Jack Henry & Associates (JKHY) 5 Feb 202020 Q2 Earnings call transcript

Company Profile

Participants

David Foss	President and Chief Executive Officer
Kevin Williams	Chief Financial Officer and Treasurer
Vasundhara Govil	Keefe Bruyette & Woods
Kartik Mehta	Northcoast Research
John Davis	Raymond James
Joseph Foresi	Cantor Fitzgerald Securities
Peter Heckmann	D.A. Davidson
Glenn Greene	Oppenheimer
David Koning	Robert W. Baird
Brett Huff	Stephens, Inc.
David Togut	Evercore ISI

Call transcript

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Operator

Ladies and gentlemen and welcome to the Jack Henry & Associates Second Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions] Pleased be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker, Mr. Williams, Chief Financial Officer. sir. ahead, go Please

Kevin Williams

on Good and you year Associates Kevin President Treasurer call. Sherrie. is me for Foss, David XXXX joining the I’m our and and CFO Jack second CEO. Williams, call morning. you, with for today Thank and us earnings the Thank quarter fiscal

and of follow will and some the about state up our business minute, In call to thoughts just I a will David his over for then the with quarter performance the that turn to I provide some additional of regarding lines some the then comments will and and put and out the open provide we thoughts then up press for yesterday updated also close FYXX will release guidance Q&A. for after market we I

number those or of of remind uncertainties. factors, which including this no differ The Forward-Looking these the concerning you certain a or these are Company or we strategies, obligation risks questions statements. to about to due which materially number to remarks responses expectations, Like and revise a includes undertakes Statements events, results to future objectives, to future, subject events update anticipate results. trends to call I First, could cause statement actual or any need from

statements. Risk For the yesterday’s forward-looking press Risk please sections entitled a release in summary information, these additional Factors and Factors and of and refer to our XX-K

and non-GAAP be The yesterday's this discuss can measures release. in income. will certain non-GAAP we operating Also press revenue call for financial financial also on historical non-GAAP reconciliation found measures non-GAAP including

over to I Dave. will call now turn the

David Foss

everyone. Kevin Thank morning you, and good

earnings revenue growth. another report to We are pleased strong with and quarter

the for producing went for into second those work today by quarter. As always, I that like would thanking hard fiscal our our results associates begin all to

performance, million to on fiscal of quarter. increased so the for contributed increased XXXX our up although for that revenue The year and wasn't strong fees were quarter this X% the non-GAAP QX it explanation basis. variance conversion total about overall very over X% a prior $X For the quarter, revenue

quarter Turning in X% to the by solid our of segment for a Revenue X% by and on basis. core business. the quarter increased the segments, we again a non-GAAP had increased

payments both also non-GAAP and this GAAP posting revenue increase a XX% Our in on a segments quarter well basis. performed

had also businesses increase and in a a strong non-GAAP complimentary our We an an with basis. solutions this quarter increase in revenue on XX% X% quarter

are year's of in the ahead mentioned I release, quarter again sales solid teams very As bookings had our record now XX% last press and total a pace. running sales

the cloud move takeaways In to XX existing to our we customers second and core fiscal quarter, XX competitive in-house deals private booked environment.

We also saw bookings very our complimentary and and segments. strong payments solution

new card signed XX clients our three the processing new card side solution clients to of new the debit on business. We and credit

Jack new to All Henry. XX takeaways XX and card of those represent competitive revenue core contracts

Our demand banner strong also clients new XX full signing with digital experienced platform the suite. for very digital

several have of banks published on currently you I'm we the queue installed. have a last more JHA to we press As release in regarding noticed, have solution. anywhere in bank anywhere our be may new happy that the to four production bank live and announce Thursday availability

complimentary based enable open of team This solution APIs - only the banking other built the our core solution is cloud banks. functions. complete connectivity It a to and to leverages set offered and core to by digital digital easy

they and can traditional institution, the digital the offshoot bank brick integrate provide If API just world. being If and can to many example banking in compete to another anywhere digital Jack help innovative deploy Fintech core provider. our This solutions a by the running. from solution bank solutions is today we is need the of mortar our regardless virtually connectivity we technology core is the digital the system the an bank any of new Henry bank clients traditional offered charter, is of that

Regarding new customers on credit includes the and now live This now have we the XX XX on count processing service platform. over XXX live our as rather solution, new clients new new platform. debit full well and migrations clients customers than debit credit installed as

clients process We migrations migrate, have approximately the but programs we January We year. of to of and XXX implement banks complete in during remain call, the because the unions the holidays, mentioned XXXX. of don't changes to credit on our on-track I another migrations their migration suspended round card yet time like debit during to completed last calendar our as to during and that

