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Edited Transcript of JKHY earnings conference call or presentation 1-May-19 12:45pm GMT

Q3 2019 Jack Henry & Associates Inc Earnings Call

MONETT May 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Jack Henry & Associates Inc earnings conference call or presentation Wednesday, May 1, 2019 at 12:45:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David B. Foss

Jack Henry & Associates, Inc. - President, CEO & Director

* Kevin D. Williams

Jack Henry & Associates, Inc. - CFO & Treasurer

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Conference Call Participants

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* Brett Richard Huff

Stephens Inc., Research Division - MD

* David John Koning

Robert W. Baird & Co. Incorporated, Research Division - Associate Director of Research and Senior Research Analyst

* Joseph Dean Foresi

Cantor Fitzgerald & Co., Research Division - Analyst

* Peter James Heckmann

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Jack Henry & Associates Third Quarter FY 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

I would like to introduce your host for today's conference, Kevin Williams, Chief Financial Officer. Sir, you may begin.

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [2]

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Thanks, Justin. Good morning. Thank you all for joining us today for the Jack Henry & Associates Third Quarter Fiscal 2019 Earnings Call. I'm Kevin Williams, CFO and Treasurer, and on the call with me today is Dave Foss, our President and CEO.

The agenda for this morning will be my -- opening comments from me, then I will turn the call over to Dave to provide some of his thoughts about the state of our business and the performance for the quarter, and then I will get back on and provide some additional thoughts and comments regarding the press release we put out yesterday after market close, and then provide some guidance and then open the lines for Q&A.

I need to remind you that remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results constitute forward-looking statements or deal with expectations about the future. Like any statement about the future, these are subject to a number of factors which could cause actual results or events to differ materially from those which we anticipate due to a number of risks and uncertainties, and the company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our 10-K entitled Risk Factors and Forward-looking Statements.

With that, I'll now turn the call over to Dave.

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [3]

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Thank you, Kevin. Good morning, everyone. We're pleased to report another strong quarter of revenue and operating income growth. As always, I'd like to begin today by thanking our associates for all the hard work that went into producing those results for our third fiscal quarter.

On our last quarterly call, we highlighted the fact that we expected deconversion revenue to be down significantly in the third fiscal quarter, and that expectation was realized. As we've discussed previously, in many respects, this is a good problem to have because although we experience a short-term revenue impact, it indicates that far fewer customers are deconverting and their long-term revenue contribution stays in place. As you now know, deconversion revenue is largely outside our control and very difficult to forecast, but we'll continue to do our best to set proper expectation on this topic when we expect the revenue variances to be significant.

For the third quarter, total revenue increased 2% for the quarter and increased 5% excluding the impact of deconversion fees from both quarters. Year-to-date, revenue is up 6% and is up 8% year-to-date if you exclude the impact of deconversion fees. The core segment of our business was the most heavily impacted by the decline of deconversion revenue, but saw a revenue increase of 1% for the quarter and an increase of 4% if you exclude the impact of deconversion fees from both quarters.

Our payments segment performed well, posting a 3% increase in revenue this quarter and a 6% increase excluding the impact of deconversion fees. Our complementary solutions businesses posted a 2% increase in revenue this quarter and a 5% increase excluding the impact of deconversion fees.

As I mentioned in the press release, our sales teams again had a very solid quarter in Q3. We booked an almost unbelievable 18 new core wins in the third quarter alone, with 17 as competitive core takeaways and 1 de novo bank. Additionally, we signed 20 new customers to our debit processing solution and booked 13 in-house-to-outsourcing deals between Banking and Symitar. The sales organization exceeded quota again this quarter, and continues to manage a solid pipeline for the remainder of the year. Jack Henry's full suite of modern cloud-enabled solutions continue to position us well to win share in the market.

Regarding our new debit and credit processing solution, we now have 358 customers live on the debit platform, including 37 customers installed as new, rather than as a migration. We also have 6 new credit customers live on the platform. As we've highlighted on previous calls, all of these migrations or new installations have been successful and our program continues to progress well. We're still on track to complete our core customer migrations by the end of fiscal 2020. We have, however, recently learned that it is highly likely that the migrations for the 80-or-so noncore clients on our credit union platform will extend until November of 2020 because of the extra programming and testing effort required for these noncore customers. We will continue to work with this group of customers closely and move them up on the schedule as possible.

