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 ~~March 31,~~September 30, 2022


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 ~~April~~October 28, 2022, the Registrant had ~~72,861,807~~72,949,433 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 ~~March 31,~~September 30, 2022, and June 30, ~~2021~~2022 (Unaudited)	4

	Condensed Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2119

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	2925

ITEM 4.	Controls and Procedures	2925

PART II	OTHER INFORMATION	2925

ITEM 1.	Legal Proceedings	2925



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3025

ITEM 6.	Exhibits	3127

	Signatures	3228

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, ~~2021,~~2022, 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 (Unaudited)						CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(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)

		March 31, 2022		June 30, 2021			September 30, 2022		June 30, 2022

ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	39,797	$	50,992	Cash and cash equivalents	$	31,970	$	48,787
Receivables, net	Receivables, net	222,696		306,564		Receivables, net	247,541		348,072
Income tax receivable	Income tax receivable	4,958		30,243		Income tax receivable	—		13,822
Prepaid expenses and other	Prepaid expenses and other	126,174		109,723		Prepaid expenses and other	134,539		125,537
Deferred costs	Deferred costs	57,072		46,215		Deferred costs	71,047		57,105
Assets held for sale	Assets held for sale	20,201		—		Assets held for sale	—		20,201
Total current assets	Total current assets	470,898		543,737		Total current assets	485,097		613,524
PROPERTY AND EQUIPMENT, net	PROPERTY AND EQUIPMENT, net	215,331		252,481		PROPERTY AND EQUIPMENT, net	208,307		211,709
OTHER ASSETS:	OTHER ASSETS:					OTHER ASSETS:
Non-current deferred costs	Non-current deferred costs	136,425		127,205		Non-current deferred costs	148,445		143,750
Computer software, net of amortization	Computer software, net of amortization	398,760		368,094		Computer software, net of amortization	534,488		410,957
Other non-current assets	Other non-current assets	263,937		249,210		Other non-current assets	300,924		293,526
Customer relationships, net of amortization	Customer relationships, net of amortization	72,541		81,842		Customer relationships, net of amortization	72,482		69,503
Other intangible assets, net of amortization	Other intangible assets, net of amortization	26,753		26,129		Other intangible assets, net of amortization	24,562		25,137
Goodwill	Goodwill	687,458		687,458		Goodwill	804,155		687,458
Total other assets	Total other assets	1,585,874		1,539,938		Total other assets	1,885,056		1,630,331
Total assets	Total assets	$	2,272,103	$	2,336,156	Total assets	$	2,578,460	$	2,455,564
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable	Accounts payable	$	14,415	$	18,485	Accounts payable	$	20,445	$	21,034
Accrued expenses	Accrued expenses	155,476		182,517		Accrued expenses	147,679		192,042

Accrued income taxes						Accrued income taxes	27,394		—
Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	101		110		Notes payable and current maturities of long-term debt	41		67
Deferred revenues	Deferred revenues	150,169		319,748		Deferred revenues	274,772		330,687
Total current liabilities	Total current liabilities	320,161		520,860		Total current liabilities	470,331		543,830
LONG-TERM LIABILITIES:	LONG-TERM LIABILITIES:					LONG-TERM LIABILITIES:
Non-current deferred revenues	Non-current deferred revenues	67,444		75,852		Non-current deferred revenues	70,374		71,485
Deferred income tax liability	Deferred income tax liability	276,439		260,758		Deferred income tax liability	280,285		292,630
Debt, net of current maturities	Debt, net of current maturities	225,002		100,083		Debt, net of current maturities	245,000		115,000
Other long-term liabilities	Other long-term liabilities	54,449		59,311		Other long-term liabilities	51,332		50,996
Total long-term liabilities	Total long-term liabilities	623,334		496,004		Total long-term liabilities	646,991		530,111
Total liabilities	Total liabilities	943,495		1,016,864		Total liabilities	1,117,322		1,073,941
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY					STOCKHOLDERS' EQUITY
Preferred stock -$1 par value; 500,000 shares authorized, none issued		—		—
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,895,934 shares issued at March 31, 2022; 103,795,169 shares issued at June 30, 2021		1,039		1,038
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; 103,953,128 shares issued at September 30, 2022; 103,921,724 shares issued at June 30, 2022						Common stock - $0.01 par value; 250,000,000 shares authorized; 103,953,128 shares issued at September 30, 2022; 103,921,724 shares issued at June 30, 2022	1,040		1,039
Additional paid-in capital	Additional paid-in capital	543,077		518,960		Additional paid-in capital	560,034		551,360
Retained earnings	Retained earnings	2,591,610		2,412,496		Retained earnings	2,707,182		2,636,342
Less treasury stock at cost 31,042,903 shares at March 31, 2022; 29,792,903 shares at June 30, 2021		(1,807,118)		(1,613,202)
Less treasury stock at cost 31,042,903 shares at September 30, 2022; 31,042,903 shares at June 30, 2022						Less treasury stock at cost 31,042,903 shares at September 30, 2022; 31,042,903 shares at June 30, 2022	(1,807,118)		(1,807,118)
Total stockholders' equity	Total stockholders' equity	1,328,608		1,319,292		Total stockholders' equity	1,461,138		1,381,623
Total liabilities and equity	Total liabilities and equity	$	2,272,103	$	2,336,156	Total liabilities and equity	$	2,578,460	$	2,455,564

See notes to condensed consolidated financial ~~statements.~~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 INCOME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)										CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In Thousands, Except Per Share Data)	(In Thousands, Except Per Share Data)									(In Thousands, Except Per Share Data)
(Unaudited)

		Three Months Ended				Nine Months Ended					Three Months Ended
		March 31,				March 31,					September 30,
		2022		2021		2022		2021			2022		2021

REVENUE	REVENUE	$	478,260	$	433,776	$	1,460,212	$	1,307,938	REVENUE	$	529,202	$	488,056

EXPENSES	EXPENSES									EXPENSES
Cost of Revenue	Cost of Revenue	282,339		267,770		841,799		788,481		Cost of Revenue	298,261		276,636
Research and Development	Research and Development	30,725		27,395		87,394		80,233		Research and Development	32,993		26,754
Selling, General, and Administrative	Selling, General, and Administrative	53,607		47,408		160,172		136,801		Selling, General, and Administrative	57,225		51,071

Total Expenses	Total Expenses	366,671		342,573		1,089,365		1,005,515		Total Expenses	388,479		354,461

OPERATING INCOME	OPERATING INCOME	111,589		91,203		370,847		302,423		OPERATING INCOME	140,723		133,595

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									INTEREST INCOME (EXPENSE)
Interest Income	Interest Income	3		24		16		144		Interest Income	152		7
Interest Expense	Interest Expense	(691)		(290)		(1,387)		(525)		Interest Expense	(1,576)		(248)
Total Interest Income (Expense)	Total Interest Income (Expense)	(688)		(266)		(1,371)		(381)		Total Interest Income (Expense)	(1,424)		(241)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	110,901		90,937		369,476		302,042		INCOME BEFORE INCOME TAXES	139,299		133,354

PROVISION FOR INCOME TAXES	PROVISION FOR INCOME TAXES	26,194		19,528		86,986		67,435		PROVISION FOR INCOME TAXES	32,750		31,240

NET INCOME	NET INCOME	$	84,707	$	71,409	$	282,490	$	234,607	NET INCOME	$	106,549	$	102,114

Basic earnings per share	Basic earnings per share	$	1.16	$	0.95	$	3.84	$	3.09	Basic earnings per share	$	1.46	$	1.38
Basic weighted average shares outstanding	Basic weighted average shares outstanding	72,835		75,357		73,477		76,022		Basic weighted average shares outstanding	72,896		74,016

Diluted earnings per share	Diluted earnings per share	$	1.16	$	0.95	$	3.84	$	3.08	Diluted earnings per share	$	1.46	$	1.38
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	73,019		75,431		73,619		76,141		Diluted weighted average shares outstanding	73,138		74,142

See notes to condensed consolidated financial ~~statements.~~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 CHANGES IN STOCKHOLDERS' EQUITY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)										CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
(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)

		Three Months Ended				Nine Months Ended					Three Months Ended
		March 31,				March 31,					September 30,
		2022		2021		2022		2021			2022		2021
PREFERRED SHARES:	PREFERRED SHARES:	—		—		—		—		PREFERRED SHARES:	—		—

COMMON SHARES:	COMMON SHARES:									COMMON SHARES:
Shares, beginning of period	Shares, beginning of period	103,860,246		103,736,703		103,795,169		103,622,563		Shares, beginning of period	103,921,724		103,795,169
Shares issued for equity-based payment arrangements	Shares issued for equity-based payment arrangements	15,053		6,479		41,586		84,893		Shares issued for equity-based payment arrangements	12,141		5,432
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	20,635		22,596		59,179		58,322		Shares issued for Employee Stock Purchase Plan	19,263		21,664
Shares, end of period	Shares, end of period	103,895,934		103,765,778		103,895,934		103,765,778		Shares, end of period	103,953,128		103,822,265

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

Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	—		1		1		1		Shares issued for Employee Stock Purchase Plan	1		—
Balance, end of period	Balance, end of period	$	1,039	$	1,038	$	1,039	$	1,038	Balance, end of period	$	1,040	$	1,038

ADDITIONAL PAID-IN CAPITAL:	ADDITIONAL PAID-IN CAPITAL:									ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	Balance, beginning of period	$	535,493	$	503,205	$	518,960	$	495,005	Balance, beginning of period	$	551,360	$	518,960
Shares issued for equity-based payment arrangements		—		—		—		(1)

Tax withholding related to share-based compensation	Tax withholding related to share-based compensation	(1,711)		(493)		(3,709)		(7,181)		Tax withholding related to share-based compensation	(1,556)		(953)
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	3,019		2,881		8,523		8,018		Shares issued for Employee Stock Purchase Plan	3,232		3,177
Stock-based compensation expense	Stock-based compensation expense	6,276		5,207		19,303		14,959		Stock-based compensation expense	6,998		6,071
Balance, end of period	Balance, end of period	$	543,077	$	510,800	$	543,077	$	510,800	Balance, end of period	$	560,034	$	527,255

RETAINED EARNINGS:	RETAINED EARNINGS:									RETAINED EARNINGS:
Balance, beginning of period	Balance, beginning of period	$	2,542,583	$	2,332,509	$	2,412,496	$	2,235,320	Balance, beginning of period	$	2,636,342	$	2,412,496
Cumulative effect of Accounting Standards Update adoption (Note 1)		—		—		—		(493)

