Jack Henry & Associates, Inc. (JKHY) Q1 2018 Earnings Report, Transcript and Summary

Good day ladies and gentlemen welcome to the Jack Henry and Associates First Quarter 2018 Earnings Conference Call. At this time all participants are in listen-only mode and later we will conduct a question and answer session with instructions given at that time. And as a reminder this conference is being recorded. Now, I'll turn the conference over to your host, Kevin Williams, CFO. Please begin. Kevin D. Williams - Jack Henry & Associates, Inc.: Thanks, Tyrone. Good morning. Thank you for joining us for the Jack Henry Associates first quarter fiscal 2018 earnings call. I'm Kevin Williams, CFO and Treasurer and on the call with me today is David Foss, our President and CEO. The agenda for the call this morning, in just a few minutes I will turn the call over to Dave to provide some of his thoughts about the state of the business and performance for the quarter. Then I'll provide some additional thoughts and comments regarding the press release that we put out yesterday after the market close. Then we'll then open the lines up for Q&A. I need to remind you the remarks and responses to questions concerning future expectations events, objectives, strategies, trends or results constitute forward-looking statements or deal with expectations about the future. Like any statement about the future these are subject to a number of factors which could cause actual results or events to differ materially from those which we anticipate due to a number of risks and uncertainties. And the company undertakes no obligation to update or revise these statements. For some of these risk factors and additional information, please refer to yesterday's press release in the sections in our 10-K entitled Risk Factors and Forward Looking Statements. With that I now turn the call over to Dave. David B. Foss - Jack Henry & Associates, Inc.: Thank you, Kevin. Good morning, everyone. We are pleased to report another quarter with record revenue and earnings. As in the past I'd like to begin today by thanking our associates for all the hard work that went into producing those results for the first quarter of our new fiscal year. As we outlined on our last call, this is the first quarter that we have used the new segments to disclose our financials. We believe this new format will provide better transparency for our shareholders and give you better insight into how we manage the business. Kevin will review the new segments in greater detail during his remarks. Total revenue increased 4% for the quarter and increased 6% excluding the impact of deconversion fees from both quarters. Organic revenue growth was also 4% for the quarter. We had a very solid quarter on the core side of our business. Revenue increased by 10% for the quarter and increased by 12% if you exclude the impact of deconversion fees from both quarters. Our payments businesses also continue to perform well posting a 1% increase in revenue this quarter and a 4% increase excluding the impact of deconversion fees. Our combined sales teams had a very solid first quarter finishing well ahead of quota. As I mentioned in the press release, this is particularly noteworthy because of the extremely strong sales quarter we reported for June. The core teams closed 12 new core deals, all of which were competitive takeaways and split evenly between banks and credit unions. We also saw solid success with several of our key strategic solutions like HNS, Treasury Management, and our Enterprise Risk Mitigation Solution. Speaking of those new solutions, we took our first customers live on our new Treasury Management Solution and our new Enterprise Risk Mitigation Solution during the quarter. Additionally, just last month, we took our first customer live with our new First Data PSCU debit card offering. We will implement several other beta clients in the coming months and plan to start large scale card conversions in Q2 next calendar year. At the end of August, we announced the acquisition of Vanguard Software Group and their LoanVantage platform. We have rolled this group into our lending solutions business to provide the missing component we needed to deliver a complete end-to-end online commercial lending solution. Customer reaction to this small acquisition has been very positive because of the strategic nature of the solution. In September, we hosted our annual Symitar Educational Conference in San Diego and saw record attendance during that event. In October, we conducted our first combined Jack Henry Banking and ProfitStars Conference. We hosted more than 3,000 people at that event and received a great response as we showcased several of our new solutions. With that, I'll turn it over to Kevin for some detail on the numbers. Kevin D. Williams - Jack Henry & Associates, Inc.: Thanks, Dave. As Dave mentioned, the press release reflects the new reporting lines of revenue and reportable segments that we discussed on the previous earnings calls and actually as far back as last year's Analyst Day. The Services and Support line of revenue which includes license, hardware, invitation services, in-house maintenance, bundled services and outsourcing increased 3% compared to the prior year quarter, or 6% if you exclude the deconversion fees for both quarters. The deconversion fees in this line were down $5.8 million compared to a year-ago quarter which just created a little over a $0.05 EPS headwind, and all deconversion fees are in this line of revenue. The processing line of revenue which includes our online bill pay, card processing, remittance or remote deposit capture along with transaction and digital fees was up 6% compared to the prior year. Total revenue was up 4%, as Dave mentioned, or 6% by excluding these deconversion fees. Our reported consolidated operating margins were down