Jack Henry & Associates, Inc.

Good morning and welcome to the Jack Henry first quarter and fiscal year 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star one again. Please note, this event is being recorded. I would now like to turn the conference over to Vance Sherrard, Vice President, Investor Relations. Please go ahead.

Thank you, Jeanne. Good morning, and thank you for joining the Jack Henry First Quarter Fiscal 2026 Earnings Call. Joining me today are Greg Adelson, President and CEO, and Mimi Carsley, CFO and Treasurer. Following my opening remarks, Greg will share his comments on our quarterly results operational metrics, and the outlook for the remainder of fiscal 26. Mimi will then discuss the financial results and updated fiscal 26 guidance provided in yesterday's press release, which is available in the investor relations section of the Jack Henry website. Afterward, we will open the lines for a Q&A session. Please note that this call includes forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from our expectations. The company is not obligated to update or revise these statements. For a summary of risk factors and additional information that could cause actual results to differ materially from such forward-looking statements, refer to yesterday's press release and the risk factors and forward-looking statements sections in our 10-K. During this call, we will discuss non-GAAP financial measures, such as non-GAAP revenue and non-GAAP operating income. Reconciliations for these measures are included in yesterday's press release. Now, I will hand the call over to Greg.

Thank you, Vance. Good morning, and I appreciate each of you joining today's call. I'd like to begin by thanking our associates for their hard work and unwavering commitment to our key differentiators, culture, service, innovation, strategy, and execution. I will share three key takeaways from the quarter and then provide additional detail about our overall business. First, our financial performance. We produced record first quarter financial results with non-GAAP revenue of $636 million, up an impressive 8.7% over last year's first quarter. That significantly exceeds the 7% to 7.5% increase we anticipated in August. Our non-GAAP operating margin was 27.2%, representing a robust 227 basis points of margin expansion over last year's Q1. Second, our sales performance. Starting with migrations from in-house processing to our private cloud, in Q1, we signed seven contracts to move existing clients to our private cloud, including an $11 billion asset credit union and an $8 billion asset bank. Notably, the asset size of clients migrating to our private cloud was 60% higher over the past 12 months, $43 billion versus $69 billion, while the number of deals has remained consistent with previous years. As a reminder, we earn, on average, approximately two times more revenue from clients in the private cloud compared to those on premise. Today, 77% of our core clients are operating in the Jack Henry private cloud. Turning to new core sales, as many of you know, the first quarter is typically our lightest of the year. In Q1, our sales team earned four competitive core wins, including one financial institution with over $1 billion in assets. For context, last year we started with six competitive core wins in Q1 and finished the year with 51. We remain confident that we will be within that range again this year, as we are off to a very strong start in Q2. I also want to comment on the new sales procedures we implemented for the contract renewals about six months ago, which has resulted in a healthier balance between new sales and renewal contracts, as well as improved pricing procedures. Our Q1 fiscal year 26 deal mix was 44% new core sales and 56% renewals, compared to 35% new sales and 65% renewals in Q1 last year. We expect this trend to continue throughout the fiscal year. Third, our annual client conference. In September, we hosted another highly successful Jack Henry Connect conference in San Diego, drawing a record 2,651 clients. This is our largest event of the year and a major driver of new business opportunities. We had a record 91 prospects from 30 banks and credit unions. This is important to note because 20 of last year's new core wins came from prospects who attended Jack Henry Connect, underscoring the strategic value of this event. Additionally, the conference drew 48 consultants, and our technology showcase featured 266 third-party fintechs. both all-time highs. We also had a record attendance at our annual CEO forum, hosting 211 CEOs. Overall, attendees expressed less concern about the macroeconomy than last year and plan to continue investing in technology to enhance their digital capabilities, strengthen fraud protection, improve efficiencies, and modernize their businesses. Next, I'd like to highlight several important announcements we made in the quarter. I'll start with our acquisition of Victor Technologies, which closed on September the 30th. We're excited to welcome the Victor associates to the Jack Henry family. We are equally excited about this technology as we leverage the capabilities to create new opportunities for our clients and the many fintechs serving the financial industry. As you've heard me say, our acquisition strategy targets companies that have great teams, are cloud native, API first, and accelerate our product roadmap. Victor fits that strategy perfectly. Victor's modern, innovative platform with direct-to-core connectivity enables financial institutions to embed payment capabilities into third-party, non-bank brands such as FinTechs and commercial customers. This helps financial institutions grow deposits, diversify fee income, and maintain compliance controls. For Jack Henry, Victor provides a highly scalable solution that creates diverse revenue streams, enhances our payments-as-a-service capabilities, and accelerates the delivery of emerging services like Stablecoin. Victor was already integrated with our Silver Lake Core banking system in our Jack Henry Pay Center prior to the acquisition. We plan to extend its capabilities to serve our Scimitar Credit Union and Treasury management clients and to integrate directly with the new cloud native Jack Henry platform. I will now provide an update on Stablecoin as we've been actively developing and executing our strategy. We just completed a proof of concept in less than two weeks to allow financial institutions to send and receive USDC. We continue to work with key vendors and emerging fintechs on other aspects of our strategy, which includes the development of wallet, custody, and settlement services for our