. both to share, positive from increased X% basis on customer on-premise margin benefit cloud private winning

an change transactional considered growth This The would This EPS It GAAP in payments that business. segment Fed not debit operating XX%. a issuers. change in X% related and on on in be for basis X% recently that The increase margin of had impressive due non-GAAP approximate interchange was a card basis card interchange segment an decrease model revenue increased XX% our to our XX its revenues noted and transaction should for non-GAAP. the announced and to -- interchange. growth card to for translate to revenue is processing reliant plus

basis Finally, of increased expansion XX XX%. our GAAP points complementary with both basis strong on Revenue and non-GAAP margin operating a X% segment. to non-GAAP

the And solutions, will in as growth well. key treasury including to Our LoanVantage, growth diverse to strong like fraud solutions, Banno, this addition mix segment contribute of Defender trend. numerous management, the additional headliners in solution Crimes soon our to contribute Financial new this

Quarterly let's year, increase and a than flow included was million, year. from a cash cash sales cash allocation. $XXX to review producing in over $XX $XXX that asset contribution non-reoccurring flow slightly capital operating $XXX $XX million prior million Last last the turn free million, million was Now less flow nature. year of of

an dedication resulted in invested of to value capital XX%. consistent Our annual return creation on

million capital, of in to including debt quarter. highlight share $XX dilution; and $XX Additionally, repurchases, notable dividends return I'd in in offsetting annual during like million $XX the million reduction;

I guidance of With XXXX. will rear highlights. we change conclude view, shift remainder to QX in focus the with our our And

with guidance, non-GAAP the included updated As XXXX guidance to reconciliation you're full release aware, year along metrics. fiscal yesterday's press

described August the X in possible year, that the fiscal we in filed consolidations starting half how approach a on an reminder, a half. financial using second we're current see guidance. Based X-K the XXXX minimal with fiscal to of deconversion expect revised acceleration for first current we on institution As trends, in

of $XX year full revenue and deconversion As maintaining such, reiterating guidance we're million.

on to over X.X% to full XXXX. of call. see fiscal now non-GAAP we X.X% X.X% X.X% to guidance. from and upside revenue the of full Based GAAP to strong X.X% QX our result corresponds an compared the We This prior expect positive for provided generate on growth to increased guidance revenue X.X% visibility, August to execution near-term a year year

with continued unchanged in The our now tax increase XX tandem XX full an expect rate the outlook on remains focus provided. XX%. annual cost to revenue increased points margin approximately In previously we and basis of expansion basis XX points at year to efficiencies, non-GAAP to compared XX

$X.XX upward of Incorporating the GAAP share. per previous EPS $X.XX $X.XX noted share $X.XX per revised guidance to year positive guidance to updates, full for is from to

deconversion As non-reoccurring severance-related XXXX for for deconversion a gain the costs actual revenue and guidance revenue, reminder, fiscal slightly fiscal EPS. VEDIP the sales an asset $X.XX on approximate GAAP results lower XXXX headwind compared to conservative in the

modeling And additional lastly, some commentary.

As customer revenue led in and next higher consensus believe in recall to has quarter. We be EPS associated The impact estimate. this related was FY previously Please to highlighted, conference, QX. timing we $X.XX our financial 'XX, expenses recently hosted the QX reflected $X.XX approximate will JH Connect. an shift

full these free development higher deductibility quarterly Our cash guidance the results. remains year to and expect associates to term, taxes. our resulting that we return flow consistent, drove contributions of of We appreciate continued of tax the In on XX% impact of hardworking in near timing strong historical relative the norms dedicated given expenses cash conversion conversion.

investors innovation focus the about fiscal our accelerators their for ability growth we was positive to value and confidence. our our to of conclusion, QX remain And Henry thank shareholder clients, In creation. our deliver execution, solutions, and all year. on resiliency a strong exceptionally start Jack continued We valued

the open questions? for please you could call MJ,

Bank comes Today's [Operator with first of Kupferberg America. from question Instructions] Jason

