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Jack Henry & Associates Q3 2023 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing View Latest SEC 10-Q Filing

Participants

Corporate Executives

  • Vance Sherard
    Vice President of Investor Relations
  • David Foss
    Board Chair and Chief Executive Officer
  • Mimi Carsley
    Chief Financial Officer and Treasurer
  • Greg Adelson
    President and Chief Operating Officer

Presentation

Operator

Welcome to the Jack Henry Third Quarter Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Mr. Vance Sherard, Vice President of Investor Relations. Please go ahead.

Vance Sherard
Vice President of Investor Relations at Jack Henry & Associates

Good morning and thank you for joining us for the Jack Henry fiscal 2023 third-quarter earnings call. Joining me on the call today is David Foss, Board Chair and CEO; Mimi Carsley, CFO, and Treasurer; and Greg Adelson, President and COO. After my opening remarks, I will turn the call over to Dave for his thoughts about the state of our business, financial and sales performance for the quarter, industry comments, and other key initiatives. After Dave concludes his comments, Mimi will provide additional commentary regarding the financial results and fiscal year 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 Dave.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

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

For Q3 of fiscal 2023, total revenue increased 6% for the quarter and increased 8% on a non-GAAP basis. Consistent with our prior comments regarding the reduction in bank M&A this year deconversion revenue was down approximately 65% as compared to the prior year quarter.

Turning to the segments. We again had a good quarter in the core segment of our business, revenue increased 4% for the quarter and increased by 8% on a non-GAAP basis. Our payments segment performed very well, posting a 6% increase in revenue this quarter and a 7% increase on a non-GAAP basis. We also had a strong quarter in our complementary solutions businesses, with a 6% increase in revenue this quarter and an 8% increase on a non-GAAP basis.

As I highlighted in the press release, our sales professionals posted an extremely strong quarter led by the core sales team. On our last quarterly call, I mentioned that the sales team set an all-time sales booking record in our fiscal Q2. Although we didn't break that record this quarter, we did set a record for the strongest Q3 in history. During the quarter we inked 13 competitive core takeaways, so we continue at the approximately one deal per week run rate, I've discussed this in the past. In addition to our success in signing new core clients.

We signed 13 existing on-prem core customers to move to our private cloud environment. In addition to the tremendous success, we've experienced in our core business this quarter, we continue to attract new clients to our digital banking suite. During the third quarter, we signed 39 new clients to our Banno retail platform with another 35 clients signed up for Banno business.

Regarding our Banno digital suite, as of March 31, we now have just over 9.3 million users live on the Banno platform. We continue to enjoy the highest consumer rating in the App Store. And we are regularly recognized as the fastest application in the industry. The feedback from our 30 Banno business beta testing clients has been outstanding and we remain on track to deliver Banno business into general availability later this quarter.

Let me take a moment to address the banking landscape related to the liquidity challenges experienced by a couple of large regional banks in March and earlier this week. Although I'm not aware of any Jack Henry core clients who have tapped into the Federal Reserve's new Bank Term Funding Program. I think the announcement has had a positive effect on the overall concern in the market regarding bank liquidity and I applaud the Fed on their swift and decisive action. Since those events, grab the headlines, members of our team have spoken with hundreds of our clients, and I personally have visited with a large number of CEOs at our client banks.

I'm pleased to say that our banking clients have indicated they have been largely unaffected by these events with the exception of several who have reported an influx of new accounts, as business clients look to diversify their deposit balances. Our clients typically have a diversified customer base, serve small and medium businesses and consumers in their local communities, and have long-standing and loyal customers. So I think it's logical, that they wouldn't see an adverse impact as a result of a few extreme scenarios.

Also remember that a large part of our business is focused on the credit union industry, with approximately half of all credit unions with more than $1 billion in assets, partnered with Jack Henry, as their primary technology provider. Those clients also report being largely unaffected by the challenges in the banking sector.

In late April IntraFi conducted a survey, which generated responses for more than 550 bank CEOs, Presidents and CFOs primarily at banks with less than $10 billion in assets. Approximately 77% of the respondents are no significant inflows or outflows of deposits. 14% said they saw deposits decline by 2% or more, and 9% so they saw an increase of at least 2% in deposits. I think these results are consistent with what we've heard anecdotally from our clients.

We have seen no hesitation on the part of our clients to move ahead with technology decisions since the middle of March. And as I mentioned earlier, this was the largest third quarter in terms of sales bookings in the history of our Company. What's more, our sales pipeline is now larger than at any other time including a recognizable uptick in opportunities since our last quarterly call in February. I'm well aware of the challenges bankers face in today's economy and understand that things could change, but as we speak today, our clients are generally performing well and banks and credit unions are continuing to prioritize the modernization of their technology stack to remain competitive and serve the evolving needs of their account holders.

Hopefully, you've all seen the new corporate sustainability report that we published on March 31st. I think it's an excellent representation of the key initiatives and accomplishments, we've been working on since we published our last report. In this new version, we provided a more detailed review of Jack Henry's demographic makeup. A summary of the results of our annual employee engagement survey, an overview of our data privacy and cybersecurity practices, and an outline of our commitment to setting science-based targets through these science-based targets initiatives or SBTI to address the reduction of greenhouse gas emissions. Additionally, the report highlights some of the public recognition we've received from organizations like Newsweek, Computerworld, and LinkedIn's Top Companies list.

As we look toward the end-of-the fiscal year, our sales pipeline is much larger than it's ever been and we continue to be optimistic about the strength of our technology solutions, our ability to deliver outstanding service to our customers, our ability to expand our customer relationships and our long-term prospects for success. I look forward to seeing and chatting with many of you at our Investor Day in Denver in a couple of weeks.

With that, I'll turn it over to Mimi, for some detail on the numbers.

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Thanks, Dave. Good morning, everyone. As Dave shared, Jack Henry had a successful third quarter and I will call out the details driving those results and our outlook for the remainder of the year. For both the third quarter and first nine months of our fiscal year, total revenue was up 6% on a GAAP basis, and solidly up 8% on a non-GAAP basis.

