UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2020~~

2021


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______________ to ________________

Commission file number 0-14112

JACK HENRY & ASSOCIATES, INC.

(Exact name of registrant as specified in its charter)


Delaware						43-1128385
(State or Other Jurisdiction of Incorporation)						(I.R.S Employer Identification No.)

663 Highway 60, P.O. Box 807, Monett, MO 65708

(Address of Principle Executive Offices)

(Zip Code)

417-235-6652

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock ($0.01 par value)	JKHY	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ”accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

As of January ~~29, 2021,~~28, 2022, the Registrant had ~~76,077,269~~72,825,033 shares of Common Stock outstanding ($0.01 par value).

TABLE OF CONTENTS


		Page Reference

PART I	FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Balance Sheets as of December 31, ~~2020~~2021, and June 30, ~~2020~~2021 (Unaudited)	34

	Condensed Consolidated Statements of Income for the Three and Six Months Ended December 31, ~~2020~~2021, and ~~2019~~2020 (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended December 31, ~~2020~~2021, and ~~2019~~2020 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, ~~2020~~2021, and ~~2019~~2020 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	29

ITEM 4.	Controls and Procedures	29

PART II	OTHER INFORMATION	29

ITEM 1.	Legal Proceedings	29



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2930

ITEM 6.	Exhibits	31

	Signatures	32

In this report, all references to "Jack Henry," “JKHY,” the “Company,” “we,” “us,” and “our,” refer to Jack Henry & Associates, Inc., and its wholly owned subsidiaries.

FORWARD LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements may appear throughout this report, including without limitation, in Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “seek,” “anticipate,” “estimate,” “future,” “intend,” “plan,” “strategy,” “predict,” “likely,” “should,” “will,” “would,” “could,” “can,” “may,” and similar expressions. Forward-looking statements are based only on management’s current beliefs, expectations and assumptions regarding the future of the Company, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, in particular, those included in Item 1A, “Risk Factors” of such report, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Any forward-looking statement made in this report speaks only as of the date of this report, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES	JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES					JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS	CONDENSED CONSOLIDATED BALANCE SHEETS					CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)	(In Thousands, Except Share and Per Share Data)					(In Thousands, Except Share and Per Share Data)
(Unaudited)	(Unaudited)					(Unaudited)
		December 31, 2020		June 30, 2020			December 31, 2021		June 30, 2021

ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	147,762	$	213,345	Cash and cash equivalents	$	29,120	$	50,992
Receivables, net	Receivables, net	212,934		300,945		Receivables, net	236,096		306,564
Income tax receivable	Income tax receivable	8,662		21,051		Income tax receivable	22,881		30,243
Prepaid expenses and other	Prepaid expenses and other	98,540		95,525		Prepaid expenses and other	116,778		109,723
Deferred costs	Deferred costs	50,586		38,235		Deferred costs	62,157		46,215

Total current assets	Total current assets	518,484		669,101		Total current assets	467,032		543,737
PROPERTY AND EQUIPMENT, net	PROPERTY AND EQUIPMENT, net	257,883		273,432		PROPERTY AND EQUIPMENT, net	241,409		252,481
OTHER ASSETS:	OTHER ASSETS:					OTHER ASSETS:
Non-current deferred costs	Non-current deferred costs	122,016		113,525		Non-current deferred costs	133,223		127,205
Computer software, net of amortization	Computer software, net of amortization	351,327		340,466		Computer software, net of amortization	387,128		368,094
Other non-current assets	Other non-current assets	233,865		220,591		Other non-current assets	260,186		249,210
Customer relationships, net of amortization	Customer relationships, net of amortization	88,295		95,108		Customer relationships, net of amortization	75,579		81,842
Other intangible assets, net of amortization	Other intangible assets, net of amortization	28,866		29,917		Other intangible assets, net of amortization	28,787		26,129
Goodwill	Goodwill	685,973		686,334		Goodwill	687,458		687,458
Total other assets	Total other assets	1,510,342		1,485,941		Total other assets	1,572,361		1,539,938
Total assets	Total assets	$	2,286,709	$	2,428,474	Total assets	$	2,280,802	$	2,336,156
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable	Accounts payable	$	11,569	$	9,880	Accounts payable	$	14,155	$	18,485
Accrued expenses	Accrued expenses	145,878		166,689		Accrued expenses	150,363		182,517

Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	117		115		Notes payable and current maturities of long-term debt	103		110
Deferred revenues	Deferred revenues	193,409		318,161		Deferred revenues	208,733		319,748
Total current liabilities	Total current liabilities	350,973		494,845		Total current liabilities	373,354		520,860
LONG-TERM LIABILITIES:	LONG-TERM LIABILITIES:					LONG-TERM LIABILITIES:
Non-current deferred revenues	Non-current deferred revenues	69,474		71,461		Non-current deferred revenues	67,045		75,852
Deferred income tax liability	Deferred income tax liability	252,649		243,998		Deferred income tax liability	272,331		260,758
Debt, net of current maturities	Debt, net of current maturities	149		208		Debt, net of current maturities	240,026		100,083
Other long-term liabilities	Other long-term liabilities	68,285		68,274		Other long-term liabilities	56,050		59,311
Total long-term liabilities	Total long-term liabilities	390,557		383,941		Total long-term liabilities	635,452		496,004
Total liabilities	Total liabilities	741,530		878,786		Total liabilities	1,008,806		1,016,864
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY					STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued		0		0
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,736,703 shares issued at December 31, 2020; 103,622,563 shares issued at June 30, 2020		1,037		1,036
Preferred stock -$1 par value; 500,000 shares authorized, none issued						Preferred stock -$1 par value; 500,000 shares authorized, none issued	—		—
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,860,246 shares issued at December 31, 2021; 103,795,169 shares issued at June 30, 2021						Common stock - $0.01 par value; 250,000,000 shares authorized; 103,860,246 shares issued at December 31, 2021; 103,795,169 shares issued at June 30, 2021	1,039		1,038
Additional paid-in capital	Additional paid-in capital	503,205		495,005		Additional paid-in capital	535,493		518,960
Retained earnings	Retained earnings	2,332,509		2,235,320		Retained earnings	2,542,583		2,412,496
Less treasury stock at cost 27,667,903 shares at December 31, 2020; 26,992,903 shares at June 30, 2020		(1,291,572)		(1,181,673)
Less treasury stock at cost 31,042,903 shares at December 31, 2021; 29,792,903 shares at June 30, 2021						Less treasury stock at cost 31,042,903 shares at December 31, 2021; 29,792,903 shares at June 30, 2021	(1,807,119)		(1,613,202)
Total stockholders' equity	Total stockholders' equity	1,545,179		1,549,688		Total stockholders' equity	1,271,996		1,319,292
Total liabilities and equity	Total liabilities and equity	$	2,286,709	$	2,428,474	Total liabilities and equity	$	2,280,802	$	2,336,156

See notes to condensed consolidated financial ~~statements~~statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020

REVENUE	$	493,896	$	422,361	$	981,952	$	874,161

EXPENSES
Cost of Revenue	282,825		257,782		559,460		520,711
Research and Development	29,916		26,780		56,670		52,837
Selling, General, and Administrative	55,493		44,167		106,565		89,393

Total Expenses	368,234		328,729		722,695		662,941

OPERATING INCOME	125,662		93,632		259,257		211,220

INTEREST INCOME (EXPENSE)
Interest Income	6		52		13		120
Interest Expense	(447)		(117)		(696)		(235)
Total Interest Income (Expense)	(441)		(65)		(683)		(115)

INCOME BEFORE INCOME TAXES	125,221		93,567		258,574		211,105

PROVISION FOR INCOME TAXES	29,551		21,585		60,791		47,907

NET INCOME	$	95,670	$	71,982	$	197,783	$	163,198

Basic earnings per share	$	1.30	$	0.94	$	2.68	$	2.14
Basic weighted average shares outstanding	73,580		76,202		73,798		76,354

Diluted earnings per share	$	1.30	$	0.94	$	2.68	$	2.13
Diluted weighted average shares outstanding	73,697		76,280		73,920		76,496

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2020 2019 2020 2019
REVENUE $ 422,361 $ 419,119 $ 874,161 $ 857,124
EXPENSES
Cost of Revenue 257,782 249,267 520,711 495,058
Research and Development 26,780 27,187 52,837 51,778
Selling, General, and Administrative 44,167 48,961 89,393 98,396
Total Expenses 328,729 325,415 662,941 645,232
OPERATING INCOME 93,632 93,704 211,220 211,892
INTEREST INCOME (EXPENSE)
Interest Income 52 346 120 853
Interest Expense (117) (156) (235) (312)
Total Interest Income (Expense) (65) 190 (115) 541
INCOME BEFORE INCOME TAXES 93,567 93,894 211,105 212,433
PROVISION FOR INCOME TAXES 21,585 21,796 47,907 50,965
NET INCOME $ 71,982 $ 72,098 $ 163,198 $ 161,468
Basic earnings per share $ 0.94 $ 0.94 $ 2.14 $ 2.10
Basic weighted average shares outstanding 76,202 76,879 76,354 76,926
Diluted earnings per share $ 0.94 $ 0.94 $ 2.13 $ 2.10
Diluted weighted average shares outstanding 76,280 76,935 76,496 77,001

See notes to condensed consolidated financial ~~statements~~

statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
(Unaudited)
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
PREFERRED SHARES:	—		—		—		—

COMMON SHARES:
Shares, beginning of period	103,822,265		103,696,962		103,795,169		103,622,563
Shares issued for equity-based payment arrangements	21,101		23,412		26,533		78,414
Shares issued for Employee Stock Purchase Plan	16,880		16,329		38,544		35,726
Shares, end of period	103,860,246		103,736,703		103,860,246		103,736,703

COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of period	$	1,038	$	1,037	$	1,038	$	1,036
Shares issued for equity-based payment arrangements	—		—		—		1
Shares issued for Employee Stock Purchase Plan	1		—		1		—
Balance, end of period	$	1,039	$	1,037	$	1,039	$	1,037

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	527,255	$	497,030	$	518,960	$	495,005
Shares issued for equity-based payment arrangements	—		—		—		(1)
Tax withholding related to share-based compensation	(1,046)		(1,184)		(1,998)		(6,689)
Shares issued for Employee Stock Purchase Plan	2,739		2,232		6,476		5,138
Stock-based compensation expense	6,545		5,127		12,055		9,752
Balance, end of period	$	535,493	$	503,205	$	535,493	$	503,205

RETAINED EARNINGS:
Balance, beginning of period	$	2,480,574	$	2,293,229	$	2,412,496	$	2,235,320
Cumulative effect of Accounting Standards Update adoption (Note 1)	—		—		—		(493)
Net income	95,670		71,982		197,783		163,198
Dividends	(33,661)		(32,702)		(67,696)		(65,516)
Balance, end of period	$	2,542,583	$	2,332,509	$	2,542,583	$	2,332,509

TREASURY STOCK:
Balance, beginning of period	$	(1,613,202)	$	(1,247,546)	$	(1,613,202)	$	(1,181,673)
Purchase of treasury shares	(193,917)		(44,026)		(193,917)		(109,899)
Balance, end of period	$	(1,807,119)	$	(1,291,572)	$	(1,807,119)	$	(1,291,572)

TOTAL STOCKHOLDERS' EQUITY	$	1,271,996	$	1,545,179	$	1,271,996	$	1,545,179

Dividends declared per share	$	0.46	$	0.43	$	0.92	$	0.86

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2020 2019 2020 2019
PREFERRED SHARES: 0 0 0 0
COMMON SHARES:
Shares, beginning of period 103,696,962 103,535,828 103,622,563 103,496,026
Shares issued for equity-based payment arrangements 23,412 18,594 78,414 38,482
Shares issued for Employee Stock Purchase Plan 16,329 17,707 35,726 37,621
Shares, end of period 103,736,703 103,572,129 103,736,703 103,572,129
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of period $ 1,037 $ 1,035 $ 1,036 $ 1,035
Shares issued for equity-based payment arrangements 0 1 1 1
Balance, end of period $ 1,037 $ 1,036 $ 1,037 $ 1,036
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period $ 497,030 $ 475,222 $ 495,005 $ 472,030
Shares issued for equity-based payment arrangements 0 0 (1) (1)
Tax withholding related to share based compensation (1,184) (553) (6,689) (2,625)
Shares issued for Employee Stock Purchase Plan 2,232 2,191 5,138 4,603
Stock-based compensation expense 5,127 4,145 9,752 6,998
Balance, end of period $ 503,205 $ 481,005 $ 503,205 $ 481,005
RETAINED EARNINGS:
Balance, beginning of period $ 2,293,229 $ 2,124,672 $ 2,235,320 $ 2,066,073
Cumulative effect of Accounting Standards Update adoption (Note 2) 0 0 (493) 0
Net income 71,982 72,098 163,198 161,468
Dividends (32,702) (30,731) (65,516) (61,502)
Balance, end of period $ 2,332,509 $ 2,166,039 $ 2,332,509 $ 2,166,039
TREASURY STOCK:
Balance, beginning of period $ (1,247,546) $ (1,124,269) $ (1,181,673) $ (1,110,124)
Purchase of treasury shares (44,026) (37,065) (109,899) (51,210)
Balance, end of period $ (1,291,572) $ (1,161,334) $ (1,291,572) $ (1,161,334)
TOTAL STOCKHOLDERS' EQUITY $ 1,545,179 $ 1,486,746 $ 1,545,179 $ 1,486,746
Dividends declared per share $ 0.43 $ 0.40 $ 0.86 $ 0.80

