- Non-GAAP Revenue (Q4): $633 million, up 7% year-over-year.
- Non-GAAP Revenue (FY2026): $2.5 billion, up 7% year-over-year.
- Non-GAAP Operating Margin (Q4): 21%.
- Non-GAAP Operating Margin (FY2026): 24%, a 92 basis point increase year-over-year.
- GAAP EPS (Q4): $1.57, down 10% year-over-year.
- GAAP EPS (FY2026): $6.98, an impressive increase.
- GAAP Revenue Growth (Q4): Increased 5% year-over-year.
- GAAP Services and Support Revenue (Q4): Increased 3% year-over-year; non-GAAP increased 6%.
- Processing Revenue (Q4): Increased 7% on both GAAP and non-GAAP basis.
- Cloud Revenue (Q4): Increased 7% year-over-year, representing 32% of total revenue.
- Recurring Revenue (Q4): Represented 91% of total revenue.
- Cost of Revenue (Q4): Increased 8% on a GAAP basis and 7% on a non-GAAP basis.
- R&D Expense (Q4): Increased 17% on a GAAP basis and 16% on a non-GAAP basis.
- SG&A Expense (Q4): Increased 19% on both GAAP and non-GAAP basis.
- Operating Cash Flow (Q4): $303 million, a 7% decrease year-over-year.
- Free Cash Flow (Q4): $245 million, a 10% decrease year-over-year.
- Free Cash Flow (FY2026): $539 million, a 31% increase year-over-year.
- NOPAT Return on Invested Capital (TTM): 23%, compared to 21% in the prior year.
- Share Repurchases (FY2026): $448 million, representing a 4% reduction in shares outstanding.
- Dividends Paid (FY2026): $170 million.
- Core Segment Non-GAAP Revenue (Q4): Increased 6% year-over-year; non-GAAP operating margin contracted 139 basis points.
- Payments Segment Non-GAAP Revenue (Q4): Increased 6% year-over-year; non-GAAP operating margin grew 174 basis points.
- Complementary Segment Non-GAAP Revenue (Q4): Increased 6% year-over-year; non-GAAP operating margin grew 16 basis points.
- Corporate Services Non-GAAP Revenue (Q4): Increased 31% year-over-year, primarily due to higher hardware sales.
- FY2027 Non-GAAP Revenue Growth Guidance: 6.3% to 7.3%.
- FY2027 GAAP Revenue Growth Guidance: 5.5% to 6.5%.
- FY2027 Non-GAAP Margin Expansion Guidance: 20 to 40 basis points.
- FY2027 GAAP EPS Guidance: $7.33 to $7.38 per share, a growth of 5% to 6%.
- FY2027 Free Cash Flow Conversion Guidance: 85% to 100%.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record financial performance with non-GAAP revenue up 7% and non-GAAP operating margin expansion of 92 basis points for fiscal 2026.
- Set a new sales record with 58 competitive core wins, including 14 institutions with over $1 billion in assets, and a record 45 treasury deals.
- Strong adoption of higher-value trifecta deals (core, digital, and card), with 59% of core wins including all three solutions, up from 39% last year.
- Robust growth in new and emerging solutions, such as Tap to Local (over 900 banks/credit unions) and Rapid Transfers (live with 140+ institutions), with transaction volumes exceeding expectations.
- Continued innovation in AI, with 22 AI-enabled products in the market and plans for 20+ more, driving internal productivity gains and enhancing client offerings.
- Strong cash flow generation with full-year free cash flow up 31%, enabling significant capital returns (122% of free cash flow) and a 4% reduction in shares outstanding.
Negative Points
- Fourth quarter GAAP EPS declined 10% year-over-year, partly due to lower deconversion revenue and higher expenses.
- Core segment operating margin contracted 139 basis points in Q4 due to temporary product mix from lower-margin revenue sources like implementations.
- Fiscal 2027 guidance includes headwinds from increased cyber and infrastructure investments, AI innovation costs, and the EC2030 data center consolidation project, limiting margin expansion to 20-40 basis points.
- First-half fiscal 2027 revenue growth is expected to be below the full-year guidance range due to the shift of the Connect conference to Q2 and timing of one-time revenue items.
- Deconversion revenue guidance for fiscal 2027 is conservative at $23 million, which could understate EPS growth but also reflects ongoing industry consolidation.
- Higher personnel costs, including increased medical expenses and compensation, drove SG&A and R&D expense increases in Q4.
Q & A Highlights
Q: Can you provide an update on the sales pipeline and whether the record core wins can accelerate in FY27 and FY28, especially given disruption at a competitor?
A: Greg Adelson (President and CEO) stated that the company is taking share from all competitors, not just one. He noted that they have already exceeded last year's first-quarter core win total within the first month of the current quarter. The company anticipates achieving between 58 and 65 core wins in fiscal 2027, which would be as good as or better than the record 58 wins in fiscal 2026. He also noted that while there are fewer credit union RFPs this year, he expects to win more credit union deals due to increased market share.
