2022 ANNUAL REPORT
M I S S I O N -
DRIVEN
BUILDING ON
OUR PAST WITH
INNOVATION
& PURPOSE
2022 ANNUAL REPORT
TABLE OF
CONTENTS
Financial Highlights
Shareholders’ Letter
Mission-Driven
Financials
Market for Registrant’s Common Equity
Performance Graph
Management’s Discussion and Analysis
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Board of Directors and Executive Officers
04
05
09
19
32
33
34
45
46
76
TABLE OF CONTENTS / 3
2022 ANNUAL REPORT FINANCIAL HIGHLIGHTS
$ IN MILLIONS EXCEPT PER SHARE DATA
R E V E N U E
N E T I N C O M E
$1,943
$1,758
$1,697
$2,100
$1,900
$1,700
$1,500
$363
$297
$311
D I L U T E D E A R N I N G S
PER SHARE
$4.94
$3.86
$4.12
$6
$5
$4
$3
$2
$1
$0
$500
$400
$300
$200
$100
$0
2020
2021
2022
2020
2021
2022
2020
2021
2022
R E T U R N O N
S H A R E H O L D E R S ’ E Q U I T Y
R E T U R N O N
I N V E S T E D C A P I TA L *
E B I T D A *
(EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION, AND AMORTIZATION)
26.9%
21.7%
19.9%
35%
30%
25%
20%
15%
10%
5%
0%
24.9%
19.9%
21.0%
35%
30%
25%
20%
15%
10%
5%
0%
$652
$554
$575
$800
$700
$600
$500
$400
$300
$200
$100
2020
2021
2022
2020
2021
2022
2020
2021
2022
D I V I D E N D S D E C L A R E D
PER SHARE
$2.40
$1.90
$2.00
$1.78
$1.66
$1.60
$1.20
$0.80
$0.40
2020
2021
2022
*For non-GAAP reconciliation, see page 75.
4 / FINANCIAL HIGHLIGHTS
jackhenry.com SHAREHOLDERS’ LETTER
FELLOW SHAREHOLDERS
Throughout fiscal year 2022, we continued to deal with ongoing challenges
posed by the COVID-19 pandemic, as well as uncertainty around the
country’s overall economy and impacts of the Great Resignation. Despite
those challenges, Jack Henry™ had a very good year. Employee engagement
and customer satisfaction scores remained extremely high, our sales
team hit an all-time sales record in the second quarter only to break that
record in the fourth quarter, and our financial performance was solid.
We cannot thank our nearly 6,900 associates enough for their
hard work and dedication. Throughout the year, they remained
focused on supporting one another and our clients.
According to this year’s employee engagement survey, more than three-
fourths of our associates acknowledge Jack Henry is a place where people
feel they belong. Additionally, they feel strongly that Jack Henry treats
them well and is a company they can trust. We ranked above average
in all areas surveyed compared to others in the technology industry.
In addition to our positive employee engagement scores, we were honored
this year to again be recognized as a top workplace, including making
American Banker’s 2022 Best Places to Work in Financial Technology
list for the fifth consecutive year and ranking sixth among all financial
companies on LinkedIn’s inaugural list of 25 Top Companies to Work for in
Financial Services. We also made Inc.’s inaugural Best-Led Companies list,
Newsweek’s 2022 Most Responsible Companies list, and were certified in
the Most Loved Workplaces program through the Best Practice Institute.
We believe that if we take care of our associates, they will in turn take care
of our clients, and this year’s customer satisfaction scores proved just that.
On a monthly basis, we send thousands of customer satisfaction surveys to
measure our success. At the end of the fiscal year, our surveys reflected an
average overall satisfaction score of 4.57 out of 5 and an average overall
customer service representative satisfaction score of 4.74 out of 5.
Although the economy slowed and many firms in our space experienced
financial challenges, our financial performance remained strong. In fiscal year
2022, our GAAP revenue increased by 11% over the prior year to $1.943 billion
while our GAAP net income increased 17% to $363 million. Our stock performed
well, hitting new record highs in April 2022 and then again in August 2022.
5X
Jack Henry placed
on American
Banker’s Best
Places to Work
in Financial
Technology list
for the fifth
consecutive year.
CUSTOMER
SATISFACTION
SCORES
4.57
Average overall
satisfaction score
4.74
Average overall customer
service representative
satisfaction score
SHAREHOLDERS’ LETTER / 5
2022 ANNUAL REPORT As we’ve done throughout our 46-year history,
Our rebranding is the outcome of work we’ve
we continue to meet the needs of our clients
done over the years to modernize our technology,
and work to help them navigate changes in
streamline operations, and operate as one
our industry. While they face challenges from
company to better serve our clients. Internally,
non-bank competitors and an accelerated,
we refer to this program as One Jack Henry, and
pandemic-driven shift toward digital banking, we
the work we’ve done now gives us a platform
are helping them strengthen relationships with
to speak from a single, consistent voice.
their accountholders through a full array of our
own solutions backed by modern technology and
access to a diverse network of leading fintechs.
Some of the ways we’ve improved the client
experience through One Jack Henry include
consolidating our client education teams to
Fiscal year 2022 also marked a year of evolution
create greater consistency; establishing a
for our company. We developed a mission
Customer Success group to enhance service;
statement that reflects our long history of
and centralizing our incident management,
helping community and regional financial
change management, and client communication
institutions strengthen connections with their
processes to better engage with clients.
accountholders and our concentration on helping
improve financial health for consumers and
businesses. We are focused on the two-thirds of
the American population that is not considered
financially healthy and believe we can help make
a difference through our technology and services.
Our next-generation,
cloud-native technology
strategy was announced
in February 2022.
Our belief in strengthening connections and
As part of our focus on clients, we announced
helping reduce the barriers to financial health
in February 2022 a next-generation technology
was a major part of our brand relaunch in
strategy centered on our ongoing development
August 2022. To better reflect the well-rounded
of a single, cloud-native, open-banking platform.
financial technology company we are today,
We’ve been working on the strategy for several
we now go to market as a single brand –
years and we’re now starting to roll out the first
Jack Henry – with one clear, consistent strategy
components. It builds on our industry-leading,
and a wide array of best-in-breed capabilities.
open-API digital banking platform, which enables
A key element of our rebranding is our new
easy access to a broad ecosystem of Jack Henry
external website – jackhenry.com – that offers
solutions and high-grade, third-party fintechs.
a fresh new look and feel, provides for a better
We’ve seen strong external interest in our strategy,
user experience, and details how we connect
with more than 40 articles and podcasts published
possibilities for financial institutions and the
so far reaching more than 53 million people.
people and businesses they serve. In the first
week of the website launch, site views increased
three times over our previous average.
We now go to market as a single
brand – Jack Henry – with one clear,
consistent strategy and a wide array
of best-in-breed capabilities.
Our new mission, rebranding, and technology
modernization strategy were not the only
changes we implemented in fiscal year 2022.
We also successfully managed through
various succession plans and senior leadership
changes. In September 2021, Holly Novak was
elevated to Chief People Officer. She has more
6 / SHAREHOLDERS’ LETTER
jackhenry.com than two decades of experience in the human
we are very happy to have found someone of
resources field and is focused on listening and
Mimi’s expertise to lead us into the future.
partnering with our associates and leaders.
In November 2021, our Chief Technology
Officer, Ted Bilke, and Chief Financial Officer
and Treasurer, Kevin Williams, announced
their plans for retirement. We want to thank
Ted and Kevin for their many years of service,
leadership, and contributions to the company.
While we are well-poised with a strong leadership
team and a number of successes under our
belt, fiscal year 2022 had its challenges as well.
The Great Resignation impacted Jack Henry
just as it did most other companies, but we
continue to work through it and do whatever
it takes to take care of our associates and
Ben Metz, formerly our Head of Digital, was
clients while working to recruit new talent.
elevated to Chief Digital and Technology Officer
in January 2022 to fill Ted’s role. Ben has been
instrumental in growing our digital offerings.
Also in January, Chief Operating Officer Greg
Adelson’s role was expanded to President and
Chief Operating Officer. Greg has strengthened
our operating model and positioned us well
for the future. In March 2022, we named Brian
Otte as Chief Sales and Marketing Officer.
Brian previously served as Director of Sales for
ProfitStars® and has been a very successful
sales leader during his 10 years at Jack Henry.
We also continued strengthening our operating
model with the promotion of Dr. Yonesy Núñez
to Vice President and Chief Information Security
Officer. Yonesy is a well-known leader in the
cybersecurity industry and has a proven track
record of success since joining Jack Henry. We
also promoted Renee Swearingen to Senior
Vice President, Chief Accounting Officer, and
Assistant Treasurer in May 2022. Renee has been
with the company for 26 years and has extensive
experience developing and implementing financial
strategies, collaborating with the business on
goals and initiatives, and successfully managing
Jack Henry’s finance and accounting operations.
And lastly, we named Mimi Carsley as our new
Chief Financial Officer and Treasurer, effective
September 1, 2022. Mimi is an accomplished
global business executive with more than 30
years of financial industry experience, and
Further, not only are we seeing many new
competitors in the various product areas we
support, but the complexity of our industry also
continues to grow. Technological advances
continue to happen at a fast pace and the
delicate cybersecurity environment does not
make navigating the complexities any easier.
Despite the challenges, fiscal year 2022 proved
to be a very successful year for our company. We
not only produced strong results, we continued
to position ourselves well for the future as we
focus on helping community and regional
financial institutions achieve success and meet
the evolving needs of their accountholders.
On behalf of our Board of Directors and the
entire leadership team, Greg and I want
to thank our loyal associates, clients, and
shareholders for all you have done to support
Jack Henry this year. We are proud of the strong
year and look forward to fiscal year 2023.
DAVID FOSS
Board Chair and
Chief Executive Officer
GREGORY ADELSON
President and
Chief Operating Officer
SHAREHOLDERS’ LETTER / 7
2022 ANNUAL REPORT MISSION & PURPOSE
We are Jack Henry, a well-rounded
financial technology company
with a mission to strengthen the
connections between people
and their financial institutions
through technology and services
that reduce the barriers to
financial health. Our purpose
is to empower people and
communities to gain the financial
freedom to move forward.
8 / MISSION-DRIVEN
jackhenry.com MISSION-DRIVEN
A REFLECTION ON JACK HENRY’S FISCAL YEAR 2022,
A YEAR IN WHICH WE LOOKED BACK IN ORDER TO GROW FORWARD.
At Jack Henry, we’ve always believed community
were committed to their community and believed
and regional financial institutions are the
they could help financial institutions better
lifeblood of Main Street America, and we have
serve the needs of people and businesses
a successful 46-year history of helping them
using more modern technology and services.
adapt to changes in the technology landscape.
In developing our mission, we reflected on
Our fiscal year 2022 was no different.
our heritage to look ahead to the future.
Disruptions are not uncommon in our industry,
starting with the advent of ATMs and progressing
through the rise of the internet. Most recently,
there’s been a significant shift toward digital
banking as more non-traditional banks have
entered the market. This digital disruption –
FINANCIAL DISRUPTION
AND FRAGMENTATION
The proliferation of non-bank providers has
led to increased financial fragmentation. With
accelerated by the COVID-19 pandemic – has
the development of new financial apps – from
fundamentally changed the way many people
banking and credit cards to payments and
and businesses want and expect to bank.
While this disruption creates considerable
threats, it also presents tremendous
opportunities. As we’ve done throughout
our history, Jack Henry is helping community
and regional financial institutions capture
this opportunity through modern technology
that helps them innovate faster, differentiate
strategically, and compete successfully.
Our unwavering focus on helping community
and regional financial institutions is reflected in
our mission and purpose statement published
in fiscal year 2022. As a well-rounded financial
investing – consumers and businesses are using
multiple sources to manage their finances. It is
not uncommon for people to use between 20
and 30 different financial providers, and we are
seeing small- and medium-sized businesses
(SMBs) also relying on multiple providers.
The result is that it’s more difficult than ever
for a person or business to get a full financial
picture when that view is scattered across
so many different financial sources. This
fragmentation impacts the ability of people
to make informed decisions, which can lead
to lack of transparency of their finances.
technology provider, we strive to help our clients
Approximately 69% of people in the United States
strengthen connections with their accountholders
and reduce the barriers to financial health.
This philosophy has always been a part of our
foundation and the roots on which Jack Henry
was built. Our founders, Jack Henry and Jerry Hall,
are not considered financially healthy, according
to the Financial Health Network’s 2022 U.S. Trends
Report. And 80% of consumers want their financial
institutions to help them improve their financial
health, but only 14% believe they’re doing that
MISSION-DRIVEN / 9
2022 ANNUAL REPORT according to the Financial Health Network. That
launching an internal campaign encouraging
is why we have committed ourselves to helping
them to pledge to take a step toward their
improve the financial health of consumers and
financial freedom or helping a family member or
businesses through the technology and services
friend take a step. As of June 30, 2022, more than
we offer. And as a mission-driven company, we
3,100 associates have pledged to take that step.
understand the power we have to influence
how people handle their financial health.
52%
U.S. Consumers
65%
Gen Y
69%
Gen Z
A 2022 Javelin study showed
that U.S. consumers have more
than half (52%) of their financial
relationships with non-banks.
For Generation Y and Generation Z consumers,
non-banks provide 65% and 69% of
financial relationships respectively.
JACK HENRY WITH A PURPOSE
ASSOCIATES
We have always said that our associates are the
backbone of our organization. They are also the
strongest and most visible brand ambassadors,
and to endorse what Jack Henry stands for,
they need to become aware and understand
the inherent value of our mission and how it
benefits them first. That is why we launched our
new mission and purpose statements in fiscal
year 2022 by focusing on our associates.
We wanted to make sure associates had access
to the benefits, programs, and resources to help
improve their own financial health. That meant
10 / MISSION-DRIVEN
We’ve heard many inspiring stories from associates
about steps they’ve taken. For example, Danita
Eldridge, who works in our Payment Solutions
Group, says she’s been able to better budget,
plan, and save through money management tools
offered through Jack Henry and now is providing
tips to others to help improve their financial health.
For Danita and all of our associates, we provided
materials to refamiliarize them on available tools
and resources already in place to help them gain
financial freedom and move forward, including
the following: 401(k) Retirement Savings Plan,
employee stock purchase program, health care
coordinators, health savings accounts, flexible
spending accounts, dependent care flexible
spending accounts, employee assistance
program, and free financial wellness seminars.
Danita Eldridge, Business Consulting Manager, and her husband, Tim.
jackhenry.com 3,100
associates
pledged to take
a step toward
financial freedom
and received a
Jack Henry T-shirt.
Richard Peavy, Leadership Development Manager
Candice Washington,
Quality Assurance Analyst Advanced, Synergy QA
Additionally, we’ve continued to add new offerings.
CLIENTS
In January 2022, Wellthy – a program designed
to provide personalized support to help tackle
the logistical and administrative tasks of caring
for loved ones – was launched. Wellthy’s Care
Framework ensures families are considering and
addressing all the variables of care beyond just
medical needs, thus supporting their journey to
financial health by enabling them to properly plan.
In November 2021, we announced a change to
our internal mobility program. The requirement
of time-in-role before applying for a new, internal
position was reduced from two years to six
months, which resulted in an increase in internal
applications of 50% in just half of our fiscal
year. We expanded programs and resources
to encourage associates to apply for internal
positions, which helps us create a well-rounded
employee base and helps our associates’ own
career growth. An internal mobility resource center
is also available and includes information on
mentoring resources; tips for internal networking,
résumé writing, and interviewing; résumé
templates; a career journey series; and more.
We believe community and regional financial
institutions play a critical role in helping their
accountholders achieve financial health
and are uniquely positioned to address this
crisis. It’s our responsibility to provide the
technology and services that enable them
to best serve their accountholders.
We do this by offering a full array of our own
solutions backed by modern technology and
access to a diverse network of leading fintechs.
That combination enables us to strengthen
connections and relationships and supports the
open philosophy we’ve held since our founding in
1976. To date, we have already integrated more
than 850 fintechs into our ecosystem, and we are
the only platform provider with relationships with
Jack Henry has integrated with more than
850 fintechs and is the only platform
provider with relationships with all four
major financial-data aggregators:
Finicity
Akoya®
Plaid
Envestnet | Yodlee®
MISSION-DRIVEN / 11
2022 ANNUAL REPORT all four major financial-data aggregators. Through
COMMUNITIES
our collaboration with fintechs, we’re able to
eliminate screen scraping and reduce the financial
fragmentation consumers are experiencing.
For example, we partnered with Finicity, a
Mastercard® company that helps individuals,
families, and organizations make smarter financial
decisions through its safe and secure access to
fast, high-quality data. Finicity’s integration to the
Banno Digital Toolkit™ enables community financial
institutions to provide consumers with the freedom
to control, access, and share their financial data,
creating a real-time picture of their financial
health. Not only does this strengthen connections
between our clients and their accountholders,
but it also points back to supporting the
financial health of the accountholders.
Further, Jack Henry announced in the third quarter
of fiscal year 2022 the integration into the Banno
Digital Toolkit of credit management services,
identity protection tools, and an offers engine from
Array, a leading financial innovation platform.
This integration offers consumers personalized
credit and financial insights through their trusted
financial institutions. Embedding this service
protects consumers’ data and reduces the risk of
competitive products being sold. Banks and credit
unions will also gain a better understanding of
their consumers’ complete financial lives, while
boosting digital engagement, driving revenue,
and maximizing lending and credit opportunities.
Additionally, our new Vendor Management
Program, a service built into Jack Henry’s
Jack Henry’s mission underscores the importance
for much of our work and our dedication to
those who are underserved, underbanked,
or lack the ability to get a true picture of
their financial lives and may be at risk.
Our focus on the communities we serve
and the financial health of our associates,
clients, and their accountholders is reflected
through our expanding work with Community
Development Financial Institutions (CDFIs)
and Minority Depository Institutions (MDIs).
In fiscal year 2022, Jack Henry worked with nearly
60 CDFIs and MDIs. For instance, we helped three
banks that were recently formed to serve local
communities that had limited access to local
financial services due to industry consolidation.
The banks needed a digitally-focused, open,
and flexible technology provider to support rapid
growth and help them compete with large banks
as well as non-traditional financial institutions.
With Jack Henry, the banks gained a strategic and
comprehensive technology plan with competitive
core solutions and future-ready services such as
Banno Digital Platform™ and LoanVantage® (a
complete solution for loan analysis, underwriting,
Governance, Risk, and Compliance (GRC) Suite,
review, and management for both consumer and
launched in May 2022 to provide consulting
business loan origination). It is an opportunity
expertise aimed at assisting financial institutions
to build a technology strategy with easy
in reducing or mitigating risks when working
access to the broad ecosystem of Jack Henry
with external service providers, information
solutions and third-party fintechs of choice.
technology vendors, and related third parties.
This service helps community and regional
financial institutions innovate faster and
be more competitive in their markets.
Additionally, we are proud to have joined with
several other organizations to cover the cost
for MDIs to join the Real-Time Payments (RTP®)
12 / MISSION-DRIVEN
jackhenry.comJACK HENRY WORKED WITH NEARLY 60 CDFIs AND MDIs IN FISCAL YEAR 2022. network. The RTP network allows MDIs access to
take advantage of JHA PayCenter’s seamless
flexible, faster payments options that can help
integration with the faster payment networks,
prevent missed payments and avoid late fees and
further illustrating our approach to openness.
penalties, among other things. MDIs often fund
small businesses, and access to the RTP network
allows those small businesses to offer payment on
the same day to workers, as well as the option to
purchase inventory or supplies on the same day.