DuPont Jason. Tyler on for is This

is dimensions, corporate looks across side solid I the to on things, growth of So particularly complementary. like growth pretty side and on wanted start the

specifically was the I just kind drove So outperformance you if wondering to speak can during what of quarter. that

other like lower payments looks the growth little than the "normalized" growth it a on was then the rate to And side, of X% X%. bit what's expected healthy but on

there I you're seeing So what any to just and going wanted dynamics ask expectations forward.

let the way. by portion. take payments This Foss, I'll I'll is first the on respond Greg half and Dave the

product growth seeing I driven some is and new we're Banno the of that when the other the to highlighted think complementary than in areas the the area, users primarily new success. So payments platform, product comes addition by groups success the the Banno all in that other there, now registered on so customers I line. of Banno the metrics the of platform performance it the

Crimes the Defender, quarters see variety Financial the solutions in following until we next Crimes you then But a it's But bunch again after complementary signed P&L of Financial a just solutions, other of quarter. and whole in impact then of that. won't really the contracts area. that Defender quarter primarily

with success So like continuing the see solutions great out. we're things we specifically didn't and that treasury of to other call some complementary

But new drivers years. in the comment great what's the and solutions. Jack They're happening for past all But anymore, of past continuing and let them the revenue in in payments not new on side. revenue. have Greg new Many X them drive they're become I'll couple We've as solutions a And improvement of calls to year nice these old. they're demand on of real, highlighted nice them Henry.

there's two would components. I Yes. probably say

remote in the with deposit kind we're our growth business during of dealing pandemic. aftermath excessive one, of the capture So

that so And growth. bit little lessening of we're of a seeing

I talk volume kind the of indicative what associations to both growth, card as heard is well. then think, you've about card And

business payments the that would economy I things debit business majority on our But two the are going is some Everything again, fast fairly it growing the sync. with think, during of on That the are as card the drivers, the else on isn't side. just right biggest in So now. those side. as is of

year like the to appreciate quarter, basis, the at Okay, It as it. just on or raised. seeing I were great. was looks full business. well I follow-up. least gears a then the there ahead, anticipating That's during just helpful. we came margins what an in adjusted And to dynamics and shift across you're want margins

will you're separate do given what that And I'd be sort the curious we're the year drove uplift that full on a sitting as the during and of now, quarter to line, seeing you where when hear to that more become margin about business? anticipate to Payrailz well thus neutral tangentially raise. but

that. Yes, I the can of take first part

in So saw great terms of correct we in the expansion margin you're QX.

QX Now renewals because have from basis our you quarter perspective. a largest-performing is revenue the margin from typically, there subscription-related a

which have I pretty the control. board, margin and a But significant we from through. flowed saw year-over-year did part, it impact reminder impact improvement would of Connect was a The higher the as I the conference. that from revenue revenue though, most just But the timing have good say across the then expense flow-through on a basis. would just

on Payrailz so the side, to Payrailz, gave we are in we then think guidance August. back so that And the tracking I

what I provided everything So track we back in August. is think on on based

The next question comes from David Togut with Evercore ISI.

June to of with the competitive to looks like competitive on above question just fell the XX changes? in was call-outs which more XX timing-related about Or the quarter. quarter, of issue? I'd the well current this in in environment, it trend, Any the takeaways core start quarter. was a any like pace from a It

