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JKHY
Earnings call · Jun 2026 (Q4 FY26)

JACK HENRY & ASSOCIATES Q4 FY26 earnings call JKHY

Aug 19, 2026 Source

Executive summary

Jack Henry Q4 FY26 — Record Sales and Strong Margin Expansion

Jack Henry delivered a strong Q4 and record FY26, driven by robust sales performance, including a record number of competitive core wins and a significant increase in higher-value trifecta deals. The company continues to expand its non-GAAP operating margin, demonstrating inherent business model leverage and strategic cost management. While facing some near-term expense pressures and a Q1 revenue timing shift, management remains optimistic about sustained revenue growth and margin expansion, underpinned by its public cloud-native modernization strategy and AI innovation.

Highlights

5

  • Non-GAAP revenue in Q4 was $633 million, up 7% year-over-year, exceeding implied guidance.

  • Full fiscal year non-GAAP operating margin expanded by 92 basis points to 24%, marking the third consecutive year of 60+ basis point expansion.

  • Achieved a record 58 competitive core wins for the fiscal year, including 14 institutions with over $1 billion in assets and the largest new bank client in company history (Woodforest National Bank, $9.2 billion assets).

  • Increased trifecta deals (core, digital banking, card) to 59% of core wins in FY26, up from 39% in FY25.

  • New sales comprised 60% of total sales in FY26, up from 45% in FY25, reflecting successful sales process changes.

Concerns

4

  • Q4 GAAP earnings per share decreased 10% to $1.57.

  • Q4 operating cash flow decreased 7% and free cash flow decreased 10% year-over-year, primarily due to lower deconversion revenue.

  • Q1 FY27 non-GAAP revenue growth is expected to be modestly below the full-year guidance range, impacted by a 1% shift in the client conference timing and one-time revenue items.

  • Fiscal year 2027 margins will be pressured by higher self-insured medical costs, increased cyber and infrastructure investments, and data center consolidation (EC 2030).

Guidance & targets

CategoryTargetConfidence
Full-year FY27 GAAP revenue growth
5.5% to 6.5%
high materiality
High
Full-year FY27 Non-GAAP revenue growth
6.3% to 7.3%
high materiality
High
Full-year FY27 Deconversion revenue
$23 million
medium materiality
High
Q1 FY27 Deconversion revenue
$11 million
low materiality
High
Full-year FY27 Non-GAAP operating margin expansion
20 to 40 basis points
high materiality
Medium
Q1 FY27 Non-GAAP revenue growth
modestly below the low end of our full year guidance range
medium materiality
High
Full-year FY27 GAAP EPS
$7.33 to $7.38 per share
high materiality
High
Full-year FY27 Free Cash Flow Conversion
85% to 100%
medium materiality
High
Full-year FY27 GAAP tax rate
23%
low materiality
High
FY27 Core Wins
58 to 65
high materiality
High
FY27 New Sales as % of Total Sales
north of 55%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Core
Margin contraction due to temporary product mix of lower margin revenue sources such as implementation, where 2 new conversion teams and customer work orders were added.
Competitive core wins (Q4): 15Competitive core wins (FY26): 58On-premise to private cloud contracts (Q4): 13On-premise to private cloud contracts (FY26): 36Institutions over $1 billion in assets (Q4 private cloud): 7Institutions over $1 billion in assets (FY26 private cloud): 15Core clients in private cloud: 79%
—6%—operating margin contraction of 139 basis points
Payments
Steady growth in card processing revenue partially offset by atypical lower incentive revenue. Benefited from continuing large percentage growth from faster payments.
Payment transaction volume growth (faster payments, YoY Q4): 45%Zelle adoption growth (YoY): 25%RTP adoption growth (YoY): 24%FedNow adoption growth (YoY): 29%Debit and credit card deals (Q4): 17Debit and credit card deals (FY26): 65
—6%—operating margin growth of 174 basis points
Complementary
Revenue growth benefited from digital solution demand, beneficial product mix, and additional sales sourced from new core wins, existing core customers, and non-core financial institutions.
Financial Crimes Defender and faster payment module contracts (Q4): 61Financial Crimes Defender and faster payment module contracts (FY26): 183Financial Crimes Defender installations completed: 189Financial Crimes Defender installations in progress: 57Faster payment modules installed: 191Faster payment modules in progress: 231Banno Digital platform retail signings (Q4): 26Banno Digital platform business signings (Q4): 34Banno Digital platform total signings (FY26): 219Banno Digital platform total signings growth (FY26 YoY): 24%Banno Digital platform registered users: 15.8 millionBanno Digital platform registered users growth (YoY): 11%New treasury contracts (Q4): 17New treasury contracts (FY26): 45New treasury contracts growth (FY26 YoY): 25%Average asset size of clients signing treasury deals (last 2 years): $2.1 billionAverage asset size of clients signing treasury deals growth (vs FY23-FY24): 43%
—6%—operating margin growth of 16 basis points
Corporate Services
Primarily the result of meaningful increases in hardware sales. Non-GAAP operating margins are not discussed as the segment reflects expenses not allocated to other segments.
—31%——