Net income	Net income	84,707		71,409		282,490		234,607		Net income	106,549		102,114
Dividends	Dividends	(35,680)		(34,262)		(103,376)		(99,778)		Dividends	(35,709)		(34,036)
Balance, end of period	Balance, end of period	$	2,591,610	$	2,369,656	$	2,591,610	$	2,369,656	Balance, end of period	$	2,707,182	$	2,480,574

TREASURY STOCK:	TREASURY STOCK:									TREASURY STOCK:
Balance, beginning of period	Balance, beginning of period	$	(1,807,118)	$	(1,291,572)	$	(1,613,202)	$	(1,181,673)	Balance, beginning of period	$	(1,807,118)	$	(1,613,202)
Purchase of treasury shares		—		(274,479)		(193,916)		(384,378)

Balance, end of period	Balance, end of period	$	(1,807,118)	$	(1,566,051)	$	(1,807,118)	$	(1,566,051)	Balance, end of period	$	(1,807,118)	$	(1,613,202)

TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	$	1,328,608	$	1,315,443	$	1,328,608	$	1,315,443	TOTAL STOCKHOLDERS' EQUITY	$	1,461,138	$	1,395,665

Dividends declared per share	Dividends declared per share	$	0.49	$	0.46	$	1.41	$	1.32	Dividends declared per share	$	0.49	$	0.46

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 (Unaudited)						CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)	(In Thousands)					(In Thousands)
(Unaudited)

		Nine Months Ended					Three Months Ended
		March 31,					September 30,
		2022		2021			2022		2021

CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	Net Income	$	282,490	$	234,607	Net Income	$	106,549	$	102,114
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	38,339		39,816		Depreciation	12,416		13,157
Amortization	Amortization	94,563		92,189		Amortization	33,194		31,016
Change in deferred income taxes	Change in deferred income taxes	15,681		13,205		Change in deferred income taxes	(12,345)		6,088
Expense for stock-based compensation	Expense for stock-based compensation	19,303		14,959		Expense for stock-based compensation	6,998		6,071
(Gain)/loss on disposal of assets	(Gain)/loss on disposal of assets	301		(2,206)		(Gain)/loss on disposal of assets	(6,124)		166
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Change in receivables	Change in receivables	83,868		92,716		Change in receivables	101,509		53,404
Change in prepaid expenses, deferred costs and other	Change in prepaid expenses, deferred costs and other	(51,255)		(34,886)		Change in prepaid expenses, deferred costs and other	(34,740)		(20,345)
Change in accounts payable	Change in accounts payable	2,609		(1,529)		Change in accounts payable	(2,168)		2,859
Change in accrued expenses	Change in accrued expenses	(33,400)		(19,164)		Change in accrued expenses	(45,265)		(37,231)
Change in income taxes	Change in income taxes	26,885		13,629		Change in income taxes	41,937		9,912
Change in deferred revenues	Change in deferred revenues	(177,987)		(177,021)		Change in deferred revenues	(65,130)		(60,662)
Net cash from operating activities	Net cash from operating activities	301,397		266,315		Net cash from operating activities	136,831		106,549

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired	Payment for acquisitions, net of cash acquired	—		(2,300)		Payment for acquisitions, net of cash acquired	(228,986)		—
Capital expenditures	Capital expenditures	(28,386)		(14,916)		Capital expenditures	(7,737)		(9,273)

Proceeds from dispositions	Proceeds from dispositions	38		6,187		Proceeds from dispositions	26,252		14

Purchased software	Purchased software	(7,726)		(5,820)		Purchased software	(408)		(1,221)
Computer software developed	Computer software developed	(108,950)		(95,991)		Computer software developed	(38,715)		(35,971)
Purchase of investments		—		(13,300)

Net cash from investing activities	Net cash from investing activities	(145,024)		(126,140)		Net cash from investing activities	(249,594)		(46,451)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities	Borrowings on credit facilities	292,000		200,000		Borrowings on credit facilities	280,000		—
Repayments on credit facilities and financing leases		(167,091)		(86)
Repayments on financing leases						Repayments on financing leases	(150,022)		(35,027)

Purchase of treasury stock		(193,916)		(384,378)

Dividends paid	Dividends paid	(103,376)		(99,778)		Dividends paid	(35,709)		(34,036)
Proceeds from issuance of common stock upon exercise of stock options		—		1

Tax withholding payments related to share-based compensation	Tax withholding payments related to share-based compensation	(3,709)		(7,182)		Tax withholding payments related to share-based compensation	(1,556)		(953)
Proceeds from sale of common stock	Proceeds from sale of common stock	8,524		8,019		Proceeds from sale of common stock	3,233		3,177
Net cash from financing activities	Net cash from financing activities	(167,568)		(283,404)		Net cash from financing activities	95,946		(66,839)
NET CHANGE IN CASH AND CASH EQUIVALENTS	NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(11,195)	$	(143,229)	NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(16,817)	$	(6,741)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	50,992	$	213,345	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	48,787	$	50,992
CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	39,797	$	70,116	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	31,970	$	44,251

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

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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(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~~well-rounded financial technology company. JKHY was founded in 1976 as a provider of ~~technology~~core information processing solutions for banks. Today, the Company’s extensive array of products and ~~payment~~services includes processing ~~services primarily~~transactions, automating business processes, and managing information 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 toapproximately 7,800 financial institutions ~~nationwide, 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.diverse corporate entities.

Consolidation

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

Comprehensive Income

Comprehensive income for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021, equals the Company’s net income.

~~Change in Accounting Policy~~

The Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses, ("CECL") with an adoption date of July 1, 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 ~~March 31, 2022, and 2021:~~

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Allowance for credit losses - beginning balance $ 7,733 $ 6,830 $ 7,267 $ 6,719
Cumulative effect of accounting standards update adoption — — — 493
Current provision for expected credit losses 360 540 1,200 1,450
Write-offs charged against allowance (381) (252) (754) (1,538)
Recoveries of amounts previously written off — — (1) (4)
Other — — — (2)
Allowance for credit losses - ending balance $ 7,712 $ 7,118 $ 7,712 $ 7,118

September 30, 2022:

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	Three Months Ended September 30,
	2022		2021
Allowance for credit losses - beginning balance	$	7,616	$	7,267

Current provision for expected credit losses	480		540
Write-offs charged against allowance	(65)		(145)
Recoveries of amounts previously written off	(1)		(1)

Allowance for credit losses - ending balance	$	8,030	$	7,661

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 ~~March 31,~~September 30, 2022, totaled ~~$445,706~~$461,282 and at June 30, ~~2021,~~2022, totaled ~~$435,169.~~

During the three months ended March 31, 2022, the Company received an offer to purchase one of its facilities and management has committed to a plan to sell the facility. At March 31, 2022, the facility included assets with a carrying value of approximately $20,201. Although management has not committed to a sale, a sale of the facility is likely, and the Company expects to record a gain on the sale upon closing. Total assets held for sale by the Company at March 31, 2022 and June 30, 2021 were $20,201 and zero, respectively, and were included in assets held for sale on the Company's balance sheets and were not included in property and equipment, net.$454,879.

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~~3 to ~~twenty~~20 years. Accumulated amortization of intangible assets totaled ~~$998,527~~$1,063,994 and ~~$921,050~~$1,030,800 at ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, respectively.

~~Purchase of~~ Investments

At ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, the Company had an investment in the preferred stock of Automated Bookkeeping, ~~Inc.~~Inc ("Autobooks") of ~~$13,250,~~$18,250, which represented a non-controlling share of the voting equity as of ~~each~~that 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.

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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.~~line of credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At ~~March 31,~~September 30, 2022, and June 30, 2022, there were 31,043 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,948 additional shares. The total cost of treasury shares at ~~March 31,~~September 30, 2022, and June 30, 2022, was $1,807,118. During the first ~~nine~~three months of fiscal ~~2022,~~2023, the Company ~~repurchased 1,250 shares. At June 30, 2021, there were 29,793~~did not repurchase any shares ~~in treasury stock and the Company had authority to repurchase up to 5,198 additional shares. The total cost~~ of ~~treasury shares at June 30, 2021, was $1,613,202. During the first nine months of fiscal 2021, the Company repurchased 2,500 shares.~~its common stock.

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 ~~expense~~expenses are recognized on the full amount of 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.

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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, ~~2021.~~2022. 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, ~~2021,~~2022, 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 ~~March 31,~~September 30, 2022, the results of its operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021, changes in stockholders' equity for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021, and its cash flows for the ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021. The condensed consolidated balance sheet at June 30, ~~2021,~~2022, was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.

The results of operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022, 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 the development and effectiveness of 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 March 31, 2022, 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. Whilehas determined there was not a material impact to the Company’s ~~condensed~~ consolidated financial statements as of and for the ~~fiscal~~ quarter ended ~~March 31,~~September 30, 2022, ~~the Company’s future assessment~~as a result of the ~~magnitude~~continuing impact of the COVID-19 pandemic. However, the extent to which the COVID-19 pandemic may impact the Company's future operational and ~~duration of COVID-19, as well as other factors, could result in material impacts~~financial performance remains uncertain and difficult to predict. The Company will continue to monitor developments related to the ~~Company’s condensed consolidated financial statements in future reporting periods.~~COVID-19 pandemic.

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NOTE 2:2. RECENT ACCOUNTING PRONOUNCEMENTS

~~Recently Adopted Accounting Guidance~~

In December of 2019, the FASB issued 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 was effective for the Company on July 1, 2021. 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 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 a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue

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recognized by the acquirer. The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company plans to adopt the ASU effective July 1, 2023, and will apply it prospectively to business combinations occurring on or after that date.

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.

Disaggregation of Revenue

The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note ~~10,~~11, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Company’s revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Private and Public Cloud1
$ 142,808 $ 128,703 $ 416,791 $ 374,160
Product Delivery and Services 62,349 49,235 193,363 154,547
On-Premise Support2
77,764 76,701 266,471 257,802
Services and Support 282,921 254,639 876,625 786,509
Processing 195,339 179,137 583,587 521,429
Total Revenue $ 478,260 $ 433,776 $ 1,460,212 $ 1,307,938

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.


