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

Okay. Good morning, stockholders, employees and friends. I am David Foss, Executive Board Chair of Jack Henry & Associates, and it's my pleasure to welcome all of you. In accordance with the notice of the meeting, I call to order the 47th Annual Meeting of Stockholders of Jack Henry & Associates, Inc. In the materials given to you as you entered the meeting, you will find a copy of the agenda and the rules of conduct by which we will conduct this meeting. In the official part, we need to elect 9 directors to serve for the next year, and there are 3 other items of official business. Then we will have our annual presentations and the time at the end for questions and answers. Before proceeding to the business meeting, I would like to make certain introductions. I first present the Board of Directors. Please stand when I read your name and remain standing: Matthew C. Flanigan; Thomas H. Wilson, Jr.; Thomas A. Wimsett; Shruti S. Miyashiro; Wesley A. Brown; Curtis A. Campbell, Tammy S. LoCascio, Lisa M. Nelson and me, David B. Foss; thank you. Each director is in attendance and is a candidate for reelection at this meeting. I would also like to take a moment to introduce Jacque Fiegel. So Jacque, if you would stand, Jacque is retiring from the Board after serving with us since 2012. The company has benefited greatly from her experience in the banking industry, her perspective on board matters and her commitment to serving community financial institutions. She has also been a good friend to me and to several of our Board members for many years and will be missed by all of us. Thank you, Jacque. At this time, I also want to recognize Laura Kelly. As previously disclosed, Laura passed away earlier this year after serving on the Board of Jack Henry since 2013. She too oversaw tremendous growth of our company during her tenure with our great leadership -- her great leadership and insight. For that, we are all grateful. In attendance are the following officers of the company: David Foss, Executive Board Chair; Greg Adelson, President and Chief Executive Officer; Shanon McLachlan, Senior Vice President and Chief Operating Officer; Mimi Carsley, Chief Financial Officer and Treasurer; Craig Morgan, General Counsel and Corporate Secretary; Renee Swearingen, Senior Vice President, Chief Accounting Officer and Assistant Treasurer; and Mary Stluka, Assistant Corporate Secretary. Also in attendance today are representatives of our independent registered accounting firm, PricewaterhouseCoopers LLP, Steve Maggio, lead partner; and Caroline Gagliardi, Partner Assurance. They will be available to answer any proper questions you may have during the question-and-answer portion of this meeting. Earon Crosby, representative of Computershare, our transfer agent, is in attendance to assist in tabulation of proxies and ballots and will act as Inspector of Election. Ms. Crosby has delivered her oath of office to the company. I will also add that the minutes of last year's annual meeting are available and any stockholder wishing to inspect the meetings should contact our Assistant Corporate Secretary, Mary Stluka at [email protected]. Earon Crosby, Inspector of Election, will now report on the mailing of the notice of this meeting and presence of a quorum.

This meeting is held pursuant to printed notice mailed with proxy statement on or about October 3, 2024, to each stockholder of record as of the close of business on September 16, 2024, who is entitled to vote. A list of stockholders entitled to vote at this meeting have been available at the company's headquarters for the past 10 days and is available here today. All documents concerning the call and notice of the meeting will be filed with records of the meeting. The count of shares present immediately prior to the commencement of this meeting indicated that a quorum with respect to each voting issue is present in person or by proxy.