See notes to condensed consolidated financial statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES	JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES					JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)	(In Thousands)					(In Thousands)
(Unaudited)	(Unaudited)					(Unaudited)
		Six Months Ended					Six Months Ended
		December 31,					December 31,
		2020		2019			2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	Net Income	$	163,198	$	161,468	Net Income	$	197,783	$	163,198
Adjustments to reconcile net income from operations to net cash from operating activities:	Adjustments to reconcile net income from operations to net cash from operating activities:					Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	Depreciation	26,652		25,364		Depreciation	25,843		26,652
Amortization	Amortization	61,164		58,873		Amortization	62,610		61,164
Change in deferred income taxes	Change in deferred income taxes	8,651		4,134		Change in deferred income taxes	11,573		8,651
Expense for stock-based compensation	Expense for stock-based compensation	9,752		6,998		Expense for stock-based compensation	13,027		9,752
(Gain)/loss on disposal of assets	(Gain)/loss on disposal of assets	(2,019)		(103)		(Gain)/loss on disposal of assets	240		(2,019)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Change in receivables	Change in receivables	87,518		106,782		Change in receivables	70,468		87,518
Change in prepaid expenses, deferred costs and other	Change in prepaid expenses, deferred costs and other	(26,109)		(21,911)		Change in prepaid expenses, deferred costs and other	(39,991)		(26,109)
Change in accounts payable	Change in accounts payable	16		(262)		Change in accounts payable	2,995		16
Change in accrued expenses	Change in accrued expenses	(22,627)		(28,702)		Change in accrued expenses	(35,814)		(22,627)
Change in income taxes	Change in income taxes	13,922		19,861		Change in income taxes	8,439		13,922
Change in deferred revenues	Change in deferred revenues	(126,134)		(117,489)		Change in deferred revenues	(119,822)		(126,134)
Net cash from operating activities	Net cash from operating activities	193,984		215,013		Net cash from operating activities	197,351		193,984

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired		0		(30,376)

Capital expenditures	Capital expenditures	(9,543)		(30,758)		Capital expenditures	(22,373)		(9,543)

Proceeds from dispositions	Proceeds from dispositions	6,157		326		Proceeds from dispositions	38		6,157

Purchased software	Purchased software	(4,254)		(5,551)		Purchased software	(7,364)		(4,254)
Computer software developed	Computer software developed	(62,804)		(57,886)		Computer software developed	(71,353)		(62,804)
Purchase of investments	Purchase of investments	(12,100)		(1,150)		Purchase of investments	—		(12,100)
Net cash from investing activities	Net cash from investing activities	(82,544)		(125,395)		Net cash from investing activities	(101,052)		(82,544)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments on financing leases		(57)		0
Borrowings on credit facilities						Borrowings on credit facilities	220,000		—
Repayments on credit facilities and financing leases						Repayments on credit facilities and financing leases	(80,065)		(57)

Purchase of treasury stock	Purchase of treasury stock	(109,899)		(51,210)		Purchase of treasury stock	(193,917)		(109,899)
Dividends paid	Dividends paid	(65,516)		(61,502)		Dividends paid	(67,696)		(65,516)

Tax withholding payments related to share based compensation		(6,689)		(2,624)
Tax withholding payments related to share-based compensation						Tax withholding payments related to share-based compensation	(1,998)		(6,689)
Proceeds from sale of common stock	Proceeds from sale of common stock	5,138		4,603		Proceeds from sale of common stock	5,505		5,138
Net cash from financing activities	Net cash from financing activities	(177,023)		(110,733)		Net cash from financing activities	(118,171)		(177,023)
NET CHANGE IN CASH AND CASH EQUIVALENTS	NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(65,583)	$	(21,115)	NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(21,872)	$	(65,583)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	213,345	$	93,628	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	50,992	$	213,345
CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	147,762	$	72,513	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	29,120	$	147,762

See notes to condensed consolidated financial ~~statements~~

statements.

Table of Contents

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Amounts)

(Unaudited)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Company

Jack Henry & Associates, Inc. and subsidiaries ("Jack Henry," "JKHY," or the "Company") is a leading provider of ~~integrated computer systems~~technology solutions and ~~services.~~payment processing services primarily for the financial services industry. The Company has developed and acquired a number of banking and credit union software systems. The Company's revenues are predominately earned by marketing those systems to financial institutions nationwide, ~~together with computer equipment (hardware),~~ by providing the conversion and implementation services for financial institutions to utilize JKHY systems, and by providing payment processing and other related services. JKHY also provides continuing support and services to customers using on-premise or JKHY private and public cloud-based systems.

Consolidation

The condensed consolidated financial statements include the accounts of JKHY and its subsidiaries, all of ~~its subsidiaries,~~ which are ~~wholly-owned, and all~~wholly owned. All intercompany accounts and transactions have been eliminated.

Comprehensive Income

Comprehensive income for the three and six months ended December 31, ~~2020~~2021, and ~~2019~~2020, equals the Company’s net income.

Change in Accounting Policy

The Company adopted ~~FASB~~Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses, ("CECL") with an adoption date of July 1, ~~2020 (see Note 2).~~2020. As a result, the Company changed its accounting policy for allowance for credit losses. The accounting policy pursuant to CECL is disclosed below. The adoption of CECL resulted in an immaterial cumulative effect adjustment recorded in retained earnings as of July 1, 2020.

Allowance for Credit Losses

The Company monitors trade and other receivable balances and contract assets and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience and other factors, including those related to current market conditions and events.

The following table summarizes allowance for credit losses activity for the fiscal quarter and year-to-date period ended December 31, 2021, and 2020:


							Three Months Ended December 31,				Six Months Ended December 31,
		Three Months Ended December 31, 2020		Six Months Ended December 31, 2020			2021		2020		2021		2020
Allowance for credit losses - beginning balance	Allowance for credit losses - beginning balance	$	6,731	$	6,719	Allowance for credit losses - beginning balance	$	7,660	$	6,731	$	7,267	$	6,719
Cumulative effect of accounting standards update adoption	Cumulative effect of accounting standards update adoption	0		493		Cumulative effect of accounting standards update adoption	—		—		—		493
Current provision for expected credit losses	Current provision for expected credit losses	370		910		Current provision for expected credit losses	300		370		840		910
Write-offs charged against allowance	Write-offs charged against allowance	(263)		(1,286)		Write-offs charged against allowance	(227)		(263)		(373)		(1,286)
Recoveries of amounts previously written off	Recoveries of amounts previously written off	(1)		(4)		Recoveries of amounts previously written off	—		(1)		(1)		(4)
Other	Other	(7)		(2)		Other	—		(7)		—		(2)
Allowance for credit losses - ending balance	Allowance for credit losses - ending balance	$	6,830	$	6,830	Allowance for credit losses - ending balance	$	7,733	$	6,830	$	7,733	$	6,830

~~While the novel coronavirus ("COVID-19") pandemic did not result in a significant increase in the Company’s expected credit loss allowance recorded as~~

Table of December 31, 2020, the Company believes it is reasonably possible that future developments related to the economic impact of the COVID-19 pandemic could have a material impact on management’s estimates (see Use of Estimates below).Contents

Property and Equipment

Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Accumulated depreciation at December 31, ~~2020~~2021, totaled ~~$415,044~~$453,439 and at June 30, ~~2020~~2021, totaled ~~$404,388.~~

~~Table of Contents~~

$435,169.

Intangible Assets

Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of those intangible assets with an indefinite life (such as goodwill), over an estimated economic benefit period, generally three to twenty years. Accumulated amortization of intangible assets totaled ~~$858,921~~$983,626 and ~~$812,856~~$921,050 at December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, respectively.

Purchase of Investments

At December 31, 2021, and June 30, ~~2020,~~2021, the Company had an investment in the preferred stock of Automated Bookkeeping, ~~Inc~~Inc. ("Autobooks") ~~of $6,000. During the second quarter of fiscal 2021, the Company made an additional investment in Autobooks for a total investment at December 31, 2020~~ of $13,250, which represented a non-controlling share of the voting equity as of ~~that~~each date. The total investment was recorded at cost and is included within other non-current assets on the Company's balance sheet. There have been no events or changes in circumstances that would indicate an impairment and no price changes resulting from observing a similar or identical investment. An impairment and/or an observable price change would be an adjustment to recorded cost. Fair value will not be estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

Common Stock

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing line-of-credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At December 31, ~~2020,~~2021, there were ~~27,668~~31,043 shares in treasury stock and the Company had the remaining authority to repurchase up to ~~2,323~~3,948 additional shares. The total cost of treasury shares at December 31, ~~2020~~2021, was ~~$1,291,572.~~$1,807,119. During the first six months of fiscal ~~2021,~~2022, the Company repurchased ~~675 shares for the treasury.~~1,250 shares. At June 30, ~~2020,~~2021, there were ~~26,993~~29,793 shares in treasury stock and the Company had authority to repurchase up to ~~2,998~~5,198 additional shares. The total cost of treasury shares at June 30, ~~2020~~2021, was ~~$1,181,673.~~$1,613,202. During the first six months of fiscal 2021, the Company repurchased 675 shares.

Income Taxes

Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement basis and tax basis of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties ~~expenses~~expense are recognized on the full amount of ~~deferred~~unrecognized benefits for uncertain tax positions. The Company's policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.

Interim Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission ("SEC") and in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") applicable to interim condensed consolidated financial statements and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes, which are included in its Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended June 30, ~~2020.~~2021. The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, with updates to certain policies included in this Note 1.

In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly in all material respects the financial position of the Company as of December 31, ~~2020,~~2021, the results of its operations for

Table of Contents

the three and six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, changes in stockholders' equity for the three and six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, and its cash flows for the six months ended December 31, ~~2020~~2021, and ~~2019.~~2020. The condensed consolidated balance sheet at June 30, ~~2020~~2021, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

~~Table of Contents~~

The results of operations for the three and six months ended December 31, ~~2020~~2021, are not necessarily indicative of the results to be expected for the entire fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Risks and Uncertainties

The extent to which the COVID-19 pandemic will directly or indirectly impact our business and financial results, including revenue, expenses, cost of revenues, research and development, and selling, general and administrative expenses, will depend on future developments that are highly uncertain, such as new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19 (including the efficacy of vaccines against new variants and ~~distribution~~the development and effectiveness of ~~any vaccines)~~treatments), as well as the economic impact on local, regional, national and international customers and markets. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of December 31, ~~2020~~2021, and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for credit losses, as well as the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s condensed consolidated financial statements as of and for the fiscal quarter ended December 31, ~~2020,~~2021, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s condensed consolidated financial statements in future reporting periods.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

In January 2017, the FASB issued Accounting Standard Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU No. 2017-04 on July 1, 2020 and the adoption did not have a material impact on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), or CECL, which prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses. Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial instrument. For most instruments, entities must apply the standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted CECL effective July 1, 2020 using the required modified retrospective approach, which resulted in a cumulative-effect decrease to beginning retained earnings of $493. Financial assets and liabilities held by the Company subject to the “expected credit loss” model prescribed by CECL include trade and other receivables as well as contract assets (see Note 1).

~~Not Yet Adopted~~

In December of 2019, the FASB issued ~~ASU~~Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions and simplifies other requirements of Topic 740 guidance. The ASU ~~will be~~was effective for the Company on July 1, 2021. ~~Early adoption~~The Company adopted ASU 2019-12 effective July 1, 2021 with no material impact on its condensed consolidated financial statements.

Not Yet Adopted

In October of 2021, the ~~amendments is permitted, including adoption~~FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which improves the accounting for acquired revenue contracts with customers in ~~any interim period for public~~a business ~~entities for periods for which financial statements have not yet been issued. An entity that elects~~combination by addressing diversity in practice and inconsistency related to ~~early adopt~~recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period.acquirer. The Company plans to adopt ASU ~~2019-12~~2021-08 when required, which will be for fiscal years beginning after December 15, 2022, including interim periods within the fiscal years, and should be applied prospectively to business combinations occurring on or after the effective ~~July 1, 2021 and does not expect~~date of this ASU. Although this ASU has no current effect on the ~~adoption to have a material impact on its~~Company's condensed consolidated financial ~~statements.~~statements, there could be an effect for any business combinations taking place after the effective date of this ASU.

NOTE 3. REVENUE AND DEFERRED COSTS

Revenue Recognition

The Company generates revenue from data processing, transaction processing, software licensing and related services, professional services, and hardware sales.

~~Table of Contents~~

Disaggregation of Revenue

The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note ~~11,~~10, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Company’s

Table of Contents

revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.

Three Months Ended December 31, Six Months Ended December 31,
2020 2019 2020 2019
Outsourcing & Cloud $ 124,498 $ 115,897 $ 245,456 $ 224,480
Product Delivery & Services 48,414 61,709 105,312 133,070
In-House Support 77,961 77,598 181,102 176,462
Services & Support 250,873 255,204 531,870 534,012
Processing 171,488 163,915 342,291 323,112
Total Revenue $ 422,361 $ 419,119 $ 874,161 $ 857,124


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Private and Public Cloud1	$	138,340	$	124,498	$	273,982	$	245,456
Product Delivery and Services	79,499		48,414		131,014		105,312
On-Premise Support2	78,372		77,961		188,708		181,102
Services and Support	296,211		250,873		593,704		531,870

Processing	197,685		171,488		388,248		342,291

Total Revenue	$	493,896	$	422,361	$	981,952	$	874,161

1 The name of this revenue stream was changed in fiscal 2021 from "outsourcing and cloud" to "private and public cloud" to better reflect the nature of the related revenue. However, the nature of the revenue included within this caption has not changed and is the same in the current fiscal quarter as it was in the comparative quarter of fiscal 2021 and prior.