Q: How are conversations with customers evolving regarding cyber threats from frontier models, and is this driving demand for private cloud migration and other products?
A: Greg Adelson (President and CEO) confirmed that the company is having more significant conversations with larger institutions about the risks and costs of running frontier models. This is driving momentum for on-premise to private cloud conversions, evidenced by 13 such contracts in Q4, including seven from institutions over $1 billion in assets. He also highlighted that the Gladiator solution set is expected to have a strong year due to increased interest related to frontier model security concerns.
Q: How close is Jack Henry to selling Banno outside of its core base, and what is the revenue opportunity?
A: Greg Adelson (President and CEO) stated that while it is early to discuss revenue specifics, the company is close to announcing a Banno deal with a non-core client. Additionally, they have already signed a contract for a client to use both the Jack Henry platform and Banno for a digital-only core, without being connected to any Jack Henry core. He emphasized that leveraging the platform and digital offering as a combined solution set is a key differentiator.
Q: Can you walk through the puts and takes that might prevent the same level of margin expansion in FY27, and what came in better than expected in FY26?
A: Mimi Carsley (CFO and Treasurer) explained that FY26 results benefited from one-time items, including lower-than-normal medical expenses and second-half-weighted commissions, which are not expected to repeat. For FY27, headwinds include pressure from self-insured medical costs returning to historical levels, increased cyber and infrastructure investments related to frontier models, AI innovation, and the data center consolidation project EC2030. She reiterated the guidance of 20 to 40 basis points of margin expansion, with cautious optimism to potentially increase that range as the year progresses.
Q: Can you explain the new sales process that drove 60% new sales versus 45% in the prior year, and how it dovetails with the increase in trifecta deals?
A: Greg Adelson (President and CEO) clarified that the trifecta success is driven by product improvements, particularly in Banno and card solutions, rather than the sales process. The new sales process was implemented to prevent the sales team from pulling in renewals to meet quota targets, which did not benefit the company. He noted that the team exceeded expectations by winning new deals, and while hitting 60% again will be tough, he expects new sales to remain north of 55%.
Q: What is the average asset size of the 58 new wins in fiscal '26 versus fiscal '25, and would you expect it to increase in fiscal '27?
A: Greg Adelson (President and CEO) stated that the average asset size was roughly on par with the prior year. This was because credit union wins were significantly smaller in asset size, but they were valuable as they purchased all three key products to become trifectas. He emphasized the longer-term trend of winning larger institutions, noting that over the past three years, the company has won 45 deals with institutions over $1 billion in assets, representing approximately $98 billion in total assets, compared to 15 institutions with $26 billion in assets in the prior two years.
Q: Did the size of the institution have any impact on implementation timing and therefore revenue timing for the record core wins?
A: Greg Adelson (President and CEO) explained that implementation timing is more dependent on the time left on the client's existing contract and their willingness to engage in education and re-education, rather than the size of the institution. He noted that new core wins typically take 15 to 24 months to go live, while mergers of Jack Henry clients can be completed in six months or less.
Q: Given the strong margin expansion over the last three years, are we at a new normal for operating leverage, and what are the catalysts for sustained higher margin expansion?
A: Mimi Carsley (CFO and Treasurer) stated that FY26 results included one-time benefits, and FY27 includes anticipated headwinds, which offset each other. She believes there are several tailwinds that could lead to higher margin expansion in the near term, including AI efficiency, the completion of the data center transition, FinOps management of AI compute costs, and the growing mix of new and emerging segments with attractive margins. However, she noted that FY27 is not the year to see a significant step-up, and more details will be shared at Investor Day.
Q: Can you provide more specifics on the additional spend supporting AI efforts, particularly on the COGS line, and how you are managing token costs?
A: Mimi Carsley (CFO and Treasurer) explained that while encouraging AI usage, the company is being fiscally responsible by managing access to over 100 internal AI tools based on return. They are staying LLM model agnostic, with partnerships across all three cloud providers, allowing the FinOps team to optimize AI compute costs and routing. She also noted that some contracts include clauses for pass-through capabilities of certain cost arrangements, providing flexibility for the future.
Q: How should we expect AI opportunities to flow through to earnings and margins, given the cited productivity improvements and R&D expense increases?
A: Greg Adelson (President and CEO) explained that many AI capabilities are added to existing products to increase penetration rather than for immediate monetization. He highlighted that the company tracks AI utilization by associate and has hired nine AI coaches to train over 2,000 associates. Mimi Carsley (CFO and Treasurer) added that the benefits of AI are often seen over multiple fiscal years, as development velocity increases, allowing projects to be completed faster and monetized sooner. She distinguished between AI for security enhancements, which is
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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