Jack Henry & Associates Inc.
02/06/2026 | Press release | Distributed by Public on 02/06/2026 12:16
Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q for the fiscal quarter ended December 31, 2025.
OVERVIEW
Jack Henry & Associates, Inc. is a well-rounded financial technology company headquartered in Monett, Missouri, that employs approximately 7,200 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 U.S. banks ranging from de novo to multi-billion-dollar institutions with up to $55 billion and above in assets, core data processing solutions for credit unions of all sizes, and non-core highly specialized core-agnostic products and services that enable banks and credit unions of every asset size and charter, and diverse corporate entities outside the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. Our integrated solutions are available for on-premise installation and delivery in our private and public cloud.
Each of our solutions shares the fundamental commitment to provide high-quality business systems, service levels that consistently exceed client expectations, and integration of solutions and practical new technologies. The quality of our solutions, our high service standards, and the fundamental way we do business typically foster long-term client relationships, attract prospective clients, and have enabled us to capture substantial market share.
Through internal product development, disciplined acquisitions, and alliances with companies offering niche solutions that complement our proprietary solutions, we regularly introduce new products and services and generate new cross-sales opportunities. We provide compatible computer hardware for our on-premise installations and secure processing environments for our outsourced solutions in our private and public cloud. We perform data conversions, software implementations, initial and ongoing client training, and ongoing client support services.
We believe our primary competitive advantage is client service. 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. Dedicated surveys are also used to grade specific aspects of our client experience, including product implementation, education, and consulting services.
Our two primary revenue streams are "services and support" and "processing." Services and support includes: "private and public cloud" revenues that predominantly have contract terms of six years at inception; "product delivery and services" revenues, which include revenues from the sales of licenses, implementation services, deconversions, consulting, and hardware; and "on-premise support" revenues, composed of maintenance fees that primarily contain annual contract terms. Processing includes: "remittance" revenues from payment processing, remote capture, and ACH transactions; "card" revenues, including card transaction processing and monthly fees; and "transaction and digital" revenues, which include transaction and mobile processing revenues. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.
We have four reportable segments: Core, Payments, Complementary, and Corporate and Other. The respective segments include all related revenues along with the related cost of revenue.
A detailed discussion of the major components of the results of operations follows. All amounts in the following discussion are in thousands, except per share amounts.
RESULTS OF OPERATIONS
For the second quarter of fiscal 2026, total revenue increased 7.9%, or $45,486, compared to the same quarter in fiscal 2025. Total revenue less deconversion revenue of $6,212 for the current fiscal quarter and less revenue related to a contractual change of $1,223 and deconversion revenue of $69 for the prior fiscal second quarter results in an increase of 6.7% quarter over quarter. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting revenues within private and public cloud, Jack Henry digital and transaction revenues, card revenue, and faster payments products revenue.
Operating expenses increased 2.1%, or $9,340, for the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. Total operating expenses less the impact of the gain on sale of assets, net, of $3,032, deconversion operating expenses of $2,612, and operating expenses for the acquired company of $2,929 for the current fiscal quarter and less operating expenses related to a contractual change of $1,059 and deconversion operating expenses of $690 for the prior fiscal second quarter results in an increase of 1.9% quarter over quarter. This increase was primarily driven by increased direct costs and higher personnel costs tempered by lower than normal medical claims and partially offset by the decrease in travel and entertainment and meeting expenses, quarter over quarter, due to the timing of the Connect conference.
Operating income increased 29.4%, or $36,146, for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. Total operating income less the impact of the gain on sale of assets, net, of $3,032, deconversion operating income of $3,600, and an operating loss for the acquired company of $984 for the current fiscal quarter and less operating income related to a contractual change of $164 and deconversion operating loss of $622 for the prior fiscal second quarter results in an increase of 24.3%, quarter over quarter. This increase was primarily driven by organic revenue growth partially offset by increased operating expenses detailed above tempered by our disciplined approach to controlling costs and lower than normal medical claims quarter over quarter.
The provision for income taxes increased 33.8%, or $9,989, for the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. This increase was primarily driven by the increase in income before income taxes. The effective tax rate for the current fiscal quarter was 24.1% compared to 23.2% for the same quarter a year ago.
