"We exceeded our second-quarter outlook. We had non-GAAP revenue growth of 6.1% in Q2, slightly ahead of the 6% anticipated on the November call."
— Greg Adelson
03Detailed Report
JKHY
Company JKHY
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedMay 14, 2026
Swipe to view all report sections
Executive Summary
Jack Henry & Associates delivered solid QQ2 2025 results, underscoring the company’s ongoing transition to a cloud-native, API-first platform and a high-velocity renewals engine. GAAP revenue rose about 5% year-over-year (YoY) and non-GAAP revenue grew ~6%, with a robust gross margin of 42.0% and an EBIT margin of ~21.4%, culminating in net income of $97.8 million and diluted EPS of $1.34 for the quarter. Management reaffirmed full-year guidance and highlighted a back-half acceleration driven by continued cloud adoption, stronger card and payments processing volumes, and stronger Digital/Pay Center adoption. EPS and cash flow formation remain solid, supported by a healthy balance sheet and strong operating cash flow, although near-term liquidity is modest given a debt load of $150 million and cash of ~$25.7 million at quarter-end. The company also signaled a constructive 2026 outlook as cloud-related initiatives (private cloud, Bano, and enterprise origination) gain traction and regulatory clarity around cloud adoption improves. In aggregate, JKHY’s QQ2 results reinforce the investment thesis: a durable, technology-led vendor with sticky customer relationships, expanding recurring revenue, and a multi-year migration to a modern, cloud-native platform that positions the company to capture higher-yielded banking and payments workflows. Actionable takeaways include monitoring cloud migration pace (private-cloud penetration ~75% of core clients; target run-rate of 40-45 private-cloud conversions annually), the progress of Move/Visa Direct collaborations for SMBs, and the trajectory of FCD and real-time payments modules as growth accelerants in H2 2025 and into 2026.
Key Performance Indicators
Revenue
Increasing
573.85M
QoQ: -4.51% | YoY: 5.16%
Gross Profit
Increasing
241.00M
42.00% margin
QoQ: -6.43% | YoY: 7.24%
Operating Income
Increasing
123.00M
QoQ: -18.69% | YoY: 3.39%
Net Income
Increasing
97.85M
QoQ: -17.91% | YoY: 6.39%
EPS
Increasing
1.34
QoQ: -17.79% | YoY: 6.35%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and profitability highlights:
- Q2 2025 GAAP revenue: $573.85 million; YoY growth ~5%; QoQ change not provided in the press release. Non-GAAP revenue growth: ~6% YoY.
- Gross margin: 41.997% (≈0.4200); Gross profit: $240.998 million.
- Operating income: $123.002 million; operating margin ≈21.43%.
- EBITDA: $181.915 million; EBITDA margin ≈31.70%.
- Net income: $97.845 million; net margin ≈17.05%; Diluted EPS: $1.34.
- Primary profitability drivers: data processing and hosting growth, private and public cloud expansion (recurring revenue now ~33% of total; up 11% in the quarter for cloud offerings).
Cash flow and balance sheet:
- Operating cash flow: $89.647 million; trailing twelve-month free cash flow: $296 million; FCF conversion: 73%.
- Free cash flow: $28.583 million for the quarter; capex: $61.064 million.
- Net debt: $124.347 million; total debt: $150.0 million; cash and cash equivalents: $25.653 million; cash at end of period: $25.653 million.
- Balance sheet health: total assets $2.912 billion; total liabilities $936.205 million; stockholders’ equity $1.976 billion; current ratio ~1.17; debt ratio ~7.06%; debt to capitalization ~9.43%.
Operational/Strategic highlights:
- Cloud and digital transformation: private cloud core conversions run-rate targets (≈40-45 per year) on track; current private-cloud penetration around 75% of core clients.
- Growth drivers: Bano platform growth to ~1,000 retail clients and 212 Bano business live; 13 private-cloud conversions completed in Q2; 28 core renewals in the quarter and 46 YTD, with several >$10B asset banks renewing.
- Payments ecosystem expansion: Zelle (338 clients), RTP (357 clients, ≈42% of live RTP clients), FedNow (339 clients, ≈28% of live FedNow clients).
- Strategic partnerships: Move/Visa Direct integration (SMB-focused rapid transfers) with testing in late 2025 and a May 2025 rollout for Move-based retail; Mastercard Move collaboration in progress; target to deliver the broader SMB solution in 2025; cloud-native infrastructure enabling these partnerships.
- Margin and cost discipline: quarterly non-GAAP margin improved by 25 bps to 22% in the quarter; 2Q non-GAAP margin expansion offset by 34 bps YTD decline to 23%; expenses rising modestly with more personnel and R&D investment in cloud and security initiatives.
Outlook/Guidance:
- Management reaffirmed full-year 2025 guidance. GAAP revenue growth around 5% and non-GAAP revenue growth around 6%; deconversion revenue guidance approximately $16 million for the year, with an even-ish weighting across the remaining quarters.
- Expectation of continued back-half acceleration driven by cloud growth, card ramp, faster payments adoption, and higher implementation activity around Financial Crimes Defender and digital/payments products.
- Regulatory environment and macro demand signals: Cornerstone/industry surveys indicate higher tech-spending intentions in 2025 (banks 73%; credit unions 79%; American Banker survey 83%), which supports demand for JKHY’s modernization capabilities.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
573.85M
5.16%
-4.51%
Gross Profit
241.00M
7.24%
-6.43%
Operating Income
123.00M
3.39%
-18.69%
Net Income
97.85M
6.39%
-17.91%
EPS
1.34
6.35%
-17.79%
Key Financial Ratios
Gross Profit Margin
Good
42.00%
Gross profit margin is healthy and competitive within industry standards
Operating Profit Margin
Good
21.40%
Operating margin is healthy and competitive within industry standards
Net Profit Margin
Good
17.10%
Net profit margin is healthy and competitive within industry standards
Return on Assets
Fair
3.36%
Return on assets is acceptable but below top-tier companies
Return on Equity
Weak
4.95%
Return on equity suggests inefficient capital allocation
Current Ratio
Adequate
1.17
Current ratio meets minimum requirements but limited cushion
Debt to Equity
Conservative
0.10
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Growth
32.71x
Elevated P/E suggests growth expectations or premium valuation
Price to Book
High Premium
6.48x
Very high premium suggests asset-light business model or lofty expectations
Management Insights Available for Members
Get exclusive access to management commentary, earnings call quotes, and forward guidance from company leadership.
Jack Henry & Associates, Inc. (JKHY) Q1FY2026 Earnings Analysis: Robust Margin Expansion, Cloud-First Platform Progress, and Strategic Growth Initiati...