December financial on institution to payments during we we to customer the I'm live later became bring will this, second release this processor happy the done clearing Although the house, network first real the and with through a the announce month. in country we haven't press a live bring time

at the our I As rather call, connect to a to mentioned clients been time on center us payments solution has allow one designed last network pace in time. groups real to than the

providers, platform provide multiple facilitates and any efficient this clients for the which in logical today. we connectivity to market more through Additionally, processor approach single than our a other

second the and long-term technology prospects year, abilities for our to solutions, relationships, As of be we deliver outstanding strengths to expand success. our our half customer of the customers, spending to our ability to our we fiscal the our service continue begin environment, optimistic our about

the will over I detail some to for on it turn numbers. With Kevin that,

Kevin Williams

increase Thanks, quarter. service The compared revenue support prior line and of the X% to year, Dave.

is and long-term which now quarter million Our primarily compared us continued which both being ways. in private moving related year, good the created combined due for many to shareholders to headwinds for license our some is the the customers support $X.X last cloud, to actually and in-house our

XX% again up last at compared nicely to this Outsourcing services an year. were cloud increase quarter and of

a over grew up deconversion nice remittance, quarter. of card of the go and Dave all dollars our compared compared As processing is to very digital quarter. fees little mentioned, your which revenue, were to million year a line XX% The prior transaction,

last by the for fees. deconversion to and license the quarter operating for consolidate down lower XX.X% last Total Reported on from XX.X% increase this slightly fees or processing due until card through will year a margins to revenue in X% our primarily the migration. basis, year platform into revenue excluding which was additional quarter were fiscal headwinds continue year non-GAAP up was eliminate can remainder year margin related year and continued related to next to we of costs additional and our platform the the to this see migration, these we the fiscal the costs X%

will will we talked to see that us quarterly FYXX, leveraging position and allow on third those headwinds and have on reductions cost have the those will a impact margins operating impact to reduction in margins. income of previous the the our that cost from and calls With return we quarters first about of the remove fiscal our

segment our QX we to and margin new operating Our segments payments margins increase very migrate to can off that increased last the of platform solid core will costs with this get have small going to fiscal continue be year. customers until the headwind to forward we as as continue fluctuations payments in continue additional customers

tax the compared quarter year flat rate for year. effective last was year with at relatively The last to XX.X% XX.X% this

year. fiscal the amortization intangibles decreased For the X.X cash year-to-date which last year was the this to compared to amortization related million press disclosed is release to X.X included acquisitions, flow of million in in total

non-acquisition fiscal our the due due data production developed last of year-to-date, year into and Our are our was placed of products depreciation to half amortization in in center upgrades up which and more being production. CapEx is up primarily this internally first hardware

Operating year-to-date, million is cash from for year. up XXX million flow was which last XXX

which our products, through is up half back X% million CapEx and over the year, developing ago. million into first During Company we from XX.X invested year XX.X - a

guidance. FYXX To update your

discussed we the over have fees have control received. that we timing we of recognized previously, deconversion no As

However, remainder second the small in will compared half, deconversion first at and be which means last over previous large year’s due this to revenue flat to to be for QX. time, increase quarter had we we the the up the year anticipate the year of relatively FYXX

from In full-year addition, and private over for total grow our a cloud therefore, And FYXX. revenue little grow customers compared X% continue FYXX, will to revenue should nicely. GAAP processing

an fees will this deconversion excluding for full-year. acquisition then, be both contributed to million approximately which Geezeo about revenue of the incremental And an $XX year years from for

non-GAAP compared Our little a to last should X% revenue over grow year.

With continued project a on headwinds slight income little offset by above we discount platform operating at basis. from our at to revenue payments X% increased and a migration, additional license and revenue implementation grow decreased cost will related a the deconversion GAAP fees, growth

X.X% Then, on for operating excluding a operating acquisition, costs and and basis net the grow associated related revenue with fees small deconversion non-GAAP the income fiscal from X% between should year. full the income and impact our

operating fiscal between continue fluctuations platform to software subscription will due income experience and to license, revenue quarters We implementation, usage. and migrations our

all of in-line the just with We the margins XX%. year non-GAAP anticipate for XX% to GAAP approximately excluding for margins the we at operating mentioned, year FYXX be and mostly operating things approximately expect

tax we We a to project rate year to of and $X.XX from the of range XX.X%. the will range full to last to QX continue of for $X.XX of our and to FYXX, provided previous full-year a for EPS fiscal we to be range between in the increasing are $X.XX EPS effective current guidance Our $X.XX. XX% be quarter $X.XX $X.XX projected

comments take lines call opening for and our will up questions. you are now to ready we the please concludes open This questions. Sherrie,

Operator

Instructions]. [Operator course. Of

with question first Vasu Govil Our from KBW. comes

Vasundhara Govil

the of strong question, question quarter. talk congrats anticipated growth outside Hi. first strength seeing Thanks of the taking on what the where are you seen are already non-GAAP a Could the this versus and fees seeing sustainability had top-line my and X% raise guidance here. you coming pretty great like XXXX? into and revenue we performance guess for I about have you deconversion beyond also you more year