I hereby declare a quorum present at the meeting. On behalf of the Board of Directors, I would like to express my appreciation to all stockholders who returned their proxies. The formal business of the meeting will now proceed. Those stockholders who have returned their proxy and do not wish to change their vote need not vote as your proxy has been counted. Stockholders who did not return a proxy or who wish to change your vote please go to the registration desk now and mark your ballots as we will declare the polls to be closed and voting will conclude upon completion of the following review of items to be voted upon. The first item of business is the election of 9 directors to serve until the 2025 Annual Meeting of Stockholders or until their successors are duly elected and qualified. As indicated in the company's proxy statement and notice of meeting, the Board of Directors has nominated the following 9 persons whom I presented earlier. There is no need to stand when your name is read: Matthew C. Flanigan, Thomas H. Wilson Jr., Thomas A. Wimsett, Shruti S. Miyashiro, Wesley A. Brown, Curtis A. Campbell, Tammy S. LoCascio, Lisa M. Nelson and David B. Foss. Mr. Morgan General Counsel and Corporate Secretary has informed me that there were no stockholder nominations or proposals for other business for this meeting timely filed with the Secretary prior to this meeting. The next item of business will be to approve, on an advisory basis, the compensation of our named executive officers. This vote is commonly referred to as the say-on-pay vote. Specifically, the Board of Directors has recommended that you vote, on an advisory basis, to approve the following resolution: Resolved that the compensation paid to the named executives as disclosed in the company's proxy statement for the 2024 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation session and analysis, the compensation tables and related narrative disclosure is hereby approved. For your information, the named executives for fiscal year 2024 were David Foss, Board Chair and Chief Executive Officer; Greg Adelson, President and Chief Operating Officer; Mimi Carsley, Chief Financial Officer and Treasurer; Craig Morgan, General Counsel and Secretary; and Stacey Zengel, Senior Vice President and President of Jack Henry Banking Solutions. The next item of business will be a vote on the amendment of the company's certificate of incorporation to reduce stockholder voting thresholds. Our Board has recommended that you vote for the approval of the charter amendments to reduce stockholder voting thresholds. Next item of business will be to vote on ratification of the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending June 30, 2025. Stockholders voting in person, please mark your ballots and take them to the registration desk now. All proposals are formally before the meeting. We will pause briefly to allow voting to conclude. [Voting]

I hereby declare the polls to be closed. The Inspector of Election will now report the tabulation results of all balloting for the election of directors and the other matters presented to the stockholders.

The voting results have been tabulated, and 8 of the 9 nominees for director have been elected by a majority of the votes cast. The compensation of the named executive officers has been approved by a majority of the votes cast. The amendment to the certificate of incorporation to reduce stockholder voting thresholds has been approved by at least 2/3 of the outstanding shares of common stock. The ratification of PricewaterhouseCooper LLP as the company's independent registered public accounting firm has been approved by a majority of the votes cast.

The final vote tally will be disclosed on a Form 8-K that will be filed with the SEC. This concludes the official business of the meeting. I declare this 47th Annual Meeting of Stockholders to be adjourned. Now is the time that I would normally turn this meeting over to Greg Adelson and Mimi, and I will do that in a moment. But before I do that, I do want to recognize one special guest that we have in the audience, and some of you have already noticed, so Brenda Henry has joined us today, and we're thrilled to have Brenda with us. And for those of you who don't know, Brenda is Jack's wife, Brenda hasn't been at the meeting for several years. We had dinner last night, and we said, we sure hope that she would join us, and so we're thrilled to have Brenda. Brenda has been such a supporter of the leadership team, of the Board and so this relationship continues, this special family relationship that we have at Jack Henry continues with Brenda now, and we're thrilled to have you here. So thank you, Brenda. And with that -- yes. And with that, I'm going to turn the meeting over to Greg. Of course, you all know that I retired as CEO as of July 1. So Greg Adelson is your new CEO, and Greg and Mimi will walk you through their presentations.

