Jack Henry & Associates, Inc. (JKHY) Earnings Call Transcript & Summary

Good morning, and thank you to everyone for joining us for day 2 of the Nashville Investment Conference. My name is Chuck Nabhan, I cover the fintech space, including bank technology and transaction processors. And I have the pleasure of hosting the CEO of Jack Henry today, Mr. David Foss. And just a quick background on Jack Henry for those of you that aren't familiar, Jack Henry has been around since 1976 and is one of the largest providers of bank technology solutions with over 8,500 clients.

And with that, I want to start with a high-level question for you, David. You've been around the industry for some time now, and I'd love to get your perspective on how the banking industry has changed from a technology perspective as well as some of the drivers of innovation you see in the current environment?

So do you want me to compare 36 years of my time in the industry or you're talking about just the last few years?

We only have 45 minutes.

Okay. It is -- I will give you a quick comparison on that point. So when I started in this industry, us as technology providers, our job was to deliver technology to the bank with the expectation that the bank's employees would use the technology period, today almost everything we deliver, we're not only have to assume we're arming the bank employees to use the technology, but their customers will be using our technology, whether it's a consumer or a commercial business. So it's been a real shift over the years in our focus in that if you're delivering technology to the bank employee, does it have to be sexy, does it have to be cool? Not necessarily. But if you're going to attract the consumer to come and do business with your customer -- our customer, which is the bank or credit union, it definitely has to be really easy to use cutting-edge, well-designed functionality that's top-notch. And so that has been a significant shift for us over the time that I've been in this industry, which again, is a long time. In the past few years, of course, the focus has been on usability. So user experience is a key for the technology that we deliver today. Digital first. So we, as an example, rolled out a new treasury management solution about 1.5 years or 2 years ago. Never thought we'd be writing a new treasury management solution in 2019. But the reason we did that was because there was no digital-first technology for treasury management. And if you're running a large commercial business, you're the CFO or the CEO, you want to be able to approve wires and see what's going on, on your phone. You don't want to have to go back to your office and sit down to do that. So again, with an eye now for us of not just serving our banking clients but their clients, we got to be very mindful of what it is that those customers are interested in and make sure that the user experience for those customers is outstanding.

Great. So diving into the segments, I want to start with the core banking segment. One of the big themes there is the shift towards the private cloud. So could you talk about the underlying drivers of that shift and the impact it has on your unit economics and cross-sell efforts?

