UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______________ to ________________

Commission file number 0-14112

JACK HENRY & ASSOCIATES, INC.

(Exact name of registrant as specified in its charter)


Delaware						43-1128385
(State or Other Jurisdiction of Incorporation)						(I.R.S Employer Identification No.)

663 Highway 60, P.O. Box 807, Monett, MO 65708

(Address of Principle Executive Offices)

(Zip Code)

417-235-6652

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock ($0.01 par value)	JKHY	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ”accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

As of ~~April 29,~~October 28, 2021, the Registrant had ~~74,282,912~~74,041,032 shares of Common Stock outstanding ($0.01 par value).

TABLE OF CONTENTS


		Page Reference

PART I	FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2021 and June 30, ~~2020~~2021 (Unaudited)	34

	Condensed Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2021 and 2020 (Unaudited)	5

	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2021 and 2020 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2021 and 2020 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2119

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	2926

ITEM 4.	Controls and Procedures	2926

PART II	OTHER INFORMATION	2926

ITEM 1.	Legal Proceedings	2926



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2927

ITEM 6.	Exhibits	3028

	Signatures	3129

In this report, all references to "Jack Henry," “JKHY,” the “Company,” “we,” “us,” and “our,” refer to Jack Henry & Associates, Inc., and its wholly owned subsidiaries.

FORWARD LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements may appear throughout this report, including without limitation, in Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “seek,” “anticipate,” “estimate,” “future,” “intend,” “plan,” “strategy,” “predict,” “likely,” “should,” “will,” “would,” “could,” “can,” “may,” and similar expressions. Forward-looking statements are based only on management’s current beliefs, expectations and assumptions regarding the future of the Company, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, those discussed in our Annual Report on Form 10-K for the year ended June 30, ~~2020,~~2021, in particular, those included in Item 1A, “Risk Factors” of such report, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Any forward-looking statement made in this report speaks only as of the date of this report, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES	JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES					JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS	CONDENSED CONSOLIDATED BALANCE SHEETS					CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)	(In Thousands, Except Share and Per Share Data)					(In Thousands, Except Share and Per Share Data)
(Unaudited)	(Unaudited)					(Unaudited)
		March 31, 2021		June 30, 2020			September 30, 2021		June 30, 2021

ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	70,116	$	213,345	Cash and cash equivalents	$	44,251	$	50,992
Receivables, net	Receivables, net	207,736		300,945		Receivables, net	253,160		306,564
Income tax receivable	Income tax receivable	9,511		21,051		Income tax receivable	20,833		30,243
Prepaid expenses and other	Prepaid expenses and other	107,575		95,525		Prepaid expenses and other	111,288		109,723
Deferred costs	Deferred costs	47,731		38,235		Deferred costs	61,429		46,215

Total current assets	Total current assets	442,669		669,101		Total current assets	490,961		543,737
PROPERTY AND EQUIPMENT, net	PROPERTY AND EQUIPMENT, net	248,041		273,432		PROPERTY AND EQUIPMENT, net	241,157		252,481
OTHER ASSETS:	OTHER ASSETS:					OTHER ASSETS:
Non-current deferred costs	Non-current deferred costs	125,036		113,525		Non-current deferred costs	130,995		127,205
Computer software, net of amortization	Computer software, net of amortization	360,335		340,466		Computer software, net of amortization	377,776		368,094
Other non-current assets	Other non-current assets	234,838		220,591		Other non-current assets	248,918		249,210
Customer relationships, net of amortization	Customer relationships, net of amortization	85,254		95,108		Customer relationships, net of amortization	78,617		81,842
Other intangible assets, net of amortization	Other intangible assets, net of amortization	27,868		29,917		Other intangible assets, net of amortization	25,029		26,129
Goodwill	Goodwill	687,458		686,334		Goodwill	687,458		687,458
Total other assets	Total other assets	1,520,789		1,485,941		Total other assets	1,548,793		1,539,938
Total assets	Total assets	$	2,211,499	$	2,428,474	Total assets	$	2,280,911	$	2,336,156
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable	Accounts payable	$	7,833	$	9,880	Accounts payable	$	14,015	$	18,485
Accrued expenses	Accrued expenses	152,669		166,689		Accrued expenses	147,073		182,517

Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	117		115		Notes payable and current maturities of long-term debt	110		110
Deferred revenues	Deferred revenues	141,110		318,161		Deferred revenues	268,840		319,748
Total current liabilities	Total current liabilities	301,729		494,845		Total current liabilities	430,038		520,860
LONG-TERM LIABILITIES:	LONG-TERM LIABILITIES:					LONG-TERM LIABILITIES:
Non-current deferred revenues	Non-current deferred revenues	70,928		71,461		Non-current deferred revenues	66,099		75,852
Deferred income tax liability	Deferred income tax liability	257,203		243,998		Deferred income tax liability	266,846		260,758
Debt, net of current maturities	Debt, net of current maturities	200,120		208		Debt, net of current maturities	65,056		100,083
Other long-term liabilities	Other long-term liabilities	66,076		68,274		Other long-term liabilities	57,207		59,311
Total long-term liabilities	Total long-term liabilities	594,327		383,941		Total long-term liabilities	455,208		496,004
Total liabilities	Total liabilities	896,056		878,786		Total liabilities	885,246		1,016,864
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY					STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued		0		0
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,765,778 shares issued at March 31, 2021; 103,622,563 shares issued at June 30, 2020		1,038		1,036
Preferred stock -$1 par value; 500,000 shares authorized, none issued						Preferred stock -$1 par value; 500,000 shares authorized, none issued	—		—
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,822,265 shares issued at September 30, 2021; 103,795,169 shares issued at June 30, 2021						Common stock - $0.01 par value; 250,000,000 shares authorized; 103,822,265 shares issued at September 30, 2021; 103,795,169 shares issued at June 30, 2021	1,038		1,038
Additional paid-in capital	Additional paid-in capital	510,800		495,005		Additional paid-in capital	527,255		518,960
Retained earnings	Retained earnings	2,369,656		2,235,320		Retained earnings	2,480,574		2,412,496
Less treasury stock at cost 29,492,903 shares at March 31, 2021; 26,992,903 shares at June 30, 2020		(1,566,051)		(1,181,673)
Less treasury stock at cost 29,792,903 shares at September 30, 2021; 29,792,903 shares at June 30, 2021						Less treasury stock at cost 29,792,903 shares at September 30, 2021; 29,792,903 shares at June 30, 2021	(1,613,202)		(1,613,202)
Total stockholders' equity	Total stockholders' equity	1,315,443		1,549,688		Total stockholders' equity	1,395,665		1,319,292
Total liabilities and equity	Total liabilities and equity	$	2,211,499	$	2,428,474	Total liabilities and equity	$	2,280,911	$	2,336,156

See notes to condensed consolidated financial ~~statements~~statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
	Three Months Ended
	September 30,
	2021		2020

REVENUE	$	488,056	$	451,800

EXPENSES
Cost of Revenue	276,636		262,929
Research and Development	26,754		26,057
Selling, General, and Administrative	51,071		45,226

Total Expenses	354,461		334,212

OPERATING INCOME	133,595		117,588

INTEREST INCOME (EXPENSE)
Interest Income	7		68
Interest Expense	(248)		(117)
Total Interest Income (Expense)	(241)		(49)

INCOME BEFORE INCOME TAXES	133,354		117,539

PROVISION FOR INCOME TAXES	31,240		26,323

NET INCOME	$	102,114	$	91,216

Basic earnings per share	$	1.38	$	1.19
Basic weighted average shares outstanding	74,016		76,507

Diluted earnings per share	$	1.38	$	1.19
Diluted weighted average shares outstanding	74,142		76,713

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2021 2020 2021 2020
REVENUE $ 433,776 $ 429,406 $ 1,307,938 $ 1,286,530
EXPENSES
Cost of Revenue 267,770 258,571 788,481 753,629
Research and Development 27,395 28,308 80,233 80,086
Selling, General, and Administrative 47,408 50,589 136,801 148,985
Total Expenses 342,573 337,468 1,005,515 982,700
OPERATING INCOME 91,203 91,938 302,423 303,830
INTEREST INCOME (EXPENSE)
Interest Income 24 197 144 1,050
Interest Expense (290) (165) (525) (477)
Total Interest Income (Expense) (266) 32 (381) 573
INCOME BEFORE INCOME TAXES 90,937 91,970 302,042 304,403
PROVISION FOR INCOME TAXES 19,528 18,115 67,435 69,080
NET INCOME $ 71,409 $ 73,855 $ 234,607 $ 235,323
Basic earnings per share $ 0.95 $ 0.96 $ 3.09 $ 3.06
Basic weighted average shares outstanding 75,357 76,683 76,022 76,845
Diluted earnings per share $ 0.95 $ 0.96 $ 3.08 $ 3.06
Diluted weighted average shares outstanding 75,431 76,884 76,141 76,962

See notes to condensed consolidated financial ~~statements~~

statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES	JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES									JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY									CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)	(In Thousands, Except Share and Per Share Data)									(In Thousands, Except Share and Per Share Data)
(Unaudited)	(Unaudited)									(Unaudited)
		Three Months Ended				Nine Months Ended					Three Months Ended
		March 31,				March 31,					September 30,
		2021		2020		2021		2020			2021		2020
PREFERRED SHARES:	PREFERRED SHARES:	0		0		0		0		PREFERRED SHARES:	—		—

COMMON SHARES:	COMMON SHARES:									COMMON SHARES:
Shares, beginning of period	Shares, beginning of period	103,736,703		103,572,129		103,622,563		103,496,026		Shares, beginning of period	103,795,169		103,622,563
Shares issued for equity-based payment arrangements	Shares issued for equity-based payment arrangements	6,479		8,616		84,893		47,098		Shares issued for equity-based payment arrangements	5,432		55,002
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	22,596		18,899		58,322		56,520		Shares issued for Employee Stock Purchase Plan	21,664		19,397
Shares, end of period	Shares, end of period	103,765,778		103,599,644		103,765,778		103,599,644		Shares, end of period	103,822,265		103,696,962

COMMON STOCK - PAR VALUE $0.01 PER SHARE:	COMMON STOCK - PAR VALUE $0.01 PER SHARE:									COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of period	Balance, beginning of period	$	1,037	$	1,036	$	1,036	$	1,035	Balance, beginning of period	$	1,038	$	1,036
Shares issued for equity-based payment arrangements	Shares issued for equity-based payment arrangements	0		0		1		0		Shares issued for equity-based payment arrangements	—		1
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	1		0		1		1		Shares issued for Employee Stock Purchase Plan	—		—
Balance, end of period	Balance, end of period	$	1,038	$	1,036	$	1,038	$	1,036	Balance, end of period	$	1,038	$	1,037

ADDITIONAL PAID-IN CAPITAL:	ADDITIONAL PAID-IN CAPITAL:									ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	Balance, beginning of period	$	503,205	$	481,005	$	495,005	$	472,029	Balance, beginning of period	$	518,960	$	495,005
Shares issued for equity-based payment arrangements	Shares issued for equity-based payment arrangements	0		0		(1)		0		Shares issued for equity-based payment arrangements	—		(1)
Tax withholding related to share-based compensation	Tax withholding related to share-based compensation	(493)		(703)		(7,181)		(3,328)		Tax withholding related to share-based compensation	(953)		(5,505)
Shares issued for Employee Stock Purchase Plan	Shares issued for Employee Stock Purchase Plan	2,881		2,597		8,018		7,200		Shares issued for Employee Stock Purchase Plan	3,177		2,907
Stock-based compensation expense	Stock-based compensation expense	5,207		4,691		14,959		11,689		Stock-based compensation expense	6,071		4,625
Balance, end of period	Balance, end of period	$	510,800	$	487,590	$	510,800	$	487,590	Balance, end of period	$	527,255	$	497,031

RETAINED EARNINGS:	RETAINED EARNINGS:									RETAINED EARNINGS:
Balance, beginning of period	Balance, beginning of period	$	2,332,509	$	2,166,039	$	2,235,320	$	2,066,073	Balance, beginning of period	$	2,412,496	$	2,235,320
Cumulative effect of Accounting Standards Update adoption (Note 2)		0		0		(493)		0
Cumulative effect of Accounting Standards Update adoption (Note 1)										Cumulative effect of Accounting Standards Update adoption (Note 1)	—		(493)
Net income	Net income	71,409		73,855		234,607		235,323		Net income	102,114		91,216
Dividends	Dividends	(34,262)		(32,984)		(99,778)		(94,486)		Dividends	(34,036)		(32,815)
Balance, end of period	Balance, end of period	$	2,369,656	$	2,206,910	$	2,369,656	$	2,206,910	Balance, end of period	$	2,480,574	$	2,293,228

TREASURY STOCK:	TREASURY STOCK:									TREASURY STOCK:
Balance, beginning of period	Balance, beginning of period	$	(1,291,572)	$	(1,161,334)	$	(1,181,673)	$	(1,110,124)	Balance, beginning of period	$	(1,613,202)	$	(1,181,673)
Purchase of treasury shares	Purchase of treasury shares	(274,479)		(20,339)		(384,378)		(71,549)		Purchase of treasury shares	—		(65,873)
Balance, end of period	Balance, end of period	$	(1,566,051)	$	(1,181,673)	$	(1,566,051)	$	(1,181,673)	Balance, end of period	$	(1,613,202)	$	(1,247,546)

TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	$	1,315,443	$	1,513,863	$	1,315,443	$	1,513,863	TOTAL STOCKHOLDERS' EQUITY	$	1,395,665	$	1,543,750

Dividends declared per share	Dividends declared per share	$	0.46	$	0.43	$	1.32	$	1.23	Dividends declared per share	$	0.46	$	0.43

See notes to condensed consolidated financial statements.

