Jack Henry & Associates Inc

NASDAQ:JKHY

Earnings Call Analysis

Jack Henry Reports Strong Q3 2024 Performance with Optimistic Outlook

Jack Henry reported a robust third quarter for fiscal 2024, with total revenue increasing by 6%, and 7% on a non-GAAP basis. Operating income rose 3%, or 9% non-GAAP. Revenue from core segments grew by 7%, or 8% on a non-GAAP basis. New product implementations and strong demand for digital solutions, notably the Banno Digital banking platform, bolstered performance. Full year GAAP EPS guidance has been revised upward to $5.15-$5.19 per share. The company anticipates continued strong growth, driven by their innovative solutions like Financial Crimes Defender and expanded cloud offerings.

Steady Revenue Growth and Strong Financial Performance

In the third quarter of fiscal 2024, Jack Henry reported a 6% increase in total revenue, with a rise of 7% on a non-GAAP basis. Operating income saw a 3% uptick, and a more robust 9% increase on a non-GAAP basis. The company continues to benefit from private cloud trends and effective cost control, helping to bolster its financial position. Year-to-date non-GAAP revenue growth stands at 8%, with margins also expanding by 124 basis points.

Segment Performance Highlights

Each of Jack Henry's operating segments displayed solid performance. The core segment saw a 7% revenue increase, and 8% on a non-GAAP basis. The payments segment posted a 6% rise in non-GAAP revenue, bolstered by continuous growth in the EPS business. The complementary solutions segment also experienced an 8% increase in non-GAAP revenue, with quarterly margins slightly impacted by direct support costs and other fees.

Cash Flow and Capital Allocation

Year-to-date operating cash flow reached $336 million, marking a $129 million increase from the prior period. Free cash flow, excluding asset sale proceeds, was $172 million, up significantly from $54 million last year. A focus on legislative clarity and internal adjustments resulted in lower cash tax payments and a revised positive outlook for cash taxes this fiscal year.

Updated Guidance and Future Outlook

Jack Henry reiterated its full-year guidance, expecting non-GAAP revenue growth to lean towards the lower end of the 7.4% to 8.0% range. The guidance for GAAP EPS was revised upward to between $5.15 and $5.19 per share, an increase from the previous $5.09 to $5.13 per share. Free cash flow conversion guidance was also raised to 70%-75%, up from the earlier 60% projection. The company remains positive about its ability to continue delivering innovative solutions and maintaining strong client relationships.

Transition in Leadership

David Foss, the outgoing CEO, reminisced on his tenure and expressed confidence in the new leadership team. Gregory Adelson will succeed Foss as CEO on July 1. Foss highlighted the company's strengths, including exceptional technology and service, and assured stakeholders of a smooth transition.

Technological Innovations and Market Trends

Jack Henry is witnessing strong interest in its AI-powered Financial Crimes Defender solution, with 11 new contracts in Q3 alone. The Banno Digital banking platform continues to grow, gaining 69 new signings during the quarter. The company’s strategy benchmark survey indicated that 80% of bank and credit union CEOs plan to increase technology spending in the next two years, focusing on fraud detection, digital banking, data analytics, and automation.

Client and Market Expansion

The company reported its best third quarter ever for sales bookings, signing several multibillion-dollar institutions and transitioning existing clients to its private cloud environment. Jack Henry's brand equity has increased, with notable gains among large regional financial institutions and millennials. The company continues to target larger financial institutions while maintaining its focus on community and regional financial institutions.

Future Strategic Focus

Jack Henry's future strategy includes a comprehensive approach to AI, prioritizing internal operational efficiencies and expanding its technology offerings. The company sees significant opportunities in both the credit union and larger financial institution markets. As it moves forward, Jack Henry aims to enhance its product mix and continue its strong financial performance.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to the Jack Henry Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded.

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

[Vance Sherard, executive]

Thank you, Alan. Good morning, and thank you for joining us for the Jack Henry Third Quarter 2024 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 comments on our business and the industry. After Dave concludes his comments, Greg will discuss our recent strategic benchmark survey, recent success metrics for multiple solutions, our strategic focus on AI plus other key initiatives.

Mimi will then provide commentary around the financial results and updated guidance included in the press release issued yesterday that is available from the Investor Relations section of the Jack Henry website.

Concluding our prepared remarks, Dave will add some closing comments. 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, executive]

Thank you, Vance. Good morning, everyone. I'd like to begin today's call by remembering Jack Henry Board member, Laura Kelly, who passed away unexpectedly on March 15. Laura served on our Board for over a decade and was a cherished colleague and friend to all who had the privilege of working with her. With over 30 years of experience in senior leadership roles, she brought invaluable insights, wisdom and financial expertise to our organization. Beyond her remarkable professional achievements, Laura was known for her kindness, generosity and unwavering dedication to making a positive impact. Our thoughts and deepest condolences go out to John and Jake and the rest of Laura's family during this incredibly difficult time. Let's now transition to our quarterly results.

We're very pleased to report another strong quarter of revenue growth and overall business performance. As always, I'd like to thank our associates for all the hard work and commitment that went into producing those results for the quarter. For the third quarter of fiscal 2024, total revenue increased by 6% for the quarter and increased 7% on a non-GAAP basis. Operating income increased 3% for the quarter and increased 9% on a non-GAAP basis. Turning to the segments.

We again had a strong quarter in the core segment of our business. Revenue was up by 7% for the quarter and increased 8% on a non-GAAP basis. Our payments segment performed very well, posting a 5% increase in revenue this quarter and a 6% increase on a non-GAAP basis.

We also had a solid quarter in our complementary solutions businesses, with a 5% increase in revenue this quarter and an 8% increase on a non-GAAP basis. As I highlighted in the press release, this was our best third quarter ever for sales bookings. During the quarter, we inked 11 competitive core takeaways with one of them being a multibillion-dollar institution.

For the year, we've now signed 6 multibillion-dollar institutions topping last year's full year total of 5. Additionally, we signed 7 deals to move existing in-house core clients to our private cloud environment. We are seeing strong interest in our new Financial Crimes Defender solution with 11 new contracts in Q3.

Additionally, we signed 45 new contracts for our new Financial Crimes Defender fraud module, for the Zelle, FedNow and RTP payments networks that uses artificial intelligence and machine learning to detect fraud and money laundering in real time. We continue to see success with card processing solution, signing 14 new card processing clients this quarter. Our Banno Digital banking platform remains very popular with 69 new signings in Q3 including 37 contracts for Banno business. We now have over 11.6 million users live on Banno and we're continuing to add approximately 200,000 users per month.