Sure. So for us, and I'm not sure how many of you are new to the story and how many of you know our story well. But one of our key segments is what we refer to as core banking. So core banking is that technology that processes loans, deposits and general ledger for a bank or credit union. So all of the other things that we do, those are all wrapped around, we have a wide variety of payments and ancillary solutions that wrap around the core. But the core, when you hear us talk about our core system, it's that primary accounting system, back-office system, for a bank or credit union that processes loans, deposits and general ledger. And we've been in this business since the inception of our company. We've been a core provider. And again, we do all kinds of other things today. But we've been a core provider for 45 years. And originally, our company, we started out selling license copies of software. So a customer would buy a license, they would run the core solution in-house and process it themselves. Over the years, there's been a real shift from running in-house or on-prem to the private cloud environment. And there are a few drivers for that. And by the way, we convert about 50 customers a year from our on-prem deployment to private cloud. There are a few drivers. Why do people come to us and say, "Hey, I've decided I want to move from doing this myself in the back office." Number one is the capital outlay when you're doing it yourself. So years ago, you refresh your hardware in your backroom every 10 years, and you depreciate it out over 10 years. Today, it's about 3 years. The depreciation cycle and the refresh cycle for hardware is about every 3 years. So they're looking at capital outlay more frequently. If you're running everything yourselves in the back office, you have to have all the tech talent to do with that and finding tech talent if you're running a bank or credit union is tougher and tougher. And so oftentimes, bankers will come to us and say, we can't do this anymore. We don't have the talent or CIO retired and we lost our -- one of our tech folks and we don't think we have the talent anymore to do this ourselves. So that can be a driver. The regulatory environment, if you are processing your core system yourself in your back office, regulators are very strict about ensuring that you have the right talent that you have the right security infrastructure and so a lot of banks are intimidated by that and they don't want to have to deal with the regulators on that topic. They got plenty of other regulation that they have to deal with. Oftentimes, they'll say to me, "I prefer to be a banker. I don't want to be a technologist, I want to be a banker." I can handle the regulators on banking questions. I can't handle the regulators when it comes to all the technology questions. I'd like Jack Henry to take care of that for me. So it's usually one of those drivers. But it's an interesting conversation because -- and I say it all the time, it's kind of a religious conversation with a lot of bankers. They are -- they either think of themselves as being in-house. We're going to do it ourselves or they think of themselves as somebody who's going to outsource that responsibility to somebody else. And so historically, it's been tough to get the people who think I'm an in-house bank get them to think about offloading that responsibility. But because of those factors I just listed, more and more of them are coming to that conclusion that whether I want it or not, I've got to make that move. So we convert about 50 a year, as I mentioned, from the on-prem environment to the private cloud environment. And we have -- at that pace, we have another 8 or 10 years of that activity that's going to happen. Now the second part of your question was regarding the economics of a move like that. So the average customer will pay us about double what they pay when they're running the solution in their back office. They'll pay about double to go to the private cloud environment. Why would they do that? And how does that happen? Well, first off, if you're on-prem, your only obligation to Jack Henry is to pay an annual maintenance fee. That's your only obligation. So you can leave at any time but you got to pay that annual maintenance fee. When you go to the private cloud environment, you sign up generally for a 7- to 10-year contract. So you're committed to 7 to 10 years paying Jack Henry for that service. And the reason that they're essentially paying double is because we're taking all of that burden off of them. They don't need to have the staff, the technical staff anymore. They don't need to worry about hardware refreshes anymore. They don't need to worry about when updates come out to their software. We take care of all that for them. They don't need to worry about the regulators, hounding them about what are they doing to secure the infrastructure. Jack Henry takes care of all that. We are constantly being reviewed by regulators and they produce a report that they will hand to the bank and say, here you go, you're now compliant as far as the regulatory expectations are concerned. And so for our customers, there's logic for them to spend that with Jack Henry as they transition out of the on-prem environment. For us, on the other hand, when we take on that new relationship with the customer, we don't have to add staff. We've already got the staff. We do use the same customer service teams to support them, whether they're running their own solution on-prem or if they're in a private cloud environment, we use the same teams to do upgrades for them that we do for everybody else. We are a multi-tenant provider. We're a SaaS provider. So we don't have a separate hardware stack for each bank. We're running one cloud environment, private cloud environment, and it's a multi-tenant environment. So we just slide them into the same environment as everybody else. And then -- and so that was employees, that was the environment. And one of the things I was going to mention and it just lost me. But on their side, they, of course, can cut costs because they're not having to buy hardware and they're not having to employ people. They want to lay some people off. They don't have to have that -- those folks in-house anymore. So the economics make sense for them. It's highly profitable for us to move them from on-prem to our private cloud. And again, we get that long-term contractual commitment from them.

Great. Just sticking with core banking, I'd love to get your perspective on how you're differentiated in the market. And what are some of the driving factors behind the competitive takeaways?

