Jack Henry & Associates Q3 2024 Earnings Call Transcript

Well, Dave, it's been good talking to all these calls. We'll miss speaking with you in the future, at least on the calls anyways. I wanted to get your perspective on maybe just the backlog. I know, Mimi, you said you're expecting maybe the lower-end of the non-GAAP revenue for fiscal '24. And maybe backlog is the wrong word to use, but just your perspective on based on what the sales pipeline looks like and how good you feel about as we move forward, the ability to predict revenue and maybe why the lower-end of the guidance?

So I'll give you my perspective and then I'll ask Mimi to comment. So first-off, I mentioned in the release and in my comments that the best sales quarter we've ever best third quarter sales quarter we've ever had. And I also highlighted the fact that the sales pipeline has been replenished almost to that same record level that it was at last quarter. So as I see what's going on in the sales pipeline, but even more importantly, as I see what's happening here in the quarter that we're in right now, which of course, we're not here to announce, I feel really bullish about the future opportunity as far as sales at Jack Henry and our ability to continue to deliver. So that's a sales perspective. I'll ask Mimi, did you want to say?

Let me just add this. So I think the other thing is that we've had unbelievable sales success this year. But as we've highlighted many times, the deals that we're selling this year for the most part don't actually become revenue opportunities until future years and future quarters. So I think part of this is, yes, there are some things that are in an implementation queue and we're working through all those as we always do. But there isn't really anything that is signaling in anything other than hopefully future success-based on what we've seen. So I just want to make sure that you understand that all of the sales success we're seeing right now will be in future quarters.

Yeah. The only thing I would add, Kartik, is that we feel really good about all three operating segments, revenue and the total revenue is still very much in-line with our long term algorithm and what we thought about at the beginning of the year. There is a part of our business that does relate to economic factors in U.S. unmet, and that's the card business. So I think as we look out for the year, we feel really confident about our ability to hit that range.

Perfect. And then, Greg, just you talked about AI and maybe the opportunities in there. But I'm wondering for Jack Henry, is there an opportunity for you to use it internally and could that lower-cost? And if so, is there upfront cost that you're dealing with in an effort to implement that.

Yeah, it's a great question, Kartik. So the short answer is we are spending a lot of time on internal operational efficiency opportunities throughout our entire organization. In fact, we most recently had a corporate leadership team meeting where each of the individual business units and non-operating business units all presented their ideas for utilization of AI, specifically generative AI. And so we're going through prioritization. We've done a really good job of spending time making sure that we're focused on building the efficiencies first, getting the learnings and all the other stuff. We've just approved a couple of utilizations for the Microsoft co-pilot for internal-use and the GitHub co-developer stuff for the copilots. And we're actually in the process of going through all of those things and looking for ways that we can continue to build efficiency and effectiveness first as we're actually doing some other things within some of our products as I announced as well.

The only thing I would add-on there is, as Greg said, responsibly bold and balance is our approach and that covers both the usage as well as the investment. And so we're using the internal existing policies and processes to prioritize, to develop business cases, to think about the benefits, not -- this isn't just a curiosity, there has to be business cases. And so all of that will still sit within our planned budget and R&D and internal expense policies.

Perfect. Thank you very much. Appreciate it.

Hi, Dave, Greg, Mimi. Thanks for taking my questions. And Dave, congrats again on the transition, (overlap). Well, wanted to start on the margin front, good performance here. Nimi, maybe if you put a finer point on this. I know that you mentioned some operational efficiencies that drove this maybe some mix factors as well. But maybe a finer point on that. And then as we think about the go-forward margin trajectory, it seems like you're above this year kind of what you've outlined for the longer-term. So how does this year's margin performance kind of inform the view on the longer-term margin progression? Thanks a lot.