As I referenced in the press release, we are very happy to have recently been recognized by Forbes Magazine as one of America's Best Large Employers for the third year in a row. We were also recognized last month by American Banker as one of the top 50 companies to work for in the fintech space. Recognition like this comes as a result of these publications directly surveying employees at companies throughout the country, and we have no ability to influence these results. As you can probably imagine, this type of recognition not only aids tremendously in employee retention, it also helps us continue to recruit the best and brightest in this time of very low unemployment.

I want to thank all of our employees for their continued commitment to our company and our customers. I look forward to seeing many of you at our Analyst Day in Denver next week.

And with that, I'll turn it over to Kevin for some detail on the numbers.

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [4]

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Thanks, Dave. The service and support line of revenue decreased 1% compared to the prior year restated quarter. Remember, we restated the prior year numbers for ASC 606. Our license revenue was flat compared to last year. We continue to have headwinds from decreased implementation revenue due to almost all of our core installations electing the outsourced model or a private cloud, which the implementation revenue on these must be spread over the term of the contract under ASC 606, which is one of the reasons for the significant increase in deferred revenue compared to the prior year.

In-house support was up and almost offset the decrease in implementation revenues. Outsourcing and cloud services were up nicely to help offset the decrease. And deconversion fees were down $10.3 million, as we highlighted on last quarter's call that they're going to be down significantly this year over last year. The processing line of revenue grew 6% compared to the prior year and had no impact from deconversion fees in this line of revenue.

Total revenue was up 2% as reported and little higher than 5% adjusting for the deconversion fees. Reported consolidated operating margins were down from 24% last year to 20% this year, primarily due to the significant decrease in deconversion fees. Without the impact of those, our non-GAAP operating margins decreased from 20% to 19% for the quarter compared to last year due to the 2 headwind impacts on operating margins this year, as we've discussed on previous calls. The first is the additional cost of processing our debit card customers' transactions until we can get them all migrated to the new platform, as Dave was mentioning in his opening comments. And then second is the additional cost for the employee pay-for-performance plans that are being funded with a portion of the savings from the Tax Cuts and Jobs Act. Remember that we have the benefit of reduced federal income tax this year compared to last year.

Our operating margins for the year dropped from 25% to 23%, but for non-GAAP remain flat at 22%. Our segments' operating margins continue to be very solid with small fluctuations, but the payment segment will continue to see increased margin headwind going forward as double of costs continue to increase as we migrate customers to the new platform. The effective tax rate for the quarter was 22.4% this year compared to 23.3% last year. For the balance of the year, our effective tax rate will increase and our projected total yearly effective tax rate is expected to wind up at 22%.

For cash flow, included in the total amortization, which was disclosed in the press release in the cash flow review, is the amortization of intangibles from acquisitions, which increased to $15.6 million year-to-date this fiscal year compared to $12.5 million last year.

Depreciation expense was down slightly for the quarter, but amortization was up due to more of our internally developed products being put into production. Remember, when a product gets to beta, we stop capitalizing according to the accounting rules and begin amortizing over the projected estimated life.

Our operating cash flow was $233.4 million for the first 9 months, which is essentially flat with last year. The significant increase in capital expenditures year-to-date was primarily due to the cash paid out in Q1 that we discussed on previous calls. Our cash flows will have the same seasonality as historically, with significantly higher Q1 and Q4 due to the billing and collection of our annual in-house maintenance billings.

We invested $128.1 million back into our company through CapEx and developing products, which is up from $97 million a year ago, which much of the increase is due to the data center upgrades we talked about in Q1.

So now I'll give some update on our FY '19 guidance. As we've discussed previously, when we provided estimated guidance at the beginning of the year, that it was going to take a year or so to get the lumpiness out of the financials due to the new revenue recognition rules of ASC 606. Due to software subscriptions and other items being recognized differently, our revenue grew 8.4% for the first half of the year, and as shown in Q3, our revenue growth is not as fast in the second half. A significant headwind impacting the second half obviously is the deconversion fees being down $10.3 million in Q3 alone compared to last year, which actually is a good thing long-term as that means we are not losing as many customers through M&A, but it does create some challenges in year-over-year comparisons, which is why we back them out to show non-GAAP operations.