slightly from 26.5% last year to 25.6% this year due to the decreased deconversion fees. But looking at true operations by excluding these deconversion fees for both quarters, our total operating margins improved from 23.6% to 24.1% or a 50 bps improvement. So the deconversion, decreasing deconversion fees has presented a challenge in margin for the quarter, but long term is best for JHA as we would much rather keep our customers. For our new segments, true operating margin improved overall. And just to highlight a little bit about what these segments are, for our core group which those of you that have been through our Analyst Day, you've met our Group President of JHA Banking Symitar. Their business lines are primarily in this core, and the margins in core as reported went up slightly from 54.9% to 56.4%; without the impact of deconversion fees they improve very nicely from 52.6% to 54.8%. Our payments business which is primary to all of our electronic payments groups, that reports up to that group GM, those margins actually declined slightly as reported from 54.2% to 53.5%, but excluding deconversion fees, those also went up from 51.8% to 52.7%. And then our complementary segment which is primarily the ProfitStars brand and then the GM that is over all of our retail and commercial solutions, their margins actually went down a little bit due to deconversion fees from 57.3%to 56.8%, and remained relatively level by excluding those deconversion fees. Also as reported in the release yesterday, we divested our jhaDirect business line during the quarter, which is essentially our forms and supplies business, and we reported a small pre-tax gain of $1.7 million on the sale. However, this also caused a bit of a revenue headwind during the quarter of just under $1 million which without that headwind we would have right in line with consensus estimate of revenue for the quarter. Also excluding the gain, our EPS for the quarter was roughly $0.80 or slightly ahead of consensus estimate. The effective tax rate decreased slightly from 31.9% last year to 31.2% in this year's first quarter, primarily due to the impact on taxes from vesting equity grants which causes Q1 to typically be the lowest effective tax rate quarter of the year. And this is the effective tax rate that we utilize in our guidance for the quarter. We do expect future quarters to return to the total year guided tax rate of approximately 34% for the full fiscal year. Net income was up 2% as reported but was actually a 9% increase without the impact of the decreased deconversion fees. So our ongoing operations continues to be very solid. Included in total amortization, which was disclosed in the press release in the cash flow review is the amortization of intangibles from acquisitions which was down to $3.5 million this quarter compared to $3.7 million last year. Free cash flow was very strong this quarter of $108.9 million or approximately 172% of net income for the quarter which compares to $101.5 million or 162% of net income in Q1 of last year. However remember that our first and fourth fiscal quarters are our largest cash flow quarters due to collections of our annual maintenance fees. During the quarter, we deployed our capital by investing $30.1 million into our company through CapEx and developing products, which is down from $32.7 million or 8% a year ago. We also returned $53.9 million to shareholders through stock buybacks and dividends, and our return on equity for the trailing 12 months was 24%. We're currently debt free with nothing drawn on our revolver facility and a very strong cash position which provides significant flexibility. We projected that our revenues from deconversion fees caused by M&A activity would decrease in FY 2018 and cause a headwind of approximately $8 million with a good part of this in the first quarter, which per our guidance we had $5.8 million of this in the first quarter as we guided. So, this will continue to cause some noise but we will continue to provide the deconversion revenue on a quarterly basis so you can see how our true operations are performing. Also, as we disclosed in the press release yesterday, we did divest the jhaDirect business which will represent a little over $6 million in revenue headwind, but we don't believe this to be a huge hurdle to grow over. Also as we discussed last quarter, there will be some revenue headwind and margin pressure from getting our new payments platform in place and getting our customers converted to that platform over the next couple of years. Therefore, for the full year fiscal 2018, we continue to expect our reported GAAP revenue growth to be in the 5% to 6% range. And by backing out the deconversion fees from both years, we think we'll end up the year at the 6% to 7%. We also expect our effective tax rate to increase to 34%, so our net income will be slightly lower than our revenue growth. Our reported EPS for the year should grow approximately 5% to 6%, while EPS adjusted for the deconversion fee should actually be growing the 7% to 9% without any consideration of future stock buybacks. For Q2, we expect deconversion fees to be essentially flat with last year. So our revenues should grow approximately 6% to 7% in Q2 and operating income should be fairly in line with that revenue growth but with the increased tax rate we expect net income Q2 to be in the 4% to 6% range compared to last year. So at this time, we are comfortable with the consensus estimate of $0.80 EPS for Q2. Obviously, there can be changes due to higher than expected deconversion fees, stock buybacks or changes in the federal corporate tax rates which could affect these, but we will provide updates in future earnings calls. With that, this concludes our opening comments. We're now ready to take questions. Tyrone, will you please open the call lines up for questions.

