Jack Henry & Associates, Inc.

Jack Henry is a US financial-technology infrastructure provider that builds and runs the mission-critical core processing systems, payments rails, and complementary software that community banks and credit unions operate on. It serves >7,200 financial institutions (core processing to >900 banks and >700 credit unions) from a Monett, Missouri base, founded 1976 (50 years).

Payments & Financial Workflow (DT-4) — the data/compliance infrastructure every bank and credit union must pass through for deposit, loan, and payment processing.

• FY2026 revenue $2,544.3M, +7.1% YoY (10-K XBRL / 8-K EX-99.1). Q4 FY26 revenue $644.0M, +4.7% YoY.
• FY2026 operating income $635.0M (25.0% margin); net income $502.8M (19.8% margin) (10-K XBRL).
• Revenue mix: Services & Support $1,448.0M (56.9%) + Processing $1,096.3M (43.1%); Processing +8.2% YoY (higher-margin recurring leg growing faster).
• FY2026 segments: Core $768.5M, Payments $936.0M, Complementary $752.2M, Corporate $87.7M (10-K).
• FY2027 guidance (8-K EX-99.1, 08-18): GAAP revenue $2,684–2,709M (+5.5–6.5%), operating margin 24.5–24.7%, GAAP EPS $7.33–7.38. CFO: margin comps "impacted by tough comparisons from the first half of last year."
• Market cap $12.05B → P/E ≈ 24× FY2026 net income (DB quant, derived).

Jack Henry builds and hosts the core processing, payments, and complementary software that US community banks and credit unions run as their system of record.

• Mix: Services & Support $1,448.003M (56.9%) + Processing $1,096.336M (43.1%); Processing +8.2% YoY. Faster-payments revenue +49.5% FY / +47.0% Q4; card +6.0% FY; digital/transaction +11.6% FY (EX-99.1).
• Cloud hosting (private + public) +8.5% FY / +7.4% Q4 inside services & support.
• Q4 Core GAAP +1.9% / nGAAP +6.0% (deconversion mix); Payments GAAP +4.9% / nGAAP +6.1%; Complementary GAAP +4.7% / nGAAP +5.6%.
• Implementation revenue +14.1% FY — the leading indicator that signed cores are entering the conversion factory.
• Next primary catalyst: Investor Day, Dallas, afternoon of 2026-09-15 (first time management will guide beyond the current year — earnings-call close). Next earnings is FY2027 Q1 (typically early November; not yet dated in this pass).

• monetization model: Recurring subscription/data-processing and transaction-based payment fees, plus implementation, license, hardware, and professional services. (Source: FY2025 10-K, Item 1 Business & Revenue Notes; SEC EDGAR CIK 0000779152, sec.gov ; accession UNKNOWN in this environment.)
• revenue mix: Core ~47%, Payments ~36%, Complementary ~17% (FY2025 segment note). (Source: same.)
• who pays: Financial institutions—community/regional banks and credit unions—under multi-year contracts. (Source: 10-K Item 1 Customers.)
• margin_value_capture: Gross margin ~44%; operating margin ~21-22%; value accrues in high-retention recurring core/payments, while hardware/services are lower-margin. (Source: 10-K MD&A/segment note.)

• customer classes: Community/regional banks, credit unions, bank holding companies; economic buyers are CIO/CTO, payment operations, and Compliance & GRC Officers. (Source: FY2025 10-K Item 1 Customers.)

Jack Henry & Associates, Inc. (JKHY) operates a recurring, relationship-based technology and payment-processing business serving financial institutions. Its economic model is not a single software sale; it is a long-duration subscription and transaction-processing relationship.

JKHY generally reports revenue in the following segments:

• Core
• Payments
• Complementary
• Corporate and Other

The exact fiscal-year 2024 revenue mix by segment is needs primary source validation — it should be pulled directly from the segment footnote in the FY2024 Form 10-K. However, the structural model is clear from Jack Henry’s annual report disclosures:

• Core revenue is driven by bank and credit-union core processing systems, including hosted and outsourced deployment.
• Payments revenue is driven by transaction processing, card programs, bill pay, ACH, remote deposit capture, and other payment services.
• Complementary revenue is driven by add-on applications: digital banking, lending, fraud/AML, treasury, document management, and operational tools.
• Corporate and Other is typically small and includes items not allocated to operating segments.

From the 10-K business section, customer classes are:

• Community banks with assets generally under $10 billion.
• Regional banks that need scalable core and payments capabilities.
• Credit unions of various sizes through Symitar.
• Other financial services providers that use payments or complementary products without adopting the full core stack.

Exact client count and asset-size cutoffs are needs primary source validation.

The economic buyer inside a bank or credit union typically includes:

• Chief Information Officer / Chief Technology Officer: owns core systems, infrastructure, security.
• Chief Operating Officer / VP of Operations: owns deposit operations, payments, back office.
• Chief Digital Officer / Head of Digital Banking: buys digital and account-opening solutions.
• Payments operations executive: buys ACH, card, bill pay, and RDC.
• CEO/CFO: approves large multi-year enterprise contracts and outsourcing decisions.
• Credit union CEO/CIO: specific buyer archetype inside credit unions.

These archetypes are inferred from the operational function of the products; individual named buyers are not disclosed in the 10-K.

To satisfy “top customers named from filings only”:

• Jack Henry does not appear to name top customers in its 10-K.
• If any customer name appears in an 8-K, 10-K, or annual-meeting proxy, it is generally not in the form of a “top customer” list.
• Therefore, I do not claim named top customers.

No fabricated customer names.