I'm quarter first that push We as every went light thrilled in with had comparative, quarter. negative normally, the interesting you the Last to the a tend first real see X year. XX XX. fourth called from we quarter. that XX quarter to that in It's a a we very because as a out year, is

gives pipeline really, this a we're year. great XX first Based to have And what I So news I saw think, going quarter seeing what the XX in for led that's to wins really as for as was new us strong on I'm XX what to we concerned. to the me that in far produce year. me confidence and quarter the great was say, in

the of our are Those I cycles. happening with said, us. talking events competitors Now environment, and disruption create that's opportunity of on. that happening in what's sales well our still These what's for some our with all know very long types of in of pretty so all happened about and think environment you

a who think You conversion." conversion. go through and a says, a very disruptive one go I'll It's day don't banker up core wakes process very core a through have suddenly long. "Hey, They're I to

takes by the we are being But that's that seeing of in so produced our space core. it are some around And lightly. the nobody of disruption impacts pipeline some happening definitely in our sales topic

upmarket to initiatives it. you And this bank couple moving update you in broader Got the the years a then area modernization. banks long a treasury And us ago You to of months? XX, to this talking success on space? is you do bigger with up move yours. has Where called within of effort the XX move process? management, which focus you started into upmarket. to out are And been part about be of that bigger expect of where Can tech

Sure.

recall to this us I -- long doing to us range in at at that we were been $XX in $XX remarks, to a banks I I billion prepared the about ever So recall -- that I prospects brand-new my come billion having talk prospect time, should may pointed had were conference forgotten have core. for conference. our $XX our But out our couple that client don't to client say one. billion I I've don't of over a a

by driven have to pretty that now. tech that modernization. the in is So think, indicative And success really I of being we're range, two it's having

is and Jack institutions to a platform current a Henry. figure we're provider. that forward can't that see among with public that new lot now getting this trying see out to path things have The with doing actually with demonstrate our to cloud larger path to environment, story of they're ability They they the and their because get how we attention

I a predict that some we'll now the you'll see that larger right significant when gives banking So But regional one future space. in activity are institutions that as the confidence of me announcements wins of I great these can't in sign client. new think

comes question next Vasu KBW. with from The Govil

the question up I on follow wanted to first, guess, about just payments previous the segment. I

should of of Just the will wondering for the from the remote for year? when deposit And some there us? of we issues the grow-over remainder growth be behind what kind expect capture

with start me Let that.

the continue were trends So Vasu, year. the QX I say payments that business. segment last to we much year for the we full for in see line with would that strength saw in And what pretty

in to So It's and we're it. continue transactional, not in expand services revenues also just a very there I upon perspective. we from think positive ancillary that there's portfolio about optimistic

itself derisking in exposure is that the So transactional. just to

basically, should XQ So it continue to expect remainder seems and puts we the rate there? rate, through takes the Any like year. of this

that's a good think I assumption.

base, And it Banno, a more how your on it's there today us success we are I'm a for within give you, client Dave. to driver willing enough might seems, about is quick you think total be addressable market been for with it's it. Got several big how clear one years penetrated visibility where then It's your if you it for Banno? and how has now. story fast growth a big you. growing. And as been wondering

still the push to becoming business. we're side It's of side. hard of existing started well penetrated, over with secret, yes, the started we base, the union our client we banking on really Banno particularly on opportunity, have we're Within a on But side lot no the credit banking and XX%.

We have not been as forceful maybe.

We side. for on is certainly the as didn't it an of have area union on ready been that haven't And we But union side. credit us. credit the forceful focus

in will to anything penetration. that else consume all that to or solution the customers in the core almost differences expect market. banking another So at want we mean, the when because digital our see you'll you between of industry, point leading they continue one and have I see the

try try don't as to I we everything revenue As we provide far tend to else Vasu, the that. part per products. Jack a It's your concerned with size segment. to products. expect do is change We as question, on don't first as But we part segment. of Henry, size to at individual guidance to of don't us

kind and ammunition My that as create visibility of of giving effectively you product revenue like like to been view we specific doing I try counts going we're start and the don't user a has you But provide to much Henry. at Jack to Banno. on give in we're have expect what own real guidance to goal your model

is question next from The Kartik Northcoast Mehta with Research.