You're welcome. So Andrew, I would say for this year, it came down to strong execution, operational focus. It's a bit of product mix as well, but we're being very diligent around headcount, around spending for the year. There's also some timing around products and how that amortization impacts us as well, which is also something that we're just going to be thoughtful about for next year. It's a really early still in our budget planning. Our teams are getting together and thinking about the prioritization. I would say at this point, still thinking about that long term range we've given versus an elevated state, but we're always trying to deliver shareholder value. And so that's going to always be a focus for us.

Perfect. Thank you for that, Mimi. And then maybe just digging into the average contract sizes of recent cohorts. I know the tax rates have gone up over the past few years, but maybe you could put just a finer point in terms of what you're seeing in terms of just complementary product adoption and just average contract sizes, perhaps recent periods versus maybe a year or two years ago? Thank you very much.

Yeah, it's Dave. So one of the challenges in this whenever we have a conversation like this is there is no such thing as average when it comes to our contracts. You're correct, the tax rates tend to be high with our core clients but remember, we sell a lot of solutions that are outside the core base and the variety of solutions that we sell, roughly 300 different solutions, they range from very small-ticket price to very large ticket price. Most of the solutions, almost everything we sell today is hosted. So it's rare for us to sell a licensed version of a solution. Well then in a hosted contract, are they going to be hosted for three years or 10 years, so the trying to talk about average is pretty challenging, the best indicator, because we have used the same measurement approach for sales quota attainment for many years now, the best measure is the fact that as I just mentioned, Q3 was the best Q3 we've ever had. And that's the most significant indicator of sales success is the fact that we've used the same way of measuring contracts for many years. And so it's a good relative performance indicator for our sales organization and sales overall are up. So I know it's frustrating to not be able to talk about averages, but it's just really not a practical thing to try and do in our world.

No, it makes sense. Yeah, a lot of different shapes and sizes out there.

Exactly.

Yeah. Congrats again, Dave. Thank you very much.

Thank you.

Guys, thanks. And Dave, I want to say my congrats as well. It's been in three years on so always appreciate the help. Hey, guys, maybe just start-off on a free-cash discussion. If we could just revisit, it obviously has gone through its periods of strength above 80% and below 60%. Now you're saying back to 70 plus. Maybe just give us a sense a little more on what the driving factors are in the sustainability of it now and maybe just help us understand if we're back to 80% going-forward in the next couple of years?

Yeah, so it has been a bit of a roller-coaster ride. And in-part, that was due to the lack of clarity from a legislative front. As we said on last quarter's call, we were hopeful the progress on Congress addressing the Section 174 R&D related impact on cash taxes would go through. We were optimistic, but not betting on that. But even in the absence of that, the clarity that the Treasury, the IRS, our outside consultants, our incredible tax team here at Jack Henry have had has really helped us from being able to discover savings from a cash tax perspective that impacted effectively last year a benefit. So that would mean less cash tax paid this year. And so even if that legislation does not get fully addressed, I think we're in an improved position versus where we thought earlier in the year. We're still hopeful that it will be addressed, but that's the biggest driver. That represents over $29 million in last year's impact alone, let alone some additional for this year. So that's the biggest impact to the free-cash flow, and I think that's sustainable further go-forward.

Okay. That's very helpful. Thanks. Guys. Greg, maybe just on your side, if we could just talk about what you're seeing in the market more specifically around demand for core conversions or obviously, the cloud discussion we've had for some time now. I mean just any inflections you're seeing for specific products or offerings or maybe vice-versa anything that's weaker? Any more color would be great. Thanks, guys.

Yeah, sure. So I think a couple of things as part of our survey and even just obviously with our regular conferences and conversations with our clients, deposit growth continues to be a big driver. Operational efficiency continues to be. And that's why we really highlighted some of those key products that we're already focused on and fraud being a big one, things that we're already focused on and driving out in the market set, and we're continuing to see some nice pickup in all of those. So those continue to be big ones. I think related to the tech modernization and what we're doing with our modules, we're continuing to have a lot of success and on the execution side of that. We'll continue to talk more about that in future calls. But right now, we're really excited about what we've done with Data broker and executive dashboard. We think those are some products that really are not out there in the space today and we'll continue to create an opportunity for us to show the advancement of what we're doing in our cloud-native technology and utilization of generative AI as part of that. So all of those will kind of tie into what the demand has been around deposits, fraud opportunities, operational efficiency as the three big things.