2 The name of this revenue stream was changed in fiscal 2021 from "in-house support" to "on-premise support" to better reflect the nature of the related revenue. However, the nature of the revenue included within this caption has not changed and is the same in the current fiscal quarter as it was in the comparative quarter of fiscal 2021 and prior.

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers.

December 31,
2020 June 30,
2020
Receivables, net $ 212,934 $ 300,945
Contract Assets- Current 19,274 21,609
Contract Assets- Non-current 52,430 54,293
Contract Liabilities (Deferred Revenue)- Current 193,409 318,161
Contract Liabilities (Deferred Revenue)- Non-current 69,474 71,461


	December 31, 2021		June 30, 2021
Receivables, net	$	236,096	$	306,564
Contract Assets - Current	20,374		22,884
Contract Assets - Non-current	59,119		52,920
Contract Liabilities (Deferred Revenue) - Current	208,733		319,748
Contract Liabilities (Deferred Revenue) - Non-current	67,045		75,852

Contract assets primarily result from revenue being recognized when or as control of a solution or service is transferred to the customer, ~~but~~except where invoicing is contingent upon the completion of other performance obligations or payment terms differ from the provisioning of services. The current portion of contract assets is reported within prepaid expenses and other in the condensed consolidated balance sheet, and the non-current portion is included in other non-current assets. Contract liabilities (deferred revenue) primarily relate to consideration received from customers in advance of delivery of the related goods and services to the customer. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

The Company analyzes contract language to identify if a significant financing component does exist and ~~would adjust~~adjusts the transaction price for any material effects of the time value of money if the timing of payments provides either party to the contract with a significant benefit of financing the transaction.

During the three months ended December 31, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenue of ~~$79,421~~$89,257 and ~~$84,613,~~$79,421, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods. For the six months ended December 31, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenue of ~~$156,666~~$157,781 and ~~$155,625,~~$156,666, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods.

Amounts recognized that relate to performance obligations satisfied (or partially satisfied) in prior periods were immaterial for each period presented. These adjustments are primarily the result of transaction price re-allocations due to changes in estimates of variable consideration.

Table of Contents

Transaction Price Allocated to Remaining Performance Obligations

As of December 31, ~~2020,~~2021, estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period totaled ~~$4,139,497.~~$5,154,912. The Company expects to recognize approximately ~~27%~~26% over the next 12 months, 20% in 13-24 months, and the balance thereafter.

~~Table of Contents~~

Contract Costs

The Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with customers that are expected to be recovered. These costs consist primarily of sales commissions, which are incurred only if a contract is obtained, and customer conversion or implementation-related costs. Capitalized costs are amortized based on the transfer of goods or services to which the asset relates, in line with the percentage of revenue recognized for each performance obligation to which the costs are allocated.

Capitalized costs totaled ~~$296,757~~$347,867 and ~~$271,010,~~$314,807 at December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively.

For the three months ended December 31, ~~2020~~2021 and ~~2019,~~2020, amortization of deferred contract costs was ~~$28,795~~$32,154 and ~~$27,821,~~$28,794, respectively. During the six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, amortization of deferred contract costs totaled $67,998 and $62,620, ~~and $59,214,~~ respectively. ~~There were no impairment losses in relation to capitalized costs for the periods presented.~~

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

For cash equivalents, certificates of deposit, amounts receivable or payable, and short-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets and liabilities.

The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: inputs to the valuation are quoted prices in an active market for identical assets

Level 2: inputs to the valuation include quoted prices for similar assets in active markets that are observable either directly or indirectly

Level 3: valuation is based on significant inputs that are unobservable in the market and the Company's own estimates of assumptions that we believe market participants would use in pricing the asset

Fair value of financial assets included in current assets is as follows:

Estimated Fair Value Measurements Total Fair
Level 1 Level 2 Level 3 Value
December 31, 2020
Financial Assets:
Certificate of Deposit $ 0 $ 5,000 $ 0 $ 5,000
June 30, 2020
Financial Assets:
Certificate of Deposit $ 0 $ 0 $ 0 $ 0


	Estimated Fair Value Measurements						Total Fair
	Level 1		Level 2		Level 3		Value
December 31, 2021
Financial Assets:

Certificates of Deposit	$	—	$	1,209	$	—	$	1,209
Financial Liabilities:
Revolving credit facility	$	—	$	240,000	$	—	$	240,000
June 30, 2021
Financial Assets:
Certificates of Deposit	$	—	$	1,200	$	—	$	1,200

Financial Liabilities:
Revolving credit facility	$	—	$	100,000	$	—	$	100,000

NOTE 5. LEASES

The Company determines if an arrangement is a lease at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease agreements with lease and non-lease

components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the Company’s leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based upon the information available at commencement date. The determination of the incremental borrowing rate requires judgment and is determined by using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease.

The Company leases certain office space, data centers and equipment with remaining terms of 1 to 1312 years. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in

the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. Variable lease costs are recognized as a variable lease expense when incurred.

At December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, the Company had operating lease assets of ~~$62,021~~$51,888 and ~~$63,948~~$55,977 and financing lease assets of ~~$260~~$124 and ~~$318,~~$188, respectively. At December 31, ~~2020,~~2021, total operating lease liabilities of ~~$66,765~~$56,653 were comprised of current operating lease liabilities of ~~$11,690~~$11,623 and noncurrent operating lease liabilities of ~~$55,075,~~$45,030, and total financing lease liabilities of ~~$266~~$129 were comprised of current financing lease liabilities of ~~$117~~$103 and noncurrent financing lease liabilities of ~~$149.~~$26. At June 30, ~~2020,~~2021, total operating lease liabilities of ~~$68,309~~$60,828 were comprised of current operating lease liabilities of ~~$11,712~~$11,460 and noncurrent operating lease liabilities of ~~$56,597,~~$49,368, and total financing lease liabilities of ~~$323~~$193 were comprised of current financing lease liabilities of ~~$115~~$110 and noncurrent financing lease liabilities of ~~$208.~~$83.

Operating lease assets are included within other non-current assets and operating lease liabilities are included within accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s condensed consolidated balance sheet. Operating lease assets were recorded net of accumulated amortization of ~~$18,807~~$27,625 and ~~$13,719~~$23,813 as of December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, respectively. Financing lease assets are included within property and equipment, net and financing lease liabilities are included within notes payable (current portion) and long-term debt (noncurrent portion) in the Company’s condensed consolidated balance sheet. Financing lease assets were recorded net of accumulated amortization of ~~$96~~$206 and ~~$38~~$153 as of December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, respectively.

Operating lease costs for the three months ended December 31, 2021, and 2020, were $3,327 and ~~2019 were~~ $3,766, ~~and $4,024, respectively. Operating lease costs for the six months ended December 31, 2020 and 2019 were $7,675 and $8,031,~~ respectively. Financing lease costs for the three ~~and six~~ months ended December 31, 2021, and 2020, were $27 and ~~2019 were~~ $30, ~~and $0,~~ respectively. Total operating and financing lease costs for the respective quarters included variable lease costs of approximately $441 and $809, respectively. Operating lease costs for the six months ended December 31, 2021, and ~~$780.~~2020, were $6,759 and $7,675, respectively. Financing lease costs for the six months ended December 31, 2021, and 2020, were $55 and $30, respectively. Total operating and financing lease costs for the respective fiscal year-to-date periods included variable lease costs of approximately ~~$2,189~~$840 and ~~$1,659.~~$2,189. Operating and financing lease expense are included within cost of services, research and development, and selling, general &and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s condensed consolidated statement of income.

For the six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, the Company had operating cash flows for payments on operating leases of $6,802 and $6,872, respectively, and ~~$7,803, and right-of-use~~ROU assets obtained in exchange for operating lease liabilities of $1,870 and $4,485, ~~and $1,370,~~ respectively. ~~Operating~~Financing cash flows for ~~interest paid~~payments on financing leases for the six months ended December 31, 2021, and 2020, were $55 and ~~2019 were $4 and $0,~~$63, respectively.

As of December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, the ~~weighted-average~~weighted average remaining lease term for the Company's operating leases was 8477 months and 8881 months, respectively, and the ~~weighted-average~~weighted average discount rate was ~~2.66%~~2.62% and ~~2.76%~~2.67%, respectively. As of December 31, ~~2020~~2021, and June 30, ~~2020~~2021, the ~~weighted-average~~weighted average remaining lease term for the Company's financing leases was 2715 months and 3321 months, respectively. The ~~weighted-average~~weighted average discount rate for the Company's financing leases was ~~2.42%~~2.36% and 2.39% as of December 31, ~~2020~~2021, and June 30, ~~2020.~~2021, respectively.

Maturity of Lease Liabilities under ASC 842

Future minimum rental payments on operating leases with initial non-cancellable lease terms in excess of one year were due as follows at December 31, 2020*2021*:


Due Dates (fiscal year)	Due Dates (fiscal year)	Future Minimum Rental Payments		Due Dates (fiscal year)	Future Minimum Rental Payments

2021 (remaining period)		$	6,569
2022		13,233
2022 (remaining period)				2022 (remaining period)	6,617
2023	2023	11,772		2023	12,089
2024	2024	9,640		2024	10,029
2025	2025	6,899		2025	7,266
2026				2026	6,342
Thereafter	Thereafter	25,164		Thereafter	19,388
Total lease payments	Total lease payments	$	73,277	Total lease payments	$	61,731
Less: interest	Less: interest	(6,512)		Less: interest	(5,078)
Present value of lease liabilities	Present value of lease liabilities	$	66,765	Present value of lease liabilities	$	56,653

*Financing leases were immaterial to the fiscal quarter, so a maturity of lease liabilities table has only been included for operating leases.

Lease payments ~~include~~included $5,464 related to options to extend lease terms that are reasonably certain of being exercised. At December 31, ~~2020, there were 0~~2021, the Company had $60 in legally binding lease payments for ~~leases~~one lease that was signed but not yet commenced. The lease commencement date is March 1, 2022, and the lease term is 36 months.

NOTE 6. DEBT

Revolving credit facility

On February 10, 2020, the Company entered into a five-year senior, unsecured revolving credit facility. The credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $700,000. The credit facility bears interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the U.S. Bank prime rate ~~("Prime Rate")~~ for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit facility agreement. As of December 31, ~~2020,~~2021, the Company was in compliance with all such covenants. The revolving credit facility terminates February 10, 2025. There was 0$240,000 outstanding ~~balance~~ under the credit facility at December 31, ~~2020 or~~2021, and $100,000 outstanding balance at June 30, ~~2020.~~2021.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line expires on April 30, ~~2021.~~2023. There was 0no balance outstanding at December 31, ~~2020~~2021, or June 30, ~~2020.~~2021.

Interest

The Company paid interest of ~~$105~~$604 and ~~$193~~$105 during the six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, respectively.

NOTE 7. INCOME TAXES

~~The effective tax rate was 23.1% and 23.2% of~~Provision for income ~~before income~~ taxes increased for the three months ended December 31, 2021, compared to the three months ended December 31, 2020, ~~and 2019, respectively.~~ with an effective tax rate of 23.6% of income before income taxes, compared to 23.1% in the prior-year fiscal quarter. The increase in the effective tax rate comparing the three-month periods ended December 31 was primarily due to the impact of increases in operating income relative to the impact of other items affecting the effective tax rate in the current period.

Table of Contents

For the six months ended December 31, 2021, provision for income taxes increased compared to the six months ended December 31, 2020, ~~and 2019,~~with an effective tax rate of 23.5% of income before income taxes, compared to 22.7% for the same period last fiscal year. The increase in the effective tax rate ~~was 22.7% and 24.0%, respectively. The decrease in~~comparing the ~~Company's~~ fiscal year-to-date ~~tax rate~~periods ended December 31 was primarily due to the ~~difference in~~relative impact of the increase in operating income in the current fiscal year-to-date period and a larger excess tax benefit received from share-based compensation ~~that vested during each of~~in the ~~periods.~~prior fiscal year-to-date period.

The Company paid income taxes, net of refunds, of ~~$24,794~~$40,687 and ~~$26,262~~$24,794 in the six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, respectively.

At December 31, ~~2020,~~2021, the Company had ~~$11,314~~$9,594 of gross unrecognized tax benefits ~~$10,496~~before interest and penalties, $8,891 of which, if recognized, would affect our effective tax rate. The Company had accrued interest and penalties of ~~$1,896~~$1,425 and ~~$1,883~~$1,896 related to uncertain tax positions at December 31, 2021, and 2020, ~~and 2019,~~ respectively.

~~Table of Contents~~

The U.S. federal and state income tax returns for fiscal ~~2017~~2018 and all subsequent years remain subject to examination as of December 31, ~~2020~~2021, under statute of limitations rules. ~~We anticipate potential changes due to lapsing statutes of limitations and examination closures could reduce~~The Company believes it is reasonably possible that the liability for unrecognized tax benefits ~~balance~~could reduce by $3,500 to $4,500 within twelve months of December 31, ~~2020.~~2021, due to lapsing statutes of limitations and examination closures.

