Jack Henry & Associates, Inc. (JKHY) Earnings & Analysis

Latest quarter

Jack Henry reported Q4 FY2026 revenue of $644.0 million, up 4.66% from Q4 FY2025, and the reported figure exceeded the consensus revenue estimate of $629.5 million. The company reported adjusted EPS, as the consensus counts it, of $1.57, above the $1.44 consensus estimate; diluted EPS was $1.57, down −10.3% from a year earlier.

Mimi Carsley said services and support growth reflected data processing and hosting revenue from private and public cloud offerings, while processing growth came from card, digital and transaction, and faster-payments revenue. She said higher personnel costs, direct costs, internal licenses and fees, and research and development expense contributed to quarterly expense growth. Jack Henry reported a Q4 gross margin of 42.5%, versus 44.1% a year earlier, and an operating margin of 21.2%, versus 25.3%. The company reported free cash flow of $245.1 million, down −9.65% from Q4 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Greg Adelson said the company’s sales activity included competitive core wins and a greater proportion of deals combining core, digital banking and card capabilities. He said the company’s public-cloud-native platform has supported conversations with larger financial institutions and is a factor in competitive wins. Adelson also said the company has begun consulting engagements to help clients establish AI governance and related capabilities.

On product development, Adelson said Jack Henry is incorporating AI capabilities into client solutions and internal operations, while maintaining risk management, compliance and governance frameworks. He said the company is advancing its platform with modules that clients can use individually or as part of a deposit-only core offering, and said several clients are in closed beta testing. In response to an analyst question on opportunities outside the company’s core customer base, Adelson said Jack Henry signed a client to use the Banno application and Jack Henry Platform without using a Jack Henry core.

Carsley said fiscal 2027 margins will reflect cyber and infrastructure investments related to frontier models, AI innovation and the EC 2030 data-center consolidation project. She said fiscal 2026 also included lower medical expenses and commissions that the company does not expect to recur, and said the company is focused on AI efficiency, automation, workflow and headcount management. When analysts asked about the outlook for margin expansion, Carsley said product mix, AI efficiency, data-center work and emerging offerings could affect margins over time, while stating that fiscal 2027 is not expected to be the year when that higher sustained level appears.

On the quarter ahead, Carsley said first-quarter non-GAAP revenue growth is expected to fall modestly below the low end of the full-year range because of the client-conference timing shift and certain one-time revenue items. She said revenue is expected to improve gradually through fiscal 2027 rather than depend disproportionately on the fourth quarter.

Guidance

Jack Henry set FY2027 GAAP revenue-growth guidance of 5.50% to 6.50% and non-GAAP revenue-growth guidance of 6.30% to 7.30%. Carsley said the company expects GAAP EPS of $7.33 to $7.38, a GAAP operating margin of 24.5% to 24.7%, and a non-GAAP operating margin of 24.1% to 24.3%. The company also expects a 23.0% GAAP tax rate, $23.0 million of deconversion revenue and free-cash-flow conversion of 85.0% to 100.0% for FY2027. Adelson said Jack Henry expects 58 to 65 core bookings in FY2027.