Jack Henry (JKHY) Q3 FY26 earnings call: guidance and Q&A

What's driving the strong core win trend, and is competitor platform consolidation a factor yet?

Strong innovation and customer service are key. 13 of 17 wins came from one competitor, but most deals were in motion before recent announcements. The company is taking wins from all competitors.

“I will tell you, of the 17 core wins, 13 of them came from one provider and one competitive provider.”

asked by Vasundhara Govil · answered by Gregory Adelson

Has Jack Henry set up a timetable for Mythos access to identify cyber vulnerabilities, and will Banno customers demand this?

Jack Henry is heavily involved with Mythos, participating in workshops and operational readiness. There are still delays due to objections, but the company has made significant cybersecurity investments over several years.

“our cyber teams are been involved in a multitude of meetings Project Glass wing, which is now called Myths workshop, our teams are getting information associated with that and joining various meetings.”

asked by Peter Heckmann · answered by Gregory Adelson

What drove the strong Q3 free cash flow, and how should we think about it going forward relative to the 95-105% conversion guide?

Strong operational foundation, positive impact from tax bill changes, and small asset sales contributed. The company is confident in returning to historical free cash flow levels, with a bias towards the high end of the 95-105% conversion range.

“First and foremost, a tremendously strong operational foundation that led to strong cash, but there was also impact -- positive impact from the tax bill change that we saw come to clarity as well as small asset sales.”

asked by Tyler DuPont · answered by Mimi Carsley

How are banks/credit unions thinking about IT spending for the next 6-12 months, and any initial read on FY27 revenue growth and margins?

IT spending commitment is strong, with 88% of clients planning increases (41% by 6-10%). AI is the top priority. FY27 outlook is positive but premature to detail, with budgeting still in progress.

“we had 88% said that they were going to increase their spending as compared to 76% last year. And with that average, I think it was 41% is actually at 6% to 10% of an increase.”

asked by Rayna Kumar · answered by Gregory Adelson

How does AI play a role in core processing, and what's the risk of banks working directly with AI companies, and how does the core provider's role change?

Larger institutions may work directly with AI providers, but community banks rely on Jack Henry. Jack Henry is proactively building AI into its solutions (e.g., financial crimes, exception processing) to provide efficiency gains, maintaining its role as a key technology partner.

“our community and regional banks that Jack Henry works with -- they don't have the wherewithal in most of the cases to build that out. So they're relying on us, which is why we've taken such a proactive way of doing this for the last 3.5 years.”

asked by Kenneth Suchoski · answered by Gregory Adelson

How does Jack Henry view Pismo/Visa as a new competitor, given recent traction?

Pismo is not a full core; it has ledgering but lacks full deposit/lending capabilities. It's seen more as a "headless core" or side core solution. Jack Henry has validated this with Visa and is not seeing Pismo in competitive core deals.

“It has the ledgering capability that is it -- it does not have any of the other -- so people are calling to the headless core because of the UI and backing of that, but it doesn't have any of the pure functionality of a core itself”

asked by Timothy Chiodo · answered by Gregory Adelson