Jack Henry & Associates, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Jack Henry & Associates fourth quarter fiscal year 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Kevin Williams. Thank you. Please go ahead, sir.

Thank you, Gigi. Good morning. Thank you for joining us for the Jackson & Associates fourth quarter and fiscal year-end 2020 earnings call. I'm Kevin Williams, CFO and Treasurer, and on the call with me today is David Foss, our President and CEO. In just a minute, I'll turn the call over to Dave so he can provide some of his thoughts about the state of our business, the performance for the quarter and fiscal year, as well as some comments relating to the impacts of COVID-19 and some other key initiatives that we have in place. And then after that, I will provide some additional thoughts and comments regarding the press release we put out yesterday after market close and provide comments regarding our guidance for our fiscal year 21 provided in the release and then open the lines for Q&A. First, I need to remind you that this call includes certain forward-looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results. Like any statement about the future, these are subject to a number of factors that could cause actual results or events to differ materially from those which we anticipate due to a number of risks and uncertainties. The company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our Form 10-K entitled Risk Factors and Forward-Looking Statements. On this call, we will discuss certain non-GAAP financial measures, including non-GAAP revenue and non-GAAP operating income. The reconciliations for historical non-GAAP financial measures can be found in yesterday's press release. With that, I will now turn the call over to Dave.

Thank you, Kevin. Good morning, everyone. We're pleased to report another strong quarter of revenue and operating income growth. As always, I'd like to begin today by thanking our associates for all the hard work and commitment that went into producing those results for our fourth quarter and for the entire fiscal year, particularly in light of the challenges posed by conducting business in the midst of a global pandemic. Before we get into the discussion of our results for the quarter and the full year, I think it's appropriate to review some of the ongoing impacts we're seeing as a result of the pandemic. We remain extremely thankful for the fact that very few of our almost 7,000 employees or their family members have been directly affected by the COVID-19 virus. Our HR and benefits teams are working closely with all the groups around our company to be sure anyone who is affected is receiving the care and accommodations they require. We continue to operate with well over 90% of our employees working full-time remote and have recently extended our return to office date to January 4th of next year. We extended that date for a couple of key reasons. First, we have a strong commitment at Jack Henry to put our associates first as we make key decisions about how we run the company. With all the concerns expressed by our teams about returning to an office environment, and with so many members of the Jack Henry team struggling to make plans for their school-aged children in the fall, we decided to remove the worry for our employees by extending the date. and second, we have had great success in all areas of our business adapting to a work from home status and we see no reason why that can't and won't continue. So the decision was easier than you might otherwise think. Speaking of our success working from home, we are now several months into working with a modified set of processes for many of our groups. We are routinely doing sales presentations and executing contracts with no onsite presence at the customer location. We've completed many 100% remote implementations with great success, including several full core conversions. And our customer service teams continue to deliver outstanding service through remote channels while keeping our customer satisfaction ratings at an even higher level than they were before the pandemic. I continue to be amazed and impressed by the adaptability and commitment of our team members throughout our organization. They continue to execute in this new environment with the success of the customer always foremost in their mind. As I mentioned on the last call, many of you have commented in the past about the unique culture at Jack Henry, a culture built on the do the right thing and do whatever it takes mantra. Never has that culture been on display in a more meaningful way than what we've witnessed during this pandemic. I'm extremely proud of our team and their ongoing commitment to our customers and our company. With that, let's shift our focus to a look at our performance for the quarter we completed in June. For the fourth quarter of fiscal 2020, total revenue increased 4% for the quarter and increased 4% on a non-GAAP basis. Deconversion fees were up just slightly over the prior year quarter, but down significantly as compared to our fiscal third quarter. Turning to the segments, we had a solid quarter in the core segment of our business. Revenue increased by 4% for the quarter and also increased by 4% on a non-GAAP basis. Our payment segment also performed well, posting a 3% increase in revenue this quarter and a 3% increase on a non-GAAP basis. We had a very strong quarter in our complementary solutions