Jack Henry's Q3 2025: Unpacking Contradictions on M&A Impact, Sales Cycles, and Growth Expectations

M&A impact on revenue growth, sales cycle and project delays, core decision-making and project delays, growth expectations and revenue guidance, cloud migration and project delays are the key contradictions discussed in Jack Henry & Associates' latest 2025Q3 earnings call



Revenue and Margin Performance:
- Jack Henry & Associates reported a 7% increase in non-GAAP revenue and a non-GAAP operating margin expansion of 207 basis points to 23% for Q3 Fiscal Year 2025.
- The growth was driven by strong performance in key areas such as processing and cloud, and increased incremental margins.

Core and Total Pipeline:
- As of this fiscal year, Jack Henry secured 28 new core wins, including 11 in Q3, with financial institutions totaling $30 billion in assets.
- The increase in competitive core wins and migrations is due to the success of Jack Henry's technology modernization and innovations, aligning well with industry demands.

Impact of M&A Activity:
- Quarterly deconversion revenue increased significantly to approximately $9.6 million, reflecting an acceleration in industry consolidation.
- The increase is expected to continue, with a full-year deconversion revenue guidance of $22 million to $28 million.

Economic Conditions and Revenue Guidance:
- Despite strong performance in strategic areas, overall non-GAAP revenue growth was tempered by lower nonkey revenue, particularly in hardware sales.
- The company adjusted its full-year revenue guidance due to macroeconomic concerns, softening nonstrategic revenue, and delays in some nonrecurring projects.