Good morning, and welcome to the Jack Henry Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Vance Sherard, Vice President, Investor Relations. Please go ahead.

Thank you, Drew. Good morning, and thank you for joining us for the Jack Henry fourth quarter and full year 2024 earnings call. Joining me on the call today is President and CEO, Greg Adelson; and Mimi Carsley, CFO and Treasurer. After my opening remarks, I will turn the call over to Greg for his comments on our fourth quarter results and observations related to our business and the industry. Mimi will then provide commentary around the financial results and fiscal '25 guidance, included in the press release issued yesterday, that is available from the Investor Relations section of the Jack Henry website. We will then open the lines for Q&A. As a reminder, this call includes certain forward-looking statements, including remarks or responses to questions concerning future expectations, events, objectives, strategies, trends or results. Like any statement about the future, these are subject to multiple factors that could cause actual results or events to differ materially from those which we anticipate due to multiple risks and uncertainties. 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. On this call, we will discuss certain non-GAAP financial measures, including non-GAAP revenue and non-GAAP operating income. The reconciliations for non-GAAP financial measures are in yesterday's press release. I will now turn the call over to Greg.

Thank you, Vance, and hello, everyone. I appreciate all of you joining this morning's call. We are very pleased to report strong sales and financial performance in the fourth quarter and for all of fiscal 2024. I want to especially thank all of our associates for your hard work, dedication and unwavering commitment that significantly contributed to these outstanding results. I will begin with a summary of what I believe are the three main takeaways and then provide additional detail on all areas of our business. We produced record revenue and operating income for fiscal '24 with $2.2 billion in revenue and $489.4 million in operating income. Our sales team set an all-time record for sales bookings for both the fourth quarter and the fiscal year that included 22 competitive core wins in the quarter and 57 for the fiscal year. We signed 15 new core contracts this fiscal year, with financial institutions that have over $1 billion in assets compared to only five in fiscal 2023. This was a direct result of our technology modernization strategy and execution, One Jack Henry initiative, and several new innovative solutions. Now for more detail on each of these takeaways. For the fourth quarter, total revenue increased 5% and increased 6% on a non-GAAP basis. For the fiscal year, total revenue increased 7% on a GAAP and non-GAAP basis. Operating income increased 1% for the quarter and increased 5% on a non-GAAP basis. For the fiscal year, operating income increased 2% and increased 10% on a non-GAAP basis. As I mentioned, the fourth quarter was the highest quarter for sales bookings in the history of the company, and we set a new record for sales bookings for the fiscal year. I am very proud of the remarkable year by our sales team. The…

Thank you, Greg, and good morning, everyone. Our continued focus on serving our community and regional financial institution clients and delivering shareholder value led to another quarter of solid revenue and earnings growth. I will start with the details driving our fourth quarter and full year results, then conclude with the fiscal '25 guidance. Q4 GAAP revenue increased 5% and non-GAAP revenue increased 6%, a continuation of the consistently solid performance. Full year growth was 7% on both a GAAP and non-GAAP basis. Fourth quarter deconversion revenue of approximately $7 million, which we pre-released, was down approximately $8 million, reflecting minimal financial institution consolidation of our clients. Full year deconversion revenue of $17 million, $15 million less than the prior year, was consistent with guidance. Now let's look more closely at the details. GAAP services and support revenue increased 2%, while non-GAAP increased 4%. For the year, the increase was a healthy 5% for GAAP and 6% on a non-GAAP basis. Services and support growth during the quarter was the result of volume increases in data processing and hosting revenue and consulting revenues, partly offset by decreases in deconversion, implementation and maintenance fee revenue. We continue to experience impressive growth in our private and public cloud offerings, which increased 11% in the quarter, 10% for the year. This reoccurring revenue contributor is 31% of our total revenue and has long been a key double-digit growth engine. Shifting to processing revenue, which is 42% of total revenue and another key component of our long-term growth model. We saw robust performance with 9% growth on both a GAAP and non-GAAP basis for the quarter and for the year. Consistent with recent results, quarterly drivers included increased card, digital and payment processing revenue. Completing commentary on revenue, I would highlight that total reoccurring…

Certainly. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew Schmidt with Citi. Please go ahead.