on think the I'm good? year? the just was a timing it's in might anticipate about still be for maybe that know that it is go cash said first this as XX% throughout the just Or you we you do quarter little Maybe wondering, free XX% conservative year. I now flow.

can cadence I sometimes would quarterly that say the choppy. be

Our quarter. QX is always a very strong cash flow

maintenance cash annual strong coming in QX. We flows have other and the

be So this last year. than track that bit steep and of about year little maybe than on still a might I XX%. more But we're more U optimistic shape would say anticipated, a

And if other business. then where Connect, was wondering maybe JHA if just are sure was use could that help to talking AI there AI. like Dave, And a ways banks that topic Henry at so, I'm And Jack about discussed. that banks want just are I'm every if

Yes.

as So who's about what to it. about about and they're definitely Everybody these talking out trying a talking talking to topic. they're days anybody AI seems figure be

kind And here. So two topic, intelligence/machine of traditional ChatGPT, artificial of if will. of two in version of AI. things AI, mind kind There's AI. flavors generative you there's to the then new keep There's learning hot the

So many we've AI for traditional years. been deploying

into machine our fraud that especially have And and And So into quite Banno learning a that intelligence center for artificial we've some baked we we that's solution. and area, do lot in use our with call had time. technology. baked solution, our

quite demoing about been for effectively able to talk it some and time. that we've So been

we AI. the our generative conference. mentioned generative the The platform with on new at twist AI Google Connect as with And prepared in show is my platform solution I remarks, working

session. had stage one we main So

with Officer Google thinks way, He to us. environment an he for could the their change do to who, solution a executive a and beta Technology Connect, specifically onstage operating -- going so Chief bank talk onstage it's what generative for CEO, was Our AI to customer our by trip the is and what made the be bank. about from he

best Google Jack have protect Cloud. course, of the Google customers roll yet. on that information, it's that news they AI. generative Henry so expect written market, in player as is solution the in with has, production good beta. help to they'll in partly we not we able the we the we'll private and because this AI definitely This a with And space, our is that We're Platform, out. PII, we'll And be all using gen be But guaranteed believe, the

And very for that so bullish use customers. to help opportunity on to the our we're the future technology

Davis The with James. Raymond John next is question from

still of curious, just X in And to was lap believe I up the just cash comment about flow R&D you a clarify a to historical levels of the to kind X Mimi, from once nondeductibility years we comment to free to wanted on returning expense? conversion levels. flow. you is I that want to normal I expect follow it that historical perspective. free cash return made Just

of deductibility of I Washington, If had the in that question, we're might I'd ball legislative tax a of Great be changing hopeful that JD. for bit role. crystal of there expenses. But a little a a development probably nature be different consideration

impact does we you, would technology them. years You're at guidance. starting a not negative not that on that would couple X, say companies now, for banking of talk this right than sticking XX% about but more hopefully I and point, the for agree that this comfortable with the year -- so -- more to feel I pretty hear out, happening. If more occur, with and we're If to

can this if JD, is And on, Dave. I tack

So clarity little I to out just add want to a everybody there.

that been Henry these out. The now just the Greg Platform highlighted products. that's Jack been and on for things new solutions future Crimes rolling company, that Jack great spending that's one out brand-new R&D, for is success getting have success lot new the things is And And is were Henry Business new development, the them. all or for innovative We've great Banno right of great recognition these One we of rolling we've Financial the all Defender. a company. of the

what's as this it's happening the news it's our because of tax the reputation The numbers. really And in bad our side, created Jack space. cash hitting for on Henry being free is innovation leader

all the the of the are sustain the that when solutions And future fact great innovating this -- being really company. comes to free delivering for which driven cash, so we growth concerns we have to it's about and leading it by industry

say you year. months, first a then earlier last than least track. And Greg, X for Payrailz. on heard you one helpful. I of That's for like, revenue you're Okay. was little the at looks on quick bit kind a It lighter