So good morning, everybody. And Brenda, thank you for making the trip in today. So we appreciate you, seeing you and what you -- the party that we had last night. So for me, this is a very exciting and humbling moment for me to be able to take over the leadership of this company. And I am very proud of our past, and I really want to make sure that we honor our past and so one of the things that I am adamant about doing in my role this year and as we go forward is continuing to look for opportunities to bring back folks that have helped our company move forward. And there's a lot of folks that have -- if you think about where we've been in the past and where we're going in the future, there's a lot of folks that have laid that foundation and we will continue to do that. But the things that we won't forget is maintaining our people first culture, making sure that the community and regional financial institutions that we are supporting every day understand that, that is our only mission and making sure that we continue to lead the industry and our customer service and our people first mindset. So some things that came to us from Jack and Jerry back in the day and have been passed on through the years from prior CEOs, like Dave and others have been our culture, our service and our innovation mindset. And we are taking that really to a whole another level. So the things that you're going to see as I go through the presentation is how we are starting to lead the industry in a lot of technology that the rest of the industry is still catching up to. But again, we're not going to forget the things that were part of -- that's on the back of our business cards, doing whatever it takes and doing the right thing, keeping an open philosophy. That's something that Jack was very -- Jerry were very proud of and making sure that we make it very easy for our customers to integrate with anybody that they're working with in the industry. And we're going to continue, and you'll hear this from Mimi, to continue to be very disciplined, resilient and future focused on where we're going. Some of the highlights that we had for the year, so it starts with record revenue of $2.2 billion and operating income of $489.4 million. We did have record sales attainment for both -- or for Q2, Q3 and Q4 for the fiscal year. We have 57 competitive core wins. That means that we actually took a business from one of our big competitors, whether that was FIS or Fiserv or whomever else, so 57 core wins in the year. 15 of those were over $1 billion in asset size. And so those of you that have been following us for a long time, we are continuing to go up market, winning larger and larger deals. Our pipeline continues to remain as robust as it's ever been. In fact, we have the largest pipeline in the history of the company right now. We continue to execute on our tech modernization strategy and what we're doing with our noncore products as well. We've been talking about that over the last several years. We've had successful rollout of a lot of our key noncore products. So Banno Business, Financial Crimes Defender and what we've been doing for faster payments with FedNow and the real-time payments network. We had significant progress in a program that we started about 5 years ago called One Jack Henry and really trying to improve the level of collaboration and communication within the -- across the company. Something that we're very proud of is continuing our industry-leading culture and service through post COVID and the macroeconomic challenges. So if you think about the challenges that happened during COVID and people working remotely, we continue to still work in a fairly remote environment, but we've been able to maintain the culture that again goes back to the days when Jack and Jerry started the company. Successful transition of a lot of key leadership. So not only the transition between Dave and myself, but we had a lot of other leaders that had retired through the year and people that we had moved into new roles. These are some names that I want to make sure that you're familiar with. So Shanon McLachlan, who was introduced earlier. He's been at the company a little over 9 years, actually ran our credit union division for a long time. Jonathan Baltzell, he's in the audience today, been at the company 23 years. He's been in our banking segment took over for Stacey Zengel, a name that most of you probably know. Brynn Ammon, Brynn has been with our company 11.5 years. She's actually been in our credit union group for all that time, but worked in the credit union industry for a long time before that. Susan Geiss. She's been at our company 29 years, 30 next, I think, in March. And she is now leading all of our large client kind of strategy and delivery of all of our large clients, making a big difference in making sure that our large clients stay with us. Erica Pilon is a new add that we had that she actually came to us from Cap One, Capital One, and she's come in to lead our strategy. So really a dynamic person to add to our organization. And then Abby Wood, who's been at our company about 13.5 years. She came to us through an acquisition when we acquired Banno, and she is now leading that group on a day-to-day basis. So a lot of leadership changes over the years, but all of these people have been put in place through a really nice succession planning process that we have and very excited about what they're already doing for our organization. So today, and you see this even in our template. The tenets, what we call the 4 tenets are really big on how we drive this company from a leadership standpoint and how we talk to our clients. And everything starts with a level of transparency. And so we believe that we need to have difficult conversations with our clients, with our associates and folks along that line to make sure they fully understand where we're going, what we're doing and understand the vision because as you all know, the people that can get behind that vision are the ones that are going to help us move that vision forward. We're trying to build a level of consistency like nobody else in the industry. and that's what One Jack Henry is about. So making sure that we have a lot of disparate parts of our organization that are now coming together to look and operate like one, One Jack Henry. Collaboration. Collaboration is really about us working together better as a team. We're now in 30 different locations across the United States. We actually have associates in all 50 states now. And so to be able to do that, you have to make sure that you're collaborating and you're communicating at a level that we've never been able to do in the past. And that is a big focus for us and a big level of differentiated different for us with our customers and in the market. So today, as a company, we're roughly 7,200 associates, again, spread out across 50 states in 30 locations. We still have roughly 300 solutions that we operate with, 4 core processing systems, 3 on the banking side, 1 on the credit union side. 73% of our clients now live in our private cloud. So that number has continued to grow through the years as you've seen these presentations. We mentioned earlier, $2.2 billion in revenue, and obviously, the market cap changes every day. This again is back to honoring our past. So the foundational