	Three Months Ended September 30,
	2022		2021
Private and Public Cloud	$	148,999	$	135,642
Product Delivery and Services	57,523		51,516
On-Premise Support	113,627		110,336
Services & Support	320,149		297,494

Processing	209,053		190,562

Total Revenue	$	529,202	$	488,056

Contract Balances

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

March 31,
2022 June 30,
2021
Receivables, net $ 222,696 $ 306,564
Contract Assets - Current 19,899 22,884
Contract Assets - Non-current 59,601 52,920
Contract Liabilities (Deferred Revenue) - Current 150,169 319,748
Contract Liabilities (Deferred Revenue) - Non-current 67,444 75,852


	September 30, 2022		June 30, 2022
Receivables, net	$	247,541	$	348,072
Contract Assets- Current	24,240		24,447
Contract Assets- Non-current	68,386		68,261
Contract Liabilities (Deferred Revenue)- Current	274,772		330,687
Contract Liabilities (Deferred Revenue)- Non-current	70,374		71,485

Contract assets primarily result from revenue being recognized when or as control of a solution or service is transferred to the customer, 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 ~~adjusts~~would adjust 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.

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During the three months ended ~~March 31,~~September 30, 2022 and 2021, the Company recognized revenue of ~~$92,147~~$97,990 and $80,722, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods. For the nine months ended March 31, 2022 and 2021, the Company recognized revenue of $225,424 and $211,735,$99,316, 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.

Transaction Price Allocated to Remaining Performance Obligations

As of ~~March 31,~~September 30, 2022, 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 ~~$5,187,412.~~$5,643,334. The Company expects to recognize approximately ~~25%~~26% over the next 12 months, 20% in 13-24 months, and the balance thereafter.

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 ~~$354,373~~$397,833 and ~~$314,807~~$380,095, at ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, respectively.

For the three months ended ~~March 31,~~September 30, 2022 and 2021, amortization of deferred contract costs was ~~$31,444~~$41,980 and ~~$29,384,~~$35,844, respectively. ~~During~~There were no impairment losses in relation to capitalized costs for the ~~nine months ended March 31, 2022, and 2021, amortization of deferred contract costs totaled $99,441 and $92,004, respectively.~~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

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


		Estimated Fair Value Measurements						Total Fair			Estimated Fair Value Measurements						Total Fair
		Level 1		Level 2		Level 3		Value			Level 1		Level 2		Level 3		Value
March 31, 2022
September 30, 2022										September 30, 2022
Financial Assets:	Financial Assets:									Financial Assets:

Certificates of Deposit	Certificates of Deposit	$	—	$	1,212	$	—	$	1,212	Certificates of Deposit	$	—	$	1,213	$	—	$	1,213
Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Revolving credit facility	Revolving credit facility	$	—	$	225,000	$	—	$	225,000	Revolving credit facility	$	—	$	245,000	$	—	$	245,000
June 30, 2021
June 30, 2022										June 30, 2022
Financial Assets:	Financial Assets:									Financial Assets:
Certificates of Deposit	Certificates of Deposit	$	—	$	1,200	$	—	$	1,200	Certificates of Deposit	$	—	$	1,212	$	—	$	1,212

Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Revolving credit facility	Revolving credit facility	$	—	$	100,000	$	—	$	100,000	Revolving credit facility	$	—	$	115,000	$	—	$	115,000

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 1211 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 ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, the Company had operating lease assets of ~~$49,170~~$46,452 and ~~$55,977~~$46,869 and financing lease assets of ~~$100~~$39 and ~~$188,~~$65, respectively. At ~~March 31,~~September 30, 2022, total operating lease liabilities of ~~$53,845~~$50,932 were comprised of current operating lease liabilities of ~~$10,938~~$10,546 and noncurrent operating lease liabilities of ~~$42,907,~~$40,386, and total financing lease liabilities of ~~$103~~$41 were ~~comprised of~~all current ~~financing lease liabilities of $101 and noncurrent financing lease liabilities of $2.~~liabilities. At June 30, ~~2021,~~2022, total operating lease liabilities of ~~$60,828~~$51,452 were comprised of current operating lease liabilities of ~~$11,460~~$10,681 and noncurrent operating lease liabilities of ~~$49,368,~~$40,771, and total financing lease liabilities of ~~$193~~$67 were ~~comprised of~~all current financing lease ~~liabilities of $110 and noncurrent financing lease liabilities of $83.~~liabilities.

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 ~~$29,413~~$33,478 and ~~$23,813~~$31,006 as of ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, 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) is included in the Company’s condensed consolidated balance sheet. Financing lease assets were recorded net of accumulated amortization of ~~$231~~$276 and ~~$153~~$255 as of ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, respectively.

Operating lease costs for the three months ended ~~March 31,~~September 30, 2022 and 2021, were ~~$3,182~~$3,059 and ~~$3,573,~~$3,432, respectively. Financing lease costs for the three months ended ~~March 31,~~September 30, 2022 and 2021, were ~~$25~~$21 and ~~$30,~~$28, respectively. Total operating and financing lease costs for the respective quarters included variable lease costs of approximately ~~$640~~$928 and ~~$1,015,~~$399, respectively. Operating lease costs for the nine months ended March 31, 2022, and 2021, were $9,942 and $11,312, respectively. Financing lease costs for the nine months ended March 31, 2022, and 2021, were $80 and $92, respectively. Total operating and financing lease costs for the respective fiscal year-to-date periods included variable lease costs of approximately $1,480 and $3,205. 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 ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021, the Company had operating cash flows for payments on operating leases of ~~$9,947~~$3,110 and ~~$10,121, respectively,~~$3,031, and ROU assets obtained in exchange for operating lease liabilities of ~~$1,985~~$2,296 and ~~$4,746,~~$272, respectively. ~~Financing~~Operating cash flows for ~~payments~~interest paid on financing leases for the ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021, were ~~$83~~$22 and ~~$91,~~$29, respectively.

As of ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, the ~~weighted average~~weighted-average remaining lease term for the Company's operating leases was 7774 months and 8176 months ~~respectively,~~ and the ~~weighted average~~weighted-average discount rate was ~~2.61%~~2.60% and ~~2.67%~~2.58%, respectively. As of ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, the ~~weighted average~~weighted-average remaining lease term for the Company's financing leases was 126 months and 219 months, respectively. The ~~weighted average~~weighted-average discount rate for the Company's financing leases was ~~2.36% and 2.39%~~2.23% as of ~~March 31,~~September 30, 2022, and 2.29% as of June 30, ~~2021, respectively.~~2022.

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 ~~March 31,~~September 30, 2022*:


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

2022 (remaining period)		$	3,169
2023		11,859
2023 (remaining period)				2023 (remaining period)	$	9,019
2024	2024	10,149		2024	10,696
2025	2025	7,390		2025	7,952
2026	2026	6,468		2026	7,046
2027				2027	6,265
Thereafter	Thereafter	19,561		Thereafter	14,296
Total lease payments	Total lease payments	$	58,596	Total lease payments	$	55,274
Less: interest	Less: interest	(4,751)		Less: interest	(4,342)
Present value of lease liabilities	Present value of lease liabilities	$	53,845	Present value of lease liabilities	$	50,932

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

Lease payments ~~included~~include $5,464 related to options to extend lease terms that are reasonably certain of being exercised. At ~~March 31,~~September 30, 2022, ~~the Company had approximately $1,418 in~~there were $6,128 of legally binding lease payments for ~~two~~ leases ~~that were~~ signed but not yet commenced. ~~The lease commencement dates are July 1, 2022 and November 1, 2022, and the lease terms are 84 months and 60 months, respectively.~~

NOTE 6. DEBT

~~Revolving credit facility~~Credit facilities

On ~~February 10, 2020,~~August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement. The credit agreement allows for borrowings of up to $600,000, which may be increased to $1,000,000 by the Company at any time until maturity. The credit agreement bears interest at a variable rate equal to (a) a rate based on an adjusted Secured Overnight Financing Rate ("SOFR") term rate or (b) an alternate base rate (the highest of (a) 0%, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Adjusted Term SOFR Screen Rate (without giving effect to the Applicable Margin) 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 agreement 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 agreement. As of September 30, 2022, the Company was in compliance with all such covenants. The amended and restated credit facility terminates August 31, 2027. There was $245,000 outstanding under the amended and restated credit facility at September 30, 2022.

On June 30, 2022, there was a $115,000 outstanding balance on the prior credit facility that was entered into on February 10, 2020. The prior credit facility was a five-year senior, unsecured revolving credit facility. The prior credit facility ~~allows~~allowed for borrowings of up to $300,000, which ~~may~~could be increased by the Company to $700,000 at any time until ~~maturity to $700,000.~~maturity. The prior credit facility ~~bears~~bore 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 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 prior credit facility iswas guaranteed by certain subsidiaries of the Company and iswas subject to various

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financial covenants that ~~require~~required the Company to maintain certain financial ratios as defined in the prior credit ~~facility~~ agreement. As of ~~March 31,~~June 30, 2022, the Company was in compliance with all such covenants. The ~~revolving~~prior credit ~~facility terminates~~facility's termination date was February 10, 2025. ~~There was $225,000 outstanding under the credit facility at March 31, 2022, and $100,000 outstanding balance at June 30, 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, 2023. There was no balance outstanding at ~~March 31,~~September 30, 2022, or June 30, ~~2021.~~2022.

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Interest

The Company paid interest of ~~$1,235~~$1,333 and ~~$525~~$234 during the ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

NOTE 7. INCOME TAXES

Provision for income taxes increased for the three months ended ~~March 31,~~September 30, 2022, compared to the three months ended March 31, 2021, with an effective tax rate of 23.6% of income before income taxes, compared to 21.5% in the prior-year fiscal quarter. The increase in the effective tax rate comparing the three-month periods ended March 31 was primarily due to differences in the impact of increases in operating income relative to the impact of other items affecting the effective tax rate in the current period, the most significant of which are federal and state income tax credits.

~~For the nine months ended March 31, 2022, provision for income taxes increased compared to the nine months ended March 31,~~September 30, 2021, with an effective tax rate of 23.5% of income before income taxes, compared to 22.3% for the same period last fiscal year. The increase in the effective tax rate comparing the fiscal year-to-date periods ended March 31 was primarily due to the 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 compensation23.4% in the prior fiscal ~~year-to-date period.~~year quarter.

The Company paid income taxes, net of refunds, of ~~$44,245~~$2,828 and ~~$40,440~~$15,187 in the ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

At ~~March 31,~~September 30, 2022, the Company had ~~$10,000~~$9,586 of gross unrecognized tax benefits before interest and penalties, ~~$9,267~~$8,532 of which, if recognized, would affect our effective tax rate. ~~The~~At September 30, 2022, the Company had accrued interest and penalties of ~~$1,542 and $2,035~~$1,360 related to uncertain tax ~~positions at March 31, 2022, and 2021, respectively.~~positions.