Now onto the third quarter details. On a GAAP basis, services and support revenue increased 3% in both the third quarter and year-to-date. Consistent with trends over the past two quarters, services and support were negatively impacted as deconversion revenue decreased $11 million for the quarter and $31 million year-to-date. This remains in line with the limited broader market activity, acquisition activity in our space.

With only a couple of months left, we are projecting approximately $20 million in deconversion revenue this fiscal year. However, forecasting deconversion activity is always challenging given the limited advanced notice and general uncertainty of M&A. Our private and public cloud offerings show robust growth this quarter, growing 11% and 10% year-to-date. Product delivery and services decreased 10% in the quarter, 11% year-to-date, impacted by lower deconversion revenue and convert merge activity offset by higher license and hardware revenue.

On a non-GAAP basis, services and support revenue grew 8% for the quarter and 7% year-to-date, which serves to highlight the consistent strength of our business model. Processing revenue increased 11% on a GAAP basis for the quarter and 10% year-to-date. On a non-GAAP basis, the growth was 10% for the quarter and 9% year-to-date. The increases were driven by the higher card volumes and services, plus robust digital demand.

Now reviewing costs. Cost of revenue was up 9% in the third quarter and 8% year-to-date. Quarterly drivers included increased card processing costs consistent with card revenue growth, higher personnel cost, and amortization expense. These drivers are consistent across our year-to-date results.

Research and development expense increased 13% during the quarter, mostly due to higher personnel costs and license fees furthering innovation. Year-to-date, these expenses increased 19%, based on the same factors. SG&A rose 9% for the quarter, driven by increases in personnel-related costs.

Year-to-date, the increase was 8% driven by personnel, travel, professional services costs, partly offset by the gain on sale of assets earlier this year. We remain focused on actions involving facility rationalization, headcount, and travel controls, procurement wins, and other expense management. Collectively, these efforts are helping offset inflationary pressures and driving positive operational results.

Despite the decline in net income primarily related to deconversion revenue and partially offset by a lower tax rate, we delivered fully diluted earnings per share of $1.12 for the quarter. Thanks to our hard-working and dedicated associates, GAAP and non-GAAP results for the third quarter and nine months of the year are consistent with internal expectations and set us up for a strong conclusion to FY '23.

As a reminder, for transparency the impact from the gain on sale of assets, the Payrailz acquisition, and deconversion revenue are shown as part of the non-GAAP adjustments in the press release.

Turning our attention to cash flow. Year-to-date, operating cash flow was $207 million, down from $301 million in the same period last year due to lower deconversion revenue and the timing of taxes. The tax payments were significant -- as significant outflow at $64 million in the quarter related to a change in the timing of the deductibility of development expenses.

Free-cash flow, which is operating cash flow less capex and cap software, plus proceeds from the sale of assets was $82 million year-to-date. Excluding this previously discussed tax payments and keeping year-to-date deconversion revenue flat, free cash flow would have been approximately $163 million.

While balancing repurchase activities with maintaining a conservative balance sheet, we've repurchased 151,000 shares during the quarter. We also returned capital to shareholders through a dividend of $0.52 per share, representing a 6% increase. Our capital allocation priorities remain consistent. We're focused on maintaining ample liquidity, investing in our business to fuel growth, evaluating acquisitions, paying dividends, and opportunistically repurchasing our stock. This consistent dedication to value creation resulted in a trailing 12-month return on invested capital of 20.1%.

With that, let's review our outlook for the completion of our fiscal year. The press release included updated full-year GAAP guidance. The GAAP guidance remains inclusive of the Payrailz acquisition, gain on asset sales and deconversion revenue. We expect the year-to-date trends to continue for the remainder of the fiscal year, impacting GAAP results. Most significantly, assuming continued minimal consolidation in our customer base, deconversion revenue will remain muted. Considering year-to-date activity, we expect approximately $20 million of annual deconversion revenue representing a $5 million increase from our previous guidance provided on the last call.

To be transparent, on our August full-year earnings call, we will outline our new approach to providing guidance for deconversion revenue. While the integration of Payrailz continues to meet our expectations, there have been third-party implementation delays impacting FY '23 revenue, amounting to a shortfall of $3 million. This revenue remains in our pipeline, we remain confident in the strategic value and financial performance trajectory.

We expect full-year GAAP revenue growth for fiscal '23 to be between 5.5% to 5.9%. With respect to full-year GAAP EPS, we expect $4.85 to $4.87 per share, with improvement driven from positive impacts from a modestly higher expected deconversion revenue, lower tax rate, partly offset by a slight increase in Payrailz dilution. Non-GAAP guidance remains unchanged due to the continued impressive and consistent performance of our business model.

So in closing, we delivered another quarter of strong operational and financial results and remain solidly optimistic about the conclusion of this fiscal year. We thank all of our investors for their continued confidence in Jack Henry.

Debbie, will you please open the call for questions?


Questions and Answers

Operator

[Operator Instructions]. The first question is from Rayna Kumar with UBS. Please go ahead.

Rayna Kumar
Analyst at UBS Group

Good morning. David, in the past you spoken about having the ability to sell Banno to non-Jack Henry core customers, how is that progressing? And in general, are you seeing the opportunity to sell your core processing services to larger financial institutions?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, good morning, Rayna. So two questions in there. First off, as far as Banno is concerned. So -- and I think I talked about this on the last earnings call. I know I've talked about and in some of these Fireside chats that I've done with some of you. We had in fact a plan to start selling Banno outside the base here in the fall of this past year and what we learned much to our surprise was that some of our competitors had identified that as an opportunity for them to hang on to their core customers. The fact that their core customer was going to be able to use Banno. They were essentially using that as a selling point for those customers to retain their legacy core system, because they would get the best-of-breed digital banking system without having to change out the cores and that is certainly was not part of our strategy.

And so we kind of backed off on that. We were prepared in the fall to start. So I think outside the base we backed away from that. Now, we are really reworking that strategy with a more targeted approach. And so you'll hear more about that from us, I think later this year as far as how we're going to go-to-market with Banno outside the core base.

As far as the -- now you'll have to remind me the second part of your question. Selling up -- selling up market. Good thing, I have help here in the room. Selling up markets. So yeah, the -- first-off, we're having great success with Silver Lake in the banking side, and of course, we're the dominant player on the credit union side already a market. So approximately 50% of the credit union industry with assets over a billion are already Jack Henry core customers. So we are already the dominant player on the paying side of the business.