David Foss

ask comment on I he will wants add that will and add. first to I to then So, anything Kevin

we think are are and the that signing layers on get end, rates you on the those off, which just revenue are customer a customer, hosted virtually in Normally days, sometimes core as don't win contracts. first you and core of these signing means sustainable. get every So business year customers revenue core now side is that XX-year a we the - the contract prop I seven front seeing

there. call we not functionality times went this years on have that the the customers payment wasn't through payments winning The platform. business, starting the card reason - ago, customers five to we we not so reason lose conversion many we were were new the but only to was about because the The talked

of new are signing this platform as are new demand new and we the seeing bringing credit quarter. have XX before, payments on call. and revenue just in we customers, a that out, customers we three because in didn't new functionality debit referenced we on pointed the single Today, the I good signed certainly

is us. sustainable certainly and that for adding So, is

are the full that demand continuing to new clients banking XX have referenced so on The our is side interest we that platform, grow digital continuing for to area. I digital the strong house, that see we and in of suite

a growth is the are So, from but of I the products, as far could product and number headlines lot is coming list and where that growth other as those of kind out still there. a of

The ahead quota was, running ahead sales year their pipeline just of record running mentioned is well last That are here, is I sales the year. team last the ahead and important ahead not record is they now what this of pace. solid. but of year's point year's

So new happening you as sales product add that? far to then a whatever going to and Kevin, lot as are

Kevin Williams

year would customers. add this I customers signed we We if is fiscal core you last thing only core new signed new to XX XX year-to-date. remember The that

we last much those revenue. over that our are both couple the of So drive to to pretty platforms on pace convert continue one a is and keeping as migrate continue to customers for week a of to complimentary going years, we core actually

a share continue And our organic we comments, existing we move customers as this over institutions. his out those see which Dave of from mentioned very of to very as wallet those move we is built and get in a just in-house customers solid to in-house nice outsourcing, revenue on larger

Vasundhara Govil

these provider, merger Great, thanks, has that just M&A couple are And guess very follow-up for banking the better client where market? of one given There I if to winning average your may about how And up relationships or players have that for the been a on of you equals sense a of they guys more so your that conversions and these we are core thinking you. wanted the is competitors environment than about parties a think, the dominant get of a competitive industry. for helpful. are you I are hand sort you larger were quick potentially just positioning in seeing

David Foss

calls have Sure. no about been on serve that all competitors tiers talked Well institutions. are some our of position larger in times we these the many you market. out positioned; that financial more we secret have know it well have the dominant the But is we of to rolling upper solutions

feel I the these the though that would nice right these you piece our happening now. to and to great core the keep represents mind thing keep that of in is But mind The in of I a about encourage are position you deals some with thing know, days business. certainly

solutions But possible our the to Stars are these because be so Profit are win is for still of candles and side us of today, Henry. they what the is. it days the It regardless solution provided offered many a through meaning lose core have Jack for on core

which end Jack hosted Henry. institutions at now rather And of hosted rate a customer, private are they the being hosted some nearly the Jack Henry, than solutions private they know and cloud. real can if Because are the up are in-house larger that cloud not our those in for oftentimes retain win on complimentary you of so paying

So we and in positioned we not point to of out, those dominant space. those deals several the are in as well that are But deals. we are you win player

And opportunity customers. Jack for so there piece Henry to non-core in the is side, of core were with on if amount business still tremendous lose those a of the we

Kevin Williams

a reminder customers. customers those in-house of just are typically And

them So revenue. of if to we represent customers losing our we of lose would those maintenance than more in-house and X% none have are

Vasundhara Govil

it. the Got Thanks color. for

Operator

Thank you.

comes Mehta Northcoast Our from question next Research. Kartik with

Kartik Mehta

time Dave on about I just little you Kevin. about and wanted Hey, last retention a good. ask customers. a and debit talked I good morning was And Dave you to are think credit really migration doing your bit

You roll new to platform. and any you know leakage that wanted out just seeing in I are out find stand stood clients. where terms of not you of clients you where this as net

David Foss

Yes.

a So is . good it question Kartik

good maybe been last shouldn't certainly that that didn't I away, because to call So and say majority way. have is, along wouldn't one I on every, of any the the but were impression every lost on the gone aren't I this that have customers. haven't want I think they news give call there the acquired we vast the But and many, them,

have So XX we have the customers or in so range that way. acquired merged along somewhere been or had XX that

combined they get with if when else, potentially sometimes Jack a know, you to platform. so, And customer, is somebody different Henry it acquired, they their business go is a

of let's I have of a you mergers, lost a don't that along the look a us to handful few have maybe than at at have way So we someplace going because are they going decided we because else. conversion to know put other but lost, look more that solutions, through we ought

been So, of I some that has have mentioned, number, a there lost as have because been but very M&A. been small

- side, we XX debit are signed, Jack all number this have new and anything of paying would not here new I with the the offset before live already I before these that headlined Henry we have on But, are that we the XX customers processing have of in queue, a in that platform.