Table of Contents


JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
	Three Months Ended
	September 30,
	2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	102,114	$	91,216
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	13,157		13,391
Amortization	31,016		30,352
Change in deferred income taxes	6,088		2,393
Expense for stock-based compensation	6,071		4,625
(Gain)/loss on disposal of assets	166		(159)
Changes in operating assets and liabilities:
Change in receivables	53,404		77,439
Change in prepaid expenses, deferred costs and other	(20,345)		(30,522)
Change in accounts payable	2,859		(2,244)
Change in accrued expenses	(37,231)		(27,896)
Change in income taxes	9,912		22,995
Change in deferred revenues	(60,662)		(67,113)
Net cash from operating activities	106,549		114,477

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures	(9,273)		(4,478)

Proceeds from dispositions	14		6,115

Purchased software	(1,221)		(1,374)
Computer software developed	(35,971)		(31,451)

Net cash from investing activities	(46,451)		(31,188)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments on credit facilities and financing leases	(35,027)		(28)

Purchase of treasury stock	—		(65,873)
Dividends paid	(34,036)		(32,815)

Tax withholding payments related to share-based compensation	(953)		(5,505)
Proceeds from sale of common stock	3,177		2,907
Net cash from financing activities	(66,839)		(101,314)
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(6,741)	$	(18,025)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	50,992	$	213,345
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	44,251	$	195,320

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
March 31,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 234,607 $ 235,323
Adjustments to reconcile net income from operations
to net cash from operating activities:
Depreciation 39,816 38,812
Amortization 92,189 89,160
Change in deferred income taxes 13,205 9,082
Expense for stock-based compensation 14,959 11,688
(Gain)/loss on disposal of assets (2,206) 3,095
Changes in operating assets and liabilities:
Change in receivables 92,716 99,425
Change in prepaid expenses, deferred costs and other (34,886) (28,396)
Change in accounts payable (1,529) (2,129)
Change in accrued expenses (19,164) (21,446)
Change in income taxes 13,629 9,905
Change in deferred revenues (177,021) (168,066)
Net cash from operating activities 266,315 276,453
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired (2,300) (30,376)
Capital expenditures (14,916) (39,563)
Proceeds from dispositions 6,187 11,106
Purchased software (5,820) (6,133)
Computer software developed (95,991) (87,284)
Purchase of investments (13,300) (1,150)
Net cash from investing activities (126,140) (153,400)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities 200,000 55,000
Repayments on financing leases (86) (6)
Purchase of treasury stock (384,378) (71,549)
Dividends paid (99,778) (94,486)
Proceeds from issuance of common stock upon exercise of stock options 1 0
Tax withholding payments related to share-based compensation (7,182) (3,327)
Proceeds from sale of common stock 8,019 7,201
Net cash from financing activities (283,404) (107,167)
NET CHANGE IN CASH AND CASH EQUIVALENTS $ (143,229) $ 15,886
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 213,345 $ 93,628
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 70,116 $ 109,514

See notes to condensed consolidated financial ~~statements~~

statements.

Table of Contents

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Amounts)

(Unaudited)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Company

Jack Henry & Associates, Inc. and subsidiaries ("Jack Henry," "JKHY," or the "Company") is a leading provider of technology solutions and payment processing services primarily for the financial services industry. The Company has developed and acquired a number of banking and credit union software systems. The Company's revenues are predominately earned by marketing those systems to financial institutions nationwide, by providing the conversion and implementation services for financial institutions to utilize JKHY systems, and by providing payment processing and other related services. JKHY also provides continuing support and services to customers using on-premise or JKHY cloud-based systems.

Consolidation

The condensed consolidated financial statements include the accounts of JKHY and its subsidiaries, all of ~~its subsidiaries,~~ which are wholly ~~owned, and all~~owned. All intercompany accounts and transactions have been eliminated.

Comprehensive Income

Comprehensive income for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020 equals the Company’s net income.

Change in Accounting Policy

The Company adopted FASB Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses, ("CECL") with an adoption date of July 1, ~~2020 (see Note 2).~~2020. As a result, the Company changed its accounting policy for allowance for credit losses. The accounting policy pursuant to CECL is disclosed below. The adoption of CECL resulted in an immaterial cumulative effect adjustment recorded in retained earnings as of July 1, 2020.

Allowance for Credit Losses

The Company monitors trade and other receivable balances and contract assets and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience and other factors, including those related to current market conditions and events.

The following table summarizes allowance for credit losses activity for the fiscal quarter ended September 30, 2021 and ~~year-to-date period ended March 31, 2021:~~

Three Months Ended March 31, 2021 Nine Months Ended March 31, 2021
Allowance for credit losses - beginning balance $ 6,830 $ 6,719
Cumulative effect of accounting standards update adoption 0 493
Current provision for expected credit losses 540 1,450
Write-offs charged against allowance (252) (1,538)
Recoveries of amounts previously written off 0 (4)
Other 0 (2)
Allowance for credit losses - ending balance $ 7,118 $ 7,118

While the novel coronavirus ("COVID-19") pandemic did not result in a significant increase in the Company’s expected credit loss allowance recorded as of March 31, 2021, the Company believes it is reasonably possible that future developments related to the economic impact of the COVID-19 pandemic could have a material impact on management’s estimates (see Use of Estimates below).2020:


	Three Months Ended September 30, 2021		Three Months Ended September 30, 2020
Allowance for credit losses - beginning balance	$	7,267	$	6,719
Cumulative effect of accounting standards update adoption	—		493
Current provision for expected credit losses	540		540
Write-offs charged against allowance	(145)		(1,023)
Recoveries of amounts previously written off	(1)		(3)
Other	—		5
Allowance for credit losses - ending balance	$	7,661	$	6,731

Property and Equipment

Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Accumulated depreciation at ~~March 31,~~September 30, 2021 totaled ~~$428,063~~$443,926 and at June 30, ~~2020~~2021 totaled ~~$404,388.~~

~~Table of Contents~~

$435,169.

Intangible Assets

Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of those intangible assets with an indefinite life (such as goodwill), over an estimated economic benefit period, generally three to twenty years. Accumulated amortization of intangible assets totaled ~~$889,945~~$952,036 and ~~$812,856~~$921,050 at ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, respectively.

Table of Contents

Purchase of Investments

At September 30, 2021 and June 30, ~~2020,~~2021, the Company had an investment in the preferred stock of Automated Bookkeeping, ~~Inc~~Inc. ("Autobooks") ~~of $6,000 and at March 31, 2021~~ of $13,250, which represented a non-controlling share of the voting equity as of ~~that~~each date. The total investment was recorded at cost and is included within other non-current assets on the Company's balance sheet. There have been no events or changes in circumstances that would indicate an impairment and no price changes resulting from observing a similar or identical investment. An impairment and/or an observable price change would be an adjustment to recorded cost. Fair value will not be estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

Common Stock

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing line-of-credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At ~~March 31,~~September 30, 2021, there were ~~29,493~~29,793 shares in treasury stock and the Company had the remaining authority to repurchase up to ~~498~~5,198 additional shares. The total cost of treasury shares at ~~March 31,~~September 30, 2021 was ~~$1,566,051.~~$1,613,202. During the first ~~nine~~three months of fiscal ~~2021,~~2022, the Company repurchased ~~2,500 shares for the treasury.~~no shares. At June 30, ~~2020,~~2021, there were ~~26,993~~29,793 shares in treasury stock and the Company had authority to repurchase up to ~~2,998~~5,198 additional shares. The total cost of treasury shares at June 30, ~~2020~~2021 was ~~$1,181,673.~~$1,613,202. During the first three months of fiscal 2021, the Company repurchased 400 shares.

Income Taxes

Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement basis and tax basis of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties ~~expenses~~expense are recognized on the full amount of ~~deferred~~unrecognized benefits for uncertain tax positions. The Company's policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.

Interim Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission ("SEC") and in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") applicable to interim condensed consolidated financial statements, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes, which are included in its Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended June 30, ~~2020.~~2021. The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, with updates to certain policies included in this Note 1.

In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly in all material respects the financial position of the Company as of ~~March 31,~~September 30, 2021, the results of its operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020, changes in stockholders' equity for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020, and its cash flows for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020. The condensed consolidated balance sheet at June 30, ~~2020~~2021 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.

The results of operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 are not necessarily indicative of the results to be expected for the entire year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Table of Contents

~~Use of Estimates~~Risks and Uncertainties

The extent to which the COVID-19 pandemic will directly or indirectly impact our business and financial results, including revenue, expenses, cost of revenues, research and development, and selling, general and administrative expenses, will depend on future developments that are highly uncertain, such as new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19 (including the efficacy and distribution of any vaccines), as well as the economic impact on local, regional, national and international customers and markets. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of ~~March 31,~~September 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for credit losses, as well as the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s condensed consolidated financial statements as of and for the quarter ended ~~March 31,~~September 30, 2021, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s condensed consolidated financial statements in future reporting periods.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

In January 2017, the FASB issued Accounting Standard Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU No. 2017-04 on July 1, 2020 and the adoption did not have a material impact on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), or CECL, which prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses. Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial instrument. For most instruments, entities must apply the standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted CECL effective July 1, 2020 using the required modified retrospective approach, which resulted in a cumulative-effect decrease to beginning retained earnings of $493. Financial assets and liabilities held by the Company subject to the “expected credit loss” model prescribed by CECL include trade and other receivables as well as contract assets (see Note 1).

~~Not Yet Adopted~~

In December of 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions and simplifies other requirements of Topic 740 guidance. The ASU ~~will be~~was effective for the Company on July 1, 2021. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company ~~plans to adopt~~adopted ASU 2019-12 effective July 1, 2021 ~~and does not expect the adoption to have a~~with no material impact on its condensed consolidated financial statements.

NOTE 3. REVENUE AND DEFERRED COSTS

Revenue Recognition

The Company generates revenue from data processing, transaction processing, software licensing and related services, professional services, and hardware sales.