On the banking side, we've had great success here in the past few years, moving up market with -- particularly with our Silver Lake core system. What's been interesting now with the tech modernization strategy, we are engaging with a number of customers now that are significantly larger than you would normally think of as a Jack Henry core customer, who are very interested in what we're doing and are now seeing Jack Henry as the very probable technology partner, that they want to partner up with going forward.

So more to come on that, it's early days for us, with some of these very large customers that we're talking to. But the prospects I think are pretty bright and much of that being driven by the tech modernization strategy that we've been talking about lately.

Rayna Kumar
Analyst at UBS Group

Very helpful. And then if I can fit one in for Mimi. Mimi, could you just comment on the debit processing volume in the quarter? And secondly, if you can just give us your preliminary thoughts on how FY '24 revenue and operating margin could pan-out given that your -- close to your fiscal year end? Thank you.

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Thanks, Rayna. Yeah, so we continue to see the trends that have happened for the first nine months of the year. And are consistent with the broader market data that you're getting from other industry players in terms of slightly slower as it relates to consumer sentiment impacting those trends and a little bit more going to the credit side than the debit side. And as you know, we have a much bigger profile on debit in our business. So our guidance incorporates the continuation of that trend.

And then to your second question. Unfortunately it's a little premature at this point to talk about FY '24, our teams are still heads-down collaborating on the budgeting process and we'll probably share that more on the August call, than we will today.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

And can I add one comment on the debit. So I think there was a bit of a misunderstanding, after the last call, we attributed a part of our guide change to the fact that the debit volumes we saw going forward, we're going to slow, just a little bit. And certainly, that's true, but that doesn't mean the debit business is underperforming. The debit side of our business has been a real solid performer for us this year. We just had a little higher expectation

For the remainder of the year then is reality and that's why we made the adjustment. But the debit business is performing extremely well for Jack Henry.

Operator

The next question comes from Dan Perlin with RBC Capital Markets. Please go ahead.

Dan Perlin
Analyst at RBC Capital Markets

Thanks, good morning. Dave, I had a question going back to the demand environment. I feel like there is a huge disconnect in the market with the stocks and kind of what we hear from the banks versus what you're seeing. I'm just wondering if maybe we're getting it wrong a little bit, like is the -- the pressure that the banks are feeling right now, driving more tech demand to you as opposed to maybe the converse, which is I think what most people are expecting?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, it's an insightful question Dan. And I think what you're saying is generally correct. So if you're running a bank or credit union in the United States today, they've been performing pretty well and we all know the challenges that they're under and rate increases and cost to capital and that kind of stuff. But if you're running a bank or credit in the United States today, you -- for almost all of them they need to continue to focus on modernizing their technology stack for one or two reasons, one, you're trying to attract new customers to institution and customers aren't coming into the branch anymore, right. They are expecting to do things through some type of digital presentation layer. So for most banks and credit unions that requires them to continue on this modernization track and make sure that they have the tools to attract, not just consumers but business customers, small-medium business customers are the lifeblood of our customers and how they operate on the banking side.

And so there's that driver. But then the other side of the equation is efficiency. So for most bankers, they can quote their efficiency ratio immediately to you without looking at any piece of paper, they can quote it off the top of your head, because they are all focused on efficiency and trying to figure out where are those areas where we can drive efficiency through the operation. Well, generally technology is at the kind of the crux of where they're going to find efficiency. And so there two Jack Henry is in the mix, having those conversations with our customers.

And then you throw into that -- on top of that, fraud and cyber security and all those kind of things. All of that stuff is driven by technology. And so -- yeah. I think there is a bit of a disconnect in this sense that because there is some turmoil in the industry, Jack Henry sales are going to be negatively impacted. They're just not. The business has continued to run and they need to continue to find technology solutions to help them with all those things, that I just highlighted.

Dan Perlin
Analyst at RBC Capital Markets

It sounds -- It's somewhat counterintuitive, but it clearly makes sense in the current context. The quick question or follow-up on margins here. I know you don't want to go out next year, but. I would appreciate it if you could maybe talk about some of the key drivers and leverage that you're gonna be able to have here, whether it'd be expense control specifically a kind of mix of the business, just as we start to think about the margin expansion story again. Thank you.

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Sure, Dan. Great question. So as we talked about previously, we continue to see margin expansion throughout the year, we knew it would be a modest amount this year. Earlier in the year, our original guidance was for flat for the year. We're hopeful that and we're on track for a small increase in margin expansion.

I would say the things we're working on are consistent. We do a ton around efficiency continuous improvement. We've done a lot on internal automization and procurement has been a huge win for us as we think about streamlining partnerships and really prioritizing that spend. So, we're being really thoughtful on controllable spend like travel, headcount additions, really thinking about each position from a zero-base perspective. But there's nothing structurally that concerns me in terms of the ability to once again continue back now that we have the normalization of some of the headwinds we've seen past years and return out of COVID environment, that will return back to the margin expansion story.

Dan Perlin
Analyst at RBC Capital Markets

That's great to hear. Thank you.

Operator

The next question is from Nik Cremo with Credit Suisse. Please go ahead.

Nik Cremo
Analyst at Credit Suisse Group

Hey, congrats on the strong results. Thanks for taking my question. I was hoping to get some more color on the performance in the payment segment in the quarter across the various business lines and if you've received any one-time benefits related to the banking turmoil, if some of your competitors? And this is my follow-up, are you still expecting Payrailz to be modestly accretive in FY '24? Thank you.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

So let's do Payrailz, first. Greg is prepared to give you an overview on Payrailz. And then I'll talk about the rest of the payments business.

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

Yeah, and I think, so I am going to start with Payrailz. But a couple of things. So one, Mimi alluded to the fact that in her opening comments around. We do have some challenges with a couple of third-parties. And I think some of it's headcount related and other constraints that they have to get some of the work done to allow some of our contracts that are already done, and in the implementation queue to be brought into the production queue.