clients to service their account holders. Furthermore, the new Jack Henry platform supports nine decimal places, well above the six required for USDC, positioning us very well for both stablecoin and tokenized deposits. By contrast, most, if not all, existing cores support only two decimal places. This advancement has already enabled us to facilitate cross-border stablecoin transactions for third parties through BANO. Another key development this quarter was the launch of our cloud-native tap-to-local merchant acquiring solution. Tap-to-local is offered exclusively through banks and credit unions, giving them a powerful way to win back deposits from small and medium-sized businesses that have shifted their card acceptance activities to other providers. Tap-to-local primarily targets the 82% of SMBs that are sole proprietors. Today, only 16% of sole proprietors keep both their retail and commercial accounts at the same community financial institution, largely due to the lack of SMB-focused services. Built in partnership with Move, Tap to Local delivers differentiated capabilities for SMBs, including easy enrollment, tap to pay on both iOS and Android devices without additional hardware, and continuous account reconciliation to the accounting platform of their choice. We showcased a live demo of Tap the Local at Jack Henry Connect and received fantastic feedback. We are currently rolling it out in phases to our Bano clients. We rolled out the initial phase of 40 clients on Monday of this week. We also did a live on-stage demo of Jack Henry Rapid Transfers at the conference. In partnership with MOVE, we conducted more than 1,000 additional demos of this solution in the technology exhibit hall. Rapid transfers enables both SMBs and consumers to instantly move funds between external accounts, eligible cards, and digital wallets to manage day-to-day transaction and personal finances. There are only a handful of institutions offering this service today. Zero were community financial institutions until now. We are collaborating with both Visa and MasterCard to facilitate these transactions through their respective debit rails. Rapid Transfers is receiving strong initial reviews with 48 clients now live and 126 more in various stages of implementation. These unique solutions are all powered by the cloud-native API-first infrastructure we've built through our technology modernization strategy and are part of the Jack Henry platform. This strategy has enabled us to accelerate our innovation at speeds not typically seen in our industry, especially from a core provider. We developed our tap to local and rapid transfer solutions in less than 10 months, including close to 40 external certifications. We developed a foolproof concept of USDC in only two weeks, and we will be launching our public cloud native deposit-only core in only three years, still on schedule for the first half of calendar 2026. The new Jack Henry platform is integrated with all of our existing cores. Unlike most of our competitors, it's not a side core, which is a separate parallel system that runs alongside the primary core. Side cores do not integrate directly with, nor do they extend existing cores to enable new and enhanced use cases in the way the Jack Henry platform does. This integration delivers significant advantages to our clients, including real-time processing, streamline operations, open API connectivity, enhanced security, and immediate continuous upgrades. Next, I'll provide a few updates on specific products. In our payment segment, we continue to experience outstanding growth in our faster payment solutions. Over the past year, the number of financial institutions using Zelle has grown by 20%, the Clearinghouse's RTP network by 25%, and FedNow by 32%. In Q1, payment transaction volume through these channels increased by 55% over the prior year Q1. In our complementary segment, we signed a total of 38 new financial crimes defender and faster payment module contracts in the quarter. As of September 30, we have 148 financial crimes installations completed and another 66 in various stages of implementation. We also have 113 faster payment modules installed and 205 in various stages of implementation. Speaking of Financial Crimes Defender, we are proud that our solution recently won a silver medal from Datos Insights for Best AML and Fraud Transaction Monitoring Innovation. Continuing with our complimentary segment, we continue to see success with our Bano digital platform. For the quarter, we signed a total of 18 new clients to the Bano platform. We currently have 1,026 Bano retail clients and 390 live with Bano business. We finished the quarter with 14.7 million registered users on the Bano platform. At the end of Q1 last year, we had 12.7 million registered users, a 15% increase over the past 12 months. We are confident that the tech spending will remain strong based on recent surveys, direct feedback from our clients, and our robust sales pipelines. In Bank Director's 2025 technology survey that came out in September, 71% of respondents reported an increase in their bank's technology budget for fiscal year 2025, with a median increase of 10%. These results align with findings from our strategy benchmark published last spring. In that survey, 76% of our own clients said they plan to increase spending over the next two years, with their top priorities being digital banking, fraud prevention, automation, cybersecurity, and AI. Speaking of AI, we continue to focus on numerous product and internal use cases to help our clients and our staff improve back office efficiency. Our new solutions are built with a human in the loop approach, and while reviews are still early, feedback has been extremely positive. We have created over 100 internal AI use cases. While we continue working through prioritization, these efforts have already enabled us to control headcount additions, from the improvements we have seen across all lines of business. As a reminder, we do not sell any of our products utilizing a seat license model, so factors such as the number of branches or employees at the bank do not have a bearing on our revenue stream. Looking ahead, we will hold our annual shareholder meeting next week in Monette, Missouri, and offer a webcast for remote viewers. We're also proud to recognize the 40th anniversary of our IPO this month and will commemorate the milestone with a bell ringing at NASDAQ on November the 21st. In closing, we are extremely pleased with our overall Q1 performance and remain highly optimistic about the rest of the year. I know I'll now hand things over to Mimi to walk through the financial details.