~~Table of Contents~~

Disaggregation of Revenue

The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note ~~11,~~10, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Company’s revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Private & Public Cloud1
$ 128,703 $ 120,443 $ 374,160 $ 344,922
Product Delivery & Services 49,235 72,891 154,547 205,962
On-Premise Support2
76,701 76,870 257,802 253,332
Services & Support 254,639 270,204 786,509 804,216
Processing 179,137 159,202 521,429 482,314
Total Revenue $ 433,776 $ 429,406 $ 1,307,938 $ 1,286,530


	Three Months Ended September 30,
		2021		2020
Private and Public Cloud1		$	135,642	$	120,959
Product Delivery and Services		51,516		56,897
On-Premise Support2		110,336		103,141
Services and Support		297,494		280,997

Processing		190,562		170,803

Total Revenue		$	488,056	$	451,800

1 The name of this revenue stream was changed in ~~third quarter~~ fiscal 2021 from "outsourcing and cloud" to "private and public cloud" to better reflect the nature of the related revenue. However, the nature of the revenue included within this caption has not changed and is the same in the current quarter ~~and year-to-date period~~ as it was in the comparative ~~periods of~~quarter fiscal ~~2020~~2021 and prior.

2 The name of this revenue stream was changed in ~~third quarter~~ fiscal 2021 from "in-house support" to "on-premise support" to better reflect the nature of the related revenue. However, the nature of the revenue included within this caption has not changed and is the same in the current quarter ~~and year-to-date period~~ as it was in the comparative ~~periods~~quarter of fiscal ~~2020~~2021 and prior.

Table of Contents

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers.

March 31,
2021 June 30,
2020
Receivables, net $ 207,736 $ 300,945
Contract Assets- Current 18,439 21,609
Contract Assets- Non-current 52,920 54,293
Contract Liabilities (Deferred Revenue)- Current 141,110 318,161
Contract Liabilities (Deferred Revenue)- Non-current 70,928 71,461


	September 30, 2021		June 30, 2021
Receivables, net	$	253,160	$	306,564
Contract Assets - Current	19,434		22,884
Contract Assets - Non-current	53,135		52,920
Contract Liabilities (Deferred Revenue) - Current	268,840		319,748
Contract Liabilities (Deferred Revenue) - Non-current	66,099		75,852

Contract assets primarily result from revenue being recognized when or as control of a solution or service is transferred to the customer, but where invoicing is contingent upon the completion of other performance obligations or payment terms differ from the provisioning of services. The current portion of contract assets is reported within prepaid expenses and other in the condensed consolidated balance sheet, and the non-current portion is included in other non-current assets. Contract liabilities (deferred revenue) primarily relate to consideration received from customers in advance of delivery of the related goods and services to the customer. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

The Company analyzes contract language to identify if a significant financing component does exist, and ~~would adjust~~adjusts the transaction price for any material effects of the time value of money if the timing of payments provides either party to the contract with a significant benefit of financing the transaction.

During the three months ended ~~March 31,~~September 30, 2021 and 2020, the Company recognized revenue of ~~$77,911~~$94,983 and $87,768, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods. For the nine months ended March 31, 2021 and 2020, the Company recognized revenue of $207,804 and $216,684,$93,047, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods.

Amounts recognized that relate to performance obligations satisfied (or partially satisfied) in prior periods were immaterial for each period presented. These adjustments are primarily the result of transaction price re-allocations due to changes in estimates of variable consideration.

~~Table of Contents~~

Transaction Price Allocated to Remaining Performance Obligations

As of ~~March 31,~~September 30, 2021, estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period totaled ~~$4,189,051.~~$5,031,319. The Company expects to recognize approximately ~~26%~~27% over the next 12 months, 20% in 13-24 months, and the balance thereafter.

Contract Costs

The Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with customers that are expected to be recovered. These costs consist primarily of sales commissions, which are incurred only if a contract is obtained, and customer conversion or implementation-related costs. Capitalized costs are amortized based on the transfer of goods or services to which the asset relates, in line with the percentage of revenue recognized for each performance obligation to which the costs are allocated.

Capitalized costs totaled ~~$299,413~~$335,568 and ~~$271,010,~~$314,807, at ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, respectively.

For the three months ended ~~March 31,~~September 30, 2021 and 2020, amortization of deferred contract costs was ~~$29,384~~$35,844 and ~~$28,849,~~$33,825, respectively. During the nine months ended March 31, 2021 and 2020, amortization of deferred contract costs totaled $92,004 and $88,063, respectively. There were no impairment losses in relation to capitalized costs for the periods presented.

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

For cash equivalents, certificates of deposit, amounts receivable or payable, and short-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets and liabilities.

The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: inputs to the valuation are quoted prices in an active market for identical assets

Level 2: inputs to the valuation include quoted prices for similar assets in active markets that are observable either directly or indirectly

Table of Contents

Level 3: valuation is based on significant inputs that are unobservable in the market and the Company's own estimates of assumptions that we believe market participants would use in pricing the asset

Fair value of financial assets included in current assets is as follows:


		Estimated Fair Value Measurements						Total Fair			Estimated Fair Value Measurements						Total Fair
		Level 1		Level 2		Level 3		Value			Level 1		Level 2		Level 3		Value
March 31, 2021
September 30, 2021										September 30, 2021
Financial Assets:	Financial Assets:									Financial Assets:

Certificates of Deposit	Certificates of Deposit	$	0	$	6,200	$	0	$	6,200	Certificates of Deposit	$	—	$	1,200	$	—	$	1,200

June 30, 2020
Financial Liabilities:										Financial Liabilities:
Revolving credit facility										Revolving credit facility	$	—	$	65,000	$	—	$	65,000
June 30, 2021										June 30, 2021
Financial Assets:	Financial Assets:									Financial Assets:
Certificates of Deposit	Certificates of Deposit	$	0	$	0	$	0	$	0	Certificates of Deposit	$	—	$	1,200	$	—	$	1,200

Financial Liabilities:										Financial Liabilities:
Revolving credit facility										Revolving credit facility	$	—	$	100,000	$	—	$	100,000

NOTE 5. LEASES

The Company determines if an arrangement is a lease at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease agreements with lease and non-lease components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the Company’s leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based upon the information available at commencement date. The determination of the incremental borrowing rate requires judgment and is determined by

using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease.

The Company leases certain office space, data centers and equipment with remaining terms of 1 to 1312 years. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. Variable lease costs are recognized as a variable lease expense when incurred.

At ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, the Company had operating lease assets of ~~$59,132~~$53,219 and ~~$63,948~~$55,977 and financing lease assets of ~~$231~~$161 and ~~$318,~~$188, respectively. At ~~March 31,~~September 30, 2021, total operating lease liabilities of ~~$64,047~~$58,048 were comprised of current operating lease liabilities of ~~$11,737~~$11,285 and noncurrent operating lease liabilities of ~~$52,310,~~$46,763, and total financing lease liabilities of ~~$237~~$166 were comprised of current financing lease liabilities of ~~$117~~$110 and noncurrent financing lease liabilities of ~~$120.~~$56. At June 30, ~~2020,~~2021, total operating lease liabilities of ~~$68,309~~$60,828 were comprised of current operating lease liabilities of ~~$11,712~~$11,460 and noncurrent operating lease liabilities of ~~$56,597,~~$49,368, and total financing lease liabilities of ~~$323~~$193 were comprised of current financing lease liabilities of ~~$115~~$110 and noncurrent financing lease liabilities of ~~$208.~~$83.

Operating lease assets are included within other non-current assets and operating lease liabilities are included within accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s condensed consolidated balance sheet. Operating lease assets were recorded net of accumulated amortization of ~~$21,388~~$26,372 and ~~$13,719~~$23,813 as of ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, respectively. Financing lease assets are included within property and equipment, net and financing lease liabilities are included within notes payable (current portion) and long-term debt (noncurrent portion) in the Company’s condensed consolidated balance sheet.

Financing lease assets were recorded net of accumulated amortization of ~~$125~~$180 and ~~$38~~$153 as of ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, respectively.

Operating lease costs for the three months ended ~~March 31,~~September 30, 2021 and 2020 were ~~$3,573~~$3,432 and ~~$3,999, respectively. Operating lease costs for the nine months ended March 31, 2021 and 2020 were $11,312 and $12,030,~~$3,909, respectively. Financing lease costs for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020 were ~~$30~~$28 and ~~$92, respectively, and were $10 for both the three and nine months of fiscal 2020.~~$31, respectively. Total operating and financing lease costs for the respective quarters included variable lease costs of approximately ~~$1,015~~$399 and ~~$934. Total operating and financing lease costs for the respective year-to-date periods included variable lease costs of approximately $3,205 and $2,593.~~$1,380. Operating and financing lease expense are included within cost of services, research and development, and selling, general &and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s condensed consolidated statement of income.

For the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020, the Company had operating cash flows for payments on operating leases of ~~$10,121~~$3,031 and ~~$11,676,~~$3,298, and ~~right-of-use~~ROU assets obtained in exchange for operating lease liabilities of ~~$4,746~~$272 and ~~$2,138,~~$4,485, respectively. ~~Operating~~Financing cash flows for ~~interest paid~~payments on financing leases for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020 were $5$29 and ~~$1,~~$30, respectively.

As of ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, the weighted-average remaining lease term for the Company's operating leases was 8280 months and 8881 months and the weighted-average discount rate was 2.64% and ~~2.76%~~2.67%, respectively. As of ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, the weighted-average remaining lease term for the Company's financing leases was 2418 months and 3321 months, respectively. The weighted-average discount rate for the Company's financing leases was ~~2.42%~~2.39% as of ~~March 31,~~September 30, 2021 and June 30, ~~2020.~~

2021.

Maturity of Lease Liabilities under ASC 842

Future minimum rental payments on operating leases with initial non-cancellable lease terms in excess of one year were due as follows at ~~March 31,~~September 30, 2021*:


Due Dates (fiscal year)	Due Dates (fiscal year)	Future Minimum Rental Payments		Due Dates (fiscal year)	Future Minimum Rental Payments

2021 (remaining period)		$	3,203
2022		13,320
2022 (remaining period)				2022 (remaining period)	9,884
2023	2023	11,862		2023	11,829
2024	2024	9,686		2024	9,762
2025	2025	6,899		2025	7,001
2026				2026	6,083
Thereafter	Thereafter	25,165		Thereafter	19,257
Total lease payments	Total lease payments	$	70,135	Total lease payments	$	63,816
Less: interest	Less: interest	(6,088)		Less: interest	(5,768)
Present value of lease liabilities	Present value of lease liabilities	$	64,047	Present value of lease liabilities	$	58,048

*Financing leases were immaterial to the quarter, so a maturity of lease liabilities table has only been included for operating leases.

Lease payments include $5,464 related to options to extend lease terms that are reasonably certain of being exercised. ~~At March 31,~~For the three months ended September 30, 2021, there were 0no legally binding lease payments for leases signed but not yet commenced.

NOTE 6. DEBT

Revolving credit facility

On February 10, 2020, the Company entered into a five-year senior, unsecured revolving credit facility. The credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $700,000. The credit facility bears interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the U.S. Bank prime rate ~~("Prime Rate")~~ for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit facility agreement. As of ~~March 31,~~September 30, 2021, the Company was in compliance with all such covenants. The revolving

Table of Contents

credit facility terminates February 10, 2025. There was ~~$200,000~~$65,000 outstanding under the credit facility at ~~March 31,~~September 30, 2021 and 0$100,000 outstanding balance at June 30, ~~2020.~~2021.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line expires on April 30, 2023. There was 0no balance outstanding at ~~March 31,~~September 30, 2021 or June 30, ~~2020.~~2021.

Interest

The Company paid interest of ~~$525~~$234 and ~~$275~~$79 during the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020, respectively.

NOTE 7. INCOME TAXES

Provision for income taxes increased for the three months ended ~~March 31,~~September 30, 2021 compared to the three months ended ~~March 31,~~September 30, 2020 with an effective tax rate of ~~21.5%~~23.4% of income before income taxes, compared to ~~19.7%~~22.4% in the prior fiscal year quarter. The increase in the effective tax rate comparing the ~~three month~~three-month periods ended ~~March 31,~~September 30, was primarily due to a ~~change~~larger excess tax benefit received from share-based compensation in the ~~timing of the release of reserves for uncertain tax positions resulting from varying statute of limitation periods.~~

For the nine months ended March 31, 2021, provision for income taxes decreased compared to the nine months ended March 31, 2020, with an effective tax rate of 22.3% of income before income taxes, compared to 22.7% for the same period last year. The decrease to the Company’s fiscal year-to-date effective tax rate compared to the prior fiscal year period was primarily due to the difference in impact of share-based compensation that vested during each of the periods.

