Mimi Carsley : Good question, Vasu. I think generally, the tightening was more so based on our confidence as we’re now halfway through the year with strong results in already banked in the ability to really center around that guide. So, I think it’s more that than thinking about the top end coming down, just feeling more and more confident about that midpoint. We still have a second half to do here and a decent amount of growth that we have anticipated in our plans, especially in Q3 and Q4 around processing around card, around our payments business. So too early yet to say it’s going to be higher than that, but very confident in our ability to deliver.
Operator: The next question is from Kartik Mehta of Northcoast Research.
Kartik Mehta : Steve, you’ve commented a lot on core and obviously, Jack Henry is doing well. But as you look at the market, what would you anticipate in terms of a number of core deals? I know when COVID happened, it’s kind of flipped and then we went back to kind of normal. So, as you look at 2024, what would you anticipate the number of deals that might show up in the marketplace?
David Foss : Well, it’s a pretty predictable number. Every year, it’s somewhere around 100 deals in total that happened per year as far as somebody leaving whoever is their current provider and going to a different provider. That’s not, hey, I’m staying with my same provider and switching to another system. It is going to a different provider. Normally, about 100 deals a year is a good number to use on average.
Kartik Mehta : Perfect. And you’ve talked about, obviously, the sales pipeline being very strong. I think Greg talked about maybe hiring more people. And as you look at your sales pipeline kind of look out forward, how much confidence can you look at that revenue that’s going to come up in terms of the number of quarters you feel good that as that revenue converts that you’ll be able to put up kind of this high single-digit revenue growth?
David Foss : Yes. On the core side, we have very accurate predictability. We have — we go through this monthly the chart as far as the core conversions that are slotted, whether it’s a new core customer coming in, it’s a customer moving from in-house to our private cloud environment. Or if it’s a customer who’s acquiring another institution, and we’re merging them in. We have all those things. We have great dashboard tools that we use at Jack Henry. So, it’s very predictable for us.
Mimi Carsley : Kartik, if I can add on. The only add-on I would say, is we look at that on an annual basis. So, in any one quarter, depending on prior year, the comp of the size of the organization that was being implemented or migrated versus this year, the size of an organization still feels confident in that number, but it can vary quarter-to-quarter depending on just the roster of slots and the profile of those customers. So that’s the only color I would add.
Kartik Mehta : Just one last question, maybe for you. You talked a little bit about free cash flow and let’s assume that the legislation doesn’t pass, but you still seem confident that maybe there’s upside to the original guide on free cash flow conversion. And I’m wondering maybe what’s behind that or what’s changed since the original guide to give you confidence that maybe it will be better.
Mimi Carsley : Yes. I think a couple of things that are coming in. One is just the certainty of the results that we have year-to-date. The other is, as we lowered the tax rate as part of the guide, that helps from a cash flow as well. So, there’s just a couple of small components as we fine-tune the free cash flow forecast for the remainder of the year that makes me feel comfortable about there being upside there.
Operator: The next question comes from Cris Kennedy of William Blair.
Cris Kennedy: Good morning, and thanks for taking my question. Congratulations to Greg and David. Regarding the technology initiatives, is there a way to think about the revenue opportunity associated with that? And if you could maybe frame it against the private cloud transition that you guys have been going through for the last 10 years or so.
Greg Adelson: Yes, I think it’s — you have to think about it differently than the private cloud transition because that was truly pulling, as Dave has alluded to many times, pulling a customer out and it was typically a 2x kind of thing. I don’t think that when you look at the tech modernization because depending on the number of components that are purchased and really the advent of the timing of some of that, it isn’t a take everything we have today and move it over. So, it isn’t that same level of, I think, revenue growth. But the part that is exciting for us is the ability to take these components drive again, an additional wedge into the relationship and create that opportunity for larger customers or smaller customers to dip their toe into the public cloud.
And as Dave has said many, many times, I mean, there’s a lot of our customers that aren’t ready to do this. There are some that are already and part of our beta process today. So that’s going to be a constant evaluation of the timing of when that big hit comes. But we do know that it’s coming based on the feedback that we’re getting from some of the larger institutions that we’ve been speaking to because they’re more apt to do this sooner than later. And so just continued growth in that path. But there’s still some time to be taken before we can give much certainty or what I would say, certainty on some of the revenue parts of this.