businesses with a 9% increase in revenue this quarter and a 6% increase on a non-GAAP basis. As I highlighted in our press release, despite the obvious COVID-19 related challenges for the sales team, June was the strongest sales month in the history of the company, and the fourth quarter was our strongest sales quarter ever. All three sales groups exceeded their quota for the full year and for the quarter. This is remarkable to me because we made no adjustments to quotas for our sales teams as a result of any COVID-19 expected impacts. In the fourth fiscal quarter, we booked seven competitive core takeaways and nine deals to move existing in-house customers to our private cloud environment. Several of our complementary offerings saw very strong demand in the quarter with, as you might guess, our digital suite leading the pack. We signed 53 new clients to our Bano digital platform in the quarter, and we signed 13 new clients to our new card processing solutions. For the full year then, we signed 43 competitive core takeaways with six of them greater than a billion in assets and six de novo banks. Additionally, we signed 45 contracts to move in-house core clients to our private cloud, 167 new Banno Digital customers, and 81 new clients for our card processing solution. Of course, we signed a myriad of other contracts for many of our other solutions as well. but it's important to note that almost all of these contracts represent long-term recurring revenue commitments to Jack Henry for a wide variety of our solutions. Speaking of our new card processing platform, on the last call I pointed out that prior to the onset of COVID-19, we were poised to wrap the migration of our core clients by June 30th and had all 136 of those clients scheduled to convert in April, May, and June. In early April, however, several of the clients on those lists asked us to delay the schedule because they had minimized their employee presence in their offices and didn't want to introduce any new payment solutions while their employees and customers were working remote. As disappointed as we were to introduce a delay in a project that has been moving along so well, we determined it was definitely the right thing to do. In July, however, we resumed the migration process and now expect to have all of our core customers migrated by the end of the current quarter and all of our non-core clients completed by the end of our third fiscal quarter. We are prepared and anxious to wrap these migrations and expect no further delays from our customers. One topic I haven't discussed previously on these calls is all the work we've been doing in the area of diversity and inclusion for the past several years. In the spirit of doing the right thing and attempting to always put our associates first, we formally launched our D&I program more than two years ago with a variety of training initiatives, followed by the launch of our first business innovation group. We added a full-time diversity leader to our team more than a year ago, and we now support five very active and successful business innovation groups within the company. Our D&I team provides ongoing training, they facilitate panel discussions, and work with the Jack Henry leadership team to ensure that our work environment provides a safe space for our employees to thrive. Given all the social unrest in our country today, I am particularly grateful to our team for the outstanding progress and long list of successes we've seen with this program so far. As you have undoubtedly noted from the press release, we have decided that we will stick with past practice and provide guidance for the new fiscal year at the conclusion of today's call. As we've discussed in the past, although our business model is not impervious to impacts from the current economic environment, it is resistant to significant swings caused by economic disruption. After much discussion, and despite the obvious challenges in trying to predict the future in the midst of a global pandemic, we believe we have enough information to provide reasonable insights and assumptions, and sharing that information with you today is the right thing to do. As I reflect back on fiscal 2020, even with the extraordinary challenges in the environment at the close of our fiscal year, I view it as a very good year for our company. We have made great strides with our diversity and inclusion initiatives and our employee engagement scores remain very high. Our levels of customer engagement and customer satisfaction scores are also very high. Our sales teams are performing extremely well and have positioned us for another successful year of selling and overall demand for Jack Henry Technology Solutions remains high in all segments of our business. As we move forward, we will continue to implement minor changes to our delivery and service models. and we have every expectation that we will end next calendar year with a greater percentage of full-time work from home employees than we had before the pandemic. We have a commitment to doing the right thing for our constituents that we believe will serve us well as we adjust to the new normal. We will continue with our disciplined approach to running the company and expect that approach to help provide stability for our employees, customers and shareholders. As we begin the new fiscal year, I continue to be very optimistic about our future. With that, I'll turn it over to Kevin for some detail on the numbers.