Yes, there are several players when it comes to core banking. There are 3 major players, the 3 largest players. And as Chuck mentioned, we're one of the largest 3 providers in the United States, but there are a number of smaller players. But we are actively winning share in our market at the pace of about 1 new logo per week, customers moving to Jack Henry with their core business as -- and that's a much faster pace than anybody else in the industry. And so the question often comes up, why are people leaving whoever they were working with before to come to Jack Henry at a pace like that 1 new logo a week. There are a few drivers. One is Jack Henry is delivering innovative technology every day. In fact, we're the only provider in our space that is recognized by American Banker regularly as a top fintech in our space. And when normally, when you hear the word fintech, you think of a Silicon Valley startup and sure enough, most of the companies on the American Banker list fit that profile. But then there's Jack Henry, we're a 45-year-old, $2 billion revenue, $12 billion market cap company, we're on the cool kids list now every year, and we've been on that list for 6 years in a row. Why is that? Because of this technology, this really outstanding technology that we've been delivering. So that's one of the drivers for people moving to Jack Henry. A second one is on the core side of our business, we have a very focused strategy. So if you are a credit union and you want to talk to Jack Henry about moving your core, we are going to talk to you about our Episys solution. Our major competitors have a variety of solutions. And nobody has ever quite sure what's the winning horse, and which one do I want to buy? At Jack Henry, you know that it's going to be Episys. Episys has far more credit unions on our core platform than any other provider on a single platform. So people know that we're investing in that platform. We're committed to it. We're focused on that platform. On the banking side of the house, a similar story. We offer 3 core solutions, but our flagship is Silver Lake. And people know that we're going to propose Silver Lake to them, and they know that we're putting extra investment in Silver Lake. So they know what our strategy is. They know where we're putting our investment dollars. There's no debate about a variety of different cores and which one is going to win in the end. They know what our strategy is. So that focus gets people's attention. We are recognized regularly in our space for providing the best customer service in the industry. And there are a number of analysts who would report on that, who call our customers and they produce a report comparing us to the other players in the space. And customer service sales deals. In our industry, if you have outstanding customer service like Jack Henry does, it does help sell a deal. And then the one comment that comes up almost every time I talk to a CEO prospect, they will say to me, our relationship with our current provider is broken. We don't trust them anymore. Customer service isn't as good as it used to be. We don't know where they're going as far as their core strategy. We're not exactly sure -- we're not getting the same type of relationship commitment that we used to have. We don't know if they're committed to us as a customer. And it's an intangible when it comes to the economics of a decision like that. But it is real and it is top of mind for many CEOs out there because they bring it up to me all the time. And so it's definitely something that they hear about Jack Henry. They hear that the reputation that we have for commitment to service, commitment to relationship with our customers, and that certainly helps us win deals. And then back on the topic of innovative technology, so back in the day when we won core deals, it was strictly on the merits of the core. Today, because our digital banking solution, #1 rated solution in the App Store, getting lots of attention out there is a highly competitive solution, that helps us win deals because people say, "You guys have this outstanding core solution, and you have the best rated digital banking platform, why would I not do business with you?" So those types of things and the same is true on our commercial loan, digital commercial loan origination platform. People see what we're doing there, and they'll say, why would I not choose Jack Henry for the core because not only do I get this great core solution that's well known in the industry but I get these best-of-breed solutions around it from the same provider. So you put all those things together and certain customers gravitate towards one or the other of those sometimes, but those tend to be the reasons that people make that switch.

Great. We'll get to Banno and the complementary segment in a bit. But I wanted to talk about the topic of public cloud, which has been a theme in the industry. And you've moved some of your solutions into the public cloud already. The core is not there just yet. But could you talk about what that means operationally and the impact it could have from a financial standpoint?