Net income increased 27.4%, or $26,823, for the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. The total net income increase, quarter over quarter, was lower when adjusted for the impact of the gain on sale of assets, net, deconversion net income, and a net loss for the acquired company in the current fiscal quarter and the net income related to a contractual change and deconversion net loss in the prior fiscal second quarter. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the second quarter of fiscal 2026 partially offset by commensurate higher operating expenses detailed above that were tempered by our disciplined approach to controlling costs and lower than normal medical claims, and the increased provision for income taxes.
For the fiscal six months ended December 31, 2025, total revenue increased 7.6%, or $89,242, compared to the same period in fiscal 2025. Total revenue less deconversion revenue of $14,838 and revenue for the acquired company of $1,945 for the current fiscal year period and deconversion revenue of $3,766 and revenue from a contractual change of $13,471 for the prior fiscal year period results in an increase of 7.7%, period over period. This increase was primarily driven by organic growth in our revenue lines including data processing and hosting revenues within private and public cloud, card revenue, Jack Henry digital and transaction revenues, and faster payment products revenue.
Operating expenses increased 2.3%, or $20,307, for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Total operating expenses less deconversion operating expenses of $4,137, the impact of the gain on sale of assets, net, of $6,829, and operating expenses for the acquired company of $2,929 for the current fiscal year period and less deconversion operating expenses of $892 and operating expenses related to a contractual change of $11,501 for the prior fiscal year period results in an increase of 3.7%, period over period. This increase was primarily driven by increased personnel costs tempered by lower than normal medical claims and higher direct costs.
Operating income increased 25.1%, or $68,935, for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Removing from total operating income deconversion operating income of $10,701, the impact of the gain on sale of assets, net, of $6,829, and an operating loss for the acquired company of $984 for the current fiscal year period and deconversion operating income of $2,873 and operating income related to a contractual change of $1,970 for the prior fiscal year period results in an increase of 21.2%, period over period. This increase was primarily driven by organic revenue growth partially offset by increased operating expenses detailed above tempered by our disciplined approach to controlling costs and lower than normal medical claims.
The provision for income taxes increased 27.9%, or $18,713, for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. This increase was primarily driven by the increase in income before income taxes. The effective tax rate for the current fiscal year period was 24.2% compared to 23.6% for the same period a year ago.
Net income increased 23.8%, or $51,619, for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. The total net income increase, period over period, was lower when adjusted for the impact of the gain on sale of assets, net, deconversion net income, and a net loss for the acquired company in the current fiscal year period and the net income related to a contractual change and deconversion net income in the prior fiscal year period. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the six months ended December 31, 2025, partially offset by commensurate higher operating expenses detailed above, tempered by our disciplined approach to controlling costs and lower than normal medical claims, and the increased provision for income taxes.
As we move into the third quarter of fiscal 2026 - our 50thyear in business - we are excited and confident about our future, and we remain well-positioned to deliver durable, consistent growth and attractive results for our shareholders. Technology spending by financial institutions remains strong, and there is clear demand for our differentiated and innovative technology solutions. We have a very healthy sales pipeline and a proven ability to attract and win deals, especially with larger financial institutions. Our unwavering focus on culture, service, innovation, strategy, and execution continues to set us apart in the market and will enable us to drive continued industry-leading revenue growth with strong margin expansion, benefiting our associates, clients, and shareholders.
A detailed discussion of the major components of the results of operations for the fiscal three and six months ended December 31, 2025, follows.
Discussions compare the current fiscal year's three and six months ended December 31, 2025, to the prior fiscal year's three and six months ended December 31, 2024.
REVENUE
| Services and Support | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Services and Support | $ | 345,809 | $ | 323,027 | 7.1 | % | $ | 722,659 | $ | 679,706 | 6.3 | % | |||||||||||||||||||||||
| Percentage of total revenue | 56 | % | 56 | % | 57 | % | 58 | % | |||||||||||||||||||||||||||
Services and support revenue increased 7.1% for the second quarter of fiscal 2026 compared to the same quarter a year ago. Total services and support revenue less deconversion revenue of $6,212 for the current fiscal quarter and less revenue related to a contractual change of $1,223 and deconversion revenue of $69 for the prior fiscal second quarter, results in growth of 5.6% quarter over quarter. This increase was primarily driven by growth in data processing and hosting revenues within private and public cloud as new and existing clients continue to migrate to our private cloud and processing volumes expand.