So there's a few of those constraints and things that we're working through. But the good news is, is that since September when we made that acquisition, we've actually sold 40 new -- 48 new contracts and 17 add-ons, add-ons are things like the P2P solution. We have a loan payment solution, things like that. So the sales engine is starting to move, and a lot of the sales that were done previously, before we acquired Payrailz, were really predominantly done through that third-party channel. So of course we have a much larger sales force and folks that are focused on selling more direct deals.

So we're pretty -- very optimistic on what's happening in the sales side of this, we just need a couple of the integration partners to be able to get some of their work done. That will help us accelerate the revenue in fiscal year '24.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

And I can start on the payment side too. So I think -- and Mimi alluded to what was going on, on our card business, which continues to go very, very strongly as far as growth. But when you look at the rest of our payment businesses, there is a nice mix of growth, maybe not to the same level that we had, remote deposit capture in our EPS business with significant during the pandemic obviously folks were not going into branches and all though that continues for the most part, that business is not growing at the same pace it did, but still in double-digit growth in our portfolio.

So, things that we're doing in our PayCenter business around general payments and preparation for FedNow which we can talk about at some point too, but in our clearing house business and what we've done with Zelle, we continue to have about 60% of all the clearing house customers that are out there, there's only about 300 clearing house, so we have over 180 that are live on Jack Henry today. That continues to grow nicely. And so that business continues to have a lot of upside.

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Yeah. I would just add that there is consistency. To Greg's point, there's consistency across mid cards payments, also led by things like the fraud and other risk management solutions that are add-ons. So I would say that trend from a consistency of growth will continue, then added by the benefit of Payrailz.

Operator

The next question comes from David Togut with Evercore ISI.

David Togut
Analyst at Evercore ISI

Thank you. Good morning. Y ou've called out, you do sales pipeline at a record level. Could you walk through what are the biggest drivers of that is that new tech modernization modules, is it Banno business, Silver Lake. What are the underlying components of that strength?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Dave. One thing I'll highlight as I go through this. When I talk about pipeline, I know there's been some confusion in the past. I'm not talking about individual deals. How many core customers are in the pipeline or anything like that, I'm talking about the dollar amount, essentially this is a non-GAAP number, but it's the dollar amount that we track as far as the value of each contract. So it's in theory that all converts into revenue at some point after deals are signed and they are implemented.

As far as the drivers. So core continues to be king for us when it comes to a driver. We have just a tremendous amount of core activity right now, both banking and credit union. And as far as customers that are talking to Jack Henry about -- trading out their existing technology. Some of that is certainly driven by tech modernization. But I don't think it's as much driven by -- I want to sign for the tech modernization module right now today, it is more about Jack Henry has a strategy that makes sense to us, as bank and credit union executives their strategy makes sense, we need to look at them now and get to Jack Henry now, because we want to be partnered with them as they continue to evolve.

And so there's a lot of that that's driving interest in our existing core customer. Silver Lake primarily on the banking side and of course Symitar on the credit union side. But then on top of that, Banno continues to be a driver, and that's why I call it out on these calls, almost every time there's a tremendous amount of interest in Banno. Our new financial Crime Defender Solution, that we've talked about on this call. That's rolling out here very soon. We have a lot of customers that are looking at Financial Crimes Defender. because it's the first brand new ground up public-cloud native fraud solution in the industry in many years. And so lots of interest not only inside our core base, but outside the core base in that solution.

Our Treasury Management solution is getting great reviews. Today, so continued interest in Treasury Management. Certainly, cards, we've talked about the number of customers that we've been adding to the cards business. So, we're continuing to drive interest there. Our online commercial lending solution, tremendous amount of interest in that. So it's just a broad variety of solutions. But I think the common thread in all of that is almost all of those non-core solutions have been written and rolled out within the past two, three, four years. So it's a new technology that people are interested in.

And then, of course, on the core side, you know all about our tech modernization initiative there, and so you put all those things together, much of what's driving this is the recognition in the industry, that Jack Henry has put a tremendous amount of investment into brand new technology and new solutions to help our customers solve problems and so that's what's getting us a lot of attention.

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

I'd like -- this is Greg. I'd like to add a relevant example. So we actually just got an inbound requests from a large regional that hadn't talked to us since 2010 and they came to us and said, hey, we'd like to renew conversations based on what we've heard about you in the industry, the tech modernization story and things in general. And that's a relevant example because these are larger institutions that we typically wouldn't have seen in the past that again that are inbound to us, because of the things that we're doing and the stuff that Dave just described.

David Togut
Analyst at Evercore ISI

And what's the asset size of that large regional bank, Greg?

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

It's greater than $50 billion. And we're engaged today Dave with the number in the mid 20 billion space, several banks in mid 20s are talking to us today. And I think a lot of it is because of what they've seen with tech modernization and -- but they're not talking about moving right to that platform, they're talking about Silver Lake and then evolving to that platform.

David Togut
Analyst at Evercore ISI

Understood. And just as a follow-up, what's your latest view on the timing of the rollout of FedNow, Jack Henry's role? And how the material could FedNow be the Jack Henry over the next 12-plus months?

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

Yes, this is Greg. I'll take that question as well. So a good insightful question. We are absolutely ready, we're already fully certified and on July the 19th, when the first transaction takes place, we will be part of that transaction process. We have 20 institutions that will be going live between the July 19th timeframe and sometime in late August based on just the rollout with those institutions we can go as fast as they want to go. We have 51 contracts that are already sold. And a significant number of others that are in process, just based on interest.

I think to your point about the significance of where this is in our portfolio. Time will tell. A lot of it's going to be based on use cases and there's a lot of rumors that the Fed in general will be mandating several use cases that will be important for institutions to be set up on the receive now, at least aspect of the equation, allowing them to receive payments if one comes to them. So we are having very detailed conversations with a lot of our institutions about the importance of at least being set up on the receive aspect even if they're not ready to go to the two the send aspect.

But again, we're very bullish on this, the clearinghouse, there had been some challenges just because some institutions that we work with, were a little leery of working with the larger conglomerate that owns the clearinghouse versus the Fed being a part of this. So, we think we're going to see a little more uptick in the FedNow solution that maybe that we saw so far in the clearing house.