~~Table of Contents~~

prior-year period.

The Company paid income taxes, net of refunds, of ~~$40,440~~$15,187 and ~~$49,970~~$455 in the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020, respectively.

At ~~March 31,~~September 30, 2021, the Company had ~~$11,731~~$9,162 of gross unrecognized tax benefits before interest and penalties, ~~$10,886~~$8,492 of which, if recognized, would affect our effective tax rate. At ~~March 31,~~September 30, 2021, the Company had accrued interest and penalties of ~~$2,035~~$1,282 related to uncertain tax positions.

The U.S. federal and state income tax returns for fiscal ~~2017~~2018 and all subsequent years remain subject to examination as of ~~March 31,~~September 30, 2021 under statute of limitations rules. The Company believes it is reasonably possible that the liability for unrecognized tax benefits could reduce by $3,500 to $4,500 within twelve months of ~~March 31,~~September 30, 2021 due to lapsing statutes of limitations and examination ~~closures..~~closures.

NOTE 8. STOCK-BASED COMPENSATION

Our operating income for the three months ended ~~March 31,~~September 30, 2021 and 2020 included ~~$5,207~~$6,071 and ~~$4,691 of stock-based compensation costs, respectively. Our operating income for the nine months ended March 31, 2021 and 2020 included $14,959 and $11,688~~$4,625 of stock-based compensation costs, respectively.

Stock Options

On November 10, 2015, the Company adopted the 2015 Equity Incentive Plan ("2015 EIP") for its employees and non-employee directors. The plan allows for grants of stock options, stock appreciation rights, restricted stock shares or units, and performance shares or units. The maximum number of shares authorized for issuance under the plan is 3,000. For stock options, terms and vesting periods of the options are determined by the Compensation Committee of the Board of Directors when granted. The option period must expire not more than ten years from the option grant date. The options granted under this plan are exercisable beginning three years after the grant date at an exercise price equal to 100% of the fair market value of the stock at the grant date. The options terminate upon surrender of the option, ninety days after termination of employment, upon the expiration of one year following notification of a deceased optionee, or ten years after grant.

A summary of option plan activity under this plan is as follows:

Number of Shares Weighted Average Exercise Price Aggregate
Intrinsic
Value
Outstanding July 1, 2020 22 $ 87.27
Granted 0 0
Forfeited 0 0
Exercised 0 0
Outstanding March 31, 2021 22 $ 87.27 $ 1,398
Vested and Expected to Vest March 31, 2021 22 $ 87.27 $ 1,398
Exercisable March 31, 2021 22 $ 87.27 $ 1,398


	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding July 1, 2021	22	$	87.27
Granted	—	—
Forfeited	—	—
Exercised	—	—
Outstanding September 30, 2021	22	$	87.27	$	1,665
Vested and Expected to Vest September 30, 2021	22	$	87.27	$	1,665
Exercisable September 30, 2021	22	$	87.27	$	1,665

Table of Contents

At ~~March 31,~~September 30, 2021, there was 0no compensation cost yet to be recognized related to outstanding options. For options currently exercisable, the weighted average remaining contractual term (remaining period of exercisability) as of ~~March 31,~~September 30, 2021 was ~~5.25~~4.75 years.

~~Restricted Stock Unit Awards~~

The Company issues unit awards under the 2015 EIP. The following table summarizes non-vested performance and restricted stock unit awards as of ~~March 31,~~September 30, 2021:

Unit awards Units Weighted
Average
Grant Date
Fair Value Aggregate Intrinsic Value
Outstanding July 1, 2020 307 $ 136.41
Granted 109 171.43
Vested (113) 107.34
Forfeited (1) 139.17
Outstanding March 31, 2021 302 $ 159.83 $ 45,817

~~Table of Contents~~


	Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2021	294	$	160.22
Granted	80	194.21
Vested	(14)	150.65
Forfeited	(39)	199.28
Outstanding September 30, 2021	321	$	164.27	$	52,619

The ~~109~~80 unit awards granted in fiscal ~~2021~~2022 had service requirements and performance targets, with 7432 having only service requirements. ~~Those 74~~The unit awards with only service requirements were valued at the weighted-average fair value of the non-vested units based on the fair market value of the Company’s equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period, consistent with the methodology for calculating compensation expense on such awards.

The remaining 3548 unit awards granted in fiscal ~~2021 had~~2022 have performance targets along with service ~~requirements, all~~requirements. 19 of ~~which~~the remaining performance and service requirement unit awards were valued at grant by estimating 100% payout at release and using the fair market value of the Company equity shares on the grant date, less the present value of expected future dividends to be declared during the vesting period. The payout at release of approximately half of these unit awards will be determined based on the Company's compound annual growth rate (CAGR) for revenue (excluding adjustments) for the three-year vesting period compared against goal thresholds as defined in the award agreement. The performance payout at release of the other half of these unit awards will be determined based on the expansion of the Company's non-GAAP operating margin over the three-year vesting period compared against goal thresholds as defined in the award agreement. 29 of the remaining performance and service requirement unit awards were valued at grant using a Monte Carlo pricing model as of the measurement date customized to the specific provisions of the Company’s plan ~~design to value the unit awards as of the grant date.~~design. Per the Company's award vesting and settlement provisions, ~~approximately half of~~ the awards that ~~utilize~~utilized a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return (TSR) in comparison to the ~~compensation~~custom peer group ~~made up~~comprised of participants approved by the Compensation Committee of the Company's Board of Directors for fiscal year 2021, and the other half of the awards utilizing a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return in comparison to the Standard & Poor's 1500 Information Technology Index (S&P 1500 IT Index) participants.2022. The Monte Carlo inputs used in the model to estimate fair value at the measurement date and resulting values for these performance unit awards are as follows.

Compensation Peer Group S&P 1500 IT Index
Volatility 25.17 % 25.17 %
Risk free interest rate 0.11 % 0.11 %
Annual dividend based on most recent quarterly dividend 1.72 1.72
Beginning TSR 37 % 30 %


Fiscal year 2022 Monte Carlo award inputs:
Volatility	28.55		%
Risk free interest rate	0.32		%
Annual dividend based on most recent quarterly dividend	$	1.84
Beginning TSR	65		%

At ~~March 31,~~September 30, 2021, there was ~~$23,718~~$28,904 of compensation expense, excluding forfeitures, that has yet to be recognized related to non-vested restricted stock unit awards, which will be recognized over a weighted average period of ~~1.40~~1.53 years.

Table of Contents

NOTE 9. EARNINGS PER SHARE

The following table reflects the reconciliation between basic and diluted earnings per share.


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended September 30,
		2021		2020		2021		2020				2021		2020
Net Income	Net Income	$	71,409	$	73,855	$	234,607	$	235,323	Net Income		$	102,114	$	91,216
Common share information:	Common share information:									Common share information:
Weighted average shares outstanding for basic earnings per share	Weighted average shares outstanding for basic earnings per share	75,357		76,683		76,022		76,845		Weighted average shares outstanding for basic earnings per share		74,016		76,507
Dilutive effect of stock options and restricted stock	Dilutive effect of stock options and restricted stock	74		201		119		117		Dilutive effect of stock options and restricted stock		126		206
Weighted average shares outstanding for diluted earnings per share	Weighted average shares outstanding for diluted earnings per share	75,431		76,884		76,141		76,962		Weighted average shares outstanding for diluted earnings per share		74,142		76,713
Basic earnings per share		$	0.95	$	0.96	$	3.09	$	3.06
Diluted earnings per share		$	0.95	$	0.96	$	3.08	$	3.06
Basic earnings per share1										Basic earnings per share1		$	1.38	$	1.19
Diluted earnings per share1										Diluted earnings per share1		$	1.38	$	1.19

1The Company’s repurchase of 2,800 shares of common stock during fiscal year 2021 contributed $0.05 to earnings per share for the first quarter of fiscal year 2022.

Per share information is based on the weighted average number of common shares outstanding for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020. Stock options and restricted stock units have been included in the calculation of earnings per share to the extent they are dilutive. There were 022 anti-dilutive stock options or restricted stock units excluded for the quarter ended ~~March 31,~~September 30, 2021 and 3none were excluded for the quarter ended ~~March 31, 2020. There were 0 anti-dilutive stock options or restricted stock units excluded for the nine months ended March 31, 2021 and 48 were excluded for the nine months ended March 31,~~September 30, 2020.

~~Table of Contents~~

~~NOTE 10. BUSINESS ACQUISITIONS~~

~~Geezeo~~

On July 1, 2019, the Company acquired all of the equity interest of DebtFolio, Inc. ("Geezeo") for $37,776 paid in cash. The primary reason for the acquisition was to expand the Company's digital financial management solutions and the purchase was funded by cash generated from operations. Geezeo is a Boston-based provider of retail and business digital financial management solutions.

Management has completed a purchase price allocation and its assessment of the fair value of acquired assets and liabilities assumed. The recognized amounts of identifiable assets acquired and liabilities assumed, based on their fair values as of July 1, 2019 are set forth below:


~~Current assets~~	$	~~8,925~~
~~Long-term assets~~	~~397~~
~~Identifiable intangible assets~~	~~19,114~~
~~Deferred income tax liability~~	~~(2,593)~~
~~Total other liabilities assumed~~	~~(7,457)~~
~~Total identifiable net assets~~	~~18,386~~
~~Goodwill~~	~~19,390~~
~~Net assets acquired~~	$	~~37,776~~

The goodwill of $19,390 arising from this acquisition consists largely of the growth potential, synergies and economies of scale expected from combining the operations of the Company with those of Geezeo, together with the value of Geezeo's assembled workforce. The goodwill from this acquisition has been allocated to our Complementary segment and is not deductible for income tax purposes.

Identifiable intangible assets from this acquisition consist of customer relationships of $10,522, computer software of $5,791, and other intangible assets of $2,801. The amortization period for acquired customer relationships, computer software, and other intangible assets is 15 years for each.

~~Current assets were inclusive of cash acquired of $7,400. The fair value of current assets acquired included accounts receivable of $1,373, NaN of which were expected to be uncollectible.~~

Costs incurred related to the acquisition of Geezeo in fiscal 2020 totaled $30 for professional services, travel, and other fees, and were expensed as incurred and reported within cost of revenue and selling, general, and administrative expense.

The Company's condensed consolidated statements of income for the three months ended March 31, 2021 included revenue of $3,328 and after-tax net income of $1,190 resulting from Geezeo's operations. The Company's condensed consolidated statements of income for the three months ended March 31, 2020 included revenue of $2,356 and after-tax net income of $345 resulting from Geezeo's operations.

The Company's condensed consolidated statements of income for the nine months ended March 31, 2021 included revenue of $9,814 and after-tax net income of $3,413 resulting from Geezeo's operations. The Company's condensed consolidated statements of income for the nine months ended March 31, 2020 included revenue of $6,787 and after-tax net income of $523 resulting from Geezeo's operations.

The accompanying condensed consolidated statements of income for the three and nine months ended March 31, 2021 and 2020 do not include any revenues and expenses related to this acquisition prior to the acquisition date. The impact of this acquisition was considered immaterial to the current and prior periods of our condensed consolidated financial statements and pro forma financial information has not been provided.

NOTE ~~11.~~10. REPORTABLE SEGMENT INFORMATION

The Company is a provider of integrated computer systems that perform data processing (available for on-premise installations or JKHY cloud-based services) for banks and credit unions.

The Company’s operations are classified into 4 reportable segments: Core, Payments, Complementary, and Corporate &and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card transaction processing services, online and mobile bill pay solutions, Automated Clearing House ("ACH") origination and remote deposit capture processing, and risk management products and services. The Complementary segment provides additional software and services that

~~Table of Contents~~

can be integrated with our Core solutions and many can be used independently. The Corporate &and Other segment includes hardware revenue and costs, as well as operating costs not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast. Only revenue and costs of revenue are considered in the evaluation for each segment.