INNOVATING TO
CONNECT POSSIBILITIES
Jack Henry is committed to strengthening
connections between people and their financial
institutions. One way we do this is through
people-inspired innovation, which solidifies
our commitment to ensuring our clients’
accountholders feel understood, valued, and
confident, while also being set up for success.
GROWING FASTER
PAYMENTS STRATEGIES
Our payments capabilities are one example
of these connections and innovation. Our
JHA PayCenter™ growth illustrates our continued
ability to meet the evolving payments needs
of our clients and their accountholders. Our
proprietary payments hub provides seamless
connections to The Clearing House’s RTP
network and the Zelle Network®, provided by
Early Warning Services, LLC. As of June 2022,
more than 250 banks and credit unions were
leveraging one or both networks. JHA PayCenter
enables financial institutions to accelerate time
to market with proven faster payment solutions
that expedite funds availability, improve cash flow,
and ultimately improve the financial health of
consumers and businesses. Nearly 170 Jack Henry
clients are live on the RTP network, over 200
clients are live with Zelle®, and another 132 are
in various stages of the implementation process.
Third-party digital platform providers can also
TECHNOLOGY MODERNIZATION
As part of our mission, in February 2022, we
announced a next-generation technology strategy
centered on Jack Henry’s ongoing development
of a single, cloud-native, open-banking platform.
This initiative builds on our industry leading,
open-API digital banking platform, which enables
easy access to a broad ecosystem of Jack Henry
solutions and high-grade, third-party fintechs.
The multi-year strategy addresses the
ecosystem disruption happening in the
financial services industry and crystallizes our
plan to not only help community and regional
financial institutions compete and prosper,
but also utilize technology to help reduce
the barriers to financial health among their
customers and members. Our strategy also
supports the evolving need of our clients to
offer Banking-as-a-Service (BaaS) options.
This new technology modernization strategy is
just one aspect of our continuing investment
to improve our organization and offerings. We
consistently commit at least 14% of annual revenue
to research and development. Additional key
projects and platforms tied to this investment are
our digital solutions, financial crimes technology,
our Jack Henry payments hub, cybersecurity,
and our treasury management platform.
14%
We consistently
commit at least
14% of annual
revenue to research
and development.
MISSION-DRIVEN / 13
2022 ANNUAL REPORT ASSOCIATE
ENGAGEMENT
SURVEY RESULTS
67%
A WELL- ROUNDED ENVIRONMENT
Being a well-rounded financial technology company is just one part of
what our mission means. Well-rounded also has to do with how we treat
associates and create an environment where everyone belongs. We take
care of our associates and in turn, they take care of our clients by providing
them with the service and support they deserve. Jack Henry understands
PARTICIPATION
the importance of considering all our stakeholders when pursuing our
According to Gartner,
the industry-average
response rate is 45%.
business goals and believes that business can be a force for good.
We have been highly focused on our commitment to continually listen to our
associates. In July 2021, we partnered with Gartner, a global research and
advisory organization, to send an engagement survey to associates based
on their anniversary date each year. In fiscal year 2022, 67% of our associates
participated in the survey, which exceeds the 45% industry-average response
77%
rate for the survey (according to Gartner). Results showed where we are doing
well in the eyes of our associates, and where we have opportunities to improve.
BELONGING
Associates ranked
Jack Henry high for
creating an environment
where associates
feel they belong.
79%
We ranked above average in all areas compared to other technology
companies: 77% ranked Jack Henry high for creating an environment
where associates feel they belong, and 79% feel strongly that
Jack Henry treats them well and they trust the company.
Based on feedback, we introduced new resources to associates,
including ways to create an individual development plan, continue their
education, improve their skills, and expand their network. For example,
in January 2022, we launched access to LinkedIn Learning® for all
associates and contractors. LinkedIn Learning allows users to select
courses to help improve their performance and prepare for upcoming
projects – in areas like business, technology, and marketing.
ENGAGEMENT
RECOGNITION
Associates felt strongly
that Jack Henry treats
them well and they
trust the company.
Jack Henry once again was ranked on several “best places to work”
lists, which underscores the environment and culture we strive to
uphold for our associates. In fiscal year 2022, we were named to:
• The inaugural Best-Led Companies list by Inc. magazine that considered
10,000 companies with revenue between $50 million and $2 billion. The
ranking is based on accomplishments in four areas: performance and
value creation, market penetration and customer engagement, talent,
and leadership.
• The 2022 Most Responsible Companies list by Newsweek. The publication
partnered with global research and data firm Statista to develop the
14 / MISSION-DRIVEN
jackhenry.com WE RANKED ABOVE AVERAGE IN ALL AREAS COMPARED TO OTHERS IN THE INDUSTRY ranking based on publicly available data of 2,000 of the largest U.S. public
companies by revenue. Scores are based on company performance in
the environmental, social, and corporate governance areas, along with
an independent survey that asked U.S. citizens about their perception of
company activities related to corporate social responsibility.
• The 2022 Best Places to Work in Financial Technology list by
American Banker for the fifth consecutive year. The list is designed
to identify, recognize, and honor the best employers in the financial
technology industry.
• The inaugural list of 25 Top Companies to Work for in Financial Services
by LinkedIn. Jack Henry ranked sixth among the top financial companies.
This list focuses on companies that invest in talent and help set up
employees for long-term success.
Additionally, we received certification in the Most Loved Workplaces
program through the Best Practice Institute. This program focuses on
the emotional connection employees have with their employer.
CORPORATE RESPONSIBILITY AT JACK HENRY
We made marked advancements on our corporate responsibility journey. In
March 2022, we published our second Sustainability Report detailing how we
strive to serve as a “force for good” in society through inclusive products and
services that support the communities where we live and work, information
and cybersecurity practices that safeguard our associates and clients, and
progress toward reducing greenhouse gas emissions and mitigating climate-
related risks. The report also includes an overview of the many additional
corporate responsibility efforts that are underway to foster a highly ethical
business strategy and culture. Corporate responsibility has always been
a key area of focus for Jack Henry, and now each Sustainability Report
allows us to show advancement in our commitments to our stakeholders:
people, clients, shareholders, communities, and the environment.
2022 Sustainability Report
Scan the QR code:
Experiencing issues with the QR code?
Visit: https://hubs.la/Q01lDZ060
MISSION-DRIVEN / 15
2022 ANNUAL REPORT BUSINESS INNOVATION GROUPS
A major contributor to Jack Henry’s strong
corporate culture is our commitment to diversity,
equity, and inclusion (DEI). In fiscal year 2022,
Jack Henry enhanced the Hiring Manager’s
Toolkit to provide information and resources
to help reduce bias in the hiring process and
assist with more objective decision making.
We are also focused on ensuring diversity in
programs such as summer internships.
JACK HENRY BIGs HIGHLIGHTS
WOMEN AT JACK HENRY
Gender
• Formed the Allyship team to enlist allies
committed to fostering genuine connections,
championing fair treatment, and increasing
the feeling of belonging company-wide while
supporting professional growth.
• Hosted National Health Week and presented
opportunities for associates to learn more
about, and participate in, overall health and
wellness activities including physical, mental,
financial, and overall well-being sessions.
GO GREEN
Environment
• Collaborated with JHAnyWhere to celebrate
World Cleanup Week in September 2021 and
represented 19 North American cities.
• Celebrated Earth Week with a series of
events including a pollinator garden reveal,
composting education, and an annual tree
planting at a Jack Henry office.
MOSAIC OF PEOPLE
People of Color
• Celebrated National Hispanic Heritage Month
with a virtual multicultural fair.
• Hosted an internal podcast episode with
Stephone Coward from BankBlackUSA to
discuss how the bank empowers black-owned
financial institutions.
16 / MISSION-DRIVEN
We encourage associates to participate
in one or more of our Business Innovation
Groups (BIGs): Women at Jack Henry, Veterans,
PRISM, Mosaic, JHAnyWhere, and Go Green.
These groups are tasked with growing our
company in a better way. Participation grew
24% over last fiscal year, and we now have
approximately 1,700 unique BIG members.
VETERANS
Active and Retired Military
• Partnered with Jack Henry’s Talent Acquisition
team to develop and produce guides that help
attract and interview military candidates.
• Hosted a Veterans Hiring & Retention mini-
series with Chief Veterans Advocate Evan
Guzman, who focuses on how to engage
and attract military veterans as part of the
hiring process.
PRISM
LGBTQIA+
• Collaborated with San Diego Pride to form a
panel of experts for PRISM’s Intersectionality
and Why it’s Important session.
• Spearheaded the effort to have pronouns and
gender identity added to Jack Henry’s human
capital management system.
JHANYWHERE
Remote Associates
• Hosted a session with Dr. Mark Crawford on
The Importance of Self-Care – and How to
Get There in October 2021.
• Collaborated with Jack Henry’s Human
Resources team to host a Virtual Leader Lab.
jackhenry.com BECOMING ONE JACK HENRY
learning and improvement with our teams as we
strive to provide superior customer service. New
To provide a centralized, one-company experience
offices were added and strategically positioned
for our associates and clients alike, Jack Henry
made some positive changes and progress in
fiscal year 2022 as part of our One Jack Henry
program – a multi-year program designed to
unify our existing brands and operations.
One Jack Henry is a
multi-year program
designed to unify
our existing brands
and operations.
CONSOLIDATED EDUCATION TEAMS
We implemented a cross-divisional, collaborative
approach to drive greater product adoption and
enablement, improve time-to-value for Jack Henry
solutions, and help the Education teams align
with our strategic goals. Additionally, by utilizing
common tools and processes, associates benefit
from fewer knowledge gaps, cross-product
training, and greater career path opportunities.
This unified client education organization
provides an end-to-end knowledge enablement
approach to our clients’ needs and creates
a more structured approach to product and
solutions training for Jack Henry associates.
CENTRALIZED INCIDENT MANAGEMENT,
CHANGE MANAGEMENT, AND
COMMUNICATION PROCESSES
Emphasizing our four tenets of execution
and leadership – transparency, collaboration,
communication, and consistency – we worked
to ensure we create an environment for faster
under our Chief Information Security Officer and
Chief Information Officer to actively establish:
• Consistent and comprehensive plans for
incident management, communications
processes to provide a single point-of-
contact, and standardized vocabulary used
to categorize incidents.
• Enhanced approval capabilities for
Change, Release, and Deployment (CRD)
Management, documentation of IT Service
Management definitions and terms, and
collaborative incident management.
ESTABLISHMENT OF
CUSTOMER SUCCESS GROUP
A new Customer Success group was established
to align Jack Henry’s Customer Experience,
Enterprise Continuous Improvement, Business
Modernization, and Knowledge Enablement
teams. This unification supports our
commitment to strengthen our capabilities
and improve productivity and effectiveness.
PRODUCT DEVELOPMENT
LIFECYCLE CONSISTENCY
Previously, each individual line of business within
Jack Henry brought products to market in their
own way. To simplify the experience for our clients,
changes were implemented to bring consistency
across the board. Now, each line of business
operates in the same way (with some nuances,
as needed) creating a streamlined process
and allowing clients to know what to expect.
MISSION-DRIVEN / 17
2022 ANNUAL REPORT COLLABORATIVE CLIENT CONFERENCE
In March 2022, we announced our new, collaborative client conference:
Jack Henry Connect. The inaugural event in August 2022 brought the
Jack Henry Annual Conference (JAC) and the Symitar Educational
Conference (SEC) together. Our annual educational conference
and technology showcase is an extension of our commitment to
strengthening connections and forging relationships. It’s an opportunity
for bank and credit union leaders and representatives to connect with
technology partners; to connect with Jack Henry leadership; and to
connect with one another to discuss, grow, and learn together.
LIVING OUR MISSION
Our company was founded with a humble spirit, a can-do attitude, an
advocate’s heart, and on three guiding principles: do the right thing, do
whatever it takes, and have fun. These values are woven into each aspect
of our work and how we treat our associates, clients, and shareholders.
Furthermore, our guiding principles underpin our mission and purpose that
reflects not only Jack Henry today, but where we are moving in the future.
Since 1976, the needs and expectations of people and businesses have
changed – and technology has transformed the financial industry as
we know it. But one thing that hasn’t changed is Jack Henry’s dedication
to community and regional financial institutions and the people and
businesses they serve. We’ve always believed the world is a better place
with these financial institutions, and we intend to keep it that way. While
the latest industry disruption presents threats, we are committed to
helping our clients navigate, adapt, and capitalize on the opportunities.
We develop and evolve as needed – just like our founders did –
because we are focused on the success of our associates and clients
and the long-term viability of our organization. Jack Henry’s fiscal
year 2022 was very solid and one in which we can take great
pride. We look forward to what fiscal year 2023 brings.
GUIDING
PRINCIPLES:
Do the
right thing
Do whatever
it takes
Have fun
Jack Henry and Jerry Hall,
Founders of Jack Henry
18 / MISSION-DRIVEN
jackhenry.com 2022 ANNUAL REPORT
F I N A N C I A L S
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2022 ANNUAL REPORT THIS PAGE INTENTIONALLY LEFT BLANK
20 / FINANCIALS
jackhenry.com BUSINESS
Jack Henry & Associates, Inc. (“JKHY”) is a well-rounded financial technology company. JKHY was founded in 1976 as a
provider of core information processing solutions for banks. Today, the Company’s extensive array of products and services
includes processing transactions, automating business processes, and managing information for over 7,800 financial institutions
and diverse corporate entities.
JKHY provides its products and services primarily to financial institutions:
• Core bank integrated data processing systems are provided to over 950 banks ranging from de novo to multi-billion-dollar
institutions with assets of up to $50 billion. The number of banks we serve has decreased in the last year due to acquisitions
and mergers within the banking industry, which are discussed further under the heading “Industry Background” in this Item
1. Our banking solutions support both on-premise and private cloud operating environments with three functionally distinct
core processing platforms and more than 140 integrated complementary solutions.
• Core credit union data processing solutions are provided to credit unions of all sizes, with a growing client base of nearly
720 credit union customers. There is one flagship core processing platform and more than 100 integrated complementary
solutions that support both on-premise and private cloud operating environments.
• Non-core highly specialized core-agnostic products and services are also provided to financial institutions. There are more
than 100 complementary solutions that offer highly specialized financial performance, imaging and payments processing,
information security and risk management, retail delivery, and online and mobile solutions. These products and services
enhance the performance of traditional financial services organizations of all asset sizes and charters, and non-traditional
diverse corporate entities with over 7,800 customers, comprised of nearly 1,650 of our core customers included in our bank
and credit union customers listed above, as well as over 6,150 other non-core customers.
Our products and services provide our customers with solutions that can be tailored to support their unique growth, service,
operational, and performance goals. Our well-rounded solutions also enable financial institutions to offer the high-demand
products and services required by their customers to compete more successfully, and to capitalize on evolving trends shaping
the financial services industry.
We are committed to exceeding our customers’ service-related expectations. We measure and monitor customer satisfaction
using annual surveys and randomly-generated online surveys initiated each day by routine support requests. We believe the
results of this extensive survey process confirm that our service consistently exceeds our customers’ expectations and generates
excellent customer retention rates.
We also focus on establishing long-term customer relationships, continually expanding and strengthening those relationships
with cross sales of additional products and services, earning new financial and non-financial clients, and ensuring our product
offerings are highly competitive.
The majority of our revenue is derived from support and services provided by our private cloud services for our hosted customers
that are typically on a seven-year or greater contract, recurring electronic payment solutions that are also generally on a contract
term of seven years or greater, and to our on-premise customers that are typically on a one-year contract. Less predictable
software license fees, paid by customers implementing our software solutions on-premise, and hardware sales, including all
non-software products that we re-market in order to support our software systems, complement our primary revenue sources.
Information regarding the classification of our business into four separate segments is set forth in Note 14 to the consolidated
financial statements (see Item 8).
JKHY’s progress and performance have been guided by the focused work ethic and fundamental ideals fostered by the
Company’s founders 46 years ago:
• Do the right thing
• Do whatever it takes
• Have fun
We recognize that our associates and their collective contribution are ultimately responsible for JKHY’s past, present, and future
success. Recruiting and retaining high-quality employees is essential to our ongoing growth and financial performance, and we
believe we have established an organizational culture that sustains high levels of employee engagement. For further discussion
of our human capital considerations, see “Human Capital” below.
FINANCIALS / 21
2022 ANNUAL REPORT COVID-19 Impact and Response
Since its outbreak in early calendar 2020, COVID-19 has rapidly spread and 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 allowed them to work off-site, and we suspended all non-essential business travel. As of August 15, 2022, the
majority of our employees were continuing to work remotely either full time or in a hybrid capacity. We have announced that
our official return-to-office date is September 6, 2022, though employees have been permitted to voluntarily return to the office
since May 2, 2022. Individual decisions on returning to the office will be manager-coordinated and based on conversations
with specific teams and departments. A large number of our employees have requested to remain fully remote or participate
in a hybrid approach where they would split their time between remote and in-person working. While our business travel is
normalizing, we do not expect it to return to pre-pandemic levels and continue to encourage a cautious approach to business
travel activities.
Customers
We 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 installations when available. We expect
these processes to provide flexibility and value both during and after the COVID-19 pandemic. Even though a substantial portion
of our workforce has worked remotely during the outbreak and business travel has been limited, 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 without materially impacting our business.
Financial Impact
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 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, including the onset of variants of the virus; the effectiveness of vaccines against new variants;
the development and effectiveness of treatments; the effect on the economy generally; 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. For a further discussion of the uncertainties and risks associated with COVID-19, see Part II, Item
1A “Risk Factors” in this Annual Report on Form 10-K.
Industry Background
Our core banking solutions serve commercial banks and savings institutions with up to $50 billion in assets. According to the
Federal Deposit Insurance Corporation (“FDIC”), there were approximately 4,790 commercial banks and savings institutions
in this asset range as of December 31, 2021, and we currently support over 950 of these banks with one of our three core
information processing platform and complementary products and services.
Our core credit union solutions serve credit unions of all asset sizes. According to the Credit Union National Association (“CUNA”),
there were more than 5,000 domestic credit unions as of December 31, 2021, and we currently support nearly 720 of these credit
unions with one flagship core information processing platform and complementary products and services.
Our non-core solutions serve financial services organizations of all asset sizes and charters and other diverse corporate entities.
We currently support over 7,800 institutions with specialized solutions for generating additional revenue and growth, increasing
security, mitigating operational risks, and controlling operating costs.
The FDIC reports the number of commercial banks and savings institutions declined 18% from the beginning of calendar year
2016 to the end of calendar year 2021, due mainly to mergers. Although the number of banks declined at a 4% compound
annual rate during this period, aggregate assets increased at a compound annual rate of 9.0% and totaled $23.7 trillion as of
December 31, 2021. There were nine new bank charters issued in calendar year 2021, compared to six in the 2020 calendar
year. Comparing calendar years 2021 to 2020, the number of mergers decreased 2%.
22 / FINANCIALS
jackhenry.com CUNA reports the number of credit unions declined 15% from the beginning of calendar year 2016 to the end of calendar
year 2021. Although the number of credit unions declined at a 3% compound annual rate during this period, aggregate assets
increased at a compound annual rate of 10% and totaled $2.1 trillion as of December 31, 2021.
Community and mid-tier banks and credit unions are important in the communities and to the consumers they serve. Bank
customers and credit union members rely on these institutions to provide personalized, relationship-based service and competitive
financial products and services available through the customer’s delivery channel of choice. Institutions are recognizing that
attracting and retaining customers and members in today’s highly competitive financial industry and realizing near-term and
long-term performance goals are often technology dependent. Financial institutions must implement technological solutions that
enable them to:
•
Implement e-commerce, mobile, and digital strategies that provide the convenience-driven services required in today’s
financial services industry;
• Maximize performance with accessible, accurate, and timely business intelligence information;
• Offer the high-demand products and services needed to successfully compete with traditional competitors and non-traditional
competitors created by convergence within the financial services industry;
• Enhance the customer/member experience at varied points of contact;
• Expand existing customer/member relationships and strengthen exit barriers by cross selling additional products and
services;
• Capitalize on new revenue and deposit growth opportunities;
•
Increase operating efficiencies and reduce operating costs;
• Protect mission-critical information assets and operational infrastructure;
• Protect customers/members with various security tools from fraud and related financial losses;
• Maximize the day-to-day use of technology and return on technology investments; and
• Ensure full regulatory compliance.