It appears the deconversion fees in Q4 will also be going down compared to prior year. For the entire year, we are now projecting deconversion fees to be down roughly $18 million compared to the previous year.

As Dave mentioned, we are being very successful with new core wins. But out of the 42 new core wins this year, all but 1 has elected to go outsourcing, and with the continued migrations from in-house to our private cloud, it means lower license revenue and in-house implementation revenue, which this alone will create a headwind in Q4 of $5 million to $6 million compared to a year ago. Also the impact of deferral of implementation revenue related to the new outsourced customers and amortizing it over the life of the contract continues to add additional headwinds.

With all these different items impacting revenue, our total revenue in Q4 should be roughly up 3% compared to last year Q4. However, even with all these headwinds in the second half of the year, our GAAP revenue for the entire fiscal year will still be above 5% and non-GAAP revenue excluding the deconversion fees will end up being right at the 6% to 7% growth range that we originally guided at the very beginning of the year. Due to these revenue headwinds, combined with the additional cost headwinds from our payments platform migration and the new pay-for-performance plan put in place at the beginning of the year, we project operating income will be down approximately $6 million to $7 million -- $6 million or 7% compared to last year's Q4.

However, on a non-GAAP basis, our operating income will also be right in line with original guidance for the full year of 6% to 7% growth compared to the previous year. The final headwind for Q4 is our effective tax rate, which will increase to 24.5% compared to 19.6% last year. With this increase in Q4, we should end the fiscal year with an effective tax rate of 22% for the fiscal year '19.

Due to all these items impacting Q4, the consensus estimate for Q4 needs to decrease by $0.07 to $0.08 from the current $0.84 consensus estimate.

Therefore, in summary, on a non-GAAP basis, adjusting revenue for deconversion fees and adjusting operating expenses for the new bonus plan put in place with a portion of the savings from the TCJA, revenue and operating income growth should both end the year pretty much in line with the original guidance of approximately 6% to 7% for the year that we provided last August. We are very early in our budget process for FY '20 at this point. However, it appears that we will continue to grow revenue at the 6% to 7% range for FY '20, very similar to what we did in FY '19. Our effective tax rate for FY '20 should be approximately 23% to 23.5% for the entire fiscal year. Further guidance on revenues and margins will be provided on our earnings year-end call in August when we report year-end earnings.

That concludes our opening comments. We're now ready to take questions. Justin, will you please open the call lines for questions?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Joseph Foresi from Cantor Fitzgerald.

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Joseph Dean Foresi, Cantor Fitzgerald & Co., Research Division - Analyst [2]

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My first question is just around the competitive landscape. So now we've had 2 of your competitors buy some fairly large merchant acquirers. I am wondering, have you seen any change in the business from a core processing perspective? And I know FDC does some processing for you. Maybe you can give us an update if there is any change there.

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [3]

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Joe, it's Dave. So first off, as far as the competitive landscape, no changes on the core side of the business. As I mentioned in my opening comments, we signed 18 brand-new core customers, 17 competitive takeaways and 1 de novo. I don't recall a quarter ever where we signed that many. You know we've had several quarters in the mid-teens, but 18 is a very strong quarter. So there's no negatives as far as what sales is experiencing currently or customer prospect sentiment. We have already obviously signed some customers in the current quarter that we'll announcing in August, and we've had lots of customer conversations. No great concern out there, no negatives as far as customers or prospects are concerned on the core side. So my expectation continues to be very positive regarding the core side of our business.

As far as the relationship with First Data, it continues to be a very solid relationship. I think I've mentioned before, if not on the call, certainly in conversations with some of you, that our working relationship with First Data is terrific and continues to be really solid. We're converting customers at a rate of almost 50 -- or migrating customers at a rate of almost 50 a month now, and I see that continuing for the foreseeable future with virtually no issues of any significance. So really excellent relationship and continuing forward as it was before any of the announcements happened.

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Joseph Dean Foresi, Cantor Fitzgerald & Co., Research Division - Analyst [4]

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Okay. And then just on demand, your competitors have seemed to be implying, at least FIS did, that there has been an uptick in demand. Are you seeing that? And anything to read into these new signings? Are you -- is the flip side happening where you're getting some new signings because your competitors are distracted? So demand and maybe a little more color on where those signings are coming from.

