Jack Henry's FY2026 revenue rose 7.1% to $2.54B and EPS 11.9% to $6.98 on cloud and payments growth, but Q4 operating income fell 12.2% as client-exit fees dropped and personnel costs jumped.
Revenue
$2.5B
+7.1% YoY
Net income
$503M
+10.3% YoY
Diluted EPS
$6.98
+11.9% YoY
Operating margin
25.0%
Overview
Jack Henry sells the core software that runs small and mid-sized US banks and credit unions (the system of record for deposits and loans), plus payment processing and digital-banking add-ons, to about 7,200 clients. In fiscal 2026 (the year ended June 30, 2026) revenue rose 7.1% to $2,544.3 million and GAAP diluted EPS rose 11.9% to $6.98. Operating margin widened from 23.9% to 25.0%, because costs grew 5.7% while revenue grew 7.1%.
The full-year result and the fourth quarter point in different directions. The first nine months carried the year. In the June quarter alone, revenue grew only 4.7% and operating income fell 12.2%, because one-off fees from departing clients fell by more than half and personnel costs, including medical costs, rose sharply.
Operating margin is the share of revenue left after running the business, before interest and tax. The "non-GAAP adjusted" figures are the company's own measures. They strip out deconversion fees, the Victor acquisition, a one-time gain on assets and a prior-year contract change.
What "deconversion" means, and why Jack Henry adjusts for it
When a client bank is bought by another bank, it usually ends its multi-year contract with Jack Henry early and pays a termination fee, called a deconversion fee. These fees are mostly profit, and they depend on how many bank mergers happen, not on how well Jack Henry is doing, so they swing from year to year. In FY2026 they came to $42.8 million, up from $33.9 million. They added about $30.0 million to operating income, compared with $27.7 million a year earlier.
With deconversions and the other one-off items removed, revenue grew 7.3%, slightly faster than the 7.1% reported figure. So the reported revenue growth is a fair picture of the underlying business. Profit is less clean. GAAP operating margin rose 1.1 points, while the adjusted margin rose 0.9 points (from 23.2% to 24.1%). Two things explain the gap: larger deconversion fees, and a $6.8 million gain on assets, which the filing does not describe further. Cash proceeds from asset sales were $32.8 million.
Segments
Segment
FY2026 revenue
FY2025 revenue
GAAP growth
Adjusted growth
Segment margin FY26 (FY25)
Core
$768.5M
$732.9M
+4.8%
+7.1%
60.3% (59.7%)
Payments
$936.0M
$873.5M
+7.2%
+6.4%
48.8% (47.3%)
Complementary
$752.2M
$694.8M
+8.3%
+7.7%
61.9% (61.2%)
Corporate Services
$87.7M
$74.1M
+18.3%
+18.3%
n/m (shared costs)
Segment margin is revenue minus the segment's direct cost of revenue, as a share of revenue. Corporate Services carries shared infrastructure costs ($362.5M), so its margin is not meaningful.
Core (+4.8% reported, +7.1% adjusted). The adjusted figure is the better guide here. The prior year included $15.9 million of revenue from a third-party agreement that was later restructured, and that makes reported growth look lower than it was. That revenue came with matching costs, so it barely affected profit. The 10-K credits growth mainly to "data processing and hosting revenue within cloud" and to consulting, work-order and release fees. Management reported a record 58 competitive core wins, meaning banks and credit unions that switched to Jack Henry from a rival. Fourteen of them had more than $1 billion in assets.
Payments (+7.2% reported, +6.4% adjusted). Here the adjusted figure is lower. Reported revenue includes $5.2 million from Victor Technologies, an embedded-payments provider bought for $42.4 million on September 30, 2025. The growth came from card fees (+6.0%, from monthly service and risk-management fees) and from faster payments (+49.5%). Faster payments are instant transfers such as FedNow and RTP, and that line is growing quickly from a small base. The segment margin rose 1.5 points because direct costs rose only 2.8% on an adjusted basis.
Complementary (+8.3% reported, +7.7% adjusted). These are add-on products such as digital banking. Jack Henry's digital and transaction revenue grew 11.6% as more people used its digital platform.
Cloud revenue, where Jack Henry hosts the bank's systems for it, is the largest single part of services revenue. It is usually signed on contracts of about six years, so it is the most predictable part of the business. About $9 million of the rise in product delivery & services came from higher deconversion fees, so not all of that line's 17.2% growth will repeat. The fall in on-premise support mostly reflects lower software-usage revenue (down 26.2%), which the company ties "mainly" to the prior-year contract change. It does not by itself show clients leaving on-premise software. At year-end Jack Henry had $8.44 billion of revenue under contract but not yet recognised (its "remaining performance obligations"). It expects to recognise about 23% of that in the next 12 months.