David Foss : The other thing I’ll add to this, Cris, it’s important to keep in mind, there are components that will be offered now. This is not an apples-to-apples comparison of the old core versus new core. The way we used to think of core and now it’s just the same thing, it’s not a different platform. There are components that we’ll be offering with this that nobody has ever offered before. And Greg alluded earlier to Data Broker. That has not been an offering. That has not been a thing as far as the industry is concerned. That’s brand-new opportunity, brand-new revenue. It’s part of the core offering, if you will, in the future, but there are several other examples like that, that create revenue upside opportunity, but it’s not — you just have to think about it differently than the way we’ve thought previously about converting a core from one platform to another.
Greg Adelson: Yes. And I think 1 thing I do want to add is that we’ll get to a point where we talk about platform as really the driver of what sits on that platform. So, data broker or executive dashboard or open banking solutions, other things, like we already mentioned, Defender, Banno, all those components are all going to sit on the platform and will drive additional revenue.
Cris Kennedy: Understood. And then just following up on — in the press release, you talked about 28.5% growth of digital revenue in the first half of the year. Is there a way to think about the contribution from digital within the services and support revenue?
Mimi Carsley : Yes. Let me get back with you on that detail.
Operator: The next question comes from Andrew Schmidt of Citi.
Andrew Schmidt : Dave, Greg, Mimi, thanks for having me on the call. So, a quick question on just the core win side of things. You mentioned the funnel, the number of RFPs being relatively consistent. But I’m curious if there’s been any changes in win rates just given what you’re seeing in the competitive environment? It seems clearly advantageous from a competitive perspective. So, I’m curious if there’s any changes on the win rate front.
David Foss : Yes, Andrew, I don’t think there’s anything notable. Again, with only 100 deals happening per year, we’re in the 50 to 55 or have been down for a while, 50 to 55. So, we’re winning more than half of those opportunities per year. I don’t know that there’s anything — getting to 60 is a big deal for us. But from a percentage basis, that doesn’t look real huge. So, I don’t think I would call out anything as being significant. Our challenge and our job is to make sure we maintain that rate because, as I said before, we are by far leading the industry. And as long as we maintain that rate, that bodes well for us as far as our algorithm — forward-looking algorithm of revenue growth and so on. So, nothing significantly notable there.
Andrew Schmidt: Got it. Makes a ton of sense. And then if you talk about just the views on acceptance of the public cloud, you’re hearing that it’s slow, but obviously, attitudes are changing towards more comfort with having things like the general ledger in the cloud. Maybe you could just talk through the process that FIs have to work through for themselves to be comfortable with hosting things like general ledger in broader core components in the cloud, that would be great.
David Foss : Yes. It’s an interesting question, an interesting topic, frankly. I’ve been doing this for a long time and kind of listening to and talking to all the financial institutions that we talk to, they all want to get there. They’re all trying to figure out how do we get there. They just — many of them are not quite sure how to get there. And with the regulatory environment that we live in, regulators are not saying, “Hey, we think you should go do this.” So, there’s a lot of walk before you run happening where people — and that’s part of where our Jack Henry platform strategy really, really positions us well because our strategy allows people to do is adopt a modularized approach. I’m going to do wires in the public cloud and kind of see how that goes and make sure I don’t have a regulator knock on my door and say, “What are you guys doing?” So, they can kind of ease into the public cloud environment.
But we have several of our noncore solutions today, fully public cloud. Savanna was there, Financial Crimes Defender, some that we’ve talked about today. But as far as the core functionality, this whole strategy allows people to walk before they run, and that is appealing to a lot of folks that we’re talking to. And so, we think that’s going to help with the question that you’re asking.
Operator: And our next question comes from James Faucette of Morgan Stanley.
James Faucette : Great. Greg and Dave extend my congratulations to both of you. I want to ask just in terms of the implementation resources. I think you’ve talked about 150-plus clients in implementation for Financial Crimes Defender and another 70 for Banno business. I’m just wondering if there’s any benefit or should we think about potentially increasing committee increasing resources to accelerate those implementations a bit? Or do you feel pretty comfortable with the pacing that you’ve got right now?