Digital Trust > Payments & Financial Workflow > community-bank core as a multi-year conversion lock-in

• Core segment FY2026 revenue = $768.5M (10-K segment table).
• Core clients ≈ 1,600 (>900 banks + >700 credit unions, 10-K).
• Avg Core revenue per core client ≈ $768.5M / 1,600 ≈ $480K/yr.
• Community-bank core conversion cost ≈ $3–15M direct + indirect, 24–36 months (assumed/inferred — industry standard, NOT JKHY-disclosed).
• Switching cost / annual core revenue ≈ $3–15M / $480K ≈ 6–31× annual revenue — a bank must underwrite 6–31 years of Jack Henry's fees to justify leaving.
• Cost to defend the moat: R&D $176.4M = 6.9% of revenue (10-K XBRL) — cheap relative to the switching cost it protects.
• Deconversion reality check: deconversion revenue $42.8M in FY2026 vs $33.9M FY2025 (10-K) — churn exists and grew +26% YoY, but is 1.7% of revenue.

Next earnings (last reported 2026-08-18); core conversion backlog; ex-div 2026-09-04

1 — Conversion-lag inventory (why FY2027 guide is only +5.5–6.5% after a record sales year).

• FY2026 competitive core wins = 58 (vs 51 prior year; prior record 57 in 2019 and 2024). Only 6 of 58 were de novos — this is share-take, not greenfield. 14 of 58 were institutions with >$1B in assets; Q4 alone had 15 competitive core deals including Woodforest National Bank ($9.2B assets, largest new core signing in company history). Source: Q4 FY2026 earnings call (Adelson, 2026-08-19) + 8-K EX-99.1 (filed 2026-08-18).
• Management lag: new core wins typically take 15–24 months to go live (earnings call); Goldman 2026-09-09 restated 12–24 months. Midpoint 18 months → FY2026 Q4 / FY2027 Q1 signings (Woodforest, Celtic) convert in FY2028, not FY2027.
• FY2027 GAAP revenue guide $2,684–$2,709M on FY2026 GAAP revenue $2,544.339M (XBRL / EX-99.1) = +5.49% to +6.47%. Non-GAAP adjusted revenue guide $2,659–$2,684M on FY2026 nGAAP $2,496.316M = +6.52% to +7.52%. The guide is the conversion lag made numeric: record signings do not equal record recognized revenue in the next fiscal year.
• Celtic Bank (announced 2026-09-08, $5B assets, SBA/BaaS lender, core + Banno Business + Enterprise Workflow) is an incremental FY2027 Q1 signing that sits after the FY2027 guide was set — another 12–24 month deferred print.

2 — Trifecta attach as the switching-cost multiplier.

• Core-only ARPU: Core segment FY2026 GAAP revenue $768.452M ÷ ~1,600 core clients (>900 banks + >700 credit unions, 10-K) ≈ $480K/institution/year (derived).
• Trifecta rate: 59% of 58 FY2026 core wins included core + digital + card, vs 39% of 51 in FY2025 (Adelson, earnings call). Absolute trifecta deals ≈ 34 vs ≈ 20, +14 bundled conversions.
• Why it multiplies the moat: a core-only leave is already 6–31× annual core fees (08-29 calc). A trifecta leave also rips Banno (15.8M registered users; ~70% of the core base already penetrated — Goldman 2026-09-09, secondary) and the card/debit rail (~98% of card transactions are debit — Goldman). Parallel-run cost scales with product count, not with the core fee alone.
• New-vs-renewal mix: 60% of FY2026 sales were new contracts, up from 45% (Adelson) — the sales engine is now adding lock-in, not just harvesting it.
• Upmarket proof: 45 core deals with >$1B-asset institutions over the last three fiscal years ≈ $98B in total assets, vs 15 institutions / $26B in FY2022–23 (Adelson). Woodforest IR (2026-05-28) published the same 3-year stack as 44 institutions / $94B — the earnings-call $98B is the refreshed figure including Q4.

3 — Q4 deconversion collapse (the 08-29 disconfirming read was incomplete).

• Q4 FY2026 deconversion revenue $9.327M vs $20.495M prior-year quarter (−54.5%). FY2026 total $42.830M vs $33.905M (EX-99.1 reconciliation table; 8-K EX-99.1 filed 2026-08-11).
• Q4 deconversion operating income $4.616M vs $17.938M (−74.3%). Q4 GAAP operating income $136.773M vs $155.697M (delta −$18.924M); the deconversion OI delta (−$13.322M) is 70% of that decline. The "Q4 margin squeeze" is mostly fewer M&A-driven exits, not competitive churn.
• Company definition (Aug 11 8-K EX-99.1): "The majority of deconversion revenue is generated when one of Jack Henry's clients agrees to be acquired by another financial institution" — i.e. outside JKHY's control, and excluded from non-GAAP. The 08-29 note's "+26% YoY deconversion = banks leave" line over-weighted a Q3 $18.7M print (Apr 28 PR) that was M&A-driven.

4 — Cost of the moat vs the franchise it defends.

• XBRL R&D expense FY2026 $176.445M = 6.93% of $2,544.339M revenue.
• Plus capitalized "computer software developed" $184.243M (EX-99.1 cash-flow) → combined product investment $360.688M = 14.2% of revenue, matching management's Goldman comment that R&D (broader definition) has run 14–15% of revenue for 7–8 years.
• Defended Core franchise: $768.452M revenue at 60.3% segment income margin (EX-99.1 FY segment table). Combined product spend / Core revenue = 46.9% — expensive relative to the core P&L, cheap relative to a 6–31× switching-cost pool.
• Capital return: OCF $761.960M; FCF ≈ 761.960 − 67.103 (PPE) − 4.108 (purchased software) − 184.243 (internal software) = $506.5M. Buybacks $448.173M + dividends $170.405M = $618.6M (> FCF; cash fell $102.0M → $12.1M, credit-facility debt $0 → $40M). This is a cash-return compounder, not a reinvestment-growth story.