JKHY: Reiterating the long thesis

Research evidence excerpt

JKHY: Reiterating the long thesis

lieve that the recent CEO change at FISV, one of JKHY's 2027 672.0E 647.0E 668.0E 673.0E

largest competitors, could prove to be a catalyst for incremental core EPS, Rpt Diluted

processing wins over the coming quarters. 2025 1.63A 1.34A 1.52A 1.75A

2026 1.97A 1.72A 1.71A 1.46E

SMB strategy is just getting started. Management expects SMB to 2027 2.03E 1.74E 1.78E 1.75E

become the fastest-growing and second-largest revenue component All values in USD unless otherwise noted.

within Payments by FY28 (behind card processing), helping push the Priced as of prior trading day's market close, EST (unless otherwise noted).

company's revenue growth from ~7% to >8% in FY28-FY29 with strong

incremental margins given a rev-share/partnership-based model that limits

development costs.

Shift to the cloud is a structural improvement. Jack Henry currently has

~79% penetration of their core base migrated to the private cloud, and

estimates that it should reach high-90s% penetration over time, but could

accelerate given new tailwinds of AI, increasing cybersecurity costs, and

regulatory clarity. When a bank migrates to the private cloud, there is a

1.75x-2x increase in revenue over the contract term, and with public cloud

migration, where JKHY has been componentizing its core and currently has

25 modules built, there is a ~20%-25% revenue uplift.

Despite raising guidance the last three quarters, the multiple has

contracted ~10pts from its peak in FY26. JKHY trades at ~18x our CY26e

PE vs. its 5yr avg of ~31x (>2 std devs below), with shares down ~27%

YTD. We view the decline as driven by a broader fintech re-rating rather

than fundamentals, which remain strong. With incremental core wins,

upmarket movement & trifecta deals, SMB offerings ramping in FY27-28,