Sure. Yes. So as you mentioned, many of our noncore solutions we have in the public cloud environment today, we're in both AWS and Azure today. Possibly Google in the future, but we're very active in those environments today. And what we have learned is when you move into the public cloud environment, scalability becomes easier and your ability to burst for certain points in time. So as an example, end of month processing for any bank or credit union is a big deal. They're producing a lot more kind of analytic data than they do on any other given day of the month. Well, your ability to scale and handle that processing need at the end of the month is a lot easier in a public cloud environment than it is in a private cloud or think about the stimulus checks that just came out here a few months ago. Most Internet banking providers crashed as those stimulus checks were coming out. Why? Because the consumer was hitting their Internet banking solution just over and over and over again, is my check here? Is my check here? Is my check here? Is my check here? Well, that produces a tremendous amount of volume in those platforms. Most of those platforms crashed during that period. Ours did not. We were living in the AWS environment. We were able to scale quickly using that public cloud environment to handle that tremendous onslaught of volume during that period. So there are definite reasons for us to consider moving certain things into the public cloud environment. On the core side because of the regulatory expectations of the examiner, so if you're running a bank or credit union, the examiners are very intense about ensuring that the PII data, private -- personally identifiable information data is secured. And because the public cloud providers aren't excited about providing their secret sauce information about how they secure things to the examiners, there hasn't been a push by customers to move into the public cloud with the core. The other thing to keep in mind is with the core system other than the month-end example that I gave, there usually isn't that much fluctuation with the processing power that's required as compared to a lot of other things that we do. But over time, this -- there's no doubt in my mind. This will happen, we'll resolve the issue about public cloud providers providing the information that the regulators are looking for. And we will be in a public cloud environment with our core systems, just like we are with many of our other complementary solutions today. And when that happens for Jack Henry, and we've seen it before, we can get out of the data center business because essentially, when you run a private cloud, you're running a great big data center so we can get out of that business and really focus on putting our solutions in a public cloud environment, let the public cloud providers provide those solutions to us. The other good news for us today as compared to several years ago is it's easier to move from one public cloud to another today. It originally when you were setting up in a public cloud, the environments were different enough that you kind of had to pick one and then stick with it. Today, that's becoming a lot easier to move. So there really are economics for a company like ours as we move into those environments. But as I've mentioned to Chuck before when we've had this conversation, that will take years. There will be customers. Bankers are conservative. Many of them will say, "I don't want my data in a public cloud." So we'll have some that we'll start to adopt and we'll kind of roll that out slowly because of customer willingness to adopt that, but it will come.

Great. So switching gears to digital. A lot of observers of the industry on a high level look at penetration levels of mobile banking, which are roughly around 70% depending on the source. And some might argue that there's -- we're reaching levels of saturation or maturation. Whereas in reality, within that 70%, there's a lot of outdated solutions that provide you with potential opportunity for upgrades. Could you talk about that opportunity as well as how the Banno solution is differentiated?

Sure. Yes. So you're accurate in your statement, almost any bank or credit union offers a mobile banking and an Internet banking solution and has for several years. Note that I said mobile banking and Internet banking, two different things, two different experiences. Most banks and credit unions out there have two different experiences. So if you're on a mobile banking app, it's an entirely different experience from if you go to your PC and log on to their Internet banking application. And so although most banks and credit unions have mobile and Internet banking. They are not digital banking solutions. So when we talk about our Banno solution today, it's a single experience. It's a single digital platform hosted in the AWS public cloud environment that provides a single experience regardless of form factor. So if you're on your phone, if you're on your tablet, if you're on your PC, whatever you're using, it's the same user experience. So back to the point I made at the very beginning of this conversation, we're very mindful these days of ensuring that the consumers experience is a positive cutting edge from a technology point of view type of experience. And that's what Banno delivers. And most banks and credit unions out there don't have that. They have Internet banking and mobile banking, and they may be very good platforms, but they're different platforms, different experiences. And so most banks and credit unions are faced with this move from legacy to new digital technology. So that creates a lot of opportunity for us with our Banno platform. The other thing that is key for us to ensure people recognize, the question I get all the time from investors, investment bankers, BofA and JPM Chase are spending billions of dollars every year on technology. How can Jack Henry's customers possibly keep up with that? Yes, you're right. They're spending billions of dollars each year. Much of that is being spent on the duct tape and bailing wire that's required to keep all the legacy technology in place, but also a lot of it is being spent on digital. But the thing that the majors have really been focused on is pushing the consumer away from interacting with people at the bank, right? So it's AI and bots to really try and keep the consumer from ever talking to somebody at the bank. What we've done with the Banno application is totally different. And it's with this idea that for a community or regional bank to be successful, what they have always depended on is a higher level of service than you can get from the majors. So how do we ensure as their consumers move into the digital world, how do we ensure that the community or regional bank still has that opportunity to provide that high level of service. So we've created an entirely differentiated experience with our Banno application that allows the bank or credit union to still offer that service through the digital channel, but with a really outstanding digital experience for their consumer. To the point that today, the Banno application is the highest-rated digital app in the App Store, and we've enjoyed that reputation now for many months. And so what we're focused on is ensuring that our customers have an experience or have a solution that uses AI and bots, all the modern technology, on a technology stack that's modern, but is using it in a different way to empower a high level of customer service as opposed to pushing the consumer away from ever interacting with the bank. And customers are figuring that out. Bankers are figuring that out. Jack Henry has a different solution from what anybody else in the market is doing and certainly different from what the majors are doing because of the technology that we're using and the philosophy that we used as we designed this solution.