During the second quarter of fiscal 2021, Jack Henry's call center was consolidated into the Complementary segment. As a result of this consolidation, an immaterial adjustment was made ~~during the third quarter of fiscal 2021~~ to reclassify revenue and related costs recognized during the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 from the Core to the Complementary segment. The revenue ~~amounts~~amount reclassified ~~were $5,320~~was $5,875 for the three months ended ~~March 31,~~September 30, 2020 ~~and $14,795 for the nine months ended March 31, 2020.~~ The cost of revenue ~~amounts~~amount reclassified ~~were $3,442~~was $3,699 for the three months ended ~~March 31, 2020, and $8,992 for the nine months ended March 31,~~September 30, 2020. An additional immaterial adjustment was made ~~after~~during the first quarter ~~ended December 31, 2019~~of fiscal 2022 to reclassify cost of revenue ~~recognized in the year-to-date period of fiscal 2020~~ from the ~~Corporate & Other~~Core to the ~~Payments~~Corporate and Other segment to be consistent with the current allocation of cost of revenue by segment. ~~There~~The amount reclassified was ~~0 amount reclassified~~$29 for the three months ended ~~March 31, 2020 and $131 for the nine months ended March 31,~~September 30, 2020.

Three Months Ended
March 31, 2021
Core Payments Complementary Corporate & Other Total
REVENUE
Services and Support $ 126,400 $ 15,978 $ 100,421 $ 11,840 $ 254,639
Processing 8,749 144,863 25,010 515 179,137
Total Revenue 135,149 160,841 125,431 12,355 433,776
Cost of Revenue 63,259 87,628 54,207 62,676 267,770
Research and Development 27,395
Selling, General, and Administrative 47,408
Total Expenses 342,573
SEGMENT INCOME $ 71,890 $ 73,213 $ 71,224 $ (50,321)
OPERATING INCOME 91,203
INTEREST INCOME (EXPENSE) (266)
INCOME BEFORE INCOME TAXES $ 90,937

1816

Table of Contents


		Three Months Ended											Three Months Ended
		March 31, 2020											September 30, 2021
		Core		Payments		Complementary		Corporate & Other		Total			Core		Payments		Complementary		Corporate and Other		Total
REVENUE	REVENUE											REVENUE
Services and Support	Services and Support	$	133,362	$	19,506	$	103,680	$	13,656	$	270,204	Services and Support	$	155,838	$	15,650	$	114,953	$	11,053	$	297,494
Processing	Processing	7,758		130,854		20,304		286		159,202		Processing	9,447		153,972		26,528		615		190,562
Total Revenue	Total Revenue	141,120		150,360		123,984		13,942		429,406		Total Revenue	165,285		169,622		141,481		11,668		488,056

Cost of Revenue	Cost of Revenue	62,699		80,836		52,133		62,903		258,571		Cost of Revenue	66,902		93,226		55,485		61,023		276,636
Research and Development	Research and Development									28,308		Research and Development									26,754
Selling, General, and Administrative	Selling, General, and Administrative									50,589		Selling, General, and Administrative									51,071

Total Expenses	Total Expenses									337,468		Total Expenses									354,461

SEGMENT INCOME	SEGMENT INCOME	$	78,421	$	69,524	$	71,851	$	(48,961)			SEGMENT INCOME	$	98,383	$	76,396	$	85,996	$	(49,355)

OPERATING INCOME	OPERATING INCOME									91,938		OPERATING INCOME									133,595

INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)									32		INTEREST INCOME (EXPENSE)									(241)

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES									$	91,970	INCOME BEFORE INCOME TAXES									$	133,354


	Three Months Ended
	September 30, 2020
	Core		Payments		Complementary		Corporate and Other		Total
REVENUE
Services and Support	$	144,586	$	16,304	$	108,550	$	11,557	$	280,997
Processing	8,569		140,429		21,805		—		170,803
Total Revenue	153,155		156,733		130,355		11,557		451,800

Cost of Revenue	63,861		86,328		52,024		60,716		262,929
Research and Development									26,057
Selling, General, and Administrative									45,226


Total Expenses									334,212

SEGMENT INCOME	$	89,294	$	70,405	$	78,331	$	(49,159)

OPERATING INCOME									117,588

INTEREST INCOME (EXPENSE)									(49)

INCOME BEFORE INCOME TAXES									$	117,539

Nine Months Ended
March 31, 2021
Core Payments Complementary Corporate & Other Total
REVENUE
Services and Support 397,744 47,089 307,799 33,877 786,509
Processing 25,509 425,667 69,394 859 521,429
Total Revenue 423,253 472,756 377,193 34,736 1,307,938
Cost of Revenue 185,668 260,411 158,638 183,764 788,481
Research and Development 80,233
Selling, General, and Administrative 136,801
Total Expenses 1,005,515
SEGMENT INCOME $ 237,585 $ 212,345 $ 218,555 $ (149,028)
OPERATING INCOME 302,423
INTEREST INCOME (EXPENSE) (381)
INCOME BEFORE INCOME TAXES $ 302,042

1917

Table of Contents

Nine Months Ended
March 31, 2020
Core Payments Complementary Corporate & Other Total
REVENUE
Services and Support $ 402,759 $ 51,643 $ 306,083 $ 43,731 $ 804,216
Processing 23,150 400,508 58,054 602 482,314
Total Revenue 425,909 452,151 364,137 44,333 1,286,530
Cost of Revenue 181,697 236,725 152,376 182,831 753,629
Research and Development 80,086
Selling, General, and Administrative 148,985
Total Expenses 982,700
SEGMENT INCOME $ 244,212 $ 215,426 $ 211,761 $ (138,498)
OPERATING INCOME 303,830
INTEREST INCOME (EXPENSE) 573
INCOME BEFORE INCOME TAXES $ 304,403

The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the Chief Executive Officer, who is also the Chief Operating Decision Maker.

NOTE ~~12:~~11: SUBSEQUENT EVENTS

None.

2018

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements included in this Form 10-Q for the quarter ended ~~March 31,~~September 30, 2021.

OVERVIEW

Jack Henry & Associates, Inc. ("JKHY") is a leading provider of technology solutions and payment processing services primarily for financial services organizations. Its solutions are marketed and supported through three primary brands. Jack Henry Banking® provides innovative solutions to community and regional banks. Symitar® provides industry-leading solutions to credit unions of all sizes. ProfitStars® offers highly specialized solutions to financial institutions of every asset size, as well as diverse corporate entities outside of the financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JKHY's integrated solutions are generally available for on-premise installation and delivery in our ~~JKHY~~private cloud.

Our two primary revenue streams are "services and support" and "processing." Services and support includes: "private and public cloud" fees (formerly known as "outsourcing and cloud" fees - see Note 3)3 to the condensed consolidated financial statements) that predominantly have contract terms of ~~five~~seven years or longer at inception; "product delivery and services" revenue, which includes revenue from the sales of licenses, implementation services, deconversion fees, consulting, and hardware; and "on-premise support" revenue (formerly known as "in-house support" revenue - see Note 3)3 to the condensed consolidated financial statements), composed of maintenance fees which primarily contain annual contract terms. Processing revenue includes: "remittance" revenue from payment processing, remote capture, and ACH transactions; "card" fees, including card transaction processing and monthly fees; and "transaction and digital" revenue, which includes transaction and mobile processing fees. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.

All amounts in the following discussion are in thousands, except per share amounts.

COVID-19 Impact and Response

~~In March~~Since its outbreak in early 2020, ~~the World Health Organization declared the outbreak of~~ COVID-19 ~~as a pandemic and the President of the United States declared the outbreak as a national emergency. As COVID-19~~has rapidly spread ~~federal, state~~ and local governments responded by imposing varying degrees of restrictions, including widespread “stay-at-home” orders, social distancing requirements, travel limitations, quarantines, and forced closures or limitations on operations of non-essential businesses. Over the course of the pandemic, these restrictions have been modified, lifted, and in some cases re-imposed in various locations. The existence, diversity, and constantly changing nature of these restrictions have resulted in significant economic disruptions and uncertainty.

continues to represent a public health concern. The health, safety, and well-being of our employees and customers is of paramount importance to us. In March 2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions. We offered remote working as a recommended option to employees whose job duties ~~allow~~allowed them to work ~~off-site.~~off-site, and we suspended all non-essential business travel. This ~~recommended remote working option is currently~~company-wide recommendation extended until ~~at least~~ July 1, 2021, at which point we began transition to a return to our facilities and ~~our internal task force will continue~~normalization of travel activities. Individual decisions on returning to ~~evaluate recommending further extensions. Based~~the office were manager-coordinated and based on ~~guidance from the U.S. Department of Homeland Security’s Cybersecurity~~conversations with specific teams and ~~Infrastructure Security Agency, the Company was designated as essential critical infrastructure because~~departments. A large number of our ~~support~~employees requested to remain fully remote or participate in a hybrid approach where they would split their time between remote and in-person working. We have not required employees who return to our facilities to receive vaccinations, but we have provided information on vaccine providers, as well as hosted on-site COVID-19 vaccination clinics at several of our facilities for our employees and their families. On August 3, 2021, we reimplemented our company-wide recommendation for remote work based on the spread of the ~~financial services industry.~~Delta variant and increased infection rates. For those employees who are at our facilities, we have introduced enhanced sanitation procedures and we require face masks for both vaccinated and unvaccinated employees. As of ~~May 1,~~November 5, 2021, the majority of our employees were continuing to work ~~remotely. Our internal task force considers federal, state and local guidance, as well as employee-specific and facility-specific factors, when recommending Company actions. At such~~remotely either full time ~~that~~or in a hybrid capacity. While our internal task force recommends that our remote employees begin to return to our facilities, we have prepared procedures to assist with a safe, gradual and deliberate approach, including a return-to-office training, enhanced sanitation procedures and face mask requirements, which are currently being utilized by our employees who are required to be on-site to perform their required job functions.

~~We have suspended all non-essential~~ business travel ~~until at least July 1, 2021, and our internal task force will~~has increased in recent months, we continue to ~~evaluate~~encourage a cautious approach to business travel activities. On November 4, 2021, the ~~need for further extensions.~~Occupational Safety and Health Administration announced a new emergency temporary standard that requires employers with 100 or more employees, which includes Jack Henry, to require employees to either receive a COVID-19 vaccination or else undergo regular testing. We ~~have put additional safety precautions into place for travel that is essential. We have also updated the health benefits available~~are developing our plan to ~~our employees by waiving out-of-pocket expenses related to testing and treatment~~comply with this new standard.

Table of ~~COVID-19.~~Contents

Customers

We ~~are working~~work closely with our customers who are scheduled for on-site visits to ensure their needs are met while taking necessary safety precautions when our employees are required to be at a customer site. Delays of customer system installations due to COVID-19 have been limited, and we have developed processes to handle remote

~~Table of Contents~~

installations when available. We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic. We did experience delays related to continuing customer migrations to our new card processing platform. However, we successfully completed all the migrations according to a revised schedule by March 31, 2021. We continue to work with our customers to support them during this difficult time, and, to that end, have waived certain late fees in connection with our products and services. We have also enhanced our lending service offerings to support the Paycheck Protection Program (PPP) that was introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been curtailed, we have not yet experienced significant disruption to our operations. We believe our technological capabilities are well positioned to allow our employees to work remotely ~~for the foreseeable future~~ without materially impacting our business.

Financial impact

We have seen delays in certain product installations due to COVID-19 with the associated revenue pushed from the current period to future periods. These headwinds may continue to impact our license, hardware, installation and pass-through revenues into fiscal 2022. Despite the changes and restrictions caused by COVID-19, the overall financial and operational impact on our business has been limited and our liquidity, balance sheet, and business trends remain strong. We experienced positive operating cash flows during fiscal 2021 and the first ~~nine~~three months of fiscal ~~2021,~~2022, and we do not expect that to change in the near term. However, we are unable to accurately predict the future impact of COVID-19 due to a number of uncertainties, including further government actions; the duration, severity and recurrence of the ~~outbreak;~~outbreak, including the onset of variants of the virus; the speed and effectiveness of vaccine and treatment developments; the speed of economic recovery; the potential impact to our customers, vendors, and employees; and how the potential impact might affect future customer services, processing and installation-related revenue, and processes and efficiencies within the Company directly or indirectly impacting financial results. We will continue to monitor COVID-19 and its possible impact on the Company and to take steps necessary to protect the health and safety of our employees and customers.