Sure. First question is from Brett Huff of Stephens. Your line is open.

Good morning, guys. Thanks for taking my question. David B. Foss - Jack Henry & Associates, Inc.: Good morning, Brett.

First of all, thanks for the detail on the divestiture on the $1 million. I think you said when you went through that math, it was just under $1 million. And so, I think that would have brought you, I think you said right in line with what the Street is expecting. Was that the right math that I heard? Kevin D. Williams - Jack Henry & Associates, Inc.: Yes.

Okay. Kevin D. Williams - Jack Henry & Associates, Inc.: Yes, but adding that back will put us right at the $361 million.

Okay. That's helpful. And then in terms of divestitures, you guys have done a few of those kind of around the edges. Are there more of those that we should expect as you guys kind of refocus your capital maybe on higher growth areas and things like that, or how should we think about that? I know you don't need to generate any cash in order to do M&A deals if something interesting comes along. But kind of what's your outlook on some of those divestitures? David B. Foss - Jack Henry & Associates, Inc.: Yeah. Good question. The, what we've been doing here with these divestitures really lines up with the message that I delivered at the Analyst Day here earlier this year around focus. So, we had a few of those very small businesses that were frankly not focused or not in the areas that we believe we really need to remain focused. Forms and Supplies is one of those. It's not a growth area and it's not something that we're particularly focused on. So, I can tell you that we don't have any other anticipated divestitures right now. I think we've gotten rid of kind of the solutions that were around the edges and now the mission is to grow the business as it is.

That's helpful. And then last question for me. Kevin, I think you mentioned again some of the work you were doing around getting the First Data, PSCU, things off the ground or maybe it was Dave. So, the first debit customer already went live. How did that go and does that feel like you got, give you guys good line of sight for the timelines I think you had outlined for us starting really to convert a lot of those folks this year, but then kind of finishing them up next year? Does that timeline still make sense given that first one that went live? David B. Foss - Jack Henry & Associates, Inc.: Yeah. We feel really good about the – our positioning right now. I think the team from all three sides – remember, there are three partners in this deal between First Data, Jack Henry and PSCU. All three of us were surprised at how smoothly that conversion went, four, five issues I guess identified for them resolved within no time. One that was something that took a little bit longer to resolve, but definitely a very smooth conversion for the customer. Customer is thrilled. We have our second beta customer in line right now and then we'll do two more in January and once we get through those four beta customers then we'll start to get conversions lined up after that. But so far it's gone very smoothly. Kevin D. Williams - Jack Henry & Associates, Inc.: Yeah. And remember, Brett, the timing of this is actually and if you remember when we talked about this at the Analyst Day you know this is a two and a half year process to get all these customers migrated over. So, as Dave said we should be through betas by the end of January. Starting sometime in mid to late February, we will start the mass movement of our customers. We're planning to move somewhere between 60 to 80 at a time. But right at 1,000 customers, it's just going to take a while to do that because you can't do them all the same time. So, it's really going to be once we get started, it's going to be about an 18 month, maybe a little longer project, to get all of our existing customers migrated. And starting in April, we will start putting new customers on this new platform and our first card customers, credit card customers.