Operator

Just to emphasize, Dave, the level of our involvement with the Fed on this project. I was just in Washington D.C. on Monday, so two days ago, meeting with some of the FedNow Presidents and the FedNow team and the President of our payments division was with me, talking strategy, talking rollout. This was a Jack Henry only meeting with these Fed President. So we are very engaged with the Fed and very -- it's top-of-mind for us to make sure that we're helping our customers take advantage of this opportunity.

David Togut
Analyst at Evercore ISI

Understood. Thank you.

Operator

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

Vasundhara Govil
Analyst at KBW

Hi, thank you for taking my question. I guess first one, I know you will share more on your Investor Day, but just thinking about revenue growth next year, what are some of the puts and takes that we should consider?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Hi, Vasu. I appreciate the question. We're still in the midst of planning. In fact, this afternoon will be spending -- whole afternoon with the sales team on their planning for next year. I would say, overall, as Dave mentioned, a continuation of both the transition and implementation from a great pipeline from the last two years, plus the continued interest in some of these new products. Banno business wasn't in this year numbers for FY '23, will be in '24, so that's a nice bump as well. But I would say it's going to be a continuation of a diverse portfolio growing very well.

Vasundhara Govil
Analyst at KBW

That's helpful and then just a follow-up on the complementary segment. Clearly Banno is a big driver there, maybe David you could talk about what are the some of the other products that rise to the top in terms of growth drivers, and then as we think about growth in that segment long-term, is mid single digits sort of the right base going-forward or do you see that accelerating?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

I'm sorry, I missed the last part of your question, is what?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Mid single digit.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Oh, mid single digit. Okay. So, as you know Vasu, the complementary segment is a little bit of a challenging one to talk about, because there are so many solutions in there, but I understand your point, trying to figure out what are the key drivers. So there are several, I already highlighted the Financial crimes Defender solution that we're just now rolling out. So we definitely expect that to be a key driver for us in the coming year. Banno is in that segment and so Banno will of course continue to be a driver as we're rolling out Banno business. Treasury Management, that I called out a while ago. Treasury is in that segment, that will continue to be a driver for us.

Most of the fraud solutions that are not specific to payments, so the payments fraud pieces show-up in the payments segment, but the other fraud type things that security solutions, for example, those are all in that segment that is always top of mind for our customers. So that continues to be a driver for us as well. So it's just a lot of different things. And then as I mentioned earlier, our online commercial lending solution, that has really picked-up here in the past several months, we've had that solution in market for probably four years now, but in the past few months, it's really picked up as far as the level of engagement with customers and prospects.

And so a bunch of different pieces. And so, to the second part of your question about mid single digits. I think that is a good assumption because with so many solutions in there, you have some that are growing quickly and some that are kind of just steady performers and so I think that's a good assumption for that segment for the long term.

Vasundhara Govil
Analyst at KBW

Great. And just on that, online commercial lending solution sort of any drivers why you think that's getting more traction now?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, well. I think it's because -- interesting thing when you work with banks. In banks, most bank CEOs grew up in the bank as a commercial lender, that's their background for most of them. Commercial lenders, they are the money makers in the bank. You can talk all day long about all the consumers and what wonderful relationships you have with your consumers. But what really makes money for a bank is the commercial lending business. And so that's small-medium business customers. And then, of course, even larger customers. Commercial lenders tend to have a process that they follow, they are the money makers, they are the people who have a process that they follow. They have tended traditionally to be averse to using more technology. But now with so many people particularly on the backside of the pandemic, so many people not wanting to go to the branch, they've gotten used to this idea of being able to do everything through some kind of a digital layer.

Commercial lenders are getting a lot more comfortable with the idea and I don't say they like it, but they are accepting it. They're getting more comfortable with the idea that their customers small-medium businesses, expect to be able to apply for a loan and interact with the bank, using the commercial presentation layer. That's exactly what our solution does, it's a complete commercial lending solution that is hosted online, where the borrower can do everything they need to do through that presentation. And then the lender can interact with them, again, through that technology.

So I think it's a result of the backside of the pandemic, customer expectation has changed and lenders are kind of oftentimes, grudgingly accepting the fact that their customers want to do things differently and they're now thinking about how do we adapt different technology to make sure we take care of our customers.

Vasundhara Govil
Analyst at KBW

Great, thank you very much.

Operator

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

Peter Heckmann
Analyst at D.A. Davidson

Hey, good morning. Most of my questions are answered, but I wanted to follow-up on FedNow. I guess, is it your impression that would FedNow, the primary use case is going to be enterprise B2B and likely replacing same day ACH? And related to that, are you aware of any other use cases that might involve the consumer or other certain niche processes that you think you're going to be strong right out of the gates?

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

Yeah, Pete actually. I think, that could be one example. I think what we have seen even with some of the other solutions that are out there that we think will be the primary use case, is with the gig workers. The gig workers taking the payments that they're getting and moving them using -- and remember the FedNow solution actually, it's truly real-time. The clearing house solutions still has kind of a batch settlement on the back-end. And so the ability -- though they have access to their funds immediately, the process is different. But using the gig workers to move those funds into their FI accounts, we see that today with a lot of the stuff that we have with the clearing house and the Fed believes that to be a big one.

The other one is having, the FI customers, the financial institution customers actually moving money from external wallets into their depository accounts as well. So there's a whole host of use cases that are being built out of those two scenarios. As well as and Dave was just there. There's going to be some -- I don't know if I would call them mandates, but there's going to be some strong requests for things to be done through the FedNow account for stuff like various tax payments.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

And one of the things we talked on Monday was VA benefits.

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

Yeah, yeah. So there's going to insurance payment. It seems like that, things that the treasury and the Fed can't control, they're going to be pushing that. So, that's why it's important for processors like Jack Henry, who can really kind of help get to that last mile of institutions to to get that received now turned on. So regardless of where that payment has been initiated from it has a place to land.