RESULTS OF OPERATIONS

For the ~~third~~first quarter of fiscal ~~2021,~~2022, total revenue increased 1%8%, or ~~$4,370,~~$36,256, compared to the same quarter in fiscal ~~2020. Reducing total~~2021. Total revenue ~~for the effects~~less deconversion fee and acquisition and divestiture revenues of ~~deconversion fees of $4,367~~$3,724 and $106, respectively, for the current fiscal ~~year~~ quarter and ~~$22,781~~less deconversion fee and acquisition and divestiture revenues of $5,882 and $1,182, respectively, for the prior fiscal ~~year quarter and for the effects of acquisitions and divestitures of $1,241 for the prior fiscal year~~ quarter, results in an increase of ~~6% for the~~9%, quarter ~~compared to the same quarter a year ago.~~over quarter. This ~~total revenue~~ increase was primarily driven by growth in support revenue, card, ~~processing, data processing and hosting fee,~~remittance, and transaction and digital processing revenues, partially offset by ~~a decrease~~lower hardware revenue in ~~hardware revenue.~~our product delivery and services revenue line.

Operating expenses increased 2%6% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the ~~third~~first quarter of fiscal ~~2020,~~2021, primarily due to increased direct costs related to our card payment processing platform and Jack Henry digital, higher personnel costs, and higher travel expenses related to an increase in business travel compared to the prior fiscal quarter, as ~~well as higher licenses and fees partially offset by lower research and development costs due~~travel began to ~~more of those costs being capitalized during~~pick up after the ~~quarter, the change in gain/loss on disposal of assets, and travel expense savings due to~~prior fiscal year's COVID-19 travel limitations (see "COVID-19 Impact and Response" section above) ~~that included savings generated by holding virtual events.~~.

Operating income ~~decreased 1%~~increased 14% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the ~~third~~first quarter of fiscal ~~2020. Reducing~~2021. Operating income less deconversion fee operating income of $3,184 and adjusted for ~~the effects~~acquisition and divestiture operating loss of ~~deconversion fees of $3,967~~$45 for the current fiscal quarter, and ~~$21,512~~less deconversion fee and acquisition and divestiture operating income of $5,219 and $369, respectively, for the prior fiscal ~~year quarter and increasing operating income for the effects of acquisitions, divestitures, and gain/loss, of $46 for the current fiscal year quarter and $2,838 for the prior fiscal year~~ quarter, results in a ~~19%~~16% increase for the ~~third~~first quarter of fiscal ~~2021 compared to the same~~2022, quarter ~~a year ago.~~over quarter. This increase in operating income was primarily driven by ~~increased~~ revenue growth partially offset by increased operating expenses, as detailed above.

The provision for income taxes increased 8%19% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the prior fiscal ~~year third~~first quarter. The effective tax rate for the ~~third~~first quarter of fiscal ~~2021~~2022 was ~~21.5%~~23.4% compared to ~~19.7%~~22.4% for the same quarter a year ago. The increase in the effective tax rate was primarily due to a ~~change~~larger excess tax benefit received from share-based compensation in the ~~timing of the release of reserves for uncertain tax positions resulting from varying statute of limitation periods.~~prior fiscal quarter.

Due to the above changes, net income ~~decreased 3%~~increased 12% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the ~~third~~first quarter of fiscal ~~2020.~~

For the nine months ended March 31, 2021, total revenue increased 2%, or $21,408, over the nine months ended March 31, 2020. Reducing total revenue for the effects of deconversion fees of $12,405 for the current fiscal year period and $45,384 for the prior fiscal year period and for the effects of acquisitions and divestitures from the prior fiscal year period of $2,408, results in a 5% increase for the period compared to the same period a year ago. This total revenue increase was primarily driven by increased data processing and hosting fee, card processing, Jack Henry digital, and remittance revenues.

~~Table of Contents~~

Operating expenses for the nine months ended March 31, 2021 increased 2% compared to the equivalent period in the prior fiscal year, primarily due to increased direct costs, operating licenses and fees, and higher personnel costs partially offset by travel expense savings due to COVID-19 travel limitations (see "COVID-19 Impact and Response" section above), that included savings generated by holding virtual events, and lower costs related to hardware and the change in gain/loss on disposal of assets. The increased direct costs were primarily related to our card payment processing platform and Jack Henry digital. Higher personnel costs were primarily related to a headcount increase of 2% at March 31, 2021 compared to March 31, 2020.

Operating income remained consistent for the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. Reducing operating income for the effects of deconversion fees of $11,105 for the current fiscal year period and $41,960 for the prior fiscal year period and for the effects of acquisitions, divestitures, and gain/loss, of $1,994 for the current fiscal year period, and increasing operating income for the effects of acquisitions, divestitures, and gain/loss of $2,561 for the prior fiscal year period, results in a 9% increase for the nine months ended March 31, 2021 compared to the same period a year ago. This increase was primarily driven by the revenue growth described above partially offset by increased operating expenses detailed above.

The provision for income taxes decreased 2% for the nine months ended March 31, 2021 compared to the prior fiscal year-to-date period. The effective tax rate for the nine months ended March 31, 2021 was 22.3% compared to 22.7% for the prior year fiscal period. The decrease was primarily driven by the difference in impact of share-based compensation that vested during each of the periods.

~~The result of the above changes led to net income that remained consistent for the nine months ended March 31, 2021 compared to the same period in the prior fiscal year.~~2021.

We move into the ~~fourth~~second quarter of fiscal ~~2021~~2022 with optimism following strong performance in the ~~third~~first quarter, but with limited visibility of the future impact of the COVID-19 ~~pandemic.~~pandemic (see "COVID-19 Impact and Response" section above). Significant portions of our business continue to come from recurring revenues and our sales pipeline also remains encouraging. Our customers continue to face regulatory and operational challenges which our products and services address, and in these uncertain times, we believe they have an even greater need for our solutions that directly address institutional profitability, efficiency, and security. Our strong balance sheet, access to extensive lines of credit, the continued strength of our existing lines of revenue, and an unwavering commitment to superior customer service should position us well to address current and future opportunities.

Table of Contents

A detailed discussion of the major components of the results of operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 follows. Discussions compare the current fiscal year's three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 to the prior fiscal year's three ~~and nine~~ months ended ~~March 31,~~September 30, 2020.

~~REVENUE~~

Services and Support Three Months Ended March 31, %
Change Nine Months Ended March 31, %
Change
2021 2020 2021 2020
Services and Support $ 254,639 $ 270,204 (6) % $ 786,509 $ 804,216 (2) %
Percentage of total revenue 59 % 63 % 60 % 63 %
REVENUE


Services and Support	Three Months Ended September 30,				% Change
		2021			2020
Services and Support		$	297,494		$	280,997		6	%
Percentage of total revenue		61		%	62		%

Services and support revenue ~~decreased~~increased 6% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter a year ~~ago primarily due to a~~ago. This revenue less deconversion fee revenue ~~reduction of $18,414, as fewer customers were lost to mergers with non-Jack Henry customers. Reducing services and support revenue for deconversion fee revenue from each quarter, which was $4,367~~ for the current fiscal ~~year~~ quarter of $3,724 and ~~$22,781~~less deconversion fee and acquisition and divestiture revenues for the prior ~~fiscal year~~ quarter of $5,882 and ~~for revenue from acquisitions and divestitures of $1,240 for the prior fiscal year quarter,~~$1,182, respectively, results in growth of 2%7%, quarter over quarter. ~~This increase was primarily driven by increased data processing and hosting fee revenue reflecting a continuing shift of customers to our term license model.~~

For the nine months ended March 31, 2021, services and support revenue decreased 2% compared to the nine months ended March 31, 2020 primarily due to a deconversion fee revenue reduction of $32,979, as fewer customers were lost to mergers with non-Jack Henry customers. Reducing services and support revenue for deconversion fee revenue from each period presented, which was $12,405 for the current fiscal year period and $45,384 for the prior fiscal year period and for revenue from acquisitions and divestitures of $2,407 from the prior fiscal year period, results in growth of 2% period over period. This increase was primarily driven by growth in data processing and hosting fees as new customers were added and volumes continued to expand, as well as higher software usage ~~revenues partially offset by lower hardware revenue and decreased pass through revenue related~~fees for customers using on-premise products while outsourced core customers continued to ~~billable travel limitations due~~shift to ~~COVID-19 (see "COVID-19 Impact and Response" section above).~~our term license model.

~~Table of Contents~~


Processing	Processing	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Processing	Three Months Ended September 30,				% Change
		2021			2020					2021			2020							2021			2020
Processing	Processing	$	179,137		$	159,202		13	%	$	521,429		$	482,314		8	%	Processing		$	190,562		$	170,803		12	%
Percentage of total revenue	Percentage of total revenue	41		%	37		%			40		%	37		%			Percentage of total revenue		39		%	38		%

Processing revenue increased ~~13%~~12% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter last fiscal year. The increase was ~~primarily~~ driven by higher card, ~~processing~~remittance, and Jack Henry digital processing revenues. All remittance revenue ~~due to~~lines experienced expanding volumes ~~complemented by growth in~~during the ~~other processing revenue components,~~current quarter ~~over quarter.~~

~~Each processing revenue component also experienced volume growth in the fiscal year-to-date period, leading to an increase in processing revenue of 8% for the nine months ended March 31, 2021~~ compared to the ~~nine months ended March 31, 2020.~~prior fiscal quarter.

OPERATING EXPENSES


Cost of Revenue	Cost of Revenue	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Cost of Revenue	Three Months Ended September 30,				% Change
		2021			2020					2021			2020							2021			2020
Cost of Revenue	Cost of Revenue	$	267,770		$	258,571		4	%	$	788,481		$	753,629		5	%	Cost of Revenue		$	276,636		$	262,929		5	%
Percentage of total revenue	Percentage of total revenue	62		%	60		%			60		%	59		%			Percentage of total revenue		57		%	58		%

Cost of revenue for the ~~third~~first quarter of fiscal ~~2021~~2022 increased 4%5% over the prior fiscal year third quarter and increased as a percentage of total revenue. Reducing cost of revenue for the effects of deconversion fees from each quarter, which were $351 for the current fiscal year quarter and $670 for the prior fiscal year quarter and for the effects of acquisitions, divestitures, and gain/loss of $29 from the current fiscal year quarter and $726 from the prior fiscal year quarter, results in a 4% increase quarter overfirst quarter. This increase was primarily due to higher direct costs associated with our card processing platform, ~~operating~~increased licenses and fees, and higher personnel costs, ~~related to increased headcount at March 31, 2021 compared to a year ago due to organic growth within our product lines. The increase in costs was~~ partially offset by ~~travel expense savings as a result of COVID-19 travel limitations (see "COVID-19 Impact and Response" section above), which included savings generated by holding virtual events.~~lower hardware costs. Cost of revenue ~~increased 2%~~decreased 1% compared to the prior fiscal ~~year~~ quarter as a percentage of total revenue.

~~For the fiscal year-to-date period, cost of revenue~~


Research and Development	Three Months Ended September 30,				% Change
		2021			2020
Research and Development		$	26,754		$	26,057		3	%
Percentage of total revenue		5		%	6		%

Research and development expense increased ~~5% over the same prior fiscal year-to-date period and increased as a percentage of revenue. Reducing cost of revenue~~3% for the ~~effects~~first quarter of ~~deconversion fees from each period, which were $1,000 for the current~~ fiscal ~~year period and $2,601 for~~2022 over the prior fiscal year ~~period and for the effects of acquisitions, divestitures, and gain/loss of $29 from the current fiscal year period and $1,446 from the prior fiscal year period, results in a 5%~~first quarter. The increase ~~period over period. This increase in costs~~ was primarily due to higher consulting fees, personnel costs, ~~associated with our card processing platform~~contract labor and ~~operating~~ licenses and ~~fees. Cost of revenue~~fees partially offset by increased ~~1% compared to the prior fiscal year period as a percentage of total revenue.~~

Research and Development Three Months Ended March 31, %
Change Nine Months Ended March 31, %
Change
2021 2020 2021 2020
Research and Development $ 27,395 $ 28,308 (3) % $ 80,233 $ 80,086 — %
Percentage of total revenue 6 % 7 % 6 % 6 %

~~Research and development expense decreased 3% for the third quarter of fiscal 2021 over the prior fiscal year third quarter. The decrease was primarily due to higher~~ capitalized research and development ~~costs partially offset by an increase in personnel~~ costs, quarter over quarter. Research and development expense for the quarter decreased 1% compared to the prior fiscal ~~year~~ quarter as a percentage of total revenue.