Even with our strong sales success in Q3, we continued to replenish our sales pipeline and keep it near an all-time high. As we look toward the end of our fiscal year, we remain very optimistic about the industry, the demand for our solutions, our ability to deliver outstanding service and our long-term prospects for success.

With that, I'll turn it over to Greg for more detail on our solutions and businesses.

[Gregory Adelson, executive]

Thank you, Dave. As some of you have seen, we recently released the 2024 results from our Annual Strategy Benchmark survey. This survey offers insight into concerns, opportunities and technology priorities from bank and credit union CEOs. The survey indicated that 80% of bank and credit union CEOs plan to increase technology spending over the next 2 years.

Of those, the largest segment, 35% plan to increase investments between 6% and 10%. We also inquired where they plan to invest over the next 2 years. The top 4 areas for planned investment were fraud detection, digital banking, data analytics and automation, all areas where Jack Henry has been investing and executing with innovative solutions through our technology modernization strategy.

As previously announced, we recently launched our cloud-native AI-powered Financial Crimes Defender fraud detection platform. We now have 16 clients live and another 175 clients in the implementation queue. In addition, we announced in March the Financial Crimes Defender was named the best fraud prevention platform by FinTech Breakthrough, an independent market intelligent organization.

Dave mentioned earlier that we have more than 11.6 million registered users on our cloud-native Banno Digital banking platform. We continue to see strong interest in our recently launched Banno Business Solution that provides a modern banking experience for small and medium-sized businesses.

As of March 31, we had 124 clients live and about 70 additional clients in various stages of implementation. In terms of data analytics, we continue to make progress on our data broker and executive dashboard solutions. Both are part of the cloud-native API-first Jack Henry platform. Data broker, which is currently in beta will eventually provide access to all of a client's Jack Henry data in a single repository with innovative AI intelligence capabilities.

To complement the data broker solution, we are developing an executive dashboard with real-time event monitoring to help executives at our financial institutions make informed, dynamic decisions throughout the database on metrics they customize.

Related to automation technology, one new Jack Henry platform offering, we haven't spoken much about yet is our cloud-native online deposit and loan account opening solution. This integrated solution will provide a seamless digital account opening experience for our clients that enables them to streamline processes, automate workflows and better serve both retail and commercial loan clients.

We plan to begin the beta phase with clients in early calendar year 2025. The survey also found that 96% of our clients plan to add payment services over the next 2 years. We continue to offer a full range of payment solutions in our pay center application as well as other areas of our payment groups.

As of March 31, we had 312 clients using Zelle, 275 clients using RTP, the real-time payments network, which represents 48% of the live RTP clients and 190 clients using FedNow, representing 29% of the live FedNow clients. One final point on the survey findings. They were consistent with what we heard from our clients at our Annual Strategic Initiative Symposium in late April. While financial institutions are concerned about the increasing cost of deposits and impact to interest margins, there is a general feeling of optimism and less concern about an economic slowdown this year versus what we heard a year ago.

One topic we spent a lot of time discussing at the Strategic Initiative Symposium is artificial intelligence. We presented in detail Jack Henry's framework for building the necessary guardrails, education, training, use of acceptable tools, et cetera. We continue to actively identify opportunities to leverage AI, aiming to enhance client solutions and optimize internal process and work streams.

Incorporating AI into select client solutions like, Financial Crimes Defender, Data Broker, Executive Dashboard and Banno Conversations is part of that strategy. We are approaching AI deployment thoughtfully, ensuring it benefits our clients and associates and aligns with our commitment to data privacy, protection and security. Our strategy ensures we are responsibly bold and balanced. It's been about 18 months since our corporate rebranding initiative to retire the Symitar, ProfitStars and Jack Henry banking brands as we now simply go to market as Jack Henry.

As we said at that time, uniting the brands reflects Jack Henry's role as a well-rounded financial technology provider and enables us to speak from a single, consistent brand voice, one Jack Henry. We recently received results from an independent brand study that showed that Jack Henry's brand equity has increased by 9 points in just 18 months. We specifically saw significant improvement with large regional financial institutions and millennials.

This is important as we continue to execute on our strategy to provide innovative technology solutions to larger financial institutions beyond what we already provide today through both our payment and complementary groups. And millennials are a critical audience because they are taking on larger leadership roles at these financial institutions and having more influence and technology buyer decisions.

Speaking of brand equity, Hopefully, you all have seen the new corporate sustainability report that we published on March 29. We believe the 2024 report is an excellent representation of the key initiatives and accomplishments we've been working on over the past year. This year's report details how we are supporting local communities with a focus on financial wellness through both our investments and innovative technology in a variety of philanthropic efforts.

We also continue to further our commitment to valuing people with disabilities with the launch of a new associate-led business innovation group focused on awareness of visible and invisible disabilities. The report also highlights some of the public Best Places to Work recognition we received from organizations like Newsweek, Computer World and USA Today.

As part of our planned organizational changes, we recently announced the promotion of Shanon Mclachlan who is currently President of Jack Henry Credit Union Solutions to Chief Operating Officer, effective July 1. Shanon has been with Jack Henry for 9 years, but has close to 30 years working with both banks and credit unions and senior technology and operational roles. Shanon is a strategic visionary leader who has significantly contributed to our company's overall success, and wil lcontinue to do so as the next Chief Operating Officer.

I want to close by recognizing Dave for the exceptional job he has done as CEO over the past 8 years. Under Dave's leadership, Jack Henry has experienced outstanding growth, both organically and through strategic acquisitions. I also want to thank Dave for his mentorship and guidance. He has prepared me well as I step into the CEO role on July 1, and I'm honored to continue leading our company with an unwavering focus on our associates, clients and shareholders.

With that, I will turn it over to Mimi for more details on the numbers.

[Mimi Carsley, executive]

Thank you, Greg, and good morning. Our continued focus on serving our community and regional financial institution clients, delivering shareholder value led to another quarter of solid revenue and earnings growth. I'll start with the details driving our third quarter and year-to-date results, then conclude with our full year guidance update.

Q3 GAAP revenue increased 6% and non-GAAP revenue increased 7%, a continuation of consistently solid performance and keeping us on track for a strong fiscal 2024. Year-to-date growth was 7% on a GAAP basis and stronger on non-GAAP at 8%. Deconversion revenue of approximately $800,000, which we pre-released last week, was down approximately $5.3 million, reflecting minimal financial institution consolidation of our clients. Year-to-date deconversion revenue is $9.9 million, $7.2 million less than the prior period. Now let's look more closely at the details.