Peter Heckmann
Analyst at D.A. Davidson

Okay, that's helpful. And then just to clarify though, again that with FedNow, it doesn't sound as if there is a lot of applications that are currently either cash based or card based then we replaced with real-time payments, its primarily some form of ACH or bank transfer. Is that how you see it?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

No. I do see some reasonable in this to some of the card products. There's various things that happened today in the B2B world that where transactions that typically would have gone out, paper, maybe would have gone out through a virtual card program or things like that where there's inter-change and some of those programs could be disintermediated because of this type of solution. So I think there's going to be some heavy focus on B2B solutions as well because there is so much paper in the process today. And other types of card payments may be at a merchant level, where depending on how the merchant is set up could those transactions to them or from them end up going through that channel as well.

So yet to be determined. But I think the card part of this is specifically on the merchant side and specifically in B2B payments could have some chances for disintermediation.

Peter Heckmann
Analyst at D.A. Davidson

Okay, great, that's helpful, thanks.

Operator

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

Kartik Mehta
Analyst at Northcoast Research

Dave, I know you're not talking about this a little bit, but. One of the things, I think that it's misunderstood is, how strong your pipeline is and how much visibility you have on revenue. And I'm wondering if you could just talk about -- you've talked about how the pipeline has grown. Just looking at the pipeline and what kind of visibility you have and what kind of confidence that gives you over the next 12 to 18 months?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, thanks, Kartik. So it's an interesting thing in this -- the business that we're in with the recurring model -- recurring revenue model that we've built. So first-off, when it comes to the contracts that we already have signed, we of course have a tremendous amount of visibility because we're almost 90% recurring revenue as far as the contracts that we have in-house and the kind of watching the revenue build-on those contracts.

And then you know that once we sign a customer, oftentimes, depending on the product it can take one month to 12 months depending on what they purchased from us for that revenue to start layering in. So we see -- we have visibility into that. And then as far as the pipeline is concerned, so when you've been doing this as long as I have and I've been doing this a long-time. We have a very predictable model. So I can -- I'm not going to quote numbers here, but I can tell you with a pretty high degree of accuracy of the pipeline is X then Y percentage of the pipeline is very likely to close because we have years and years and years of history, doing this and so we know that that's going to translate into the Z dollars of revenue over time. And so we can kind of do that math and predict pretty accurately, what the impact is going to be.

Now the challenge again is, some of those solutions you signed a contract today and we won't see the first dime practically of revenue for 9 to 12 months. Some of them you signed a contract today and you have revenue flowing in one month and so there is some art to this, but there is a lot of science to it as well, just based on all the experience that we have doing this for as long as we have an understanding the way these contracts works and the way customers make decisions.

Kartik Mehta
Analyst at Northcoast Research

But sometimes you have to give us to X Y&Z, Dave. And then just thinking about. I don't want to call it a banking crisis, just the issues that are out there and looking at Jack Henry, when the last crisis happened and kind of how you looked at the business then and what happened? And if there's any lessons you could take from that and what's happening today? I know they are very different, but just trying to get a feel for maybe, what we could clean?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, it is a very different environment today from 2007, 2008 for sure. And of course, if you go back in time and look at Jack Henry's performance during the period to the great recession, we performed really well, even though there were hundreds of banks that were being shut down at that time. And of course, many of them were our customers that were being shut down.

So I think the the major difference, if you look specifically at Jack Henry between then and now is at that time we were still very dependent on license fees and maintenance revenue. So when customers kind of pull their arms and said we're not spending on anything, our revenue has the potential to dropped significantly, because we were so dependent on license fees. Whenever we sell a license, you see the impact in the quarter as opposed to being spread like we do today. Today, of course, so back then, we were maybe 50%, 60% hosted today were our recurring revenue today were 90% recurring revenue. So, very different from Jack Henry's perspective as far as the predictability of revenue, because of a bank is challenged unless they shut down, they don't quit spending money with us. They don't decide all of a sudden we're just gonna quit processing loans, you have to still process loans, which means you still have to pay Jack Henry, for that service.

And so today, I would draw a significant contrast as far as our business and the resilience of our business as bankers are going through what they're going through right now. That does not say we're bullet proof, it doesn't say we're totally immune to any challenges out there, but I think we have a much more resilient model than we had during the great recession at that time.

And again, if you go back and look at how we performed during that period, we performed pretty well. And so my expectation is that we should be able to weather this storm right now. And of course, much of this storm is the result -- I mean these are runs on the banks that are happening. So you get some headline somewhere that says, this bank has a liquidity challenge and by the way liquidity and capitalization those have been conflated over and over in these conversations, two totally different topics. And yet the run on the banks are happening because wildfire, the spreads like wildfire through social media that there are some challenges to the bank. Everybody uses their digital banking solution to withdraw money from the bank and all of a sudden, they're in trouble.

And so, I just view this as two totally different scenarios. But if I look specifically at our company, we are in a much better position to weather the storm, than we were even in 2008, and we performed really well in 2008.

Kartik Mehta
Analyst at Northcoast Research

Perfect. Thanks, Dave. I really appreciate it.

Operator

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

John Davis
Analyst at Raymond James

Hey, good morning. Maybe I just wanted to follow up on Dan's question around margins. I think the guide implies about 250 basis point year-over-year improvement in the fourth quarter. So anything to call from a timing perspective or what kind of gives you confidence in that ramp in 4Q margins?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Yeah, thanks, JD. Great question. Yeah, I think that 250 is a good estimation. I think we feel good about that. We always knew that it would be a grow as the year continued kind of situation. And we're seeing that transpires. So I feel good with that estimation.

John Davis
Analyst at Raymond James

Okay, and then you called out tax payment timing, first free cash flow in the quarter. So how should we think about free cash flow conversion for the full year. Obviously 4Q is always a huge free cash flow conversion quarter. So just curious, I think you guys did like mid 80s conversions last year, just any sort of guide rails for us for the full year?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Yeah, great question. And JD, I love that you're looking at it on an annual basis versus a quarterly, just because of the lumpiness of any one quarter can have. In this quarter in particular, between the deconversion and then the larger tax payments and just kind of going into that, we were waiting for some legislative priority around IRC 174, like a lot of companies that impacted the capitalization, the deductibility of that capitalized labor. Unfortunately, with lack of legislative clarity, we had to make a payment, so you would have normally have seen that kind of may be spread over a couple of quarters. That's a timing thing, it doesn't impact our tax rate that will reverse over several years and kind of normalize.

