1) Financial Performance Highlights
- Record Q3 results with non-GAAP revenue of $616 million, up 7.3% YoY.
- Non-GAAP operating margin remained strong at 22.9%, consistent with last year's Q3.
- GAAP revenue increased by 9%, with deconversion revenue at approximately $19 million, reflecting ongoing M&A activity among financial institutions.
- Operating cash flow was $186 million, a 72% increase YoY, and free cash flow reached $122 million, up 137% YoY.

2) Sales and Market Dynamics
- Achieved 17 competitive core wins, the best third quarter in 7 years, including 5 institutions with over $1 billion in assets.
- Year-to-date, 43 core deals won, up from 28 last year, with confidence to exceed last year's total of 51 core wins.
- 58% of core wins included trifecta solutions (digital banking and card solutions), up from 29% last year, indicating stronger client relationships.

3) Strategic Initiatives and Product Development
- Continued investment in AI, with nearly 100 approved tools enhancing productivity across various departments.
- Progress on stablecoin strategy with successful beta testing for USDC transactions, awaiting regulatory guidance.
- Significant traction with Tap2Local, now live with over 700 banks, and Rapid Transfers with 110 banks onboarded, indicating strong early momentum.
- Development of a cloud-native deposit-only core is ahead of schedule, with client testing underway.

4) Guidance and Outlook
- Increased fiscal 2026 full-year GAAP revenue growth guidance to 6.1% to 6.6% and non-GAAP revenue growth guidance to 6.6% to 7.1%.
- Anticipated lower revenue growth in Q4 due to slowing digital revenue and increased expenses from medical costs and cloud migration.
- Projected non-GAAP margin expansion for the full year increased to 75 to 95 basis points from the previous 20 to 40 basis points.
- Full-year GAAP EPS guidance raised to $6.78 to $6.87, reflecting a 9% to 10% growth.

5) Challenges and Competitive Landscape
- Potential headwinds include normalization of medical expenses and lower network incentive revenue impacting margins in Q4.
- The competitive landscape remains dynamic, with ongoing consolidation among providers, which may impact RFP activity.
- The company is confident in its ability to navigate these challenges, supported by a strong pipeline and robust client demand for technology investments.

Bottom line: Jack Henry's strong Q3 performance, driven by record core wins and strategic investments in AI and innovative solutions, positions the company well for continued growth. Despite anticipated challenges in Q4, the overall outlook for fiscal 2026 remains positive, with increased guidance reflecting confidence in sustained demand and margin expansion.