GAAP services and support revenue increased 4%, while non-GAAP increased a more robust 6%. Year-to-date, the increase was 6% for GAAP and 7% on a non-GAAP basis. Service and support growth during the quarter was the result of increases in data processing and hosting revenues. We continue to experience robust growth in our private and public cloud offerings, which again increased 10% in the quarter and for the year-to-date. This reoccurring revenue contributor is 32% of our total revenue and has long been a key to double-digit growth engine.

Shifting to processing revenue, which is 43% of total revenue and another key component of our long-term growth model. We saw positive performance with 8% growth on both a GAAP and non-GAAP basis for the quarter and year-to-date delivered 9% for both. Consistent with recent results, drivers include positive demand for our digital solutions, card processing, other payment processing and other processing revenues.

In closing out revenue commentary, I would like to highlight total recurring revenue exceeded 91%. Next, moving to expenses. Beginning with cost of revenue, which increased 7% on both a GAAP and non-GAAP basis for the quarter and 7% for GAAP versus 6% for non-GAAP year-to-date.

Drivers for the quarter included higher direct costs consistent with increases in related revenue, higher personnel costs and increased internal license and fees.

Next, R&D increased 4% on both a GAAP and non-GAAP basis for the quarter. The increase is primarily due to cloud consumption costs net of capitalization. For the year-to-date, R&D increased 4% on a GAAP basis and 3% for non-GAAP.

And lastly, on a GAAP basis, SG&A rose 7% for the quarter and 8% on a non-GAAP basis, primarily due to higher personnel costs. Year-to-date SG&A expense increased 23% on a GAAP basis and 9% on a non-GAAP basis. The primary GAAP differences are the $16.4 million in onetime-related costs, related to the voluntary early departure incentive program. We did, in Q1, and prior period, $7.4 million gain on asset sales.

For non-GAAP, the difference is primarily due to the higher personnel costs and absence of gain on sale of assets. We remain focused on generating compounding margin expansion and the quarter results delivered 30 basis points of increased non-GAAP margin, which was 20.8%. Non-GAAP margin benefited from focused process improvements and disciplined management of our workforce, while retaining key talent. These strong quarterly results produced a fully diluted GAAP earnings per share of $1.19, up 7%.

Separating results into the 3 operating segments, we're pleased to see across the board positive performance. Our core segment revenue increased 8% for the quarter on a non-GAAP basis, with non-GAAP operating margins increasing 216 basis points. We continue to benefit from private cloud trends and strong cost control.

Year-to-date, non-GAAP revenue growth was 8% and the associated margin increased 124 basis points. Payments segment revenue increased 6% on a non-GAAP basis. The segment had impressive non-GAAP operating margin growth of 121 basis points. This was due to continuing growth in our EPS business, and moderate card growth consistent with U.S. consumer spending trends and a slightly tough comp combined with the focused cost management.

Year-to-date, non-GAAP revenue growth matched the quarter at 6% with 103 basis points of margin expansion. And finally, complementary segment, non-GAAP revenue increased 8% with 33 basis points of margin expansion. Year-to-date, non-GAAP revenue also increased 8% to 28 basis points of margin expansion. Growth year-to-date reflects digital solution demand and beneficial overall product mix. Segment quarterly margins were impacted by moderate headwinds from direct support costs and license and fees. Let's now turn to a review of cash flow and capital allocation.

Year-to-date operating cash flow was $336 million, $129 million increase over prior period. Excluding proceeds from the sale of assets, free cash flow was $172 million, significantly more than the $54 million last year. Our base case entering the year included an elevated level of cash tax payments based on the Section 174 impact.

Based on legislative clarity and internal efforts, we were able to meaningfully lessen the impact. The net result was lower cash taxes equating to an approximately $29 million overpayment last fiscal year as well as improved cash tax outlook this fiscal year. Our consistent dedication to shareholder's value creation resulted in a trailing 12-month return on invested capital of 19%.

Additionally, I would highlight other notable return on capital metrics for the year-to-date period, including $20 million in share repurchase, offsetting annual dilution, $25 million in debt reduction and $116 million in dividends. With 3 quarters of the year complete, we're nearing the conclusion of our fiscal year, and therefore, I'll conclude with guidance changes.

As you're aware, yesterday's press release included updated fiscal 2024 full year GAAP guidance along with a reconciliation to non-GAAP metrics. As a reminder, we filed an 8-K on August 3 that described how starting in the current fiscal year, we're using a revised approach for deconversion guidance. While we reported third quarter deconversion revenue of approximately $800,000, we are reiterating our full year deconversion guidance of $16 million. We are reiterating both GAAP and non-GAAP revenue growth and expect non-GAAP growth to potentially have a bias towards the lower end of our 7.4 to 8.0 growth range.

Due to the continued positive operational results and a focus on cost management, we now expect an increase in annual non-GAAP margin expansion of 45 to 50 basis points compared to the 35 to 40 basis points previously provided. The full year tax rate estimate remains at 23.5%. Incorporating the noted positive updates, full year guidance for GAAP EPS is revised upward to $5.15 to $5.19 per share from the previous guidance of $5.09 to $5.13 per share.

As a reminder, the guidance or deconversion revenue compared to actual fiscal 2023 deconversion revenue, we did, severance related costs and nonrecurring gain on asset sales results in approximate $0.37 headwind for GAAP EPS for fiscal 2024. Due to the better than initially anticipated cash tax payments, improved margins and contributions from favorable net interest, our full year guidance for free cash flow conversion has increased to 70% to 75% from the previous commentary of 60%.

In conclusion, Q3 results reflected continued momentum of the strong execution we've seen thus far this year and we expect a solid finish for the remainder of the fiscal year. We remain exceptionally positive about our ability to deliver innovative and in-demand solutions, the resilience of our clients and our focus on execution and shareholder value creation. We appreciate the contributions of our diligent and dedicated associates that drove these strong results and Jack Henry investors for their continued confidence.

Before I turn the call back over to Dave for closing remarks. While I haven't had the pleasure of working with Dave as long as others, I cherished our time together. I want to thank Dave for giving me the opportunity to work for this amazing company for being so incredibly generous with his wisdom and support for so many small and meaningful pieces of guidance over the past 2 years. He is a role model of service, leadership and doing the right thing. We are fortunate to have him lead the Jack Henry Board, and I look forward to this continued journey together. Dave?

[David Foss, executive]

Thank you, Mimi. As you are all undoubtedly aware, this marks my final earnings call as CEO before my transition to Executive Board Chair on July 1. Reflecting on my career at Jack Henry, this has been an incredibly humbling journey for me, both personally and professionally. And I'm beyond grateful to have had the opportunity to lead this great company for the past 8 years.

