Q4 2026 Jack Henry & Associates Inc Earnings Call Transcript
Key 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.
- 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.
Good morning and welcome to the Jack Henry fourth quarter and full year fiscal 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note.
I would now like to turn the conference over to Vance Sherrard, Vice President, Investor Relations. Please go ahead.
Thank you, Drew. Good morning, and thank you for joining the Jack Henry fourth quarter and full-year fiscal 2026 earnings call.
Joining me today are Greg Adelson, President and CEO and Mimi Carsley, CFO and Treasurer.
Following my opening remarks, Greg will provide a summary of our quarterly and annual results along with updates on our operations.
And
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