aspects of how this company was built was that if we take care of our associates, our associates are going to be happy, they will take care of our clients. Our clients are going to be happy they're going to buy more. Our shareholders ultimately become happy. And that is not going to change. And so we have spent a lot of time making sure that we do the right thing with our associates and kind of driving various improvements, whether that be in benefits or in pay or just again, work-life balance. So good news is, is that we do a survey with all of our associates on their anniversary. So we get a lot of feedback literally on a daily basis from the associates that have those anniversaries. Dave started this several years ago. I continued it. I sent out 20-something e-mails this morning to folks that had anniversaries. And so this is something that we pride ourselves to get that instantaneous feedback. So 77% say that Jack Henry encourages a work-life balance. At a time when there was a lot of things going on with the pandemic and trying to let people balance what they needed to do at home for their family and what they needed to do to make sure that we were successful. That's a really good number that we continue to maintain that 77%. Average tenure at Jack Henry: 9.2 years. That is significant. Again, when you look at what's going on with the rest of the industry and our competition. 79% in our engagement score. Those are 4 or 5 questions that we utilized to get kind of a balance of what we're doing well. So 79% of that score, the industry benchmarks about 66% to put that in perspective. The employee experience monitor. So that is really, again, a framework of questions that we put out in our survey to get a variety of answers and get an opportunity for us to make adjustments to that if we need to. So 63% of our associates have taken the time to fill out these surveys, which is a very high number, again, so over 4,400 associates when the target percentage is about 45. But 87% believe in Jack Henry's value, 77% feel a sense of belonging. 77% trust Jack Henry and his leadership team, 83% feel Jack Henry demonstrates integrity, all significantly higher numbers than the average benchmark. As a byproduct of that, we continue to win a lot of Best Places to Work awards across the country. And many of these are awards that we intentionally go after and some of them are awards that we win that we don't even know that we're actually quote up for. So if you kind of look through the list, I won't go through them, but there's a variety of things in here that are tied to innovation. So the very first one around our new fraud platform and things with where we operate. So whether that be in technology. So the IDC FinTech rankings and what we're doing in technology there and a lot of things like U.S. News and World Report best companies to work for, but look at the Newsweek awards and the number of Newsweek awards that we won are all things that we did not apply for. Those are opportunities where Newsweek makes calls out to our associates, get feedback and based on that, we had the opportunity to win all of these different awards. And Most Loved Workplace in the top 200 in the country, and we were #11 of the Most Loved Workplaces in the country. So all of that taking care of our associates, as I said, leads to ensuring our customer service is second to none. And it still remains second to none in the industry. So our belief is, and it goes back to the days of Jack and Jerry that the world is a better place with community and regional financial institutions in here. And so we are -- as we say, we don't have a Plan B. Our Plan A, B and C is to ensure that community and regional financial institutions continue to thrive in the communities that they serve. So we have roughly 7,500 clients now here at Jack Henry. 1,700 of them are on our core systems, those 4 core systems that I mentioned earlier, 3 on the banking side, 1 on the credit union side. But 5,800 of our clients actually are not on a Jack Henry core system. They're on a Fiserv and FIS, whomever competitive core, but they buy one or more of our complementary and payment products. So we continue to maintain that number in a shrinking world of financial institutions. We continue to maintain the number of customers that we've had for many years. So our market share continues to grow in a shrinking environment. 99% of Jack Henry's plus, 99% of revenue comes from the financial institution space. So you have a little bit of business comes from another side, but it's less than 1%. And we continue, even through all these challenging times and having people work remotely and working in a variety of locations, we continue to maintain a 99% client retention rate at this company. Again, a testament to our associates and what they do to drive customer service for our customers. So again, as I mentioned earlier, we're continuing to go up market. We're continuing to win. We won 15, what we call, multibillion dollar opportunities last year. But as you can see over the last 24 years, how much growth that we've continued to have, what our market share is today on the banking side and what our market share is on the credit union side. And I'd point to the graph here to show that 27% increase in the size of our customers over the last 4 years, roughly, I guess, 5 years by the chart. Last 5 years, we've been able to grow 27% on the banking side and 34% on the credit union side, the size of our customers. And that means that our products, the things that we're doing to help them grow and again thrive in the communities that they support are all a byproduct to that. Our investment in technology is different than anybody else in the space as well. We continue to throw about 14% to 15% of our top line revenue goes back into the products and services and things that we need to do to protect our clients. And so that is something that is about double what we see in the industry from anybody else. And you can see kind of a smattering of a few things that we are actually working on today that are driving the numbers and the customer service and the core wins that I mentioned earlier in the presentation. So then it all comes down to how do customers view us from a customer service perspective. We send out about 20,000 different surveys a month. We get about 12% or so back from a return rate. And if you think about yourself, when most people respond to a survey, they usually respond when they're not happy versus when they are. And so we are actually getting unbelievable customer service scores from a standpoint of customers that have just received whatever that particular case or question they had. And you can see that their overall customer service experience is a 4.6 and their experience with the customer service rep is a 4.74. Well, this is on a 5-point scale, where 5, as you can see, is extremely satisfied and 3 is meets expectations. So in between that 3 and that 5, which you can imagine, most of those have to 5s to have those kind of averages, that everybody that we're talking to on the most part is viewing that their satisfaction level with the rep or the overall was extremely satisfied. And then ultimately, it comes down to making sure that we're generating attractive shareholder value. So I mentioned the revenue. We now have 91% recurring