Kartik Mehta

savings little this you was thoughts and articulated as a conversion? you into bit platform you the as all have know it, the I at get dollar I in your save the this Kevin, had past changed more can And wondering from to amounts from

Kevin Williams

I mean, solid. No. are Kartik, gave amounts dollar previously I still I the pretty think

upside I think some potential to there is those still numbers.

as gave and numbers year are try give of shut platforms somewhat down You next for we to QX like that. QX conservative The going I two and always know, to we cautious we that numbers in when year. we be the savings this see

then the off customers the customers get all platform second end on still we of remaining as off our Obviously QX Dave core off in course of QX. and are non-core by the mentioned, to

year's and costs and take nice obviously costs in margins have those those the throw lot see see savings of going we better. will kind past that you if whole this are that we a obviously those just I to So, provided the quarter, look into

Kartik Mehta

from as second you to what finally, deconversion fiscal as then half the of And last this fees, year half see, same would just of now of year? expect be fiscal the sure on want to Kevin, I second you can make

Kevin Williams

now. like looks That right is what it

Kartik Mehta

very you Okay. Thank much.

Kevin Williams

Yes.

Operator

you. Thank

John question next Our James. Raymond from comes with Davis

John Davis

good trying robust, to morning, but that maybe of on out think XX% the want you on number, bookings to gave also I David, pretty Hey, remember quarterly a last kind start I basis. guys. time is

last So, year how last does take that and it typically? compare with or then quarter to either turn long how does into those bookings revenue for

David Foss

you are there Okay. XX% know I my was time. can't quarter, number give but at last point accurate you as we far up over year-to-date this last year as key an

by it bookings a year So again, team is a sales to comparison actual not is up last the to quota, it performance comparison XX%.

an give the first Last half quarter. quarter last the quarter this produced compared can't combined to as second of was you I run for strong, really year. rate accurate the the but quarter number outstanding with

the as a – the us when revenue, copy of of for translate a sign things today sell things it we because any core As of rare whether are far delivering hosted solutions other regardless or it to of to solution most is deliver, software. licensed we we are as anymore is that

so every that one the of layered in delivery, those overtime. in where revenue cloud is instances And then hosted is in it

processing quarter to usually a contract can conversion signed start core you or after or Payments, times revenue the with see deal. two. start to often revenue so we year within a So, see you

amount complete the So, is it you we X the of depends that in to time the solution us, and sometimes timing on just conversion. know is, driven by order what is, what need

do need ready and are by make everybody's Sometimes that we the financial it driven sure is it is delivering. whatever they because for training institution to

layered licensed to in get that it see when us things far it so the think Board solution. the for in in it today is starts it a same So, for us the rare is But because I quarter to to revenue or when point is of next quarter, the produce. all rare is the version over key as as the sell

John Davis

new kind tougher is called bit helpful. is out then some there, waiting - think acceleration. as a come it And on XX% maybe It you of of faster. that growing it Okay, and this North wins that to of Keep of but a was dive we little for just bit comps back forward? payments get the, kind growth should down but in of going little about quickly and the quarter how

you So about changes near-term in this of outlook going the that forward? a double-digits know can the business should kind Is how grow we that think or term that business. longer to any of

Kevin Williams

this when our Kevin. I talked mean, John So did debit three you years they if have few about customers ago quite we migration, back we the off to we because we is think started this many have wanted. not technology a losing this platform, were times, four

we When that two out the to we make this years and move, going signed were made had leave already we move, losing We customers little customers. time. and ago the of to told that stopped the bleeding, came still at this world we but kind had over were

about stopped totally - new the a last signing bleeding. few We a as few signed finally customers started We So David we quite year year. a ago, mentioned. customers new

and now. not to We we sign them losing those this continue customers year are

we having. right growth for now, - the wins signed obviously are the quarter, is ago producing are accelerated payments that a predicted the that see are mentioned, and So wins none any growth new we And do we those even future seeing we was because new Dave the going it, are foreseeable hesitant that yet. this going to and think revenue to this to as of of I year very I that I

John Davis

noise of messed I from I in then And accounting accounting a the for easier of year. an basis we looks if kind deal, that - guide think guys half XX perspective Despite, about calling even of the point full-year, like it the I new out, this had the comps, quickly I revenue year tailwind the just up are you. otherwise. would or a deceleration that back lot from last quarterly think back cadence Got related you on what be the for know

David Foss

service in still we strong continue the subscription quarter, XXX% software's be we accounting the noise, that because sell that We remember XXX, under same to in John, QX. Well all is going revenue and have a very to of because recognize QX software. of

will first enough. So mean I going be strong continue just Otherwise to in new little quarter to our QX a because the slower be strongest under QX rules. was QX actually QX growth half the be will and XXX

John Davis

guys. thanks Alright, Okay.

David Foss

Yep.

Operator

you. Thank

question comes Foresi next with Cantor Our Joseph from Fitzgerald.