As we move forward, I have the utmost confidence in Greg and the rest of our exceptional team to sustain our reputation for great technology and service as well as our strong financial performance. I've cherished the opportunity to get to know all of you over the years and appreciate your insightful questions and thorough analysis.

I thank our investors for their trust in Jack Henry and our clients for allowing us to serve their needs. And lastly, I want to express my heartfelt appreciation to our associates. It is their dedication and unwavering commitment to supporting our clients and each other that drives our success and makes this company special.

With that, we'll open up the floor for questions. Alan, if you would, please open the line.

[Operator]

[Operator Instructions]

Our first question comes from Kartik Mehta of Northcoast Research.

[Kartik Mehta, analyst]

Dave, I wanted to get your perspective on maybe just the backlog. I know, Mimi, you said, as you're expecting maybe the lower end of the non-GAAP revenue for fiscal '24, and maybe backlog is a wrong word to use. But just your perspective on based on what the sales pipeline looks like, and how good you feel about as we move forward, the ability to predict revenue and maybe why the lower end of the guidance.

[David Foss, executive]

So I'll give you my perspective, and then I'll ask Mimi to comment. So first off, I mentioned in the release and in my comments that this was a -- the best sales quarter we've ever -- best third quarter sales quarter we've ever had. And I also highlighted the fact that the sales pipeline has been replenished almost to that same record level that it was at last quarter.

So as I see what's going on in the sales pipeline, but even more importantly, as I see what's happening here in the quarter that we're in right now, which, of course, we're not here to announce, I feel really bullish about the future opportunities for sales at Jack Henry and our ability to continue to deliver. So that's a sales perspective.

I'll ask Mimi to -- did you want to say something.

[Gregory Adelson, executive]

Let me just add this. So I think the other thing is that we've had unbelievable sales success this year. But as we've highlighted many times, the deals that we're selling this year, for the most part, don't actually become revenue opportunities until future years and future quarters. So I think part of this is, yes, there are some things that are in an implementation queue and we're working through all those as we always do.

But there isn't really anything that is signaling anything other than hopefully future success based on what we've seen. So I just want to make sure that you understand that all of the sales success we're seeing right now will be in future quarters.

[Mimi Carsley, executive]

Yes. The only thing I would add, Kartik, is that we feel really good about all 3 operating segments revenue. The total revenue is still very much in line with our long-term algorithm and what we thought about at the beginning of the year. There is a part of our business that does relate to economic factors in -- that's the card business. So I think as we look out for the year, we feel really confident about our ability to hit that range.

[Kartik Mehta, analyst]

Perfect. And then, Greg, just you talked about AI and maybe the opportunities in there. But I'm wondering for Jack Henry, is there an opportunity for you to use it internally and could that lower cost? And if so, is there an upfront cost that you're dealing with in an effort to implement that.

[Gregory Adelson, executive]

Yes, it's a great question, Kartik. So the short answer is we are spending a lot of time on internal operational efficiency opportunities throughout our entire organization. In fact, we most recently had a corporate leadership team meeting where each of the individual business units and nonoperating business units all presented their ideas for utilization of AI and specifically generative AI.

And so we're going through prioritization. We've done a really good job of spending time, making sure that we're focused on building the efficiencies first, getting the learnings and all the other stuff. We've just approved a couple of utilizations for the Microsoft copilot for internal use and the GitHub codeveloper stuff for the developers -- or copilot, sorry. And we're actually in the process of going through all of those things and looking for ways that we can continue to build efficiency and effectiveness first as we're actually doing some other things within some of our products that I announced as well.

[Mimi Carsley, executive]

The only thing I would add on there as Greg said, responsibly bold and balance is our approach, and that covers both the usage as well as the investment. And so we're using the internal existing policies and processes to prioritize, to develop business cases, to think about the benefits, not -- this isn't just a curiosity. There has to be business cases. And so all of that will still sit within our planned budget and R&D and internal expense policies.

[Operator]

The next question comes from Andrew Schmidt of Citi.

[Andrew Schmidt, analyst]

Dave, congrats again on the transition. Want to start on the margin front. Good performance here. Mimi, maybe you could put a finer point on this. I know that there were some -- you mentioned some operational efficiencies that drove this maybe some mix factors as well. But maybe a finer point on that. And then as we think about the go-forward margin trajectory, it seems like you're above this year, kind of what you've outlined for the longer term. So how does -- this year's margin performance kind of inform the view on the longer-term margin progression?

[Mimi Carsley, executive]

So Andrew, I would say for this year, it came down to strong execution, operational focus, it's a bit of product mix as well, but we're being very diligent around headcount, around spending for the year. There's also some timing around products and how that amortization impacts us as well, which is also something that we're just going to be thoughtful about for next year.

It's really early still in our budget planning. Our teams are getting together and thinking about the prioritization I would say at this point, still thinking about that long-term range we've given versus an elevated state, but we're always trying to deliver shareholder value. And so that's going to always be a focus for us.

[Andrew Schmidt, analyst]

Perfect. And then maybe just digging into the average contract size of recent cohorts. I know the attach rates have gone up over the past few years, but maybe to put just a finer point in terms of what you're seeing in terms of just a complementary product adoption and just average contract sizes perhaps recent periods versus maybe a year or 2 years ago.

[David Foss, executive]

Andrew, it's Dave. So one of the challenges in this, whenever we have a conversation like this is there is no such thing as average when it comes to our contracts. You're correct. The attach rates tend to be high with our with our core clients. But remember, we sell a lot of solutions that are outside the core base and the variety of solutions that we sell roughly 300 different solutions. They range from very small ticket price to very large ticket price. Most of the solutions -- almost everything we sell today is hosted. So it's rare for us to sell a licensed version of a solution.

Well, then in the hosted contract or are they going to be hosted for 3 years or 10 years or so they're trying to talk about average is pretty challenging. The best indicator because we have used the same measurement approach for sales quota attainment for many years now, the best measure is the fact that, as I just mentioned, Q3 was the best Q3 we've ever had.

That's the most significant indicator of sales success is the fact that, we've used the same way of measuring contracts for many years. And so it's a good relative performance indicator for our sales organization. And sales overall are up. So I know it's frustrating to not be able to talk about averages, but it's just really not a practical thing to try and do in our world.

[Operator]

The next question comes from Darrin Peller of Wolfe Research.

[Darrin Peller, analyst]

Maybe just start off on a free cash discussion. If we could just revisit, it obviously has gone through its periods of strength above 80% and below 60%. Now you're saying back to 70%-plus. Maybe just give us a sense a little more on what the driving factors are and the sustainability of it now, maybe Mimi just help us understand if we're back to 80% going forward in the next couple of years?