The fourth quarter was weaker
Q4 (Apr–Jun)
Q4 FY26
Q4 FY25
YoY
Revenue
$644.0M
$615.4M
+4.7%
Deconversion revenue
$9.3M
$20.5M
−54.5%
Non-GAAP adjusted revenue
$633.1M
$593.7M
+6.6%
Operating margin
21.2%
25.3%
−4.1 pts
Non-GAAP adjusted operating margin
21.1%
23.2%
−2.1 pts
Diluted EPS
$1.57
$1.75
−10.2%
Operating income fell by $18.9 million. About $13.3 million of that came from lower profit on deconversions, after a strong prior-year quarter. The rest came from costs. SG&A (selling, general and administrative expenses) rose 19.2% and R&D rose 17.0% in the quarter. The company attributes the SG&A increase to "increased medical costs from second-half normalization trends and higher compensation tied to trailing twelve month headcount growth." Even after removing the one-off items, adjusted operating income fell 3.1% while adjusted revenue grew 6.6%. For a business whose revenue is mostly recurring, costs growing faster than revenue is the number to watch.
Takeaway: Jack Henry's underlying revenue growth held steady at about 7% (7.3% adjusted for the year, 6.6% in Q4), backed by roughly six-year cloud contracts and a record year of core wins. The profit side is less clear. Part of the full-year margin gain came from deconversion fees and a one-time asset gain. In Q4, costs outgrew revenue even on an adjusted basis, and FY2027 guidance calls for a lower GAAP operating margin.
Cash, buybacks and the balance sheet
Operating cash flow rose 18.8% to $762.0 million. The 10-K says this was "primarily due to the change in deferred income taxes." The One Big Beautiful Bill Act, the 2025 US tax law, restored immediate deduction of R&D spending, and the company says this significantly reduced its cash tax payments. That is a timing benefit, not a lasting improvement in how much profit turns into cash. Free cash flow of $539.3 million also includes the $32.8 million from asset sales.
Share buybacks jumped to $448.2 million (about 2.9 million shares at an average price of $152), from $35.1 million the year before. In Q4 alone the company spent $164 million at about $140 a share. Together with $170.4 million of dividends, shareholder returns were larger than free cash flow. Cash fell from $102.0 million to $12.1 million, and the company drew $40 million on a new $1 billion revolving credit facility signed in March 2026. That debt is small next to $813 million of adjusted EBITDA (earnings before interest, tax, depreciation and amortization), but the company ended the prior year with no debt.
Diluted share count fell 1.4% (72.0 million vs. 73.0 million), which is why EPS grew 11.9% while net income grew 10.3%. The effective tax rate rose to 23.0% from 22.2%, which is why net income grew more slowly than operating income (+11.7%).
Guidance for fiscal 2027
Management's FY2027 outlook, from the earnings release:
Measure
FY2027 guidance
FY2026 actual (comparable basis)
GAAP revenue
$2,684M–$2,709M (+5.5% to +6.5%)
$2,544M
Non-GAAP adjusted revenue
$2,659M–$2,684M (+6.3% to +7.3%)
$2,502M*
GAAP operating margin
24.5%–24.7%
25.0%
Non-GAAP adjusted operating margin
24.1%–24.3%
23.9%*
GAAP EPS
$7.33–$7.38 (+5.0% to +5.7%)
$6.98
*FY2026 recast to include Victor, which is counted in adjusted revenue from October 1, 2026, one year after the deal closed.
The guidance assumes only $23 million of deconversion revenue, compared with $42.8 million in FY2026. The company bases that assumption on its lowest recent actual result. That assumption is the main reason GAAP revenue growth is guided below adjusted growth, and why the GAAP margin is expected to dip. The CFO said adjusted revenue growth "should remain consistent, but margin comparisons will be impacted by tough comparisons from the first half of last year."
Our read: The midpoint of the adjusted revenue guidance, about 6.8% growth, is in line with this year's 7.3%. That fits the steady cloud growth and the record core wins. The adjusted margin is guided only 0.2–0.4 points higher, and GAAP EPS growth of about 5% trails revenue growth. So FY2027 depends on revenue continuing to grow rather than on margins widening, unless deconversion fees again come in well above the $23 million assumption. Two things to check in the coming quarterly reports: whether the Q4 rise in personnel and medical costs continues, and whether buybacks keep running ahead of free cash flow now that cash is nearly used up.
Source: Jack Henry & Associates Form 10-K for the fiscal year ended June 30, 2026 (filed August 28, 2026) and the Q4/FY2026 earnings release (Form 8-K Exhibit 99.1, filed August 18, 2026). Figures in US dollars.