Services and support revenue increased 6.3% for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Reducing services and support revenue for deconversion revenue from each period, which was $14,838 for the current fiscal year period and $3,766 for the prior fiscal year period and reducing services and support revenue for a contractual change of $13,471 for the prior fiscal year period, results in growth of 6.8% period over period. This increase was primarily driven by growth in data processing and hosting revenues within private and public cloud as new and existing clients migrate to our private cloud and processing volumes expand as well as higher consulting and work order revenues.
| Processing | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Processing | $ | 273,525 | $ | 250,821 | 9.1 | % | $ | 541,412 | $ | 495,123 | 9.3 | % | |||||||||||||||||||||||
| Percentage of total revenue | 44 | % | 44 | % | 43 | % | 42 | % | |||||||||||||||||||||||||||
Processing revenue increased 9.1% for the second quarter of fiscal 2026 compared to the same quarter last fiscal year. Reducing processing revenue for processing revenue for the acquired company of $1,945 for the current fiscal quarter, results in growth of 8.3% quarter over quarter. This increase was primarily driven by improvement in Jack Henry digital and transaction revenues from a higher number of active users and the ramping up of add-on products, growth in card revenue from monthly service and risk management fees, and higher faster payments products revenue from expanding active users and new clients.
Processing revenue increased 9.3% for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Reducing processing revenue for processing revenue for the acquired company of $1,945 for the current fiscal year period, results in growth of 9.0% period over period. This increase was primarily driven by growth in card revenue primarily from monthly service and risk management fees, improvement in Jack Henry digital and transaction revenues from a higher number of active users and expanding volumes and the ramping up of add-on products, and higher faster payments products revenue from expanding volumes and new clients.
OPERATING EXPENSES
| Cost of Revenue | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Cost of Revenue | $ | 350,989 | $ | 332,850 | 5.4 | % | $ | 699,554 | $ | 676,282 | 3.4 | % | |||||||||||||||||||||||
| Percentage of total revenue | 57 | % | 58 | % | 55 | % | 58 | % | |||||||||||||||||||||||||||
Cost of revenue for the second quarter of fiscal 2026 increased 5.4% over the prior fiscal second quarter. Total cost of revenue less deconversion costs of $1,128 and cost of revenue for the acquired company of $2,503 for the current fiscal quarter and less deconversion costs of $240 and costs related to a contractual change of $1,059 for the prior fiscal second quarter, results in a 4.8% increase quarter over quarter. This increase was primarily due to higher direct costs generally consistent with increases in the related lines of revenue, higher personnel costs tempered by lower than normal medical claims, as well as increased amortization of intangible assets. Cost of revenue decreased 1% as a percentage of total revenue compared to the prior fiscal second quarter.
Cost of revenue for the fiscal six months ended December 31, 2025, increased 3.4% compared to the same period in fiscal 2025. Reducing cost of revenue for deconversion costs of $2,032 and cost of revenue for the acquired company of $2,503 for the current fiscal year period and deconversion costs of $355 and costs related to a contractual change of $11,501 for the prior fiscal year period, results in a 4.6% increase period over period. This increase was primarily due to higher direct costs generally consistent with increases in the related lines of revenue, increased personnel costs tempered by lower than normal medical claims, as well as higher amortization of intangible assets. Cost of revenue decreased 3% as a percentage of total revenue compared to the prior fiscal year period.
| Research and Development | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Research and Development | $ | 42,228 | $ | 41,095 | 2.8 | % | $ | 81,505 | $ | 80,780 | 0.9 | % | |||||||||||||||||||||||
| Percentage of total revenue | 7 | % | 7 | % | 6 | % | 7 | % | |||||||||||||||||||||||||||
Research and development expense increased 2.8% for the second quarter of fiscal 2026 compared to the prior fiscal second quarter. Research and development expense increased 0.9% for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Research and development expense remained consistent as a percentage of total revenue compared to the prior fiscal second quarter and decreased 1% as a percentage of total revenue compared to the prior fiscal year period.