I partners. delays think with you talked about some implementation

be Just there, kind there perspective? So integration update there still an sort of going just curious helpful. really how about the Are update of from long implementation that would you guys any excited seem delays? term. is an But

question. Yes, worked is short answer great integration the we've delays. through Yes,

been through So component. able get to we've that

the is it the group. we've is the of reality there. with But through challenges just Some gotten up pipeline that rebuilding

build as that's out -- that build other has to The the well. that helped the as we synergies us the important of we've thing been additional able is product some

So able -- things. operational with sales we're we're to working more some find through lot on synergies we've of kind delays been of of the the that

to So why be on that's everything continues track. -- everything

the JD, in his prepared numbers reemphasize, Greg shared remarks. Let's

are So implementation, more process, XX and XXX but they're signed. been so clients then just new live contracts that of us in now, process XX paying yet, they're that not in have

Okay, then more if capital just Dave, quick one could I great. squeeze in just on allocation. And one,

paid a of bit You debt. down little

from a with stock would stock you of You the whether versus think update bit the in any rationalized bought there color And paydown Just valuations do yet? How helpful. M&A about then buybacks debt here? on, be little have an perspective, quarter. back any

Yes.

it conversations M&A comes interesting what seeing first. in And So to they're some had I'll I've a some opportunities about bankers Not industry. answer happening that when with part the the lot space. far as in as last investment

to now it M&A. right intriguing really comes nothing Just when

debt share So that leaves buyback, paydown.

to committed our we're policy. dividend course, Of

a that on something two Because paydown, the topics, time, share be with is analyze to so other that Monday. meeting our to balancing in be needs definitely debt at that topic buyback going fully. Board this And we

So those will Board appropriately. very on But discussion. and trying to focused that prioritize we're require topics two

The Dominick next with comes from Oppenheimer. Gabriele question

that of you sell to calls, to Is found good our some Henry." of way just core your that previous competitors' this sales have stop a "Keep move way that products stop And of a an found outside mentioned say, I products with upgrade on follow-up. dynamics that to I the that? think have mentioned you you've the competing that indication indicate should you are one Dave, the force Jack core upgrades? the mean, I basically sales a would core, so just

you a It are previous characterizing what my I us. comments was Yes, correctly, to shocker Dominick. That's said. exactly

back have, yes, the specific that this we're Jack kind targeting made few very that with And a in we leverages up stepped sure that we But cores few ourselves an we and answer of so process. specific by is messages confident the Platform. and mess didn't a approach Henry

Financial about, about news, and the of today, is, one it comments, are talked Greg talking So things new of in Henry one and these Defender Jack living they are on and on, Platform so solutions those his prepared good good platform. that modernization, highlighted Banno core the platform we're already on the for we've Crimes the

these so cores. advantage a for us in believe created platform. we've on it an We the are opportunity that And of strategy targeted takes create fact that the those will

want of active pointed have next sales. we an Do about be believe we something add as that? we're yes, so to or really And out, talking in -- that beginning summer we'll you to And Greg now. answer

to Yes, just things two add.

this So think bundle. our ability bundles good one, into pretty other is of we can component to that. found sell that the we We some

technology what of the think will have and modules leveraging rate we we coming platform out. also So success Dave said, that kind using and, help some that the of with the

the does part other it is that integration take. work The

it that work before and to you of get close take while a does integration out done can So some actually some go deal.

in well. we're So the on background that as working all

guidance, quarter that I I I we know was XX%. if structured modest and set a wondering you a have going you've don't the But target And making. the company your the level the and now of was expectation Great. way ROIC this. of deconversion guess, hit -- forward dynamics for maybe ROIC has that might help the you now? around, investments of why you that And floor you're some the could given move believe do some kind of provide

Sure, Dom.