Hi, Greg and Mimi. Thanks for taking my questions. I guess just to drill down on the fourth quarter core and complementary performance. And I know you're right, fiscal year metrics are the best way to look at the business, but was there anything for the fourth quarter that affected revenues there, timing shifts or perhaps the -- some of the things you called out for the fiscal first quarter that impacted results, or was it truly kind of tough comps? Thank you very much.

Good morning, Andrew. I appreciate the question. Although I would reiterate, just -- as you just mentioned, the importance of looking at our year -- on a year-long basis rather than the quarters. I don't see any trends that I think structurally will continue that we would call out. I think it was mostly just, you always have to look at what is the installation queue, what's going on, what's going on with that shift from on-premise to outsourcing. And so, I think it was just a matter of this quarter playing out in that pattern.

Got it. Appreciate that. And then, maybe, I could ask a question on just the new wins side. Step-up in new core signed above $1 billion in assets is pretty bright spot. Obviously, there's multiple factors that drive that, but is it possible to spill that down? Is it products? Is it go-to-market focus? What's driving the move up market? I know that's been a theme in the past several years, but it seems like you're making faster progress towards -- shifting towards higher asset size institutions. So, I would love to get some more color there. Thank you very much.

Sure. Andrew, this is Greg. So, yeah, thanks for the question. I think, as I tried to reference a little bit in the script, but more importantly, it is about our level of execution. We're hearing this on a regular basis, that I think, you know this and most people do that, we do provide to our clients what our roadmaps are, and we show what we're going to be doing and when we're going to be doing. And I think there's a level of trust and belief. And so, the more that we're executing, the more that our technology innovation is getting out there and they're seeing the results and it's providing a -- really an opportunity for us to get in front of these larger customers first of all. And then, second of all, as we mentioned, our associates and our client service reputation continues to truly shine, especially at a time when maybe it's not in the rest of the industry. So, those have been big. And then, I think, we've also hired some really good and talented sales individuals that have come with experience in selling into these larger institutions, and that's continued to help us as well. But I think it's a combination of all those things that are coming to fruition and allowing us to be successful.

Got it. Thank you very much, Greg. Appreciate the comments.

Sure.

The next question comes from Vasu Govil with KBW. Please go ahead.

Hi. Thanks for taking my question. First one for you, Greg. Just as you've taken over the reins, any sort of strategic changes that you're envisioning for the company that the company might need? And where are you focusing more of your efforts at this point?

Yeah. No, I mean, fortunately, I took over for an individual that did a pretty good job. So, not being significant. I mean, we've been able to really make a very -- what I would say, a very smooth transition. And so, we're focused on some things that I've talked about. Obviously, the execution of the tech modernization strategy and what we've been doing with One Jack Henry continues. I've talked a little bit, and we'll talk a lot more at the Investor Day about our SMB strategy and where we're going with that. So, there's a lot of excitement behind that, that will be unveiling. And then, there's a couple of things that we've talked around product rationalization and really looking at things primarily in the complementary group that maybe aren't growing at the same pace as the rest of our company or have the margins and looking at what we want to do with those particular things, a lot of them are very small, but again, just making sure we stay focused on the things that really do move the needle. But I wouldn't say anything else really outside of that and just staying true to who we are as a company and our leadership team.

That's very helpful color. And then, a quick one for you, Mimi. Just on the payments segment, it was good to see the acceleration in revenue growth there. I know you called out fraud-related services. I guess just maybe if you could put a finer point on whether all of the acceleration was these value-added services, because I think the debit numbers we saw from Visa, MasterCard were pretty consistent sequentially?