The U.S. federal ~~and state~~ income tax returns for fiscal ~~2018~~2019 and all subsequent years remain subject to examination as of ~~March 31,~~September 30, 2022, under statute of limitations rules. The U.S. state income tax returns that remain subject to examination as of September 30, 2022, under the statute of limitation rules varies by state jurisdiction from fiscal 2016 through 2019 and all subsequent years. The Company anticipates ~~reductions~~potential changes due to lapsing of statutes of limitations, and examination closures could reduce the unrecognized tax benefits balance ofby $1,500 to $3,500 ~~to $4,500~~ within twelve months of ~~March 31, 2022, due to potential changes from lapsing statutes of limitations and examination closures.~~

September 30, 2022.

NOTE 8. STOCK-BASED COMPENSATION

Our operating income for the three months ended ~~March 31,~~September 30, 2022 and 2021, included ~~$6,276~~$6,998 and ~~$5,207 of stock-based compensation costs, respectively. Our operating income for the nine months ended March 31, 2022, and 2021, included $19,303 and $14,959~~$6,071 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 ~~terminate upon surrender of the option, ninety days after termination of employment, or upon the expiration of one year following notification of a deceased optionee. 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.

~~Table~~ The options terminate upon surrender of ~~Contents~~

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, 2021 22 $ 87.27
Granted — —
Forfeited — —
Exercised (10) 87.27
Outstanding March 31, 2022 12 $ 87.27 $ 1,283
Vested and Expected to Vest March 31, 2022 12 $ 87.27 $ 1,283
Exercisable March 31, 2022 12 $ 87.27 $ 1,283


	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding July 1, 2022	12	$	87.27
Granted	—	—
Forfeited	—	—
Exercised	—	—
Outstanding September 30, 2022	12	$	87.27	$	1,084
Vested and Expected to Vest September 30, 2022	12	$	87.27	$	1,084
Exercisable September 30, 2022	12	$	87.27	$	1,084

At ~~March 31,~~September 30, 2022, there was no 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 ~~March 31,~~September 30, 2022, was ~~4.25~~3.75 years.

Restricted Stock Unit Awards

The Company issues unit awards under the 2015 EIP. The following table summarizes non-vested ~~performance and~~ restricted stock unit awards as of ~~March 31,~~September 30, 2022:

Units Weighted
Average
Grant Date
Fair Value Aggregate Intrinsic Value
Outstanding July 1, 2021 294 $ 160.22
Granted 133 178.36
Vested (63) 143.93
Forfeited (50) 191.11
Outstanding March 31, 2022 314 $ 166.25 $ 61,821

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Unit awards	Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2022	303	$	166.50
Granted	112	223.96
Vested	(20)	170.87
Forfeited	(4)	173.71
Outstanding September 30, 2022	391	$	182.68	$	71,376

The ~~133~~112 unit awards granted in the first quarter of fiscal ~~2022~~2023 had service requirements and performance ~~targets,~~measures, with 8570 only having ~~only~~ service requirements. The unit awards with only service requirements were valued at the 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 4842 unit awards granted in the first quarter of fiscal ~~2022~~2023 have performance ~~targets~~measures along with service requirements. 1917 of 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 2925 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. Per the Company's award vesting and settlement provisions, the awards that ~~utilized~~utilize a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return ~~(TSR)~~("TSR") in comparison to the ~~custom~~compensation peer group ~~comprised~~made up of participants approved by the Compensation Committee of the Company's Board of Directors for fiscal year ~~2022.~~2023. 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.

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~~Fiscal year 2022~~ Monte Carlo award inputs:

Fiscal 2023

Compensation Peer Group:

Volatility

~~28.55~~29.4

Risk free interest rate

~~0.32~~2.96

Annual dividend based on most recent quarterly dividend

$1.96

~~1.84~~

~~Beginning TSR~~Dividend yield

650.94

Beginning average percentile rank for TSR

71.0

At ~~March 31,~~September 30, 2022, there was ~~$23,813~~$37,428 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 ~~1.32~~1.25 years.

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NOTE 9. EARNINGS PER SHARE

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

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Net Income $ 84,707 $ 71,409 $ 282,490 $ 234,607
Common share information:
Weighted average shares outstanding for basic earnings per share1
72,835 75,357 73,477 76,022
Dilutive effect of stock options and restricted stock 184 74 142 119
Weighted average shares outstanding for diluted earnings per share1
73,019 75,431 73,619 76,141
Basic earnings per share2
$ 1.16 $ 0.95 $ 3.84 $ 3.09
Diluted earnings per share2
$ 1.16 $ 0.95 $ 3.84 $ 3.08

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 (2,500 shares repurchased during the first three quarters of fiscal 2021) and the repurchase of 1,250 shares during fiscal year-to-date 2022.

2~~Common stock repurchases during the trailing twelve months contributed $0.02 to diluted earnings per share for the third fiscal quarter and $0.05 for year-to-date fiscal 2022.~~


	Three Months Ended September 30,
	2022		2021
Net Income	$	106,549	$	102,114
Common share information:
Weighted average shares outstanding for basic earnings per share	72,896		74,016
Dilutive effect of stock options and restricted stock units	242		126
Weighted average shares outstanding for diluted earnings per share	73,138		74,142
Basic earnings per share	$	1.46	$	1.38
Diluted earnings per share	$	1.46	$	1.38

Per share information is based on the weighted average number of common shares outstanding for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021. Stock options and restricted stock units have been included in the calculation of earnings per share to the extent they are dilutive. There were ~~nominal and 10~~11 anti-dilutive stock options or restricted stock units excluded for the ~~three~~quarter ended September 30, 2022, and ~~nine~~22 were excluded for the quarter ended September 30, 2021.

NOTE 10. BUSINESS ACQUISITIONS

Payrailz

On August 31, 2022, the Company completed the acquisition of Payrailz, LLC ("Payrailz") for $229,563 paid in cash. The purchase price is subject to a customary post-closing adjustment to the extent actual closing date working capital, cash, debt, and unpaid seller transaction expenses exceeds or is less than the amount estimated at closing. Pursuant to the merger agreement for the transaction, $48,500 of the purchase price was placed in an escrow account at the closing for final purchase price adjustments and indemnification matters under the merger agreement.

The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was funded by our revolving line of credit (Note 6) and cash generated from operations. Payrailz provides cloud-native, API-first, AI-enabled consumer and commercial digital payment solutions and experiences that enable money to be moved in the moment of need.

Management has completed a preliminary purchase price allocation and 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 August 31, 2022, are set forth below:


Current assets	$	1,851

Identifiable intangible assets	119,868
Deferred revenue	(8,104)
Total other liabilities assumed	(749)
Total identifiable net assets	112,866
Goodwill	116,697
Net assets acquired	$	229,563

The goodwill of $116,697 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 Payrailz, together with the value of Payrailz's assembled workforce. The goodwill from this acquisition has been allocated to our Payments segment and $116,697 is expected to be deductible for income tax purposes.

Identifiable intangible assets from this acquisition consist of customer relationships of $6,109, computer software of $112,505, and other intangible assets of $1,254. The amortization period for acquired customer relationships, computer software, and other intangible assets is over a term of 10 to 15 years for each.

Current assets were inclusive of cash acquired of $577. The fair value of current assets acquired included accounts receivable of $978, none of which were expected to be uncollectible.

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Costs incurred related to the acquisition of Payrailz during the three months ended ~~March 31,~~September 30, 2022, ~~respectively,~~totaled $458 for administrative and ~~there~~professional services, travel, and other fees, and were ~~none excluded~~expensed as incurred and reported within cost of revenue and selling, general, and administrative expense.

The Company's condensed consolidated statements of income for ~~both~~ the three ~~and nine~~ months ended ~~March 31, 2021.~~September 30, 2022, included revenue of $738 and after-tax net loss of $1,870 resulting from Payrailz's operations.

The accompanying condensed consolidated statements of income for the three months ended September 30, 2022 and 2021, do not include any revenues and expenses related to this acquisition prior to the acquisition date. The following unaudited pro forma consolidated financial information is presented as if this acquisition had occurred at the beginning of the prior period presented. The pro forma net income includes estimated incremental amortization expense of $1,957 and $2,935 for the three months ended September 30, 2022 and 2021, respectively. In addition, this unaudited pro forma financial information is provided for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisition had actually occurred during this period, or the results that may be obtained in the future as a result of the acquisition.


	JKHY				Pro forma
	Three Months Ended September 30,				Three Months Ended September 30,
	2022		2021			2022		2021
Revenue	$	529,202	$	488,056		$	530,829	$	489,397
Net Income	106,549		102,114			102,012		97,098

NOTE ~~10.~~11. 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 4four 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 can be integrated with our ~~core~~Core solutions and 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.

Immaterial adjustments were made to reclassify cost of revenue in the quarter and year-to-date periods of fiscal 2021 from the Core segment to the Corporate and Other segment to be consistent with the current allocation of cost

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~~of revenue by segment. The amounts reclassified for the three and nine months ended March 31, 2021 were $34 and $97, respectively.~~

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.

Three Months Ended
March 31, 2022
Core Payments Complementary Corporate and Other Total
REVENUE
Services and Support $ 141,194 $ 22,455 $ 107,730 $ 11,542 $ 282,921
Processing 9,605 155,092 29,980 662 195,339
Total Revenue 150,799 177,547 137,710 12,204 478,260
Cost of Revenue 66,576 94,628 58,957 62,178 282,339
Research and Development 30,725
Selling, General, and Administrative 53,607
Total Expenses 366,671
SEGMENT INCOME $ 84,223 $ 82,919 $ 78,753 $ (49,974)
OPERATING INCOME 111,589
INTEREST INCOME (EXPENSE) (688)
INCOME BEFORE INCOME TAXES $ 110,901
Immaterial adjustments have been made to reclassify revenue that was recognized in the three months ended September 30, 2021 from the Complementary to the Payments and Corporate and Other segments. Immaterial adjustments were also made to reclassify cost of revenue from the Corporate and Other and Complementary segments to the Payments segment for the three months ended September 30, 2021. These reclasses were made to be consistent with the current allocation of revenue and cost of revenue by segment. Revenue reclassed from Complementary to Payments was $2,969 and from Complementary to Corporate and Other was $734. Cost of revenue reclassed from Complementary and Corporate and Other to Payments was $1,356.