Great thanks, Greg. Thanks guys.

Hi, thanks for taking my questions. I guess first quick one from Mimi. I know it's a little too early to talk about the '25 outlook, but just based on the new sales momentum that you've had this year, it seems like you are setting up for stable, if not accelerating revenue growth into next year. Any reason to think that may not be the case? And then maybe if you could also specifically comment on the payment segment trending slightly softer than we would have thought, just how it performed relative to internal expectations and what you're expecting for the go-forward trend-line there?

So, I wish I could tell you with more precision than next year's targets, but it's just a little too early. We're still during the budget process, but there's no reason to have any other expectation than the growth algorithm at a high-level. There are some things that present challenges each year from a grow over perspective that even though we're having tremendous success with the sales pipeline, there's a lower convert merge that impacted this year. You just never know from a grow over perspective. But I think the growth algorithm is a pretty good framework to think about for next year. As it relates to this year and the payments question, I would say that really to categorize it, we saw slower transaction growth of broadly slower-growth in debit. And that was in-line with all of the major card network providers and U.S. trends we've seen and a tough comp, but we're reiterating the full-year guide and we feel comfortable in that 7% to 8% growth algorithm is still appropriate level.

Thank you for that. And then, Dave, I want to add, I really enjoyed working with you the last few years and you will certainly be missed. One high-level question for you, three big players that have the majority of the share in the industry, but the number of fintechs that are going after the opportunity is larger today than it probably was a few years ago. So how do you see the competitive landscape evolving over the next three to five years?.

Yeah. So first-off, thank you, Vasu. It's been fun. So it's interesting. This people trying to come into the U.S. market and provide competing services to players like us has been going on for quite a while now. And the challenge for many of them is they approach it from a technology point-of-view as opposed from a banking point-of-view. And so they come in thinking, hey, I can deliver a greater user experience, something that's cooler and more fun, but they don't realize how really difficult it is to do the heavy-lifting that's behind the scenes that you don't see, it's the work that's not sexy, but it's the work that has to be done for a bank or credit union to be successful. And so we've seen many come into the U.S. market trying to deliver a solution, don't understand the regulatory environment, don't really understand all the heavy-lifting that happens underneath and then they kind of back away and maybe turn their solution into a digital banking solution or something like that. And so I don't view what's going on today as really any different from that.

There are people out there and they're smart people, but I think the complexity of all the things you have to do to keep a bank or credit union operating in imbalance and all those important things is oftentimes overlooked. So we have our eyes wide-open. We're not pretending that nobody is a threat, and we follow a lot of different companies. But today isn't really in my mind any different than it was five years ago where a lot of people were talking, a lot of people were trying to figure out how to really take a foothold in this industry and it's just really difficult to do all the things that we do. So I don't see that changing anytime soon.

Thank you for the color.

Hi, good morning. This is Tyler on for Jason. Thanks for taking the question. I wanted to start by asking about the progress in rolling out some of the complementary solutions, such as Business Financial Crimes Defenders outside the core. Can you maybe just level-set where we are today with that rollout? If I remember right, the target was some sort of implementation by the end of F '24 and just sort of when you think this might be needle-moving going-forward? Any clarity there?