Joseph Foresi

is environment know and you competitors some first do seeing Obviously are point. those just from competitive at an think this is through M&A distracted win your you more the to Hi. What a perspective? are players creating massive day-to-day My are question this market around going environment. are take How allowed share? you you where

David Foss

so question, It industry that people I been a is number that is to had opportunity is going for happening, Jack calls probably Henry. happen. on major I hesitant to of whole a in in it that the the that these is a our good suggest past say distracted of that Joe. create are have bunch competitors to going have

on solutions our taking that up and one is their win eye We for core Can know overall. half in about interest per Our off ball? I to do that prepared running week, as at Henry that little of yet. a sales I Jack two we now. lot I mentioned are deal a side I'm years new over that right the the and have at a been see core before, rates now don't pace to competitors attribute

the time in But there out and of we all in of Henry we and deals with I market. now that is, can interest know Henry now all the high time I solutions pace an as an if of don't is high, say far lot the right are Jack activity interest certainly at pace engaged as Jack it in but probably about right see a

technology Jack our of And there I'm just solutions. not ready competitors, a is in I to Henry specific with describe anything interest lot that know happening to

Joseph Foresi

XX your some is And you that little get it. trying upgrade solid I'm I'm feel and about, Got sort Do you feel do seen maybe that in some you suite the suite wondering, the And causing a my place to in the side just the that talked or wins. the it? upgrades over of I'm to at card deal on the offerings, months have caused we you months see like trying what upgrade, bit of of of from some uptick. got is pickup full that sense leading upgrades a now on did last just again results in have and are of read you and XX improvement to product of your offerings it. card to get then like a what has

David Foss

I Yes, do.

it think a solid observation. I is

spent have these we solutions in Banno enterprise of and talking management rolled out, new and half all the digital a last year lot time, have or our treasury particularly two risk about management years and technology solution. the So, and a we suite suite

market out. about think the talked this anywhere, a been call make I have we that to almost on in today I wanted proved about we everything year, we it talked just because but sure haven't yet,

I is are of new new you we user for It combination right. And solutions that and have some awhile. the so, experience look yes, of feel, for think had a

prospects number our out years technology three the new new of ground just Then and didn't customers or have we rolled a two we to from ago. up, that technologies

much had suite that the a we idea with And on and so right you previously. a refreshed than is there it of I track broader kind think are the

some recently. add you that the that to done of And we acquisitions then have

strategic we three needle recollections view. but So, - have seen as years needle revenue is last in a us definitely done concerned, the movers they the you movers haven't have haven't two, of doing been as been from point far

very this created have lot it about talked in of about a center have robust commercial lending now past. I it on getting I didn't call, is many today's but even that we times So, suite talk attention.

very intentional solution. create of move was put little together we new - acquisitions So, that that few a - that to

earlier. us on That a for not solution revenue a but highlighted mover acquisition, The point is definitely call it contribution digital Henry, our needle of differentiated Geezeo strategy the from Kevin makes with suite. a Jack view, the

think those all well. the of of combination So, positioned us I has things

our are business you in you when challenge is, The never are done.

have talking to the the else. to constantly about and for be been re-examining I opportunity are on differentiate these couple But, things great trying that from to last everybody how we find that calls solutions about of You we with refreshing and position years. your feel have today

Kevin Williams

dollars the on Joe one again, and from clear go products, we with the market there bank [X] things SilverLake of side, I And credit (Ph) is, the focus. think flagship in have primary $X the our are core was you best products those the by spend and side to that space. we billion R&D is on. $XX billion And the very We system banks [indiscernible] last know, two year SilverLake ticked to for the

that of around all reputation new The core to in products Dave mentioned those win technology combination win and that I is the think the why and when market. that to that get have continue you wrap to all continue So, you we things.

Joseph Foresi

me, is for it. something. It said And Got you you. I'm one then and the glad for last Kevin,

just confidence you see bit little that going give level an of to margins products. free around and us to the detail event. that of confidence. on of it We a flow expand up, update the you Can due finally to pick a are know that we have maybe for sunset year is that and the said you level next waiting have of year cash next Thanks. been I your to why

Kevin Williams

hard the cost and the what what know those will obviously We the dollar cost we throughout Joe organization will those our on are today. additional running in systems is we that be to able personnel that there we I we going for is also mean, eliminate. Well, away, be know card platforms know that our costs so are debit

both kind numbers fiscal will are and and QX away costs the margins away of increase will that go for that QX I’m in the of see we QX year and in those very year, going So this two QX year. next extremely in nice the confident big tranches gave I go that numbers to and of next in

Joseph Foresi

Alright. Thank you.

Kevin Williams

Yep.