Three Months Ended
March 31, 2021
Core Payments Complementary Corporate and Other Total
REVENUE
Services and Support $ 126,400 $ 15,978 $ 100,421 $ 11,840 $ 254,639
Processing 8,749 144,863 25,010 515 179,137
Total Revenue 135,149 160,841 125,431 12,355 433,776
Cost of Revenue 63,225 87,628 54,207 62,710 267,770
Research and Development 27,395
Selling, General, and Administrative 47,408
Total Expenses 342,573
SEGMENT INCOME $ 71,924 $ 73,213 $ 71,224 $ (50,355)
OPERATING INCOME 91,203
INTEREST INCOME (EXPENSE) (266)
INCOME BEFORE INCOME TAXES $ 90,937

1817

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	Three Months Ended
	September 30, 2022
	Core		Payments		Complementary		Corporate & Other		Total
REVENUE
Services and Support	$	165,024	$	18,659	$	118,147	$	18,319	$	320,149
Processing	10,100		167,881		30,203		869		209,053
Total Revenue	175,124		186,540		148,350		19,188		529,202

Cost of Revenue	72,240		101,155		58,437		66,429		298,261
Research and Development									32,993
Selling, General, and Administrative									57,225


Total Expenses									388,479

SEGMENT INCOME	$	102,884	$	85,385	$	89,913	$	(47,241)

OPERATING INCOME									140,723

INTEREST INCOME (EXPENSE)									(1,424)

INCOME BEFORE INCOME TAXES									$	139,299


		Nine Months Ended											Three Months Ended
		March 31, 2022											September 30, 2021
		Core		Payments		Complementary		Corporate & Other		Total			Core		Payments		Complementary		Corporate & Other		Total
REVENUE	REVENUE											REVENUE
Services and Support	Services and Support	442,730		62,049		335,174		36,672		876,625		Services and Support	$	155,838	$	17,063	$	112,806	$	11,787	$	297,494
Processing	Processing	28,232		467,648		85,741		1,966		583,587		Processing	9,447		155,528		24,972		615		190,562
Total Revenue	Total Revenue	470,962		529,697		420,915		38,638		1,460,212		Total Revenue	165,285		172,591		137,778		12,402		488,056

Cost of Revenue	Cost of Revenue	198,032		283,423		172,593		187,751		841,799		Cost of Revenue	66,902		94,582		54,417		60,735		276,636
Research and Development	Research and Development									87,394		Research and Development									26,754
Selling, General, and Administrative	Selling, General, and Administrative									160,172		Selling, General, and Administrative									51,071

Total Expenses	Total Expenses									1,089,365		Total Expenses									354,461

SEGMENT INCOME	SEGMENT INCOME	$	272,930	$	246,274	$	248,322	$	(149,113)			SEGMENT INCOME	$	98,383	$	78,009	$	83,361	$	(48,333)

OPERATING INCOME	OPERATING INCOME									370,847		OPERATING INCOME									133,595

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									(1,371)		INTEREST INCOME (EXPENSE)									(241)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES									$	369,476	INCOME BEFORE INCOME TAXES									$	133,354

Nine Months Ended
March 31, 2021
Core Payments Complementary Corporate & Other Total
REVENUE
Services and Support $ 397,744 $ 47,090 $ 307,798 $ 33,877 $ 786,509
Processing 25,509 425,666 69,395 859 521,429
Total Revenue 423,253 472,756 377,193 34,736 1,307,938
Cost of Revenue 185,571 260,411 158,638 183,861 788,481
Research and Development 80,233��
Selling, General, and Administrative 136,801
Total Expenses 1,005,515
SEGMENT INCOME $ 237,682 $ 212,345 $ 218,555 $ (149,125)
OPERATING INCOME 302,423
INTEREST INCOME (EXPENSE) (381)
INCOME BEFORE INCOME TAXES $ 302,042

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.

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NOTE ~~11:~~12. SUBSEQUENT EVENTS

None.

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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 ~~March 31,~~September 30, 2022.

OVERVIEW

Jack Henry & Associates, Inc. ("JKHY") is a well-rounded financial technology company and 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® provides innovative~~consist of integrated data processing systems solutions to ~~community and regional banks. Symitar® provides industry-leading~~U.S. banks ranging from de novo to multi-billion-dollar institutions, core data processing solutions tofor credit ~~unions~~union of all ~~sizes. ProfitStars® offers~~sizes, and non-core highly specialized ~~solutions to~~core-agnostic products and services that enable financial institutions of every asset size ~~as well as~~and charter, and 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 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 amounts in the following discussion are in thousands, except per share amounts.

~~COVID-19 Impact and Response~~RESULTS OF OPERATIONS

~~Since its outbreak in early calendar 2020, COVID-19 has rapidly spread and continues to represent a public health concern. The health, safety, and well-being~~For the first quarter 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 updatesfiscal 2023, total revenue increased 8%, or $41,146, compared to the ~~COVID-19 situation~~same quarter in fiscal 2022. The increase was primarily driven by growth in private and ~~recommend Company actions. We offered remote working as~~public cloud, card processing, transaction and digital, remittance, software usage, and implementation revenues.

Operating expenses increased 10% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Increasing operating expenses for the net effects of deconversion fees of $653, acquisitions of $2,535, and the gain on disposal of assets, net, of $6,176, for the current fiscal quarter and reducing operating expenses for the effects of deconversion fees of $540 for the prior fiscal year quarter, results in an 11% increase for the first quarter of fiscal 2023 compared to the same quarter a ~~recommended option to employees whose job duties allowed them to work off-site, and we suspended all non-essential business travel.~~year ago. This company-wide recommendation initially extended until July 1, 2021, at which point we began transition to a return to our facilities and normalization of travel activities. However, we reimplemented our company-wide recommendation for remote work on August 3, 2021, based on new virus variantsincrease in operating expenses was primarily driven by higher personnel costs, increased direct costs in line with related revenue, and increased ~~infection rates. As~~travel expenses.

Operating income increased 5% for the first quarter of ~~April 29, 2022,~~fiscal 2023 compared to the ~~majority~~first quarter of ~~our employees were continuing to work remotely either full time or~~fiscal 2022. Reducing operating income for the effects of deconversion fees of $3,865 for the current fiscal quarter and $3,184 for the prior fiscal year quarter and for the effects of acquisitions of $1,797 and the gain on disposal of assets, net, of $6,176 for the current fiscal quarter, results in a ~~hybrid capacity. We have announced that our official return-to-office date is September 6, 2022, though employees can voluntarily return~~2% increase for the first quarter of fiscal 2023 compared to the ~~office on May 2, 2022. Individual decisions on returning~~same quarter a year ago. This increase in operating income was primarily driven by increased revenue growth partially offset by increased operating expenses detailed above.

The provision for income taxes increased 5% for the first quarter of fiscal 2023 compared to the ~~office will be manager-coordinated and based on conversations with specific teams and departments. A large number~~prior fiscal year first quarter. The effective tax rate for the first quarter of ~~our employees have requested~~fiscal 2023 was 23.5% compared to ~~remain fully remote or participate in~~23.4% for the same quarter a ~~hybrid approach where they would split their time between remote and in-person working. While our business travel has~~year ago.

Due to the above changes, net income increased ~~in recent months, we continue~~4% for the first quarter of fiscal 2023 compared to ~~encourage a cautious approach to business travel activities.~~

~~Customers~~

We 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. Delaysthe first quarter of customer system installations due to COVID-19 have been limited, and we have developed processes to handle remote installations when available. We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic. Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been limited, we have not yet experienced significant disruption to our operations. We believe our technological capabilities are well positioned to allow our employees to work remotely without materially impacting our business.fiscal 2022.

2119

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~~Financial impact~~

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 nine months of fiscal 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, including the onset of variants of the virus; the effectiveness of vaccines against new variants; the development and effectiveness of treatments; the 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~~

For the third quarter of fiscal 2022, total revenue increased 10%, or $44,484, compared to the same quarter in fiscal 2021. Total revenue less deconversion fee and acquisition and divestiture revenues of $17,431 and $71, respectively, for the current fiscal quarter and less deconversion fee revenues of $4,367 for the prior fiscal quarter, results in an increase of 7%, quarter over quarter. This increase was primarily driven by growth in public and private cloud, transaction and digital, remittance processing, card processing, and implementation fee revenues.

Operating expenses increased 7% for the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021, primarily due to increased direct costs and higher personnel costs. The increase in direct costs was primarily related to increased card volume activity processed through our card payment processing platform and Jack Henry digital and were in alignment with the increases in revenue described above. Higher personnel costs were primarily related to salary and pay-related increases in the trailing twelve months.

Operating income increased 22% for the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021. Operating income less deconversion fee operating income of $15,482 and adjusted for acquisition and divestiture operating loss of $306 for the current fiscal quarter, and less deconversion fee operating income of $3,967 for the prior fiscal quarter, results in an 11% increase for the third quarter of fiscal 2022, quarter over quarter. This increase in operating income was primarily driven by revenue growth partially offset by increased operating expenses, as detailed above.

The provision for income taxes increased 34% for the third quarter of fiscal 2022 compared to the prior fiscal third quarter. The effective tax rate for the third quarter of fiscal 2022 was 23.6% compared to 21.5% for the same quarter a year ago. The increase in the effective tax rate was primarily due to differences in the impact of increases in operating income relative to the impact of other items affecting the effective tax rate in the current fiscal period, the most significant of which are federal and state income tax credits.

~~Due to the above changes, net income increased 19% for the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021.~~

For the nine months ended March 31, 2022, total revenue increased 12%, or $152,274, over the nine months ended March 31, 2021. Total revenue less deconversion fee and acquisition and divestiture revenues of $48,058 and $273, respectively, for the current fiscal period and deconversion fee and acquisition and divestiture revenues of $12,405 and $1,182, respectively, for the prior fiscal period, results in a 9% increase for the period compared to the same period a year ago. This total revenue increase was primarily driven by growth in public and private cloud, card processing, remittance processing, transaction and digital, and implementation fee revenues.

Operating expenses for the nine months ended March 31, 2022, increased 8% compared to the equivalent period in the prior fiscal year, primarily due to increased direct costs, higher personnel costs, and increased operating licenses and fees. The increased direct costs were primarily related to increased card volume activity processed through our card payment processing platform and Jack Henry digital and were in alignment with the increases in revenue described above. Higher personnel costs were primarily related to salary and pay-related increases in the trailing twelve months.