[Mimi Carsley, executive]

Darrin, it has been a bit of a roller coaster ride. And in part, that was due to the lack of clarity from a legislative front. As we said on last quarter's call, we were hopeful the progress on Congress addressing the Section 174 R&D-related impact on cash taxes would go through, we were optimistic, but not betting on that.

But even in the absence of that, the clarity that the treasury to IRS our outside consultants, our incredible tax team here, Jack Henry have had -- has really helped us from being able to discover savings from a cash tax perspective that impacted effectively last year a benefit so that would mean less cash tax paid this year.

And so even if that legislation does not get fully addressed, I think we're in an improved position versus where we thought earlier in the year. We're still hopeful that it will be addressed. But that's the biggest driver that represents over $29 million in last year's impact alone, let alone some additional for this year. So that's the biggest impact to the free cash flow, and I think that's sustainable for the [ go forward ] .

[Darrin Peller, analyst]

Greg, maybe just on your side, if we could just talk about what you're seeing in the market, more specifically around demand for core conversions or obviously, the cloud discussion we've had for some time now. I mean just any inflections you're seeing for specific products or offerings or maybe vice versa anything that's weaker? Any more color would be great.

[Gregory Adelson, executive]

Yes, sure. So I think a couple of things as part of our survey and even just obviously with our regular conferences and conversations with our clients, deposit growth continues to be a big driver. Operational efficiency continues to be. And that's why we really highlighted some of those key products that we're already focused on, and fraud being a big one, things that we're already focused on and driving out in the market set and we're continuing to see some nice pickup in all of those.

So those continue to be big ones. I think related to the tech modernization and what we're doing with our modules. We're continuing to have a lot of success on the execution side of that. We'll continue to talk more about that in future calls. But right now, we're really excited about what we've done with Data Broker and Executive Dashboard.

We think those are some products that really are not out there in the space today and we'll continue to create an opportunity for us to show the advancement of what we're doing in our cloud-native technology and utilization of generative AI as part of that. So all of those will kind of tie in to what the demand has been around deposits, fraud opportunities, operational efficiency as the 3 big things.

[Operator]

Our next question comes from Vasu Govil of KBW.

[Vasundhara Govil, analyst]

I guess first quick one for Mimi. I know it's a little too early to talk about the '25 outlook, but just based on the new sales momentum that you've had this year, it seems like you're setting up for stable, if not accelerating revenue growth into next year. Any reason to think that would not be the case? And then maybe if you could also specifically comment on the payment segment, trending slightly softer than we would have thought, just how it performed relative to internal expectations and what you're expecting for the go-forward trend there.

[Mimi Carsley, executive]

So Vasu, I wish I could tell you with more precision the next years targets, but it's just a little too early. We're still during the budget process. But there's no reason to have any other expectation than the growth algorithm at a high level. There are some things that present challenges each year from a grow-over perspective that even though we're having tremendous success with the sales pipeline there's lower convert merge that impacted this year.

You just never know from a grow-over perspective. But I think the growth algorithm is a pretty good framework to think about for next year. As it relates to this year and the payments question, I would say that, that really -- to categorize it, we saw slower transaction growth, broadly slower growth in debit. And that was in line with all of the major card network providers and U.S. trends we've seen and a tough comp, but we're reiterating the full year guide, and we feel comfortable in that 7% to 8% growth algorithm is still at an appropriate level.

[Vasundhara Govil, analyst]

And then, Dave, I want to add, I've really enjoyed working with you the last few years, and you will certainly be missed. One high-level question for you. 3 big players that have the majority of the share in the industry, but the number of fintechs that are going after the opportunity is larger today than it probably was a few years ago. So how do you see the competitive landscape evolving over the next 3 to 5 years?

[David Foss, executive]

Yes. So first off, thank you, Vasu. It's been fun. So it's interesting. People trying to come into the U.S. market and provide competing services to players like us has been going on for quite a while now. And the challenge for many of them is they approach it froma technology point of view as opposed from a banking point of view. And so they come in thinking, hey, I can deliver a greater user experience, something that's cooler and more fun, but they don't realize how really difficult it is to do the heavy lifting that behind the scenes that you don't see. It's the work that's not s***, but it's the work that has to be done for a bank that need to be successful.

And so we've seen many come into the U.S. market trying to deliver a solution, don't understand the regulatory environment, don't really understand all the heavy lifting that happens underneath. And then they kind of back away and maybe turn their solution into a digital banking solution or something like that. And so I don't view what's going on today is really any different from that.

There are people out there, and they're smart people, but I think the complexity of all the things you have to do to keep a bank or credit union operating and in balance and all those important things is often times overlooked. So we have our eyes wide open, and we're not pretending nobody is a threat, and we follow a lot of different companies. But today isn't really in my mind any different than it was 5 years ago where a lot of people were talking, a lot of people were trying to figure out how to really take a foothold in this industry, and it's just really difficult to do all the things that we do. So I don't see that changing anytime soon.

[Operator]

The next question comes from Tyler DuPont of Bank of America.

[Tyler DuPont, analyst]

This is Tyler on for Jason. I wanted to start by asking about the progress in rolling out some of the complementary solutions, such as the business, Financial Crimes Defender, outside the core. Can you maybe just level set where we are today with that rollout. If I remember right, the target was some sort of implementation by the end of F '24 and just sort of when you think this might be needle moving going forward? Any clarity there?

[Gregory Adelson, executive]

Yes. This is Greg. So I'll take that one. So as far as execution, we're moving forward. We had talked about being able to sell it at the end of this calendar year, and we'll be able to start doing that in Q4. Execution and planned implementation will be in the fourth quarter of our fiscal year '25 -- second year -- or second quarter of the calendar year '25.

That will be the planned implementations. As we mentioned earlier, we were going to take this in a very strategic fashion going after just a handful of competitive course. We're focused on working through one right now. You have to get some level of cooperation to do some of what we're doing as well. So some of that gets kind of in the documentation and working through some of those kind of idiosyncrasies that what you need.

But as far as our plan is on track to have Banno business, our CPS card product and Financial Crimes Defender, all 3 of those products that today that do not go outside of the Jack Henry core base to be available all at the same time and offer the first specific core that we're targeting and then we'll be working through the other things. So as far as answering your question of when it will have any significant impact, it will be a little while for that to happen. And -- but the reality is we think the stickiness of what we're doing with those particular products will help us with some other things in selling other solutions and other opportunities.