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [5]

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Yes. The signings are coming -- again, record quarter. So they're coming from kind of the same places we've always seen them. It would be hard for me to articulate an uptick in demand because we've had such strong demand for the past -- it's been since last June. I reported on the June -- the call at the end of last June that we were at a record pipeline in the sales organization and that has continued. Even with all these signings, the pipeline continues to be really strong. So it would be hard for me to say that I see some great big uptick coming because we've been running at a really healthy pace here for quite some time.

As far as competitors being distracted, I think it's early days in all of that to see. These are long decision-making processes that our customers go through. And so, if there's distraction happening out there, that may come. I'd say, we're all in the same competitive environment that we've been in for a long time and I don't see any major changes right now, but obviously that may change over time.

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Joseph Dean Foresi, Cantor Fitzgerald & Co., Research Division - Analyst [6]

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Got it. And the last question for me is just on margins. Kevin, any updates on what the short- and long-term margin outlook might be? And when we'll get some of the noise that we're currently seeing out of the numbers?

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [7]

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Joe, I mean, obviously, Q4, the guidance is the margins are going to go down even a little more than they were this quarter because of the tough comp for license and install implementation revenue and continued decrease in deconversion fees. Margins for next year, we're still trying to kind of line those out. So I mean, margin is going to be down a little bit in Q4. And what I'm planning on doing is on our year-end is give you full guidance for next year, which will include revenue and margins. And I'm going to try to break it down by quarter, which again, with 606 is a little tough. But that is my commitment to you all is to give that guidance in mid-August when I give next year's guidance.

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Operator [8]

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And the next question comes from Peter Heckmann from Davidson.

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Peter James Heckmann, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [9]

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I wanted to talk a little bit more about the top line growth, and acknowledging 5% adjusted growth and the impact from either lack of implementation fees or deferral of implementation fees. With 5 quarters of strong core signings as well as complementary signings, it seems like we should be getting adjusted revenue growth more toward the 7% to 9% range over the next four quarters. Can you talk us through like that change in the implementation fees and the deferrals, kind of quantify how much of that is impacting it? I mean, is that a 100 to 150 basis point impact?

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [10]

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I mean, Pete, just think about, I mean, just Q4, the tough comp for -- compared to last year, just in in-house license and in-house implementation revenue is $5 million to $6 million. That has -- that drops to the bottom line pretty quick, which that has a pretty significant impact on margins. So as we ramp up the outsourcing and get more of these new customers on, that doesn't provide any license revenue or immediate implementation revenue because the implementation revenue of those is spread over the life of the contract. So it's just going to layer on slowly and give us nice growth.

So 2 things I'd say, one, with the decreased deconversion fees, which is obviously a bad thing this year, but that means we're continuing to keep that revenue. And as we layer on this additional revenue, I mean, it should pick up revenue growth a little bit. I don't know that we're going to get up to your -- the high level of yours. But like I said, the original budgets for next year, we're very careful saying that we're going to continue in the 6% to 7% range. And Pete, we've always tried to hit exactly what we could hit or be conservative.

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Peter James Heckmann, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [11]

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Got it. That's helpful. And then can you just give us an update on some of the new products, Banno Digital account opening, some of the new things that you've been rolling out more recently and maybe just a bit of an update on success in the marketplace?

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [12]

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Sure. And I'll highlight some of these things next week at the Analyst Day in some detail, but continue to see great success with our digital platform. In fact, 27 new customer contracts in the quarter. So really significant demand as far as digital is concerned. I already highlighted what's happening in payments. We now, on our treasury management platform, have 20 customers live on that platform. We signed 5 additional customers in the most recent quarter. So that continues to progress well.

One that we've talked about a lot in the past but haven't really focused on here in the call recently is our Hosted Network Solutions offering, where we're running the entire back-office, including the network infrastructure for a customer. We now have 126 customers live on that platform. So continuing to see good success there. So those are just a few highlights. But like I say, next week, we'll go through a fair amount of detail on some of those new platforms.

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Operator [13]

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And our next question comes from David Koning from Baird.

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David John Koning, Robert W. Baird & Co. Incorporated, Research Division - Associate Director of Research and Senior Research Analyst [14]

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Congrats on all those core wins. That's impressive. I guess my first question is, it seems like with 606, there's been more lumpiness to revenue. You're still averaging that 6%, 7%, just like you've been kind of doing for the last 5, 6 years. But I think the first half of the year, this year, the organic core growth was kind of 7%, 8%, the back half it seems like more like mid-single digits. Is there a new either seasonality that it creates or after we kind of anniversary this year, the next few years should just be kind of a whole bunch of 7s in a row again, like we used to see?

