JKHY
Jack Henry & Associates
Recurring SaaS
★ Quality 74/100Price today
$165.64
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What this business is made of
The business
The operating system for 7,500 banks that nobody dares to replace.
Jack Henry provides the core banking software, payment processing, and digital banking for more than 7,500 community banks and credit unions in the U.S. It charges through recurring contracts and per transaction processed: every time someone uses their card or pays a bill, JKHY collects. Revenue of $2.4B, two-thirds recurring.
Switching your core banking system is like changing a patient's heart while they're awake: expensive, risky, and slow. Those switching costs keep the customer tied in for decades. The moat is real, but it's not a monopoly — it competes against Fiserv and FIS, giants with more scale.
Revenue history
From $1.8B to $2.4B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $2.5B · FY2026
Of every $100 in sales, $80 goes to costs and operations; $20 is left as net profit (20% margin).
Catalysts and risks
Cloud migration (Jack Henry platform) that raises margins from the current 43%.
Growth in real-time payments (FedNow), where JKHY connects thousands of small banks.
Consistent buybacks with $0.6B in FCF and a balance sheet with no net debt.
Bank consolidation: each merger of small banks eliminates a customer.
Fiserv and FIS have more scale and can subsidize prices to win contracts.
8% growth doesn't justify a 27.9x multiple if the cloud migration falls behind.
Charlie's note
“A boring business that prints cash: I like it. The problem is the price — paying 28 times cash flow for 8% growth leaves little room for error. Good business, impatient valuation.”
Analysis · June 2026
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