Operating income increased 23% for the nine months ended March 31, 2022, compared to the nine months ended March 31, 2021. Operating income less deconversion fee operating income of $43,022 and adjusted for acquisition and divestiture operating loss of $372 for the current fiscal period, and less deconversion fee operating income of $11,105 and income from divestitures and a gain on disposals totaling $2,410 for the prior fiscal period, results in a 14% increase for the nine months ended March 31, 2022, compared to the same period a year ago. This increase

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~~was primarily driven by revenue growth described above partially offset by increased operating expenses, as detailed above.~~

The provision for income taxes increased 29% for the nine months ended March 31, 2022, compared to the nine months ended March 31, 2021. The effective tax rate for the current fiscal period was 23.5% compared to 22.3% for the prior fiscal period. The effective tax rate increase was primarily due to the relative impact of the increase in operating income in the current period and a larger excess tax benefit received from share-based compensation in the prior period.

~~The result of the above changes led to net income that increased 20% for the nine months ended March 31, 2022, compared to the same period in the prior fiscal year.~~

We move into the ~~fourth~~second quarter of fiscal ~~2022~~2023 with optimism following strong performance in the ~~third quarter, but with some uncertainty as to the future impact of the COVID-19 pandemic (see "COVID-19 Impact and Response" section above).~~first quarter. 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~~a great 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 nine~~ months ended ~~March 31,~~September 30, 2022, follows. Discussions compare the current fiscal year's three ~~and nine~~ months ended ~~March 31,~~September 30, 2022, to the prior fiscal year's three ~~and nine~~ months ended ~~March 31,~~September 30, 2021.

REVENUE


Services and Support	Services and Support	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Services and Support	Three Months Ended September 30,						% Change
		2022			2021					2022			2021						2022			2021
Services and Support	Services and Support	$	282,921		$	254,639		11	%	$	876,625		$	786,509		11	%	Services and Support	$	320,149		$	297,494		8	%
Percentage of total revenue	Percentage of total revenue	59		%	59		%			60		%	60		%			Percentage of total revenue	60		%	61		%

Services and support revenue increased ~~11%~~8% for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the same quarter a year ago. ~~Total~~Reducing services and support revenue ~~less~~for deconversion fee revenue from each quarter, which was $4,518 for the current fiscal quarter and $3,724 for the prior fiscal year quarter and for the effects of ~~$17,431 and $4,367, respectively,~~acquisitions of $24 for the current fiscal quarter, results in growth of ~~6%,~~7% quarter over quarter. This increase was primarily driven by growth in ~~data~~cloud processing, software usage, and ~~hosting~~implementation fee revenues, as ~~new customers were added and volumes continued to expand, as~~ well as ~~higher implementation revenues when compared to the prior fiscal quarter.~~

~~For the nine months ended March 31, 2022, services and support revenue increased 11% compared to the same fiscal period a year ago. Total services and support revenue less deconversion~~an increase in user group fee ~~revenue for the current and prior fiscal periods of $48,058 and $12,405, respectively, and for revenue from acquisitions and divestitures of $1,181 from the prior fiscal period, results~~revenue. Growth in growth of 7% period over period. This increase was primarily driven by growth in data processing and hosting fee revenues, as new customers were added and volumes continued to expand, as well as higher implementation fee and software usage ~~fee revenues when compared~~reflects a continuing shift of customers to ~~the prior fiscal period.~~our time-based license model.


Processing	Processing	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Processing	Three Months Ended September 30,						% Change
		2022			2021					2022			2021						2022			2021
Processing	Processing	$	195,339		$	179,137		9	%	$	583,587		$	521,429		12	%	Processing	$	209,053		$	190,562		10	%
Percentage of total revenue	Percentage of total revenue	41		%	41		%			40		%	40		%			Percentage of total revenue	40		%	39		%

Processing revenue increased 9%10% for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the same quarter ~~a year ago. The increase was driven by growth in card~~last fiscal year. Reducing processing ~~Jack Henry digital, and remote capture and ACH fee revenues, as customers were added and volumes expanded during the fiscal quarter compared to the 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 12% for the nine months ended March 31, 2022, compared to the nine months ended March 31, 2021.

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~~OPERATING EXPENSES~~

Cost of Revenue Three Months Ended March 31, %
Change Nine Months Ended March 31, %
Change
2022 2021 2022 2021
Cost of Revenue $ 282,339 $ 267,770 5 % $ 841,799 $ 788,481 7 %
Percentage of total revenue 59 % 62 % 58 % 60 %

~~Cost of~~ revenue for the ~~third quarter~~effects of fiscal 2022 increased 5% over the prior fiscal year third quarter. This increase was primarily due to higher direct costs associated with increased card volume activity processed through our card processing platform and higher personnel costs. Costacquisitions of ~~revenue decreased 3% compared to the prior fiscal quarter as a percentage of total revenue due to the impact of increased deconversion fees in the current quarter that yield higher margins.~~

For the current fiscal year-to-date period, cost of revenue increased 7% over the prior fiscal year-to-date period. This increase in costs was primarily due to higher costs associated with increased card volume activity processed through our card processing platform, higher personnel costs, and operating licenses and fees. Cost of revenue decreased 2% compared to the prior fiscal year-to-date period as a percentage of total revenue due to the impact of increased deconversion fees in the current period that yield higher margins.

Research and Development Three Months Ended March 31, %
Change Nine Months Ended March 31, %
Change
2022 2021 2022 2021
Research and Development $ 30,725 $ 27,395 12 % $ 87,394 $ 80,233 9 %
Percentage of total revenue 6 % 6 % 6 % 6 %

Research and development expense increased 12% for the third quarter of fiscal 2022 over the prior fiscal third quarter. Total research and development expense adjusted for acquisition and divestiture research and development expense of $322$714 for the current fiscal quarter, results in angrowth of 9% quarter over quarter. This increase was primarily driven by higher card processing and Jack Henry digital revenue, including Banno, as well as payment processing fees, including iPay, primarily due to expanding volumes, complemented by growth in the other processing revenue components, quarter over quarter.

OPERATING EXPENSES


Cost of Revenue	Three Months Ended September 30,						% Change
	2022			2021
Cost of Revenue	$	298,261		$	276,636		8	%
Percentage of total revenue	56		%	57		%

Cost of ~~11%,~~revenue for the first quarter of fiscal 2023 increased 8% over the prior fiscal year first quarter. Reducing cost of revenue for the effects of deconversion fees from each quarter, which were $411 for the current fiscal year quarter and $337 for the prior fiscal year quarter and increasing cost of revenue for the net effects of acquisitions of $1,539 from the current fiscal year quarter, results in a 7% increase quarter over quarter. This increase was primarily due to higher costs associated with our card processing third-party platform, higher personnel costs, increased internal licenses and fees, and increased amortization of intangible assets at September 30, 2022, compared to the same period a year ago. The increases in cost of revenue were primarily due to organic growth within our product lines. Cost of revenue decreased 1% compared to the prior fiscal year quarter as a percentage of total revenue.

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Research and Development	Three Months Ended September 30,						% Change
	2022			2021
Research and Development	$	32,993		$	26,754		23	%
Percentage of total revenue	6		%	5		%

Research and development expense increased 23% for the first quarter of fiscal 2023 over the prior fiscal year first quarter. Reducing research and development expense for the effects of acquisitions of $332 for the current fiscal quarter, results in a 22% increase quarter over quarter. This increase was primarily due to an increase in personnel costs, net of capitalization, quarter over quarter. Research and development expense ~~remained consistent~~for the quarter increased 1% compared to the prior fiscal ~~third~~year quarter as a percentage of total revenue.

For the current fiscal year-to-date period, research and development expense increased 9% over the prior fiscal year-to-date period. The increase 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 as a percentage of total revenue.

~~The growth of this expense category in both the third quarter and year-to-date fiscal periods reflects our continuing commitment to the development of strategic products.~~


Selling, General, and Administrative	Selling, General, and Administrative	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Selling, General, and Administrative	Three Months Ended September 30,						% Change
		2022			2021					2022			2021						2022			2021
Selling, General, and Administrative	Selling, General, and Administrative	$	53,607		$	47,408		13	%	$	160,172		$	136,801		17	%	Selling, General, and Administrative	$	57,225		$	51,071		12	%

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

Selling, general, and administrative expense increased ~~13%~~12% in the ~~third~~first quarter of fiscal ~~2022~~2023 over the same quarter ~~a year ago. Total~~in the prior fiscal year. Reducing selling, general, and administrative ~~expenses less deconversion-related expenses,~~expense for the effects of deconversion fees from each quarter, which were ~~$820~~$242 for the current fiscal year quarter and ~~$49~~$202 for the prior fiscal year quarter and increasing selling, general, and administrative expense for the net effects of acquisitions and ~~divestitures~~gain/loss of ~~$10 in~~$5,512 for the ~~current~~prior fiscal year quarter, results in ~~an 11%~~a 23% increase quarter over quarter. This increase was primarily due to higher travel expenses and personnel costs, ~~related to a 2% growth in headcount~~increased consulting and salary and pay-related increases in the trailing twelve months. Selling, general, and administrative expense remained consistent as a percentage of total revenue in fiscal third quarter versus the prior fiscal third quarter.

For the fiscal year-to-date period, selling, general, and administrative expense increased 17% over the prior fiscal year-to-date period. Total selling, general, and administrative expenses less deconversion-related expenses from each period, which were $1,968 for the current fiscal period and $300 for the prior fiscal period, and less the effects of acquisitions and divestitures, which were $30 for the current fiscal period and $28 for the prior fiscal period, and adjusted for a gain on disposals of $2,040 in the prior fiscal period, results in a 14% increase period over period. This increase was primarily due to higher personnel costs related to a 2% growth in headcount and salary and pay-

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~~related increases in the trailing twelve months~~other professional services, and an increase in ~~travel expenses.~~meetings and trainings. Selling, general, and administrative expense increased 1% as a percentage of total revenue ~~for the current~~this fiscal ~~period~~quarter versus the ~~year-ago~~prior fiscal ~~period.~~year quarter.


INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)	Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change		INTEREST INCOME (EXPENSE)	Three Months Ended September 30,				% Change
		2022		2021				2022		2021					2022		2021
Interest Income	Interest Income	$	3	$	24	(88)	%	$	16	$	144	(89)	%	Interest Income	$	152	$	7	2,071	%
Interest Expense	Interest Expense	$	(691)	$	(290)	138	%	$	(1,387)	$	(525)	164	%	Interest Expense	$	(1,576)	$	(248)	535	%

Interest income fluctuated due to changes in invested balances and yields on invested balances during the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the ~~third quarter~~same period a year ago. Interest expense increased when compared to the prior fiscal year quarter due to interest rate fluctuations, length of borrowing time, and amounts borrowed. There was a ~~$225,000~~$245,000 outstanding balance under the credit facility at ~~March 31,~~September 30, 2022, and ~~$200,000~~$65,000 outstanding balance at ~~March 31,~~September 30, 2021. The ~~credit facility~~increase in the outstanding balance ~~increase~~ was primarily due to funding the ~~increase in the Company's repurchases of common stock for the treasury during the trailing twelve months.~~Payrailz acquisition on August 31, 2022.


PROVISION FOR INCOME TAXES	PROVISION FOR INCOME TAXES	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		PROVISION FOR INCOME TAXES	Three Months Ended September 30,						% Change
		2022			2021					2022			2021						2022			2021
Provision for Income Taxes	Provision for Income Taxes	$	26,194		$	19,528		34	%	$	86,986		$	67,435		29	%	Provision for Income Taxes	$	32,750		$	31,240		5	%
Effective Rate	Effective Rate	23.6		%	21.5		%			23.5		%	22.3		%			Effective Rate	23.5		%	23.4		%

The ~~increase~~change in ~~the~~ effective tax rate was minimal for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the same quarter a year ago was primarily due to the differences in the impact of increases in operating income relative to the impact of other items affecting the effective tax rate in the current quarter, the most significant of which are federal and state income tax credits.ago.

The increase in effective tax rate for the current fiscal year-to-date period compared to the prior fiscal year-to-date period was primarily due to the relative impact of the increase in operating income in the current period and a larger excess tax benefit received from share-based compensation in the prior period.


NET INCOME	NET INCOME	Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change		NET INCOME	Three Months Ended September 30,				% Change
		2022		2021				2022		2021					2022		2021
Net income	Net income	$	84,707	$	71,409	19	%	$	282,490	$	234,607	20	%	Net income	$	106,549	$	102,114	4	%
Diluted earnings per share	Diluted earnings per share	$	1.16	$	0.95			$	3.84	$	3.08			Diluted earnings per share	$	1.46	$	1.38	6	%

Net income increased ~~19%~~4% to ~~$84,707,~~$106,549, or ~~$1.16~~$1.46 per diluted share, for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to ~~$71,409,~~$102,114, or ~~$0.95~~$1.38 per diluted share in the ~~prior~~same quarter of fiscal ~~third quarter, resulting in a 23% increase in diluted earnings per share.~~2022.

Net income increased 20% to $282,490, or $3.84 per diluted share, for the current fiscal year-to-date period, compared to $234,607, or $3.08 per diluted share in the prior fiscal year-to-date period, resulting in a 25% increase in diluted earnings per share.

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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

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center support, and network security management, consulting, and monitoring, that can be integrated with our core solutions and 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.~~segments

Core
Three Months Ended March 31, % Change Nine Months Ended March 31, % Change
2022 2021 2022 2021
Revenue $ 150,799 $ 135,149 12 % $ 470,962 $ 423,253 11 %
Cost of Revenue $ 66,576 $ 63,225 5 % $ 198,032 $ 185,571 7 %
.


Core
	Three Months Ended September 30,				% Change
	2022		2021
Revenue	$	175,124	$	165,285	6	%
Cost of Revenue	$	72,240	$	66,902	8	%

Revenue in the Core segment increased ~~12%~~6% and cost of revenue increased 5%8% for the three months ended ~~March 31,~~September 30, 2022, compared to the three months ended ~~March 31,~~September 30, 2021. This increase in Core revenue ~~less~~over the prior fiscal year quarter was primarily driven by the growth in cloud processing and software usage revenues. Cost of revenue increased 8% quarter over quarter primarily due to increased direct support costs and higher personnel costs. Cost of revenue increased 1% as a percentage of revenue for the first quarter of fiscal 2023 compared to the same quarter of fiscal 2022.


Payments
	Three Months Ended September 30,				% Change
	2022		2021
Revenue	$	186,540	$	172,591	8	%
Cost of Revenue	$	101,155	$	94,582	7	%

Revenue in the Payments segment increased 8% for the first quarter of fiscal 2023 compared to the equivalent quarter of the prior fiscal year. Reducing Payments revenue for deconversion fee revenue in both periods, which totaled $1,435 for the ~~third~~first quarter of ~~$8,154~~fiscal 2023 and ~~less deconversion fee revenue of $1,362~~$448 for the ~~prior~~first quarter of fiscal ~~third~~2022 and for revenue from acquisitions of $738 from the current fiscal year 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 3% as a percentage of revenue for the third quarter of fiscal 2022 compared to the prior fiscal third quarter.

For the nine months ended March 31, 2022, 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 $21,176 for the current fiscal period and $4,297 for the prior fiscal period and revenue from acquisitions and divestitures of $1,182 from the prior fiscal period, results in an 8% increase, period over period. This increase was primarily driven by the growth in data processing and hosting fee revenue. Cost of revenue decreased 2% as a percentage of revenue for year-to-date fiscal 2022 compared to the year-ago period.

Payments
Three Months Ended March 31, % Change Nine Months Ended March 31, % Change
2022 2021 2022 2021
Revenue $ 177,547 $ 160,841 10 % $ 529,697 $ 472,756 12 %
Cost of Revenue $ 94,628 $ 87,628 8 % $ 283,423 $ 260,411 9 %

~~Revenue in the Payments segment increased 10% for the third quarter of fiscal 2022 compared to the prior fiscal quarter.~~ Payments revenue less deconversion fee revenue in both periods, which totaled $4,703 for the third quarter of fiscal 2022 and $1,911 for the prior fiscal third quarter, results in a 9% increase, quarter over quarter. This growth was primarily due to increased card and remittance fee revenues within processing. Cost of revenue ~~decreased 1% as a percentage of revenue for the third~~increased 7% quarter ~~of fiscal 2022 compared to the same~~over quarter ~~of fiscal 2021.~~

For the nine months ended March 31, 2022, revenue in the Payments segment increased 12% compared to the same fiscal period a year ago. Payments revenue less deconversion fee revenue in both periods, which totaled $13,084 for year-to-date fiscal 2022 and $4,433 for year-to-date fiscal 2021, results in a 10% increase period over period. This Payments revenue growth was primarily due to increased costs related to our credit and debit card third-party processing platform in line with associated revenues and ~~remittance revenues within processing.~~higher personnel costs. Cost of revenue as a percentage of revenue decreased 2%1% for ~~year-to-date~~the first quarter of fiscal ~~2022~~2023 compared to the same ~~period~~quarter of fiscal ~~2021.~~2022.


Complementary	Complementary													Complementary
		Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change			Three Months Ended September 30,				% Change
		2022		2021				2022		2021					2022		2021
Revenue	Revenue	$	137,710	$	125,431	10	%	$	420,915	$	377,193	12	%	Revenue	$	148,350	$	137,778	8	%
Cost of Revenue	Cost of Revenue	$	58,957	$	54,207	9	%	$	172,593	$	158,638	9	%	Cost of Revenue	$	58,437	$	54,417	7	%

Revenue in the Complementary segment increased ~~10%~~8% for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the ~~same~~equivalent quarter of the prior fiscal year. This Complementary revenue less deconversion fee revenue in both periods, which totaled $4,540 for the third quarter of fiscal 2022 and $1,080 for the prior fiscal third quarter, and less acquisitions and divestitures revenue in the current quarter of $71, results in a 7% increase, quarter over quarter. This growth was primarily driven by ~~growth in~~increased Jack Henry digital and ~~hosting fee~~cloud processing revenues. Cost of revenue increased 7% quarter over quarter primarily

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due to increased direct support and personnel costs. Cost of revenue as a percentage of revenue remained consistent for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the same quarter of fiscal ~~2021.~~2022.

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For the nine months ended March 31, 2022, revenue in the Complementary segment increased 12% compared to the same period last fiscal year. Complementary revenue less deconversion fee revenue in both periods, which totaled $13,554 for year-to-date fiscal 2022 and $3,588 for year-to-date fiscal 2021, and less acquisitions and divestitures revenue in the current fiscal year-to-date period of $273, results in a 9% increase period over period. This increase in Complementary revenue was primarily driven by growth in Jack Henry digital and hosting fee revenues. Cost of revenue decreased 1% as a percentage of revenue for year-to-date fiscal 2022 compared to the same period of fiscal 2021.


Corporate and Other	Corporate and Other													Corporate and Other
		Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change			Three Months Ended September 30,				% Change
		2022		2021				2022		2021					2022		2021
Revenue	Revenue	$	12,204	$	12,355	(1)	%	$	38,638	$	34,736	11	%	Revenue	$	19,188	$	12,402	55	%
Cost of Revenue	Cost of Revenue	$	62,178	$	62,710	(1)	%	$	187,751	$	183,861	2	%	Cost of Revenue	$	66,429	$	60,735	9	%

Revenue in the Corporate and Other segment ~~decreased 1%~~increased 55% for the ~~third~~first quarter of fiscal ~~2022~~2023 compared to the ~~same~~equivalent quarter of the prior fiscal ~~year and increased 11% for the fiscal year-to-date period compared to the prior fiscal year-to-date period.~~year. The ~~fiscal year-to-date~~ increase quarter over quarter was primarily due to higher ~~services~~user group and ~~support revenue, including an increase in software usage and subscription~~hardware revenues. ~~Revenues~~Revenue classified in the Corporate and Other segment ~~include~~includes revenues from other products and services and hardware not specifically attributed to any of the other three segments.

~~The increased cost~~Cost of revenue for the Corporate and Other segment includes operating costs not directly attributable to any of the other three segments. The cost of revenue in the first quarter of fiscal ~~2022 year-to-date period of 2%~~2023 increased 9% when compared to the prior fiscal ~~period, was~~year quarter primarily due to higher ~~operating~~internal licenses and ~~fees.~~

fees, personnel costs, and hardware costs.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to ~~$39,797~~$31,970 at ~~March 31,~~September 30, 2022, from ~~$50,992~~$48,787 at June 30, ~~2021.~~2022.