NOTE 8. STOCK-BASED COMPENSATION

Our operating income for the three months ended December 31, 2021, and 2020, included $6,956 and ~~2019 included~~ $5,127 ~~and $4,145~~ of stock-based compensation costs, respectively. Our operating income for the six months ended December 31, 2021, and 2020, included $13,027 and ~~2019 included~~ $9,752 ~~and $6,998~~ of stock-based compensation costs, respectively.

Stock Options

On November 10, 2015, the Company adopted the 2015 Equity Incentive Plan ("2015 EIP") for its employees and non-employee directors. The plan allows for grants of stock options, stock appreciation rights, restricted stock shares or units, and performance shares or units. The maximum number of shares authorized for issuance under the plan is 3,000. For stock options, terms and vesting periods of the options are determined by the Compensation Committee of the Board of Directors when granted. The option period must expire not more than ten years from the option grant date. The options granted under this plan are exercisable beginning three years after the grant date at an exercise price equal to 100% of the fair market value of the stock at the grant date. The options terminate upon surrender of the option, ninety days after termination of employment, upon the expiration of one year following notification of a deceased optionee, or ten years after grant.

A summary of option plan activity under this plan is as follows:

Number of Shares Weighted Average Exercise Price Aggregate
Intrinsic
Value
Outstanding July 1, 2020 22 $ 87.27
Granted 0 0
Forfeited 0 0
Exercised 0 0
Outstanding December 31, 2020 22 $ 87.27 $ 1,620
Vested and Expected to Vest December 31, 2020 22 $ 87.27 $ 1,620
Exercisable December 31, 2020 22 $ 87.27 $ 1,620


	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding July 1, 2021	22	$	87.27
Granted	—	—
Forfeited	—	—
Exercised	—	—
Outstanding December 31, 2021	22	$	87.27	$	1,729
Vested and Expected to Vest December 31, 2021	22	$	87.27	$	1,729
Exercisable December 31, 2021	22	$	87.27	$	1,729

At December 31, ~~2020,~~2021, there was 0no compensation cost yet to be recognized related to outstanding options. For options currently exercisable, the weighted average remaining contractual term (remaining period of exercisability) as of December 31, ~~2020~~2021, was ~~5.50~~4.50 years.

~~Restricted Stock Unit Awards~~

Table of Contents

The Company issues unit awards under the 2015 EIP. The following table summarizes non-vested performance and restricted stock unit awards as of December 31, ~~2020:~~2021:


Unit awards		Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2020		307	$	136.41
								Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2021							Outstanding July 1, 2021	294	$	160.22
Granted	Granted	73	185.52				Granted	130	178.47
Vested	Vested	(102)	104.57				Vested	(40)	148.56
Forfeited	Forfeited	0	0				Forfeited	(41)	198.03
Outstanding December 31, 2020		278	$	161.09	$	44,979
Outstanding December 31, 2021							Outstanding December 31, 2021	343	$	163.99	$	57,242

The 73130 unit awards granted in fiscal ~~2021~~2022 had service requirements and performance targets, with 3882 having only ~~having~~ service requirements. ~~Those 38~~The unit awards with only service requirements were valued at the ~~weighted-average~~weighted average fair value of the non-vested units based on the fair market value of the Company’s equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period, consistent with the methodology for calculating compensation expense on such awards.

The remaining 3548 unit awards granted in fiscal ~~2021 had~~2022 have performance targets along with service ~~requirements, all~~requirements. 19 of ~~which~~these performance and service requirement unit awards were valued at grant by estimating 100% payout at release and using the fair market value of the Company equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period. The payout at release of approximately half of these unit awards will be determined based on the Company's compound annual growth rate (CAGR) for revenue (excluding adjustments) for the three-year vesting period compared against goal thresholds as defined in the award agreement. The performance payout at release of the other half of these unit awards will be determined based on the expansion of the Company's non-GAAP operating margin over the three-year vesting period compared against goal thresholds as defined in the award agreement. The other 29 performance and service requirement unit awards were valued at grant using a Monte Carlo pricing model as of the measurement date customized to the specific provisions of the Company’s plan ~~design to value the unit awards as of the grant date.~~

~~Table of Contents~~

design. Per the Company's award vesting and settlement provisions, ~~approximately half of~~ the awards that ~~utilize~~utilized a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return (TSR) in comparison to the ~~compensation~~custom peer group ~~made up~~comprised of participants approved by the Compensation Committee of the Company's Board of Directors for fiscal year 2021, and the other half of the awards utilizing a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return in comparison to the Standard & Poor's 1500 Information Technology Index (S&P 1500 IT Index) participants.2022. The Monte Carlo inputs used in the model to estimate fair value at the measurement date and resulting values for these performance unit awards are as follows.

Compensation Peer Group S&P 1500 IT Index
Volatility 25.17 % 25.17 %
Risk free interest rate 0.11 % 0.11 %
Annual dividend based on most recent quarterly dividend 1.72 1.72
Beginning TSR 37 % 30 %


Fiscal year 2022 Monte Carlo award inputs:
Volatility	28.55		%
Risk free interest rate	0.32		%
Annual dividend based on most recent quarterly dividend	$	1.84
Beginning TSR	65		%

At December 31, ~~2020,~~2021, there was ~~$23,610~~$29,290 of compensation expense, excluding forfeitures, that has yet to be recognized related to non-vested restricted stock unit awards, which will be recognized over a weighted average period of ~~1.52~~1.39 years.

Table of Contents

NOTE 9. EARNINGS PER SHARE

The following table reflects the reconciliation between basic and diluted earnings per share.

Three Months Ended December 31, Six Months Ended December 31,
2020 2019 2020 2019
Net Income $ 71,982 $ 72,098 $ 163,198 $ 161,468
Common share information:
Weighted average shares outstanding for basic earnings per share 76,202 76,879 76,354 76,926
Dilutive effect of stock options and restricted stock 78 56 142 75
Weighted average shares outstanding for diluted earnings per share 76,280 76,935 76,496 77,001
Basic earnings per share $ 0.94 $ 0.94 $ 2.14 $ 2.10
Diluted earnings per share $ 0.94 $ 0.94 $ 2.13 $ 2.10


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Net Income	$	95,670	$	71,982	$	197,783	$	163,198
Common share information:
Weighted average shares outstanding for basic earnings per share1	73,580		76,202		73,798		76,354
Dilutive effect of stock options and restricted stock	117		78		122		142
Weighted average shares outstanding for diluted earnings per share1	73,697		76,280		73,920		76,496
Basic earnings per share2	$	1.30	$	0.94	$	2.68	$	2.14
Diluted earnings per share2	$	1.30	$	0.94	$	2.68	$	2.13

1The change in weighted average shares outstanding is primarily due to the weighted effect of the Company's repurchase of 2,800 shares of common stock during all of fiscal 2021 (675 shares repurchased during the first half of fiscal 2021) and the repurchase of 1,250 shares during fiscal year-to-date 2022.

2Common stock repurchases during the trailing twelve months contributed $0.05 to diluted earnings per share for the second fiscal quarter and $0.09 for year-to-date fiscal 2022.

Per share information is based on the weighted average number of common shares outstanding for the three and six months ended December 31, ~~2020~~2021, and ~~2019.~~2020. Stock options and restricted stock units have been included in the calculation of earnings per share to the extent they are dilutive. There were 2128 and 23 anti-dilutive stock options or restricted stock units excluded for the ~~quarter ended December 31, 2020~~three and ~~50 excluded for the quarter ended December 31, 2019. There were 21 anti-dilutive stock options or restricted stock units excluded for the~~ six months ended December 31, ~~2020~~2021, respectively, and 3721 were excluded for ~~the six months ended December 31, 2019.~~

~~Table of Contents~~

~~NOTE 10. BUSINESS ACQUISITIONS~~

~~Geezeo~~

On July 1, 2019, the Company acquired all of the equity interest of DebtFolio, Inc. ("Geezeo") for $37,776 paid in cash. The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was funded by cash generated from operations. Geezeo is a Boston-based provider of retail and business digital financial management solutions.

Management has completed a purchase price allocation and its assessment of the fair value of acquired assets and liabilities assumed. The recognized amounts of identifiable assets acquired and liabilities assumed, based on their fair values as of July 1, 2019 are set forth below:


~~Current assets~~	$	~~8,925~~
~~Long-term assets~~	~~397~~
~~Identifiable intangible assets~~	~~19,114~~
~~Deferred income tax liability~~	~~(2,593)~~
~~Total other liabilities assumed~~	~~(7,457)~~
~~Total identifiable net assets~~	~~18,386~~
~~Goodwill~~	~~19,390~~
~~Net assets acquired~~	$	~~37,776~~

The goodwill of $19,390 arising from this acquisition consists largely of the growth potential, synergies and economies of scale expected from combining the operations of the Company with those of Geezeo, together with the value of Geezeo's assembled workforce. The goodwill from this acquisition has been allocated to our Complementary segment and is not deductible for income tax purposes.

Identifiable intangible assets from this acquisition consist of customer relationships of $10,522, computer software of $5,791, and other intangible assets of $2,801. The amortization period for acquired customer relationships, computer software, and other intangible assets is 15 years for each.

~~Current assets were inclusive of cash acquired of $7,400. The fair value of current assets acquired included accounts receivable of $1,373, NaN of which were expected to be uncollectible.~~

Costs incurred related to the acquisition of Geezeo in fiscal 2020 totaled $30 for professional services, travel, and other fees, and were expensed as incurred and reported within cost of revenue and selling, general, and administrative expense.

The Company's condensed consolidated statements of income for the three months ended December 31, 2020 included revenue of $3,273 and after-tax net income of $1,156 resulting from Geezeo's operations. The Company's condensed consolidated statements of income for the three months ended December 31, 2019 included revenue of $2,040 and after-tax net income of $140 resulting from Geezeo's operations.

The Company's condensed consolidated statements of income for the six months ended December 31, 2020 included revenue of $6,486 and after-tax net income of $2,222 resulting from Geezeo's operations. The Company's condensed consolidated statements of income for the six months ended December 31, 2019 included revenue of $4,432 and after-tax net income of $178 resulting from Geezeo's operations.

~~The accompanying condensed consolidated statements of income for~~both the three and six months ended December 31, 2020 and 2019 do not include any revenues and expenses related to this acquisition prior to the acquisition date. The impact of this acquisition was considered immaterial to the current and prior periods of our condensed consolidated financial statements and pro forma financial information has not been provided.2020.

NOTE ~~11.~~10. REPORTABLE SEGMENT INFORMATION

The Company is a provider of integrated computer systems that perform data processing (available for on-premise installations or JKHY cloud-based services) for banks and credit unions.

The Company’s operations are classified into 4 reportable segments: Core, Payments, Complementary, and Corporate &and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card transaction processing services, online and mobile bill pay solutions, Automated Clearing House ("ACH") origination and remote deposit capture processing, and risk management products and services. The Complementary segment provides additional software and services that

~~Table of Contents~~

can be integrated with our ~~Core~~core solutions, orand many can be used independently. The Corporate &and Other segment includes hardware revenue and costs, as well as operating costs not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast. Only revenue and costs of revenue are considered in the evaluation for each segment.

~~During the second quarter~~

Table of fiscal 2021, Jack Henry's call center was consolidated into the Complementary segment. As a result of this consolidation, an immaterial adjustment was made during the second quarter of fiscal 2021 to reclassify revenue and related costs recognized during the three and six months ended December, 31, 2019 from the Core to the Complementary segment. The revenue amounts reclassified were $4,845 for three months ended December 31, 2019, and $9,475 for the six months ended December 31, 2019. The cost of revenue amounts reclassified were $2,866 for the three months ended December 31, 2019, and $5,550 for the six months ended December 31, 2019. An additional immaterial adjustment was made after the quarter ended December 31, 2019 to reclassify cost of revenue recognized in the year-to-date period of fiscal 2020 from the Corporate & Other to the Payments segment to be consistent with the current allocation of cost of revenue by segment. The amount reclassified totaled $131 for the three and six months ended December 31, 2019.Contents


		Three Months Ended											Three Months Ended
		December 31, 2020											December 31, 2021
		Core		Payments		Complementary		Corporate & Other		Total			Core		Payments		Complementary		Corporate and Other		Total
REVENUE	REVENUE											REVENUE
Services and Support	Services and Support	$	126,758	$	14,807	$	98,829	$	10,479	$	250,873	Services and Support	$	145,699	$	23,944	$	112,490	$	14,078	$	296,211
Processing	Processing	8,190		140,375		22,579		344		171,488		Processing	9,179		158,584		29,234		688		197,685
Total Revenue	Total Revenue	134,948		155,182		121,408		10,823		422,361		Total Revenue	154,878		182,528		141,724		14,766		493,896

Cost of Revenue	Cost of Revenue	58,519		86,455		52,407		60,401		257,782		Cost of Revenue	64,554		95,570		58,151		64,550		282,825
Research and Development	Research and Development									26,780		Research and Development									29,916
Selling, General, and Administrative	Selling, General, and Administrative									44,167		Selling, General, and Administrative									55,493

Total Expenses	Total Expenses									328,729		Total Expenses									368,234

SEGMENT INCOME	SEGMENT INCOME	$	76,429	$	68,727	$	69,001	$	(49,578)			SEGMENT INCOME	$	90,324	$	86,958	$	83,573	$	(49,784)