let be envy first, think me of companies. I a quite of that XX% would the ROIC say and attractive is So lot

from creation. a and So shareholder it's us. We And both it to value We balance know our it's about sheet, closely following. think has you're led to approach from conservative know ROICs that a we allocation, we're a sustainability attractive a as of how fortress thoughtful believe quite metric following historically. something we commitment that capital that

just I there's a bit math would a itself. little of say metric challenge from the

growth, growing is we repurchase, dividend our we focused some because now, right share debt fiscal income did years years take net and our are of -- cash. on of paydown, XX because those So

shareholder touch. we paydown, buybacks is and large going dividend equity, therefore, continue Unless by while or ROIC the reduces. nature So increases income the net it mathematically, do debt their that grow to to that a dip

we acquisition. And that share as to you'll more so income from that repurchases the debt down and hangover And just rebound Payrailz it's of I net effect see the number. more debt, do think as from that back investors, we the return had we pay

of that and trailing So just growing has that the that on impact impact for XX-month it's that. into the net income equity

And is XX% super attractive. helpful. That's very

Baird. Dave comes Koning The question with from next

a a what similar, of right seems moving think, there now. And changed job. revenue from pretty recently. losing pace a lost just as parts just you've you looks How growing stuff those already is standpoint of And you've in a that Payrailz better? million like looked been couple on just but then stand-alone entity? not a you much. that it mentioned around guess, just touch, then Nice getting I it just few kind of guidance it quarter, which the I questions there. bunch But things, fast like year-over-year a just the couple a is as Is all

it taking in I add a by would say then strategic from I'll start perspective. me remains let and track. the Greg Let on acquisition

a clip. hit our nice previous guidance. As to is we confident the ability feel in at Greg mentioned, growing Revenue

visibility more is. I not annualize that trend the say wouldn't than So months is -- only to it I take it of because looking you're a would at X

in confident growth profitability. So we still the terms very that of feel journey to and

past the some in And we've sold would of lot earlier, I of were through of we've a of that say, solutions the Payrailz barriers had, Yes. mentioned I as where the kind kind resellers. unhitched

in issues have there. our on of lot anticipated than the some gotten the working with of we we even folks sales stronger feel again in we that And very on resellers, challenges that back we've able track. a we're that have and and now that So brought been direct focus strongly technology work as have we the to the through itself is through and

almost that got for the And EPS, be guiding just income, it then those the us then XX.X%, two kind the get the Okay, to seems two to numbers guidance be thing, X. other GAAP that like tax items Is would GAAP net between other. of just like you're And GAAP income you. EPS? rate and would one operating be interest to

would At tax to say continue Yes, in year see that. use materially it's off Dave, to I rate. anything point, the XX% a from of changing too this early

interest it the XX%. expense. one helps bit So from interest rates interest recommend an as The as using well you're as I of higher is see would starting still positive a offset little to to income

flow-through that. year. operational share year, change as of probably in a from VEDIP reminder, I coming QX. this look highlight And those most the EPS the I would are the some of just from bit, revenue impact, the the say is that little growth. at last just would year in gains buyback the would totality from count But last did But the a asset really I and -- from sale impact we

question Cris with Kennedy The Blair. from William is next

about you of the Platform or about for just progression Can is Henry module innovation. talk talked going? David, you Jack kind how the origin

to defer there. day-to-day on in He's with what Greg one. doing I'll the Actually, for more we're the team that

So go ahead, Greg.

have as we out of are sure. beta now. And modules that Yes, right I couple in a mentioned,

map. customers. outside of time So have that exactly do we're public we our But frames not base. a We map We our road have. do share a that we road we the to it with share tracking have customer

going particular to that modules evolution we're and to actually that full the a we've into the of year we to this have road are able mentioned And back where modules monetization as map. T be excited in those executing created of their other We're I share pretty for strategy some and be next. that going to of earlier, to rest

on Cris, Greg you going And call. is February that give the to detail,

Correct.

a Banno kind to of outside is are Okay, your just attracting core And that that business, forward customers that. of quick looking base? then for update,

Yes.

up definitely as core So I yet, want and that to earlier. sell And mentioned core sure got outside people go right base you and it's one ready to it attention not we're from everything lined it those the because lapping got is base. the But make has to outside but we're of selling away, be you've effective.

outside part a Business than it's base. And Banno simply of larger the selling strategy

definitely talked well. base. about getting definitely there, strategy broader But are outside So selling as Banno the part retail earlier that actively preparing attention. yes, we We it's out are of sales to because goes that we get it with

happen fiscal that will next And year. sales of not lot a until

Yes.

