David Foss: Sure. So in my prepared remarks, I pointed out that we had a couple of banks in the $15 billion to $30 billion range that were at our prospects — I should say, that were at our client conference. I don’t recall — I’ve been doing this for a long time, I may have forgotten one. But I don’t recall us ever having a brand-new prospect over $10 billion come to our client conference to talk to us about core. So, to have two in that range, I think is pretty indicative of the success that we’re having now. And it’s really being driven by tech modernization. The story that we have now and our ability to actually demonstrate things that we’re doing with this new platform, is getting a lot of attention among larger institutions, because they’re trying to figure out how to get to the public cloud environment and they can’t see a path forward with their current provider.
They see that path with Jack Henry. So, I can’t predict when we’ll sign one of these larger institutions, as a new client. But I think the activity right now, gives me great confidence that you’ll see some announcements in the future that are of significant wins in that regional banking space.
Q – David Togut: Understood. Thank you.
Operator: Thank you. The next question comes from Vasu Govil with KBW. Please go ahead.
Q – Vasu Govil: Hi. Thank you. for taking my questions. I guess first I just wanted to follow up on the previous question about the payments segment. Just wondering, when some of the grow-over issues from the remote deposit capture will be kind of behind us? And what should we expect for growth there for the remainder of the year?
Mimi Carsley: Let me start with that. So Vasu, I would say, that the Q1 trends for the payments segment were pretty much in line with what we saw for the full year last year. And we continue to see strength in that business. So I think we’re very positive and optimistic about it. It’s not just transactional, there’s also ancillary revenues in there in services that we continue to expand upon from a portfolio perspective. So that in itself is derisking just the exposure to transactional.
Q – Vasu Govil: Thank you. So, basically, it seems like we should expect this rate 1Q rate to continue through the remainder of the year. Any puts and takes there?
Mimi Carsley: I think that’s a good assumption.
Vasu Govil: Got it. And then a quick one for you Dave. Banno it seems has been a clear success story for you. It’s been a growth driver for several years now. I’m wondering if it’s big enough where you might be willing to give us more visibility on how big it is and how fast it’s growing. And as you think about your total addressable market within your client base how penetrated are we there today with Banno?
David Foss: Within the existing client base yes we’re becoming well penetrated we’re over 50%. But we still have a lot of opportunity particularly on the credit union side of our business. It’s no secret we started with Banno on the banking side and really started to push hard on the banking side. We have not been as forceful maybe. We didn’t have it ready on the credit union side. And we haven’t been as forceful on the credit union side. But that certainly is an area of focus for us. So you’ll continue to see penetration. I mean, when you have the leading digital banking solution in the industry we expect almost all of our core customers will want to consume that at one point or another because they see the differences between that and anything else in the market.
As to the first part of your question, Vasu, we don’t tend to try to size individual products. It’s part of a segment. We provide guidance per segment. But as with everything else we do at Jack Henry, we don’t try to size as far as revenue is concerned on products. I don’t expect us to change that. My real goal in giving you the user counts like we have has been to try and give you as much ammunition to model effectively and kind of create your own view of what we’re doing at Jack Henry. But I don’t expect that we’re going to start to provide revenue visibility guidance on a specific product like Banno.
Vasu Govil: All right. appreciate the color. Thank you very much.
Operator: Thank you. The next question is from Kartik Mehta with Northcoast Research. Please go ahead.
Kartik Mehta: Good morning. Maybe just on free cash flow. I know you said still anticipate about 60% for the year. I’m wondering is it just timing that it’s in the first quarter was this good? Or do you think now maybe that 60% might be a little conservative as we go throughout the year?
Mimi Carsley: Good morning, Karthik. I would say that the quarterly cadence can sometimes be choppy. Our Q1 is always a very strong cash flow quarter. We have the annual maintenance and other strong cash flows coming in Q1. So I would say this year might be more of a U shape than anticipated maybe a little bit more steep than last year. But we’re still on track and optimistic about that 60%.
Kartik Mehta: And then Dave, just I’m sure banks are talking about AI just like every other business. And I’m wondering at JHA Connect if that was a topic that was discussed. And if so if there are ways where Jack Henry could help banks that want to maybe use AI.
David Foss: Yes. So definitely a topic. Everybody who’s anybody seems to be talking about AI these days and trying to figure out what they’re talking about as they’re talking about it. So, two things to keep in mind here. There’s two flavors of AI. There’s the kind of traditional artificial intelligence/machine learning version of AI. And then there’s generative AI the new kind of hot topic ChatGPT if you will. So we’ve been deploying traditional AI for many years. So we’ve had artificial intelligence and machine learning baked into our Banno solution that’s baked into our call center solution. And we do a lot with that and have for quite some time. And especially in our fraud area, we use that technology. So we’ve been demoing that and been able to talk about it effectively for quite some time.
The new twist is with generative AI. And as I mentioned in my prepared remarks, we show generative AI working on the Google platform with our platform solution at the Connect conference. So we had one main stage session. Our Chief Technology Officer was onstage with an executive from Google and a bank CEO, who by the way is a beta customer for us. He specifically made the trip to Connect so he could be onstage and talk about what our generative AI solution — what he thinks it’s going to do to change the operating environment for their bank. We’re not in production with that yet. This is beta. But we definitely expect that we’ll be a player in that space and we’ll be able to help our customers using generative AI. And of course the good news is with the Jack Henry Platform it’s all written on the Google Cloud.
And Google has we believe the best gen AI solution in the market, partly because they have guaranteed they’ll protect PII so private information, as we roll this out. And so we’re very bullish on the opportunity for the future to use that technology to help our customers.