Yeah. The payments segment had a 8.4% growth for Q4, and more importantly, the 6.7% growth for the full year. It was a big year for payments, especially given throughout the year some economic uncertainty around the strength of the US consumer. We're seeing the trends from that being in line with our expectations, still healthy, but not over exuberant from a spending perspective. The nice thing about our payments business, it's not just ours, we have other businesses. We have the EPS business, we have the PayCenter business, those are doing quite well. We're seeing a lot of demand, especially as the continuation of real-time payments excitement, the fraud solutions that are helping people feel more comfortable in going to these newer solutions. So, those two businesses are doing quite well from a processing, and the remit business overall has been healthy. Within card, as you mentioned, we do have a whole portfolio of complementary services that surround the card transaction and we're continuing to see nice demand for those services. So, that's really helping us from a total portfolio perspective.

Thank you very much.

You're welcome.

The next question comes from Jason Kupferberg with Bank of America. Please go ahead.

Good morning, guys. I just wanted to start on the margin side. I know that you've comfortably beat your initial fiscal '24 guidance on the margin line. The initial fiscal '25 guide calls for less margin expansion than in 2024. So, is this reflective of some ongoing conservatism, or were there some transitory tailwinds last year you don't expect to recur? I know you're starting off the year down about 100 basis points in Q1, but just wanted to get a little bit of more color on the margin outlook, please.

I appreciate you bringing up that important point. Margin expansion is one of the key elements that we are focused on as a management team. We're quite disciplined as we think about the cost of the organization, and yet, building for a scale of future success. I would say there's a couple of things. I don't think it's an excessive conservatism. I think that's what we feel confident that the market and the model generate. But there are some headwinds as we leave FY '24 into '25 that helps us in '24, things like the slowing back-fills of the VEDIP departures, particularly that's part of the reason why you'll see the guide for Q1 a little bit weaker, is that really helped us in Q1 of FY '24, as well as we had a one-time shift in the timing of our annual merit increase cycle. So, those are some issues that create just kind of a grow-over challenge next year. But in general, we feel quite confident that the model continues to produce margin expansion at a nice clip. So, we're excited about the year guidance and we always aim and strive for more, but we want to put a number out there that we feel confident in our ability to deliver.

Okay. That's helpful. Just a follow-up on the payments segment. I wanted to hone in on card production a little bit. I know on the issuer processing side, it sounds like things are pretty stable, but there had been some softness in card production earlier in the year. Did you see some reversal of that? What are you expecting for F '25 on the card production side?

Yeah. I think that was more of a one-time issue that we've worked through. It was not an issue in Q4. We don't expect it to be an issue going forward. It's resolved itself.

Excellent. Thank you, Mimi.

You're welcome.

The next question comes from John Davis with Raymond James. Please go ahead.

Hey, good morning, guys. Greg, I wanted to circle back to core wins. I think you called out 15 of greater than $1 billion in assets versus five just a year ago. Just curious where that stacks up historically? Has it always kind of been in the low- to mid-single-digits and now we had a big step up? And then, also you called out that your average client is larger today. Any context behind that, like, it's X percent bigger than it was five years ago, or any color to help us contextualize the kind of moving up-market?

Yeah, for sure. So, I appreciate the question, JD. So, I'll start with your first one. So, yeah, 15 is by far a historical number for us. So, five last year was more on the average. So, we would typically be in the four to six ranges, something like that on an average year. So, 15 is a big step up for us. And again, I think, a lot of it is, what I had mentioned earlier on, I believe, it was Andrew's question, was around just kind of what we've been doing on our level of execution and showing the innovation that we have. I really truly believe that we are now viewed in the industry as the innovative leader, especially when it comes to core processors in this space. So, I think that has helped us a lot. To your second question, yeah, I think, I had referenced over four years, I can't tell you over five, but over four, we have grown our banking assets by 27% and our credit union assets by 34%, and those were over the last four years. So, that is an aggregation of a few things. One, the continued growth of our customers and what we've been able to do to help them grow deposit growth. Obviously, some things may have been helped through PPP at the time, but the reality is their assets continue to grow. Some of the products that we provide, Banno and products like that, definitely have a really big impact on deposit growth. And then, of course, some of it is the wins that we've had as well.