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [15]

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Well, I think next year, Pete (sic) [Dave], there may still be a little more lumpiness. I think next year is going to be kind of the level setter, but there will still be larger growth, at least in Q1, because as we continue to sell more and more software subscriptions, that all gets recognized basically the first day of the year, unlike it used to be. So as we sell software subscriptions through the year, all those now get recognized in Q1 under 606. And then you have the carve, which is basically throughout the year on each quarter, we actually go through and reanalyze our estimates on total contract value for all of our services yet to be provided and tweak those. So there's going to be some ups and downs, so there's still some tweaking of that, which that had a small impact this quarter. Well, it had an impact every quarter. And actually, that impact was a little more positive in the first half than it is in the second half.

So a long answer for a short question, but I think next year is kind of going to be the base. But I think as we go through the budget, we're going to be able to do a better job of predicting what that is and hopefully, when I give guidance in August, I can give you better quarterly guidance of what that's going to be to us.

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David John Koning, Robert W. Baird & Co. Incorporated, Research Division - Associate Director of Research and Senior Research Analyst [16]

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Okay. So that's helpful. And I guess the other seasonality question, it looks like historically, if you ex out term fees, that Q1 historically has been a little better on the margin front and then the -- usually, Q3, I think, has often been the low point for margins. If you exclude term fees, you can see it a little clearer. Is that just kind of the natural cadence? And why is that again?

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [17]

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Well, I think Q3 is partially because all the fringe load of taxes, everything's kicked in for every -- again, FICA and everything starts over again, but there's just some other costs that kind of kick in back in Q3 of our fiscal year that for a lot of companies kick in their Q1.

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Operator [18]

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(Operator Instructions) Our next question comes from Brett Huff from Stephens.

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Brett Richard Huff, Stephens Inc., Research Division - MD [19]

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Two questions for you. Dave, I know you're going to probably talk about this too on -- from a product point of view, but one we've always been interested in that we don't talk as much about is your enterprise fraud solution. So could you give us a quick update on that? I mean, I know that was a really nice win on the partnership, and it sounds like it's -- or at least based on conversations we've had, it's doing better maybe than some think.

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [20]

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Well, so yes, the partnership you're alluding to, Brett, is with SAS. So SAS, of course, is known as the provider of enterprise risk solutions to the largest banks in the world, not just in the United States. That -- as I disclosed early on, we didn't expect to sell this to every bank or credit union. This was something that was targeted at our larger customers. So we today have 15 customers live. We booked another new customer in the quarter. So it's progressing well. But again, I would emphasize, this is not a solution that we expect to sell to 2,000 customers or anything like that. This was specifically targeted at our largest banks and credit unions who had -- were serving very broad markets, particularly commercial customers, and had a real need for significantly advanced fraud and analytic solutions in that area.

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Brett Richard Huff, Stephens Inc., Research Division - MD [21]

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That's helpful. Second question is, on the treasury management, it sounds like you guys are making good headway. I know those are difficult deals to sell. They're big decisions for banks. And depending on who you talk to, there are some newer products out there that are like yours and there are some legacy products. How is that market dynamic or the competitive dynamic? I mean, is it still -- are banks still frustrated with their choices? Or are they pleased that there's maybe some newer options? Or kind of where are we on that innovation curve on that market?

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [22]

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Yes, it's a good question. The pretty consistent feedback that I get is, thank goodness that somebody has created a brand-new ground-up modern solution to address treasury management, and that somebody being Jack Henry. So we have a couple of competitors out there that have good solid solutions, but as far as I know, our treasury management solution is the newest to the market. It was written ground-up to be a cloud-native solution with mobile functionality. You know a lot of the legacy treasury solutions don't have good mobile functionality. In this day and age, if you're running a commercial business, you expect to be able to approve wires and so on through an easy mobile interface.