Faucette with Stanley. next James is from The question Morgan

can cetera. and to talked we implementations? et -- help implementation, a long take does the scaled little that revenue about and it And fully when But to start then P&L? bit scales? Payrailz does to contribution Like the see when from how we about do get implemented know like how that time and us within you think I

implementations, as can the of typically. We it have within typically, type as those I of actually and days install far as pay somewhat with we Well, products, Yes. customer. mean, any is on dependent bill really payment-providing XX

it So the is some customer. of dependent on

to may be of an where waiting deal, core implement a core so that part on dependent is it of Some actual that. they're deal, Payrailz

they're have those of before implemented. some contracts tail longer actually could So

we I that we the as queue to with the the moving were ability start have the XXX sold, XX and just implementation have the earlier, that that mentioned XX the in platform the are now, on needle. But actually

small But As amount gave which are is the started number. guidance we I I those obviously, again, mentioned that August we track for substantial on think, for the in we drive. revenue again, percentages, a with earlier, a numbers, of even

immediate going and from the drive longer-term Payrailz wanted But current things the driving a as do -- this the to go. ability with strategy, to modernization we're just of while we're the for waiting technology parts offering. the these we the part that place, some of contracts we're technology all the tech doing to driving part strategy that get itself of not to is that to So in get

And layer on let me just there, James.

Just our as call roughly the bill is it, reminder, a of revenue sector, total of which let's about XX%. payment pay, XX% that,

reinvigoration this neither of new combined to So of itself, see the a And that of as really plus that features on over that be that was their together, mature. upcoming but the that reinvigoration segment. will in is business pretty own, platform that iPay see a added that quarters has won't Payrailz help business and you'll to we existing start total able innovation so

that. then it. landscape. want Got on ask competitive And Appreciate I the to

that One enables an at for competitors deposit have a announced in them a market new of banks to targeting more adjacent digital initiative lightweight least and core your of credit products. unions product

compete And that I the don't with get outside environment into generally the at opportunities a low installed go you as I Banno, especially you you're about think But for base about of they're price to it just on trying point. competitive to price. know and kind curious how thinking base. installed work the think

been for that We doing a refer We've years. side core. that to as

Certainly, where integrated that requirement can long digital Banno you actually We've core So with requirement a functionality, time. that's accounts. have having it's our banking application a that those of doing process of a been the we solution. necessarily, not for

simply complete We the to and everything as can and same else offering. thing it's want gathering, the digital the wants they nice about same for do if to through deposit the solution. can to exact we grow, GL customer host that do If offer it's is a bank But it platform, continue that. they that loans offering our

Jack time. that's quite something that been Henry. for to new So doing some not We've

session. concludes over to remarks. This question-and-answer turn any for our you. to would back Sherard Thank like closing Vance the conference I

Thank you, MJ.

As Tuesday, you virtually person hope the XXth, as we Meeting. either join Dave Annual week Shareholder will on or our we host us mentioned, next in

November upcoming look to during many seeing we forward and events Additionally, investor of December. at you

you In associates the replay Thank number? joining conclusion, produce financial whose these we And MJ, thank all today. will Jack efforts Henry us for provide strong please results. you

number you (XXX) concluded. is access today's has conference call XXX-XXXX today's now The XXXXXXX. replay Vance. Thank The Thank course. you, code and is for presentation. Of the attending for

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