revenue, which creates a really nice opportunity for forecasting and for people to understand where we're going and what our guide is. We've had 20 calendar years in a row of increasing our dividends. And then at this point in time, we're roughly 97% institutionally held and 24% of that is internationally held. And then as you can see, we continue to drive revenue growth and EPS growth for the company. We're determined to get back to that double-digit EPS growth, and that's something that we're highly focused on for this year and will continue to be. So it's not just about what we do with inside the company, but it's also how we approach what's going on, on the outside. So we continue to be committed to the things that we need to do for the people and the communities that we support through a whole host of things that we've talked about. Our diversity and belonging inclusion components continue to drive a lot of our hiring practices and things along that line. And we continue to bring on some really top-notch talent based on our service reputation and our -- the way we handle our talent development reputation, but we also have a strong commitment to the planet as well. So we've come out with low carbon transition numbers, environmental stewardship and client-related risks as part of our sustainability reports and our commitment to responsible business practices. So whether that be making sure that we keep our customers safe through information and cybersecurity, our business ethics practices, and then ultimately, our human rights and fair labor practices as well. And then in the end, we're focused on where we're going. So we, again, honoring our past making sure that we continue to protect what this company was built on, but we need to continue to move this company forward. And so it starts with around 1:00 there. We're cultivating our people-first culture and continuing to deliver industry-leading solutions. So that is a high focus for us. It continues to be about execution. It continues to be about making sure that we continue our level of differentiation out in the space. So we're focused on that level of execution and making sure that the tech modernization strategy in our One Jack Henry continues to be huge differentiators as we talk to clients and we talk to prospects. We're going to be delivering a new, very unique small-, medium-sized business offering in early 2025, something that really nobody else in the industry has. So I won't go into detail here today, but I will tell you that based on the uniqueness we've gotten support from very large -- the card associations, Mastercard and Visa and others to make sure that this is successful. And again, we're driving this product through our financial institutions, which is an important part of making sure they continue to thrive. We're going to continue to deliver innovation and efficiency through what we call responsibly bold and balanced approach to AI and that is AI being artificial intelligence. And so making sure that we protect the guardrails of where we need to protect in the areas that we do back to where our associates are playing and where our products are playing because AI right now still has a lot of things that need to be figured out. So we're going to continue to take a very conservative approach, but we are very active in that space, both in what we're doing inside the company and what we're doing in our products. Continue to look at our market share and grow that again at the larger bank and credit union space. So again, our success from last year and the success that we've already continued to see this year. We had 50 prospects at our Jack Henry Connect Conference that came and we continue to, again, bring a lot of different folks here with interest in our company. We have to continue to be mindful of our security and compliance mindset. So making sure that everything that we do has security and compliance is the backbone of protecting the clients that we serve. We're also looking at things at the company that really aren't driving enough growth for our customers, ultimately means they're not driving enough growth for us. So we call this product rationalization, but we have an opportunity to look for some of the small businesses or small opportunities that really aren't moving the needle and we need to make a decision on those. And then part of the tech modernization is delivering core and noncore solutions, both inside and outside the Jack Henry base. So I mentioned earlier, we have 5,800 clients today that buy products that are not part of the Jack Henry core family today. So we're going to continue as we build out our tech modernization story to be able to sell our products both inside the Jack Henry base and outside the Jack Henry base as well. And then I'll wrap things up with kind of what's top of mind for me as we kind of move in post election. So just kind of figuring out what's going to happen with the new administration, whether that's going to end up being less regulatory scrutiny and things along that line. The interest rate uncertainty, I think we have a little bit better understanding of where that might happen over the next 12 to 15 months based on what we've seen post election. The credit union and bank market is going to explode with M&A, so mergers and acquisitions. We're hearing this from our customers. We're gearing up for that. We have our teams ready to go, but it will be much more significant than it's been in the last several years for a variety of reasons. The regulatory scrutiny continues to increase, so does our focus and our resources. So we have a lot more resources than we've ever had in our compliance and security sides of our business. Again, could that change with the election results, possibly. But at this point in time, it continues to be high in top of mind. Maintaining our sales momentum, especially in the multibillion asset market. As I said before, as you start to look at some of this M&A and you look at where we are going as a company, opportunity to truly be in front of that and have the larger institutions in our in our group is a big part of our strategy. Continued execution on our key priorities. So whether that be the small, medium-sized business, product that I mentioned earlier, the tech modernization strategy and our One Jack Henry strategy as well, leveraging AI to enhance our products and operational efficiency and effectiveness. So that is a big part of us continuing to drive margin growth and opportunities to do things, again, differently in our business, ensure our Jack Henry and our clients win. We believe that we are in business to make sure that our clients are successful. They are not in business to make us successful. So the more that we can make them win in the markets that they win, we will ultimately become successful as well. And we want to continue that with our exceptional service and our innovative technology. So with that, I will pass over the baton over here to Mimi. And as I mentioned earlier, this is something that doesn't change either. So our company philosophy this goes back to Jack and Jerry, and this is something that we're very prideful of and we'll continue to operate, which is do the right thing, do whatever it takes and have fun. So we're very appreciate that Brenda is here today. I'll pass that over to you.