Great. That's what I needed. Thanks for the detail, guys. David B. Foss - Jack Henry & Associates, Inc.: You bet.

Our next question is from Kartik Mehta of Northcoast Research. Your line is open.

Hey, Kevin, if I could just get your view on this PSCU partnership; you talked about the conversion and time line. Can you just talk about the cost and savings associated with eventually converting those customers over to the PSCU, First Data platform and how it impacts Jack Henry? Kevin D. Williams - Jack Henry & Associates, Inc.: Well, the, like we said from the very beginning, this is going to put a little headwind especially on our margins because as we start migrating these customers over obviously we will have the transaction fees that we'll be paying PSCU and then they will pay whatever their agreement is with FDC for the actual process and transactions. But at the same time, we still have two main mainframes with backup mainframes for the two existing systems that we have to continue to support and enhance. We still have all of our developers continuing to enhance the code for our existing customers, which we have to keep those in place, continue to take care of our customers, continue to protect our customers until we get all those migrated off. Now, once we get them migrated off, then obviously there will be a big reduction in cost because we won't need for maintenance and support and maintenance that goes along with them and the facility costs, and everything else. So, there's going to be some margin pressure but by the time we get the last customer over, our margins will effectively be higher than they are today.

I know you talked about organic growth in the second quarter and kind of based on the backlog that Dave talked about, how would you anticipate organic growth trending through the year? Do you think you'll be similar in the second half of the year or do you think there's any changes based on maybe installation backlog or how you see some customers coming off? Kevin D. Williams - Jack Henry & Associates, Inc.: No. I think our organic growth is pretty solid for the year. I think it's going to stay right in line with what we talked about for the second quarter, Kartik. The card business represents about 20% of our revenue and the biggest growth drivers we have right now, was in this quarter was our core business without, even with, considering without the deconversion fees, and that continues to do extremely well. As Dave said, we signed 12 new core customer takeaways in Q1. I think and, Dave, correct me if I'm wrong here, but I think our sales pipeline is as big as it's ever been in the history of the company. David B. Foss - Jack Henry & Associates, Inc.: That's correct. Kevin D. Williams - Jack Henry & Associates, Inc.: With the last years that we have. So, I'm feeling pretty, pretty good about the rest of the year, Kartik.

And then, Kevin, just one last question. Obviously, the balance sheet's in great shape. And I was just wondering, from an acquisition standpoint, have you seen anything in the marketplace that piques your interest or do you think it's more about right now return capital to shareholders? Kevin D. Williams - Jack Henry & Associates, Inc.: Well, I mean, we would love to find the right acquisition. We continue to kick the tires, Kartik. I mean, we hope that the right one will come along shortly because we would love to deploy our capital that way. But obviously, it's been a while since we've found a sizable one and the Vanguard, as Dave mentioned, fit in very nicely and it just kind of with the Bayside acquisition that we did before that, the Banno acquisition was small but very extremely strategic for us going forward. So, we'll continue to look at those and we'll continue to look for sizable ones that could move the needle. But at the same time we will continue to effectively return capital to our stockholders by continuing the quarterly dividend and increasing it and we'll continue to evaluate stock buybacks.

Thank you very much. Kevin D. Williams - Jack Henry & Associates, Inc.: Yes. Thanks, Kartik.