So I think that, obviously, will not be part of Q4, as you said, we have a large inflow, so you'll certainly see an uptick. I think the reality is because the deconversion revenue. We also had a couple of larger renewals have some third party expenses in third quarter. I think we'll be light of our target of 100% that frequent cash flow conversion that we target. But I think it will definitely be an uptick from third quarter.

John Davis
Analyst at Raymond James

Okay. And then last one for me, Dave, you talked about some of the impacts from all the banking turmoil has been kind of increase in account growth. So maybe, how should we think about your business like what percentage of revenue ballpark is priced on kind of a per account basis versus transaction or anything else, just to kind of help us understand what the account growth could mean from a revenue perspective?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Well, I don't know that I know the answer to that question. Anybody want to -- any guess.

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

It's more -- I mean the payments businesses that. But he is talking about account base. So it's the core businesses and assets to 25%.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

25%. Okay, we'll do it 25%, JD.

John Davis
Analyst at Raymond James

Okay, all right, thanks guys.

Operator

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

David Koning
Analyst at Robert W. Baird

Hey guys, thanks. Maybe I guess, first of all, just on Q4 kind of the implied guide is for somewhere around 6% I think kind of non-GAAP revenue growth. The rest of the quarters here I think we're kind of 6% to 8.5%, so it's a little slower. What's the reason for the slower in Q4?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Yeah, -- hi Dave, good morning. I would say if anything, I think there's a little bit of conservatism in that. I would expect us to maybe be a slightly biased towards the higher side of that range. I think with a little bit of uncertainty still in the consumer sentiment, we just wanted to think about a little bit conservative, but the trends I feel are still quite strong for the year. And in terms of getting us to our full-year number more better.

David Koning
Analyst at Robert W. Baird

Okay. And then -- and I guess on Payrailz, I think year-to-date, you add-back the loss from acquisition to non-GAAP margin I believe. And I think it's trended like around $10 million year-to-date loss. So probably a little more by the end-of-the year. Is that all going away in '24 and basically is that why you can get to accretion in '24, like is that just the main that's just kind of goes away?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

So it will not be part of non-GAAP in '24 for sure. So that will be one component, but I also think it's just a question of having let some of those inflationary pressures, like the great recession, the wage inflation we saw that some of the third-party onetime costs like Java, are now in our normalized base rate.

David Koning
Analyst at Robert W. Baird

But it was specifically a Payrailz.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

You're talking about the impact on margin. So I think we're still set for margin expansion in '24, because of the base now running through the '23 numbers, where it wasn't in the '22 number. So I think we're still in good shape, as well as some of the efficiency measures that we're continuing to focus on internally.

David Koning
Analyst at Robert W. Baird

Yeah, just thank you and I appreciate it.

Operator

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

James Faucette
Analyst at Morgan Stanley

Hey, good morning, everybody. Thanks a lot for taking some time. I think most of the questions around demand and sales cycle, etc. You guys have address a little bit. I wanted to ask quickly on capital allocation. I think Dan Perlin raised kind of ability pains in sentiment in the market and clearly that's impacted your stock. At the same time continue to wonder about M&A. So just any comment on how you're thinking about capital allocation and what looks attractive to you right now and how you prioritize?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yes, so nothing has changed there, James. As far as capital allocation is concerned, we are committed to our dividend policy and Mimi emphasize that in her comments. As we've said many times before M&A is always at the top of our list. We do share buybacks when it makes sense for us and Mimi highlighted that, of course, in her comments as well.

But M&A, we are a, I've said it many times, we're a solid acquirer, we know how to do integration well of companies once we acquire them. We're very disciplined and only pursuing acquisitions that we think are really going to be additive to our business in the long-term. I think Payrailz is a great example of that, you've seen that it's a little challenging in the short term, but when we look at what we're doing with that business in the long term, I am absolutely convinced it's going to be a real home-run for Jack Henry in the long-term, and that's the way we think about doing M&A, we're always looking for those things that we believe we can take advantage of as a long-term solution for our customers to help our customers performed better.

Now, I was hoping and I've said this in many forums that, by this time and even several months ago that there would be a lot more interesting M&A opportunity for Jack Henry. We have been looking at some companies. We continue to look at some companies to acquire, but there just hasn't been anything that has kind of jumped over that bar for us so far here, even though the deal flow hasn't been particularly strong. We have been looking at some deals, but nothing's jumped over the bar here recently. But we're going to continue to look.

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Dave, the only thing I would add to that -- just add one more thing, which is consistent with our priorities is paying down the debt through our normal cash flow from operations and so you would expect to see that over the next several months, years that we're going to continue to decline the debt balance.

James Faucette
Analyst at Morgan Stanley

Thanks for that, Mimi. And then Dave, we've heard a lot of headlines around technology layoffs and headcount reductions, etc. How is that impacting your ability to go out and hire and add talent to the Jack Henry pool and maybe even out of your customer. Anything you can talk about there?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah, so we've it's been an interesting time since the great resignation. We went from the great resignation where everybody was resigning their jobs and going to find the pot of gold at the end-of-the rainbow to within about three months, all of a sudden companies were doing these massive layoffs and so a lot of heads were spinning I think among employees a lot of these companies. So for us here in the recent past, we have picked up some really good new hires, and we've had some wonderful what we refer to here as boomerang and people who left because they wanted to chase the pot of gold, and then they realize the pot of gold wasn't there and they called us up and said, can we come back and those are great additions to us because they already know our company, they know how we do things and they are oftentimes really talented folks.

We've had a number of boomerang has come back. We are attracting some great talent from some other companies in our space that have been challenged and so they understand the industry, they understand what we do, may not understand the Jack Henry products completely, but we found some really good talent. People that were little shaken by what's happening at other companies in the industry who are looking for a steady provider. And so they've joined Jack Henry. So, we are not just hiring left and right and we're being very judicious about when we hire and where we hire. And so we're trying to be very selective about who we choose to join the Jack Henry team. But I think the overall message would be we've had some great additions to our team in the last two, three, four months.

James Faucette
Analyst at Morgan Stanley

That's great color there, Dave.