Before I start, I just wanted to share a thank you to Brenda. It's so wonderful to have you here. I've now been at the company over 2.5 years. So unfortunately, a newbie relative to these wonderful 10 years that you've heard of so many of our associates. And so I am appreciative and grateful for Brenda for sharing so many stories and history and allows me to get a sense of the spirit and the man that was Jack Henry. So thank you so much for that. So I always get the luck of being right before lunch in Q&A, so I'll try and keep us on time. The team behind me did a fantastic job of preparing a wonderful experience for you all. So with that, let's talk a little bit about Jack Henry and our fiscal year 2024, which we closed about 4 months ago. We've just reported Q1 of fiscal year 2025 a couple of weeks ago. So let's get into that a little bit. I'll start with just at a high level from a CFO perspective, to me, Jack Henry is a premium franchise. The durable, predictable growth that we deliver not only on growth but margin expansion, you have an experienced management team, a strong culture that Greg talked about of doing the right thing, and a performance management system that really is designed to align outcomes. We are 100% focused on delivering growth and delivering profitability. We have a conservative approach to our balance sheet we have strong free cash flow generation. And although we have not done as much M&A in recent history, we're an experienced buyer and we really have that blend of being able to build in-house to partner and to buy to fuel our growth. And so those enduring financial principles dedicated to creating shareholder value will help us today and tomorrow to not only meet our future, our clients' future needs, but also to help build a sustainable business and generate shareholder returns. So let's jump into a little of some financial metrics. At our recent Investor Day, we talked about 5 key financial metrics for the company. It's great to see in fiscal year 2024, we delivered or exceeded on all of these metrics relative to our targets. So let's get into those important 5. You have non-GAAP revenue growth that grew solidly at 7.4% and I'll remind you, that's off of a $2 billion revenue base. Number two, you have non-GAAP operating income margin expansion. That's the increased profitability for every dollar of revenue. That grew, and that's a continuation of our commitment to delivering additional profitability. Number 3 is GAAP EPS. We are a very disciplined GAAP EPS, which means we don't add a lot of like noise into our earnings. It's a very high-quality earnings story. We produced a healthy $5.23 a share. for all of our shareholders. And we're continuing to focus on in FY '25, you'll see our targets about returning to double-digit earnings per share growth. The fourth metric is around free cash flow. Free cash flow conversion was at 88.1%. That's $337 million of free cash flow, representing $130 million improvement over the prior year. And the last metric, ROIC, it's kind of a funky term, but it stands for a return on invested capital. That means how are we spending, what are the returns we're getting on the investments we're making. And we have a very healthy and impressive 20%. And so if you look at a lot of other companies, Jack Henry's return on invested capital numbers are quite impressive. So we've talked about many times that our long-term growth model generates about 7% to 8% of non-GAAP revenue growth. And that comes from that portfolio. We have over 70 product families, many different services that all help financial institutions grow, manage risk, serve their end account holders. So that revenue comes up from a broad base of functions. We'd like to talk about and we introduced at Investor Day this concept of key and non-key, or lesser key, if you will, not really dramatically correct, but it's kind of lesser key. Still important, great revenue to get but really not as part of the future direction. So that key revenue makes up about 75% of our total revenue, growing at healthy numbers, over 10% growth. It includes areas like our cloud and processing business. As a reminder, our cloud is both our private and public cloud business. The processing has to do with things like our card business, our transaction and digital business, our mobile processing business. And that remaining 25% of the nonkey business, as I said, still really desirable important revenue to the company and important to cash flow and important to provide our clients with choice as it supports also some of the key business areas. So there, you'll have things like software license maintenance, hardware sales, work orders and the rest. So that side of the business not growing as large numbers, but still very important to the future. So as a total, a healthy profile of business. And as we continue to evaluate each of our solutions with alignment to our strategy, as Greg mentioned, we're very future focused on thinking about where will that future revenue come from? And what is the growth rate potential of that future revenue. So let's look at the revenue as a totality. I talked about we've historically grown in that 7% to 8% basis. That's on a non-GAAP basis. So we take away when one of our clients is involved in an acquisition where they leave Jack Henry, we sometimes get what's called deconversion revenue. So if we strip that away, other kind of non-reoccurring revenue, we get that non-GAAP revenue. And we think that grows in the near term, about 7% to 8%, and that's in line with our FY '24 results, and that's in line with our guidance for FY '25. So drivers of our growth engine, you have our core business, the on-premise to cloud, private cloud continues to be a shift, a robust pipeline of new clients and growth of existing clients. In our payments business, you have card growing, you have our enterprise payment services business growing. And you have new areas like the new faster payments options that are providing exciting solutions to our clients and their account holders. And then complementary, I'd like to think if it's not core and it's not payment, it's complementary. It's kind of the all else bucket, if you will. And that's where we have a lot of solutions. You have fraud solutions, lending solutions, digital solutions, all that help our clients. So together, those 3 categories are the 7% to 8% of near-term growth prospects. That part of that revenue, we talked about the growth of our clients and the growth of new clients comes from a strong demand. If I think about the solutions we offer, who we serve, the construct of our business model, the robust and sustainable and consistent nature of that demand. Dave had a phrase that we love to say, which is no matter the challenge at a financial institution. Technology is either the