Yeah, this is Greg. So I'll take that one. So as far as execution, we're moving forward. We had talked about being able to sell it at the end of this calendar year, and we'll be able to start doing that in Q4. Execution and planned implementation will be in the 4th-quarter of our fiscal year '25 second-quarter of the calendar year of '25. That will be the planned implementations. As we mentioned earlier, we were going to take this in a very strategic fashion going after just a handful of competitive cores. We're focused on working through one right now. You have to get some level of cooperation to do some of what we're doing as well. So some of that gets kind of in the documentation and working through some of those kind of idiosyncrasies with what you need. But as far as our plan is on-track to have Banno business, our CPS card product and Financial Crimes Defender, all three of those products that today that do not go outside of the Jack Henry core base to be available all at the same time and offer the first specific core that we're targeting and then we'll be working through the other thing. So as far as answering your question of when it will have any significant impact, it will be a little while for that to happen. And but the reality is we think the stickiness of what we're doing with those particular products will help us with some other things in selling other solutions and other opportunities.

Can I offer just one clarification to your question, Tyler, just to make sure we're on the same page here. So what Greg has talked about is these brand-new solutions that we're rolling into outside the base. But we have thousands and thousands of deployments of other solutions to non-Jack Henry core customers. So I just want to make sure there's no confusion about we've been selling outside the core base for many years, thousands, in fact, I think we have more customers, more banks and credit unions running our bill-pay solution who are not Jack Henry Corp customers than who are Jack Henry Corp customers, and that's true for a number of other solutions. So I just want to make sure we're clear on the fact that we know-how to sell outside the base. It's just the strategy around these brand-new solutions that we've been really kind of talking about and thoughtful about.

Okay, understood. I appreciate the clarity there. And then just as a follow-up, I wanted to jump-off of the previous competitive positioning question, but from a slightly different angle. Can you discuss any signs of success you're seeing or any trends you're seeing with moving a little bit more into the mid-market financial institutions? A playing field, if you will, sort of what trends you're seeing there, if there's any different go-to-market that you need to implement? I know you mentioned that there was a couple of multi-billion dollar signings over the past several quarters, but just any update there?

Yeah, sure. This is Greg again. So I'll take that. So as we've mentioned previously and they're still all-in the queue. We have $20 billion-plus opportunities in our current pipeline, and we continue to work those and continue to make progress on those. But I would say that even in the multi-billion space, let's just Call it the $5 billion to $15 billion, we're continuing to see more-and-more opportunities in there. And I would say the biggest drivers really are the technology modernization strategy that we have articulated and what folks are seeing for the future. And more importantly, what we've already executed on, as you can imagine, most people want to see that it's not just a sales pitch, it's some level of execution and we continue to show advancements on what we've done, where we're going and things along that line. So that has really helped us continue to move and progress in the sales pipeline with many of these larger opportunities. So I think what you're going to continue to see is what we're doing on the technology side, what we've always been known from the service side, continue to create those opportunities.

Thanks, Greg. That's very helpful.

Hey guys, congrats, Dave. Great career. I guess, first of all, I guess just kind of two kind of cleanup questions. Corporate revenue was lower-than-normal, lower than recently, I think as the conference wasn't in the quarter, but then corporate costs were higher-than-usual. What's just the dynamic there? And do those go back-down in the coming quarters?

Yeah. I think I wouldn't read anything into just like a 1/4. We did have relative to last quarter, we talked about that the annual merit increases hit in Q3. So from a cost perspective, that's where you saw personnel costs go up. So the revenue, it could just be hardware or as you mentioned last quarter was the conference, but I would not read too much into that.

Okay. And then one other one. I think you had a negative term fee in complementary. And then I think you actually had a small EBIT loss on term fees. So both of those, I don't know if you've ever seen those dynamics before either of those. And maybe just, I know it was such a small term fee quarter anyway, but just describe kind of how that happens and if that's one-off?

Yeah. This is certainly a one-off. So as you know, for deconversion, we do get a little bit of notice once they start the file transfer process. So we were informed that a financial institution had planned to de-convert and then later postpone the timing and delay. And so there was a bit of a reversal on that transaction.

And this is something, Dave I mean, I've been doing this a long-time. I don't remember the last-time I saw this, but this was essentially a customer that was recruited away by a competitor and they had a failed conversion and so decided that they needed to back-out of that and come back to Jack Henry. So I I don't ever remember that happening and certainly haven't seen a failed conversion in our industry for many, many years. So this was a real unique situation.