Great. So for those not familiar, the complementary segment, which includes digital and Banno. It's basically everything but payments and core. It includes a number of other solutions, including digital lending and fraud, if I'm not mistaken. Could you talk about some of those other solutions and how they meet demand in the market?

Yes. There are more than 200 solutions in that bucket. So I could probably talk for about 4.5 hours on what else in there. I'm assuming you don't want me to do that, but there are a number of pieces in there that are pretty key for our customers. So one is digital lending. So several years ago, when OnDeck and Kabbage were really taking off, we viewed that as a threat to our customers. Our commercial -- our customers' ability to serve their commercial customers because at that time, banks and credit unions normally expected the commercial customer to walk into a branch, bring their packet of information, bring their tax returns, that's how they would do a commercial loan. When OnDeck and Kabbage hit the market and they're doing everything online. And so we didn't view that as a competitive threat to Jack Henry, we viewed it as a competitive threat to our bankers. And we said we got to go figure out how can we enable them, how can we empower them with a solution that positions them to compete effectively with OnDeck and Kabbage and we did that. So within about 1.5 years, we rolled out a complete digital solution to do commercial lending online, quick decision as an option. So for smaller loans, the bank could choose for that the decision-making to be automated, the underwriting to be automated. For midsized loans, they can maybe have some human intervention. And for large loans, that would be loan committee kind of a traditional process. But all electronic, all online, no need to come into a branch and bring your solutions in there. So we positioned our customers to be able to compete in that environment. That is one of those solutions that falls into that bucket, certainly a hot solution for us today. Another area, fraud. So fraud technology, we've been in this business for 12 or 15 years to protect customers when it comes to AML and BSA, ensuring that we have technology to protect them there. But the world is changing. When it comes to fraud, digital first is another -- it's another theme for us when it comes to fraud. So we've been in the process of essentially rewriting that entire platform. We'll roll it out in 2022. But that falls into that bucket of complementary solutions. Workflow. So one of the topics -- one of the key topics for bankers these days is the idea of efficiency. We want greater efficiency in the operation of the bank and the operation of the back office. But also in the operation of in the rest of the things we do in lending. So we've created a workflow solution specific to what happens in the bank. We've rolled that out to help them introduce efficiency into the equation. So that's been a good seller for us. And the last one I'll highlight is treasury management. So I alluded to it earlier, treasury management for a larger commercial customer. It's imperative for them to be able to have that connectivity with their financial institution. But it's a digital-first world that we're in today. CFOs expect to be able to approve wires through a digital presentment rather than going back to their office and sitting down with their PC. So treasury has been another one that we've highlighted recently as kind of a hot topic and one that falls into that complementary segment.

Great. So I want to switch gears to the Payment segment. And just as a starting point, can you just walk us through the businesses within that segment and we'll get into strategy in a little bit.