Okay. And that's super helpful. And then, Mimi, I want to drill in on free cash flow a little bit. Obviously, much better in the fourth quarter, I think, at least we expected and for the full year relative to your initial outlook. But if I adjust out the $29 million of over-payment in '23 that, I guess, you got back in '24, I still get free cash flow conversion around 80%. So, maybe just help me kind of walk from the 80% to the, call it, midpoint of 70% that you're talking about for we're expecting in fiscal '25?

Yeah, happy to, JD. Free cash flow is one of my favorite topics. So, let me give you a little bit more of the [walk color] (ph) there, because I think there's two major components. If you take the 88% that we just released for the full year, there's -- versus the prior year of 55%, there's two components that overstated the FY '24 conversion. One is, as we just talked about that $29 million of essentially an over-payment in FY '23 taxes. The other thing is the collection timing of our annual maintenance in this year. As you know, those invoices go out in the late spring, early summer, we start collecting on them in the June-July timeframe. And just depending on, in any given year, how many people pay them as soon as they get them versus in July, sometimes, in a given year, that shift, the timing of that collection impacting free cash flow. So, this year, I would say, there was probably about $60 million of timing collection related benefits to the free cash flow conversion in FY '24. So, if you adjust both of those, you're roughly talking probably a 65% free cash flow conversion, which is in line with where we think for FY '25, hopefully, a little better than that as we get in our guidance range, but that is the math.

Okay. No, very helpful. Thanks guys.

Thank you.

The next question comes from Will Nance with Goldman Sachs. Please go ahead.

Hey, guys. Appreciate you taking the question. I just wanted to follow-up on the 1Q guidance and sort of the trajectory over the course of the year. I know there are some kind of seasonal impacts that typically hit the first quarter around the annual maintenance. I think you've kind of just touched on that. But I think you also referenced processing on the payments side. So, maybe, can you just drill down on sort of expectations, I guess, maybe stripping around -- stripping out the annual license impacts? What are the kind of embedded assumptions around the payments segment in 1Q? Should we expect that kind of the [8%] (ph) level to continue into next year? And then, maybe just talk about drivers of the acceleration over the course of the year outside of some of the annual fees that you've just hit on?

Yeah. Will, I appreciate the question. And I would say, this year, we gave probably a little bit more color than we had in past years, only because of the way we think the pattern will play out. We don't guide to a quarterly. We manage the business on an annual basis. But in an effort to make sure that people weren't surprised by the way that Q1 might play out, we wanted to give a little bit more specificity there. I think if you look at some of the drivers, yeah, we expect a modest Q1 from a payments perspective, but that's coming off the -- payments usually grows throughout the year. So, that's usually just your typical restart from an annual basis. The other thing to look at is, we have very strong first half in hardware this past year in FY '24. So, that from a -- just the nature of the cycle of hardware sales, our clients, the new hardware that comes out, we think that probably FY '25 may not be as robust as the very strong first half of FY '24. So, I think that's some of the things. And then, as you mentioned that very important software and usage contracts and particularly, the software licensing part of that. As we see more people overtime, those renewals and how that reseller works, last year, we just saw a wave of first half renewals, that we think the pattern this year will be a little less than the first half. So, we wanted to call that out.

Yeah. That's all super helpful. And then, maybe just more big picture on the payments segment. Got a lot of questions on just what the building blocks for growth there, knowing that issuer processing is a big part of that business. There's been a lot of discussion around the kind of domestic debit transaction trends, kind of, more broadly and just what the growth algo is there. I guess, in a world where debit transactions are growing 6%, what is -- what do you see as kind of the most important driver for growing more in line with sort of how you frame the long-term targets in the segment? You called out enterprise payments, I believe, today. Just what in your mind are kind of the big building blocks to get to the segment targets there?