JKHY operating KPIs by quarter

JKHY operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q3 FY26This call Jun 2026 Q4 FY26Change vs prior quarter
Competitive core wins
17 Our sales and marketing team delivered an outstanding quarter with 17 competitive core wins, including 5 institutions with more than $1 billion in assets. Source transcript
15 As we briefly mentioned in our Q3 call, we signed the largest new bank client in our company's history in Q4, Woodforest National Bank with $9.2 billion in assets Woodforest was 1 of 15 competitive core deals we won in the fourth quarter. Source transcript
-11.8%
On-premise to private cloud contracts signed Core
4 In core, in addition to the 17 competitive wins I mentioned earlier, we also secured 4 on-premise to private cloud contracts, including 1 institution over $1 billion. Source transcript
13 In Core, in addition to the 15 competitive core wins in Q4, we also secured 13 on-premise to private cloud contracts, including 7 institutions over $1 billion. Source transcript
+225%
On-premise to private cloud contracts signed Core - Institutions over $1 billion
1 In core, in addition to the 17 competitive wins I mentioned earlier, we also secured 4 on-premise to private cloud contracts, including 1 institution over $1 billion. Source transcript
7 In Core, in addition to the 15 competitive core wins in Q4, we also secured 13 on-premise to private cloud contracts, including 7 institutions over $1 billion. Source transcript
+600%
Contracts signed Financial Crimes Defender and Faster Payment Modular
36 In complementary, we signed 36 new financial crimes, Defender and faster payment modular contracts during the quarter. Source transcript
61 In complementary, we signed 61 new Financial Crimes Defender and faster payment module contracts in the fourth quarter and 183 for the full year. Source transcript
+69.4%
Completed installations Financial Crimes Defender
168 As of March 31, we have completed 168 financial crimes Defender installations and another 68 in various stages of implementation. Source transcript
189 As of June 30, we completed 189 Financial Crimes Defender installations and another 57 are in various stages of implementation. Source transcript
+12.5%
Installed modules Faster payment modules
168 We've also installed 168 faster payment modules with an additional 256 products. Source transcript
191 We have also installed 191 faster payment modules with an additional 231 in progress. Source transcript
+13.7%
Signings Banno Retail
23 The Banno Digital platform had another strong quarter with 23 retail and 34 Banno business signings. Source transcript
26 The Banno Digital platform had another strong quarter with 26 retail and 34 Banno business signings. Source transcript
+13%
Signings Banno Business
34 The Banno Digital platform had another strong quarter with 23 retail and 34 Banno business signings. Source transcript
34 The Banno Digital platform had another strong quarter with 26 retail and 34 Banno business signings. Source transcript
0%
Registered users Banno
15.5M+ platform now serves more than 15.5 million registered users, up 13% from a year ago. Source transcript
15.8M+ The platform now serves more than 15.8 million registered users, up 11% from a year ago. Source transcript
—

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Expanded collaboration with Google Cloud for AI-driven securityupdate
Project Glasswingupdate
AI capabilities within Financial Crimes Defenderupdate
AI capabilities within Banno conversationsupdate
AI capabilities within Synapsys (CRM tool)update
Open USD integrationlaunch
USDC capabilities (send-and-receive)update

Deals & partnerships

Google Cloud Expanded collaboration to provide AI-driven security capabilities for banks and credit unions. 4-year strategic partnership

Utilizing Google's genic defense products to develop a proprietary AI security platform.

Anthropic Joined Project Glasswing, a collaborative cybersecurity initiative.

Reflects commitment to leveraging advanced technologies to help financial institutions operate securely.

Woodforest National Bank Signed as the largest new bank client in company's history for core services.

One of 15 competitive core deals won in Q4 FY26. They exited from a large competitor's modern platform.

Open USD consortium Part of a new stablecoin for global money movement.

Jack Henry will begin integrating Open USD when it launches later this year, providing access to cross-border and treasury payments. Consortium includes BlackRock, Mastercard, and Visa.

Victor Technology Asset acquisition.

Mentioned as part of significant fiscal year capital decisions.

Risks & headwinds

Lower deconversion revenue Q4 FY26

Q4 FY26 deconversion revenue of $9 million, down approximately $11 million YoY.

Mitigation:Industry consolidation is largely neutral to slightly positive for the business; the dollar amount of deconversion revenue has little correlation with the number of transactions or impact to annual revenue.

Increased operating expenses in Q4 FY26 Q4 FY26

Cost of revenue increased 7% (non-GAAP), R&D expense increased 16% (non-GAAP), SG&A expense increased 19% (GAAP and non-GAAP).

Mitigation:Q4 was a higher expense quarter primarily due to nonrecurring activity; management remains focused on generating annual compounding margin expansion through AI efficiency, strategic cost management, and enterprise process improvement.

Pressure on FY27 operating margins FY27, particularly H1

FY27 non-GAAP margin projected to expand 20-40 basis points, lower than FY26's 92 bps expansion.