[David Foss, executive]

Can I offer just one clarification to your question, Tyler, just to make sure we're on the same page here. So what Greg has talked about is these brand-new solutions that we're rolling into the -- outside the base. But we have thousands and thousands of deployments of other solutions to non-Jack Henry core customers. So I just want to make sure there's no confusion about we've been selling outside the core base for many years, thousands of -- in fact, I think we have more customers, more banks and credit unions are running our bill pay solution who are not Jack Henry core customers than who are Jack Henry core customers, and that's true for a number of other solutions.

So I just want to make sure we're clear on the fact that we know how to sell outside the base. it's just the strategy around these brand new solutions that we've been really kind of talking about and thoughtful about.

[Tyler DuPont, analyst]

Okay. Understood. I appreciate the clarity there. And then just as a follow-up, I wanted to jump off of the previous competitive positioning question, but from a slightly different angle. Can you discuss any signs of success you're seeing or any trends you've seen with moving a little bit more into the mid-market financial institutions playing field, if you will, sort of what trends you're seeing there, if there's any different go-to-market that you need to implement? I know you mentioned that there was a couple of multibillion-dollar signings over the past several quarters, but just any update there?

[Gregory Adelson, executive]

Yes. Sure. This is Greg again. So I'll take that. So as we've mentioned previously, and they're still all in the queue, we have 3 $20 billion-plus opportunities in our current pipeline, and we continue to work those and continue to make progress on those. But I would say that even in the multibillion space, let's just call it the $5 billion to $15 billion we're continuing to see more and more opportunities in there.

And I would say the biggest drivers really are the technology modernization strategy that we have articulated and what folks are seeing for the future. And more importantly, what we've already executed on as you can imagine, most people want to see that it's not just a sales pitch. It's some level of execution, and we continue to show advancements on what we've done, where we're going. And things along that line.

So that has really helped us continue to move and progress in the sales pipeline with many of these larger opportunities. So I think what you're going to continue to see is what we're doing on the technology side, what we've always been known from the service side, continue to create those opportunities.

[Operator]

The next question comes from Dave Koning of Baird.

[David Koning, analyst]

Congrats, Dave. Great career. And I guess, First of all, I guess, just kind of 2 kind of cleanup questions. Corporate revenue was lower than normal or recently, I think as the conference wasn't in the quarter, but then cost -- corporate costs were higher than usual. What's just the dynamic there? And do those go back down in the coming quarters?

[Mimi Carsley, executive]

Yes. I think I wouldn't read anything into just like a one quarter. We did have -- relative to last quarter, we talked about that the annual merit increase is hit in Q3. So from a cost perspective, that's where you saw personnel cost go up. The revenue it could just be hardware or as you mentioned last quarter was the conference, but I would not read too much into that.

[David Koning, analyst]

Okay. Okay. And then one other one. I think you had a negative term fee in complementary. And then I think you actually had a small EBIT loss on term fees. Both of those, I don't know if you've ever seen those dynamics before either of those. And maybe just -- I know it was such a small term fee quarter anyway, but just describe kind of how that happens and if that's one-off.

[Mimi Carsley, executive]

Yes. This is certainly a one-off. So as you know, for deconversions, we do get a little bit of notice once they start the file transfer process. So we were informed that a financial institution had planned to deconvert and then later postpone the timing and delay. And so there was a bit of a reversal on that transaction.

[David Foss, executive]

And this is something Dave -- I mean, I've been doing this a long time. I don't remember the last time I saw this, but this was essentially a customer that was recruited away by a competitor, and they had a failed conversion and so decided that they needed to back out of that and come back to Jack Henry. So I don't ever remember that happening and certainly haven't seen a failed conversion in our industry for many, many years. So this was a real unique situation.

[Operator]

Our next question comes from James Faucette of Morgan Stanley.

[James Faucette, analyst]

Great. And I also want to extend my thanks to Dave for all the hard he has put in on behalf of Jack Henry over the years. Wanted to quickly maybe take advantage of Greg and Dave being here and dig in a little bit on your commentary about customer sentiment. I'd love to get your thoughts on the regulatory scrutiny that banks are going through right now, which seems to be picking up, as several of the banks have alluded to plans to adjust their capital liquidity and CRE concentrations over the next several quarters.

That doesn't seem to be impacting your bookings and sales performance, but curious if the topic of greater regulatory scrutiny is coming up with customers and how you're thinking about what you can do to help those customers as they deal with that.

[David Foss, executive]

So greater regulatory scrutiny is absolutely in the conversation very regularly these days. And really, since the -- like that's May of last year, the period where there was all this consternation around what was happening in regional banking space. Since that time, the regulatory environment has changed pretty dramatically for, I think, all of our customers on the banking side. And so there's a lot of conversation about that. It is interesting, however, that has not had any impact on bookings.

And one of the things that I say regularly now is if you're running a bank or credit union, almost any challenge you have, almost any problem you need to solve in this day and age in 2024, the solution involves technology. It doesn't involve usually people because they're trying to figure out how to automate or how to use technology to either mitigate risk or grow the franchise or something like that.

And so I think because of the world we live in today where technology is almost always part of the solution, that's why, regardless of what's going on with the regulators there is an opportunity for us to help them using some type of technology solution, either like I say, to grow the franchise or to mitigate risk or deal with fraud or whatever it is.

So I haven't seen any or heard and we just did a client conference in Kansas City about 3 weeks ago, no discussion about backing off on spending on technology or anything like that in fact, the survey that Greg just cited, there was an expected increase in tech spending for the coming year. And so those would be my observations, but I'll refer to Greg, if you want to.

[Gregory Adelson, executive]

No, I think you were pretty complete. I think the part that I would say is that the technology component really is the driver here is that more and more folks are recognizing for them to continue to be able to "punch" above their weight, especially in the community bank space is that they're looking for technology to stay to the level of relevancy that they need to be. And that's why we've been so adamant on our focused execution on getting these products out giving us and our institutions an opportunity to do that.

[James Faucette, analyst]

Got it. And then I want to turn quickly, Greg, to implementation, and you mentioned implementation queues. How are those trending broadly? And how are you thinking about the puts and takes between margin expansion you're delivering versus the potential for additional resource allocations to speed up those implementations? Just walk us through the thought process and what you're dealing with from a current demand perspective there?

[Gregory Adelson, executive]

Yes, it's a great question. And it is absolutely something that we look at truly every month with our teams, we go through a very detailed financial analysis and variance reviews with each of our business unit leaders and those discussions always take place. And so Mimi already referenced the kind of business cases.

And so we actually take a business case approach where we look at what we may need to add relative to enhancing the implementation queue, what kind of value are we able to provide, both from an immediate revenue standpoint, helping kind of relieve some pressure on the sales side, things along that line.

