Jack Henry & Associates recently unveiled its impressive financial performance for the second quarter of fiscal year 2026. The company reported substantial increases across key metrics, including record non-GAAP revenue of $611 million, marking a 6.7% year-over-year rise. Furthermore, its non-GAAP operating margin expanded significantly to 25.1%, a 355 basis point improvement from the previous year. GAAP EPS also saw a robust 29% increase, reaching $0.72. These strong results have prompted the company to raise its fiscal 2026 guidance, with anticipated non-GAAP revenue growth between 6.4% and 7.1%, and GAAP EPS projected to be between $6.61 and $6.72. Jack Henry also demonstrated strong cash generation, with operating cash flow hitting $153 million and free cash flow reaching $103 million in the quarter. The company’s success is attributed to strong sales momentum, increased market share, and the successful rollout of new product initiatives like Tap2Local and Rapid Transfers.
Jack Henry & Associates Achieves Robust Growth and Strategic Milestones in Q2
On Wednesday, February 4, 2026, Jack Henry & Associates, a leading provider of technology solutions for the financial services industry, announced its second-quarter earnings call. President and CEO Greg Adelson proudly reported a record-setting quarter, with non-GAAP revenue climbing to an impressive $611 million, reflecting a robust 6.7% year-over-year increase. The company also achieved a significant expansion in its non-GAAP operating margin, which rose by 355 basis points to 25.1%. This strong financial performance underscores the company’s effective competitive sales strategies and growing market presence.
Chief Financial Officer and Treasurer Mimi Carsley elaborated on the quarterly results, noting an 8% increase in GAAP revenue and a 7% rise in non-GAAP revenue for the quarter. She clarified that despite a minor negative impact from rescheduling the Connect client conference, the underlying non-GAAP revenue growth would have been approximately 8%. Recurring revenue consistently exceeded 92% of total revenue, with cloud revenue growing by 8% and constituting 33% of the total. Processing revenue, representing 44% of total revenue, also saw a healthy 9% GAAP growth and 8% non-GAAP growth, fueled by increased demand for digital, card, and faster payment processing solutions.
The company's profitability soared, with GAAP EPS reaching $0.72 for the quarter, a 29% increase. For the first half of the fiscal year, GAAP EPS stood at $3.70, up 24%. Strategic cost management, leveraging enterprise process improvements, and the integration of AI contributed to these gains, although Carsley noted that some benefits, such as lower self-insured medical costs, are not expected to be sustainable long-term.
Adelson highlighted significant competitive success, with the core sales team securing 22 competitive core wins. Notably, 68% of these new core wins included both digital and card processing solutions, a substantial increase from 45% in the same quarter of fiscal 2025. He also pointed out long-term market share gains, with core market share among banks increasing by 17% and credit unions by 40% over the past eight years. For institutions with over $1 billion in assets, market share rose by 32% for banks and 12% for credit unions, driven by client growth through M&A and robust relationships across the U.S. financial sector.
New product initiatives are also gaining considerable traction. The cloud-native merchant acquiring solution, Tap2Local, is being rolled out in waves to Banno clients, with 300 clients already live and plans to add 100-150 per month. Rapid Transfers, facilitating fund movement between external accounts, eligible cards, and digital wallets, is now live with 75 clients, with another 180 in the onboarding process. In the realm of digital assets, Jack Henry is actively beta testing USDC stablecoin payments with multiple financial institutions and evaluating over 20 potential partners for stablecoin infrastructure. The integration of Victor Technologies, acquired on September 30, is progressing smoothly, expanding embedded payments and API capabilities.
Platform modernization efforts are also advancing, with 22 components developed on its cloud-native, API-first platform. The company anticipates multiple clients to test a new cloud-native deposit-only core functionality in the second quarter of the calendar year. Across its three operating segments—Core, Payments, and Complementary—Jack Henry reported positive results, with increased revenue and expanded operating margins. Banno, the company’s digital banking platform, continues to grow, serving 1,037 retail clients and 435 business clients, with registered users increasing by 15% year over year to 15.2 million.
Financially, operating cash flow in Q2 surged to $153 million, a $63 million increase from the prior year, and free cash flow reached $103 million, up $74 million. The trailing 12-month non-GAAP return on invested capital improved to 23% from 19% a year earlier. In terms of capital allocation, Jack Henry repurchased $125 million in shares, paid $84 million in dividends, and completed the Victor Technologies acquisition. The company concluded the quarter with minimal debt and aims to be debt-free by year-end, barring future acquisitions.
Looking ahead, Jack Henry has raised its fiscal 2026 outlook for the second time, projecting non-GAAP revenue growth between 6.4% and 7.1% and GAAP EPS of $6.61 to $6.72. Despite anticipated second-half headwinds from normalized medical benefit costs, management remains confident in achieving these targets, driven by strong demand, a robust sales pipeline, and competitive win rates. They also addressed the impact of AI on software economics, asserting that Jack Henry is strategically utilizing AI for both back-office efficiency and new product development, supported by its multi-year transition to a public cloud infrastructure.
Jack Henry & Associates, established in 1976 and headquartered in Monett, Missouri, continues its legacy as a leading technology and payment processing solutions provider for the financial services industry. The company's comprehensive suite of software and services is designed to empower banks, credit unions, and other financial institutions to optimize operations, enhance customer engagement, and effectively manage risk.
The company's core processing platforms deliver end-to-end account processing, general ledger, deposit operations, and loan servicing functionality, solidifying its position as a vital partner in the financial ecosystem.
The latest earnings call from Jack Henry & Associates highlights the dynamic nature of the financial technology sector and the strategic foresight required to thrive within it. The company's consistent growth, bolstered by innovative product development and a keen understanding of market demands, offers valuable lessons for businesses aiming for sustained success. Their ability to adapt to changing market conditions, as evidenced by their embrace of cloud-native solutions and AI, demonstrates a forward-thinking approach that is essential in today's rapidly evolving technological landscape. Furthermore, their disciplined capital allocation and commitment to shareholder value provide a strong foundation for continued expansion and market leadership. The emphasis on strengthening client relationships and expanding market share through strategic acquisitions and competitive wins also showcases the importance of a holistic growth strategy.