Our next question is from Dave Koning of Baird. Your line is open. David J. Koning - Robert W. Baird & Co., Inc.: Hey, guys. Thanks. So, I guess I wanted to just review three topics that all three, the big core processes. All of you have talked about, or most of you have talked about, term fees being down, lending being strong, and I think both you and Fiserv made acquisitions there and EMV being down. I think that doesn't really matter as much for you guys. But, why are term fees down and why is lending such a strong place right now that you guys are making acquisitions in. David B. Foss - Jack Henry & Associates, Inc.: I think, let me address the last part first, as far as lending is concerned, and this is Dave, David. So, what we've identified with our customers is a real need. On the banking side in particular but also on the credit union side now, there's a real desire and need to grow in the commercial space. So, you saw us roll out the treasury management solution. That was 100% geared toward helping our banking customers serve their commercial customers. Same thing is true on the lending side. The focus that we've had is on commercial lending. So, this Vanguard acquisition, although it is definitely not a needle mover as far as revenue is concerned, is very strategic because it filled the last remaining hole that we had to produce an end-to-end online commercial lending solution that allows our banks to compete with the OnDecks and the Kabbages and all those folks that are out there trying to grab commercial borrowers away from our bank. So, to enable the banks to compete and grow, many of them are putting a lot of focus on the commercial space. We, in turn, have put a lot of focus on providing the tools to help them grow in the commercial space both on the treasury management side and on the lending, the borrowing side, to make them more competitive. As far as term fees, term fees tend to go up and down. There is a lot of merger activity still in the space. Mergers and acquisitions are what tend to drive termination fees. But just looking at our customer base and the things that we know are in the pipeline, that's the projection as far as what we see. We just have fewer of our customers that are being acquired away. And we've had a big focus on the win-a-merger concept which we've talked about before. Win-a-merger being somebody running a competitive core comes in and acquires one of our core customers, and we end up turning the acquirer into a Jack Henry core customer. We actually had two win-a-mergers in the quarter. Well, that would have been a term fee, but we turned it into a win for Jack Henry because we gain a new customer out of it when we gain the acquiring bank as a new customer. Kevin D. Williams - Jack Henry & Associates, Inc.: And, Dave, as Dave just mentioned, it really depends on the term fees. Part of that, I mean the M&A activity continues to go on. But it really depends on what type of institution or which delivery method they have, impacts termination fees quite a bit. So, we could have a quarter where we lose three in-house customers and we get zero termination fees, where in the next quarter, we lose three outsource customers through mergers and we get several million dollars in early term fees. So, there's just so many moving parts, which is why I've decided just on a quarterly basis just to back out the deconversion fees so you can actually see what our operations are doing. David J. Koning - Robert W. Baird & Co., Inc.: Yeah. No that makes sense. And part of the reason just seems like everybody is having lower term fees right now. It just kind of feels like maybe M&A activity maybe continues but maybe kind of peaked around mid-year last year, and I mean that probably is good for everybody if it's actually going down a little bit. David B. Foss - Jack Henry & Associates, Inc.: Well, I'll tell you, we just added another conversion team specifically to focus on M&A. We have a lot of our customers acquiring other customers. So, we added another team on the banking side. So, it may have peaked last year, but I wouldn't say it's slowing down. David J. Koning - Robert W. Baird & Co., Inc.: Okay. Okay. Good. And then you said JHA about a $6 million revenue headwind to fiscal 2018. Is Vanguard, I know you said it's pretty immaterial, but is it about that same size? Like do those two roughly offset each other? Kevin D. Williams - Jack Henry & Associates, Inc.: No. David J. Koning - Robert W. Baird & Co., Inc.: It's way smaller. Kevin D. Williams - Jack Henry & Associates, Inc.: Yes. David J. Koning - Robert W. Baird & Co., Inc.: Okay. Kevin D. Williams - Jack Henry & Associates, Inc.: Now we think over time by having that piece to complete our end-to-end commercial lending solution, that that's going to help our entire lending piece grow. David B. Foss - Jack Henry & Associates, Inc.: Yeah. That acquisition was truly a strategic acquisition to fill that. So, what Vanguard brought to us was an auto decisioning component that allows – so think about a commercial borrower going online at the bank site. They fill in this information, provide the information through the online portal, and now decisioning happens in an automated fashion. You can get a quick decision back saying you've been approved by your bank for a commercial loan. Very powerful. So it was, it's very small revenue but very strategic for us to fill out the complete story for our clients. David J. Koning - Robert W. Baird & Co., Inc.: Great. And just one final one. Are you guys going to put like an 8-K out or something on the historicals using the new segmentation at all? David B. Foss - Jack Henry & Associates, Inc.: It will be in the 10-Q, right? Kevin D. Williams - Jack Henry & Associates, Inc.: It will be on the 10-Q. David J. Koning - Robert W. Baird & Co., Inc.: Got it. With some historical data too just so we can see like maybe eight quarters back or four quarters back or something? Kevin D. Williams - Jack Henry & Associates, Inc.: Well, it will be restated, but it will not be eight quarters, Dave. I'll have to think about that. We have not contemplated doing that, but let me talk to my staff, and we'll see what we can do. David J. Koning - Robert W. Baird & Co., Inc.: All right. No pressure. No big deal. But thanks for all the help, guys. Kevin D. Williams - Jack Henry & Associates, Inc.: Thanks, Dave.