JKHY’s extensive product and service offerings enable diverse financial institutions to capitalize on these business opportunities
and respond to these business challenges. We strive to establish a long-term, value-added technology partnership with each
customer, and to continually expand our offerings with the specific solutions our customers need to prosper in the evolving
financial services industry.
Mission Statement
We strengthen the connections between people and their financial institutions through technology and services that reduce the
barriers to financial health.
Purpose Statement
To empower people and communities to gain the financial freedom to move forward.
Business Strategy
Our fundamental business strategy is to generate organic revenue and earnings growth augmented by strategic acquisitions.
We execute this strategy by:
• Providing commercial banks and credit unions with core operating systems that provide excellent functionality and support
on-premise and private cloud delivery environments with identical functionality.
• Expanding each core customer relationship by cross-selling complementary products and services that enhance the
functionality provided by our core information processing systems.
• Providing non-core highly specialized core-agnostic complementary products and services to financial institutions, including
institutions not utilizing a JKHY core operating system, and diverse corporate entities.
FINANCIALS / 23
2022 ANNUAL REPORT • Maintaining a company-wide commitment to customer service that consistently exceeds our customers’ expectations and
generates high levels of customer retention.
• Capitalizing on our acquisition strategy.
Acquisition Strategy
We have a disciplined approach to acquisitions and have been successful in supplementing our organic growth with 34 strategic
acquisitions since the end of fiscal 1999. We continue to explore acquisitions that have the potential to:
• Expand our suite of complementary products and services;
• Provide products and services that can be sold to both existing core and non-core customers and outside our base to new
customers; and/or
• Provide selective opportunities to sell outside our traditional markets in the financial services industry.
After 46 years in business, we have very few gaps in our product line, so it is increasingly difficult to find proven products or
services that would enable our clients and prospects to better optimize their business opportunities or solve specific operational
issues. In addition, we see few acquisition opportunities that would expand our market or enable our entry into adjacent markets
within the financial services industry that are fairly priced or that we could assimilate into our company without material distractions.
We have a solid track record of executing acquisitions from both a financial and operational standpoint, and we will continue
to pursue acquisition opportunities that support our strategic direction, complement and accelerate our organic growth, and
generate long-term profitable growth for our stockholders. While we seek to identify appropriate acquisition opportunities, we
will continue to explore alternative ways to leverage our cash position and balance sheet to the benefit of our stockholders, such
as continued investment in new products and services for our customers, repurchases of our stock, and continued payment of
dividends.
Our most recent acquisition was:
Fiscal Year
Company or Product Name
Products and Services
2020
DebtFolio, Inc. (“Geezeo”)
Provider of technology solutions and next-generation
financial management capabilities primarily for the
financial services industry
Solutions
• Our core banking solutions support commercial banks with information and transaction processing platforms that provide
enterprise-wide automation. We have three functionally distinct core bank processing systems and more than 140 fully
integrated complementary solutions, including business intelligence and bank management, retail and business banking,
digital and mobile internet banking and electronic payment solutions, risk management and protection, and item and
document imaging solutions. Our core banking solutions have state-of-the-art functional capabilities, and we can re-market
the hardware required by on-premise use of each software system. Our banking solutions can be delivered on-premise or
through our private cloud delivery model and are backed by a company-wide commitment to provide exceptional personal
service. We are a recognized market leader, currently supporting over 950 banks with our technology platforms.
• Our core credit union solutions support credit unions of all sizes with an information and transaction processing platform that
provides enterprise-wide automation. Our solution includes one flagship core processing system and more than 100 fully
integrated complementary solutions, including business intelligence and credit union management, member and member
business services, digital and mobile internet banking and electronic payment solutions, risk management and protection,
and item and document imaging solutions. Our credit union solution also has state-of-the-art functional capabilities. We also
re-market the hardware required by on-premise use of the software system. Our credit union solution can be delivered on-
premise or through our private cloud delivery model, and is backed by our company-wide commitment to provide exceptional
personal service. We currently support nearly 720 credit union customers.
• Our non-core solutions for financial institutions are specialized products and services assembled primarily through our
focused diversification acquisition strategy. These core-agnostic solutions are compatible with a wide variety of information
technology platforms and operating environments and offer more than 100 complementary solutions, including proven
solutions for generating additional revenue and growth, increasing security and mitigating operational risks, and/or controlling
24 / FINANCIALS
jackhenry.com operating costs. Our non-core products and services enhance the performance of financial services organizations of all
asset sizes and charters, and diverse corporate entities. We have over 7,800 customers, including over 6,150 unique non-
core customers. These distinct products and services can be implemented individually or as solution suites to address
specific business problems or needs and enable effective responses to dynamic industry trends.
We strive to develop and maintain functionally robust, integrated solutions that are supported with high service levels, regularly
updating and improving those solutions using an interactive customer enhancement process; ensuring compliance with relevant
regulations; updated with proven advances in technology; and consistent with JKHY’s reputation as a premium product and
service provider.
Core Software Systems
Core software systems primarily consist of the integrated applications required to process deposit, loan, and general ledger
transactions, and to maintain centralized customer/member information.
Our core banking solutions consist of three software systems marketed to banks and our core credit union solution consists of
one software system marketed to credit unions. These core systems are available for on-premise installation at customer sites,
or financial institutions can choose to leverage our private cloud environment for ongoing information processing.
Core banking platforms are:
• SilverLake System®, a robust system primarily designed for commercial-focused banks with assets ranging from $1 billion
to $50 billion. Some progressive smaller banks and de novo (start-up) banks also select SilverLake. This system is in use
by nearly 450 banks, and now automates over 9% of the domestic banks with assets less than $50 billion.
• CIF 20/20®, a parameter-driven, easy-to-use system that now supports approximately 332 banks ranging from de novo
institutions to those with assets of $4 billion.
• Core Director®, a cost-efficient system with point-and-click operation that now supports nearly 200 banks ranging from de
novo institutions to those with assets of $2 billion.
Core credit union platform is:
• Symitar® (formerly known as Episys®), a robust system designed specifically for credit unions. It has been implemented
by nearly 720 credit unions with assets ranging from $3 million to $35 billion, and according to National Credit Union
Administration (“NCUA”) data, is the system implemented by more credit unions with assets exceeding $25 million than any
other alternative core system.
Customers electing to install our solutions on-premise license the proprietary software systems. The majority of these customers
pay ongoing annual software maintenance fees. We re-market the hardware, hardware maintenance, and peripheral equipment
that is required by on-premise use of our software solutions; and we perform software implementation, data conversion, training,
ongoing support, and other related services. On-premise customers generally license our core software systems under a
standard license agreement that provides a fully paid, nonexclusive, nontransferable right to use the software on a single
computer at a single location.
Customers can eliminate the significant up-front capital expenditures required by on-premise installations and the responsibility
for operating information and transaction processing infrastructures by leveraging our private cloud environment for those
functions. Our core private cloud services are provided through a highly resilient data center configuration across multiple
physical locations. We also provide image item processing services from two host/archive sites and several key entry and
balancing locations throughout the country. We print and mail customer statements for financial institutions from three regional
printing and rendering centers. Customers electing to outsource their core processing typically sign contracts for seven or more
years that include “per account” fees and minimum guaranteed payments during the contract period.
We support the dynamic business requirements of our core bank and credit union clients with ongoing enhancements to each
core system, the regular introduction of new integrated complementary products, the ongoing integration of practical new
technologies, and regulatory compliance initiatives. JKHY also serves each core customer as a single point of contact, support,
and accountability.
FINANCIALS / 25
2022 ANNUAL REPORT Complementary Products and Services
We have more than 140 complementary products and services that are targeted to our core banks and more than 100 targeted
to credit union customers. Many of these are selectively sold to financial services organizations that use other core processing
systems.
These complementary solutions enable core bank and credit union clients to respond to evolving customer/member demands,
expedite speed-to-market with competitive offerings, increase operating efficiency, address specific operational issues, and
generate new revenue streams. The highly specialized solutions enable diverse financial services organizations and corporate
entities to generate additional revenue and growth opportunities, increase security and mitigate operational risks, and control
operating costs.
JKHY regularly introduces new products and services based on demand for integrated complementary solutions from our
existing core clients, and based on the growing demand among financial services organizations and corporate entities for
specialized solutions capable of increasing revenue and growth opportunities, mitigating and controlling operational risks, and/
or containing costs. The Company’s Industry Research department solicits customer guidance on the business solutions they
need, evaluates available solutions and competitive offerings, and manages the introduction of new product offerings. JKHY’s
new complementary products and services are developed internally, acquired, or provided through strategic alliances.
Implementation and Training
Most of our core bank and credit union customers contract with us for implementation and training services in connection with
their systems and additional complementary products.
A complete core system implementation typically includes detailed planning, project management, data conversion, and
testing. Our experienced implementation teams travel to customer facilities or work remotely with clients to help manage the
implementation process and ensure that all data is transferred from the legacy system to the JKHY system. Our implementation
fees are fixed or hourly based on the core system being installed.
We also provide extensive initial and ongoing education to our customers. We have a comprehensive training program that
supports new customers with basic training and longtime customers with continuing education. The curricula provide the ongoing
training financial institutions need to maximize the use of JKHY’s core and complementary products, to optimize ongoing system
enhancements, and to fully understand dynamic year-end legislative and regulatory requirements. Each basic, intermediate,
and advanced course is delivered by system experts, supported by professional materials and training tools, and incorporates
different educational media in a blended learning approach. The program supports distinct learning preferences with a variety of
delivery channels, including classroom-based courses offered in JKHY’s regional training centers, Internet-based live instruction,
eLearning courses, on-site training, and train-the-trainer programs.
Support and Services
We serve our customers as a single point of contact and support for the complex solutions we provide. Our comprehensive
support infrastructure incorporates:
• Exacting service standards;
•
Trained support staff available up to 24 hours a day, 365 days a year;
• Assigned account managers;
• Sophisticated support tools, resources, and technology;
• Broad experience converting diverse banks and credit unions to our core platforms from competitive platforms;
• Highly effective change management and control processes; and
• A best practices methodology developed and refined through the company-wide, day-to-day experience supporting over
7,800 diverse clients.
Most on-premise customers contract for annual software support services, and this represents a significant source of recurring
revenue for JKHY. These support services are typically priced at approximately 20% of the respective product’s software license
fee. The subsequent years’ service fees generally increase as customer assets increase and as additional complementary
products are purchased. Annual software support fees are typically billed during June and are paid in advance for the entire fiscal
26 / FINANCIALS
jackhenry.com year, with proration for new product implementations that occur during the fiscal year. Hardware support fees also are usually
paid in advance for entire contract periods which typically range from one to five years. Most support contracts automatically
renew unless the customer or JKHY gives notice of termination at least 30 days prior to contract expiration.
High levels of support are provided to our private cloud customers by the same support infrastructure utilized for on-premise
customers. However, these support fees are included as part of monthly private cloud fees.
JKHY regularly measures customer satisfaction using annual surveys and more frequent online surveys initiated randomly by
routine support requests. We believe the results of the surveys confirm that we consistently exceed our customers’ service-
related expectations.
Hardware Systems
Our software systems operate on a variety of hardware platforms. We have established remarketing agreements with IBM
Corporation, and many other hardware providers that allow JKHY to purchase hardware and related maintenance services at a
discount and resell them directly to our customers. We currently sell IBM Power Systems™; Lenovo, Dell, Hewlett Packard, and
Cisco servers and workstations; Canon, Digital Check, Epson, and Panini check scanners; and other devices that complement
our software solutions.
Digital Products and Services
Jack Henry Digital represents a category of digital products and services that are being built and integrated together into one
unified platform. Our main offering is the Banno Digital Platform. It is an online and mobile banking platform that helps community
and regional financial institutions strategically differentiate their digital offerings from those of megabanks and other financial
technology companies. It is a complete, open digital banking platform that gives community financial institutions attractive, fast,
native applications for their customers and members and cloud-based, core-connected back office tools for their employees.
Payment Solutions
Electronic payment solutions provide our customers with the tools necessary to be at the forefront of payment innovation with
secure payment processing designed to simplify complex payment processing, attract profitable retail and commercial accounts,
increase operating efficiencies, comply with regulatory mandates, and proactively mitigate and manage payment-related risk.
•
JHA Card Processing Solutions (“CPS”) supports full-service and in-house debit and credit card programs backed by
a comprehensive suite of tools for fraud mitigation, digital payments, dispute management, plastics manufacturing and
personalization, loyalty programs, data analytics, and terminal driving. In addition, advisory services are offered to support
a variety of needs including card portfolio growth, start-up program consultation, as well as customized fraud management;
all tailored to individual financial institution goals and concerns.
• Enterprise Payment Solutions (“EPS”) is a comprehensive payments engine. It offers an integrated suite of remote
deposit capture, Automated Clearing House (“ACH”), and card transaction processing solutions, risk management tools,
reporting capabilities, and more for financial institutions, businesses and FinTechs of all sizes. EPS helps its clients succeed
in today’s competitive market to increase revenue, improve efficiencies, better manage compliance, and enhance customer
relationships.
•
•
iPay SolutionsTM provides consumers and businesses with money movement options through their financial institutions’
digital platforms including paying bills, sending money to anyone and transferring funds between their own accounts. iPay’s
extensive application programming interface (“API”) and hosted interfaces allow for multiple levels of integration by digital
platforms and financial institutions. iPay provides financial institutions with services and tools to increase adoption, support
end-users and monitor fraud. The money movement options keep the consumers and businesses engaged with the financial
institution.
JHA PayCenterTM, provides our customer financial institutions with a single entry point to both Zelle and Real Time Payments
(“RTP”) real-time networks with plans to accommodate the Federal Reserve’s FedNow in 2024, with testing to begin in 2023.
PayCenter manages the certification process and mandatory updates from the networks, simplifies integration with toolkits
and provides fraud monitoring. Financial institutions are able to send and receive transactions instantly 24 hours a day, 365
days a year, through our core and complementary solutions.
• Payments as a Service (PaaS) ties together and further enhances the complete array of electronic payments functionality
with a front end Payments Developers Experience Portal and back end data analytics.
FINANCIALS / 27
2022 ANNUAL REPORT Research and Development
We invest significant resources in ongoing research and development to develop new software solutions and services and
enhance existing solutions with additional functionality and features required to ensure regulatory compliance. Our core and
complementary systems are enhanced a minimum of once each year. Product-specific enhancements are largely customer-
driven with recommended enhancements formally gathered through focus groups, change control boards, strategic initiatives
meetings, annual user group meetings, and ongoing customer contact. We also continually evaluate and implement process
improvements that expedite the delivery of new products and enhancements to our customers and reduce related costs.
Research and development expenses for fiscal 2022, 2021, and 2020 were $121.4 million, $109.0 million, and $110.0 million,
respectively. We recorded capitalized software in fiscal 2022, 2021, and 2020 of $148.2 million, $128.3 million, and $117.3
million, respectively.
Sales and Marketing
JKHY serves established, well-defined markets that provide ongoing sales and cross-sales opportunities.
The marketing and sales initiatives within the core business lines are primarily focused on identifying banks and credit unions
evaluating alternative core information and transaction processing solutions. Our non-core specialized core-agnostic niche
solutions are sold to complement existing technology platforms to domestic financial services organizations of all asset sizes
and charters.
Sales executives are responsible for the activities required to earn new customers in assigned territories, and regional account
executives are responsible for nurturing customer relationships and cross selling additional products and services. Our sales
professionals receive base salaries and performance-based commission compensation. Sales support staff provide a variety
of services, including product and service demonstrations, responses to prospect-issued requests-for-proposals, and proposal
and contract generation. Our marketing department supports sales with lead generation and brand-building activities, including
participation in state-specific, regional, and national trade shows; print and online advertising; telemarketing; customer/client
newsletters; ongoing promotional campaigns; and media relations. JKHY also hosts annual national education conferences
which provide opportunities to network with existing clients and demonstrate new products and services.
JKHY has sold select products and services outside the United States, primarily in Latin America and the Caribbean and
Canada. International sales accounted for less than 1% of JKHY’s total revenue in each of fiscal 2022, 2021, and 2020.
Competition
The market for companies providing technology solutions to financial services organizations is competitive, and we expect that
competition from both existing competitors and companies entering our existing or future markets will remain strong. Some of
JKHY’s current competitors have longer operating histories, larger customer bases, and greater financial resources. The principal
competitive factors affecting the market for technology solutions include product/service functionality, price, operating flexibility
and ease-of-use, customer support, and existing customer references. For more than a decade there has been significant
consolidation among providers of products and services designed for financial institutions, and this consolidation is expected to
continue in the future.
Our core solutions compete with large vendors that provide information and transaction processing solutions to banks and
credit unions, including Fidelity National Information Services, Inc.; Fiserv, Inc.; and Finastra. Our non-core specialized solutions
compete with an array of disparate vendors that provide niche solutions to financial services organizations and corporate entities.
Intellectual Property, Patents, and Trademarks
Although we believe our success depends upon our technical expertise more than our proprietary rights, our future success
and ability to compete depend in part upon our proprietary technology. We have registered or filed applications for our primary
trademarks. Most of our technology is not patented. Instead, we rely on a combination of contractual rights, copyrights, trademarks,
and trade secrets to establish and protect our proprietary technology. We generally enter into confidentiality agreements with
our employees, consultants, resellers, customers, and potential customers. Access to and distribution of our Company’s source
code is restricted, and the disclosure and use of other proprietary information is further limited. Despite our efforts to protect our
proprietary rights, unauthorized parties can attempt to copy or otherwise obtain, or use our products or technology. We cannot be
certain that the steps taken in this regard will be adequate to prevent misappropriation of our technology or that our competitors
will not independently develop technologies that are substantially equivalent or superior to our technology.
28 / FINANCIALS
jackhenry.com Regulatory Compliance
JKHY maintains a corporate commitment to address compliance issues and implement requirements imposed by federal
regulators prior to the effective date of such requirements when adequate prior notice is given. JKHY’s compliance program is
coordinated by a team of compliance analysts and auditors that possess extensive regulatory agency and financial institution
experience, and a thorough working knowledge of JKHY and our solutions. These compliance professionals leverage multiple
channels to remain informed about potential and recently enacted regulatory requirements, including regular discussions on
emerging topics with the Federal Banking Agencies (“FBA”) examination team and training sessions sponsored by various
professional associations.
JKHY has a process to inform internal stakeholders of new and revised regulatory requirements. Upcoming regulatory changes
also are presented to the Company’s development teams through monthly regulatory compliance meetings and the necessary
product changes are included in the ongoing product development cycle. JKHY publishes newsletters to keep our customers
informed of regulatory changes that could impact their operations. Periodically, customer advisory groups are assembled to
discuss significant regulatory changes.
Internal audits of our systems, networks, operations, business recovery plans, and applications are conducted and specialized
outside firms are periodically engaged to perform testing and validation of our systems, processes, plans and security. The
FBA conducts annual reviews throughout the Company and issues a Report of Examination. The Board of Directors provides
oversight of these activities through the Risk and Compliance Committee and the Audit Committee.