No, that's great to hear. Thanks guys.

Great. Thank you very much. And also want to extend my thanks to Dave for all the hard work he's put in on behalf of Jack Henry over the years. Wanted to quickly maybe take advantage of Greg and Dave being here. And dig in a little bit on your commentary about customer sentiment. I'd love to get your thoughts on the regulatory scrutiny that banks are going through right now, which seems to be picking-up as several of the banks have alluded to plans to adjust their capital, liquidity and CRE concentrations over the next several quarters. That doesn't seem to be impacting your bookings and sales performance, but curious if the topic of greater regulatory scrutiny is coming up with customers and how you're thinking about what you can do to help those customers as they deal with that?

So greater regulatory scrutiny is absolutely in the conversation very regularly these days and really since the I guess May of last year the period where there was all this consternation around what was happening in regional banking space, since that time, the regulatory environment has changed pretty dramatically for I think all of our customers on the banking side. And so there's a lot of conversation about that. It is interesting, however, that has not had any impact on bookings. And one of the things that I say regularly now is if you're running a bank or credit union, almost any challenge you have, almost any problem you need to solve in this day and age in 2024, the solution involves technology.

It doesn't involve usually people because they're trying to figure out how to automate or how to use technology to either mitigate risk or grow the franchise or something like that. And so I think because of the world we live in today, where technology is almost always part of the solution, that's why regardless of what's going on with the regulators, there is an opportunity for us to help them using some type of technology solution, either, like I say, to grow the franchise or to mitigate risk or deal with fraud or whatever it is. So I haven't seen any or heard and we just did a client conference in Kansas City about three weeks ago, no discussion about backing off on spending on technology or anything like that. In fact, the survey that Greg just cited, there was an expected increase in tech spending for the coming year. And so those would be my observations, but I'll defer to Greg if you want to.

No, I think you were pretty complete. I think the part that I would say is that the technology component really is the driver here is that more-and-more folks are recognizing for them to continue to be able to quote punch above their weight, especially in the community bank space is that they're looking for technology to stay to the level of relevancy that they need to be. And that's why we've been so adamant on our focused execution on getting these products out and giving us and our institutions an opportunity to do that?

Got it. Thank you for that. And then want to turn quickly, Greg, to implementation and you mentioned implementation queues. How are those trending broadly and how are you thinking about the puts and takes between margin expansion you're delivering versus the potential for additional resource allocation to speed-up those implementations? Just walk us through the thought process and what you're dealing with from a current demand perspective?

Yeah, it's a great question. And it is absolutely something that we look at truly every month with our teams through. We go through very detailed financial analysis and various reviews with each of our business unit leaders. And those discussions always take place. And so Mimi already referenced the kind of business cases. And so we actually take a business case approach where we look at what we may need to add relative to enhancing the implementation queue, what kind of value are we able to provide both from an immediate revenue standpoint, helping kind of relief some pressure on the sales side, things along that line. So we actually have done that multiple times this year where we've added resources to accelerate queues or to do things differently. We're also constantly looking at process improvements that we can do both from a systemic standpoint or just general process improvements.

Obviously, the questions that were asked about AI earlier, we're looking at ways that AI might be able to help us with some of those. But to answer your question, we are constantly evaluating both sides, but we also recognize as long as we can continue to move that queue forward and it makes sense, then we're going to add people to make sure that happens.

Great. Thanks for that, Greg.

Sure.

Our next question comes from Charles Navan of Stephens. Please go ahead.

Great. Good morning and thank you for taking my question. And just want to echo everybody's gratitude and congratulations, Dave. It's been great working with you and just want to wish you all the best.

Thank you, Charles.

So I wanted to follow-up with the earlier question on some of the progress you've made in the middle-market and just get a better understanding of how we should think about some of those larger relative banks from an ARPU standpoint as well as their product consumption in terms of what products there, how it compares to some of your smaller banks in your customer-base, what they're buying, what they're not buying and what's helping you win those deals as well?

