Jack Henry Posts 26% Profit Jump in Q4
Key Points
GAAP earnings per share of $1.75 in Q4 FY2025 beat expectations by 32.6%, while non-GAAP revenue exceeded estimates by 3.2%.
Cloud revenue grew by double digits, and payment processing revenue increased 9.4%.
Full-year free cash flow (non-GAAP) rose 21.9% to $410.3 million.
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Jack Henry & Associates (NASDAQ:JKHY), a technology solutions provider for banks and credit unions, reported results for Q4 and FY2025 that surpassed analyst estimates. The company published its earnings on August 19, 2025, covering the quarter ended June 30, 2025. GAAP earnings per share for the quarter were $1.75, well above the expected $1.32. Revenue reached $615.4 million for the quarter ended June 30, 2025, compared to non-GAAP estimates of $576.31 million. The quarter saw margin expansion and free cash flow growth compared to the prior year period, driven by firm demand for cloud and payments solutions.
| Metric | Q4 FY25(Ended Jun 30, 2025) | Q4 FY25 Estimate | Q4 FY24(Ended Jun 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $1.75 | $1.32 | $1.38 | 26.4% |
| Revenue (GAAP) | $615.4 million | N/A | $559.9 million | 9.9% |
| Revenue (Non-GAAP) | $594.9 million | $553.2 million | 7.5% | |
| Operating Margin (GAAP) | 25.3% | 22.4% | 2.9 pp | |
| Net Income (GAAP) | $127.6 million | $101.1 million | 26.2% | |
| Free Cash Flow (Non-GAAP)(Full Year) | $410.3 million | $336.5 million | 21.9% |
Source: Analyst estimates for the quarter provided by FactSet.
About the Business and Strategic Focus
Jack Henry & Associates provides core banking systems, payment processing, and digital banking software for financial institutions. Its client base includes approximately 7,400 financial institutions throughout the United States.
The firm’s recent priorities have revolved around expanding its cloud-based service offerings, strengthening digital payments, and deepening relationships with larger clients. Key success factors include innovation in cloud technologies, product launches that align with shifting customer demands, and maintaining disciplined cost control. Cross-selling, a focus on organic growth, and selective strategic acquisitions have shaped its recent strategy.
Quarter in Review: Performance Drivers and Segment Trends
The quarter saw notably strong operating results. All major metrics -- from revenue and earnings per share to operating margin -- moved higher versus the same period last year for Q4 FY2025. Revenue exceeded expectations by $18.57 million. Profitability increased due to higher revenue. The company's GAAP operating margin rose to 25.3% in Q4 FY2025, up from 22.4% a year earlier. This margin increase was supported by lower tax expenses (an effective tax rate of 20.2%).
For the fiscal year ended June 30, 2025, public and private cloud revenue grew 11%. Data processing and hosting revenue within cloud grew 12.0%. The company also launched new products like Jack Henry Rapid Transfers™, a money-movement tool, and Tap2Local™, a merchant acquiring solution. Payment processing revenue increased 9.4%, aided by ongoing growth in digital transaction channels.
Digital and transaction-related revenue was up 13.0%. This growth came even as the company acknowledged renewed contracts have brought some price compression -- a term that describes narrowing profit margins as customers negotiate lower prices at renewal. New client wins remained robust with 51 new core customers signed during the year, especially among larger financial institutions.
Complementary solutions, which include add-ons to core banking systems, grew by 11% (non-GAAP) in the quarter. However, deferred revenue and hardware-related sales declined. No major acquisitions occurred during the quarter. The company ended the year with no debt and a sizable cash reserve, reflecting strong cash generation from operations.
Jack Henry & Associates paid $164.6 million in dividends. In addition, $35.1 million was deployed for share repurchases.
Looking Forward: Guidance and What to Monitor
Management expects moderate revenue growth for fiscal 2026, with GAAP revenue guidance set at $2.48–2.50 billion, This represents 4.2–5.4% growth from the prior year. Projected GAAP earnings per share are $6.32–$6.44, reflecting slower growth of 1–3%. Margin expansion is expected to pause, with GAAP operating margin expected at 24.0–24.2%, slightly below the recent quarter’s elevated level.
The company points to price compression in large client renewals and ongoing attrition due to banking industry consolidation as likely headwinds. Management highlighted that the first quarter of the new fiscal year will benefit from the timing of the annual Connect client event, which should boost revenue. Investors may want to watch trends in new core wins, progress in cloud and digital channels, and the impact of contract renewals on future growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Jack Henry & Associates. The Motley Fool has a disclosure policy.
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