Government Regulation
The financial services industry is subject to extensive and complex federal and state regulation. All financial institutions are
subject to substantial regulatory oversight and supervision. Our products and services must comply with the extensive and
evolving regulatory requirements applicable to our customers, including but not limited to those mandated by federal truth-in-
lending and truth-in-savings rules, the Privacy of Consumer Financial Information regulations, usury laws, the Equal Credit
Opportunity Act, the Fair Housing Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Bank Secrecy Act,
the USA Patriot Act, the Gramm-Leach-Bliley Act, the Community Reinvestment Act and the Dodd-Frank Wall Street Reform and
Consumer Protection Act. The compliance of JKHY’s products and services with these requirements depends on a variety of
factors, including the parameters set through the interactive design, the classification of customers, and the manner in which the
customer utilizes the products and services. Our customers are contractually responsible for assessing and determining what
is required of them under these regulations and then we provide solutions that assist them in meeting their regulatory needs
through our products and services. We cannot predict the impact these regulations, any future amendments to these regulations
or any newly implemented regulations will have on our business in the future.
JKHY is not chartered by the Office of the Comptroller of Currency (“OCC”), the Board of Governors of the Federal Reserve
System, the FDIC, the NCUA or other federal or state agencies that regulate or supervise depository institutions. However,
operating as a service provider to financial institutions, JKHY’s operations are governed by the same regulatory requirements as
those imposed on financial institutions, and subject to periodic reviews by FBA regulators who have broad supervisory authority
to remedy any shortcomings identified in such reviews.
JKHY provides private cloud services through JHA OutLink Processing Services™ for banks and EASE Processing Services™
for credit unions. JKHY provides data centers and electronic transaction processing through JHA Card Processing Solutions™,
internet banking through NetTeller® and BannoTM online solutions, bill payment through iPay, network security monitoring and
Hosted Network Solutions (“HNS”) through our Gladiator® unit, cloud services through Hosted Partner Services and Enterprise
Integration Services, and business recovery services through Centurion Disaster Recovery®.
The private cloud services provided by JKHY are subject to examination by FBA regulators under the Bank Service Company
Act. These examinations cover a wide variety of subjects, including system development, functionality, reliability, and security,
as well as disaster preparedness and business recovery planning. Our private cloud services are also subject to examination by
state banking authorities on occasion.
Information and Cybersecurity
In our increasingly interconnected environment, information is inherently exposed to a growing number of risks, threats, and
vulnerabilities. As a provider of products and services to financial institutions, we take extreme caution and due care in processing
and storing sensitive, personally identifiable information securely. We prioritize protecting our associates, clients, and their
private data from the ever-evolving cyber threat environment and ensuring the resiliency of such information.
FINANCIALS / 29
2022 ANNUAL REPORT We have an established information and cybersecurity program maintained by a team of diverse, highly skilled cybersecurity
professionals, as well as a portfolio of investments in modern technology including artificial intelligence and machine learning.
The program incorporates industry-standard frameworks, policies, and practices designed to protect the confidentiality and
privacy of JKHY’s and our clients’ information. Additionally, we maintain insurance that includes cybersecurity coverage.
In support of the program, our systems and services undergo regular reviews performed by the same regulatory agencies that
review financial institutions: Consumer Financial Protection Bureau (“CFPB”), Federal Reserve Board (“FRB”), FDIC, NCUA,
and the OCC, among others. Reviews such as those by the Federal Banking agencies (a regulatory group comprised of the
FDIC, FRB, and the OCC) assess and identify security gaps or flaws in controls and monitor the effectiveness of our security
program. Critical services provided to our clients are subject to annual System and Organization Controls (“SOC”) reviews
by independent auditors. SOC reports are made available to clients via the client communications portal. Information and
cybersecurity leadership reports to the Risk and Compliance Board committee and the full Board of Directors quarterly, on
information security and cybersecurity matters.
Human Capital
Our Employees
As of June 30, 2022, we had 6,847 full-time employees. Our employees are not covered by a collective bargaining agreement
and there have been no labor-related work stoppages.
Talent Attraction and Engagement
Our people and culture strategy focuses on attracting, engaging, and retaining qualified, diverse, and innovative talent at all
levels of the Company. We are a committed equal opportunity employer and all qualified candidates receive consideration for
employment without regard to race, color, religion, national origin, age, disability, sex, sexual orientation, gender, gender identity,
pregnancy, genetic information, or other characteristics protected by applicable law.
Beyond nondiscrimination compliance, we are committed to fostering a respectful, diverse, and inclusive workplace in which all
individuals are treated with respect and dignity. We continue to concentrate efforts on diversity, equity, inclusion, and belonging
and have hired employees in the human resources function to focus on this important area. We seek nontraditional talent
streams to help identify candidates from underrepresented groups, including through our internship program and our newly
launched apprenticeship program. Our internship program focuses on attracting college and university students to paid work
in JKHY departments related to their studies, while our apprenticeship program offers paid training and work for candidates
(either students or non-students) with little to no traditional experience in the field, such as learning computer coding. Both our
internship program and our apprenticeship program can lead to full-time employment. We have sought to expand our sources
for candidates for these programs, including by increasing our recruiting efforts at historically black colleges and universities and
through relationships with non-profits that promote employment opportunities for veterans.
We continue to engage our Business Innovation Groups (“BIGs”) to develop attraction and retention suggestions and practices
that advance a diverse, equitable, and inclusive culture. Our BIGs are company-sponsored groups open to all employees. As of
June 30, 2022, we had approximately 1,700 unique associates participating in six active BIGs, with five focused on inclusion for
specific communities – women, people of color, remote associates, LGBTQ+, and veterans – and one focused on environmental
and sustainability topics. While BIGs allow associates to connect and support each other, they also function to assist us in
addressing bona fide business problems through input and suggestions. For example, these groups work with executive
leadership to actively improve our talent attraction processes for prospective employees. They also provide education, training,
and conversation opportunities to all employees to advance diversity, inclusion, understanding, and innovation throughout the
Company.
We seek to actively listen to our employees throughout the year using a defined and continual listening strategy designed
to gather regular feedback on well-being, engagement, leadership, ethics, culture and values, and other top of mind topics.
These surveys allow us to respond to employee concerns, benefit from employee perspectives, and better design and develop
processes to support our Company culture. Employees can learn about changes through our quarterly employee update videos
or all-employee town hall meetings delivered by senior management.
30 / FINANCIALS
jackhenry.com Training and Development
Our success depends not only on attracting and retaining talented employees, but also in developing our current employees
and providing new opportunities for their growth. We offer our employees numerous live and on-demand training programs
and resources to help them build knowledge and improve skills. These trainings include mandatory programs, such as security
awareness, as well as recommended but optional programs in areas including leadership development; technical skills; and
diversity, equity, and inclusion. Jack Tracks, a three-week virtual development event, offers employees a large selection of
curated topics such as future readiness, technology trends, and education on Company solutions.
Recognizing the importance of mentoring in career development, we host an internal mentorship marketplace, which allows
prospective mentors and mentees to connect and self-initiate a mentoring relationship. We also make career mobility and
personal development plan resources available to all employees. In fiscal 2022, we strengthened our leadership capacity by
providing training on effective coaching practices to all leaders and offered a virtual summit for the Company’s most senior
leaders focused on alignment to top priority business initiatives.
We recognize and value the contribution of our employees who develop, improve, and support our technology solutions and we
provide additional development opportunities for them to advance their technical expertise. This includes access to on-demand
technical training libraries, certification programs, and classes facilitated by external experts.
Wellness and Safety
JKHY emphasizes the safety and well-being of our employees as a top priority. We define wellness comprehensively and
include mental, physical, emotional, financial, psychological, and environmental considerations. JKHY offers a competitive
compensation and benefits package and supports dedicated campaigns that communicate directly to employees about financial
wellness, mental health, healthful nutrition and exercise, and other wellness topics. Employee well-being is further supported
through policies such as remote work, paid parental leave, military service leave, educational assistance, and bereavement
leave policies.
For more information on our COVID-19 response, see “COVID-19 Impact and Response” above.
Available Information
JKHY’s Website is easily accessible to the public at jackhenry.com. The “Investors” portion of the Website provides key corporate
governance documents, the code of conduct, an archive of press releases, and other relevant Company information. Our annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings and amendments thereto
that are made with the SEC also are available free of charge on our website as soon as reasonably practical after these reports
have been filed with or furnished to the SEC. The SEC also maintains a website that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov.
FINANCIALS / 31
2022 ANNUAL REPORT MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
The Company’s common stock is quoted on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “JKHY.”
The Company established a practice of paying quarterly dividends in fiscal 1991 and has paid dividends with respect to every
quarter since that time. The declaration and payment of any future dividends will continue to be at the discretion of our Board of
Directors and will depend upon, among other factors, our earnings, capital requirements, contractual restrictions, and operating
and financial condition. The Company does not currently foresee any changes in its dividend practices.
On August 15, 2022, there were approximately 271,813 holders of the Company’s common stock, including individual participants
in security position listings.
Issuer Purchases of Equity Securities
The following shares of the Company were repurchased during the quarter ended June 30, 2022:
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 (1)
April 1- April 30, 2022
May 1- May 31, 2022
June 1- June 30, 2022
Total
—
—
—
—
$ —
$ —
$ —
$ —
—
—
—
—
3,947,713
3,947,713
3,947,713
3,947,713
(1) Total stock repurchase authorizations approved by the Company’s Board of Directors as of May 17, 2021 were for 35.0 million shares, which includes an
authorization on that date of an additional 5.0 million shares. Under these authorizations, the Company has repurchased and not re-issued 31,042,903 shares and
has repurchased and re-issued 9,384 shares. The authorizations have no specific dollar or share price targets and no expiration dates.
32 / FINANCIALS
jackhenry.com
Performance Graph
The following chart presents a comparison for the five-year period ended June 30, 2022, of the market performance of the
Company’s common stock with the Standard & Poor’s 500 (“S&P 500”) Index, the Standard & Poor’s Composite 1500 Software
& Services (“S&P 1500 Software & Services”) Index, and a Peer Group of companies selected by the Company. For comparisons
in years following this five-year period ended June 30, 2022, JKHY will no longer present a comparison to the Peer Group of
companies selected by the Company. Management has determined that the S&P 1500 Software & Services index provides a
more stable base of comparison to the Company’s results than the peer group used historically and is less susceptible to outlier
performances of individual companies. Further, a large majority of the companies in the current peer group are also included in
the S&P 1500 Software & Services index. Comparisons to the S&P 500 and S&P 1500 Software & Services published indices
only will be presented for the five-year period ended June 30, 2023 and ongoing periods. Historic stock price performance is not
necessarily indicative of future stock price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Jack Henry & Associates, Inc., the S&P 500 Index, the S&P 1500 Software & Services Index, and a Peer Group
The following information depicts a line graph with the following values:
JKHY
S&P 500
2017
2018
2019
2020
2021
2022
100.00
127.02
131.92
183.21
164.64
183.26
100.00
114.37
126.29
135.77
191.15
170.86
S&P Composite 1500 Software & Services
100.00
130.96
157.16
201.04
268.31
224.21
Peer Group
100.00
138.79
171.60
187.88
242.66
152.09
This comparison assumes $100 was invested on June 30, 2017 and assumes reinvestments of dividends.
FINANCIALS / 33
2022 ANNUAL REPORT For Peer Group members, total returns are calculated according to market capitalization at the beginning of each period. Peer
Group companies selected are in the business of providing specialized computer software, hardware and related services to
financial institutions and other businesses. Companies in the fiscal 2022 Peer Group are ACI Worldwide Inc.; Black Knight, Inc.;
Block Inc. (formerly Square Inc.); Broadridge Financial Solutions Inc.; Euronet Worldwide Inc.; ExlService Holdings Inc.; Fair
Isaac Corp.; Fidelity National Information Services Inc.; Fiserv Inc.; Fleetcor Technologies Inc.; Global Payments Inc.; SS&C
Technologies Holdings Inc.; Tyler Technologies Inc.; Verint Systems Inc.; and WEX Inc. Bottomline Technologies (de) Inc., was
originally part of the fiscal 2022 peer group, but was acquired in fiscal 2022 and was thus removed from the 2022 peer group
and stock performance graph.
The stock performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by
reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following section provides management’s view of the Company’s financial condition and results of operations and should
be read in conjunction with the audited consolidated financial statements, and related notes included elsewhere in this report.
All dollar and share amounts, except per share amounts, are in thousands and discussions compare fiscal 2022 to fiscal 2021.
Discussions of fiscal 2020 items and comparisons between fiscal 2020 and fiscal 2021 that are not included in this Form 10-K
can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2021.
OVERVIEW
Jack Henry & Associates, Inc. is a well-rounded financial technology company headquartered in Monett, Missouri, that employs
approximately 6,900 full-time and part-time associates nationwide, and is a leading provider of technology solutions and
payment processing services primarily for financial services organizations. Its solutions serve over 7,800 customers and consist
of integrated data processing systems solutions to U.S. banks ranging from de novo to multi-billion-dollar institutions with assets
up to $50 billion, core data processing solutions for credit unions of all sizes, and non-core highly specialized core-agnostic
products and services that enable financial institutions of every asset size and charter, and diverse corporate entities outside the
financial services industry, to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JKHY’s
integrated solutions are available for on-premise installation and delivery in our private cloud.
Each of our solutions shares the fundamental commitment to provide high-quality business systems, service levels that
consistently exceed customer expectations, and integration of solutions and practical new technologies. The quality of our
solutions, our high service standards, and the fundamental way we do business typically foster long-term customer relationships,
attract prospective customers, and have enabled us to capture substantial market share.
Through internal product development, disciplined acquisitions, and alliances with companies offering niche solutions that
complement our proprietary solutions, we regularly introduce new products and services and generate new cross-sales
opportunities across our three primary marketed brands. We provide compatible computer hardware for our on-premise
installations and secure processing environments for our outsourced solutions in our private cloud. We perform data conversions,
software implementations, initial and ongoing customer training, and ongoing customer support services.
We believe our primary competitive advantage is customer service. Our support infrastructure and strict standards provide
service levels we believe to be the highest in the markets we serve and generate high levels of customer satisfaction and
retention. We consistently measure customer satisfaction using comprehensive annual surveys and randomly generated daily
surveys we receive in our everyday business. Dedicated surveys are also used to grade specific aspects of our customer
experience, including product implementation, education, and consulting services.
Our two primary revenue streams are “services and support” and “processing.” Services and support includes: “private and
public cloud” fees that predominantly have contract terms of 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, 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.
34 / FINANCIALS
jackhenry.com We have four reportable segments: Core, Payments, Complementary, and Corporate and Other. The respective segments
include all related revenues along with the related cost of sales.
COVID-19 Impact and Response
Since its outbreak in early calendar 2020, COVID-19 has rapidly spread and 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 allowed them to work off-site, and we suspended all non-essential business travel. As of August 15, 2022, the
majority of our employees were continuing to work remotely either full time or in a hybrid capacity. We have announced that
our official return-to-office date is September 6, 2022, though employees have been permitted to voluntarily return to the office
since May 2, 2022. Individual decisions on returning to the office will be manager-coordinated and based on conversations
with specific teams and departments. A large number of our employees have requested to remain fully remote or participate
in a hybrid approach where they would split their time between remote and in-person working. While our business travel is
normalizing, we do not expect it to return to pre-pandemic levels and continue to encourage a cautious approach to business
travel activities.
Customers
We 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 installations when available. We expect
these processes to provide flexibility and value both during and after the COVID-19 pandemic. Even though a substantial portion
of our workforce has worked remotely during the outbreak and business travel has been limited, 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 without materially impacting our business.
Financial Impact
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 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, including the onset of variants of the virus; the effectiveness of vaccines against new variants;
the development and effectiveness of treatments; the effect on the economy generally; 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. For a further discussion of the uncertainties and risks associated with COVID-19, see Part II, Item
1A “Risk Factors” in this Annual Report on Form 10-K.
A detailed discussion of the major components of the results of operations follows.
RESULTS OF OPERATIONS
FISCAL 2022 COMPARED TO FISCAL 2021
In fiscal 2022, total revenue increased 11% or $184,659, compared to fiscal 2021. Reducing total revenue for the effects of
deconversion fees of $53,279 for the current fiscal year and $20,635 for the prior fiscal year, and for revenue from acquisitions
and divestitures in fiscal 2022 of $274 and in fiscal 2021 of $1,182, results in a 9% increase, or $152,923. This increase was
primarily driven by growth in private and public cloud, card processing, remittance, implementation, and transaction and digital
revenues, partially offset by a decrease in license fee revenue compared to the prior fiscal year.
Operating expenses increased 8% in fiscal 2022 compared to fiscal 2021, primarily due to higher costs related to our card
payment processing platform associated with corresponding increases in revenue, higher personnel costs, increased operating
licenses and fees, and higher travel expenses.
FINANCIALS / 35
2022 ANNUAL REPORT We move into fiscal 2023 following strong performance in fiscal 2022. Significant portions of our business continue to provide
recurring revenue and our sales pipeline is also encouraging. Our customers continue to face regulatory and operational
challenges which our products and services address, and in these times, they have an even greater need for our solutions that
directly address institutional profitability, efficiency, and security. We believe our strong balance sheet, access to extensive lines
of credit, the strength of our existing product line and an unwavering commitment to superior customer service position us well
to address current and future opportunities.
A detailed discussion of the major components of the results of operations for the fiscal year ended June 30, 2022 compared to
the fiscal year ended June 30, 2021 follows.
REVENUE
Services and Support Revenue
Services and support
Percentage of total revenue
Year Ended June 30,
% Change
2022
2021
$ 1,156,365
$ 1,048,206
10 %
60 %
60 %
Services and support includes: “private and public cloud” fees that predominantly have contract terms of seven years or greater 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, which is composed primarily of maintenance
fees with annual contract terms.
In the fiscal year ended June 30, 2022, services and support revenue increased compared to the prior fiscal year. Reducing
total services and support revenue by the effects of deconversion fees for each year, which totaled $53,279 in fiscal 2022 and
$20,635 in fiscal 2021, and for revenue from acquisitions and divestitures in fiscal 2021 of $1,181, revenue grew 7.5%. This
increase was primarily driven by higher private and public cloud revenue resulting from organic growth in data processing and
hosting fee revenue reflecting a continuing shift of customers to our term license model. Growth in implementation and software
usage revenues also contributed to the increase, partially offset by a decrease in license fee revenue compared to the prior
fiscal year.
Processing Revenue
Processing
Percentage of total revenue
Year Ended June 30,
% Change
2022
2021
$
786,519
$
710,019
11 %
40 %
40 %
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.
Processing revenue increased 11% for the fiscal year ended June 30, 2022, compared to the fiscal year ended June 30, 2021,
with strong organic growth in the card processing, transaction and digital, and remittance revenue components primarily due to
expanding volumes.
36 / FINANCIALS
jackhenry.com
OPERATING EXPENSES
Cost of Revenue
Cost of revenue
Percentage of total revenue
Year Ended June 30,
% Change
2022
2021
$ 1,128,614
$ 1,063,399
6 %
58 %
60 %
Cost of revenue for fiscal 2022 increased 6% compared to fiscal 2021, driven by higher direct costs associated with our card
processing platform in line with related revenue increases, higher personnel costs, and higher operating licenses and fees. Cost
of revenue decreased 2% as a percentage of total revenue for fiscal 2022 compared to fiscal 2021.
Research and Development
Research and development
Percentage of total revenue
Year Ended June 30,
% Change
2022
2021
$ 121,355
$ 109,047
11 %
6 %
6 %
We devote significant effort and expense to develop new software, service products and continually upgrade and enhance our
existing offerings. We believe our research and development efforts are highly efficient because of the extensive experience of
our research and development staff and because our product development is highly customer driven.