Sure. Hey, Will, this is Greg. I'll take that one. So, I think there's a couple of things. I think EPS has -- there's some things that we're doing in that product base that could have some additional growth, but I think the most of it is going to come from really the other two payment groups. So as you know, what we're doing with our bill pay and turning that into more of a bill management solution with the Payrailz acquisition and what we've done to combine the back-end of the iPay solution, the very -- and the front-end of the Payrailz solution and kind of rolling that out and what we call Journey to One. And that will be -- it's continuing to get completed and executed on time. We'll have that done by the end of the fiscal year, but the reality is that we've already seen some nice uptake there with clients that are very interested in what we're doing and how we're going about that. And so, there's some opportunities there. And the other big one comes from the PayCenter application. And what we've done today on the receive side where we have roughly over 300 institutions on all three of those faster payment rails today, including the FedNow, and -- which is roughly about 40% of the RTP clients that are live and roughly about 30% of the FedNow clients. But we're working with our clients today because of the fraud modules that we've been able to create with Financial Crimes Defender, and I referenced a lot of those sales, we're working with our clients on the use cases to be able to do send. And once the send capabilities get out and we get some more leverage for that and some things to get changed, I think, with a few of the use cases in particular, I think there's some real upside in that particular group as well. So, as Mimi referenced, it isn't all about card. Obviously, card is the biggest driver, but there's a few of these of the ancillary solutions within payments that I think have some upside over the next couple of years.

Got it. It's great color. Appreciate you taking the questions this morning.

Sure.

The next question comes from Chris Kennedy with William Blair. Please go ahead.

Good morning. Thanks for taking the question. Clearly, new sales activity has been very strong, but you're going with larger institutions. Is there any impact on kind of the timeline to implementation of some of these newer wins?

No. Chris, I'll take that. This is Greg. So, no, I mean, typical -- and just as a reminder really for everybody that typically when we win these new core deals, it's usually a 12- to 18-month process. So, depending on who that institution is, really what the timeliness is of their existing contract, some clients like to get out ahead of their termination window, and so there's negotiation and things that take place, and then, there's a kind of a wait-and-see period for -- not wait and see, but wait period for that implementation. But we're still in that 12 to 18 month typical window for those implementations. So, really anything that we just sold those 22 aren't going to see -- for the most part, aren't going to see any real revenue for Jack Henry in this fiscal year. Obviously, the ones we sold last year, and Mimi referenced, an increasing opportunity for us in our quarters over time and some of that is a byproduct of the timing of some of those implementations. But we're not seeing anything today that has extended beyond what we had typically seen in the past.

Great. Thanks for that. And then, just a quick one on return on invested capital. Obviously, it's very high, but it has come down over the last couple of years. Any thoughts on kind of the long-term opportunity with that metric? Thank you.

Okay. Yeah, part of being a disciplined capital allocator, we're being really thoughtful around that. I think the ROIC, while 20% is an enviable number and something we're quite proud of, it has come down a little bit just based on the math of as we had to take on the debt for the Payrailz acquisition. We're now paying that down. We paid down that substantially this past year. So, as we continue to pay down the debt and have the flexibility to do more in the form of repurchases or more in the form of other activities, that will drive ROIC. So, it's just the very tail end of working through that process. So, we expect that to continue on a positive trend and an upward trend.

Great. Thank you.

You're welcome.

The next question comes from Kartik Mehta with Northcoast Research. Please go ahead.

Hey, good morning, Greg. Greg, I wanted to just get your perspective on the core business. I know the focus should be the year, but after saying that I'm going to talk about the quarter, so I apologize for that. Fourth quarter maybe a little bit lower than expectation. But I'm wondering, as you look at FY '25, considering all the core wins you've had, is that a business that you think segment that continues to grow kind of in line with the overall revenue growth of the company?