solution or a significant part of the solution. And so through driving continued innovation, we're helping our clients not only overcome the challenges, but think about growth prospects, continuing to deliver on that trust, innovation service to their end account numbers and the future members that they want to have an account holders. So driving service excellence today and innovation for tomorrow. And that's how we're going to continue to have a strong pipeline for demand for our products and services. We talked a little bit a moment ago of those 3 segments that we report on. You had core, you had payment and you had complementary. And I'm pleased to report that each of those segments individually produce strong results. So we're not just reliant on one segment of our business to overcompensate for other segments across the board, we're seeing strong profitability and growth. In our core business, Greg had some of the statistics a couple of minutes ago, but over 1,600 banks and credit unions that we support with mission-critical processing systems. Payments, we handle $230 billion worth of monthly processing volume that's over $1 billion in monthly transactions on behalf of our customers of all sizes, including institutions up to $200 billion in size in our payments business. And then we have a lot of new, exciting innovation. You have the RTP and FedNow and all these new payment rails that are going to help our clients think about solutions, think about quicker ways to help their end customers send and receive payments across the ecosystem. And then complementary. We have areas like digital that are continuing to grow. And when we think of digital, it's not just the apps you use on your phone, it's all of our solutions experience without walking into a branch without talking to someone. So it's a digital marrying that trust, service and relationship of their financial institution but also delivering it into a way that allows them to expand their growth and their reach of clients. So exciting things for the future. And from that revenue, which we talked about of that 5 pillars, the first was revenue growth. The second was profitability, that non-GAAP operating margin expansion. And the great news is the basis of our model that software delivery, where you deliver it once, you have shared software components across multiple of our solutions and then you can sell the same product many times. Our multi-tenant architecture, which means we don't have to stand up a new server every time we have a new client sales that keeps variable costs low. The way we build and the way we contract that grows with our clients as they grow. All of those things, the mix of our new products that we have and our disciplined cost management approach allows us to generate additional profitability as we continue to grow revenue. And as we think about things in the future, Greg mentioned AI, we have the public cloud usage we had the product rationalization project. That should all contribute to additional margin expansion opportunities for the company. The third metric we talked about was GAAP EPS, or earnings per share. And from our start, if we were here in 1986, I would have been reporting $0.03 a share, and that was pre split. So imagine there's been a couple of splits, $0.03 a share to today -- well, as of 4 months ago in FY '24, $5.23. So a long history of delivering shareholder value through earnings per share growth. As I said, Jack Henry is a premium, high-quality growth earnings company. And you see that revenue flow through to operating income flow through to earnings per share for each of our shareholders. So in the year, we expect in FY '25 to return to solid double-digit earnings per growth. So last year, in FY '24, we did an early voluntary retirement or departure program and that was a bit of a drag. We had some expense and onetime expense that related to some of those associates leaving, so this year in FY '25, we're going to be able to grow over that expense and produce even larger earnings per share opportunity. The fourth metric, I'm nearing the end, just 2 metrics left to go, the fourth metric of free cash flow. So Jack Henry as a software company has a long history of solid free cash flow generation. So talking about how your revenue flows all the way to the bottom line to the balance sheet and generates cash that we're able to reinvest into the business that we're able to use through dividend growth that we're able to use for acquisitions. So reinvesting in our business so that we can create outsized long-term shareholder valuation. And as we invest in our business, we invest about 14% to 15% of revenue back into research and development every year to drive that strategic innovation that will support new and existing clients. So that leads us to our fifth and final metric. I know, thank goodness, I didn't do top 10, right? So fifth metric, return on invested capital. As I mentioned, we are disciplined in how we think about investing to ensure the return of that investment. So we're committed to being disciplined, responsible stewards of your capital to shareholders and we're disciplined capital allocators. So the result is in FY '24, a return on invested capital of almost 20%, 19.7%. And during FY '24, we were able to return significant amount of capital to our shareholders and debt holders. We distributed over $150 million in dividends. Greg mentioned a 20-year consecutive calendar year increases in our dividend and repurchase of over $28 million of Jack Henry stock. And we also made significant progress in paying down our debt, $125 million. So we're very responsible in how we manage our balance sheet, our low leverage profile and our prudent track record of promptly repaying M&A-related debt and returning capital to our shareholders. So let's think recapping those final financial 5, as I call them, and the outlook for this year, we're about a quarter into the year. We -- about a week ago, last Wednesday, we had our earnings call and released our Q1 solid start to the fiscal year, and we expect to see accelerating growth throughout fiscal year '25 as we get through with an even stronger second half of the year. So our full year guidance of non-GAAP revenue growth of 7% to 8%; non-GAAP margin expansion of 25 to 40 basis points and EPS growing at 10.6% to 12.3%, our free cash flow conversion of 65% to 75% and a return on invested capital of at least 20%. So together, signaling another solid year of consistency, strength, growth profitability in a bright future. So with that, building on our future and focusing on our -- building on our history rather than focusing on our future, I want to thank you for your commitment to being shareholders to participating to understanding our business. So on behalf of all of our associates, thank you.