So we actually have done that multiple times this year where we've added resources to accelerate queues or to do things differently. We're also constantly looking at process improvements that we can do, both from a systemic standpoint or just general process improvements, obviously, the questions that were asked about AI earlier, we're looking at ways that AI might be able to help us with some of those.

But to answer your question, we are constantly evaluating both sides, but we also recognize as long as we can continue to move that queue forward and it makes sense, then we're going to add people to make sure that, that happens.

[Operator]

Our next question comes from Charles Nabhan of Stephens.

[Charles Nabhan, analyst]

I just want to echo everybody's gratitude and congratulations, Dave. It's been great working with you. I just want to wish you all the best. So I wanted to follow up with the earlier question on some of the progress you've made in the middle market and just get a better understanding of how we should think about some of those larger relative banks from an ARPU standpoint as well as their product consumption in terms of like what products there -- how it compares to some of your -- the smaller banks in your customer base, what they're buying, what they're not buying, and what's helping you win those deals as well.

[Gregory Adelson, executive]

Yes. So I'll go ahead and take this. This is Greg. So I think as far as the deals that we've won, so the 6 multibillion that Dave referenced this year, I think there hasn't been a significant alternative to any of the solutions that we typically sell. What's helping is what I described earlier, not only the strategy for the future, but what we've executed on the present, which is around Financial Crimes, around Banno and specifically Banno Business, what we've done in our payments markets and things along that line.

So those continue to be huge drivers of opportunity and maybe even more specifically than what we see just specifically in a core offering because those complementary products really help drive the core decisions, to be honest with you.

As we continue to go to the larger ones, so the $20 billion plus that I've talked about, still a lot of the same interest. The question will be is, where are they in some of their current relationships. More importantly, they buy -- tend to buy a little bit fewer products. They tend to not do everything with one particular vendor.

So as we're working through the dynamics of specifically those 3 larger ones that I've referenced, but we're also seeing some larger ones where a product or 2 of Jack Henry, especially as we start to look outside of the Jack Henry core base and be able to take some of these products we're getting one-off opportunities and two-off opportunities from larger institutions that are more than the $50 billion that we have today.

So I think you'll continue to see that evolution as we continue to drive things outside of the Jack Henry base. But as we've referenced before, we have complementary and payment products today in institutions that are as large as $200 billion. So that's not foreign to us.

[Charles Nabhan, analyst]

Great. And as a follow-up, I just wanted to get your general thoughts on M&A and consolidation in the bank space. There's been a handful of deals announced in the past month. And it seems like the regulatory scrutiny that you had alluded to could be a catalyst for consolidation. But as you think about the next year or 2, I just wanted to get your general thoughts on M&A in the bank and the credit union space.

[Gregory Adelson, executive]

Yes, another good question. So we are continuing to see that. As we've referenced, I think, in our last earnings call that we have started to add some staff relative to that, especially on the credit unions side, where we've seen even more of that -- of those opportunities. But we're seeing more on the banking side than we did just a few months ago. Part of the challenge though is the timing of when those are expected to be completed.

So we've actually had a couple of our institutions that have acquired other institutions -- competitive institutions for that matter. And -- but there -- the ability for them to be able to complete those have been delayed by regulatory challenges. So in some cases, 5 and 6 months. So will that continue to be a challenge?

That remains to be seen. But I think what's happening right now, especially in the market with -- and especially we'll see what happens with the election. But we're continuing to see some challenges with the timing of when those things can be completed, not necessarily the interest in doing them.

[Mimi Carsley, executive]

I would just add on that, that creates a little bit of a headwind for us this year. We talked about the lower deconversion revenue of people leaving that also impacts us from the convert merge. And in Q3, we saw approximately $3.5 million less year-over-year in convert merge revenue.

[Gregory Adelson, executive]

I will just finalize with one last comment is that you are absolutely right that when we have our conversations with our institutions as well as what we just had in Kansas City, the interest level in continuing to look at M&A opportunities is very, very relevant in part of their overall strategies.

[Operator]

Our next question comes from John Davis of Raymond James.

[John Davis, analyst]

And Dave, I'll echo my congrats. But maybe before you go or maybe Greg can hop in here. But just thoughts on capital allocation. We're talking about free cash flow conversion going up. It looks like you guys haven't bought back stock in a couple of quarters, balance sheet is in good shape. So just broader thoughts on capital allocation, maybe more specifically, buybacks.

[David Foss, executive]

You've heard me talk about the capital allocation thousand times JD. So I'll defer to Greg for that one.

[Gregory Adelson, executive]

Well, I think we continue to look at opportunities to buyback. And I know Mimi has done a great job of presenting use cases and timing. So we're continuing to look at that. Obviously, we're focused on free cash flow and the opportunities of continuing to improve that. So the opportunities are closer to that than they were in the past.

[Mimi Carsley, executive]

Yes. And JD I would just add on, we always look to, first, is there investments within our own business to accelerate growth. We've been at that 14% R&D for quite some time, but we're always open to think about ways to accelerate our strategy and where we can continue to serve our clients through investments in technology. So that's always a prioritization.

And then the other is we're expecting to pay down the debt substantially. So one thing I would note just from a call out for folks for modeling purposes, you'll see in the next quarter a reclassification of our debt. The term loan A goes current in May in a couple of weeks here. And as we plan to, well, being very mindful of the current ratio, we do anticipate paying that down and shifting some of that to the revolver. So it's not common that a lot of people let their debt go current, but we intend to pay it off.

[John Davis, analyst]

Okay. Great. And then, Greg, it seems like Banno Business is off to a pretty good start. I just would love to get your thoughts longer term where you see the mix of like Banno Business versus retail. I know we're really early innings today, but just how you think about that over the next, call it, 3 to 5 years, just the mix between retail and business in Banno?

[Gregory Adelson, executive]

Yes. Well, we continue -- to your point, I mean, there's part that I think is important for you to understand is that how we do the revenue model for this is that we basically -- it's an add-on to each of -- so the 11.6 million registered users that Dave alluded to, any of our institutions that have a commercial focus that want to add Banno Business, then that add-on price is added to all of their registered users regardless of whether they are being utilized in a business application or not. As you can imagine, there's a lot of small business owners that are hiding in a retail presence today. And so this creates the opportunity to do both.

So for our benefit, any institution that has interest in buying Banno Business, it gets applied to all of their active registered users versus just ones that are kind of allocated to business application. So that's great for us, and that's kind of how we built the model. As far as, again, continued success, we think there's a huge opportunity on the credit union side of our business as we continue to see more and more credit unions get focused on this side.