Sure. So we have 3 primary businesses within the Payment segment. The first is our card processing platform. So we do debit and credit now. We originally -- we used to only do debit, but we've been through a major conversion here. You may have heard us talk about on earnings calls, but we've completed it in March. So now we're on a new platform. We can do both credit and debit issuing through that platform for our customers. So that's segment number one. I'm sorry, component number one in the segment. Component number two is our bill pay platform. So we have a complete bill pay platform for a bank or credit union to stand up on their website. Consumer comes to the website and pays bills through that platform. And we have 3,500, 3,800, I think, it is FIs that are using that platform. Interestingly, about 1,000 of them are Jack Henry core customers. The other 2,500 or 2,800 are not running a Jack Henry core. So we have a lot of customers who are running our bill pay who are not running a Jack Henry core, I'll say yet, but they're running somebody else's core system. And then the third piece of the Payments bucket is what we refer to as enterprise payment solutions. So it's remote deposit capture and ACH origination. Remote deposit capture being that ability to capture a check on your phone or at the point of presentment at a small business site or a business customer and then ACH origination. Interestingly, although the ACH and -- I mean the card business is the largest of the 3 within that segment and is growing rapidly. The faster growing piece is our EPS segment. So we're the dominant player today when it comes to remote deposit capture, and that is a growing segment. We also are one of the largest providers of ACH processing that is continuing to grow. So I realize it's 2021 and what in the world you guys talk about ACH for in 2021 with all the new payments rails that have been emerging, but it is growing, and it's growing rapidly. And so it's a nice business for us. We're known as a really solid provider in that space. And then remote deposit capture is continuing to grow through these hundreds of thousands of merchants that we work with -- through our banks. So it's a model where the bank goes out to that small business and sells them in that service. That business has also continued to grow at a nice rate. So that's the third piece of the Payments segment.

Great. So you touched on payment rails and speed of payment. Could you talk about the work you've done with FedNow some of the initiatives you have in place?

Yes, that's an exciting project for us. So we -- about a year ago, we rolled out a solution called PayCenter. So let me back up a little bit before that. So a few years ago, Zelle was the hot topic, right? Zelle was going to roll out, Zelle was going to compete with Venmo. Everybody was talking about Zelle as essentially a P2P platform. We took a look at Zelle and said, "Okay, this is good, and we could do point-to-point integration so from Zelle to a bank to enable Zelle transactions." But what we saw at the time was this isn't going to stop with Zelle. There are going to be more things that are going to be innovated over time. They're going to do essentially the same thing. At the time, we didn't know if the Fed was going to get into this game. We suspected they might, but we firmly believed that there were going to be other players that would get into this space of P2P payments and then eventually real-time payments. And so we stood back and created what we call PayCenter. So PayCenter is a single hub that allows a bank customer to connect to any of these new real-time or P2P payment rails. So it took a little longer. We didn't jump right out there and say, okay, we're going to go and do point-to-point integration because we didn't believe that was the right thing to do for our customers. We believed our customers would want to have choice, they would want to be able to offer a variety of options. And so we created PayCenter and we rolled out PayCenter about 1.5 years ago. But along the way, as we were working on that, the Fed learned what Jack Henry was doing in creating PayCenter, and they approached us to help them design what has become their competitor to Zelle and its labeled FedNow. FedNow is not in the market yet. It will come out. I don't think it will even come out in 2022. It will probably be 2023, but that's up to the Fed to deliver when they deliver. But they are already, and we've been in their steering committee. We've been helping them as they've designed FedNow, and they will be integrated. When they come live, they'll be integrated right into PayCenter. The other player in the space is The Clearing House. So real-time payments through The Clearing House. We've been integrated with The Clearing House since essentially day 1, 67% of the financial institutions today that are offering real-time payments through The Clearing House are doing it through Jack Henry. So we're very active in that space today. But again, that's all happening through what we refer to as PayCenter. So we're positioned very well to handle any of those other emerging technologies. We can hook them into PayCenter. So the value for our customer is they buy PayCenter once, they have a connection from PayCenter back to their core system with Jack Henry. And then they can connect up whatever they want, and it will all be through one transaction stream that it comes into the bank, there's one balancing exercise for them. They don't have to go out and balance with all these different providers. So it really makes life easier for the banker and it's much more logical, we believe, solution for the banker to handle these emerging technologies as they come up.