| Selling, General, and Administrative | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Selling, General, and Administrative | $ | 66,969 | $ | 76,901 | (12.9) | % | $ | 139,799 | $ | 143,489 | (2.6) | % | |||||||||||||||||||||||
| Percentage of total revenue | 11 | % | 13 | % | 11 | % | 12 | % | |||||||||||||||||||||||||||
Selling, general, and administrative expense decreased 12.9% in the second quarter of fiscal 2026 compared to the same quarter in the prior fiscal year. Total selling, general, and administrative expense less the gain on sale of assets, net, of $3,032, deconversion costs of $1,484, and costs for the acquired company of $54 for the current fiscal quarter and deconversion costs of $451 for the prior fiscal second quarter results in a 10.4% decrease quarter over quarter. This decrease was primarily due to the decrease in travel and entertainment and meeting expenses compared to the same quarter last year due to the timing of the Connect conference. Selling, general, and administrative expense decreased 2% as a percentage of total revenue compared to the prior fiscal second quarter.
Selling, general, and administrative expense decreased 2.6% in the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025. Reducing selling, general, and administrative expense for deconversion costs from each period, which were $2,105 for the current fiscal year period and $538 for the prior fiscal year period, and for the impact of the gain on sale of assets, net, of $6,829 and costs for the acquired company of $54 in the current fiscal year period, results in a 1.1% increase period over period. This increase was primarily due to higher personnel costs including increased compensation costs due to modest headcount increases in the trailing twelve months that were tempered by lower than normal medical claims. Selling, general, and administrative expense decreased 1% as a percentage of total revenue compared to the prior fiscal year period.
|
INTEREST INCOME
|
Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Interest Income | $ | 6,187 | $ | 7,159 | (13.6) | % | $ | 13,326 | $ | 15,506 | (14.1) | % | |||||||||||||||||||||||
| Interest Expense | $ | (1,142) | $ | (2,780) | (58.9) | % | $ | (2,028) | $ | (5,605) | (63.8) | % | |||||||||||||||||||||||
Interest income and interest expense decreased due to lower interest-earning and credit line balances, respectively, for the fiscal three and six months ended December 31, 2025, compared to the fiscal three and six months ended December 31, 2024.
| PROVISION FOR INCOME TAXES | Three Months Ended December 31, |
% Change |
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Provision for Income Taxes | $ | 39,525 | $ | 29,536 | 33.8 | % | $ | 85,856 | $ | 67,143 | 27.9 | % | |||||||||||||||||||||||
| Effective Rate | 24.1 | % | 23.2 | % | 24.2 | % | 23.6 | % | |||||||||||||||||||||||||||
The provision for income taxes increased 33.8% for the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. The effective tax rate for the current fiscal quarter was 24.1% compared to 23.2% for the same quarter a year ago. The provision for income taxes increased 27.9% for the six months ended December 31, 2025, compared to the same period a year ago. The effective tax rate for the current fiscal year-to-date period was 24.2% compared to 23.6% for the same period a year ago.
| NET INCOME | Three Months Ended December 31, |
%
Change
|
Six Months Ended December 31, |
% Change |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Net income | $ | 124,668 | $ | 97,845 | 27.4 | % | $ | 268,655 | $ | 217,036 | 23.8 | % | |||||||||||||||||||||||
| Diluted earnings per share | $ | 1.72 | $ | 1.34 | 28.6 | % | $ | 3.70 | $ | 2.97 | 24.5 | % | |||||||||||||||||||||||
Net income increased 27.4% to $124,668, or $1.72 per diluted share, for the second quarter of fiscal 2026 compared to $97,845, or $1.34 per diluted share, in the same quarter of fiscal 2025. The total net income increase, quarter over quarter, was lower when adjusted for the impact of the gain on sale of assets, net, deconversion net income, and a net loss for the acquired company in the current fiscal quarter and the net income related to a contractual change and deconversion net loss in the prior fiscal second quarter. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the second quarter of fiscal 2026 partially offset by commensurate higher operating expenses detailed above that were tempered by our disciplined approach to controlling costs and lower than normal medical claims, as well as the increased provision for income taxes.