And that's been a lot of the opportunities that we have right now. And then I think more importantly, as we do take the product outside of the Jack Henry base, we think we're going to be able to go -- take the product further up market, maybe even to some institutions that are much larger than the ones that we support today as part of that.

[John Davis, analyst]

Okay. And then maybe just -- I really appreciate the clarification there, but maybe the better way to rephrase is, what kind of adoption or what percentage of banks adopting of your current base adopting Banno Business, would you guys kind of consider success over the next, let's call it, 3 to 5 years? Is it 30%, 40%, 80%? Just trying some guidepost on how to think about that longer term.

[Gregory Adelson, executive]

I'd say roughly, it's in the 60% to 70% just because a lot of our institutions are commercially focused already. So I would say anything north of 60% would be a fairly decent target.

[David Foss, executive]

I won't be here anymore. Can I vote for 100%.

[Gregory Adelson, executive]

I don't know if we'll get 100%. I'm under-promising. But I really do believe that the -- what we've seen today based on where we are today, anywhere from 60% to 70% is probably a reasonable approach.

[Operator]

Our next question comes from Chris Kennedy of William Blair.

[Cristopher Kennedy, analyst]

I'll echo all the comments for Dave. Just one last one. Just a follow-up to that last question. And clearly, Banno business is a big initiative. But can you just talk about some of the other opportunities and initiatives that you have to capture that commercial banking opportunity, especially within small businesses?

[Gregory Adelson, executive]

Yes, it's a great comment. And actually from -- we have several different kind of what I would call, point-to-point solutions that we have. So we have a treasury management solution that we talk about a lot. So there's a great opportunity to continue to drive that there. We have things that we're doing on the lending side and the account opening side for small businesses that we continue.

We have a small business application in bill pay that we use a business bill pay application things that we do on the remote deposit capture side of our businesses as well. So we have a lot of point-to-point solutions that we utilize today, but one of the focuses that I have, and I've talked about this in individual meetings is a focus on building a cohesive SMB strategy, and we'll continue to talk more about what we're doing, not only with our existing products but what we plan to do as an overarching strategy and solution set.

[Operator]

The next question comes from David Togut of Evercore.

[David Togut, analyst]

Congratulations, Dave, since this is your last call as CEO, perhaps you could give us a final update on kind of the status of your credit card processing initiative. And then maybe to go along with that, you continue to call out the 3 big $20 billion asset banks in the pipe. How important is it to the bigger banks that you have a robust credit card processing offering, perhaps is that more important than it might be for the smaller FIs, which tend to be more debit focused?

[David Foss, executive]

Yes. I don't -- thank you, Dave. I don't think that it's a big item of consideration regardless of the size of the bank. It's all about where they are with their strategy, where they are with their relationship, whoever their process there is. The decision regarding core is a totally independent decision from who am I going to do debit and credit with and what am I looking for as far as functionality and all that.

And I think that whole decision process has been conflated in the industry in the past few years as some of our competitors have tried to sell a narrative that if you have the quarter, you're going to get the card business that's not necessarily true. You have to provide great service and great product on the card side in order to win that business. So they're really divorced of each other.

As far as, where are we at on the credit side, so I didn't mention in my script, but we did sign 3 additional credit customers in the quarter. So we're continuing to make progress there. But you'll recall, Dave, when I first started talking about our move and getting into credit, I said at the time, this will be a slow grower for us. It's not that everybody is looking for Jack Henry to offer credit, but there are some customers who want the same processor to provide dividend credit at the same time on the same platform.

And so it was a necessary offering for us, but we never had an expectation that it was going to be a really fast grower or become a really significant part of our revenue stream and sure enough, that's the position that we're in today. But we have a very complete offering. We have a partnership with another entity to offer agent program. And so I think we're in a great position today, but it has lived up to the expectation that I set with you all years ago. Not a great big grower, not a great big piece of our portfolio, but a nice offering for those customers that want both together.

[Operator]

The next question comes from Ken Suchoski of Autonomous Research.

[Kenneth Suchoski, analyst]

Maybe I think I heard you say that for the full year on non-GAAP revenue growth, I think you might come in towards the low end of that 7.4% to 8% growth range, which I think puts fiscal 4Q non-GAAP revenue growth, maybe slightly below 7%. So I just wanted to make sure I'm thinking about that right. Is there anything that would be driving maybe a slight deceleration. And I guess is that the right jumping off point for fiscal year '25.

[Mimi Carsley, executive]

Yes, Ken, I think that's just the way FY '24 is going to play out. We're still looking at that growth revenue within our growth algorithm of the 7% to 8% longer term, this year will hit within that range. Still, as I mentioned earlier, the payments business, we saw a little bit slower card, nothing that is out of line with what the card networks are seeing. But we believe that the consumer is resilient. We continue to see that.

They're spending more per ticket, but less tickets overall and us being transactional that is having a bit of an impact. So we're seeing really positive growth on card risk business, other monthly services. So it's just a little bit lower on that transactional growth. That's just the way the segments are playing out for this year for Q4. But I wouldn't say that, that has anything from a launching off point for next year of concern.

[Kenneth Suchoski, analyst]

Okay. No, that's really helpful. And then it sounds -- I mean, it sounds like there's a lot of momentum behind Banno and Crimes Defender, we got a few questions just on the slowdown in complementary revenue growth, just I guess, is there anything to call out there in terms of that slowdown just because Banno, I think, is becoming a bigger part of the business and the user growth is quite strong.

[Mimi Carsley, executive]

No, you're right to call it. I mean digital has been a great growth engine for us, and we continue to see robust growth and demand for those solutions. I would say complementary is a portfolio of products. So there's nothing there from a slowing -- and I wouldn't say it's slowed. I mean the numbers are really strong, and they're in line with what we expect year in and year out for the segment.

[Operator]

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

[Vance Sherard, executive]

Thank you, Alan. Our Investor Day has historically been an annual May event. But starting this year, we are moving our Investor Day to September. The meeting will take place on Thursday, September 5, in Dallas. We hope you'll be able to join us and if interested attending in person, please let me know. Executives will be traveling in the coming weeks, and we look forward to attending various investor events. And on behalf of the entire management team, I would like to express our appreciation to all the Jack Henry associates whose efforts produce these outstanding results. .

Finally, I, too, would like to congratulate Dave on his upcoming retirement as CEO. Thank him for his constant willingness to do anything requested on behalf of investors and our 25-year friendship, while working in this great company. Thank you for joining us today. And Alan, will you please provide the replay number.

[Operator]

The replay number for today's call is 877-344-7529 and the access code is 2714678. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.