Operator

you. Thank

Our Heckmann Peter next comes Davidson. with from question

Peter Heckmann

question. Thanks else Good regulatory upgrade. the as any and a you for for anything morning bookings talk Cecil that playing that is Could catalyst the gentlemen. about to some maybe of into including that taking some deadlines act the radar needs on

David Foss

question Good was us guess about then. or half Cecil to the I a a talk definitely ago had Yes. was ago and Two was a into excited year or Today, effect. for first I it although Peter. whenever Cecil wave, and catalyst went back we January years Xst

extended definitely has second And an for timeline reprieve. second not the has been Cecil January a wave, they so who needed it. wave, driver the smaller extra by it have given that those been Everybody needed right and in X, the the it now. For is institutions,

there not to when action comes now is it Cecil. much So right

And revenue. any no there or revenue is that lot regulatory a we driving lot our major that expense for is Obviously happening of change there competitors, producing just know, that a regulation. around not beyond us is you of have

no being regulatory drivers right our to are fueled now having systems but change. that We revenue constantly by comply, ensure

Peter Heckmann

or the on landscape? Got side? the in are does the commercial differentiating where then management What it. on question And some lending, competitive of just sit the aspects origination more another that reporting product

David Foss

unique of the piece does those. that solution is all it of is that That

to be loan online, designed lending borrower is electronic. it commercial apply So can commercial solution. the a online for all an Meaning

has at everything a did. the can They off they decision came quick paper we that of have It institution. through acquisitions small engine financial electronic. the So drop one forms don't that do to

process. chooses, the can if bank they the So decision automate

the XX a borrower back for sets. loan, automated minutes whatever bank get an smaller commercial So decision hour in an or can the or

more normally least For but provide commercial response a the loan to to larger to send review, online at or the formal still borrower. some can they committee loans, it would

the for then bank. And

just origination not is it of So the the the the to bank is it loan end to the front through the of borrower, life the loan. manage loan for

those all come banker approve an platform. basis statements. statements review So for is same as up, and financial requirements to receive financial for automated into on the annual and example, That the

well. So, functionality as bank there at backend the is the

doing it other as online differentiated So, to that offering. commercial lending completely is out there compared is solution any

into it commercial love pretty it, solution. dig lenders dig of So, people kind are who impressed who and the into

it, (Ph). Officer more because and And more time that [administrative] time the their the with Loan lender and dealing the with clients a tool less spend financial be for administering to is allows or it likes institution Chief efficient

by a well. tailed productivity as widely as being So, tool lenders

Peter Heckmann

I Great. it. appreciate

Operator

Thank you.

question Greene Glenn Oppenheimer. next comes with Our from

Glenn Greene

Hello. good Dave Kevin. morning Thanks. and Hey,

David Foss

morning. Good

Glenn Greene

the I of alluded first guess takeaways. just to question, number you sort of the competitive

like I it sort think improved sort typical just that you as frame It you Can competitive of year? can what a of in position XX an first quarter. for year-to-date relative the of it all, was and strikes you. acceleration, me to - was

David Foss

last year, the why the for the for the we of Glen. said a XX you has pace first that our of that is one Well continuing the first XX it for so But, if at which are half or was half on been pace. a half two year, quarter and week, earlier, look the is I and years

we so fell second normal into is out. but So, quarter, didn't quarter, evens next you into the core as they of signing, of close were lot first in have sometimes really know lapse over the as so the about quarter, a can those it the thing to kind many they decisions

So, a is core leading new one so, I'm by same very customer comfortable on the that the about which years the the far, on industry saying we have which been last for two week. per pace is half same pace, we are or and

Glenn Greene

guess factors, Okay. sort pace And to to I is of competitive way I an why, don't you you Is may demand alluded demand? at want of are go a be sort to high, your then to the the all there sort distracted. frame and you allude a an seeing earlier it market to given of suite. I that alluded but you with situation number environment, question, of question product think time a better why any think time of maybe sort competitors to all of there, an pace better you could

David Foss

could I you an wish I Yes, answer, give absolute Glenn.

highlighted I the earlier of call. is of on things, combination it a think I several as those

creating I lot things we treasure solutions are doing that demand, a it demand getting here objective new out suite, solution, talking refreshed that Banno center of are commercial about think of rolled for Digital new these of the when that past have technology. and risk, have leader enterprise the two, - payments to suite, been all we they three a lot are the a in space creating in platform, of the we the management not these view lending years years attention, out last kind couple as rolled have technology in only the with but a solutions, comes things the innovative

variety the about been winning we and a pace the a have people is of things you it that of when side, core are that. think at combination on I hear

some these of is must I then coming see down. it we deals? those happens. think How that things and right so, slowing are winning of is that guys don't come be right. combination doing all now, a there chatter together And something these And that core They

Glenn Greene

grew is deals Okay. in is And sort that my converting but then is sustainable? of said guess the outsourcing of Kevin, on, I XX% new mid-teens quarter, think you sort

Kevin Williams

know over I don't if years, two range. you the the XX% at Well, our to growing mid-teens look outsourcing but back if last I mean, XX% is has sustainable Glenn, been

I little a sustainable. in it bit, very XX% up popped I think XX% So, is but that to mean,

Glenn Greene

guys. thanks Okay.

David Foss

Yep.

Operator

Thank you.

question with Baird. Our David Koning next comes from

David Koning

third think I third of still is there is four if full a off QX to fiscal by great guess think just a guys, XX kind the of million few you that and job. about and run so to the a million before sure, once XXXX, think then of old numbers fiscal cost million, comes the got and of platform QX it Hey you off million off rate that questions, think of make per kind right is I it? that I is you four quarter, in way we said QX move savings just I XX said

Kevin Williams

Yes.