Yeah. So I'll go ahead and take this. This is Greg. So I think as far as the deals that we've won, so the six multi-billion that Dave referenced this year, I'd say there hasn't been a significant alternative to any of the solutions that we typically sell. What's helping is what I described earlier, not only the strategy for the future, but what we've executed on the present, which is around financial crimes, and specifically Banno business, what we've done in our payments markets and things along that line. So those continue to be huge drivers of opportunity. And maybe even more specifically than what we see just specifically in a core offering because those complementary products really help drive the core decisions, to be honest with you. As we continue to go to the larger ones, so the $20 billion-plus that I've talked about, still a lot of the same interest. The question will be is where are they in some of their current relationships, more importantly, they tend to buy a little bit fewer products. They tend to not do you know everything with one particular vendor.

So as we're working through the dynamics of specifically those three larger ones that I've referenced, but we're also seeing some larger ones where a product or two of Jack Henry, especially as we start to look outside the Jack Henry core base and be able to take some of these products, we're getting one-off opportunities and two-off opportunities from larger institutions that are more than the $50 billion that we have today. So I think you'll continue to see that evolution as we continue to drive things outside of the Jack Henry base. But as we've referenced before, we have complementary and payment products today in institutions that are as large as $200 billion. So that's not foreign to us.

Great. Thank you. And as a follow-up, I just wanted to get your general thoughts on M&A and consolidation in the bank space. There's been a handful of deals announced in the past month and it seems like the regulatory scrutiny that you had alluded to could be a catalyst for consolidation. But as you think about the next year or two, just wanted to get your general thoughts on M&A in the bank and the credit union space?

Yeah, another good question. So we are continuing to see that. As we've referenced, I think on our last earnings call that we have started to add some staff relative to that, especially on the credit union side, where we've seen even more of those opportunities. But we're seeing more on the banking side than we did just a few months ago. Part of the challenge though is the timing of when those are expected to be completed. So we've actually had a couple of our institutions that have acquired other competitive institutions for that matter. But the ability for them to be able to complete those have been delayed by regulatory challenges. So in some cases, five and six months. So will that continue to be a challenge? That remains to be seen. But I think what's happening right now, especially in the market with especially we'll see what happens with the election, but we're continuing to see some challenges with the timing of when those things can be completed, not necessarily the interest in doing them.

And I would just add-on that, that creates a little bit of a headwind for us this year. We've talked about the lower deconversion revenue of people leaving that also impacts us from the convert merge. And in Q3, we saw approximately $3.5 million less year-over-year in convert merge revenue.

Got it.

Sure. I will just finalize with one last comment is that you're absolutely right that when we have our conversations with our institutions as well as what we just had in Kansas City, the interest level in continuing to look at M&A opportunities is very, very relevant and part of their overall strategies.

Got it. Thank you.

Our next question comes from John Davis of Raymond James. Please go ahead.

Hey, good morning, guys. And Dave, I'll echo my congrats. You'll be missed. But maybe before you go or maybe Greg can hop in here, but just thoughts on capital allocation. We're talking about free-cash flow conversion going up. It looks like you guys haven't bought back stock in a couple of quarters, balance sheet is in good shape. So just broader thoughts on capital allocation, maybe more specifically buybacks?

You've heard me talk about capital allocation 1,000 times, JD. So I'll defer to Greg from that one. Well, I think we continue to look at opportunities to buyback. And I know Mimi has done a great job of presenting use cases and timing. So we're continuing to look at that. Obviously, we're focused on free-cash flow and the opportunities of continue to improve that. So the opportunities are closer to that than they were in the past.