For the fiscal year-to-date period, research and development expense remained consistent over the prior fiscal year-to-date period. The consistency of this expense category for the fiscal year-to-date period reflected our continuing commitment to the development of strategic products. Research and development expense for the nine months ended March 31, 2021 also remained consistent with the same period a year ago as a percentage of total revenue.

2421

Table of Contents


Selling, General, and Administrative	Selling, General, and Administrative	Three Months Ended March 31,						% Change		Nine Months Ended March 31,						% Change		Selling, General, and Administrative	Three Months Ended September 30,				% Change
		2021			2020					2021			2020							2021			2020
Selling, General, and Administrative	Selling, General, and Administrative	$	47,408		$	50,589		(6)	%	$	136,801		$	148,985		(8)	%	Selling, General, and Administrative		$	51,071		$	45,226		13	%

Percentage of total revenue	Percentage of total revenue	11		%	12		%			10		%	12		%			Percentage of total revenue		10		%	10		%

Selling, general, and administrative expense ~~decreased 6%~~increased 13% in the ~~third~~first quarter of fiscal ~~2021~~2022 over the same quarter in the prior fiscal year. Reducing selling, general, and administrative expense for the effects of deconversion fees from each quarter, which were $49 for the current fiscal year quarter and $599 for the prior fiscal year quarter and for the effects of acquisitions, divestitures, and gain/loss of $3,196 for the prior fiscal year quarter, results in a 1% increase quarter over quarter. This increase was primarily due to higher personnel costs ~~for~~and higher travel expenses due to an increase in business travel compared to the prior fiscal quarter, ~~and were partially offset by travel expense savings as~~which was during a ~~result~~period of broader COVID-19 travel limitations (see "COVID-19 Impact and Response" section above). Selling, general, and administrative expense ~~decreased 1%~~remained consistent as a percentage of total revenue this fiscal ~~year~~ quarter versus the prior fiscal ~~year~~ quarter.

For the fiscal year-to-date period, selling, general, and administrative expense decreased 8% over the prior fiscal year-to-date period. Reducing selling, general, and administrative expense for the effects of deconversion fees from each period, which were $300 for the current fiscal year period and $823 for the prior fiscal year period and for the effects of acquisitions, divestitures, and gain/loss of $3,228 for the prior fiscal year period, and increasing selling, general, and administrative expense for the effects of acquisitions, divestitures, and gain/loss of $2,040 for the current fiscal year period, results in a 4% decrease period over period. This decrease was primarily due to travel expense savings as a result of COVID-19 travel limitations (see "COVID-19 Impact and Response" section above) partially offset by higher personnel costs. COVID-19 related savings included our national sales meeting, Jack Henry Annual Conference, and Symitar Education Conference being held virtually during the current year-to-date period. Selling, general, and administrative expense decreased 2% as a percentage of total revenue this period versus the prior-year period.


INTEREST INCOME (EXPENSE)	INTEREST INCOME (EXPENSE)	Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change		INTEREST INCOME (EXPENSE)	Three Months Ended September 30,			% Change
		2021		2020				2021		2020						2021		2020
Interest Income	Interest Income	$	24	$	197	(88)	%	$	144	$	1,050	(86)	%	Interest Income		$	7	$	68	(90)	%
Interest Expense	Interest Expense	$	(290)	$	(165)	76	%	$	(525)	$	(477)	10	%	Interest Expense		$	(248)	$	(117)	112	%

Interest income fluctuated due to changes in invested balances and yields on invested balances during the ~~third~~first quarter ~~and year-to-date period~~ of fiscal ~~2021~~2022 compared to the same ~~periods~~period a year ago. Interest expense ~~decreased~~increased when compared to the prior fiscal ~~year~~ quarter ~~and fiscal year-to-date period~~ due to interest rate fluctuations, length of borrowing time, and amounts borrowed. There was a ~~$200,000~~$65,000 outstanding balance under the credit facility at ~~March 31,~~September 30, 2021 and ~~$55,000~~no outstanding balance at ~~March 31,~~September 30, 2020.

PROVISION FOR INCOME TAXES Three Months Ended March 31, %
Change Nine Months Ended March 31, %
Change
2021 2020 2021 2020
Provision for Income Taxes $ 19,528 $ 18,115 8 % $ 67,435 $ 69,080 (2) %
Effective Rate 21.5 % 19.7 % 22.3 % 22.7 %


PROVISION FOR INCOME TAXES	Three Months Ended September 30,				% Change
		2021			2020
Provision for Income Taxes		$	31,240		$	26,323		19	%
Effective Rate		23.4		%	22.4		%

The increase in effective tax rate for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter a year ago was primarily due to a ~~change in the timing of the release of reserves for uncertain~~larger excess tax ~~positions resulting~~benefit received from ~~varying statute of limitation periods. The decrease in effective tax rate for the nine months ended March 31, 2021 compared to the same period~~share-based compensation in the prior fiscal ~~year was primarily due to the difference in impact of share-based compensation that vested during each of the periods.~~quarter.

NET INCOME

Net income ~~decreased 3%~~increased 12% to ~~$71,409,~~$102,114, or ~~$0.95~~$1.38 per diluted share, for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to ~~$73,855,~~$91,216, or ~~$0.96~~$1.19 per diluted share in the same quarter of fiscal ~~2020.~~2021.

Net income remained consistent at $234,607, or $3.08 per diluted share, for the nine months ended March 31, 2021, compared to $235,323, or $3.06 per diluted share, for the nine months ended March 31, 2020, resulting in a 1% increase in diluted earnings per share.

~~Table of Contents~~

REPORTABLE SEGMENT DISCUSSION

The Company is a leading provider of technology solutions and payment processing services primarily for financial services organizations.

The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services; online and mobile bill pay solutions; ACH origination and remote deposit capture processing; and risk management products and services. The Complementary segment provides additional software, hosted processing platforms, and services, including call center support, and network security management, consulting, and monitoring, that can be integrated with our core solutions and many can be used independently. The Corporate and Other segment includes revenue and costs from hardware and other products not attributed to any of the other three segments, as well as operating costs not directly attributable to the other three segments.

Core
Three Months Ended March 31, % Change Nine Months Ended March 31, % Change
2021 2020 2021 2020
Revenue $ 135,149 $ 141,120 (4) % $ 423,253 $ 425,909 (1) %
Cost of Revenue $ 63,259 $ 62,699 1 % $ 185,668 $ 181,697 2 %

Table of Contents


Core
	Three Months Ended September 30,			% Change
		2021		2020
Revenue		$	165,285	$	153,155	8	%
Cost of Revenue		$	66,902	$	63,861	5	%

Revenue in the Core segment ~~decreased 4%~~increased 8% and cost of revenue increased 1%5% for the three months ended ~~March 31,~~September 30, 2021 compared to the three months ended ~~March 31,~~September 30, 2020. ~~Reducing~~ Core revenue ~~for~~less deconversion fee revenue ~~in both periods, which totaled $1,362~~ for the ~~third~~first quarter of fiscal 2022 of $2,168 and less deconversion fee and acquisitions and divestiture revenues for the first quarter of fiscal 2021 of $2,052 and ~~$10,603 for the third quarter of fiscal 2020 and for revenue from acquisitions and divestitures of $1,241 from the prior year quarter,~~$1,182, respectively, results in a 3%9% increase, quarter over quarter. This increase ~~in Core revenue over the prior fiscal year quarter~~ was primarily driven by ~~the~~ growth in data processing and hosting fee revenue. Cost of revenue ~~increased 2%~~decreased 1% as a percentage of revenue for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter of fiscal ~~2020.~~2021.

For the nine months ended March 31, 2021, revenue in the Core segment decreased 1% compared to the prior fiscal year-to-date period. Reducing Core revenue for deconversion fee revenue in both periods, which totaled $4,297 for the year-to-date period of fiscal 2021 and $21,218 for the year-to-date period of fiscal 2020 and for revenue from acquisitions and divestitures of $2,408 from the prior year period, results in a 4% increase period over period. This increase in Core revenue over the prior fiscal year-to-date period was primarily driven by the growth in data processing and hosting fees as well as increased software usage fee revenue. Cost of revenue increased 2% period over period primarily due to increased direct support costs. Cost of revenue increased 1% as a percentage of revenue for year-to-date fiscal 2021 compared to the same period of fiscal 2020.


Payments	Payments													Payments
		Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change			Three Months Ended September 30,			% Change
		2021		2020				2021		2020						2021		2020
Revenue	Revenue	$	160,841	$	150,360	7	%	$	472,756	$	452,151	5	%	Revenue		$	169,622	$	156,733	8	%
Cost of Revenue	Cost of Revenue	$	87,628	$	80,836	8	%	$	260,411	$	236,725	10	%	Cost of Revenue		$	93,226	$	86,328	8	%

Revenue in the Payments segment increased 7%8% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the equivalent quarter of the prior fiscal year. ~~Reducing~~ Payments revenue ~~for~~less deconversion fee revenue in both periods, which totaled ~~$1,911~~$448 for the ~~third~~first quarter of fiscal 2022 and $1,847 for the first quarter of fiscal 2021, ~~and $6,442 for the third quarter of fiscal 2020,~~ results in a ~~10%~~9% increase, quarter over quarter. This ~~Payments revenue~~ growth was primarily due to increased card and remittance fee revenue within processing. Cost of revenue increased 8%, quarter over quarter, primarily due to increased costs related to our ~~credit and debit~~ card processing platform. Cost of revenue as a percentage of revenue ~~increased 1%~~remained consistent for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter of fiscal ~~2020.~~2021.

For the nine months ended March 31, 2021, revenue in the Payments segment increased 5% compared to the same period last fiscal year. Reducing Payments revenue for deconversion fee revenue in both periods, which totaled $4,433 for year-to-date fiscal 2021 and $13,478 for year-to-date fiscal 2020, results in a 7% increase period over period. This Payments revenue growth was primarily due to increased card and remittance revenue within processing. Cost of revenue increased 10% period over period primarily due to the same factors as the quarter

~~Table of Contents~~

~~increase. Cost of revenue as a percentage of revenue increased 3% for year-to-date fiscal 2021 compared to the same period of fiscal 2020.~~


Complementary	Complementary													Complementary
		Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change			Three Months Ended September 30,			% Change
		2021		2020				2021		2020						2021		2020
Revenue	Revenue	$	125,431	$	123,984	1	%	$	377,193	$	364,137	4	%	Revenue		$	141,481	$	130,355	9	%
Cost of Revenue	Cost of Revenue	$	54,207	$	52,133	4	%	$	158,638	$	152,376	4	%	Cost of Revenue		$	55,485	$	52,024	7	%

Revenue in the Complementary segment increased 1%9% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the equivalent quarter of the prior fiscal year. Reducing Complementary revenue for deconversion fee revenue in both periods, which totaled $1,080 for the third quarter of fiscal 2021 and $5,462 for the third quarter of fiscal 2020, results in a 5% increase quarter over quarter. This ~~Complementary revenue~~ growth was primarily driven by increased Jack Henry digital, ~~revenue and higher~~ hosting fee, ~~revenue.~~and software usage revenues. Cost of revenue increased 4%7%, quarter over quarter, primarily due to ~~increased~~higher personnel costs, amortization, and direct support costs. Cost of revenue as a percentage of revenue ~~increased~~decreased 1% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same quarter of fiscal ~~2020.~~2021.