David Koning

Okay, really and And really pattern this new that cash for and usually The an patterns, quarter, is like Is but good. QX had a just QX this just then QX for flow, and like time? pattern flow. quarter. like normal you are the just second QX free strong was one cash seasonal weak fiscal QX are or did outstanding strong just change something changes

Kevin Williams

look couple historical over of you right. mean things are I you Well, a absolutely numbers, If Dave.

because a private burning not cast. QX cash QX have annual cloud continues cash We of only a from extremely our generate inflow and monthly They outsourcing maintenance our payments, and and quarters. no nice recurring, strong then business are are to to but of both QX and also our starting for our more our our billings, and but billing shift in more, QX always as to been longer

out So just income back a that free look point, to it level to to of bit. is months, flow. XX over little And starting if cash our a are little trailing you we XX% net conversion

So we to are right back that up XXX%. getting

be rate FYXX, I as out. those to we think, costs into conversion, up conversion by to is are think get additional going when back XXX% I again we our take well able

David Koning

great. Okay, just And last one one. quick

going the the of You eight. This eight, organic last kind year, more the in seems it to year eight think seven, feels and four. five, QX is know, pattern like year starting right I was nine, went was it rest QX now around growth like, QX be of

but higher know are you where is to year the still, year the stable now, more decelerated is it of a this and QX So little much normal a a little last the of is then it about rest year, a QX little higher compared kind than through same is I more year?

Kevin Williams

on point. You are exactly

are year at is over non-GAAP X% a to like said to I X% going the be So going the year year. we gap for X% little bright of over finish rest the and and

David Koning

Thank Now good. it really is you.

Kevin Williams

Yep.

Operator

you. Thank

Our comes with from Brett question next Huff Stephens.

Brett Huff

Kevin morning Dave. Good and

David Foss

Good morning.

Kevin Williams

Good morning Brett.

Brett Huff

mentioned solution or product number there fragmented kind new uptick Three a on market. wins it favorite me, downtick or mine progress a the such and cash a the or data kind understand of the any interest on in is one. management Any one? how Dave, of to is you treasury that because that is of questions and such

David Foss

Sure. quarter. We treasury signed in a the seven

We users didn't live today. number with me. the businesses impressive, businesses platform. on number have bring numbers for those of businesses the of end institutions XX statistics number the it XX But at lives the got of I is now. platform, live And and and a the the I users, using just

Brett Huff

point the And helpful. before how is larger about card of you to and to market, talked then of and moving this needed kind service the of up framed banks. product was of some That kind the business that up

cash same with think the I management. the thing

is a is of with there sort others know similar I think probably couple the of it I commercial I'm lending. missing.

a we you those M&A effectively And and to these and much whether is that big ongoing? Where be still have do banks, going banks going in competitor trying a or more those are market, things don't them bigger of up deals with bank, negotiation conversations sort you going ProfitStars of framed where context we this of at is to scoring are or the you sort is as are core you how all? points banks? relationship the all those as But move arm are also to couple the ourselves hearing of compete what from that, in how just mergers you a whom off for are sell conversation maybe cold they and

David Foss

I it because banks been conversations have talk general, the lot is of to any of been I it those fact, to about in this around through in great I connecting among a deal I'm ease whether an not those in realized. just has going specifically But XX-years. the more size, of API banks interesting A deal than and size, of business think a a negotiations. the set. dissatisfaction, great that traditional topics of of the or dissatisfaction tool be integration, of third-parties, there

lot those among There of of customers. a a frustration, lot demand is

that So well Henry. Jack bodes for

are for for designed larger that really together connectivity, record open track new easier solutions institution, We that that have of great tools with all these have developing out make a rolling the specifically of put that been institutions. life we

there. We are of lot points scoring a

the space secret, one go it that difficult the on side. referenced core no a be billion track-record don't for into have will space, in if that okay, earlier to say a partner call, is to guys it you that assets, and is I on I Now, about know in think say, these decision somebody to with I $XX the you first

in So moves lot to points, are going there are the ongoing going to it. make a things at seen are past for market and moving moving to in there and direction. Jack hammering against But Henry, then continue up we away us committed but work are are years, we scoring you we that conversations, we here few of continue that and that are have us a just

banks we be to successful. to dominant be you among billion $XXX the the But don't know, have player

kind of We here been we are surely lots but and slowly have doing doing runway doing that have of into what up space. growing

Brett Huff

when that that? who then me, Mitek, for it hard about we Wells any is one might figure all thing last that in you USAA for that whole on, to in just to kind out there? way that. pull how us worry string, get of about That's you going this Anything And or to is think Fargo, helpful. smeared Does do relate

David Foss

through it this I viewing affects space or and internet offer be images. don't them solutions, know solution, all to to about. that that It potentially that converting there is it anything us be text whether in digital worry are an whether of image capturing imaging banking

to are those in something wouldn't technologies, it space something of offer technologies, potentially into worry for come is certainly at this players major the of we all those have All us. as game, all stage play which on. that the our categorize eyes that of - of about, But are those but it us I

Brett Huff

for guys. appreciate I Great. time it. the Thanks

David Foss

You bet.

