Jack Henry & Associates (JKHY) Stephens 26th Annual Investment Conference | NASH2024 summary

Business overview and segment performance

• Operates across four segments: core, payments, complementary, and corporate, with payments contributing 37% of revenue and complementary plus core making up about 30%.

• Payments segment includes enterprise payment solutions, card business, bill pay (including Payrailz), and the fast-growing PayCenter group focused on faster payments like Zelle, RTP, and FedNow.

• Core segment targets 6%-7% growth, payments 7%-8.5%, and complementary 8%-9% annually.

• Company has moved up market, closing more multi-billion dollar institution deals and increasing average client size.

• Maintains a strong focus on community and regional financial institutions, with 99.8% of revenue from this segment.

Market trends and client demand

• Surveys indicate a 6%-10% planned increase in technology spending for 2025, consistent across two separate surveys.

• Prioritization among clients has shifted, with deposit growth remaining top, operational efficiency rising to second, followed by lending growth and fraud mitigation.

• M&A activity is expected to increase, driven by pent-up demand and potential regulatory easing.

• Company has historically maintained or grown market share during consolidation cycles, with average client asset size increasing significantly.

Technology innovation and product strategy

• Significant investment in public cloud-native solutions, including a modular core system with 10 components already completed and a deposit-only core set for 2026.

• Banno digital banking platform has grown to 13 million users in six years, offering a unified experience across devices and extensive third-party integrations.

• Financial Crimes Defender, a real-time, single-platform solution for BSA/AML, is gaining traction, with 83 customers live and 133 in the queue.

• New lending platform combines consumer and commercial lending with account origination, launching in early 2025.

• Partnership with Moov introduces a public cloud-native acquirer processor, offering rapid onboarding, multi-window settlements, and advanced reconciliation for SMBs.