Yeah. And JD, I would just add-on, we always look to, first is there investments within our own business to accelerate growth we've been at that 14% R&D for quite some time, but we're always open to think about ways to accelerate our strategy and where we can continue to serve our clients through investments in technology. So that's always a prioritization. And then the other is we're expecting to pay-down the debt substantially. So one thing I would note just from a call-out for folks for modeling purposes, you'll see in the next quarter a reclassification of our debt. The term-loan A goes current in May in a couple of weeks here. And as we plan to, while being very mindful of the current ratio, we do anticipate paying that down and shifting some of that to the revolver. So it's not common that a lot of people let their debt go current, but we intend to pay it off?

Okay, great. And then, Greg, it seems like Banno business is off to a pretty good start. Just would love to get your thoughts longer-term where you see the mix of like Banno business versus retail. I know we're really early innings today, but just how you think about that over the next, Call-IT, three to five years, just the mix between retail and business in Banno?

Yeah. Well, we continue to your point, I mean, there's a part that I think is important for you to understand is that how we do the revenue model for this is that we basically it's an add-on to each of, so the 11.6 million registered users that Dave alluded to, any of our institutions that have a commercial focus that want to add Banno business, then that add-on price is added to all of their registered users regardless of whether they are being utilized in a business application or not. As you can imagine, there's a lot of small-business owners that are hiding in a retail presence today. And so this creates the opportunity to do both. So for our benefit, any institution that has interest in buying Banno business, it get applied to all of their active registered users versus just ones that are kind of allocated to quote a business application. So that's great for us and that's kind of how we built the model. As far as, again, continued success, we think there's a huge opportunity on the credit union side of our business as we continue to see more-and-more credit unions get focused on this side and that's been a lot of the opportunities that we have right now. And then I think more importantly, as we do take the product outside of the Jack Henry base, we think we're going to be able to take the product further upmarket, maybe even to some institutions that are much larger than the ones that we support today as part of that.

Okay. And then maybe I really appreciate the clarification there. But maybe the better way to rephrase is what kind of adoption or what percentage of banks adopting of your current base adopting Banno business would you guys kind of consider success over the next, let's Call-IT, three or five years. Is it 30%, 40%, 80%? Just trying to some guidepost on how to think about that longer-term?

I'd say roughly it's in the 60% to 70% just because a lot of our institutions are commercially focused already. So I would say anything north of 60% would be a fairly decent target. So I won't be here anymore. Can I vote for 100%. I don't know if we'll get 100%. (overlap) under promising. But I really do believe that what we've seen today based on where we are today, anywhere from 60% to 70% is probably a reasonable approach.

Okay. Appreciate it. Thanks for the color.

Our next question comes from Chris Kennedy of William Blair. Please go ahead.

Good morning. Thank you for fitting me in, and I'll echo all the comments for Dave. Just one last one, just a follow-up to that last question and clearly Banno business is a big initiative, but can you just talk about some of the other opportunities and initiatives that you have to capture that commercial banking opportunity, especially within small businesses?

Yes. It's great to comment. And actually we have several different what I would call point-to-point solutions that we have. So we have a treasury management solution that we've talked about a lot. So there's a great opportunity to continue to drive that there. We have things that we're doing on the lending side and the account opening side for small businesses that we continue. We have a small-business application in bill-pay that we use a business bill-pay application, things that we do on the remote deposit capture side of our businesses as well. So we have a lot of point-to-point solutions that we utilize today. But one of the focuses that I have and I've talked about this in individual meetings is a focus on building a cohesive SMB strategy and we'll continue to talk more about what we're doing, not only with our existing products, but what we plan to do as an overarching a strategy and solution set.

Thank you. Great. Thanks for fitting me in.

Sure.

The next question comes from David Togut of Evercore. Please go ahead.

Thank you. Good morning and congratulations, Dave. Since this is your last call as CEO, perhaps you could give us a final update on kind of the status of your credit card processing initiative? And then maybe to go along with that, you continue to call-out the three big $20 billion asset banks in the pipe. How important is it to the bigger banks that you have a robust credit card processing offering? Perhaps is that more important than it might be for the smaller FIs, which tend to be more debit focused?