Great. Well, the topic of integration and open architecture is certainly an interesting one with respect to your story. And you've highlighted your partner ecosystem and including Autobooks as one of your partners. Could you tell us a little more about that and some of the solutions you offer to your customers through your partner ecosystem?

So this is a philosophy that we've embraced at Jack Henry forever since before I got here. I've been here 21, almost 22 years. But this -- philosophically, this concept is something that Jack Henry has embraced forever. And that is the idea that although we want to provide one-stop shopping, if you're a bank or credit union, you can get most -- any technology solution from Jack Henry. We're not going to force you to get it from Jack Henry. We're going to make it easy for you to choose somebody else for digital banking or for a fraud platform or whatever. So our philosophy has always been, we're here to help our bankers be successful. It's not their job to make us successful. We're here to make them successful. And if you're really committed to that, you should provide open connectivity that allows the banker to choose what do they want to use. They've chosen a Jack Henry core. But what do they want to use as their other solutions if they choose not to buy something from Jack Henry. So traditionally, we've offered a variety of legacy solutions. But now in 2021, it's this very robust API suite that we have. And we're out there in production today. Hundreds of third parties are using this platform that we have. And the idea is to enable a banker to choose whoever they want to choose to use for whatever solution they want and connect into the Jack Henry platforms easily using this API layer. So you highlighted Autobooks. Autobooks is one of our favorites because we're also invested in Autobooks, publicly disclosed. So we like those guys a lot as an API and small business provider. But there are any number of other providers who have integrated into that platform. They don't pay Jack Henry a spiff. We're not in the business of trying to take a dollar out of their pocket every time they use the platform. We are in the business of trying to make our customers successful. And so we make that readily available to our customers to use the platform to create that connectivity. Now, of course, you have to ensure security in those connections. You have to make sure people are following the rules. So we published all of that for third parties to use. But what it's done for us now as these new fintechs are emerging, it's created this reputation for Jack Henry as the provider to go work with because Jack Henry is really trying to make it easy for fintechs to connect into the ecosystem. And we are committed to that. We're serious about that. And we believe it provides extra value as a core provider to customers. So back to the discussion we had at the beginning of this conversation about why we're winning essentially one new core logo a week, that's another one of the contributors to that conversation is Jack Henry has this reputation now being very open, willing to support open connectivity. And so fintechs are kind of driving customers to saying, "Hey, you want to work with us, Jack Henry is the core provider you want to work with because they make it really easy for us to connect to." And I would tell you, they're probably at this conference today, smaller public providers who are ancillary solutions, you go ask any of them who's the easiest core to work with, they will tell you Jack Henry, and it's because of that commitment to open connectivity and open banking.

Got you. Okay. Well, let's switch gears to capital allocation. How -- what role does M&A play in your product road map?