Research and development expenses for fiscal 2022 increased 11% compared to fiscal 2021, primarily due to higher personnel
costs, net of capitalization. Research and development expense remained consistent as a percentage of total revenue for
fiscal 2022 and fiscal 2021. The consistency of this expense category for the fiscal years presented reflected our continuing
commitment to the development of strategic products.
Selling, General, and Administrative
Year Ended June 30,
% Change
2022
2021
Selling, general, and administrative
$ 218,296
$ 187,060
17 %
Percentage of total revenue
11 %
11 %
Selling, general, and administrative costs included all expenses related to sales efforts, commissions, finance, legal, and human
resources, plus all administrative costs.
Selling, general, and administrative expenses for fiscal 2022 increased 17% compared to fiscal 2021. Reducing total selling,
general, and administrative expense for the effects of deconversion fees from each year, which totaled $2,485 in fiscal 2022 and
$489 in fiscal 2021, and removing the effects of acquisitions, divestitures, and gain/loss of $29 for the current fiscal year and
of $(2,012) for the prior fiscal year, selling, general, and administrative expense increased 14% compared to fiscal 2021. This
increase was primarily due to higher personnel costs, increased travel expenses, and a smaller gain on sale of assets in the
current fiscal year. Selling, general, and administrative expense remained consistent as a percentage of total revenue for fiscal
2022 compared to fiscal 2021.
FINANCIALS / 37
2022 ANNUAL REPORT
INTEREST INCOME AND EXPENSE
Interest income
Interest expense
Year Ended June 30,
% Change
2022
2021
$
$
32
(2,384)
$
$
150
(1,144)
(79) %
108 %
Interest income fluctuated due to changes in invested balances and yields on invested balances. Interest expense increased in
fiscal 2022 mainly due to the timing and amounts of borrowed balances.
PROVISION/ (BENEFIT) FOR INCOME TAXES
Year Ended June 30,
% Change
2022
2021
Provision/ (Benefit) for income taxes
$ 109,351
$
86,256
27 %
Effective rate
23.2 %
21.7 %
The increase in the Company’s effective tax rate in fiscal 2022 compared to fiscal 2021 was primarily the result of an increase
in the state tax rate applied to net deferred tax liabilities and less rate benefit received from research and development credits.
NET INCOME
Net income
Diluted earnings per share
Year Ended June 30,
% Change
2022
2021
$
$
362,916
4.94
$
$
311,469
4.12
17 %
20 %
Net income grew 17% to $362,916, or $4.94 per diluted share, in fiscal 2022 from $311,469, or $4.12 per diluted share, in fiscal
2021. The diluted earnings per share increase year over year was 20%. Growth in net income and earnings per share was
primarily due to the organic growth in our lines of revenue in fiscal 2022 compared to fiscal 2021, partially offset by the increase
in provision for income taxes.
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.
Immaterial adjustments were made in fiscal 2022 to reclassify cost of revenue in fiscal 2021 from the Core segment to the
Corporate and Other segment to be consistent with the current fiscal year allocation of cost of revenue by segment. The amounts
reclassified for the fiscal year ended June 30, 2021 were $135.
38 / FINANCIALS
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Core
Revenue
Cost of Revenue
2022
% Change
2021
$ 622,442
$ 261,585
10 %
$ 564,096
6 %
$ 247,150
In fiscal 2022, revenue in the Core segment increased 10% compared to fiscal 2021. Reducing total Core revenue by the effects
of deconversion fees from both years, which totaled $23,048 in fiscal 2022 and $7,458 in fiscal 2021, and for revenue from
acquisitions and divestitures in fiscal 2021 of $1,180, Core segment revenue increased 8%. This increase was primarily driven
by organic increases in our private and public cloud revenue. Cost of revenue in the Core segment increased 6% for fiscal 2022
compared to fiscal 2021 primarily due to increased costs associated with the organic growth in cloud revenue. Core segment
cost of revenue decreased 2% as a percentage of revenue for fiscal 2022 compared to fiscal 2021.
Payments
Revenue
Cost of Revenue
2022
% Change
2021
$ 707,019
$ 380,954
10 %
$ 642,308
8 %
$ 353,581
In fiscal 2022, revenue in the Payments segment increased 10% compared to fiscal 2021. Reducing total Payments revenue
by the effects of deconversion fees from both years, which totaled $14,319 in fiscal 2022 and $6,285 in fiscal 2021, Payments
segment revenue increased 9%. This increase was primarily driven by organic growth within card processing and remittance
fee revenues. Cost of revenue in the Payments segment increased 8% for fiscal 2022 compared to fiscal 2021 primarily due to
increased costs associated with our card processing platform and other costs related to the organic growth in card processing
and remittance fees. Payments segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2022 compared
to fiscal 2021.
Complementary
Revenue
Cost of Revenue
2022
% Change
2021
$ 561,211
$ 232,088
11 %
9 %
$ 505,928
$ 212,627
Revenue in the Complementary segment increased 11% for fiscal 2022 compared to fiscal 2021. Reducing total Complementary
revenue by the effects of deconversion fees from both years, which totaled $15,589 in fiscal 2022 and $6,778 in fiscal 2021,
and for revenue from acquisitions and divestitures of $274 from fiscal 2022, Complementary segment revenue increased 9%.
This increase was driven by organic increases in our transaction and digital, private and public cloud, and on-premise support
revenues. Cost of revenue in the Complementary segment increased 9% for fiscal 2022 compared to fiscal 2021, primarily due
to higher direct costs, increased personnel costs, amortization expense mainly related to capitalized software, and operating
licenses and fees. Complementary segment cost of revenue decreased 1% as a percentage of revenue for fiscal 2022 compared
to fiscal 2021.
Corporate and Other
Revenue
Cost of Revenue
2022
% Change
2021
$
52,212
$ 253,987
14 %
2 %
$
45,893
$ 250,041
Revenue in the Corporate and Other segment increased 14% for fiscal 2022 compared to fiscal 2021. The increase was mainly
due to increased on-premise support and implementation revenues.
Cost of revenue for the Corporate and Other segment includes operating costs not directly attributable to any of the other three
segments and increased 2% for fiscal 2022 compared to fiscal 2021. The increased Corporate and Other segment cost of
revenue was primarily related to increased operating licenses and fees.
FINANCIALS / 39
2022 ANNUAL REPORT
LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash and cash equivalents decreased to $48,787 at June 30, 2022 from $50,992 at June 30, 2021. The following
table summarizes net cash from operating activities in the statement of cash flows:
Net income
Non-cash expenses
Change in receivables
Change in deferred revenue
Change in other assets and liabilities
Net cash provided by operating activities
Year Ended
June 30,
2022
2021
$
362,916
$
311,469
234,676
(41,508)
6,572
(58,025)
211,266
(6,112)
6,541
(61,035)
$
504,631
$
462,129
Cash provided by operating activities for fiscal 2022 increased 9% compared to fiscal 2021. Cash from operations is primarily
used to repay debt, pay dividends and repurchase stock, and for capital expenditures.
Cash used in investing activities for fiscal 2022 totaled $196,344 and included: $148,239 for the ongoing enhancements and
development of existing and new product and service offerings; capital expenditures on facilities and equipment of $34,659,
mainly for the purchase of computer equipment; $8,491 for the purchase and development of internal use software; and $5,000
for purchase of investments. These expenditures were partially offset by $45 of proceeds from asset sales.
Cash used in investing activities for fiscal 2021 totaled $162,250 and included: $128,343 for the ongoing enhancements and
development of existing and new product and service offerings; capital expenditures on facilities and equipment of $22,988, mainly
for the purchase of computer equipment; $13,300 for the purchase of investments; $6,506 for the purchase and development of
internal use software; and $2,300, net of cash acquired, for asset acquisitions last year; These expenditures were partially offset
by $6,187 of proceeds from the sale of assets and $5,000 of proceeds from investments.
Financing activities used cash of $310,492 for fiscal 2022 and included $193,916 for the purchase of treasury shares and
$139,070 for dividends paid to stockholders. These expenditures were partially offset by borrowings and repayments on our
revolving credit facility and financing leases which netted to a borrowing of $14,873 and $7,621 of net cash inflow related to
stock-based compensation.
Financing activities used cash in fiscal 2021 of $462,232 and included $431,529 for the purchase of treasury shares and
$133,800 for dividends paid to stockholders. These expenditures were partially offset by borrowings and repayments on our
revolving credit facility and financing leases which netted to $99,886 at June 30, 2021 and $3,211 of net cash inflow related to
stock-based compensation.
Capital Requirements and Resources
The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital
expenditures totaling $34,659 and $22,988 for fiscal years ended June 30, 2022 and June 30, 2021, respectively, were made
primarily for additional equipment and the improvement of existing facilities. These additions were funded from cash generated
by operations. At June 30, 2022, the Company had no significant outstanding purchase commitments related to property and
equipment. We assessed our liquidity needs throughout fiscal 2022, including in relation to the impact of the COVID-19 pandemic,
and determined we had adequate capital resources and sufficient access to external financing sources to satisfy our current and
reasonably anticipated funding needs. We will continue to monitor and assess these needs going forward.
At June 30, 2022, the Company had contractual obligations of $1,449,442, including operating lease obligations and $1,393,541
related to off-balance sheet purchase obligations. Included in off-balance sheet purchase obligations were open purchase orders
of $167,692 and a strategic services agreement entered into by JKHY in fiscal 2017 with First Data® and PSCU® to provide full-
service debit and credit card processing on a single platform to all existing core bank and credit union customers, as well as to
expand our card processing platform to financial institutions outside our core customer base. This agreement and subsequent
amendments include a total purchase commitment at June 30, 2022 of $980,348 over the remaining term of the contract,
40 / FINANCIALS
jackhenry.com
which currently extends until January 2036, subject to certain renewal terms. Contractual obligations also include an agreement
entered into during fiscal 2022 with Google LLC to provide Google Cloud Platform to the Company, including a total purchase
commitment at June 30, 2022 of $225,000. Contractual obligations also include an agreement entered into during fiscal 2022
with Feedzai Inc. to provide a software as a service offering that allows prevention, detection, and monitoring of financial crime,
including a total purchase commitment at June 30, 2022 of $20,501. Contractual obligations exclude, however, $10,225 of
liabilities for uncertain tax positions as we are unable to reasonably estimate the ultimate amount or timing of settlement.
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 short-term borrowings on its existing credit facilities.
The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At
June 30, 2022, there were 31,043 shares in treasury stock and the Company had the remaining authority to repurchase up to
3,948 additional shares. The total cost of treasury shares at June 30, 2022 was $1,807,118. During fiscal 2022, the Company
repurchased 1,250 treasury shares for $193,916. At June 30, 2021, there were 29,793 shares in treasury stock and the Company
had authority to repurchase up to 5,198 additional shares.
We have entered into a definitive agreement to acquire Payrailz, LLC. We anticipate the transaction closing on August 31, 2022.
In connection with the closing, we expect to amend the revolving credit facility to increase the borrowing limit to allow funding of
the transaction.
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 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 June 30, 2022, the Company was in compliance with all such covenants. The revolving credit
facility terminates February 10, 2025. There was a $115,000 outstanding balance under the credit facility at June 30, 2022 and
$100,000 outstanding balance under this credit facility at June 30, 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 May 2019 and modified in March 2021 to extend the expiration to April 30, 2023. There
was no balance outstanding at June 30, 2022 or June 30, 2021.
RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Guidance
In December 2019, the FASB issued Accounting Standards Update (“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 was effective for the Company on July 1, 2021. The Company adopted ASU 2019-12 effective July 1, 2021 with no
material impact on its condensed consolidated financial statements.
Not Adopted at Fiscal Year End
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets
and Contract Liabilities from Contracts with Customers, which improves the accounting for acquired revenue contracts with
customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired
contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The ASU is effective for
fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company plans to adopt the
ASU effective July 1, 2023, and will apply it prospectively to business combinations occurring on or after that date.
FINANCIALS / 41
2022 ANNUAL REPORT CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements in accordance with U.S. GAAP. The significant accounting policies are
discussed in Note 1 to the consolidated financial statements. The preparation of consolidated financial statements in accordance
with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue
and expenses, as well as disclosure of contingent assets and liabilities. We base our estimates and judgments upon historical
experience and other factors believed to be reasonable under the circumstances. Changes in estimates or assumptions could
result in a material adjustment to the consolidated financial statements.
We have identified several critical accounting estimates. An accounting estimate is considered critical if both: (a) the nature of
the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (b) the impact of changes
in the estimates and assumptions would have a material effect on the consolidated financial statements.
Revenue Recognition
We generate revenue from data processing, transaction processing, software licensing and related services, professional
services, and hardware sales.
Significant Judgments in Application of the Guidance
Identification of Performance Obligations
We enter into contracts with customers that may include multiple types of goods and services. At contract inception, we assess
the solutions and services promised in our contracts with customers and identify a performance obligation for each promise to
transfer to the customer a solution or service (or bundle of solutions or services) that is distinct - that is, if the solution or service
is separately identifiable from other items in the arrangement and if the customer can benefit from the solution or service on its
own or together with other resources that are readily available. Significant judgment is used in the identification and accounting
for all performance obligations. We recognize revenue when or as we satisfy each performance obligation by transferring control
of a solution or service to the customer.
Determination of Transaction Price
The amount of revenue recognized is based on the consideration we expect to receive in exchange for transferring goods and
services to the customer. Our contracts with our customers frequently contain some component of variable consideration. We
estimate variable consideration in our contracts primarily using the expected value method, based on both historical and current
information. Where appropriate, we may constrain the estimated variable consideration included in the transaction price in the
event of a high degree of uncertainty as to the final consideration amount. Significant judgment is used in the estimate of variable
consideration of customer contracts that are long-term and include uncertain transactional volumes.
Technology or service components from third parties are frequently included in or combined with our applications or service
offerings. Whether we recognize revenue based on the gross amount billed to the customer or the net amount retained involves
judgment in determining whether we control the good or service before it is transferred to the customer. This assessment is made
at the performance obligation level.
Allocation of Transaction Price
The transaction price, once determined, is allocated between the various performance obligations in the contract based upon
their relative standalone selling prices. The standalone selling prices are determined based on the prices at which we separately
sell each good or service. For items that are not sold separately, we estimate the standalone selling prices using all information
that is reasonably available, including reference to historical pricing data.
Contract Costs
We incur 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.
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jackhenry.com Depreciation and Amortization Expense
The calculation of depreciation and amortization expense is based on the estimated economic lives of the underlying property,
plant and equipment and intangible assets, which have been examined for their useful life and determined that no impairment
exists. We believe it is unlikely that any significant changes to the useful lives of our tangible and intangible assets will occur in
the near term, but rapid changes in technology or changes in market conditions could result in revisions to such estimates that
could materially affect the carrying value of these assets and our future consolidated operating results. For long-lived assets,
we consider whether any impairment indicators are present. If impairment indicators are identified, we test the recoverability of
the long-lived assets. If this recoverability test is failed, we determine the fair value of the long-lived assets and recognize an
impairment loss if the fair value is less than its carrying value.
Capitalization of software development costs
We capitalize certain costs incurred to develop commercial software products. For software that is to be sold, significant areas
of judgment include: establishing when technological feasibility has been met and costs should be capitalized, determining the
appropriate period over which to amortize the capitalized costs based on the estimated useful lives, estimating the marketability
of the commercial software products and related future revenues, and assessing the unamortized cost balances for impairment.
Costs incurred prior to establishing technological feasibility are expensed as incurred. Amortization begins on the date of general
release and the appropriate amortization period is based on estimates of future revenues from sales of the products. We consider
various factors to project marketability and future revenues, including an assessment of alternative solutions or products, current
and historical demand for the product, and anticipated changes in technology that may make the product obsolete.
For internal use software, capitalization begins at the beginning of application development. Costs incurred prior to this are
expensed as incurred. Significant estimates and assumptions include determining the appropriate amortization period based
on the estimated useful life and assessing the unamortized cost balances for impairment. Amortization begins on the date the
software is placed in service and the amortization period is based on estimated useful life.
A significant change in an estimate related to one or more software products could result in a material change to our results of
operations.
Estimates used to determine current and deferred income taxes
We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates
and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition
of revenue and expense for tax and financial statement purposes. We also must determine the likelihood of recoverability of
deferred tax assets and adjust any valuation allowances accordingly. Considerations include the period of expiration of the tax
asset, planned use of the tax asset, and historical and projected taxable income as well as tax liabilities for the tax jurisdiction to
which the tax asset relates. Valuation allowances are evaluated periodically and will be subject to change in each future reporting
period as a result of changes in one or more of these factors. Also, liabilities for uncertain tax positions require significant
judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position.
Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of the effective tax rate
and consequently, affect our financial results.
Assumptions related to purchase accounting and goodwill
We account for our acquisitions using the purchase method of accounting. This method requires estimates to determine the fair
values of assets and liabilities acquired, including judgments to determine any acquired intangible assets such as customer-
related intangibles, as well as assessments of the fair value of existing assets such as property and equipment. Liabilities
acquired can include balances for litigation and other contingency reserves established prior to or at the time of acquisition and
require judgment in ascertaining a reasonable value. Third-party valuation firms may be used to assist in the appraisal of certain
assets and liabilities, but even those determinations would be based on significant estimates provided by us, such as forecast
revenues or profits on contract-related intangibles. Numerous factors are typically considered in the purchase accounting
assessments, which are conducted by Company professionals from legal, finance, human resources, information systems,
program management and other disciplines. Changes in assumptions and estimates of the acquired assets and liabilities would
result in changes to the fair values, resulting in an offsetting change to the goodwill balance associated with the business
acquired.
FINANCIALS / 43
2022 ANNUAL REPORT As goodwill is not amortized, goodwill balances are regularly assessed for potential impairment. Such assessments include a
qualitative assessment of factors that may indicate a potential for impairment, such as: macroeconomic conditions, industry and
market changes, our overall financial performance, changes in share price, and an assessment of other events or changes in
circumstances that could negatively impact us. If that qualitative assessment indicates a potential for impairment, a quantitative
assessment is then required, including an analysis of future cash flow projections as well as a determination of an appropriate
discount rate to calculate present values. Cash flow projections are based on management-approved estimates, which involve
the input of numerous Company professionals from finance, operations and program management. Key factors used in estimating
future cash flows include assessments of labor and other direct costs on existing contracts, estimates of overhead costs and
other indirect costs, and assessments of new business prospects and projected win rates. Our most recent assessment indicates
that no reporting units are currently at risk of impairment as the fair value of each reporting unit is significantly in excess of the
carrying value. However, significant changes in the estimates and assumptions used in purchase accounting and goodwill
impairment testing could have a material effect on the consolidated financial statements.
44 / FINANCIALS
jackhenry.com QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 interest 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 $115 million outstanding debt with variable interest rates as of June 30, 2022, and a 1% increase in our borrowing rate
would increase our annual interest expense by $1.15 million.
FINANCIALS / 45
2022 ANNUAL REPORT FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Report of Independent Registered Public Accounting Firm
Management’s Annual Report on Internal Control Over Financial Reporting
Financial Statements
Consolidated Statements of Income,
Years Ended June 30, 2022, 2021, and 2020
Consolidated Balance Sheets,
June 30, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity,
Years Ended June 30, 2022, 2021, and 2020
Consolidated Statements of Cash Flows,
Years Ended June 30, 2022, 2021, and 2020
Notes to Consolidated Financial Statements
47
49
50
51
52
53
54
Financial Statement Schedules
There are no schedules included because they are not applicable, or the required information is shown in the consolidated
financial statements or notes thereto.