Our next question is from Tim Willi of Wells Fargo. Your line is open.

Hi. Good morning. This is Charles Nabhan calling in for Tim. Just had a quick follow-up on the PSCU partnership. You alluded to expense runway of about 18 months. And just wanted to get a sense for how to think about that from, if I heard you correctly, wanted to get a sense for when to think about – when we could anticipate the headwind to margins turning into a tailwind? You talked about expenses dropping off and just want to get a better understanding of the timing of that. Kevin D. Williams - Jack Henry & Associates, Inc.: I would tell you right now because we are still in the planning process, to get the conversions all lined out, and at this point we don't really know exactly how many we will able to convert at a time. So, it's kind of a rough estimate. But what we think that by two years from this December, so December 2020, we should have all of our customers migrated, be able to cut all the costs out and starting in Q3 of that year, fiscal Q3 our margins should go up nicely.

Okay. Great. Thank you. And as a follow-up, could you talk about the pipeline and what customer demand looks like for the new treasury and cash management products? David B. Foss - Jack Henry & Associates, Inc.: Sure. So, again we just completed our annual client conference. So, we had a great opportunity to not only showcase the solution but to have customers who are up and running live now talk about the solution. So, we have four customers that are live with treasury management. One of them actually spoke, the CIO for the bank spoke, at the conference and shared with our customers the impact that they were having. So, pipeline looks strong. Now the thing I've mentioned on previous calls and I'll just say it again treasury management is a solution designed for larger institutions who are serving very large commercial customers. So, this isn't something that you're going to sell to 1000 or 2000 banks. This is something that will be sold only to the largest banks in our family. But given that, demand is strong and we're very happy with where that position – that product is positioned today.

Great. Thank you for the color. David B. Foss - Jack Henry & Associates, Inc.: Sure Kevin D. Williams - Jack Henry & Associates, Inc.: Yeah. I think the other part of that, the cash management solution, that is for all of the smaller banks that don't go for that. And that is going extremely well too. David B. Foss - Jack Henry & Associates, Inc.: Yeah. We distinguish between treasury management and cash management. So, treasury management is the new solution that we've talked about a lot. We just put the press release out, all that kind of stuff. That's for the largest banks, the largest clients. As Kevin points out, cash management is the lower end solution. We revamped that. We've had that for several years, revamped that and have assigned a number of new customers on that solution. It's a smaller solution, not as big a ticket price, but that has received a very solid reception from our customers as well.

Great. Thank you. Kevin D. Williams - Jack Henry & Associates, Inc.: You bet.