We have time before lunch, if you all have any questions that either Mimi or myself could answer and they'll pass around a microphone. But we have some time if you have any questions.

I'm [ Dale Marni ]. Are you FDIC insured?

Our banks are, yes.

Well, What I ask is, is your financial statement, profit and lost any different than a bank?

So as a public company, we report on GAAP, which is according to the accounting standards, and we have our auditors here. If you have any questions as well. So we are not -- we don't take deposits ourselves. We deliver the solution so that our clients who are typically FDIC insured programs, they have that offering.

Well, that's what I understand. The FDIC is for depositors to keep them financially correct or whatever. Well, in case the bank goes belly up. So you're not involved in that.

We provide the technology to enable them to take the deposits or to lend the products or to do your debit card or things along on that line, but we're not responsible for taking the deposits for them.

And the FDIC is a government-run program. So it's a safeguard kind of a safety net, if you will, that's run across the banking system so that should any one bank in the system have a failure they've essentially all put money into a pool to protect those deposit holders.

Okay. That's what I understand. So you've cleared it up.

If you like to deposit any money, we'll take it, though, if you want do that.

Thank you for your question.

Any other questions? Okay. Well, the team has provided a really nice lunch. And so just if you follow the signs right back here, you all can grab some lunch and come back down and sit down and we can interact with some of the leadership team as well. I do want to thank you all for making the time to come here and to be a part of our shareholder meeting. And so we'll see you again next year. But again, thank you for your investment and trust in our company.