Operator

you. Thank

comes question Togut Evercore David ISI. from next Our with

David Togut

morning. Good you. Thank

their As top you smaller between be with union sit IT greatly down priorities nuance banks then let's the budget comment CEOs, say and any would outlook, banks offer, growth you. credit Thank you on might you and larger bank XXXX and can appreciated. spending

David Foss

depend a information or are so every the think. couple we month year. I here on within Sure of Dave. get There will survey next that surveys I

you year, I So, separate host anecdotal. each is credit on But is, banking the will think CEO with a everything you that know, and of I can one say side. the fall in side I I conference share union the thing

on. demand conversations, ended we CEOs about at for up spending, so, future those usually And often you conversations the know, and meetings, so their we those those XXX for talking technology XXX, have,

particular was there. as can mean I this and holiday optimism continue CEO commitment the their tell you like And of before to spend things season, I still digital. just late fall, in to

out So why consumer figure that. of we lot around tools digital, what to experience how modernize that and they any I talked trying the the is them have can their monetize are here demand for to about use are of a think consumers to

online it talked the about. suite suite play brings that we talked about, Banno into commercial lending we So center play into brings that the

kind optimism slowing they adjusted don't it, of we happy They about not are see CEO have but to So down. They environment to have continues live they that interest be high. the that adjusted rate to in. it and

And is talk the hearing here earnings call, don't what I next that I'm just to. from information on but based certainly will anecdotal. formal more survey a shifts before CEOs get the I expect major

David Togut

say just kind information anecdotal had with conversations let's to in any or the space. I of good between then And appreciate treasury management traction banks, up market large and from smaller you your size that. mid banks nuance

of demand priorities? So you banks of some the terms difference XXXX? for know, You any are to spending when speak there larger picture in

David Foss

Yes. question. good is It a

are larger the for their can up. think be what the only are there focused on banks me ratio looking efficiency I intensely those ratio their would efficiency for are that drive and nuance help tools

spend That go conversations. absolutely for improve is ratio see as banks money the smaller probably focused, ratio but in difference is to a major efficiency larger not key is to the they a topic, the topic The that banks, with I are them. intensely that as not efficiency ready just

David Togut

much. very you Thank Understood.

David Foss

David. you Thank

Operator

[Operator Our [indiscernible] Wells with comes from you. next Fargo. Thank question Instructions]

Unidentified Analyst

as morning. question. was material not momentum have past. you have business could the Hi. hoping long-term solutions margin of for the thank the my the overall you some given on that taking in some comment in And profile may generated you I newer of Good been contributors

some of patterns? profile the to card fees if redundant we mix platform revenue past changes. envision if changes seasonal margin wondering or any material So and Do the you the overall elimination XXXX look any the of

Kevin Williams

only make see going about Payments XX% seasonal of I Well, bigger. to mean is revenue we continue are much that think so XX% and revenue. to is Kevin. are going this you I up to recurring get now don't change our because

offerings the Our those of XX% margins about payments outsourcing, little our of shifting are maintenance, revenue larger. continues balance our bit slowly improve outsourcing cloud over and XX% business and is or revenue get private continue which to recurring as is which a in-house to the to

out, traditional costs our get going a future. a said first So through expansion in the taken opening more some go that to XX and we margin back are at comments, back to point and as once XXX the of those bips will foreseeable getting to half my we get to XXXX I of traditional margins year go for we additional

Unidentified Analyst

I you. color. the appreciate Thank Great.

Kevin Williams

Yep.

Operator

like showing to Thank for questions you. back this in further over the remarks. to turn queue I am now further at any would no I call the time. management

David Foss

Thanks Sherrie.

Analyst First again. of Annual to Fair to Brett like again point that, will we be point something our on all, the Huff’s May the out once I we Dallas, Day would will and Tech in holding have Texas area Monday, Mini XXth

the of have so time be products that much about digital our talking commercial payments treasury and we spent we will and management. cash the some that solutions, highlighting be So, platform there our lending would platform,

others few the make next this be to call So, the event. in and many year. can out this you weeks event going invitations for We it that will of hope on

take of efforts of with the of results are all and customers. care pleased operations our we associates ongoing our Now, to from our

is best associates Our for customers focus and and our continue all our executives, on managers of to shareholders. our what

I again you provide us number. playback And for now Sherrie, will want you please to the joining today. thank

Operator

number ID for ID that's your conference XXX-XXX-XXXX, participation. this call. XXXXXXX. The conference will you Yes. concludes number be and Ladies Again, gentlemen, conference playback Thank XXX-XXX-XXXX today's XXXXXXX. with number,

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