For the nine months ended March 31, 2021, revenue in the Complementary segment increased 4% compared to the same period last fiscal year. Reducing Complementary revenue for deconversion fee revenue in both periods, which totaled $3,588 for year-to-date fiscal 2021 and $10,364 for year-to-date fiscal 2020, results in a 6% increase period over period. This increase in Complementary revenue was primarily driven by increased Jack Henry digital revenue and higher hosting fee revenue. Cost of revenue increased 4% period over period primarily due to the same factors as the quarter increase. Cost of revenue as a percentage of revenue remained consistent for year-to-date fiscal 2021 compared to the same period of fiscal 2020.


Corporate and Other	Corporate and Other													Corporate and Other
		Three Months Ended March 31,				% Change		Nine Months Ended March 31,				% Change			Three Months Ended September 30,			% Change
		2021		2020				2021		2020						2021		2020
Revenue	Revenue	$	12,355	$	13,942	(11)	%	$	34,736	$	44,333	(22)	%	Revenue		$	11,668	$	11,557	1	%
Cost of Revenue	Cost of Revenue	$	62,676	$	62,903	—	%	$	183,764	$	182,831	1	%	Cost of Revenue		$	61,023	$	60,716	1	%

Revenue in the Corporate and Other segment ~~decreased 11%~~increased 1% for the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the equivalent quarter of the prior fiscal ~~year, and decreased 22% for the fiscal year-to-date period compared to the prior fiscal year-to-date period.~~year. The ~~decrease quarter over quarter and period over period~~quarter-over-quarter increase was primarily due to higher processing revenue partially offset by lower services and support revenue mainly from decreased hardware revenue. Revenue classified in the Corporate and Other segment includes revenue from other products and services and hardware not specifically attributed to any of the other three segments.

Table of Contents

Cost of revenue for the Corporate and Other segment includes operating cost not directly attributable to any of the other three segments. ~~The cost~~Cost of revenue as a percentage of revenue decreased 2% in the ~~third~~first quarter of fiscal ~~2021 remained consistent~~2022 when compared to the prior fiscal ~~year~~ quarter. ~~The increased cost of revenue for the fiscal 2021 year-to-date period of 1% was primarily due to higher other operating expenses partially offset by lower hardware costs.~~

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents decreased to ~~$70,116~~$44,251 at ~~March 31,~~September 30, 2021 from ~~$213,345~~$50,992 at June 30, ~~2020.~~2021.

The following table summarizes net cash from operating activities in the statement of cash flows:

Nine Months Ended
March 31,
2021 2020
Net income $ 234,607 $ 235,323
Non-cash expenses 157,963 151,837
Change in receivables 92,716 99,425
Change in deferred revenue (177,021) (168,066)
Change in other assets and liabilities (41,950) (42,066)
Net cash provided by operating activities $ 266,315 $ 276,453


	Three Months Ended
	September 30,
	2021		2020
Net income	$	102,114	$	91,216
Non-cash expenses	56,498		50,602
Change in receivables	53,404		77,439
Change in deferred revenue	(60,662)		(67,113)
Change in other assets and liabilities	(44,805)		(37,667)
Net cash provided by operating activities	$	106,549	$	114,477

Cash provided by operating activities for the first ~~nine~~three months of fiscal ~~2021~~2022 decreased 4%7% compared to the same period last year. Cash from operations is primarily used to repay debt, pay dividends, repurchase stock, and for capital expenditures.

Cash used in investing activities for the first ~~nine~~three months of fiscal ~~2021~~2022 totaled ~~$126,140~~$46,451 and included: ~~$95,991~~$35,971 for the ongoing enhancements and development of existing and new product and service offerings; capital expenditures on facilities and equipment of ~~$14,916; the purchase of investments, including Autobooks of $7,250~~$9,273; and ~~certificates of deposit of $6,200; $5,820~~$1,221 for the purchase and development of internal use ~~software; and $2,300 for an asset acquisition during the third quarter. This was~~software. Uses of cash were partially offset by proceeds from dispositions of ~~$6,187.~~$14. Cash used in investing activities for the first ~~nine~~three months of fiscal ~~2020~~2021 totaled ~~$153,400~~$31,188 and ~~included $87,284~~included: $31,451 for the development of software; capital expenditures of ~~$39,563; $30,376, net of cash acquired, for the acquisition of Geezeo; $6,133~~$4,478; and $1,374 for the purchase and development of internal use ~~software; and $1,150 for the purchase~~software. Uses of ~~investments. This was~~cash were partially offset by proceeds from dispositions of ~~$11,106.~~$6,115.

Financing activities used cash of ~~$283,404~~$66,839 for the first ~~nine~~three months of fiscal ~~2021, including $384,378 for~~2022 and included $35,027 net repayment on the ~~purchase of treasury shares, dividends paid to stockholders of $99,778,~~revolving credit facility and ~~$86 for~~ payments on financing ~~leases. This was~~leases, and $34,036 for the payment of dividends to stockholders. Uses of cash were partially offset by ~~borrowings on credit facilities of $200,000 and $838~~$2,224 net cash inflow from the issuance of stock and tax withholding related to stock-based compensation. Financing activities used cash of ~~$107,167~~$101,314 in the first ~~nine~~three months of fiscal ~~2020 including $94,486~~2021 and included: $65,873 for the purchase of treasury shares; $32,815 for the payment of dividends ~~$71,549 for the purchase of treasury shares, and $6 for payments on financing leases. This was partially offset by borrowings on credit facilities of $55,000 and $3,874 net cash inflow~~to stockholders; $2,598 from the issuance of stock and tax withholding related to stock-based ~~compensation.~~compensation; and $28 for payments on financing leases.

Capital Requirements and Resources

The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling ~~$14,916~~$9,273 and ~~$39,563~~$4,478 for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020, respectively, were made primarily for additional equipment and the improvement of existing facilities. These additions were funded from cash generated by operations. Total consolidated capital expenditures on facilities and equipment for the Company for fiscal year ~~2021~~2022 are not expected to exceed ~~$44,000~~$57,000 and will be funded from cash generated by operations.

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or borrowings on its existing line of credit. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At ~~March 31,~~September 30, 2021, there were ~~29,493~~29,793 shares in treasury stock and the Company had the remaining authority to repurchase up to ~~498~~5,198 additional shares. The total cost of treasury shares at ~~March 31,~~September 30, 2021 was ~~$1,566,051.~~$1,613,202. During the first ~~nine~~three months of fiscal ~~2021,~~2022, the Company repurchased ~~2,500~~no treasury shares. At June 30, ~~2020,~~2021, there were ~~26,993~~29,793 shares in treasury stock and the Company had authority to repurchase up to ~~2,998~~5,198 additional shares.

Revolving credit facility

On February 10, 2020, the Company entered into a five-year senior, unsecured revolving credit facility. The credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $700,000. The credit facility bears interest at a variable rate equal to (a) a rate based on a eurocurrency rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the ~~Prime Rate~~U.S. Bank prime rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iv) the eurocurrency rate for a one-month interest period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit facility agreement. As of ~~March 31,~~September 30, 2021, the Company was in compliance with all such covenants. The revolving credit facility terminates February 10, 2025. There was ~~$200,000~~a $65,000 outstanding balance under the credit facility at ~~March 31,~~September 30, 2021, and no$100,000 outstanding balance at June 30, ~~2020.~~2021.

Other lines of credit

The Company has an unsecured bank credit line which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line ~~was renewed in March 2021 and~~ expires on April 30, 2023. ~~At March 31,~~There was no balance outstanding at September 30, 2021 and June 30, ~~2020, no amount was outstanding.~~2021.

2825

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Dollar amounts in this item are in thousands.

Market risk refers to the risk that a change in the level of one or more market prices, interest rates, indices, volatilities, correlations or other market factors such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are currently exposed to credit risk on credit extended to customers and at times are exposed to interest rate risk on outstanding debt. We do not currently use any derivative financial instruments. We actively monitor these risks through a variety of controlled procedures involving senior management.

Based on the controls in place and the credit worthiness of the customer base, we believe the credit risk associated with the extension of credit to our customers will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

We have ~~$200,000~~$65,000 outstanding debt with variable interest rates as of ~~March 31,~~September 30, 2021 and a 1% increase in our borrowing rate would increase our annual interest expense by ~~$2,000.~~$650.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of our management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation (required in Exchange Act Rules 13a-15(b) and 15d-15(b)), the CEO and CFO concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and ~~forms~~forms. For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended ~~March 31,~~September 30, 2021, there were no changes in internal control over financial reporting which were identified in connection with management’s evaluation required by ~~paragraph (d) of~~ Rules ~~13a-15(e)~~13a-15(d) and ~~15d-15(e)~~15d-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various routine legal proceedings and claims arising in the ordinary course of our business. In the opinion of management, any liabilities resulting from current lawsuits are not expected, either individually or in the aggregate, to have a material adverse effect on our consolidated financial statements. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.

Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following shares of the Company were repurchased during the quarter ended ~~March 31,~~September 30, 2021:

Total Number of Shares Purchased (1)
Average Price of Share Total Number of Shares Purchased as Part of Publicly Announced Plans
Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
January 1- January 31, 2021 — — — 2,322,713
February 1- February 28, 2021 1,275,000 $ 149.90 1,275,000 1,047,713
March 1- March 31, 2021 550,000 151.56 550,000 497,713
Total 1,825,000 150.40 1,825,000 497,713


	Total Number of Shares Purchased	Average Price of Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans (1)
July 1 - July 31, 2021	—	$	—	—	5,197,713
August 1 - August 31, 2021	—	—		—	5,197,713
September 1 - September 30, 2021	—	—		—	5,197,713
Total	—	—		—	5,197,713

(1) ~~1,825,000 shares were purchased through a publicly announced repurchase plan.~~

~~(2)~~ Total stock repurchase authorizations approved by the Company's Board of Directors as of ~~February~~May 17, ~~2015~~2021 were for 3035 million shares. ~~These~~The Company has repurchased 29,802,287 shares under these authorizations. The authorizations have no specific dollar or share price targets and no expiration dates.

2927

Table of Contents

ITEM 6. EXHIBITS

3.2.8 Restated and Amended Bylaws attached as Exhibit 3.2.8 to the Company's Current Report on Form 8-K filed August 26, 2021.

31.1 Certification of the Chief Executive Officer.

31.2 Certification of the Chief Financial Officer.

32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS* XBRL Instance Document- the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Furnished with this quarterly report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2021 and June 30, ~~2020,~~2021, (ii) the Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020, (iii) the Condensed Consolidated Statements of Changes in Shareholders' Equity for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020, and (v) Notes to Condensed Consolidated Financial Statements.

3028

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


		JACK HENRY & ASSOCIATES, INC.

Date:	~~May 7,~~November 9, 2021	/s/ David B. Foss
		David B. Foss
		Board Chair, Chief Executive Officer and President

Date:	~~May 7,~~November 9, 2021	/s/ Kevin D. Williams
		Kevin D. Williams
		Chief Financial Officer and Treasurer

3129


	Three Months Ended March 31, 2021		Nine Months Ended March 31, 2021
Allowance for credit losses - beginning balance	$	6,830	$	6,719
Cumulative effect of accounting standards update adoption	0		493
Current provision for expected credit losses	540		1,450
Write-offs charged against allowance	(252)		(1,538)
Recoveries of amounts previously written off	0		(4)
Other	0		(2)
Allowance for credit losses - ending balance	$	7,118	$	7,118


Unit awards	Units	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding July 1, 2020	307	$	136.41
Granted	109	171.43
Vested	(113)	107.34
Forfeited	(1)	139.17
Outstanding March 31, 2021	302	$	159.83	$	45,817


	Compensation Peer Group		S&P 1500 IT Index
Volatility	25.17	%	25.17	%
Risk free interest rate	0.11	%	0.11	%
Annual dividend based on most recent quarterly dividend	1.72		1.72
Beginning TSR	37	%	30	%


	Total Number of Shares Purchased (1)	Average Price of Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
January 1- January 31, 2021	—	—		—	2,322,713
February 1- February 28, 2021	1,275,000	$	149.90	1,275,000	1,047,713
March 1- March 31, 2021	550,000	151.56		550,000	497,713
Total	1,825,000	150.40		1,825,000	497,713