Yeah. Hey, Kartik. Yeah, thanks for the question. For sure, I mean, I think as we have articulated throughout, I mean, it is a full year business for us and how we manage the business. It was a little tougher comp from last year compared to this particular one. But there is no concern on what we're doing, where we're going with that particular business. And so, the significance of the core wins, the significance of the products that we're bringing in there, the significance of what we're doing in technology modernization in general. So, I mean, the short answer to your question, Kartik, is, it just is a full year game for us. That's really what it is.

And Kartik, this is Mimi. If I could just add on, the tremendous fourth quarter that Greg talked about the [indiscernible] for the sales, I mean, that's at the very end of our year. So, if you think about that cycle for readiness for implementation on the client side, when you'll start to see that revenue, is not in FY '25 picture for the core.

Makes sense. And then, just on pricing, I know this is always a competitive industry and whenever you have renewals, pricing gets competitive. But just in general, any change in the environment in the last three, six months that you've noticed?

I'll take that. Yeah, I mean, not necessarily. I think our competition has continued to kind of do what they typically do and kind of how they go to battle. And so, we haven't seen anything significantly change there. Some of their stories are changing and some of their approaches are changing, but in reality, it is really about what have you done for me. And so, as you can imagine, in 22 competitive core wins, a lot of those came from the normal players out there that you would know. And so, it's really about our ability to execute, our ability to service our reputation for doing that, our consistency of how we go about things, the consistency of our team. Our turnover rates is very low at the company, and so you just get a consistency with that. So again, the short answer for you, Kartik, is I don't feel that there's anything significantly changing out in the marketplace other than some of the stories that go with it.

Perfect. Thank you both. I really appreciate it.

Sure.

The next question comes from Peter Heckmann with D.A. Davidson. Please go ahead.

Hey, good morning. Wanted to follow-up on Banno a little bit and just see -- I mean 927 on Banno Retail I think you said, that's really impressive. And can you talk about how many clients you still might have on NetTeller or maybe your mobile digital banking product? And how do you think about the growth of Banno once you substantially upgraded most of your clients from the older systems?

Yes, it's a great question, Pete. So, not to get in the minutiae, but just 924, just want to make sure we have our numbers right. So, 924, and so that continues to be a huge opportunity for us, and there's a lot of runway still in the credit union space, right, so -- and the banking space, but really in the credit union space where we have been attacking that part of our core business. So, there's still a lot of upside. When you think about that we have roughly 1,700 core clients, so there's still a lot of runway within our own base. But of course, we're working on outside the base strategy as well. And so, we're working with some of our competitors to get what we need to make that successful, sometimes not as easy as we had hoped, to make that happen. But the reality is we're making a lot of progress and we still expect to do what we said we were going to do, which is get that out the latter part of this fiscal year or the second half of the calendar year. So that's still on point. To answer your question around NetTeller, I don't know exactly, but it's roughly a couple of hundred left on the NetTeller platform.

Okay. All right. That's helpful. And then just in terms of M&A, clearly the pace of M&A has slowed. And just curious like how much of that is Jack Henry's suite of solutions is largely filled out and there's no longer any holes, but are there other effects to the extent that like the industry is less fragmented, there's not as many small players or valuation? How are all those playing into the outlook for M&A?

Yeah, I think you hit on all of them. I think it is a combination of much of what you described. We continue to look at opportunities that make sense. The difference is that really our approach hasn't changed, just what we're looking for has changed. So, when you think about our tech modernization strategy, we're really looking first and foremost at what is already public cloud native, and so we don't have to rewrite the technology once an acquisition takes place. Obviously, Payrailz was one of those examples where it was already public cloud native. Looking to your point about gaps, we don't have the gaps that we had many years ago. And again, maybe the opposite of where we want to focus, which is about that product rationalization, where we're looking at things that just don't make sense as they once did maybe 10 years ago, and so we're looking at that. But I think when you look at the opportunities in front of us, public cloud native, number one. Number two is, do they help us accelerate some of the things that we're looking at in payments or in the SMB strategy that we'll be talking about more, or in some of the things that we're doing to roll out in our -- I would say, the key products of digital enterprise account opening fraud, things along with that line. Those are really where our focus would be.