Net income increased 23.8% to $268,655, or $3.70 per diluted share, for the fiscal six months ended December 31, 2025, compared to $217,036, or $2.97 per diluted share, in the same period of fiscal 2025. The total net income increase, period over period, was lower when adjusted for the impact of the gain on sale of assets, net, deconversion net income, and a net loss for the acquired company in the current fiscal year period and the net income related to a contractual change and deconversion net income in the prior fiscal year period. The increase excluding these one-time items was primarily driven by net organic growth in our lines of revenue for the six months ended December 31, 2025, partially offset by commensurate higher operating expenses detailed above, tempered by our disciplined approach to controlling costs and lower than normal medical claims, as well as the increased provision for income taxes.
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. 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, 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/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's Chief Executive Officer, who is also the Company's CODM, regularly evaluated segment performance and made strategic decisions on the allocation of resources to the segments based on various factors, including performance against trend, budget, and forecast for the fiscal three and six months ended December 31, 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 six months ended December 31, 2025, the Company transferred a product from the Corporate and Other segment to the Complementary segment due to better alignment with the Complementary segment. As a result of this transfer, adjustments were made during the fiscal three and six months ended December 31, 2025, to reclassify related revenue and cost of revenue recognized for the fiscal three and six months ended December 31, 2024, from the Corporate and Other segment to the Complementary segment. Revenue reclassed for the fiscal three and six months ended December 31, 2024, was $3,229 and $6,472, respectively.Cost of revenue reclassed for the fiscal three and six months ended December 31, 2024, was $743 and $1,446, respectively.
Immaterial adjustments have been made between segments during the fiscal three and six months ended December 31, 2025, to reclassify revenue and cost of revenue that was recognized for the fiscal three and six months ended December 31, 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 three and six months ended December 31, 2024, from the Core segment to the Complementary segment, was $1,566 and $2,901, respectively. Cost of revenue reclassed for the fiscal three and six months ended December 31, 2024, from the Core segment to the Complementary segment, was $415 and $888, respectively.
| Core | Three Months Ended December 31, | % Change | Six Months Ended December 31, | % Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 186,100 | $ | 171,607 | 8.4 | % | $ | 381,393 | $ | 365,896 | 4.2 | % | |||||||||||||||||||||||
| Cost of Revenue | $ | 74,930 | $ | 70,324 | 6.5 | % | $ | 148,067 | $ | 151,271 | (2.1) | % | |||||||||||||||||||||||
Revenue in the Core segment increased 8.4% and cost of revenue increased 6.5% for the fiscal three months ended December 31, 2025, compared to the fiscal three months ended December 31, 2024. Core revenue less deconversion revenue of $3,050 for the fiscal three months ended December 31, 2025, and less revenue related to a contractual change of $1,223 and deconversion revenue of $(20) for the fiscal three months ended December 31, 2024, results in a 7.4% increase quarter over quarter. This increase was primarily driven by organic growth in our Core revenue lines including data processing and hosting revenues within private and public cloud as new and existing clients continue to migrate to our private cloud and processing volumes expand. Core cost of revenue less deconversion costs of $703 for the fiscal three months ended December 31, 2025, and less costs related to a contractual change of $1,059 and deconversion costs of $88 for the fiscal three months ended December 31, 2024, results in a 7.3% increase quarter over quarter. This increase was primarily due to higher direct costs generally consistent with increases in related lines of revenue. Core cost of revenue decreased 1% as a percentage of Core revenue for the second quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Core segment increased 4.2% and cost of revenue decreased 2.1% for the fiscal six months ended December 31, 2025, compared to the fiscal six months ended December 31, 2024. Reducing Core revenue for deconversion revenue of $6,269 for the fiscal six months ended December 31, 2025, and deconversion revenue of $1,267 and contractual revenue of $13,471 for the fiscal six months ended December 31, 2024, results in a 6.8% increase period over period. This increase was primarily driven by organic growth in our Core revenue lines including data processing and hosting revenues within private and public cloud as new and existing clients migrate to our private cloud and processing volumes expand. Reducing Core cost of revenue for deconversion costs of $1,146 for the fiscal six months ended December 31, 2025, and deconversion costs of $125 and contractual change costs of $11,501 for the fiscal six months ended December 31, 2024, results in a 5.2% increase period over period. This increase was primarily due to higher direct costs generally consistent with increases in related lines of revenue. Core cost of revenue decreased 2% as a percentage of Core revenue for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025.
