Jack Henry & Associates, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Jack Henry & Associates First Quarter FY 2022 Earnings Conference Call. At this time, all participants are in the 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. And please be advised if today's conference is being recorded. If you require further assistance, please press star 1. I would now like to hand the conference over to your first speaker for today, Kevin Williams, CFO and Treasurer. You may begin, sir.

Thanks, Brian. Good morning. Thank you for joining us for the Jack Henry & Associates first quarter fiscal 2022 earnings call. I am Kevin Williams, CFO and Treasurer, and on the call with me today is David Foss, Board Chair, President and CEO of Jack Henry. In just a minute, I'll turn the call over to Dave to provide some of his thoughts about the state of our business, financial and sales performance for the quarter, comments regarding the industry in general, and some other key initiatives that we have in place. Then after Dave concludes his comments, I will provide some additional thoughts and comments regarding the press release we put out yesterday after market closed, and also provide some comments regarding our updated guidance for our fiscal year 2022 provided in the release yesterday. And then we will open the lines up 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 10-K entitled Risk Factors and Forward-Looking Statements. On this call, we will also 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'll 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 first fiscal quarter, particularly in light of the challenges posed by the ongoing pandemic. We continue to operate with well over 90% of our employees working full-time remote and continue to evaluate options regarding an appropriate return to office target for all affected employees. With that, let's shift our focus to look at our performance for the quarter we completed in September. For the first quarter of fiscal 2022, total revenue increased 8% for the quarter and increased 9% on an on-gap basis. Deconversion fees were down more than $2 million over the prior year quarter. Turning to the segments, we had another solid quarter in the core segment of our business, Revenue increased by 8% for the quarter and increased by 9% on an on-gap basis. Our payments segment again performed well and also posted an 8% increase in revenue this quarter and a 9% increase on an on-gap basis. We also had another strong quarter in our complementary solutions businesses with a 9% increase in revenue this quarter and a 9% increase on an on-gap basis. Traditionally, our first quarter has been our lightest sales bookings quarter because our fourth quarter tends to be extremely strong and the sales pipeline is depleted as a result. As you may recall, the June quarter was the strongest sales quarter in the history of the company, so we certainly expected this historical trend to hold true. What we experienced, however, was just the opposite. The performance of the sales organization was, again, very strong with a number of notable wins. In the quarter, we booked six competitive core takeaways and ten deals to move existing in-house customers to our private cloud environment. Although our rate of six takeaways is light as compared to our normal run rate, it is clear to me that a number of deals fell into the month of October because we booked six more core takeaways in October alone. As we've discussed on prior calls, our convert merge backlog is a good indicator for us of what to expect with coming mergers and acquisitions within our base of customers. We can now see that M&A and the banking space will be very active this year because almost all of our conversion slots for acquired banks are full for the year. We are working to evaluate whether or not we need to add more conversion teams to keep up with the activity. You should expect to see a corresponding increase in deconversion revenue as some of our institutions are acquired by others in the space. Kevin will provide more detail on this line when he shares his comments. We continue to see good success with our new card processing solution, signing six new debit processing clients this quarter and one new credit client. We also continue to see great success signing clients to our Banno digital suite with 35 new contracts in Q1. Speaking of our digital suite, we are continuing to implement new financial institution clients on the Banno platform at a similar pace to recent quarters. At the end of Q1, we surpassed 6 million registered users on the platform, and that number is growing at about 125,000 users per month. At the same time, our Banno platform continues to hold one of the highest consumer ratings in the App Store. The Banno Digital Suite is well down the path to becoming the industry-leading digital banking solution. The continued success we've seen with sales and adoption of our digital suite is consistent with the expectations coming out of the bank director technology survey published in August. As they do every year, bank directors surveyed hundreds of their subscribers during June and July regarding a variety of technology prioritization and spending topics. More than 50% of the responses they received were from bank CEOs and or board members with almost 80% of the respondent bank greater than $500 million in assets. This year's survey showed an interesting shift as more than 70% of the responding banks had moved efficiency of operation to the top of their priority list. An improved customer experience and an improved digital experience followed closely behind. To further the point regarding an improved digital experience, this year 54% of the respondents indicated that their customers prefer to interact with their bank using a digital channel rather than in branch or over the phone. The survey also indicated that the median increase in expected technology spending for the coming year was 10% as compared to the prior year. All of this bodes well for the future of our digital suite as well as the other solutions offered by Jack Henry, which help facilitate an improved customer experience and an opportunity to enhance efficiency in the financial institution. As many of you know, we normally conduct our two largest client conferences in the fall each year. This year we combined those conferences into one event and, again, hosted the sessions virtually. We had hoped to be in person this year, but because of the size of the event, we decided that wasn't prudent. As we saw last year, attendance was much larger than our in-person conferences because nobody had to incur any travel expense, and they were able to readily drop into virtual sessions. We were pleased to be able to successfully interact in a virtual setting with many of our existing clients and prospects. Last week, we announced two pending retirements from our leadership team. Our longtime CFO and Treasurer, Kevin Williams, and our CTO, Ted Bilkey, have both announced their intent to retire next summer. As we shared in the press release, we already have a search-in process to find Kevin's replacement, and we'll be considering both internal and external candidates. Kevin will be with us until we identify the right person and have them fully prepared to take the reins. Ted will transition out of his role in January when Ben Metz, our current head of digital solutions, will become our chief digital and technology officer. Ted will stay for several months after that to help Ben with the transition. Of course, we have many months before each of them actually retire, so I have lots of time to thank them for their many years of service to our associates, customers, and shareholders, but I would be remiss if I didn't acknowledge how much I've enjoyed working with each of them and how much I appreciate the approach each of them has taken to executing these much-deserved retirements. Next week, we will conduct our annual shareholder meeting. We will be hosting this meeting in person in Monette, but will abide by strict COVID protocols to ensure a safe event for all attendees. We are excited to be able to meet with our shareholders in person again, but we are also very aware of the ongoing pandemic-related concerns that arise when you assemble a group of people. We will start an hour earlier than in past years, we'll require all attendees to be masked, and we won't be serving a lunch following the meeting. With these changes, I'm confident we will have a productive and safe meeting. In our ongoing attempt to communicate effectively regarding our ESG-related efforts, we recently published our ESG statement which provides a succinct and centralized overview of Jack Henry's ESG commitments and material environmental and social topics. Additionally, it points readers toward other related policies like our human rights policy. We've also published an environmental policy that highlights our commitment to sustainability and proper environmental management practices. Both documents can be found on our new corporate responsibility website via Investor Relations. We created this website to house our sustainability reports and provide a centralized location for Jack Henry's ESG information. Speaking of sustainability reports, our next sustainability report covering calendar year 2021 will be published in March. We have continued to make major advances across our environmental, social, and governance initiatives, and the Board has established a quarterly cadence to discuss ESG matters. As we move forward, I'm very optimistic regarding our levels of sales activity and customer responses to solutions we're delivering and the strategies we're executing. We will continue with our disciplined approach to running the company, and we expect that approach to continue to provide stability and solid performance for our employees, customers, and shareholders. With that, I'll turn it over to Kevin for some detail on the numbers. Thanks, Dave.