Okay. Good stuff. I'll look forward to seeing you in a few weeks.

Okay. Thanks, Pete.

The next question comes from Charles Nabhan with Stephens. Please go ahead.

Good morning, and thank you for taking my question. You had mentioned that roughly 73% of your clients are now in the public cloud. I think that's up from 69% at the Investor Day last year. My question is how much runway is left to move your client base to the cloud? And if you could talk about what that could mean for revenue uplift? I think you had cited 2 times revenue uplift in the past from additional cross-sell as well as some margin benefits as well. Any commentary around that would be helpful.

Sure, Chuck. I'll take it. Mimi can add some commentary. Yeah, I think -- so it is up from where we were. I don't know if I remember it was 69%, but definitely up from where we are. So roughly, we don't expect to get 100% of movement there. I would say that the 93%, 95% range is probably a reasonable number for us to think through. The other thing is that as we've kind of moved and as we've moved to the type of clients that are left in there, which tend to be a lot of the larger ones, that number actually has kind of gone down. So, it's more about 1.75% now than it was at the 2% through the years. And so, still significant, but down a little bit. But we're continuing to stay focused. We still have several years of runway on that. So, if you think about it, there's a couple of hundred left really on each side. And so, if you're averaging somewhere between 40 and 45 a year, you got three, four, five years left based on that to get kind of to our numbers. But that will continue to be a focus and an opportunity. And I think there'll be other opportunities to move from the private cloud to the public cloud over time, too. So, we can't just focus only on what will be moving to the private cloud, because at the same time, we're winding that down, we'll have opportunities to move customers from the private cloud to the public cloud around the same timeframe.

Got it. I'm sorry if I cut you off, but my follow-up was around -- sort of a follow-up to Kartik's question around segment outlook. If I compare fiscal year '24 results to your normalized guide, it looks like core came in a little ahead, whereas complementary and payments were a little below the normalized guide. And just putting aside quarterly cadence, I know you had cited some softness in maintenance, which I think flows through core. Could we expect more of a normalized annual cadence of revenue growth next year, more with core coming in the 6% to 7% range and payments and complementary in the 8% to 9% range?

Yeah. Chuck, this is Mimi. I think our intention for the growth algorithm is to have an indicator, it's not a precision. And so, I do think the nice -- the beauty of it is we have a whole portfolio. And so, sometimes they counterbalance each other, in different ways. So, the great year -- this year, core had higher than the growth algorithm, right? That's somewhat compensated for the lower complementary. Payments, you have the question of what happens with the economy and geopolitical and election and a lot of other issues. So, I think in general, we still expect that the growth algorithm holds, but it's illustrative on like any given year, they could plus and minus a little bit and offset each other.

Got it. Thank you.

You're welcome.

The next question comes from Dave Koning with Baird. Please go ahead.

Yeah. Hey, thanks guys. And I guess my question is a little similar just on what normalized growth is. I guess, if Q1 is 5.25%, the rest of the year has to average around 8.25% to hit the midpoint of the range. And I guess that's a little above normal. And I guess are any segments going to outsize kind of accelerate from Q1? Or is it really just getting all segments in that 8% range kind of the rest of the year?

Yeah, Dave, I would say, in general, we're not going to give color quarter by quarter at this point as we live into the year. We think that we want to call out something a trend we're seeing. We'll certainly be transparent on that. I agree with your math that we expect it to sequentially grow throughout the year, with second half being stronger than the first half. So, I think, Q1 is more pronounced. That's why we gave the color with more specificity. But I would say Q2 overall is going to be a higher growth than Q1. And I think that is pretty fair to say across the board, across all of the segments.