Yes. Historically, M&A, we used to refer to as a serial acquirer. We have done a lot of acquisitions, well over 50 acquisitions since the founding of the company. We did 28 acquisitions between 2004 to 2018. So we've done a lot of acquisitions. And what I think we're really good at today is the build by partner discussion. So if we figure out we need something, whether it's a customer coming to us saying, hey, we'd like you to do X or whether it's us through our strategy team deciding we need to do Y, we're very good today at kind of analyzing and deciding do we look for something to acquire, do we build it ourselves or do we try to find a partner? Now I will tell you, we lean away from partnership because a key part of our value proposition in the market is our reputation for service. Whenever you partner with somebody, you give up a little bit of that potentially and we don't like to give that up. So we don't partner very often. It's much more common for us to either acquire something or build it ourselves to satisfy a need. In the past 2, 3, 4 years, getting acquisitions done has been pretty tough for a public strategic like us, public company valuations have been crazy. Private equity is in almost every deal that we're looking at. Private equity buyers apparently can spend anything for anything. And seemingly don't have to justify the purchase price to anybody, and we're not in that position, right? We have to ensure that we're disciplined in our approach and that we're employing our shareholders' money effectively. So it's been tough to get acquisitions done here. And the other thing, of course, that's been impacting us is SPACs. Now of course, SPACs have fallen off. But last year, SPACs were hot, IPOs were hot last year in our space. And so been a little tough to get acquisitions done. And so you've seen us build more solutions ourselves in the past couple of years, and I already alluded to a couple of them here in our conversation. But we are always on the hunt for acquisitions. We are always looking at acquisitions. We have 2 or 3 right now that we're analyzing whether or not we'll be able to bring those to fruition remains to be seen because, again, PE is still a lots of money sitting on the sideline, still a lot waiting to be invested. So -- but acquisitions are always at the top of the list. We are committed to our dividend policy. We have increased our dividend successfully year-over-year for many years in a row now and are committed to that idea. We're not committed to the idea of even doing a special dividend, but we are definitely committed to our dividend policy. And then there are share buybacks. So we do share buybacks opportunistically. And if you know us well, you know that the price that we're sitting at today is opportunistic. So I'll just say that. We do share buybacks when we think that there's a real opportunity for us to get in and do something meaningful. And so that's kind of the third leg of that stool for Jack Henry and the way we think about them in priority order.

Terrific. Well, we've got a few minutes left. I wanted to open it up to the crowd and see if there's any questions. Yes, sir.

So you had few senior positions in your management that will be different lookout within a time. Those roles have been very successful based on our history. As a CEO, what do you mark those will provide you moving forward?

Sure. So the 2 roles you're alluding to our CTO and our CFO. So our Chief Technology Officer, Ted, he's -- and they're both retiring. They're both -- I mean it's a logical thing to happen, right? So Ted has been working with Ben Metz. So Ben has been running Digital for us for several years. And Ben has been the successor in waiting now for several years. And so Ben and Ted have been working together. Ted is -- again, he's retiring. So no big secret probably about how old he is. Ben brings that digital-first mindset to everything he does. I didn't grow up that way in the industry. I grew up as a programmer, by the way, but I didn't grow up with digital first and neither did Ted. Ben, that's intuitive to him. It's the way he thinks. And so the reason that not only is he tremendously talented. But one of the reasons he was chosen as the successor is because he brings that digital-first mindset to everything he does. He is very comfortable delivering solutions in the public cloud. That's almost all he's done for his career. And so he satisfies that need. He understands our business, he understands our solutions. He's well respected among our leadership team. And so that's -- I don't hesitate to say a slam dunk, but it's about a slam dunk as far as kind of what is the next right thing to do for us as a company. On the CFO side, so Kevin has been our CFO for 20 years, had seen the company grow from essentially $100 million in revenue to almost $2 billion in revenue and has seen us through a very successful run. So I'm looking for a CFO that has that type of experience, somebody who isn't -- if they're the first time CFO, it's because they have been groomed and positioned and had all the experience, but preferably somebody who's been in the CFO seat before, somebody who understands technology. But probably at the top of the list for me is somebody who understands our culture. We have a unique culture at Jack Henry, and I don't want anything that would disrupt that culture, particularly in a role like that, where if you have somebody who comes in and decides that our reputation is for being a disciplined acquirer, somebody who is disciplined in the way we do capital allocation and think about running the business, we don't need a CFO who comes in, who thinks they're going to be a hotshot and change the way we do business. So it's imperative that we find somebody who understands the culture at Jack Henry and adheres to the culture at Jack Henry. But somebody who has preferably operated at this level in the past, more of a $2 billion revenue company in the past and can help us grow to the next level effectively. So that's kind of the basic profile. We are actively involved with the headhunter. I just met with him in Dallas day before yesterday. We have 2 leads on this that specialize in CFO search. And so we're excited to get through the process.

Terrific. Well, we're coming up on a quarter of the hour. So I want to keep everybody on schedule. David, I really appreciate you joining me today, and I hope this conversation was helpful to everybody, and I hope everyone has a productive conference. Thank you.

Thanks, everybody.