| Payments | Three Months Ended December 31, | % Change | Six Months Ended December 31, | % Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 231,975 | $ | 214,836 | 8.0 | % | $ | 462,868 | $ | 426,758 | 8.5 | % | |||||||||||||||||||||||
| Cost of Revenue | $ | 120,044 | $ | 114,738 | 4.6 | % | $ | 238,703 | $ | 227,757 | 4.8 | % | |||||||||||||||||||||||
Revenue in the Payments segment increased 8.0% and cost of revenue increased 4.6% for the second quarter of fiscal 2026 compared to the same quarter last fiscal year. Payments revenue less deconversion revenue of $1,397 and Payments revenue for the acquired company of $1,945 for the second quarter of fiscal 2026 and deconversion revenue of $34 for the second quarter of fiscal 2025, results in a 6.4% increase quarter over quarter. This increase was primarily due to higher card revenue from an increase in volume and higher faster payments products revenue from expanding active users and new clients. The Payments cost of revenue increase was primarily due to higher direct costs generally consistent with increases in lines of revenue. Deconversion and one-time costs did not significantly affect Payments cost of revenue quarter over quarter. Payments cost of revenue as a percentage of Payments revenue decreased 1% for the second quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Payments segment increased 8.5% and cost of revenue increased 4.8% for the fiscal six months ended December 31, 2025, compared to the same period of the prior fiscal year. Reducing Payments revenue for deconversion revenue of $4,880 and Payments revenue for the acquired company of $1,945 for the fiscal six months ended December 31, 2025, and deconversion revenue of $1,948 for the fiscal six months ended December 31, 2024, results in a 7.4% increase period over period. This increase was primarily due to higher card revenue from an increase in volumes, higher faster payments products revenue from an increase in volumes and new clients. Reducing Payments cost of revenue for deconversion costs of $289 and Payments cost of revenue for the acquired company of $2,409 for the fiscal six months ended December 31, 2025, and deconversion costs of $70 for the fiscal six months ended December 31, 2024, results in a 3.7% increase period over period. The Payments cost of revenue increase was primarily due to higher direct costs generally consistent with increases in lines of revenue. Payments cost of revenue as a percentage of Payments revenue decreased 1% for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025.
| Complementary | Three Months Ended December 31, | % Change | Six Months Ended December 31, | % Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 181,708 | $ | 165,732 | 9.6 | % | $ | 375,926 | $ | 342,012 | 9.9 | % | |||||||||||||||||||||||
| Cost of Revenue | $ | 69,265 | $ | 64,542 | 7.3 | % | $ | 141,526 | $ | 131,686 | 7.5 | % | |||||||||||||||||||||||
Revenue in the Complementary segment increased 9.6% and cost of revenue increased 7.3% for the second quarter of fiscal 2026 compared to the same quarter last fiscal year. Complementary revenue less deconversion revenue in both quarters, which totaled $1,702 for the second quarter of fiscal 2026 and $60 for the second quarter of fiscal 2025, results in an 8.7% increase quarter over quarter. This increase was primarily driven by organic growth in hosting revenue as new and existing clients continue to migrate to our private cloud and processing volumes expanded and Jack Henry digital and transaction revenue from a higher number of active users and the ramping up of add-on products. Complementary cost of revenue less deconversion costs in both quarters, which totaled $288 for the second quarter of fiscal 2026 and $99 for the second quarter of fiscal 2025, results in a 7.0% increase quarter over quarter. This increase was primarily driven by higher direct costs generally consistent with increases in related lines of revenue and increased amortization of intangibles. Complementary cost of revenue as a percentage of Complementary revenue decreased 1% for the second quarter of fiscal 2026 compared to the same quarter in fiscal 2025.