Our next question is from Glenn Greene of Oppenheimer. Your line is open. Glenn Greene - Oppenheimer & Co., Inc.: Thanks. Good morning. I apologize if some of this has been talked about because I jumped on the call a little bit late. But maybe, Dave, could you talk about the sales activity across the three brands, thinking Banking, Symitar, ProfitStars? It sounded like in aggregate you were above quota. But could you maybe parse across the three big brands? David B. Foss - Jack Henry & Associates, Inc.: I can tell you – I don't know that I can quote where every one of them finished for the quarter, but I can tell you all three of the brands finished ahead of quarter – ahead of quota for the quarter. So, sales in both banking, specifically around core and credit union, our on core, we're strong in the quarter. The ProfitStars group, of course, having a much wider variety of solutions. The Payments groups, I think, did particularly well in the quarter for the ProfitStars groups. But the other groups including our Gladiator team which sells our H&S solution, and the other teams all had a solid quarter. So, all I can say in specific is, every one of them finished ahead of quota for the quarter. Kevin D. Williams - Jack Henry & Associates, Inc.: Yeah. And I also add that all of our sales folks are extremely excited about all the new products we have. And I think they feel like they have about as many new toys to sell as they've ever had in the history of the company. Glenn Greene - Oppenheimer & Co., Inc.: Okay. And then, Kevin, so I don't think any of us have rejiggered our models on the new segment thing. But given that, is there any way to give us some color on the old sort of support and services, the piece parts or sort of thinking that EFT, the outlook and house maintenance, the relative growth rates there at least directionally? Kevin D. Williams - Jack Henry & Associates, Inc.: The old models, boy, Glenn, I don't even have that with me. That... Glenn Greene - Oppenheimer & Co., Inc.: So the outsourcing business directionally how much – how did outsourcing do. How did payments do? Kevin D. Williams - Jack Henry & Associates, Inc.: Well I mean payments is really pretty much still payments Glenn. Glenn Greene - Oppenheimer & Co., Inc.: Okay. Kevin D. Williams - Jack Henry & Associates, Inc.: I mean the payment segment is still pretty much what it was. Outsourcing which is in core, outsourcing continued to grow very well. I think it was like at 12% for the quarter compared to a year ago, actually a little higher than that with deconversion fees. So, both of those lines of business continue to do extremely well. Glenn Greene - Oppenheimer & Co., Inc.: Okay. Kevin D. Williams - Jack Henry & Associates, Inc.: And obviously that's 60-plus percent of our total revenue. Glenn Greene - Oppenheimer & Co., Inc.: Got it. And then just based on your sort of high level guidance comments. I think you talked about you know 6% to, what was it, 5% to 6% EPS growth for the year. Can we just assume that you're comfortable where current consensus is right now which kind of seems in that range, 3.28%. Kevin D. Williams - Jack Henry & Associates, Inc.: Yes. Glenn Greene - Oppenheimer & Co., Inc.: Okay. And then just one balance sheet question. It looked like deferred revenue declined year-over-year. Is that sort of an accounting anomaly or maybe just a little bit of color on that. Kevin D. Williams - Jack Henry & Associates, Inc.: Well the current deferred revenue went up. The long-term went down and really that's just the shift in our business, Glenn, that we're moving from in-house customers to outsourcing. We don't have near the long-term maintenance contracts or long-term hardware maintenance out there. So, the long term is going to continue to go down. The fact that the current deferred is strong and up continues to be a very positive in my thinking. Glenn Greene - Oppenheimer & Co., Inc.: Okay. Great. Thank you. Kevin D. Williams - Jack Henry & Associates, Inc.: You bet.

Our next question is from David Togut of Evercore. Your line is open.

Good morning. This is Rayna Kumar for David Togut. Can you talk a little bit about the puts and takes for the payment segment topline growth, maybe just break out bill pay, transactions, debit and credit card processing? And then if you can just talk about your outlook for the remainder of the year and long term for payments specifically. David B. Foss - Jack Henry & Associates, Inc.: So, you're talking about revenue growth, Rayna, you said puts and takes. So, I'm trying to figure out what the take would be. But you're talking about revenue growth in those areas?

Revenue growth. Correct. David B. Foss - Jack Henry & Associates, Inc.: Yeah. Okay. So for the card business excluding deconversion fees, roughly 3% year-over-year revenue growth. For the bill pay business, roughly 10% year-over-year. And for the other piece of our payments business is what we refer to as enterprise payments which is remote deposit capture, ACH origination, those types of things, it's about 7% year-over-year in that area.

And how should we think about payments growth overall topline in the midterm? David B. Foss - Jack Henry & Associates, Inc.: As far as percentage growth?