So it was written ground-up to be cloud-native and with a nice, slick user experience and a slick mobile set of functionality, and so that's what's getting us the attention. But as you point out, it's a big decision to move to a new treasury management platform. I wouldn't put it in the same category as a core decision, but it's close because it has such a wide reaching impact on -- for a bank on your commercial customers. And your commercial customers are, of course, the group of customers that you don't want to disrupt in any way, shape, or form. And so it's a big decision, but as I pointed out, we've had good success.

We signed another 5 customers in the quarter, and so I expect that to be a winner for us going forward. And the key thing to remember there was the reason we did all of this was because we've continued to position ourselves as a provider for larger institutions. And if you're really going to be a solid provider for those larger institutions, having a tool like this is a real feather in our cap when we go into a large multi-billion dollar bank and say, we have the suite that you need to run your bank effectively going forward.

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [23]

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But what's really interesting is, as Dave said, we developed this thinking we would only sell it to our largest customers, but we've actually sold it to some smaller customers and some really unique situations, where one customer bought it for one customer. And then, last week, at our Symitar Strategic Initiatives, we actually had some interest in this from our credit union customers.

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Brett Richard Huff, Stephens Inc., Research Division - MD [24]

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That's interesting. And then last question is a little bit more sort of blue sky, but one of the things we've been hearing or talking a lot about with clients and other industry participants is a lot more M&A going on both in bank world, and I'm thinking BB&T and STI as the signature one, and then obviously, the core guys buying some merchant acquirers and payments businesses. But the underlying theme that we're hearing a lot is that scale matters, in particular getting a bigger pot of money to spend more money on innovation in order to kind of stay ahead of the curve, both for banks and for processors and technology vendors like you guys. And I wondered, kind of where do you -- what's your take on that? Do we have enough money or how do we feel about our arsenal of money to develop things as quickly as we want? Or would we like to do it more quickly, and does that lead to partnerships? Or kind of give us a sense of where you are on that.

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David B. Foss, Jack Henry & Associates, Inc. - President, CEO & Director [25]

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I think your last point there is valid, so that is what has prompted a couple of the partnerships we've done recently. In the past, you didn't see Jack Henry doing partnerships very often. The partnership with SAS was a really unique opportunity and it allowed us to not have to go and create that solution from the ground up, as contrasted with treasury management where we chose to do that as a ground-up solution. So it's a question of prioritizing. Regardless of size, it's a question of prioritizing and deciding what do you want to put your investment R&D dollars against and what are the things that maybe a partnership solves the problem as opposed to developing it yourself.

So it's the reason we ticked up our commitment to R&D a few years ago. It's the reason that we're running at the pace we are today with R&D. You've seen us roll out a number of new solutions in the past few years and that pace continues. So we're definitely committed to ongoing R&D, but it is a question of prioritizing and deciding what are the things we have to do ourselves, what are the things we don't have to do because we don't have to be everything to everybody, and then what are the things where we can solve a problem by partnering with a really good solid partner.

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [26]

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Yes, Brett, I mean, our total R&D spend is about 14% of our total revenue. So we are reinvesting significantly. I'm not sure how much more we really need to do. So just that's -- I think that's a good compare point.

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Operator [27]

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Thank you. And I am not showing any further questions. I would now like to turn the call back over to Kevin Williams, Chief Financial Officer, for further remarks.

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Kevin D. Williams, Jack Henry & Associates, Inc. - CFO & Treasurer [28]

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Thanks, Justin. I want to remind everyone, again, that we're having our Annual Analyst Day next Monday afternoon in Denver, Colorado. We'll have presentations by all of our executives, our officers and our General Manager of Sales, and there will be related Q&A time for each one of those sessions. The entire session will be webcast, if you are not able to attend in person. But if you are there in person, you will be able to see some of our hotter products being demo-ed in a mini tech fair that evening after the final Q&A.

Again, we're pleased with the overall results of our ongoing operations and the efforts of all of our associates to take care of our customers. Our executives, managers and all of our associates continue to focus on what is best for our customers and our shareholders. I want to thank you, again, for joining us today. And Justin, with that, will you please provide the replay number?

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Operator [29]

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Thank you, sir. Ladies and gentlemen, this conference will be available today at 11:45 Eastern Standard Time through May 10, 11:59 Eastern Time. You may access the replay system at any time by dialing (800) 585-8367 and entering the access code, which is 2567034. International participants dial (404) 537-3406.

Thank you for participating in today's conference. This concludes today's program. You may all disconnect.