Revenue in the Complementary segment increased 9.9% and cost of revenue increased 7.5% for the fiscal six months ended December 31, 2025, compared to the equivalent period of the prior fiscal year. Reducing Complementary revenue for deconversion revenue in both periods, which totaled $3,578 for the fiscal six months ended December 31, 2025, and $533 for the fiscal six months ended December 31, 2024, results in a 9.0% increase period over period. This increase was primarily driven by organic growth in increased Jack Henry digital and transaction revenue as the number of active users increased and volumes expanded and from the ramping up of add-on products and hosting revenues as new and existing clients continued to migrate to our private cloud and processing volumes expanded. Reducing Complementary cost of revenue for deconversion costs in both periods, which totaled $596 for the fiscal six months ended December 31, 2025, and $159 for the fiscal six months ended December 31, 2024, results in a 7.1% increase period over period. This increase was primarily driven by higher direct costs generally consistent with increases in related lines of revenue and increased amortization of capitalized software from capital software development projects. Complementary cost of revenue as a percentage of Complementary revenue decreased 1% for the fiscal six months ended December 31, 2025, compared to the same period in fiscal 2025.
| Corporate and Other | Three Months Ended December 31, | % Change | Six Months Ended December 31, | % Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 19,551 | $ | 21,673 | (9.8) | % | $ | 43,884 | $ | 40,163 | 9.3 | % | |||||||||||||||||||||||
| Cost of Revenue | $ | 86,750 | $ | 83,246 | 4.2 | % | $ | 171,258 | $ | 165,568 | 3.4 | % | |||||||||||||||||||||||
Revenue classified in the Corporate and Other segment includes revenues from other products and services and hardware not specifically attributed to the other three segments. Revenue in the Corporate and Other segment decreased 9.8% for the second quarter of fiscal 2026 compared to the same quarter last fiscal year. Corporate and Other revenue less deconversion revenue in both quarters, which totaled $63 for the second quarter of fiscal 2026 and $(5) for the second quarter of fiscal 2025, results in a 10.1% decrease quarter over quarter. This decrease was primarily due to the decrease in user group revenue related to the timing of our Connect conference quarter over quarter. Cost of revenue for the Corporate and Other segment includes operating expenses not directly attributable to the other three segments. The Corporate and Other cost of revenue in the second quarter of fiscal 2026 increased 4.2% when compared to the prior fiscal year quarter. Corporate and Other cost of revenue less Corporate and Other cost of revenue for the acquired company of $94 for the second quarter of fiscal 2026 results in a 4.1% increase quarter over quarter. This increase was primarily due to higher licenses and fees and a loss on sale of assets, net, quarter over quarter.
Revenue in the Corporate and Other segment increased 9.3% for the fiscal six months ended December 31, 2025, compared to the same period last fiscal year. Corporate and Other revenue less deconversion revenue in both quarters, which totaled $111 for the second quarter of fiscal 2026 and $18 for the second quarter of fiscal 2025, results in a 9.0% increase period over period. The Corporate and Other revenue increase was primarily due to software usage and subscription revenue and digital revenue, period over period. The Corporate and Other cost of revenue in the fiscal six months ended December 31, 2025, increased 3.4% when compared to the prior fiscal year period. This increase was primarily due to higher cloud consumption costs, increased internal licenses and fees, and a loss on sale of assets, net, period over period. Deconversion and non-recurring costs did not significantly affect the Corporate and Other cost of revenue comparison.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased to $28,216 at December 31, 2025, from $101,953 at June 30, 2025.