Yeah, so thank you, Dave. I don't think that it's a big item of consideration regardless of the size of the bank. It's all about where they are with their strategy, where they are, with their relationship, with whoever their processor is. The decision regarding core is a totally independent decision from who am I going to do debit and credit with and what am I looking for as far as functionality and all that. And I think that whole decision process has been conflated in the industry in the past few years as some of our competitors have tried to sell a narrative that if you have the quarter, you're going to get the card business that's not necessarily true. You have to provide great service and great product on the card side in order to win that business. So they're really divorced of each other. As far as where are we at us on the on the credit side, so I didn't mention in my script, but we did sign three additional credit customers in the quarter. So we're continuing to make progress there. But you'll recall, Dave, when I first started talking about our move and getting into credit, I said at the time, this will be a slow grower for us. It's not that everybody is looking for Jack Henry to offer credit, but there are some customers who want the same processor to provide debit and credit at the same time on the same platform.

And so it was a necessary offering for us. But we never had an expectation that was going to be a really fast grower or become a really significant part of our revenue stream and sure enough, that's the that's the position that we're in today. But we have a very complete offering. We have a partnership with another entity to offer agent program. And so I think we're in great position today, but it has lived up to the expectation that I set with you all years ago, not a great big grower, not a great big piece of our portfolio, but a nice offering for those customers that want both together.

Understood. Thanks so much and congrats again, Dave.

Thank you, Dave.

The next question comes from Ken of Autonomous Research. Please go ahead.

Hey, good morning. Thanks for taking the questions. Maybe I think I heard you say that for the full-year on non-GAAP revenue growth, I think you might come in towards the low-end of that 7.4% to 8% growth range, which I think puts fiscal 4Q non-GAAP revenue growth maybe slightly below 7%. So just wanted to make sure I'm thinking about that right. And is there anything that would be driving maybe a slight deceleration? And I guess, is that the right jumping-off point for fiscal year '25?

Ken, I think that's just the way FY '24 is going to play-out. We're still looking at that growth revenue within our growth algorithm of the 7% to 8% longer-term this year will hit within that range. Still, as I mentioned earlier, the payments business, we saw a little bit slower card, nothing that is out of line with what the card networks are seeing. But we believe that the consumer is resilient. We've continued to see that. They're spending more per ticket, but less tickets overall and us being transactional, that is having a bit of an impact. So we're seeing really positive growth on card risk business, other monthly services. So it's just a little bit lower on that transactional growth. That's just the way the segments are playing out for this year for Q4, but I wouldn't say that, that has anything from a launching off point for next year of concern.

Okay, that's really helpful. And then it sounds like there's a lot of momentum behind Banno and Crimes Defender. We got a few questions just on the slowdown in complementary revenue growth. Just I guess, is there anything to call-out there in terms of that slowdown just because Banno, I think is becoming a bigger part of the business and the user growth is quite strong.

No, you're right to Call-IT. I mean, digital has been a great growth engine for us and we continue to see robust growth in-demand for those solutions. I would say complementary is a portfolio of products. So there's nothing there from a slowing and I wouldn't say it slowed. I mean, the numbers are really strong and they're in-line with what we expect year in and year out for the segment.

Okay, great. Thanks so much. And Dave, congrats to you.

Thank you very much, Ken.

Thank you, Alan. Our Investor Day has historically been an annual May event, but starting this year, we are moving our Investor Day to September. The meeting will take place on Thursday, September 5th in Dallas. We hope you will be able to join us. And if interested in attending in-person, please let me know. Executives will be traveling in the coming weeks and we look-forward to attending various investor events. And on behalf of the entire management team, I would like to express our appreciation to all the Jack Henry associates whose efforts produce these outstanding results. Finally, I too would like to congratulate Dave on his upcoming retirement as CEO. Thank you for his constant willingness to do anything requested on behalf of investors and our 25-year friendship while working at this great company. Thank you for joining us today. And Alan, will you please provide the replay number?