Yes. David B. Foss - Jack Henry & Associates, Inc.: So, I think we've talked in the past about 4% to 5% overall being a good sustainable number for us and I think that's still true, unless, Kevin, you want to add anything to that comment. But, I think that's still reasonable. Kevin D. Williams - Jack Henry & Associates, Inc.: No, I think at this point, Rayna, the 4% to 5% is a good guide out there. Obviously, with the new platform coming up, that some of the new opportunities, because we had never sold credit cards before. So, could that go up a little bit once we get the new platform rolled out and get all the products, maybe. But I don't want to be building that in right now. So, let's just go with the 4% to 5% at this point.

Could you provide us a rough timeline of when you think you can ramp up the credit card processing business? David B. Foss - Jack Henry & Associates, Inc.: Well, we're starting to sell the credit card already. In fact, we signed our first deal yesterday, literally yesterday, first credit card deal. So our team is already out there selling. We know that there's demand among our customers. That's what prompted us to do this in the first place. The question is, as you talk to individual customers, what contract do they have in place already, what type of timeline for them as far as terminating their current contract to move to something else, is it organic or bluefield or greenfield for them to sign up with us as a new provider. So, I don't know that I'm comfortable projecting at this point how fast that's going to ramp. But we see a good bit of demand, and we have a lot of conversations going now with our sales team and our customers. But as I mentioned, we've only signed one customer so far, so we kind of got to get a little farther into this before we can really discuss how that'll ramp.

Got it. That's really helpful. And just lastly, could you just discuss any major product investments you're making and revamps? Like, what's next in the pipeline with investments? David B. Foss - Jack Henry & Associates, Inc.: I don't know that there's another one that I'm prepared to talk about today as the next investment. We still have, so Treasury Management for example, we rolled out, but it was Phase 1. We still have Phase 2 of Treasury Management that'll come out in early calendar 2018. So, we still have a very big focus on Treasury Management. Our Enterprise Risk Mitigation solution, the partnership with SAS. We've just rolled that out as we indicated in a recent press release. But we still have another version of that that we have to come. Our Biller Direct solution, our final major release for Biller Direct will happen in about halfway through next calendar year. So, most of what we're doing right now is kind of finishing the big projects that we've been working on including Episys. So, we've talked in the past about the fact that we've had this Episys database project going on. We've been rolling out incremental releases for the last three years to our customers. That will wrap up in calendar year 2018. So, we're not trying to put another big deal into the funnel right now. It's really finishing out all these big projects that we've had going on including by the way, Banno. I shouldn't have left Banno out. So the complete digital experience for our customers including mobile and online, that will do the first big online installs in, starting in January, February timeframe. So, mostly it's focused on getting all these things through the pipe that we have right now. Obviously there are other things that we're putting through the review process to see what goes in the pipe after that. But we've got to finish a lot of these projects that we have going on right now. Kevin D. Williams - Jack Henry & Associates, Inc.: Yeah. And, for example the Enterprise Risk Mitigation solution that Dave mentioned, I mean, what we have in beta now is the first module, and I think there is a total of five modules. So, there's four more yet to be developed that are in some phase of the process right now. But that's probably a two-year process to get all of those completely developed and rolled out. So, we've got a lot of things going on. We've got a lot of really cool new solutions out there with a whole lot more to come.

Great. Thank you.

Thank you. This is ends the Q&A portion of today's conference. I'd like to turn the call over to management for any closing remarks. David B. Foss - Jack Henry & Associates, Inc.: Thanks, Tyrone. Again, we're pleased with the results from our ongoing operations and the efforts that all of our associates that take care of our customers. Our executives, managers, and all our associates continue to focus on what is best for our customers and shareholders. Thank you again for joining us this morning. And with that, Tyrone, would you please provide the playback number.

Sure. Ladies and gentlemen this conference will be available for replay after 11:45 AM today through November 16, 11:59 PM Eastern time. You may access the remote replay system at any time by dialing 1-855-859-2056 and entering the access code 9503829. International participants dial 404-537-3406. Those numbers again are 1-855-859-2056 and 404-537-3406. Access code is 9503829. That concludes our conference for today. Thank you for your participation. You may now disconnect at this time.