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jackhenry.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Jack Henry & Associates, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Jack Henry & Associates and its subsidiaries (the “Company”)
as of June 30, 2022 and 2021, and the related consolidated statements of income, changes in stockholders’ equity and cash
flows for each of the three years in the period ended June 30, 2022, including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of June 30,
2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in
the period ended June 30, 2022 in conformity with accounting principles generally accepted in the United States of America. Also
in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30,
2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
FINANCIALS / 47
2022 ANNUAL REPORT Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - estimating variable consideration and identification of and accounting for performance obligations
As discussed in Notes 1 and 2 to the consolidated financial statements, the Company recorded revenue of $1.943 billion for the
year ended June 30, 2022. The Company enters into contracts with its customers, which frequently contain multiple performance
obligations and variable contract consideration. The amount of revenue recognized is based on the consideration the Company
expects to receive in exchange for transferring goods and services to the customer. The Company’s contracts with its customers
frequently contain some component of variable consideration. Management estimates variable consideration in its contracts
primarily using the expected value method, based on both historical and current information. Where appropriate, the Company
may constrain the estimated variable consideration included in the transaction price in the event of a high degree of uncertainty
as to the final consideration amount. At contract inception, management assesses the solutions and services promised in its
contracts with customers and identifies a performance obligation for each promise to transfer to the customer a solution or
service (or bundle of solutions or services) that is distinct - that is, if the solution or service is separately identifiable from other
items in the arrangement and if the customer can benefit from the solution or service on its own or together with other resources
that are readily available. The Company recognizes revenue when or as it satisfies each performance obligation by transferring
control of a solution or service to the customer. Significant judgment in revenue recognition for these customer contracts include,
where relevant, (i) the estimation of variable consideration, principally, the varying volume of transactional activity over long-term
contracts, and (ii) the identification of and accounting for all performance obligations.
The principal considerations for our determination that performing procedures relating to the estimation of variable consideration
and the identification of and accounting for performance obligations is a critical audit matter are significant judgment by
management to estimate the variable consideration, principally, the varying volume of transactional activity and the identification
of and accounting for all performance obligations in a contract. This in turn resulted in significant audit effort, a high degree of
auditor judgment and subjectivity in performing our audit procedures and in evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
the revenue recognition process, including the estimation of variable consideration and identification of and accounting for
each performance obligation. The procedures also included, among others, evaluating and testing management’s process for
determining the variable consideration and testing the reasonableness of management’s estimation of variable consideration.
Testing the estimation of variable consideration included evaluating the terms and conditions of the long-term contracts and the
related significant assumptions used in the estimate of the variable consideration, principally, the use of historical transaction
volumes to estimate the varying volume of transactional activity. The procedures for testing the performance obligations and
variable consideration included evaluation of the terms and conditions for a sample of contracts.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 25, 2022
We have served as the Company’s auditor since 2015.
48 / FINANCIALS
jackhenry.com MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Jack Henry & Associates, Inc. is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(e). The Company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of the Company’s consolidated financial statements for external reporting purposes in accordance with U.S. GAAP.
The Company’s internal control over financial reporting includes policies and procedures pertaining to the maintenance of records
that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable
assurance transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance
with U.S. GAAP, and receipts and expenditures of the Company are being made only in accordance with authorizations of
management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s
consolidated financial statements. All internal controls, no matter how well designed, have inherent limitations. Therefore, even
where internal control over financial reporting is determined to be effective, it can provide only reasonable assurance. Projections
of any evaluation of effectiveness to future periods are subject to the risk controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may deteriorate.
As of June 30, 2022, management conducted an assessment of the effectiveness of the Company’s internal control over financial
reporting based on the framework established in Internal Control-Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has concluded the
Company’s internal control over financial reporting as of June 30, 2022, was effective.
The Company’s internal control over financial reporting as of June 30, 2022, has been audited by the Company’s independent
registered public accounting firm, as stated in their report appearing in this Item 8.
FINANCIALS / 49
2022 ANNUAL REPORT JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
REVENUE
EXPENSES
Cost of Revenue
Research and Development
Selling, General, and Administrative
Total Expenses
Year Ended
June 30,
2021
2020
2022
$
1,942,884
$
1,758,225
$
1,697,067
1,128,614
121,355
218,296
1,468,265
1,063,399
109,047
187,060
1,359,506
1,008,464
109,988
197,988
1,316,440
OPERATING INCOME
474,619
398,719
380,627
INTEREST INCOME (EXPENSE)
Interest Income
Interest Expense
Total Interest Income (Expense)
32
(2,384)
(2,352)
150
(1,144)
(994)
1,137
(688)
449
INCOME BEFORE INCOME TAXES
472,267
397,725
381,076
PROVISION FOR INCOME TAXES
NET INCOME
Basic earnings per share
Basic weighted average shares outstanding
Diluted earnings per share
Diluted weighted average shares outstanding
See notes to consolidated financial statements.
109,351
362,916
4.95
73,324
4.94
73,486
$
$
$
86,256
84,408
$
$
$
311,469
4.12
75,546
4.12
75,658
$
$
$
296,668
3.86
76,787
3.86
76,934
50 / FINANCIALS
jackhenry.com
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
June 30,
2022
June 30,
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Receivables, net
Income tax receivable
Prepaid expenses and other
Deferred costs
Assets held for sale
Total current assets
PROPERTY AND EQUIPMENT, net
OTHER ASSETS:
Non-current deferred costs
Computer software, net of amortization
Other non-current assets
Customer relationships, net of amortization
Other intangible assets, net of amortization
Goodwill
Total other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses
Notes payable and current maturities of long-term debt
Deferred revenues
Total current liabilities
LONG-TERM LIABILITIES:
Non-current deferred revenues
Deferred income tax liability
Debt, net of current maturities
Other long-term liabilities
Total long-term liabilities
Total liabilities
STOCKHOLDERS’ EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued
Common stock - $0.01 par value; 250,000,000 shares authorized;
103,921,724 shares issued at June 30, 2022;
103,795,169 shares issued at June 30, 2021
Additional paid-in capital
Retained earnings
Less treasury stock at cost
31,042,903 shares at June 30, 2022;
29,792,903 shares at June 30, 2021
Total stockholders’ equity
Total liabilities and equity
See notes to consolidated financial statements.
$
$
$
$
$
$
48,787
348,072
13,822
125,537
57,105
20,201
613,524
211,709
143,750
410,957
293,526
69,503
25,137
687,458
1,630,331
2,455,564
21,034
192,042
67
330,687
543,830
71,485
292,630
115,000
50,996
530,111
1,073,941
—
1,039
551,360
2,636,342
50,992
306,564
30,243
109,723
46,215
—
543,737
252,481
127,205
368,094
249,210
81,842
26,129
687,458
1,539,938
2,336,156
18,485
182,517
110
319,748
520,860
75,852
260,758
100,083
59,311
496,004
1,016,864
—
1,038
518,960
2,412,496
(1,807,118)
(1,613,202)
1,381,623
2,455,564
$
1,319,292
2,336,156
$
FINANCIALS / 51
2022 ANNUAL REPORT
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Data)
Year Ended June 30,
2022
2021
2020
PREFERRED SHARES:
—
—
—
COMMON SHARES:
Shares, beginning of year
103,795,169
103,622,563
103,496,026
Shares issued for equity-based payment arrangements
Shares issued for Employee Stock Purchase Plan
46,669
79,886
92,747
79,859
52,336
74,201
Shares, end of year
103,921,724
103,795,169
103,622,563
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of year
Shares issued for equity-based payment arrangements
Shares issued for Employee Stock Purchase Plan
Balance, end of year
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year
Shares issued for equity-based payment arrangements
Tax withholding related to share based compensation
Shares issued for Employee Stock Purchase Plan
Stock-based compensation expense
Balance, end of year
RETAINED EARNINGS:
Balance, beginning of year
Cumulative effect of ASU 2016-13 adoption
Net income
Dividends
$
$
1,038
—
1
1,039
$
$
1,036
1
1
1,038
$
$
1,035
—
1
1,036
$
518,960
$
495,005
$
472,029
—
(4,152)
11,772
24,780
(1)
(7,720)
10,930
20,746
—
(3,739)
9,832
16,883
$
551,360
$
518,960
$
495,005
$
2,412,496
$
2,235,320
$
2,066,073
—
362,916
(139,070)
(493)
311,469
(133,800)
—
296,668
(127,421)
Balance, end of year
$
2,636,342
$
2,412,496
$
2,235,320
TREASURY STOCK:
Balance, beginning of year
Purchase of treasury shares
Balance, end of year
$
(1,613,202)
$
(1,181,673)
$
(1,110,124)
(193,916)
(431,529)
(71,549)
$
(1,807,118)
$
(1,613,202)
$
(1,181,673)
TOTAL STOCKHOLDERS’ EQUITY
$
1,381,623
Dividends declared per share
$
1.90
See notes to consolidated financial statements.
$
$
1,319,292
1.78
$
$
1,549,688
1.66
52 / FINANCIALS
jackhenry.com
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
Adjustments to reconcile net income from operations
to net cash from operating activities:
Depreciation
Amortization
Change in deferred income taxes
Expense for stock-based compensation
(Gain)/loss on disposal of assets and businesses
Changes in operating assets and liabilities:
Change in receivables
Change in prepaid expenses, deferred costs and other
Change in accounts payable
Change in accrued expenses
Change in income taxes
Change in deferred revenues
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired
Capital expenditures
Proceeds from the sale of assets
Purchased software
Computer software developed
Proceeds from investments
Purchase of investments
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities
Repayments on credit facilities and financing leases
Purchase of treasury stock
Dividends paid
Proceeds from issuance of common stock upon exercise of stock
options
Tax withholding payments related to share based compensation
Proceeds from sale of common stock
Net cash from financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
$
$
See notes to consolidated financial statements.
Year Ended
June 30,
2022
2021
2020
$ 362,916
$
311,469
$ 296,668
50,789
126,835
31,872
24,780
400
(41,508)
(82,565)
6,646
1,190
16,704
6,572
504,631
—
(34,659)
45
(8,491)
(148,239)
—
(5,000)
(196,344)
332,000
(317,127)
(193,916)
(139,070)
—
(4,152)
11,773
(310,492)
(2,205)
50,992
48,787
52,515
123,233
16,760
20,746
(1,988)
(6,112)
(57,059)
(94)
7,045
(10,927)
6,541
462,129
(2,300)
(22,988)
6,187
(6,506)
(128,343)
5,000
(13,300)
(162,250)
200,000
(100,114)
(431,529)
(133,800)
1
(7,721)
10,931
52,206
119,599
24,581
16,883
4,735
10,540
(25,759)
(47)
19,720
(3,723)
(4,871)
510,532
(30,376)
(53,538)
11,130
(6,710)
(117,262)
—
(1,150)
(197,906)
55,000
(55,033)
(71,549)
(127,421)
—
(3,739)
9,833
(462,232)
(192,909)
$
(162,353)
$ 213,345
$
50,992
$
$
119,717
93,628
$ 213,345
FINANCIALS / 53
2022 ANNUAL REPORT
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Per Share Amounts)
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 other related services. JKHY also provides continuing support and
services to customers using on-premise or JKHY cloud-based systems.
CONSOLIDATION
The consolidated financial statements include the accounts of JKHY and all of its subsidiaries, which are wholly owned, and all
intercompany accounts and transactions have been eliminated.
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.
Risks and Uncertainties
The novel coronavirus (“COVID-19”) pandemic adversely impacted global economic activity and contributed to significant
volatility in financial markets during calendar 2020 through calendar 2022 year to date. The Company has not, to this point
in time, experienced material impacts from the COVID-19 pandemic, but did assess certain accounting matters that generally
require consideration of forecasted financial information in context with the information reasonably available to the Company as
of and for its fiscal year ended June 30, 2022 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 consolidated financial statements for fiscal 2022 and no
material impacts expected for foreseeable future, the Company will continue to monitor assessments of COVID-19, as well as
other factors that could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
REVENUE RECOGNITION
The Company generates “Services and Support” revenue through software licensing and related services, private cloud core and
complementary software solutions, professional services, and hardware sales. The Company generates “Processing” revenue
through processing of remittance transactions, card transactions and monthly fees, and digital transactions.
Significant Judgments in Application of the Guidance
Identification of Performance Obligations
The Company enters into contracts with customers that may include multiple types of goods and services. At contract inception,
the Company assesses the solutions and services promised in its contracts with customers and identifies a performance
obligation for each promise to transfer to the customer a solution or service (or bundle of solutions or services) that is distinct
- that is, if the solution or service is separately identifiable from other items in the arrangement and if the customer can benefit
from the solution or service on its own or together with other resources that are readily available. Significant judgment is used in
the identification and accounting for all performance obligations.
54 / FINANCIALS
jackhenry.com Determination of Transaction Price
The amount of revenue recognized is based on the consideration the Company expects to receive in exchange for transferring
goods and services to the customer. The Company’s contracts with its customers frequently contain some component of variable
consideration. The Company estimates variable consideration in its contracts primarily using the expected value method, based
on both historical and current information. Where appropriate, the Company may constrain the estimated variable consideration
included in the transaction price in the event of a high degree of uncertainty as to the final consideration amount. Significant
judgment is used in the estimate of variable consideration of customer contracts that are long-term and include uncertain
transactional volumes.
Technology or service components from third parties are frequently included in or combined with the Company’s applications
or service offerings. Whether the Company recognizes revenue based on the gross amount billed to the customer or the net
amount retained involves judgment in determining whether the Company controls the good or service before it is transferred to
the customer. This assessment is made at the performance obligation level.
Allocation of Transaction Price
The transaction price, once determined, is allocated between the various performance obligations in the contract based upon
their relative standalone selling prices. The standalone selling prices are determined based on the prices at which the Company
separately sells each good or service. For items that are not sold separately, the Company estimates the standalone selling
prices using all information that is reasonably available, including reference to historical pricing data.
COMPUTER SOFTWARE DEVELOPMENT
The Company capitalizes new product development costs incurred for software to be sold from the point at which technological
feasibility has been established through the point at which the product is ready for general availability. Software development
costs that are capitalized are evaluated on a product-by-product basis annually for impairment and are assigned an estimated
economic life based on the type of product, market characteristics, and maturity of the market for that particular product. These
costs are amortized based on current and estimated future revenue from the product or on a straight-line basis, whichever yields
greater amortization expense. All of this amortization expense is included within components of operating income, primarily cost
of revenue.
The Company capitalizes development costs for internal use software beginning at the start of application development.
Amortization begins on the date the software is placed in service and the amortization period is based on estimated useful life.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three months or less at the time of acquisition to be cash
equivalents.
ACCOUNTS RECEIVABLE
Receivables are recorded at the time of billing. On July 1, 2020, the Company adopted FASB Accounting Standards Codification
(“ASC”) Topic 326, Financial Instruments - Credit Losses, (“CECL”) (see “Recent Accounting Pronouncements” below). 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.
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.
FINANCIALS / 55
2022 ANNUAL REPORT The following table summarizes allowance for credit losses activity for the years ended June 30, 2022, and 2021:
Allowance for credit losses - beginning balance
$
Cumulative effect of accounting standards update adoption
Current provision for expected credit losses
Write-offs charged against allowance
Recoveries of amounts previously written off
Other
Year Ended June 30,
2022
2021
$
7,266
—
1,740
(1,389)
(1)
—
Allowance for credit losses - ending balance
$
7,616
$
6,719
493
2,130
(2,070)
(3)
(3)
7,266
PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the
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 with
an indefinite life (goodwill), over an estimated economic benefit period, generally three to twenty years.
The Company reviews its long-lived assets and identifiable intangible assets with finite lives for impairment whenever events
or changes in circumstances have indicated that it is more likely than not that the carrying amount of its assets might not be
recoverable. The Company evaluates goodwill for impairment of value on an annual basis as of January 1 and between annual
tests if events or changes in circumstances indicate that it is more likely than not that the asset might be impaired.
PURCHASE OF INVESTMENT
At June 30, 2022 and 2021, the Company had $18,250 and $13,250, respectively, invested in the preferred stock of Automated
Bookkeeping, Inc. (“Autobooks”), which represents a non-controlling share of the voting equity of Autobooks. This investment
was recorded at cost and is included within other non-current assets on the Company’s balance sheet. The fair value of this
investment has not been estimated, as estimation is not practicable due to limited investors which reduces available comparative
information. 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. Equity transactions are monitored quarterly to assess
whether there are indicators of fair value.
COMPREHENSIVE INCOME
Comprehensive income for each of the fiscal years ending June 30, 2022, 2021, and 2020 equals the Company’s net income.
REPORTABLE SEGMENT INFORMATION
In accordance with U.S. GAAP, the Company’s operations are classified as four reportable segments: Core, Payments,
Complementary, and Corporate and Other (see Note 14). Substantially all the Company’s revenues are derived from operations
and assets located within the United States of America.
56 / FINANCIALS
jackhenry.com 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 short-term borrowings on its existing credit facilities.
The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At June
30, 2022, there were 31,043 shares in treasury stock and the Company had the remaining authority to repurchase up to 3,948
additional shares of its common stock. The total cost of treasury shares at June 30, 2022 was $1,807,118. During fiscal 2022,
the Company repurchased 1,250 shares of its common stock for $193,916 to be held in treasury. At June 30, 2021, there were
29,793 shares in treasury stock and the Company had authority to repurchase up to 5,198 additional shares of its common stock.
EARNINGS PER SHARE
Per share information is based on the weighted average number of common shares outstanding during the year. Stock options
and restricted stock have been included in the calculation of income per diluted share to the extent they are dilutive. The
difference between basic and diluted weighted average shares outstanding is the dilutive effect of outstanding stock options and
restricted stock (see Note 11).
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement and tax bases
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 expense are recognized on the full amount of 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.
RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Guidance
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 was effective for the
Company on July 1, 2021. The Company adopted ASU 2019-12 effective July 1, 2021 and the adoption did not have a material
impact on its consolidated financial statements.
Not Adopted at Fiscal Year End
In October of 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets
and Contract Liabilities from Contracts with Customers, which improves the accounting for acquired revenue contracts with
customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired
contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The ASU is effective for
fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company plans to adopt the
ASU effective July 1, 2023, and will apply it prospectively to business combinations occurring on or after that date.
FINANCIALS / 57
2022 ANNUAL REPORT NOTE 2.
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.
The Company recognizes revenue when or as it satisfies each performance obligation by transferring control of a solution or
service to the customer.
The following describes the nature of the Company’s primary types of revenue:
Processing
Processing revenue is generated from transaction-based fees for electronic deposit and payment services, electronic funds
transfers and debit and credit card processing. The Company’s arrangements for these services typically require the Company
to “stand-ready” to provide specific services on a when and if needed basis by processing an unspecified number of transactions
over the contractual term. The fees for these services may be fixed or variable (based upon performing an unspecified quantity
of services), and pricing may include tiered pricing structures. Amounts of revenue allocated to these services are recognized
as those services are performed. Customers are typically billed monthly for transactions processed during the month. The
Company evaluates tiered pricing to determine if a material right exists. If, after that evaluation, it determines a material right
does exist, it assigns value to the material right based upon standalone selling price after estimation of breakage associated with
the material right.
Private and Public Cloud
Private and public cloud revenue is generated from data and item processing services and hosting fees. The Company’s
arrangements for these services typically require the Company to “stand-ready” to provide specific services on a when and if
needed basis. The fees for these services may be fixed or variable (based upon performing an unspecified quantity of services),
and pricing may include tiered pricing structures. Amounts of revenue allocated to these services are recognized as those
services are performed. Data and item processing services are typically billed monthly. The Company evaluates tiered pricing
to determine if a material right exists. If, after that evaluation, it determines a material right does exist, it assigns value to the
material right based upon standalone selling price.