OPERATING INCOME	OPERATING INCOME									93,632		OPERATING INCOME									125,662

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									(65)		INTEREST INCOME (EXPENSE)									(441)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES									$	93,567	INCOME BEFORE INCOME TAXES									$	125,221


	Three Months Ended
	December 31, 2020
	Core		Payments		Complementary		Corporate and Other		Total
REVENUE
Services and Support	$	126,758	$	14,807	$	98,829	$	10,479	$	250,873
Processing	8,190		140,375		22,579		344		171,488
Total Revenue	134,948		155,182		121,408		10,823		422,361

Cost of Revenue	58,485		86,455		52,407		60,435		257,782
Research and Development									26,780
Selling, General, and Administrative									44,167


Total Expenses									328,729

SEGMENT INCOME	$	76,463	$	68,727	$	69,001	$	(49,612)

OPERATING INCOME									93,632

INTEREST INCOME (EXPENSE)									(65)

INCOME BEFORE INCOME TAXES									$	93,567

Table of Contents


		Three Months Ended											Six Months Ended
		December 31, 2019											December 31, 2021
		Core		Payments		Complementary		Corporate & Other		Total			Core		Payments		Complementary		Corporate & Other		Total
REVENUE	REVENUE											REVENUE
Services and Support	Services and Support	$	125,937	$	14,829	$	99,323	$	15,115	$	255,204	Services and Support	301,536		39,594		227,443		25,131		593,704
Processing	Processing	7,586		137,216		19,006		107		163,915		Processing	18,627		312,556		55,762		1,303		388,248
Total Revenue	Total Revenue	133,523		152,045		118,329		15,222		419,119		Total Revenue	320,163		352,150		283,205		26,434		981,952

Cost of Revenue	Cost of Revenue	58,377		79,266		50,885		60,739		249,267		Cost of Revenue	131,456		188,795		113,635		125,574		559,460
Research and Development	Research and Development									27,187		Research and Development									56,670
Selling, General, and Administrative	Selling, General, and Administrative									48,961		Selling, General, and Administrative									106,565

Total Expenses	Total Expenses									325,415		Total Expenses									722,695

SEGMENT INCOME	SEGMENT INCOME	$	75,146	$	72,779	$	67,444	$	(45,517)			SEGMENT INCOME	$	188,707	$	163,355	$	169,570	$	(99,140)

OPERATING INCOME	OPERATING INCOME									93,704		OPERATING INCOME									259,257

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									190		INTEREST INCOME (EXPENSE)									(683)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES									$	93,894	INCOME BEFORE INCOME TAXES									$	258,574

Six Months Ended
December 31, 2020
Core Payments Complementary Corporate & Other Total
REVENUE
Services and Support 271,344 31,111 207,378 22,037 531,870
Processing 16,759 280,804 44,384 344 342,291
Total Revenue 288,103 311,915 251,762 22,381 874,161
Cost of Revenue 122,410 172,783 104,431 121,087 520,711
Research and Development 52,837
Selling, General, and Administrative 89,393
Total Expenses 662,941
SEGMENT INCOME $ 165,693 $ 139,132 $ 147,331 $ (98,706)
OPERATING INCOME 211,220
INTEREST INCOME (EXPENSE) (115)
INCOME BEFORE INCOME TAXES $ 211,105

~~Table of Contents~~


		Six Months Ended											Six Months Ended
		December 31, 2019											December 31, 2020
		Core		Payments		Complementary		Corporate & Other		Total			Core		Payments		Complementary		Corporate & Other		Total
REVENUE	REVENUE											REVENUE
Services and Support	Services and Support	$	269,398	$	32,137	$	202,404	$	30,073	$	534,012	Services and Support	$	271,344	$	31,111	$	207,378	$	22,037	$	531,870
Processing	Processing	15,392		269,654		37,750		316		323,112		Processing	16,759		280,804		44,384		344		342,291
Total Revenue	Total Revenue	284,790		301,791		240,154		30,389		857,124		Total Revenue	288,103		311,915		251,762		22,381		874,161

Cost of Revenue	Cost of Revenue	118,999		155,890		100,242		119,927		495,058		Cost of Revenue	122,347		172,783		104,431		121,150		520,711
Research and Development	Research and Development									51,778		Research and Development									52,837
Selling, General, and Administrative	Selling, General, and Administrative									98,396		Selling, General, and Administrative									89,393

Total Expenses	Total Expenses									645,232		Total Expenses									662,941

SEGMENT INCOME	SEGMENT INCOME	$	165,791	$	145,901	$	139,912	$	(89,538)			SEGMENT INCOME	$	165,756	$	139,132	$	147,331	$	(98,769)

OPERATING INCOME	OPERATING INCOME									211,892		OPERATING INCOME									211,220

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									541		INTEREST INCOME (EXPENSE)									(115)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES									$	212,433	INCOME BEFORE INCOME TAXES									$	211,105

The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the Chief Executive Officer, who is also the Chief Operating Decision Maker.

Table of Contents

NOTE ~~12:~~11: SUBSEQUENT EVENTS

None.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q for the fiscal quarter ended December 31, ~~2020.~~2021.

OVERVIEW

Jack Henry & Associates, Inc. ("JKHY") is a leading provider of technology solutions and payment processing services primarily for financial services organizations. Its solutions are marketed and supported through three primary brands. Jack Henry Banking® ~~is a top provider of information and transaction processing~~provides innovative solutions to ~~U.S. banks ranging from~~ community ~~banks~~and regional banks. Symitar® provides industry-leading solutions to ~~multi-billion-dollar asset institutions. Symitar® is a leading provider of information and transaction processing solutions for~~ credit unions of all sizes. ProfitStars® ~~provides~~offers highly specialized ~~products and services that enable~~solutions to financial institutions of every asset size, ~~and charter, and~~as well as diverse corporate entities outside of the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JKHY's integrated solutions are generally available for on-premise installation and delivery in our JKHY private or the public cloud.

Our two primary revenue streams are "services and support" and "processing." Services and support includes: "private and public cloud" fees (formerly known as "outsourcing and cloud" fees - see Note 3 to the condensed consolidated financial statements) that predominantly have contract terms of ~~five~~seven years or longer at inception; "product delivery and services" revenue, which includes revenue from the sales of licenses, implementation services, deconversion fees, consulting, and hardware; and "on-premise support" revenue (formerly known as "in-house support" revenue - see Note 3 to the condensed consolidated financial statements), composed of maintenance fees which primarily contain annual contract terms. Processing revenue includes: "remittance" revenue from payment processing, remote capture, and ACH transactions; "card" fees, including card transaction processing and monthly fees; and "transaction and digital" revenue, which includes transaction and mobile processing fees. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.

All ~~dollar~~ amounts in the following discussion are in thousands, except per share amounts.

COVID-19 Impact and Response

~~In March~~Since its outbreak in early calendar 2020, ~~the World Health Organization declared the outbreak of COVID-19 as a pandemic and the President of the United States declared the outbreak as a national emergency. As~~ COVID-19 has rapidly spread ~~federal, state~~ and local governments have responded by imposing varying degrees of restrictions, including widespread “stay-at-home” orders, social distancing requirements, travel limitations, quarantines, and forced closures or limitations on operations of non-essential businesses. Such restrictions have resulted in significant economic disruptions and uncertainty.

continues to represent a public health concern. The health, safety, and well-being of our employees and customers is of paramount importance to us. In March 2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions. We offered remote working as a recommended option to employees whose job duties ~~allow~~allowed them to work ~~off-site.~~off-site, and we suspended all non-essential business travel. This ~~recommended remote working option is currently~~company-wide recommendation initially extended until ~~at least~~ July 1, 2021, at which point we began transition to a return to our facilities and normalization of travel activities. However, we reimplemented our ~~internal task force will continue~~company-wide recommendation for remote work on August 3, 2021, based on new virus variants and increased infection rates. This remote work recommendation remains in effect as of February 4, 2022. For those employees who are at our facilities, we have introduced enhanced sanitation procedures and require face masks for both vaccinated and unvaccinated employees. We have not required employees who return to ~~evaluate recommending further extensions. Based~~our facilities to receive vaccinations, but we have provided information on ~~guidance from the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, the Company was designated~~vaccine providers, as ~~essential critical infrastructure because~~well as hosted on-site COVID-19 vaccination clinics at several of our ~~support of the financial services industry.~~facilities for our employees and their families. As of February ~~1, 2021,~~4, 2022, the majority of our employees were continuing to work ~~remotely. Our internal task force considers federal, state~~remotely either full time or in a hybrid capacity. Once the remote work recommendation is lifted, individual decisions on returning to the office will be manager-coordinated and ~~local guidance, as well as employee-specific~~based on conversations with specific teams and facility-specific factors, when recommending Company actions. At such time that our internal task force recommends that our remote employees begin to return to our facilities, we have prepared procedures to assist with a safe, gradual and deliberate approach, including a return-to-office training, enhanced sanitation procedures and face mask requirements, which are currently being utilized bydepartments. A large number of our employees ~~who are required~~have requested to ~~be on-site to perform~~remain fully remote or participate in a hybrid approach where they would split their ~~required job functions.~~

~~We have suspended all non-essential~~time between remote and in-person working. While our business travel ~~until at least July 1, 2021, and our internal task force will~~has increased in recent months, we continue to ~~evaluate the need for further extensions. We have put additional safety precautions into place for~~encourage a cautious approach to business travel that is essential. We have also updated the health benefits available to our employees by waiving out-of-pocket expenses related to testing and treatment of COVID-19. Despite the move to a principally remote workforce, we honored our 2020 summer internship program through virtual methods.activities.

Customers

We ~~are working~~work closely with our customers who are scheduled for on-site visits to ensure their needs are met while taking necessary safety precautions when our employees are required to be at a customer site. Delays of customer system installations due to COVID-19 have been limited, and we have developed processes to handle remote

~~Table of Contents~~

installations when available. We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic. However, we have experienced delays related to continuing customer migrations to our new card processing platform. We completed the migrations of our core customers and are on track for the revised schedule for non-core customers by March 31, 2021. We continue to work with our customers to support them during this difficult time, and, to that end, have waived certain late fees in connection with our products and services. We have also enhanced our lending service offerings to support the Paycheck Protection Program (PPP) that was introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been ~~curtailed,~~limited, we have not yet experienced significant disruption to our operations. We

Table of Contents

believe our technological capabilities are well positioned to allow our employees to work remotely ~~for the foreseeable future~~ without materially impacting our business.

Financial impact

We have seen delays in certain product installations due to COVID-19 with the associated revenue pushed from the current period to future periods. These headwinds may continue to impact our license, hardware, installation and pass-through revenues throughout fiscal 2021. Despite the changes and restrictions caused by COVID-19, the overall financial and operational impact on our business has been limited and our liquidity, balance sheet, and business trends remain strong. We experienced positive operating cash flows during fiscal 2021 and the first six months of fiscal ~~2021,~~2022, and we do not expect that to change in the near term. However, we are unable to accurately predict the future impact of COVID-19 due to a number of uncertainties, including further government actions; the duration, severity and recurrence of the ~~outbreak;~~outbreak, including the ~~speed~~onset of variants of the virus; the effectiveness of vaccines against new variants; the development and effectiveness of ~~vaccine and treatment developments;~~treatments; the ~~speed of economic recovery;~~effect on the economy generally; the potential impact to our customers, vendors, and employees; and how the potential impact might affect future customer services, processing and installation-related revenue, and processes and efficiencies within the Company directly or indirectly impacting financial results. We will continue to monitor COVID-19 and its possible impact on the Company and to take steps necessary to protect the health and safety of our employees and customers.

RESULTS OF OPERATIONS

InFor the second quarter of fiscal ~~2021,~~2022, total revenue increased 1%17%, or ~~$3,242,~~$71,535, compared to the same quarter in fiscal 2021. Total revenue less deconversion fee and acquisition and divestiture revenues of $26,903 and $96, respectively, for the current fiscal quarter and less deconversion fee revenues of $2,155 for the prior fiscal ~~year. Adjusting total revenue in both quarters for deconversion fee revenue, which decreased $5,562 to $2,155 and revenue from divestitures from the prior fiscal year~~ quarter, ~~of $1,168,~~ results in ~~a total revenue~~an increase of ~~2% for the~~11%, quarter ~~compared to the same quarter a year ago.~~over quarter. This increase was primarily driven by growth in ~~data~~public and private cloud revenue, card, transaction and digital, and remittance processing revenues, and ~~hosting~~increased implementation fee ~~revenues, as well as growth in Jack Henry digital, remittance, and card processing revenues.~~revenue.

Operating expenses increased 1%12% for the second quarter of fiscal 2022 compared to the second quarter of fiscal ~~2020,~~2021, primarily due to increased direct costs, higher personnel costs, and increased operating licenses and fees. The increase in direct costs was primarily related to our card payment processing platform and Jack Henry digital ~~as well as higher personnel costs partially offset by travel expense savings, including savings generated by holding virtual events,~~ and ~~a gain on disposal of assets.~~were in alignment with the increases in revenue described above. Higher personnel costs were primarily related to ~~a headcount increase of 2% at December 31, 2020 compared to December 31, 2019.~~salary increases in the trailing twelve months.