Mitigation:Management is cautiously optimistic about increasing the margin expansion range as the year progresses, leveraging AI efficiency, data center transition, FinOps management of AI compute costs, and product mix. The company has a track record of consistent margin expansion.

Higher self-insured medical costs H1 FY27

Returning to historical levels.

Mitigation:Part of the broader expense management strategy; expected to normalize.

Increased cyber and infrastructure investments FY27

Investments related to frontier models, AI innovation, and data center consolidation project (EC 2030).

Mitigation:These are critical for client security and future growth; expected to be a short-term headwind with long-term benefits in accelerated development and lower total project costs.

Shift in client conference timing impacting Q1 FY27 revenue Q1 FY27

Q1 non-GAAP revenue growth expected to be modestly below the low end of full-year guidance, driven by a 1% impact from the conference shift.

Mitigation:The conference (Connect) moved from Q1 to Q2; this is a timing issue, and the full-year financial results are the correct performance indicator for the business.

Fewer credit union opportunities FY27

Lesser credit union opportunities coming available in FY27 compared to previous years.

Mitigation:Management is bullish on winning a larger market share and expects to win more credit unions this year than last, despite fewer RFPs. This is viewed as a cyclical trend.

What to watch in Q1 FY27

FY27 Non-GAAP Operating Margin Expansion

FY27
Current 20-40 basis points (initial guidance)
Target Above 40 basis points

Why it matters

Management expressed cautious optimism about increasing this range, and sustained margin expansion is key to shareholder value.

Full year non-GAAP margin is projected to expand 20 to 40 basis points, consistent with the last 3 fiscal years, but we are cautiously optimistic that we can increase that range as the year progresses.

Q&A highlights

Inquired about the current pipeline strength and potential for continued acceleration in core wins, especially considering competitor disruption.

Management confirmed strong momentum, already exceeding Q1 FY26 core wins in the first month of Q1 FY27. Anticipates 58-65 core wins for FY27, similar to or better than FY26, despite fewer credit union opportunities.

“We're anticipating to do as good or better this year somewhere in the 58 to 65 range is kind of where we think our core win total will be this year.”

asked by Nikolai Cremo · answered by Gregory Adelson

2 min read 6 chapters

Detailed narrative

Record Sales Performance and Upmarket Strategy Success

Jack Henry achieved record sales in FY26, securing 58 competitive core wins, surpassing previous records. This success is largely attributed to its public cloud-native modernization strategy, attracting larger institutions. Over the past three fiscal years, the company secured 45 core deals with institutions over $1 billion in assets, totaling approximately $98 billion in assets, a significant increase from the $26 billion in assets signed in the prior two years. This includes the largest new bank client in company history, Woodforest National Bank ($9.2 billion assets), signed in Q4.

AI Innovation and Cybersecurity Focus

The company is heavily investing in AI, expanding its collaboration with Google Cloud for AI-driven security capabilities and joining Project Glasswing. It has 22 AI-enabled products in the market, with 20 more planned for release in the next six months, focusing on streamlining processes like suspicious activity report (SAR) drafting (reducing time by 75-85%) and enhancing CRM tools. Internally, over 100 AI tools and 50 AI agents are deployed, significantly boosting engineering productivity and automating workflows.

Advancing Money Movement Capabilities

Jack Henry is advancing next-generation money movement, joining Open USD for stablecoin integration later this year and beta testing USDC capabilities for cross-border and treasury payments. New solutions like "tap to local" SMB merchant payments and "Rapid transfers" are gaining traction, with "tap to local" adopted by over 900 banks/credit unions and "Rapid transfers" live with over 140, demonstrating strong adoption and transaction volume growth, with average transaction sizes exceeding projections.

Platform-Driven Competitive Advantage

The Jack Henry platform, a public cloud-native architecture, is a key driver of competitive wins, especially among larger institutions. It serves as an integrated bridge between foundational core systems and modern solutions, providing flexibility and scale for evolving financial services needs. The company has developed 25 core-specific modules, including a full deposit-only core, with several clients in beta testing, and is working on lending functionalities.

Strong Segment Performance and Digital Adoption

The Core segment saw 15 competitive wins in Q4 and 13 on-premise to private cloud contracts, including 7 institutions over $1 billion. Payments experienced strong growth in faster payments (Zelle, RTP, FedNow), with transaction volumes up 45% YoY in Q4. The Banno Digital platform continues robust growth, serving over 15.8 million registered users (up 11% YoY) and securing 219 new signings in FY26. Treasury management also saw record new contracts, attracting larger clients with an average asset size of $2.1 billion over the last two years.

Strategic Sales Process and Investor Engagement

A new sales process implemented in FY26 successfully shifted the sales mix, with 60% of sales being new contracts, up from 45% in the prior year, exceeding expectations. The company is actively engaging with clients and prospects, with its annual client conference, Jack Henry Connect, tracking 36% ahead of last year's registration pace, and 23 new core wins in the prior year originating from conference attendees. Management plans to provide further insights into future year outlooks at its upcoming Investor Day.

AI-generated summary of the company's earnings call. Not investment advice.