Product Delivery and Services
Product delivery and services revenue is generated primarily from software licensing and related professional services and
hardware delivery. Software licenses, along with any professional services from which they are not considered distinct, are
recognized as they are delivered to the customer. Hardware revenue is recognized upon delivery. Professional services that are
distinct are recognized as the services are performed. Deconversion fees are also included within product delivery and services
and are considered a contract modification. Therefore, the Company recognizes these fees over the remaining modified contract
term.
On-Premise Support
On-premise support revenue is generated from software maintenance for ongoing client support and software usage, which
includes a license and ongoing client support. The Company’s arrangements for these services typically require the Company to
“stand-ready” to provide specific services on a when and if needed basis. The fees for these services may be fixed or variable
(based upon performing an unspecified quantity of services). Software maintenance fees are typically billed to the customer
annually in advance and recognized ratably over the maintenance term. Software usage is typically billed annually in advance,
with the license delivered and recognized at the outset, and the maintenance fee recognized ratably over the maintenance term.
Accordingly, the Company utilizes the practical expedient which allows entities to disregard the effects of a financing component
when the contract period is one year or less.
Taxes collected from customers and remitted to governmental authorities are not included in revenue. The Company includes
reimbursements from customers for expenses incurred in providing services (such as for postage, travel and telecommunications
costs) in revenue, while the related costs are included in cost of revenue.
58 / FINANCIALS
jackhenry.com Disaggregation of Revenue
The tables below present the Company’s revenue disaggregated by type of revenue. Refer to Note 14 – 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.
Private and Public Cloud
Product Delivery and Services
On-Premise Support
Services and Support
Processing
Total Revenue
Contract Balances
Year Ended June 30,
$
2022
561,500
250,843
344,022
1,156,365
2021
2020
$
504,548
208,856
334,802
$
464,066
259,110
328,275
1,048,206
1,051,451
786,519
710,019
645,616
$
1,942,884
$
1,758,225
$
1,697,067
The following table provides information about contract assets and contract liabilities from contracts with customers.
Receivables, net
Contract Assets- Current
Contract Assets- Non-current
Contract Liabilities (Deferred Revenue)- Current
Contract Liabilities (Deferred Revenue)- Non-current
June 30,
2022
June 30,
2021
$
348,072
$
306,564
24,447
68,261
330,687
71,485
22,884
52,920
319,748
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
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 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.
For the fiscal years ended June 30, 2022, 2021, and 2020, the Company recognized revenue of $270,972, $256,952, and
$259,887, 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.
Transaction Price Allocated to Remaining Performance Obligations
As of June 30, 2022, 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 $5,659,080. The Company expects to recognize
approximately 26% over the next 12 months, 20% in 13 - 24 months, and the balance thereafter.
FINANCIALS / 59
2022 ANNUAL REPORT
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 $380,095 and $314,807, at June 30, 2022 and 2021, respectively.
During the fiscal years ended June 30, 2022, 2021, and 2020, amortization of deferred contract costs totaled $133,174, $122,143,
and $117,763, respectively. There were no impairment losses in relation to capitalized costs for the periods presented.
NOTE 3.
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.
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
Level 1
Level 2
Level 3
Total Fair
Value
June 30, 2022
Financial Assets:
Certificates of Deposit
Financial Liabilities:
Revolving credit facility
June 30, 2021
Financial Assets:
Certificates of Deposit
Financial Liabilities:
Revolving credit facility
NOTE 4.
LEASES
$
$
$
$
—
—
—
—
$
$
$
$
1,212
115,000
1,200
100,000
$
$
$
$
—
—
—
—
$
$
$
$
1,212
115,000
1,200
100,000
The Company adopted ASU 2016-02 and its related amendments (collectively known as “ASC 842”) on July 1, 2019 using the
optional transition method in ASU 2018-11. Therefore, the reported results for fiscal years ended June 30, 2022, 2021, and 2020
reflect the application of ASC 842.
The Company determines if an arrangement is a lease, or contains 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
60 / FINANCIALS
jackhenry.com
terminate the lease when it is reasonably certain that the option will be exercised. The lease term is used to determine lease
classification as an operating or finance lease and is used to calculate straight-line expense for operating leases.
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. As a practical expedient, 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. ROU assets also include prepaid lease payments and exclude lease
incentives received. The Company estimates contingent lease incentives when it is probable that the Company is entitled to the
incentive at lease commencement. 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 for both real estate and equipment
leases. The determination of the incremental borrowing rate requires judgment. The Company determines the incremental
borrowing rate 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 elected the short-term lease recognition exemption for all leases
that qualify. Therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, lease
payments are recognized as lease expense on a straight-line basis over the lease term.
The Company leases certain office space, data centers and equipment. The Company’s leases have remaining terms of 1 to 11
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. These variable lease costs are recognized as a variable lease expense when
incurred. Certain leases include options to purchase the leased asset at the end of the lease term, which is assessed as a part of
the Company’s lease classification determination. The depreciable life of the ROU asset and leasehold improvements are limited
by the expected lease term unless the Company is reasonably certain of a transfer of title or purchase option.
At June 30, 2022, and 2021, the Company had operating lease assets of $46,869 and $55,977 and financing lease assets of
$65 and $188, respectively. At June 30, 2022, total operating lease liabilities of $51,452 were comprised of current operating
lease liabilities of $10,681 and noncurrent operating lease liabilities of $40,771, and all of the financing lease liabilities of $67
were current financing lease liabilities. At June 30, 2021, total operating lease liabilities of $60,828 were comprised of current
operating lease liabilities of $11,460 and noncurrent operating lease liabilities of $49,368, and total financing lease liabilities of
$193 were comprised of current financing lease liabilities of $110 and noncurrent financing lease liabilities of $83.
Operating lease assets are included within other non-current assets and operating lease liabilities are included with accrued
expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s consolidated balance sheet.
Operating lease assets were recorded net of accumulated amortization of $31,006 and $23,813 as of June 30, 2022, and
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 consolidated balance
sheet. Financing lease assets were recorded net of accumulated amortization of $255 and $153 as of June 30, 2022, and 2021,
respectively.
Operating lease costs for the fiscal years ended June 30, 2022, 2021, and 2020 were $13,058, $14,676, and $16,029, respectively.
Financing lease costs for the fiscal years ended June 30, 2022, 2021, and 2020 were $105, $121, and $41, respectively. Total
operating and financing lease costs for the fiscal years ended June 30, 2022, 2021, and 2020 included variable lease costs
of approximately $2,333, $3,831, and $4,017, respectively. 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 consolidated statement of income.
For the fiscal years ended June 30, 2022, 2021, and 2020, operating cash flows for payments on operating leases were $13,082,
$13,672, and $14,348, respectively, and ROU assets obtained in exchange for operating lease liabilities were $2,407, $4,691,
and $4,212, respectively. Financing cash flows for payments on financing leases for the fiscal years ended June 30, 2022, 2021,
and 2020 were $109, $117, and $33, respectively.
As of June 30, 2022, 2021, and 2020, the weighted-average remaining lease terms for the Company’s operating leases were
76 months, 81 months, and 88 months, respectively, and the weighted-average discount rates were 2.58%, 2.67%, and 2.76%,
respectively. As of June 30, 2022, 2021, and 2020, the weighted-average remaining lease terms for the Company’s financing
leases were 9 months, 21 months, and 33 months, respectively, and the weighted-average discount rates were 2.29%, 2.39%,
and 2.42%, respectively.
FINANCIALS / 61
2022 ANNUAL REPORT 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 June 30, 2022*:
Due dates
Future Minimum
Rental Payments
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
$
$
$
11,917
10,246
7,490
6,572
5,777
13,899
55,901
(4,449)
51,452
*Financing leases were immaterial to the fiscal year, so a maturity of lease liabilities table has only been included for operating leases.
Future lease payments include $5,464 related to options to extend lease terms that are reasonably certain of being exercised. At
June 30, 2022, there were $797 in legally binding lease payments for a lease signed but not yet commenced. The commencement
date of the lease is July 1, 2022 and has a term of 84 months.
NOTE 5.
PROPERTY AND EQUIPMENT
The classification of property and equipment, together with their estimated useful lives is as follows:
Land
Land improvements
Buildings
Leasehold improvements
Equipment and furniture
Aircraft and equipment
Construction in progress
Finance lease right of use asset (2)
Less accumulated depreciation
Property and equipment, net
(1) Lesser of lease term or estimated useful life
(2) See Note 4 for details
June 30,
2022
2021
Estimated Useful Life
$
$
16,781
23,571
129,313
51,708
400,856
41,492
2,547
320
666,588
454,879
211,709
$
$
22,885
23,783
149,041
55,407
391,507
41,047
3,639
341
687,650
435,169
252,481
5 - 20 years
20 - 30 years
5 - 30 years (1)
3 - 10 years
4 - 10 years
The change in property and equipment in accrued liabilities was a decrease of $4,097 and an increase of $8,699 for the fiscal
years ended June 30, 2022, and 2021, respectively. The changes in property and equipment acquired through capital leases
were decreases of $21 and $14 for the fiscal years ended June 30, 2022, and 2021, respectively, and an increase of $355 for
the fiscal year ended June 30, 2020. These amounts were excluded from capital expenditures on the statements of cash flows.
No impairments of property and equipment were recorded in the fiscal years ended June 30, 2022, 2021, or 2020.
62 / FINANCIALS
jackhenry.com
During the quarter ended March 31, 2022, the Company received an offer to purchase one of its facilities and management has
committed to sell the facility. At June 30, 2022, this facility’s assets were classified as assets held for sale by the Company in the
amount of $20,201, and were not included in property and equipment, net. Total assets held for sale by the Company at June
30, 2021, were $0.
NOTE 6.
OTHER ASSETS
Goodwill
The carrying amount of goodwill for the fiscal years ended June 30, 2022 and 2021, by reportable segments, is as follows:
Core
Beginning balance
Goodwill, acquired during the year
Goodwill, transferred during the year1
Goodwill, adjustments related to dispositions
Ending balance
Payments
Beginning balance
Goodwill, acquired during the year
Goodwill, adjustments related to dispositions
Ending balance
Complementary
Beginning balance
Goodwill, acquired during the year
Goodwill, transferred during the year1
Goodwill, adjustments related to dispositions
Ending balance
June 30,
2022
2021
$
195,578
$
199,956
—
—
—
—
(4,017)
(361)
$
195,578
$
195,578
$
325,326
$
325,326
—
—
—
—
$
325,326
$
325,326
$
166,554
$
161,052
—
—
—
1,485
4,017
—
$
166,554
$
166,554
1Related to the transfer of our Call Center line of business from Core to Complementary, $4,017 of goodwill was transferred in fiscal 2021 between the two based
upon the estimated fair value of that line of business.
Goodwill acquired during fiscal 2022 and 2021 was $0 and $1,485, respectively. Goodwill consists largely of the growth potential,
synergies and economies of scale expected from combining the operations of the Company with those of the entities or assets
acquired, together with their assembled workforces. No goodwill has been assigned to the Company’s Corporate and Other
reportable segment.
FINANCIALS / 63
2022 ANNUAL REPORT
Other Intangible Assets
Information regarding other identifiable intangible assets is as follows:
Customer relationships
Computer software
Other intangible assets:
Customer relationships
Computer software
Other intangible assets:
Gross Carrying
Amount
$
$
$
316,401
1,111,308
108,688
Gross Carrying
Amount
$
$
$
316,401
978,099
102,615
June 30, 2022
Accumulated
Amortization
$
$
$
(246,898)
(700,351)
(83,551)
June 30, 2021
Accumulated
Amortization
$
$
$
(234,559)
(610,005)
(76,486)
Net
69,503
410,957
25,137
Net
81,842
368,094
26,129
$
$
$
$
$
$
Customer relationships have useful lives ranging from 5 to 20 years.
Computer software includes cost of software to be sold, leased, or marketed of $173,402 and costs of internal-use software of
$237,555 at June 30, 2022. At June 30, 2021, costs of software to be sold, leased, or marketed totaled $146,090, and costs of
internal-use software totaled $222,004.
Computer software includes the unamortized cost of commercial software products developed or acquired by the Company,
which are capitalized and amortized over useful lives generally ranging from 5 to 15 years. Amortization expense for computer
software totaled $105,036, $99,305, and $92,460 for the fiscal years ended June 30, 2022, 2021, and 2020, respectively. During
fiscal 2020, computer software projects totaling $8,710, primarily related to Enterprise Risk Mitigation Solution and Payments
Hub, were written off and are included in selling, general, and administrative on the Company’s consolidated statement of
income and as (gain)/loss on disposal of assets and businesses on the Company’s consolidated statement of cash flows. There
were no material impairments in fiscal years ended June 30, 2022 and 2021.
The Company’s other intangible assets have useful lives ranging from 3 to 20 years.
Amortization expense for all intangible assets was $126,835, $123,233, and $119,599 for the fiscal years ended June 30,
2022, 2021, and 2020, respectively. The estimated aggregate future amortization expense for each of the next five years for all
intangible assets remaining as of June 30, 2022, is as follows:
Years Ending June 30,
Computer
Software
Customer
Relationships
Other Intangible
Assets
Total
2023
2024
2025
2026
2027
$
100,314
$
83,312
64,739
42,986
19,521
$
9,745
8,363
7,910
7,544
7,451
8,137
5,519
3,118
1,458
1,379
$
118,196
97,194
75,767
51,988
28,351
64 / FINANCIALS
jackhenry.com
NOTE 7.
DEBT
The Company had $67 outstanding short-term debt and $115,000 outstanding long-term debt at June 30, 2022, related to
financing leases and the revolving credit facility. The Company had $110 outstanding short-term debt and $100,083 outstanding
long-term debt at June 30, 2021.
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 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 June 30, 2022, the Company was in compliance with all such covenants. The revolving credit facility
terminates February 10, 2025. There was $115,000 outstanding balance under this credit facility at June 30, 2022 and $100,000
outstanding balance under this credit facility at June 30, 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 May 2019 and modified in March 2021 to extend the expiration to April 30, 2023. There
was no balance outstanding at June 30, 2022 or 2021.
Interest
The Company paid interest of $1,788, $852, and $475 during the fiscal years ended June 30, 2022, 2021, and 2020, respectively.
NOTE 8.
INCOME TAXES
The provision for income taxes consists of the following:
Current:
Federal
State
Deferred:
Federal
State
Year Ended June 30,
2022
2021
2020
$
$
59,390
18,089
24,391
7,481
$
109,351
$
55,598
13,897
14,401
2,360
86,256
$
$
46,137
13,690
21,130
3,451
84,408
FINANCIALS / 65
2022 ANNUAL REPORT
The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:
Deferred tax assets:
Contract and service revenues
$
Expense reserves and accruals (bad debts, compensation, and payroll tax)
Leasing liabilities
Net operating loss and tax credit carryforwards
Other, net
Total gross deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Accelerated tax depreciation
Accelerated tax amortization
Contract and service costs
Leasing right-of-use assets
Total gross deferred liabilities
June 30,
2022
2021
15,340
15,382
12,868
2,107
3,311
49,008
(200)
48,808
(33,390)
(192,187)
(104,139)
(11,722)
(341,438)
$
13,428
17,566
15,182
3,242
2,634
52,052
(270)
51,782
(37,066)
(175,804)
(85,696)
(13,974)
(312,540)
Net deferred tax liability
$
(292,630)
$
(260,758)
The following analysis reconciles the statutory federal income tax rate to the effective income tax rates reflected above:
Computed “expected” tax expense
Increase (reduction) in taxes resulting from:
State income taxes, net of federwal income tax benefits
Research and development credit
Other (net)
Year Ended June 30,
2022
2021
2020
21.0 %
4.3 %
(2.0)%
(0.1)%
23.2 %
21.0 %
3.2 %
(2.4)%
(0.1)%
21.7 %
21.0 %
3.6 %
(2.4)%
(0.1)%
22.1 %
As of June 30, 2022, the Company has $918 of gross federal net operating loss (“NOL”) pertaining to the acquisition of Goldleaf
Financial Solutions, Inc. which is expected to be utilized after the application of IRC Section 382. Separately, as of June 30,
2022, the Company has state NOL and tax credit carryforwards with a tax-effected value of $215 and $1,700, respectively. The
federal and state loss and credit carryover have varying expiration dates, ranging from fiscal 2023 to 2042. Based on state tax
rules which restrict utilization of these losses and tax credits, the Company believes it is more likely than not that $200 of these
losses and tax credits will expire unutilized. Accordingly, valuation allowances of $200 and $270 have been recorded against the
state net operating losses and tax credit carryforwards as of June 30, 2022 and 2021, respectively.
The Company paid income taxes, net of refunds, of $60,553, $80,220, and $63,692 in fiscal 2022, 2021, and 2020, respectively.
At June 30, 2022, the Company had $8,990 of gross unrecognized tax benefits, $8,066 of which, if recognized, would affect
its effective tax rate. At June 30, 2021, the Company had $8,762 of unrecognized tax benefits, $8,119 of which, if recognized,
would affect its effective tax rate. The Company had accrued interest and penalties of $1,234 and $1,180 related to uncertain tax
positions at June 30, 2022 and 2021, respectively. The income tax provision included interest expense and penalties (or benefits)
on unrecognized tax benefits of $73, $(310), and $38 in the fiscal years ended June 30, 2022, 2021, and 2020, respectively.
66 / FINANCIALS
jackhenry.com
A reconciliation of the unrecognized tax benefits for the fiscal years ended June 30, 2022, 2021, and 2020 follows:
Balance at July 1, 2019
Additions for current year tax positions
Additions for prior year tax positions
Additions related to business combinations
Reductions related to expirations of statute of limitations
Balance at June 30, 2020
Additions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Reductions related to expirations of statute of limitations
Balance at June 30, 2021
Additions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Reductions related to expirations of statute of limitations
Balance at June 30, 2022
Unrecognized Tax
Benefits
$
$
10,495
1,451
867
192
(2,893)
10,112
1,598
490
(30)
(3,408)
8,762
1,863
1,642
(36)
(3,241)
8,990
The U.S. federal income tax returns for fiscal 2019 and all subsequent years remain subject to examination as of June 30, 2022
under statute of limitations rules. The U.S. state income tax returns that remain subject to examination as of June 30,2022 under
the statute of limitation rules varies by state jurisdiction from fiscal 2016 through 2019 and all subsequent years. The Company
anticipates that potential changes due to lapsing statutes of limitations and examination closures could reduce the unrecognized
tax benefits balance by $1,500 - $4,000 within twelve months of June 30, 2022.
NOTE 9.
INDUSTRY AND SUPPLIER CONCENTRATION
The Company sells its products to banks, credit unions, and financial institutions throughout the United States and generally
does not require collateral. All billings to customers are due 30 days from date of billing. Reserves are maintained for potential
credit losses. Customer-related risks are moderated through the inclusion of credit mitigation clauses in the Company’s contracts
and through the monitoring of timely payments.
In addition, some of the Company’s key solutions are dependent on technology manufactured by third parties. Termination of the
Company’s relationship with one or more of these third parties could have a negative impact on the operations of the Company.
NOTE 10.
STOCK-BASED COMPENSATION
The Company’s pre-tax operating income for the fiscal years ended June 30, 2022, 2021, and 2020 includes $24,780, $20,746,
and $16,883, respectively, of equity-based compensation costs, of which $22,703, $18,817, and $15,148, respectively, relates
to the restricted stock plans. Costs are recorded net of estimated forfeitures. The total income tax benefits from equity-based
compensation for the fiscal years ended June 30, 2022, 2021, and 2020 were $4,252, $3,258, and $3,072, respectively. These
income tax benefits included income tax net excess benefits from stock option exercises and restricted stock vestings of $652,
$719, and $340 for the fiscal years ended June 30, 2022, 2021, and 2020, respectively.