Operating income ~~remained consistent~~increased 34% for the second quarter of fiscal ~~2021~~2022 compared to the second quarter of fiscal ~~2020. Adjusting~~2021. Operating income less deconversion fee operating income of $24,356 and adjusted for ~~both quarters~~acquisition and divestiture operating loss of $21 for ~~the effects of deconversion fees of $1,919 in~~ the current fiscal quarter, and ~~$6,800 in~~less deconversion fee operating income of $1,919 and a gain on disposals of $2,040 for the prior fiscal ~~year second~~ quarter, ~~a gain on disposal of assets of $2,040 in the current fiscal quarter, and operating income from divestitures from the prior fiscal year quarter of $277,~~ results in a 4%13% increase ~~in operating income~~ for the second quarter of fiscal ~~2021 compared to the same~~2022, quarter ~~a year ago,~~over quarter. This increase in operating income was primarily driven by ~~the~~ revenue growth ~~described above~~ partially offset by increased operating expenses, as detailed above.

The provision for income taxes ~~decreased 1%~~increased 37% for the second quarter of fiscal 2022 compared to the prior fiscal ~~year~~ second quarter. The effective tax rate for the second quarter of fiscal ~~2021~~2022 was ~~23.1%~~23.6% compared to ~~23.2% in~~23.1% for the same quarter a year ago. The increase in the effective tax rate was primarily due to the relative impact of the increase in operating income, quarter over quarter.

~~The~~Due to the above changes, ~~led to~~ net income increased 33% for the second quarter of fiscal ~~2021 that was essentially unchanged~~2022 compared to the second quarter of fiscal ~~2020.~~2021.

InFor the six months ended December 31, ~~2020,~~2021, total revenue increased 2%12%, or ~~$17,037,~~$107,791, over the six months ended December 31, ~~2019. Adjusting total~~2020. Total revenue ~~in both periods for~~less deconversion fee ~~revenue, which decreased $14,566 to~~and acquisition and divestiture revenues of $30,627 and $202, respectively, for the current fiscal year period and deconversion fee and acquisition and divestiture revenues of $8,037 and ~~revenue from divestitures from~~$1,182, respectively, for the prior fiscal year period, ~~of $1,168,~~ results in a 4%10% increase ~~in total revenue~~ for the period compared to the same period a year ago. ~~The~~This total revenue increase was primarily driven by ~~increased data processing and hosting fee revenues, as well as~~ growth in public and private cloud revenue, card, remittance, and transaction and digital processing ~~Jack Henry digital,~~revenues, and ~~remittance revenues.~~

~~Table of Contents~~

increased implementation fee revenue.

Operating expenses for the six months ended December 31, ~~2020~~2021, increased 3%9% compared to the equivalent period in the prior fiscal year, primarily due to increased direct costs, ~~and~~ higher personnel costs, ~~partially offset by travel expense savings, including savings generated by holding virtual events,~~ and ~~a gain on disposal of assets.~~increased operating licenses and fees. The increased direct costs were primarily related to our card payment processing platform and Jack Henry ~~digital.~~digital and were in alignment with the increases in revenue described above. Higher personnel costs were primarily related to ~~a headcount increase of 2% at December 31, 2020 compared to December 31, 2019.~~salary increases in the trailing twelve months.

Operating income ~~remained consistent~~increased 23% for the six months ended December 31, ~~2020~~2021, compared to the ~~same period last fiscal year. Adjusting~~six months ended December 31, 2020. Operating income less deconversion fee operating income of $27,540 and adjusted for ~~both periods~~acquisition and divestiture operating loss of $66 for ~~the effects of deconversion fees of $7,138 in~~ the current fiscal year period, and ~~$20,449 in~~less deconversion fee operating income of $7,138 and income from divestitures and a gain on disposals totaling $2,409 for the prior fiscal

Table of Contents

year period, ~~a gain on disposal of assets of $2,040 in the current fiscal year-to-date period, and operating income from divestitures from the prior fiscal year period of $277,~~ results in a 6%15% increase ~~in operating income~~ for the six months ended December 31, ~~2020~~2021, compared to the same period a year ~~ago,~~ago. This increase was primarily driven by ~~the~~ revenue growth described above partially offset by increased operating expenses, as detailed above.

The provision for income taxes ~~decreased 6%~~increased 27% for the six months ended December 31, 2021, compared to the prior fiscal year-to-date period. The effective tax rate for the six months ended December 31, ~~2020~~2021, was ~~22.7%~~23.5% compared to ~~24.0% in~~22.7% for the prior ~~year~~ fiscal year-to-date period. The ~~decrease~~effective tax rate increase was primarily driven by the ~~difference~~relative impact of the increase in operating income in the current fiscal year-to-date period and a larger excess tax ~~benefits recognized~~benefit received from ~~stock-based~~share-based compensation ~~between~~in the ~~two periods.~~prior fiscal year-to-date period.

The result of the above changes led to ~~increased~~ net income ~~of 1%~~that increased 21% for the six months ended December 31, ~~2020~~2021, compared to the same period in the prior fiscal year.

We move into the third quarter of fiscal ~~2021~~2022 with optimism following strong performance in the second quarter, but with ~~limited visibility of~~some uncertainty as to the future impact of the COVID-19 ~~pandemic.~~pandemic (see "COVID-19 Impact and Response" section above). Significant portions of our business continue to come from recurring revenues and our sales pipeline also remains encouraging. Our customers continue to face regulatory and operational challenges which our products and services address, and in these uncertain times, we believe they have an even greater need for our solutions that directly address institutional profitability, efficiency, and security. Our strong balance sheet, access to extensive lines of credit, the continued strength of our existing lines of revenue, and an unwavering commitment to superior customer service should position us well to address current and future opportunities.

A detailed discussion of the major components of the results of operations for the three and six months ended December 31, ~~2020~~2021, follows. Discussions compare the current fiscal year's three and six months ended December 31, ~~2020~~2021, to the prior fiscal year's three and six months ended December 31, ~~2019.~~2020.

~~REVENUE~~

Services and Support Three Months Ended December 31, %
Change Six Months Ended December 31, %
Change
2020 2019 2020 2019
Services and Support $ 250,873 $ 255,204 (2) % $ 531,870 $ 534,012 — %
Percentage of total revenue 59 % 61 % 61 % 62 %
REVENUE


Services and Support	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
	2021			2020					2021			2020
Services and Support	$	296,211		$	250,873		18	%	$	593,704		$	531,870		12	%
Percentage of total revenue	60		%	59		%			60		%	61		%

Services and support revenue ~~decreased 2% in~~increased 18% for the second quarter of fiscal ~~2021~~2022 compared to the same quarter a year ago. ~~Adjusting~~Total services and support revenue ~~for~~less deconversion fee revenue ~~from each quarter, which was $2,155 in~~for the current ~~fiscal year quarter~~ and ~~$7,717 in the~~ prior fiscal ~~year~~ quarter of $26,903 and ~~revenue from divestitures of $1,167 from the prior fiscal year quarter,~~$2,155, respectively, results in growth of ~~1% in this revenue line~~8%, quarter over ~~quarter~~quarter. This increase was primarily driven by ~~increased~~growth in data processing and hosting ~~fees reflecting a continuing shift of~~fee revenues as new customers were added and volumes continued to ~~our term license model, partially offset by lower pass through revenue related~~expand, as well as higher implementation and conversion/merger revenues when compared to ~~billable travel.~~the prior fiscal quarter.

InFor the six months ended December 31, ~~2020,~~2021, services and support revenue ~~remained consistent~~increased 12% compared to the ~~six months ended December 31, 2019. Adjusting~~same period a year ago. Total services and support revenue ~~for~~less deconversion fee revenue ~~from each period presented, which was $8,037 in~~for the current ~~fiscal year period~~ and ~~$22,603 in the~~ prior fiscal ~~year period,~~periods of $30,627 and $8,037, respectively, and for revenue from acquisitions and divestitures of ~~$1,167~~$1,181 from the prior fiscal year period, results in growth of ~~3% in this revenue line~~8% period over ~~period~~period. This increase was primarily driven by ~~increases~~growth in data processing and hosting ~~fees,~~fee revenues, as new customers were added and volumes continued to expand, as well as ~~increased~~higher implementation fee and software usage ~~revenue partially offset by lower pass through revenue related~~fee revenues when compared to ~~billable travel.~~the prior fiscal period.

Processing Three Months Ended December 31, %
Change Six Months Ended December 31, %
Change
2020 2019 2020 2019
Processing $ 171,488 $ 163,915 5 % $ 342,291 $ 323,112 6 %
Percentage of total revenue 41 % 39 % 39 % 38 %

~~Table of Contents~~


Processing	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
	2021			2020					2021			2020
Processing	$	197,685		$	171,488		15	%	$	388,248		$	342,291		13	%
Percentage of total revenue	40		%	41		%			40		%	39		%

Processing revenue increased ~~5% in~~15% for the second quarter of fiscal ~~2021~~2022 compared to the same quarter ~~last fiscal year.~~a year ago. The increase was ~~primarily~~ driven by ~~higher~~growth in card, ~~processing and~~ Jack Henry digital, ~~revenue due~~and remittance processing revenues, as customers were added and volumes expanded during the fiscal quarter compared to ~~expanding volumes, complemented by increases in~~ the ~~other processing revenue components, quarter over~~prior fiscal quarter.

Each processing revenue component also experienced customer additions and volume growth in the fiscal year-to-date period, leading to an increase in processing revenue of 6%13% for the six months ended December 31, ~~2020~~2021, compared to the six months ended December 31, ~~2019.~~2020.

Table of Contents

OPERATING EXPENSES


Cost of Revenue	Cost of Revenue	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change		Cost of Revenue	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
		2020			2019					2020			2019						2021			2020					2021			2020
Cost of Revenue	Cost of Revenue	$	257,782		$	249,267		3	%	$	520,711		$	495,058		5	%	Cost of Revenue	$	282,825		$	257,782		10	%	$	559,460		$	520,711		7	%
Percentage of total revenue	Percentage of total revenue	61		%	59		%			60		%	58		%			Percentage of total revenue	57		%	61		%			57		%	60		%

Cost of revenue for the second quarter of fiscal ~~2021~~2022 increased 3%10% over the prior fiscal year second quarter. Total cost of revenue less the effects of deconversion fees, which were $1,601 for the current fiscal quarter and $213 for the prior fiscal quarter, and the effects of acquisitions and divestitures of $67 for the current fiscal quarter, results in a 9% increase quarter over quarter. This increase was primarily due to higher direct costs associated with our card processing platform, higher personnel costs, and increased operating licenses and fees. Cost of revenue decreased 4% compared to the prior fiscal quarter as a percentage of total revenue. ~~Adjusting~~

For the current fiscal year-to-date period, cost of revenue ~~for the effects of deconversion fees from each quarter, which were $213 in the current fiscal year quarter and $694 in~~increased 7% over the prior fiscal ~~year quarter, and costs related to divestitures of $720 from the prior fiscal year quarter, results in a 4%~~year-to-date period. This increase in ~~cost of revenue quarter over quarter. This increase~~costs was primarily due to higher costs associated with our card processing platform and ~~higher personnel costs related to increased headcount at December 31, 2020~~operating licenses and fees. Cost of revenue decreased 3% compared to a year ago due to organic growth within our product lines. The increase in costs was partially offset by travel expense savings, including savings generated by holding virtual events, as a result of COVID-19 travel limitations.

~~For~~ the ~~fiscal year-to-date period, cost of revenue increased 5% over the same~~ prior fiscal year-to-date period ~~and increased~~ as a percentage of total revenue. Adjusting cost of revenue for the effects of deconversion fees from each period, which were $649 in the current fiscal year period and $1,931 in the prior fiscal year period, and costs related to divestitures of $720 from the prior fiscal year period, results in a 6% increase in cost of revenue period over period. The increase in costs was due to the factors discussed above for the quarter.


Research and Development	Research and Development	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change		Research and Development	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
		2020			2019					2020			2019						2021			2020					2021			2020
Research and Development	Research and Development	$	26,780		$	27,187		(1)	%	$	52,837		$	51,778		2	%	Research and Development	$	29,916		$	26,780		12	%	$	56,670		$	52,837		7	%
Percentage of total revenue	Percentage of total revenue	6		%	6		%			6		%	6		%			Percentage of total revenue	6		%	6		%			6		%	6		%

Research and development expense ~~decreased 1%~~increased 12% for the second quarter of fiscal ~~2021~~2022 over the prior fiscal ~~year~~ second quarter. The ~~decrease~~increase was primarily due to higher ~~capitalized research and development~~personnel costs, net of capitalization, quarter over quarter. Research and development expense ~~for the quarter~~ remained consistent compared to the prior fiscal ~~year~~second quarter as a percentage of total revenue.

For the current fiscal year-to-date period, research and development expense increased 2%7% over the prior fiscal year-to-date period. The increase ~~for~~was primarily due to higher personnel costs, net of capitalization, period over period. Research and development expense remained consistent compared to the prior fiscal year-to-date period ~~reflected~~as a percentage of total revenue.