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


		Nine Months Ended					Three Months Ended
		March 31,					September 30,
		2022		2021			2022		2021
Net income	Net income	$	282,490	$	234,607	Net income	$	106,549	$	102,114
Non-cash expenses	Non-cash expenses	168,187		157,963		Non-cash expenses	34,139		56,498
Change in receivables	Change in receivables	83,868		92,716		Change in receivables	101,509		53,404
Change in deferred revenue	Change in deferred revenue	(177,987)		(177,021)		Change in deferred revenue	(65,130)		(60,662)
Change in other assets and liabilities	Change in other assets and liabilities	(55,161)		(41,950)		Change in other assets and liabilities	(40,236)		(44,805)
Net cash provided by operating activities	Net cash provided by operating activities	$	301,397	$	266,315	Net cash provided by operating activities	$	136,831	$	106,549

Cash provided by operating activities for the first ~~nine~~three months of fiscal ~~2022~~2023 increased ~~13%~~28% compared to the same period last year. Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, ~~and~~ for capital ~~expenditures.~~expenditures, and acquisitions.

Cash used in investing activities for the first ~~nine~~three months of fiscal ~~2022~~2023 totaled ~~$145,024~~$249,594 and included: ~~$108,950~~$228,986 for an acquisition; $38,715 for the ongoing enhancements and development of existing and new product and service offerings; capital expenditures on facilities and equipment of ~~$28,386;~~$7,737; and ~~$7,726~~$408 for the purchase and development of internal use software. ~~Uses of cash were~~This was partially offset by proceeds from ~~dispositions~~the sale of ~~$38.~~assets of $26,252. Cash used in investing activities for the first ~~nine~~three months of fiscal ~~2021~~2022 totaled ~~$126,140~~$46,451 and ~~included: $95,991~~included $35,971 for the development of software; ~~$13,300 for purchase of investments;~~ capital expenditures of ~~$14,916; $5,820~~$9,273; and $1,221 for the purchase and development of internal use ~~software; and a $2,300 payment for acquisitions, net of cash acquired. Uses of cash were~~software. This was partially offset by proceeds from ~~dispositions~~the sale of ~~$6,187.~~assets of $14.

Financing activities ~~used~~provided cash of ~~$167,568~~$95,946 for the first ~~nine~~three months of fiscal 2022 and included $193,916 for purchases of treasury stock; $167,091 for repayment on the revolving credit facility and payments on financing leases; and $103,376 for the payment of dividends to stockholders. Uses of cash were partially offset by2023, including borrowings on credit facilities of ~~$292,000~~$280,000 and ~~$4,815~~$1,677 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. This was partially offset by payments on credit facilities of $150,022 and dividends paid to stockholders of $35,709. Financing activities used cash of ~~$283,404~~$66,839 in the first ~~nine~~three months of fiscal ~~2021~~2022 including $35,027 for repayments on credit facilities and

~~included: $384,378 for the purchase of treasury shares;~~ financing leases and ~~$99,778~~$34,036 for the payment of ~~dividends to stockholders; and $86 for payments on financing leases. Uses of cash were~~dividends. This was partially offset by ~~borrowing on credit facilities of $200,000 and $838~~$2,224 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling ~~$28,386~~$7,737 and ~~$14,916~~$9,273 for the ~~nine~~three months ended ~~March 31,~~September 30, 2022, and ~~March 31,~~September 30, 2021, 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 ~~2022~~2023 are not expected to exceed ~~$45,000~~$64,000 and will be ~~primarily~~ funded from cash generated by operations.

On August 31, 2022, the Company acquired all of the equity interest of Payrailz for $229,563 paid in cash. The purchase price is subject to a customary post-closing adjustment to the extent actual closing date working capital, cash, debt and unpaid seller transaction expenses exceeds or is less than the amount estimated at closing. Pursuant to the merger agreement for the transaction, $48,500 of the purchase price was placed in an escrow account at the closing for final purchase price adjustments and indemnification matters under the merger agreement.

The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was funded by our revolving line of credit and cash generated from operations. Payrailz provides cloud-native, API-first, AI-enabled consumer and commercial digital payment solutions and experiences that enable money to be moved in the moment of need.

On September 29, 2022, the Company entered into an agreement with Twilio Inc., which added contractual spend obligations for the period October 1, 2022, through September 30, 2027, of $16,350. This commitment is in addition to the commitments discussed in our Annual Report on Form 10-K for the year ended June 30, 2022.

On August 16, 2022, the ~~first nine months~~Inflation Reduction Act of ~~fiscal~~2022 (“IRA”) was signed into law. The IRA made several changes to the U.S. tax code including, but not limited to, a 1% excise tax on net stock repurchases and tax incentives to promote clean energy. The Company does not expect the IRA to have a material impact on its financial statements.

Credit facilities

On August 31, 2022, the Company ~~repurchased 1,250 shares~~entered into a five-year senior, unsecured amended and restated credit agreement. The credit agreement allows for borrowings of up to $600,000, which may be increased by the ~~treasury. At~~Company to $1,000,000 at any time until maturity. The credit agreement bears interest at a variable rate equal to (a) a rate based on an adjusted Secured Overnight Financing Rate ("SOFR") term rate or (b) an alternate base rate (the highest of (a) 0%, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Adjusted Term SOFR Screen Rate (without giving effect to the Applicable Margin) 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 agreement 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 agreement. As of September 30, 2022, the Company was in compliance with all such covenants. The amended and restated credit facility terminates August 31, 2027. There was $245,000 outstanding under the amended and restated credit facility at September 30, 2022.

On June 30, ~~2021,~~2022, there ~~were 29,793 shares in treasury stock and~~was a $115,000 outstanding balance on the ~~Company had the remaining authority to repurchase up to 5,198 additional shares. The total cost of treasury shares at June 30, 2021,~~prior credit facility that was ~~$1,613,202. During the first nine months of fiscal 2021, the Company repurchased 2,500 shares for the treasury and, the Company repurchased 2,800 shares for the treasury during all of fiscal 2021.~~

~~Revolving credit facility~~

Onentered into on February 10, ~~2020, the Company entered into~~2020. The prior credit facility was a five-year senior, unsecured revolving credit facility. The credit facility ~~allows~~allowed for borrowings of up to $300,000, which ~~may~~could be increased by the Company to $700,000 at any time until ~~maturity to $700,000.~~maturity. The prior credit facility ~~bears~~bore 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 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 prior credit facility iswas guaranteed by certain subsidiaries of the Company and iswas subject to various financial covenants that ~~require~~required the Company to maintain certain financial ratios as defined in the prior credit ~~facility~~ agreement. As of ~~March 31,~~June 30, 2022, the Company was in compliance with all such covenants. The ~~revolving~~prior credit ~~facility terminates~~facility's termination date was February 10, 2025. ~~There was a $225,000 outstanding balance under the credit facility at March 31, 2022, and $100,000 outstanding balance at June 30, 2021.~~

The increase in the outstanding credit facility balance of $130,000 at September 30, 2022, compared to June 30, 2022, was primarily due to the ~~Company's repurchases~~acquisition of ~~common stock~~Payrailz during the ~~current~~three months ended September 30, 2022. This borrowing is expected to contribute to the increase in interest expense during fiscal ~~year-to-date period.~~2023.

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 March 2021 and expires on April 30, 2023. ~~There was no balance outstanding at March 31,~~At September 30, 2022, and June 30, ~~2021.~~2022, no amount was outstanding.

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 $225,000~~had $245,000 outstanding debt with variable interest rates as of ~~March 31,~~September 30, 2022, and a 1% increase in our borrowing rate would increase our annual interest expense by ~~$2,250.~~

$2,450.

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 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 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 ~~March 31,~~September 30, 2022, 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 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

Table of Contents

The following shares of the Company were repurchased during the ~~fiscal~~ quarter ended ~~March 31,~~September 30, 2022:


	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)
~~January 1 - January~~July 1- July 31, 2022	—	—		—	3,947,713
August 1- August 31, 2022	—	$	—	—	3,947,713
~~February 1 - February 28, 2022~~	—	—		—	~~3,947,713~~
~~March 1 - March 31,~~September 1- September 30, 2022	—	—		—	3,947,713
Total	—	—		—	3,947,713

(1) Total stock repurchase authorizations approved by the Company's Board of Directors as of May 17, 2021, were for 35 million shares. ~~The~~Under these authorizations, the Company has repurchased and not re-issued 31,042,903 shares ~~under these authorizations. The~~and has repurchased and re-issued 9,384 shares. These authorizations have no specific dollar or share price targets and no expiration dates.

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ITEM 6. EXHIBITS

~~10.71~~

10.72 ~~Form~~Jack Henry & Associates, Inc. Executive Severance Plan , dated effective as of ~~Indemnification Agreement~~July 26, 2022 attached as Exhibit ~~10.71~~10.72 to the Company’s Current Report on Form 8-K filed ~~February 17,~~July 29, 2022.

10.73 Amended and Restated Credit Agreement, dated as of August 31, 2022 among Jack Henry & Associates, Inc., as Borrower, the lenders parties thereto, U.S. Bank National Association, as Administrative Agent, LC Issuer and Swing Line Lender, and certain other financial institutions as co-syndication agents and joint lead arrangers and joint book runners attached as Exhibit 10.73 to the Company’s Current Report on Form 8-K filed September 1, 2022.

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 ~~March 31,~~September 30, 2022, and June 30, ~~2021,~~2022, (ii) the Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~March 31,~~September 30, 2022 and 2021, and (v) Notes to Condensed Consolidated Financial Statements.

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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:	~~May 6,~~November 9, 2022	/s/ David B. Foss
		David B. Foss
		~~Board Chair and~~ Chief Executive Officer and Board Chair

Date:	~~May 6,~~November 9, 2022	/s/ ~~Kevin D. Williams~~Mimi L. Carsley
		~~Kevin D. Williams~~Mimi L. Carsley
		Chief Financial Officer and Treasurer

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	Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2021	294	$	160.22
Granted	133	178.36
Vested	(63)	143.93
Forfeited	(50)	191.11
Outstanding March 31, 2022	314	$	166.25	$	61,821


	Three Months Ended
	March 31, 2021
	Core		Payments		Complementary		Corporate and Other		Total
REVENUE
Services and Support	$	126,400	$	15,978	$	100,421	$	11,840	$	254,639
Processing	8,749		144,863		25,010		515		179,137
Total Revenue	135,149		160,841		125,431		12,355		433,776

Cost of Revenue	63,225		87,628		54,207		62,710		267,770
Research and Development									27,395
Selling, General, and Administrative									47,408


Total Expenses									342,573

SEGMENT INCOME	$	71,924	$	73,213	$	71,224	$	(50,355)

OPERATING INCOME									91,203

INTEREST INCOME (EXPENSE)									(266)

INCOME BEFORE INCOME TAXES									$	90,937