Yeah. Okay. Thank you. And maybe one just -- I guess one follow-up question. Net interest income, if we look at the interest income less interest expense, was a positive $5 million or so in the quarter. It was better than it's been in a while. But you have a net debt position. So, I'm wondering how you get a pretty sizable net interest income when you have a debt position and if that's sustainable?

Good question, Dave. So, how we get that interest income and the impact it has on net interest, as you did call out, we do have the debt. We've been paying it down pretty significantly this year in a paydown, and we expect that to continue for '25. But we do have -- we administer cash settlement balances and as part of that administrative services, we get some of the revenue from those cash settlement accounts. Through negotiations we've had with partners and the like, we've been able to increase the yield in those accounts. Now that does have some correlation to interest rate environment, so depending on what the Fed does in '25, but overall, I would say that it's sustainable. It is subject to some interest rate sensitivity, but it is sustainable.

Got you. Thanks, guys.

Happy to.

Thank you.

The next question comes from James Faucette with Morgan Stanley. Please go ahead.

Hey, good morning. Thanks for the time this morning. Wanted to just ask a quick follow-up question on a couple of points. First, on your customers and their priorities, given where we are in the deposit cycle and the prospect of a return to loan growth next year with lower interest rates et cetera, how have you seen if at all your customers change prioritization in terms of where they're looking to invest between deposit attraction and retention tools versus lending? Are we seeing any change in your customers' focus and priorities right now?

Yeah, that's a great question, James. And so, I have a couple of different reference points for you, too. So, I know Northcoast Research did their own survey, and then, of course, we do our annual benchmark survey that we have. Both of them kind of showed the priorities being fairly the same as far as deposit growth being number one. The one thing that I will reference from our benchmark survey is this, which is that, in 2023, growing deposits was 43%, it's still number one, but 43% of the CEO has named that as their number one. This year, it was 54%. So, significant growth in both of those numbers, but again, same as a priority. The other two, just since you asked, have really kind of stayed fairly consistent, which is improving operational efficiency and growing loans, but both of those have gone up slightly from 2023 to 2024. But again, those are typically the top three. And you can throw fraud as a really close number four for priorities.

Great. Appreciate that. And, Greg, I wanted to follow-up on a comment you made in terms of implementation queues and how -- wondering how those are trending broadly. And how are you thinking about the puts and takes between the margin expansion you're delivering right now versus potential for additional resource allocation to speed up those implementations broadly?

No, it's a great question, one that we address on a regular basis with our team. So, we do -- we work through that on a regular basis. So, there's a lot of short business cases that we do. But the reality is if we can implement the revenue faster, we absolutely find ways to do that. Sometimes it is a reflection on the actual product, sometimes it's a reflection of the complementary or payment product that was sold with the core. And so, sometimes those don't get implemented until the core is implemented. So, you have some of those timing delays. Core, in particular, is, as I described, it's a 12- to 18-month process most times, maybe a little longer on a couple, but most of the time than that. But for our other products, so let's just take Financial Crimes Defender, we've already increased our resources on that this year to kind of work through our installation queues and get that down into smaller numbers to ensure that we continue to keep our customers happy.

That's great. Thank you so much.

Sure.

This concludes our question-and-answer session. I would like to turn the conference back over to Vance Sherard for any closing remarks.

Thank you, Drew. Please don't forget that our Investor Day is fast approaching. It will take place on Thursday, September 5th in Dallas starting at 1:00 pm Central Time. You can join us via webcast. Or if you'd like to attend it in-person, please let us know, and we will get you the specifics. In addition to Investor Day, during the coming weeks, we will be traveling to attend various investor events in the US and Europe. We'd like to take this opportunity to thank all Jack Henry associates for their hard work and dedication, which has led to our outstanding results. Thank you for joining us today. And Drew, will you please provide the replay number?

Yes, sir. The replay number for today's call is 877-344-7529, and the access code is 7192153. That will be available in about one hour. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.