The growth of this expense category in both the second quarter and year-to-date fiscal periods reflects our continuing commitment to the development of strategic products. ~~Research and development expense for the six months ended December 31, 2020 remained consistent with the same period a year ago as a percentage of total revenue.~~


Selling, General, and Administrative	Selling, General, and Administrative	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change		Selling, General, and Administrative	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
		2020			2019					2020			2019						2021			2020					2021			2020
Selling, General, and Administrative	Selling, General, and Administrative	$	44,167		$	48,961		(10)	%	$	89,393		$	98,396		(9)	%	Selling, General, and Administrative	$	55,493		$	44,167		26	%	$	106,565		$	89,393		19	%

Percentage of total revenue	Percentage of total revenue	10		%	12		%			10		%	11		%			Percentage of total revenue	11		%	10		%			11		%	10		%

Selling, general, and administrative expense ~~decreased 10%~~increased 26% in the second quarter of fiscal ~~2021~~2022 over the same quarter a year ago. Total selling, general, and administrative expenses less deconversion-related expenses, which were $946 for the current fiscal quarter and $24 for the prior fiscal quarter, and the effects of acquisitions and divestitures of $10 in the current fiscal quarter and an adjustment for gain on disposals in the prior fiscal ~~year. Adjusting~~quarter of $2,040, results in an 18% increase quarter over quarter. This increase was primarily due to higher personnel costs related to a 2% growth in headcount and salary increases in the trailing twelve months. Selling, general, and administrative expense increased 1% as a percentage of total revenue in fiscal second quarter versus the prior fiscal second quarter.

For the fiscal year-to-date period, selling, general, and administrative expense increased 19% over the prior fiscal year-to-date period. Total selling, general, and administrative expenses less deconversion-related expenses from each period, which were $1,149 for the current fiscal period and $250 for the prior fiscal period, and less the effects of ~~deconversion fees from each quarter,~~acquisitions and divestitures, which were ~~$24 in~~$20 for the current fiscal ~~year quarter~~period and ~~$224~~$28 for the prior fiscal period, and adjusted for a gain on disposals of $2,040 in the prior fiscal ~~year quarter,~~period, results in a 16% increase period over period. This increase was primarily due to higher personnel costs related to ~~divestitures of $32 from the prior fiscal year quarter,~~a 2% growth in headcount and ~~a gain on disposal of assets, net, from the current fiscal year quarter of $2,040, results in a 5% decrease in selling, general, and administrative expense quarter over quarter. Personnel cost~~salary increases for the quarter were more than offset by travel expense savings as a result of COVID-19 travel limitations and lower expenses related to our Jack Henry Annual Conference ("JAC") being held virtually this quarter (see "COVID-19 Impact and Response" section above). Selling, general, and

Table of Contents

in the trailing twelve months. Selling, general, and administrative expense ~~decreased~~increased 1% as a percentage of total revenue ~~this fiscal year quarter versus the prior fiscal year quarter.~~

~~For the fiscal year-to-date period, selling, general, and administrative expense decreased 9% over the prior fiscal year-to-date period. Adjusting selling, general, and administrative expense~~ for ~~the effects of deconversion fees from each period, which were $250 in~~ the current fiscal year period and $224 in the prior fiscal year period, costs related to divestitures of $32 from the prior fiscal year period, and a gain on disposal of assets, net, from the current fiscal year period of $2,040, results in a 7% decrease in selling, general, and administrative expense period over period. This decrease was primarily due to the factors listed above for the quarter and included our national sales meeting, JAC, and Symitar Education Conference being held virtually during the current year-to-date period (see “COVID-19 Impact and Response” section above). Selling, general, and administrative expense decreased as a percentage of total revenue this period versus the ~~prior-year~~year-ago fiscal period.


INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)	Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change		INTEREST INCOME (EXPENSE)	Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
		2020		2019				2020		2019					2021		2020				2021		2020
Interest Income	Interest Income	$	52	$	346	(85)	%	$	120	$	853	(86)	%	Interest Income	$	6	$	52	(88)	%	$	13	$	120	(89)	%
Interest Expense	Interest Expense	$	(117)	$	(156)	(25)	%	$	(235)	$	(312)	(25)	%	Interest Expense	$	(447)	$	(117)	282	%	$	(696)	$	(235)	196	%

Interest income fluctuated due to changes in invested balances and yields on invested balances during the second quarter ~~and year-to-date period~~ of fiscal ~~2021~~2022 compared to the ~~same periods~~second quarter a year ago. Interest expense ~~decreased~~increased when compared to the prior fiscal ~~year~~ quarter ~~and fiscal year-to-date period~~ due to interest rate fluctuations, length of borrowing time, and amounts borrowed. There was noa $240,000 outstanding balance under the credit facility at December 31, ~~2020~~2021, and no outstanding balance at December 31, ~~2019.~~2020. The credit facility balance increase was primarily due to the increase in the Company's repurchases of common stock for the treasury during the trailing twelve months.

PROVISION FOR INCOME TAXES Three Months Ended December 31, %
Change Six Months Ended December 31, %
Change
2020 2019 2020 2019
Provision for Income Taxes $ 21,585 $ 21,796 (1) % $ 47,907 $ 50,965 (6) %
Effective Rate 23.1 % 23.2 % 22.7 % 24.0 %


PROVISION FOR INCOME TAXES	Three Months Ended December 31,						% Change		Six Months Ended December 31,						% Change
	2021			2020					2021			2020
Provision for Income Taxes	$	29,551		$	21,585		37	%	$	60,791		$	47,907		27	%
Effective Rate	23.6		%	23.1		%			23.5		%	22.7		%

The ~~decrease~~increase in the effective tax rate for the second quarter of fiscal 2022 compared to the same quarter a year ago was primarily due to the relative impact of the increase in operating income, quarter over quarter.

The increase in effective tax rate for the ~~three and six month periods ended December 31, 2020~~current fiscal year-to-date period compared to the ~~same periods in the~~ prior fiscal ~~year~~year-to-date period was primarily due to the ~~difference in~~relative impact of the increase in operating income in the current fiscal period and a larger excess tax benefit received from share-based compensation ~~that vested during each of~~in the ~~periods.~~prior fiscal period.

~~NET INCOME~~


NET INCOME	Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
	2021		2020				2021		2020
Net income	$	95,670	$	71,982	33	%	$	197,783	$	163,198	21	%
Diluted earnings per share	$	1.30	$	0.94			$	2.68	$	2.13

Net income ~~remained consistent at $71,982,~~increased 33% to $95,670, or ~~$0.94~~$1.30 per diluted share, for the second quarter of fiscal ~~2021~~2022 compared to ~~$72,098,~~$71,982, or $0.94 per diluted share in the ~~same~~prior fiscal second quarter, ~~of fiscal 2020.~~resulting in a 38% increase in diluted earnings per share.

Net income increased 1%21% to $197,783, or $2.68 per diluted share, for the current fiscal year-to-date period, compared to $163,198, or $2.13 per diluted share ~~for~~in the ~~six months ended December 31, 2020, compared to $161,468, or $2.10 per diluted share, for the six months ended December 31, 2019,~~prior fiscal year-to-date period, resulting in a 2%25% increase in diluted earnings per share. The increase in net income was primarily attributable to the growth in our lines of revenue, the recognition of travel expense savings, and a lower effective tax rate partially offset by the increase in cost of revenue related to the organic growth in our product lines, as well as lower deconversion fee revenue during the period.

REPORTABLE SEGMENT DISCUSSION

The Company is a leading provider of technology solutions and payment processing services primarily for financial services organizations.

The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services; online and mobile bill pay solutions; ACH origination and remote deposit capture processing; and risk management products and services. The Complementary segment provides additional software, hosted processing platforms, and services, including call center support, and network security management, consulting, and monitoring, that can be integrated with our core solutions, orand many can be used independently. The Corporate and Other segment includes revenue and costs from hardware and other products not attributed to any of the other three segments, as well as operating costs not directly attributable to the other three segments.

Table of Contents


Core	Core													Core
		Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change			Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
		2020		2019				2020		2019					2021		2020				2021		2020
Revenue	Revenue	$	134,948	$	133,523	1	%	$	288,103	$	284,790	1	%	Revenue	$	154,878	$	134,948	15	%	$	320,163	$	288,103	11	%
Cost of Revenue	Cost of Revenue	$	58,519	$	58,377	—	%	$	122,410	$	118,999	3	%	Cost of Revenue	$	64,554	$	58,485	10	%	$	131,456	$	122,347	7	%

Revenue in the Core segment increased 1%15% and cost of revenue ~~remained consistent~~increased 10% for the three months ended December 31, ~~2020~~2021, compared to the three months ended December 31, ~~2019. Adjusting~~2020. Core revenue less deconversion fee revenue for the second quarter of $10,853 and less deconversion fee revenue of $882 for the prior fiscal second quarter, results in a 7% increase, quarter over quarter. This increase was primarily driven by growth in data processing and hosting fee revenue. Cost of revenue decreased 2% as a percentage of revenue for the second quarter of fiscal 2022 compared to the prior fiscal second quarter.

For the six months ended December 31, 2021, revenue in the Core segment increased 11% compared to the prior fiscal year-to-date period. Core revenue less deconversion fee revenue in both periods, which totaled ~~$882~~$13,021 for the ~~second quarter of~~current fiscal ~~2021~~period and ~~$3,516~~$2,934 for the ~~second quarter of~~prior fiscal ~~2020~~period and revenue from acquisitions and divestitures of ~~$1,168~~$1,182 from the prior ~~year quarter,~~fiscal period, results in ~~a 4%~~an 8% increase, ~~in Core segment revenue quarter~~period over ~~quarter. The~~period. This increase ~~in Core revenue over the prior fiscal year quarter~~ was primarily driven by the growth in data processing and hosting fee ~~revenue as well as increased software usage fee~~ revenue. Cost of revenue ~~remained consistent as a percentage of revenue for the second quarter of fiscal 2021 compared to the same quarter of fiscal 2020.~~

For the six months ended December 31, 2020, revenue in the Core segment increased 1% compared to the prior fiscal year-to-date period. Adjusting Core revenue for deconversion fee revenue in both periods, which totaled $2,934 for the year-to-date period of fiscal 2021 and $10,615 for the year-to-date period of fiscal 2020 and revenue from divestitures of $1,168 from the prior year period, results in a 4% increase in Core segment revenue period over period. This increase in Core revenue over the prior fiscal year-to-date period was primarily driven by the growth in data processing and hosting fees as well as increased software usage fee revenue. Cost of revenue increased 3% period over period primarily due to increased direct support costs. Cost of revenue increaseddecreased 1% as a percentage of revenue for year-to-date fiscal ~~2021~~2022 compared to the ~~same period of fiscal 2020.~~year-ago period.


Payments	Payments													Payments
		Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change			Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
		2020		2019				2020		2019					2021		2020				2021		2020
Revenue	Revenue	$	155,182	$	152,045	2	%	$	311,915	$	301,791	3	%	Revenue	$	182,528	$	155,182	18	%	$	352,150	$	311,915	13	%
Cost of Revenue	Cost of Revenue	$	86,455	$	79,266	9	%	$	172,783	$	155,890	11	%	Cost of Revenue	$	95,570	$	86,455	11	%	$	188,795	$	172,783	9	%

Revenue in the Payments segment increased 2%18% for the second quarter of fiscal ~~2021~~2022 compared to the ~~equivalent quarter of the~~ prior fiscal ~~year. Adjusting~~quarter. Payments revenue ~~for~~less deconversion fee revenue in both periods, which totaled ~~$674~~$7,933 for the second quarter of fiscal ~~2021~~2022 and ~~$2,066~~$674 for the prior fiscal second quarter, ~~of fiscal 2020,~~ results in a 3%13% increase, ~~in Payments segment revenue~~ quarter over quarter. ~~Payments revenue~~This growth was primarily due to increased card and remittance fee revenue within processing. Cost of revenue ~~increased 9% quarter over quarter primarily due to increased costs related to our credit and debit card processing platform. Cost of revenue~~decreased 3% as a percentage of revenue ~~increased 4%~~ for the second quarter of fiscal ~~2021~~2022 compared to the same quarter of fiscal ~~2020.~~2021.

For the six months ended December 31, ~~2020,~~2021, revenue in the Payments segment increased 3%13% compared to the same period ~~last fiscal year. Adjusting~~a year ago. Payments revenue ~~for~~less deconversion fee revenue in both periods, which totaled $8,381 for year-to-date fiscal 2022 and $2,521 for year-to-date fiscal 2021, ~~and $7,036 for year-to-date fiscal 2020,~~ results in ~~a 5%~~an 11% increase ~~in Payments revenue~~ period over period. This Payments revenue growth was primarily due to increased card and remittance revenue within processing. Cost of revenue ~~increased 11% period over period primarily due~~as a percentage of revenue decreased 2% for year-to-date fiscal 2022 compared to the same ~~factors as~~period of fiscal 2021.


Complementary
	Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
	2021		2020				2021		2020
Revenue	$	141,724	$	121,408	17	%	$	283,205	$	251,762	12	%
Cost of Revenue	$	58,151	$	52,407	11	%	$	113,635	$	104,431	9	%

Revenue in the Complementary segment increased 17% for the second quarter ~~increase.~~of fiscal 2022 compared to the same quarter of the prior fiscal year. Complementary revenue less deconversion fee revenue in both periods, which totaled $7,917 for the second quarter of fiscal 2022 and $509 for the prior fiscal second quarter, and less acquisitions and divestitures revenue in the current quarter of $96, results in an 11% increase, quarter over quarter. This growth was primarily driven by growth in Jack Henry digital and hosting fee revenues. Cost of revenue as a percentage of revenue ~~increased 4% for year-to-date fiscal 2021 compared to the same period of fiscal 2020.~~

Complementary
Three Months Ended December 31, % Change Six Months Ended December 31, % Change
2020 2019 2020 2019
Revenue $ 121,408 $ 118,329 3 % $ 251,762 $ 240,154 5 %
Cost of Revenue $ 52,407 $ 50,885 3 % $ 104,431 $ 100,242 4 %

~~Revenue in the Complementary segment increased 3%~~decreased 2% for the second quarter of fiscal ~~2021~~2022 compared to the ~~equivalent~~same quarter of fiscal 2021.