The following table summarizes net cash from operating activities in the statement of cash flows:
| Six Months Ended | |||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income | $ | 268,655 | $ | 217,036 | |||||||
| Non-cash expenses | 184,197 | 109,038 | |||||||||
| Change in receivables | 21,385 | 49,811 | |||||||||
|
Change in deferred revenues
|
(92,379) | (119,463) | |||||||||
|
Change in other assets and liabilities*
|
(108,604) | (49,879) | |||||||||
| Net cash provided by operating activities | $ | 273,254 | $ | 206,543 | |||||||
*For the fiscal six months ended December 31, 2025, the change in other assets and liabilities includes the change in prepaid expenses, deferred costs and other of $(56,056), the change in accrued expenses of $(34,863), and the change in income taxes of $(9,345). For the fiscal six months ended December 31, 2024, the change in other assets and liabilities includes the change in prepaid expenses, deferred costs and other of $(34,384) and the change in accrued expenses of $(19,450), partially offset by the change in income taxes of $9,538.
Cash provided by operating activities for the first six months of fiscal 2026 increased 32% compared to the same period last year primarily due to the change in deferred income taxes period over period. Cash from operations is primarily used to repay debt, to pay dividends, to repurchase stock, for capital expenditures, and for acquisitions.
Cash used in investing activities for the first six months of fiscal 2026 totaled $155,806 and included: $92,484 for the ongoing enhancement and development of existing and new product and service offerings; $42,390 for an acquisition; capital expenditures for facilities and equipment of $30,096; the purchase of investments of $13,500, and $2,908 for the purchase and development of internal use software. Cash uses were partially offset by proceeds from the sale of assets of $24,572 and proceeds from investments of $1,000. Cash used in investing activities for the first six months of fiscal 2025 totaled $119,800 and included: $85,803 for the development of software; $29,469 for capital expenditures; $3,528 for the purchase and development of internal use software; and $2,000 for the purchase of investments. Cash uses were partially offset by proceeds from investments of $1,000.
Financing activities used cash of $191,185 for the first six months of fiscal 2026 and included: $125,237 for the purchase of treasury stock; repayments on credit facilities of $105,000; dividends paid to stockholders of $83,979; and $1,969 net cash outflow from the issuance of stock and tax withholding related to stock-based compensation. Cash uses were partially offset by borrowings on credit facilities of $125,000. Financing activities used cash of $99,374 in the first six months of fiscal 2025 and included: $165,000 for the repayments on credit facilities; $80,193 for the payment of dividends; $17,050 for the purchase of treasury stock; and $2,131 net cash outflow from the issuance of stock and tax withholding related to stock-based compensation. Cash uses were partially offset by borrowings on credit facilities of $165,000.
Capital Requirements and Resources
The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $30,096 and $29,469 for the fiscal six months ended December 31, 2025, and December 31, 2024, respectively, were made primarily for additional equipment and the improvement of existing facilities. These additions were funded from cash generated by operations. Total consolidated capital expenditures on facilities and equipment for the Company for fiscal year 2026 are expected to be between approximately $80,000 and $90,000 and have been or will be funded from our credit facilities and cash generated by operations.
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 December 23, 2025, the Company signed a contract addendum with a cloud services provider for $450,000 in contractual purchase obligations for the period of December 30, 2025, through June 30, 2033. This commitment replaced $182,000 of the total contractual purchase obligations that were reported in the Company's Annual Report on Form 10-K for the year ended June 30, 2025.
The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing credit facilities. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At December 31, 2025, there were 32,375 shares in treasury stock and the Company had the remaining authority to repurchase up to 2,616 additional shares. The total cost of treasury stock at December 31, 2025, was $2,020,461. During the first six months of fiscal 2026, the Company repurchased 795 shares. At June 30, 2025, there were 31,580 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,411 additional shares. The total cost of treasury stock at June 30, 2025, was $1,895,224. During the first six months of fiscal 2025, the Company repurchased over 99 shares.
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 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%), plusan applicable percentage in each case determined by the Company's leverage ratio. The credit agreement is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit agreement. As of December 31, 2025, the Company was in compliance with all such covenants. The credit facility terminates August 31, 2027. There was $20,000 and $0 outstanding under the credit facility at December 31, 2025 and June 30, 2025, respectively.
Other lines of credit
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 rateless2.0%. 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 December 31, 2025, or June 30, 2025.
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 bears interest at the prime rate less1.0%. The line of credit expires on July 17, 2026. There was no balance outstanding at December 31, 2025.
Jack Henry & Associates Inc. published this content on February 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 06, 2026 at 18:16 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]