Stock Option Awards
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 were determined by the Compensation Committee of the Board of Directors when granted.
FINANCIALS / 67
2022 ANNUAL REPORT
The option period must expire not more than ten years from the options grant date. The options granted under this plan are
exercisable beginning three years after grant 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 10 years after grant.
A summary of option plan activity under the plan is as follows:
Outstanding July 1, 2019
Granted
Forfeited
Exercised
Outstanding July 1, 2020
Granted
Forfeited
Exercised
Outstanding July 1, 2021
Granted
Forfeited
Exercised
Outstanding June 30, 2022
Vested and Expected to Vest June 30, 2022
Exercisable June 30, 2022
Number of
Shares
32
—
—
(10)
22
—
—
—
22
—
—
(10)
12
12
12
Weighted
Average
Exercise Price
$
87.27
Aggregate
Intrinsic
Value
—
—
87.27
87.27
—
—
—
87.27
—
—
87.27
87.27
87.27
87.27
$
$
$
$
$
$
1,084
1,084
1,084
There were no options granted in the fiscal years ended June 30, 2022, 2021, and 2020.
The Company utilized a Black-Scholes option pricing model to estimate fair value of the stock option grants at the grant date. All
remaining options were granted on July 1, 2016. Assumptions such as expected life, volatility, risk-free interest rate, and dividend
yield impact the fair value estimate. These assumptions are subjective and generally require significant analysis and judgment to
develop. The risk-free interest rate used in the Company’s estimate was determined from external data, while volatility, expected
life, and dividend yield assumptions were derived from its historical experience with share-based payment arrangements. The
appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.
At June 30, 2022, there was no compensation cost yet to be recognized related to outstanding options.
The total intrinsic value of options exercised was $1,005, $0, and $809 for the fiscal years ended June 30, 2022, 2021, and 2020,
respectively. There were 10 options exercised for the fiscal year ended June 30, 2022.
Restricted Stock Awards
The Restricted Stock Plan was adopted by the Company on November 1, 2005, for its employees. The plan expired on November
1, 2015. Up to 3,000 shares of common stock were available for issuance under the plan. The 2015 EIP was adopted by the
Company on November 10, 2015, for its employees. Up to 3,000 shares of common stock are available for issuance under the
2015 EIP. Upon issuance, shares of restricted stock were subject to forfeiture and to restrictions which limited the sale or transfer
of the shares during the restriction period. The restrictions were lifted over periods ranging from 3 years to 5 years from grant
date.
68 / FINANCIALS
jackhenry.com
The following table summarizes non-vested share awards activity:
Share awards
Outstanding July 1, 2019
Granted
Vested
Forfeited
Outstanding July 1, 2020
Granted
Vested
Forfeited
Outstanding July 1, 2021
Granted
Vested
Forfeited
Outstanding June 30, 2022
Shares
Weighted
Average Grant
Date Fair Value
$
6
—
(6)
—
—
—
—
—
—
——
——
——
——
87.27
—
87.27
—
—
—
—
—
—
——
——
——
——
No shares of restricted stock were granted during the fiscal years ended June 30, 2022, 2021, and 2020, respectively.
The non-vested share awards granted prior to July 1, 2016, did not participate in dividends during the restriction period. As a
result, the weighted-average fair value of the non-vested share awards was based on the fair market value of the Company’s
equity shares on the grant date, less the present value of the expected future dividends to be declared during the restriction
period, consistent with the methodology for calculating compensation expense on such awards. The non-vested share awards
granted after July 1, 2016, did participate in dividends during the restriction period and the weighted-average fair value of such
participating awards was based on the fair market value on the grant date.
Restricted Stock Unit Awards
An amendment to the Restricted Stock Plan was adopted by the Company on August 20, 2010, whereby restricted stock unit
(“unit/s”) awards were made to employee participants rather than restricted stock. The awarding of units continued with the 2015
Equity Incentive Plan. It is the intention of the Company to settle the unit awards in shares of the Company’s stock. Unit awards
that have service requirements only and are not tied to performance measures generally vest over a period of 1 to 3 years.
The following table summarizes non-vested unit awards with service requirements only and those tied to service requirements
and performance measures as of June 30, 2022, as well as activity for the fiscal year then ended:
Unit awards
Outstanding July 1, 2019
Granted1
Vested
Forfeited2
Outstanding July 1, 2020
Granted1
Vested
Forfeited2
Outstanding July 1, 2021
Granted1
Vested
Forfeited2
Outstanding June 30, 2022
Shares
Weighted
Average Grant
Date Fair Value
Aggregate
Intrinsic
Value
298
139
(69)
(61)
307
113
(124)
(2)
294
135
(71)
(55)
303
$
$
107.00
157.94
98.25
85.33
136.41
170.69
111.08
140.46
160.22
178.60
145.50
189.33
166.50
$
54,548
1Granted includes restricted stock unit awards and performance unit awards at 100% achievement.
2Forfeited includes restricted stock unit awards and performance unit awards forfeited for service requirements not met and performance unit awards not settled due
to underachievement of performance measures.
FINANCIALS / 69
2022 ANNUAL REPORT
The 135 unit awards granted in fiscal 2022 had service requirements and performance measures, with 87 only having service
requirements. 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 48 unit awards granted in fiscal 2022 have performance targets along with service requirements. 19 of these
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. The other 29 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. Per the Company’s award vesting and settlement provisions, the awards that
utilized a Monte Carlo pricing model were valued at grant on the basis of Total Shareholder Return (“TSR”) in comparison to the
custom peer group (“Compensation Peer Group”) comprised of the Standard & Poor’s 1500 Software & Services Index (“S&P
1500 S&S Index”) participant companies and other participants approved by the Compensation Committee of the Company’s
Board of Directors for fiscal year 2022. For fiscal years 2021 and 2020, TSR was in comparison to two separate groups – a
custom peer group, the Compensation Peer Group in the table below, and the Standard & Poor’s 1500 Information Technology
Index (“S&P 1500 IT Index”) participants – as approved by the Compensation Committee for each of those fiscal years. TSR is
defined as the change in the stock price through the performance period plus dividends per share paid during the performance
period, all divided by the stock price at the beginning of the performance period.
The weighted average assumptions used in the Monte Carlo pricing model to estimate fair value at the grant dates for awards
with performance targets and service requirements are as follows:
Monte Carlo award inputs:
Compensation Peer Group:1
Volatility
Risk free interest rate
Annual dividend based on most recent quarterly dividend
$
Dividend yield
Beginning average percentile rank for TSR
S&P 1500 IT Index:
Volatility
Risk free interest rate
Annual dividend based on most recent quarterly dividend
Dividend yield
Beginning average percentile rank for TSR
2022
28.6 %
0.32 %
1.84
1.1 %
65 %
Year Ended June 30,
2021
2020
$
$
25.2 %
0.11 %
1.72
1.0 %
37 %
25.2 %
0.11 %
1.72
1.0 %
30 %
$
$
16.8 %
1.34 %
1.60
1.1 %
63 %
16.8 %
1.34 %
1.60
1.1 %
61 %
1For fiscal 2022, S&P 1500 S&S Index participants were included in the Compensation Peer Group.
At June 30, 2022, there was $19,076 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 remaining contractual term of 1.12
years.
The fair value of restricted units at vest date totaled $12,139, $21,652, and $11,248 for the fiscal years ended June 30, 2022,
2021, and 2020, respectively.
70 / FINANCIALS
jackhenry.com
NOTE 11.
EARNINGS PER SHARE
The following table reflects the reconciliation between basic and diluted earnings per share.
Net Income
Common share information:
Weighted average shares outstanding for basic
earnings per share
Dilutive effect of stock options, restricted stock units,
and restricted stock
Weighted average shares outstanding for diluted
earnings per share
Basic earnings per share
Diluted earnings per share
Year Ended June 30,
2022
2021
2020
$
362,916
$
311,469
$
296,668
73,324
162
73,486
4.95
4.94
$
$
75,546
76,787
112
147
75,658
76,934
$
$
4.12
4.12
$
$
3.86
3.86
Per share information is based on the weighted average number of common shares outstanding for each of the fiscal years.
Stock options, restricted stock units, and restricted stock have been included in the calculation of earnings per share to the
extent they are dilutive. The two-class method for computing EPS has not been applied because no outstanding awards contain
non-forfeitable rights to participate in dividends. There were 7 anti-dilutive weighted average shares excluded from the weighted
average shares outstanding for diluted earnings per share for fiscal 2022, 11 shares were excluded for fiscal 2021, and 2 shares
were excluded for fiscal 2020.
NOTE 12.
EMPLOYEE BENEFIT PLANS
The Company established an employee stock purchase plan in 2006. The plan allows the majority of employees the opportunity
to directly purchase shares of the Company at 85% of the closing price of the Company’s stock on or around the fifteenth day of
each month. During the fiscal years ended June 30, 2022, 2021 and 2020, employees purchased 80, 80, and 74 shares under
this plan at average prices of $147.36, $136.87, and $132.51, respectively. As of June 30, 2022, approximately 1,070 shares
remained available for future issuance under the plan. The plan does not meet the criteria as a non-compensatory plan. As a
result, the Company records the total dollar value of the stock discount given to employees under the plan as expense.
The Company has a defined contribution plan for its employees: the 401(k) Retirement Savings Plan (the “Plan”). The Plan is
subject to the Employee Retirement Income Security Act of 1975 (“ERISA”) as amended. Under the Plan, the Company matches
100% of full-time employee contributions up to 5% of eligible compensation. In order to receive matching contributions, employees
must be 18 years of age and be employed for at least six months. The Company has the option of making a discretionary
contribution; however, none has been made for any of the three most recent fiscal years. The total matching contributions for the
Plan were $28,259, $26,783, and $25,155 for the fiscal years ended June 30, 2022, 2021 and 2020, respectively.
NOTE 13.
BUSINESS ACQUISITIONS
Geezeo
On July 1, 2019, the Company acquired all of the equity interest of 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.
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 consolidated statement of income for the fiscal years ended June 30, 2022, 2021, and 2020 included revenue of
$12,733, $13,233, and $8,969, respectively, and after-tax net income of $4,679, $4,805, and $654, respectively, resulting from
Geezeo’s operations.
FINANCIALS / 71
2022 ANNUAL REPORT
The accompanying consolidated statement of income for the fiscal year ended June 30, 2020 does 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 consolidated financial statements and pro forma financial information has not been provided.
NOTE 14.
REPORTABLE SEGMENT INFORMATION
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, and risk management products and services. The
Complementary segment provides additional software and services that can be integrated with the Company’s core solutions
or used independently. The Corporate and Other segment includes revenue and costs from hardware and other products not
attributable to the other three segments, 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.
Immaterial adjustments were made in fiscal 2022 to reclassify cost of revenue in fiscal 2021 from the Core segment to the
Corporate and Other segment to be consistent with the current fiscal year allocation of cost of revenue by segment. The amounts
reclassified for the fiscal year ended June 30, 2021, were $135.
During the second quarter of fiscal 2021, the Company’s call center was consolidated into the Complementary segment. As
a result of this consolidation, immaterial adjustments were made during fiscal 2021 to reclassify related revenue and costs
recognized during the fiscal year ended June 30, 2020, from the Core to the Complementary segment. The total related revenue
reclassified was $20,797 for fiscal 2020. The total related cost of revenue reclassified was $12,386 for fiscal 2020.
Year Ended
June 30, 2022
Core
Payments
Complementary
Corporate
and Other
Total
REVENUE
Services and Support
$ 583,752
$ 78,402
$
Processing
Total Revenue
38,690
622,442
628,617
707,019
444,485
116,726
561,211
$
49,726
$ 1,156,365
2,486
52,212
786,519
1,942,884
Cost of Revenue
261,585
380,954
232,088
253,987
1,128,614
Research and Development
Selling, General, and Administrative
Total Expenses
SEGMENT INCOME
$ 360,857
$ 326,065
$
329,123
$
(201,775)
OPERATING INCOME
INTEREST INCOME (EXPENSE)
INCOME BEFORE
INCOME TAXES
72 / FINANCIALS
121,355
218,296
1,468,265
474,619
(2,352)
$ 472,267
jackhenry.com
Year Ended
June 30, 2021
Core
Payments
Complementary
Corporate
and Other
Total
REVENUE
Services and Support
$ 529,193
$ 63,445
$
410,930
$ 44,638
$ 1,048,206
Processing
Total Revenue
34,903
564,096
578,863
642,308
94,998
505,928
1,255
45,893
710,019
1,758,225
Cost of Revenue
247,150
353,581
212,627
250,041
1,063,399
Research and Development
Selling, General, and Administrative
Total Expenses
SEGMENT INCOME
$ 316,946
$ 288,727
$
293,301
$ (204,148)
OPERATING INCOME
INTEREST INCOME (EXPENSE)
INCOME BEFORE
INCOME TAXES
109,047
187,060
1,359,506
398,719
(994)
$
397,725
Year Ended
June 30, 2020
Core
Payments
Complementary
Corporate
and Other
Total
REVENUE
Services and Support
$ 529,997
$ 66,920
$
401,639
$ 52,895
$ 1,051,451
Processing
Total Revenue
31,372
561,369
530,773
597,693
82,507
484,146
964
645,616
53,859
1,697,067
Cost of Revenue
240,492
319,739
203,963
244,270
1,008,464
Research and Development
Selling, General, and Administrative
Total Expenses
SEGMENT INCOME
$ 320,877
$ 277,954
$
280,183
$ (190,411)
OPERATING INCOME
INTEREST INCOME (EXPENSE)
INCOME BEFORE INCOME TAXES
109,988
197,988
1,316,440
380,627
449
$ 381,076
FINANCIALS / 73
2022 ANNUAL REPORT The Company has not disclosed any additional asset information by segment, as the information is not produced internally and
its preparation is impracticable.
NOTE 15. SUBSEQUENT EVENTS
Sale of Facility
On August 12, 2022, the Company closed on the sale of its San Diego, CA, facility that was committed to during the quarter
ended March 31, 2022. The sales price of the facility was $27,500, and proceeds after selling costs were received on the date
of closing. The facility sale included assets with a carrying value of approximately $20,201 that were reported as assets held for
sale by the Company at June 30, 2022 (see Note 5). The Company expects to recognize a gain on the sale of approximately
$6,000 during the first quarter of fiscal 2023.
Dividend
On August 22, 2022, the Company’s Board of Directors declared a cash dividend of $0.49 per share on its common stock,
payable on September 29, 2022 to stockholders of record on September 9, 2022.
Acquisition
We have entered into a definitive agreement to acquire Payrailz, LLC. We anticipate the transaction closing on August 31, 2022.
In connection with the closing, we expect to amend the revolving credit facility to increase the borrowing limit to allow funding of
the transaction.
74 / FINANCIALS
jackhenry.com CHANGES
DISCLOSURES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
None.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES.
In this annual report, we present Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Return on
Invested Capital (ROIC), which are non-GAAP financial measures. EBITDA and ROIC represent performance measures and
are not intended to represent liquidity measures. EBITDA and ROIC should be used in addition to, and not a substitute for
comparable financial measures computed in accordance with U.S. GAAP. We believe that EBITDA and ROIC provide useful
information to investors regarding the Company’s performance and overall results of operations. EBITDA and ROIC used by the
Company may not be comparable to similarly titled non-GAAP measures used by other companies.
EBITDA is defined as net income attributable to the Company before the effect of interest expense, taxes, depreciation, and
amortization. A reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure is below:
EBITDA (amounts in thousands)
Net Income
$
362,916
$
311,469
$
296,668
FY2022
FY2021
FY2020
Interest Expense
Depreciation and Amortization
Taxes
Total ITDA
EBITDA
2,384
177,624
109,351
289,359
1,144
175,748
86,256
263,148
688
171,805
84,408
256,901
$
652,275
$
574,617
$
553,569
ROIC is defined as net income divided by average invested capital, which is the average of beginning and ending long-term debt
and stockholders’ equity for a period. A reconciliation to the most directly comparable GAAP financial measure is below:
Return on Average Shareholders’ Equity
(amounts in thousands)
Net Income
FY2022
FY2021
$
362,916
$
311,469
Average Stockholders’ Equity
1,350,457
1,434,490
FY2020
296,668
1,489,350
Return on Average Shareholders’ Equity
26.9%
21.7%
19.9%
ROIC (amounts in thousands)
FY2022
FY2021
Net Income
$
362,916
$
311,469
Average Stockholders’ Equity
1,350,457
1,434,490
Average Current Maturities of Long-term Debt
Average Long-term Debt
Average Invested Capital
89
107,542
1,458,088
113
50,146
FY2020
296,668
1,489,350
58
104
1,484,749
1,489,512
ROIC
24.9%
21.0%
19.9%
FINANCIALS / 75
2022 ANNUAL REPORT BOARD OF DIRECTORS
DAVID B. FOSS
BOARD CHAIR AND CHIEF EXECUTIVE OFFICER
Jack Henry & Associates, Inc. | Monett, Missouri
MATTHEW C. FLANIGAN
VICE CHAIR AND LEAD DIRECTOR
Jack Henry & Associates, Inc. | Monett, Missouri
FORMER EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Leggett & Platt, Inc. | Carthage, Missouri
THOMAS H. WILSON, JR.
MANAGING PARTNER
DecisionPoint Advisors, LLC | Charlotte, North Carolina
JACQUELINE R. FIEGEL
CHAIRMAN/CENTRAL OKLAHOMA REGION
Prosperity Bank | Houston, Texas
THOMAS A. WIMSETT
FOUNDER AND CHAIRMAN
Merchant’s PACT, LLC | Louisville, Kentucky
LAURA G. KELLY
FORMER MANAGING DIRECTOR AND PRESIDENT, THE COLUMBIA INSTITUTE
CoreLogic | Irvine, California
SHRUTI S. MIYASHIRO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Digital Federal Credit Union | Marlborough, Massachusetts
WESLEY A. BROWN
PRESIDENT
Bent St. Vrain & Company, LLC | Denver, Colorado
CURTIS A. CAMPBELL
PRESIDENT OF SOFTWARE
Blucora, Inc. | Dallas, Texas
76 / FINANCIALS
jackhenry.com EXECUTIVE OFFICERS
DAVID B. FOSS
BOARD CHAIR AND CHIEF EXECUTIVE OFFICER
GREGORY R. ADELSON
PRESIDENT AND CHIEF OPERATING OFFICER
MIMI L. CARSLEY
CHIEF FINANCIAL OFFICER AND TREASURER
CRAIG K. MORGAN
GENERAL COUNSEL AND SECRETARY
RENEE A. SWEARINGEN
SENIOR VICE PRESIDENT, CHIEF ACCOUNTING OFFICER, AND ASSISTANT TREASURER
SENIOR VICE PRESIDENT AND PRESIDENT OF JACK HENRY BANK SOLUTIONS
STACEY E. ZENGEL
ANNUAL MEETING
The annual meeting of shareholders will be held on Tuesday, November 15, 2022, at 11 a.m. CT at
Jack Henry & Associates’ Corporate Headquarters, Monett, Missouri.
FORM 10-K
TRANSFER AGENT AND REGISTRAR
A copy of the company’s Form 10-K is available
Computershare Trust Company, N.A.
upon request to the Chief Financial Officer
P.O. Box 43006
at the corporate headquarters address or
Providence, RI 02940-3078
from our website at jackhenry.com.
ADDRESS
663 Highway 60
P.O. Box 807
Monett, MO 65708
PHONE
417-235-6652
FAX
417-235-4281
WEB
jackhenry.com
© 2022 Jack Henry & Associates, Inc.®