For the ~~prior~~six months ended December 31, 2021, revenue in the Complementary segment increased 12% compared to the same period last fiscal year. ~~Adjusting~~ Complementary revenue ~~for~~less deconversion fee revenue in both periods, which totaled $509 for the second quarter of fiscal 2021 and $2,100 for the second quarter of fiscal 2020, results in a 4% increase in Complementary segment revenue quarter over quarter. Complementary revenue growth

Table of Contents

~~was primarily driven by increased Jack Henry digital revenue~~totaled $9,014 for year-to-date fiscal 2022 and higher hosting fee revenue. Cost of revenue increased 3% quarter over quarter primarily due to increased licenses and fees expense, personnel costs, and amortization. Cost of revenue as a percentage of revenue remained consistent for the second quarter of fiscal 2021 compared to the same quarter of fiscal 2020.

For the six months ended December 31, 2020, revenue in the Complementary segment increased 5% compared to the same period last fiscal year. Adjusting Complementary revenue for deconversion fee revenue in both periods, which totaled $2,509 for year-to-date fiscal 2021, and ~~$4,902 for~~less acquisitions and divestitures revenue in the current fiscal year-to-date ~~fiscal 2020,~~period of $202, results in a 6%10% increase ~~in Complementary segment revenue~~ period over period. ~~The~~This increase in Complementary revenue was primarily driven by ~~increased~~growth in Jack Henry digital ~~revenue~~ and ~~higher~~ hosting fee ~~revenue.~~revenues. Cost of revenue ~~increased 4% period over period primarily due to the same factors as the quarter increase. Cost of revenue~~decreased 1% as a percentage of revenue ~~remained consistent~~ for year-to-date fiscal ~~2021~~2022 compared to the same period of fiscal ~~2020.~~2021.


Corporate and Other	Corporate and Other													Corporate and Other
		Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change			Three Months Ended December 31,				% Change		Six Months Ended December 31,				% Change
		2020		2019				2020		2019					2021		2020				2021		2020
Revenue	Revenue	$	10,823	$	15,222	(29)	%	$	22,381	$	30,389	(26)	%	Revenue	$	14,766	$	10,823	36	%	$	26,434	$	22,381	18	%
Cost of Revenue	Cost of Revenue	$	60,401	$	60,739	(1)	%	$	121,087	$	119,927	1	%	Cost of Revenue	$	64,550	$	60,435	7	%	$	125,574	$	121,150	4	%

Revenue in the Corporate and Other segment ~~decreased 29%~~increased 36% for the second quarter of fiscal ~~2021~~2022 compared to the ~~equivalent~~same quarter of the prior fiscal year and ~~decreased 26%~~increased 18% for the fiscal year-to-date period compared to the prior fiscal year-to-date period. The ~~decrease quarter over quarter and period over period~~quarter-over-quarter increase was primarily due to ~~lower~~higher services and support revenue, including an increase in hardware ~~and pass-through revenues.~~revenue. Revenue classified in the Corporate and Other segment includes revenue from other products and services and hardware not specifically attributed to any of the other three segments.

Cost of revenue for the Corporate and Other segment includes operating cost not directly attributable to any of the other three segments. The decreased cost of revenue in the second quarter of fiscal 2021 of 1% was primarily due to lower hardware costs partially offset by higher other operating expenses. The increased cost of revenue for the fiscal ~~2021~~2022 second quarter and year-to-date ~~period~~periods of 1%7% and 4%, respectively, when compared to the prior respective fiscal periods, was primarily due to higher ~~other~~ operating ~~expenses partially offset by lower hardware costs.~~licenses and fees for both comparisons.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to ~~$147,762~~$29,120 at December 31, ~~2020~~2021, from ~~$213,345~~$50,992 at June 30, ~~2020.~~2021.

The following table summarizes net cash from operating activities in the statement of cash flows:


		Six Months Ended					Six Months Ended
		December 31,					December 31,
		2020		2019			2021		2020
Net income	Net income	$	163,198	$	161,468	Net income	$	197,783	$	163,198
Non-cash expenses	Non-cash expenses	104,200		95,266		Non-cash expenses	113,293		104,200
Change in receivables	Change in receivables	87,518		106,782		Change in receivables	70,468		87,518
Change in deferred revenue	Change in deferred revenue	(126,134)		(117,489)		Change in deferred revenue	(119,822)		(126,134)
Change in other assets and liabilities	Change in other assets and liabilities	(34,798)		(31,014)		Change in other assets and liabilities	(64,371)		(34,798)
Net cash provided by operating activities	Net cash provided by operating activities	$	193,984	$	215,013	Net cash provided by operating activities	$	197,351	$	193,984

Cash provided by operating activities for the first six months of fiscal ~~2021 decreased 10%~~2022 increased 2% compared to the same period last year. Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, and for capital expenditures.

Cash used in investing activities for the first six months of fiscal ~~2021~~2022 totaled ~~$82,544~~$101,052 and included: ~~$62,804~~$71,353 for the ongoing enhancements and development of existing and new product and service offerings; ~~the purchase of investments including Autobooks of $7,250 and certificates of deposit of $5,000;~~ capital expenditures on facilities and equipment of $22,373; and $7,364 for the purchase and development of internal use software. Uses of cash were partially offset by proceeds from dispositions of $38. Cash used in investing activities for the first six months of fiscal 2021 totaled $82,544 and included: $62,804 for the development of software; $12,100 for purchase of investments; capital expenditures of $9,543; and $4,254 for the purchase and development of internal use software. ~~This was~~Uses of cash were partially offset by ~~$6,157 of~~ proceeds from ~~dispositions. Cash~~dispositions of $6,157.

Financing activities used ~~in investing activities~~cash of $118,171 for the first six months of fiscal ~~2020 totaled $125,395~~2022 and included ~~$57,886~~$193,917 for the development of software; capital expenditures of $30,758; $30,376, net of cash acquired, for the acquisition of Geezeo; $5,551 for the purchase and development of internal use software; and $1,150 for the purchase of investments. This was partially offset by $326 of proceeds from the sale of assets.

~~Financing activities used cash of $177,023 for the first six months of fiscal 2021, including $109,899 for the purchase~~purchases of treasury ~~shares, dividends paid to stockholders of $65,516, $1,551 net cash outflow from~~stock; $80,065 repayment on the ~~issuance of stock~~revolving credit facility and ~~tax withholding related to stock-based compensation, and $57 for~~ payments on financing ~~leases. Financing activities used cash in the first six months of fiscal 2020 totaled $110,733, which included $61,502~~leases, and $67,696 for the payment of dividends ~~$51,210 for the purchase~~to stockholders. Uses of ~~treasury shares,~~cash were partially offset by borrowings on credit facilities of $220,000 and ~~$1,979~~$3,507 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. Financing activities used cash of $177,023 in the first six months of fiscal 2021 and included: $109,899 for the purchase of treasury shares; $65,516 for the payment of dividends to stockholders; $1,551 from

the issuance of stock and tax withholding related to stock-based compensation; and $57 for payments on financing leases.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling ~~$9,543~~$22,373 and ~~$30,758~~$9,543 for the six months ended December 31, ~~2020~~2021, and December 31, ~~2019,~~2020, respectively, were made primarily for additional equipment and the improvement of existing facilities. These additions were primarily funded from cash generated by operations. Total consolidated capital expenditures on facilities and equipment for the Company for fiscal year ~~2021~~2022 are not expected to exceed ~~$58,000~~$52,000 and will be primarily funded from cash generated by operations.

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing ~~line-of-credit.~~line of credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At December 31, ~~2020,~~2021, there were ~~27,668~~31,043 shares of treasury stock, and the Company had the remaining authority to repurchase up to 3,948 additional shares. The total cost of treasury shares at December 31, 2021, was $1,807,119. During the first six months of fiscal 2022, the Company repurchased 1,250 shares for the treasury. At June 30, 2021, there were 29,793 shares in treasury stock and the Company had the remaining authority to repurchase up to ~~2,323~~5,198 additional shares. The total cost of treasury shares at ~~December 31, 2020 is $1,291,572.~~June 30, 2021, was $1,613,202. During the first six months of fiscal 2021, the Company repurchased 675 ~~treasury shares. At June 30, 2020, there were 26,993~~ shares infor the treasury ~~stock~~ and, the Company ~~had authority to repurchase up to 2,998 additional shares.~~repurchased 2,800 shares for the treasury during all of fiscal 2021.

Revolving credit facility

On February 10, 2020, the Company entered into a five-year senior, unsecured revolving credit facility. The credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $700,000. The credit facility bears interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the ~~Prime Rate~~U.S. Bank prime rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit facility agreement. As of December 31, ~~2020,~~2021, the Company was in compliance with all such covenants. The revolving credit facility terminates February 10, 2025. There was noa $240,000 outstanding balance under the credit facility at December 31, ~~2020 or~~2021, and $100,000 outstanding balance at June 30, ~~2020.~~2021. The increase in the outstanding credit facility balance was primarily due to the increase in the Company's repurchases of common stock during the current fiscal year-to-date period compared to repurchases during the prior fiscal year-to-date period.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line ~~was renewed in May 2019 and~~ expires on April 30, ~~2021. At~~2023. There was no balance outstanding at December 31, ~~2020~~2021, and June 30, ~~2020, no amount was outstanding.~~2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Dollar amounts in this item are in thousands.

Market risk refers to the risk that a change in the level of one or more market prices, interest rates, indices, volatilities, correlations or other market factors such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are currently exposed to credit risk on credit extended to customers and at times are exposed to interest rate risk on outstanding debt. We do not currently use any derivative financial instruments. We actively monitor these risks through a variety of controlled procedures involving senior management.

Based on the controls in place and the credit worthiness of the customer base, we believe the credit risk associated with the extension of credit to our customers will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

We have no$240,000 outstanding debt with variable interest rates as of December 31, ~~2020~~2021, and ~~are therefore not currently exposed to~~a 1% increase in our borrowing rate would increase our annual interest ~~rate risk.~~expense by $2,400.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of our management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation (required in Exchange Act Rules 13a-15(b) and 15d-15(b)), the CEO and CFO concluded that our disclosure controls and procedures are effective to ~~ensure~~provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information ~~that is~~ required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended December 31, ~~2020,~~2021, there were no changes in internal control over financial reporting which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various routine legal proceedings and claims arising in the ordinary course of our business. In the opinion of management, any liabilities resulting from current lawsuits are not expected, either individually or in the aggregate, to have a material adverse effect on our consolidated financial statements. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.

Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following shares of the Company were repurchased during the fiscal quarter ended December 31, ~~2020:~~

Total Number of Shares Purchased (1)
Average Price of Share Total Number of Shares Purchased as Part of Publicly Announced Plans
Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
October 1- October 31, 2020 — — — 2,597,713
November 1- November 30, 2020 250,000 $ 159.88 250,000 2,347,713
December 1- December 31, 2020 25,000 162.24 25,000 2,322,713
Total 275,000 160.10 275,000 2,322,713
2021:


	Total Number of Shares Purchased	Average Price of Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans (1)
October 1 - October 31, 2021	—	$	—	—	5,197,713
November 1 - November 30, 2021	800,000	154.44		800,000	4,397,713
December 1 - December 31, 2021	450,000	156.37		450,000	3,947,713
Total	1,250,000	155.13		1,250,000	3,947,713

(1) ~~275,000 shares were purchased through a publicly announced repurchase plan.~~

~~Table of Contents~~

~~(2)~~ Total stock repurchase authorizations approved by the Company's Board of Directors as of ~~February~~May 17, ~~2015~~2021 were for 3035 million shares. ~~These~~The Company has repurchased 31,042,903 shares under these authorizations. The authorizations have no specific dollar or share price targets and no expiration dates.

Table of Contents

ITEM 6. EXHIBITS

~~3.1.8~~ ~~Restated Certificate of Incorporation~~ ~~of Jack Henry & Associates, Inc.~~

~~10.67~~ ~~Aircraft~~ ~~Time~~ ~~Sharing~~ ~~Agreement~~

31.1 Certification of the Chief Executive Officer.

31.2 Certification of the Chief Financial Officer.

32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS* XBRL Instance Document- the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Furnished with this quarterly report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at December 31, ~~2020~~2021, and June 30, ~~2020,~~2021, (ii) the Condensed Consolidated Statements of Income for the three and six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended December 31, ~~2020~~2021, and ~~2019,~~2020, and (v) Notes to Condensed Consolidated Financial Statements.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


		JACK HENRY & ASSOCIATES, INC.

Date:	February 9, ~~2021~~2022	/s/ David B. Foss
		David B. Foss
		Board Chair and Chief Executive Officer ~~and President~~

Date:	February 9, ~~2021~~2022	/s/ Kevin D. Williams
		Kevin D. Williams
		Chief Financial Officer and Treasurer


	Compensation Peer Group		S&P 1500 IT Index
Volatility	25.17	%	25.17	%
Risk free interest rate	0.11	%	0.11	%
Annual dividend based on most recent quarterly dividend	1.72		1.72
Beginning TSR	37	%	30	%


	Total Number of Shares Purchased (1)	Average Price of Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
October 1- October 31, 2020	—	—		—	2,597,713
November 1- November 30, 2020	250,000	$	159.88	250,000	2,347,713
December 1- December 31, 2020	25,000	162.24		25,000	2,322,713
Total	275,000	160.10		275,000	2,322,713