Operator

The next question is from Dominick Gabriele with Oppenheimer. Please go ahead.

Dominick Gabriele
Analyst at Oppenheimer

Great. Good morning, everybody. David, I don't know, the best way to ask this. I'm just going to go ahead and ask. I guess you're the sole survivor of the big four companies in core platform, as far as CEO's goal from pre pandemic. A lot of our clients actually do ask about, what is the long-term succession plan, if they're even should be one you've had a major contribution to this enterprise and so I do get questions about, if a succession plan ever, would it be someone inside outside. How do we think about that -- not thinking about timing, but what does the succession plan look like in the past for Jack Henry in general for CEO? And I'm not saying you should leave.

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

That's the most polite way. I think as old. You are old Dave, so that's the plan. So, Dom, it's a reasonable question. Obviously, I can't share specifics about my timing or succession planning at Jack Henry. But I will tell you and of course, I'm also Board Chair at Jack Henry. So this is a real focus for us is making sure that we have a solid succession plan in place. As a matter of fact, so next week is our quarterly Board Meeting and in May, the Board meeting in May is when I always review with the governance committee. My personal succession plan. I also review with the entire Board the succession plans for the entire leadership team. So I'll have all the members of the leadership team with their successors, what the plan is. So if it's an internal candidate, I'll highlight that for the Board. If it's a plan to do a search, then we -- I'll highlight that as well.

And so all of those options are on the table, what I normally do as I walk into the Governance Committee meeting with some suggestions of internal candidates and also external candidates. I know a lot of people in the industry and I know people who might be a decent fit for a role like this and so I try to give the Board a good Kind of overview of who potential candidates might be and then ultimately of course it's the Board's decision to hire or fire, the CEO. And so but we have a very rigorous exercise that we go through around the topic of succession, not just for me, but for all members of the leadership team at Jack Henry.

Dominick Gabriele
Analyst at Oppenheimer

Excellent. Thanks so much. And Mimi, you mentioned in the prepared remarks, a few times about personnel-related costs increasing year-over-Year. And this was kind of talked about last question, but not exactly. Is there a way to kind of breakup new hires versus wage inflation versus tech talent demand in those growth rates, are just to kind of parse out largest factor least important factor as we think about the go-forward growth in expenses -- for personnel?

Mimi Carsley
Chief Financial Officer and Treasurer at Jack Henry & Associates

Hi, Don. Good question. I would say the head count on account basis has been modest, were about 3% increase in headcount from a number of physicians year-on year, which is a much lower percentage than obviously the fully baked cost of that. As Dave mentioned, we're being very judicious on where those head go. We've been focusing on customer facing roles like service roles as well as R&D roles. And then we look at every role on a zero-based budgeting perspective when we're thinking about that.

I can't really give you a lot of breakout in terms of because we just don't provide that level of detail in terms of vacancies versus new and rollovers. But I would just say we're being really judicious about it.

Dominick Gabriele
Analyst at Oppenheimer

Great, thanks.

Operator

The final question is from Marc Feldman with William Blair. Please go ahead.

Marc Feldman
Analyst at William Blair

Hi guys, this is Marc, on for Chris. Thanks for taking the question here. So just wanted to ask on Banno, do you guys have any information regarding the asset size of institutions that are seeing the primary uptake from Banno, any interest in it, and then I guess, additionally adding on to that, what does Banno for business to do for your sales force's ability to close Banno signings that they didn't have before, without that offering?

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Yeah. So we have about 700ish clients that are live today on Banno, and they are all over the board as far as asset size. I would say that the primary adopters have been a little bit on the larger side, so let's say averaging closer to a $1 billion probably as opposed to something smaller than that. So that's been the primary adoption, but we continue to see great demand across asset size. So and as I highlighted earlier, most banks and credit unions need to modernize their technology presentation to consumers through or and business customers through a digital presentation.

As far as the Banno business. So if you think about traditional Banno, it is designed for the retail consumer. So you are me and all the functionality is retail in nature. Banno business provides a similar functionality, but for business customers. So specifically, things like cash management and the ability within the application for the, let's say, the CFO of the small-business medium business and the CEO to communicate about financial transactions within the application. So it's a really interesting and robust application, designed specifically to help our business, manage their business and communicate about financial transactions and decisions within the business. But in the financial applications. So it's a revolutionary new solution and we have a lot of bankers that are very excited about the rollout of this of this platform.

Marc Feldman
Analyst at William Blair

Great, thanks. And if I can ask just one more on cards with credit cards. I know in the past you originally didn't have the sales force that can go out and the infrastructure to go out and sell the product. Do you have any update on where that is today. And when we can when we can start seeing some deals getting signed with credit cards? Thank you.

Greg Adelson
President and Chief Operating Officer at Jack Henry & Associates

Hey, Marc, this is Greg. I can take that one. So yes, we have a dedicated sales force. We also have dedicated install and operational folks that, now I'll have the experience. So that is starting to ramp up. We also added, if you saw our press release, we did a couple of months ago on an agent program that we've added. We now have a lot of interest in that agent program. And that's typically for smaller institutions that they themselves don't have the folks are the infrastructure to really support that type of full-service credit solution. So that's given us another angle to sell the credit side of our business, we already have I think two or three now in the in the pilot phase of that and we have a pipeline of about 10 or more just in the last two to three months. So that's starting to grow, but that -- all of those products will continue to accelerate over time.

Marc Feldman
Analyst at William Blair

Great. Thank you.

Operator

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

David Foss
Board Chair and Chief Executive Officer at Jack Henry & Associates

Thank you, Debbie. We have additional upcoming investor engagement opportunities with management at multiple investor events. The first one is going to be our Annual Investor Day, which will be held in Denver on the afternoon of Monday, May 15th at 1 PM Mountain Time. The agenda includes presentations from wide selection of the Jack Henry Management team and reception that will include demos some of our newer solutions. We look forward to hosting those attending in-person and via the webcast. We are pleased with the quarterly results, and thank all Jack Henry associates for their efforts in producing these results.

Thank you for joining us today. And Debbie, would you please provide the replay number.

Operator

Yes, the replay number for today's call is 877-344-7529. And the access code is 1452467. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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