David Foss : No, that’s a great insightful question. So, we do that on a regular basis. So, we meet with the team on a monthly basis based on installation queues. So, we do look at what the time is to do an implementation for a particular product. Can we add resources that will add value in getting those — that revenue on the — into the company faster? So, to your point, we do that on a regular basis for all of our products.
James Faucette: Got it. Got it.
Greg Adelson: Some of it, James, is also tied to just the timing of the — like Dave just mentioned a lot of sales. So, some of it is the timing of that as well.
James Faucette: Okay. Got it. Got it. But for now, we should think about you feeling like that you’re in pretty good shape from what you’re spending off from an implementation standpoint, et cetera.
David Foss : That’s correct.
James Faucette: Okay. And then just thinking about — I know this topic that’s been talked about for a long time, but any change in the overall environment around M&A? And it seems like there continues to be at least pull down of private valuations, et cetera. But I’m just wondering what you’re seeing in that market and if their potential assets that are particularly attractive, especially from a technology perspective. Just taking your temperature on potential for M&A?
David Foss : So, you know well, you followed us for a long time, James. You know well, how much we love to love to be involved in deals and we love to do deals. I will just tell you, we don’t have a single deal sitting for review right now at Jack Henry. It’s there’s still a slow, slow time. There are certainly companies out there that we’d be interested in, but not a single deal on the table right now.
Operator: The next question comes from Dave Koning of Baird.
Dave Koning : Just a couple of quick ones. First of all, EPS guide, at the midpoint, it was raised by about $0.10. And it looks like maybe $0.01 to $0.02 on EBIT is higher, a few cents on tax, but it seems like there’s about $0.05 I can’t reconcile, where might that be?
Mimi Carsley : So, on the EPS, I would say it’s about $0.01 or $0.02 for operational. And then the remaining split is about 50-50 is the difference in the tax rate plus interest — net interest income that we’re earning based on higher interest rates.
Dave Koning: Got you. I’m sure you know of many banks that will pay good rates. So — and then I guess, secondly, just on January payments volumes, many kinds of competitors and the industry participants called out the first two or three weeks being pretty slow. It sounds like maybe the back part of January got better, but what have you seen kind of through January and maybe even into early February, just in payments volumes.
Mimi Carsley : Yes. I would say, overall, our volume transaction nears Visa and Mastercard domestic, pretty similarly, we did see the same experiences that they have talked about publicly about January weather and who knows right now is all the rains in California of that. But what we saw typically by the end of January with some rebounding from those very temporary lows.
Operator: The next question is from Dominick Gabriele of Oppenheimer.
Dominick Gabriele : Thanks for everything, Dave, and looking forward to working with you, Greg. I guess we’ve been talking to investors in your quarter since the management team change announcement. And Greg, talk about what you’ve learned under Dave and being a part of the Jack Henry team over the years that should give investors’ confidence that the new management team, including Mimi, who’s done a great job, obviously, since her start, we’ll continue executing with the same consistency in the years to come.
Greg Adelson: And I think it just starts with a culture that we’ve built for 47 years here, and it’s a very collaborative approach. We work very tightly together. And between my time with Dave, I’ve done a lot of — I was heavily involved in the card work that happened years ago. Obviously, if some of the M&A that we’ve done in the Payments group when I led the payments group. And just I think from a philosophy standpoint, Dave and I are very much aligned on how we look at things, how we evaluate what we do for our three pillars of success that we always talk about our associates, clients and shareholders. And so, I don’t think you’re going to see very much change at all. A lot of the same level of consistency on how we think and operate there’ll be some nuances and opportunities where some things that I have in my background and what Dave had in his background, so I’m hoping that those will all be things that we can add to.
But the reality is that I spent 13 years at this company, and all 13 have been working for Dave directly. So, I would say there’s a lot of consistency that you should look forward to.
David Foss : Greg is a snappier dresser than I am.
Dominick Gabriele: And then if maybe if we could just dive in a little bit deeper on the guidance, I was just looking at the slides from this quarter to last quarter. And it looked like there was a rise in the non-GAAP revenue expectation, but a lowering of the high end of GAAP revenue. I was just curious on what would cause that debt deviation since the deconversion fees are versus stable?
Mimi Carsley : So, I just want to make sure I understand your question, Dom. You’re saying you’re seeing a greater change in non-GAAP? Or you’re saying you’re seeing a greater change in GAAP?
Dominick Gabriele: It looks like from what I saw that the range was a little higher in — on the growth in non-GAAP revenue, but then you took down the high end of the GAAP revenue, maybe I don’t have that right, but I.
Mimi Carsley : Yes. Let me look further into it, but I have nothing that comes to mind. It should be more of a flow-through because we’re keeping the deconversion guide for the full year at 16%. So, there’s not much that’s changing there. So, you should see a similar pattern non-GAAP and GAAP.
Dominick Gabriele: Excellent. That’s what I would have thought. Okay. Perfect. And then maybe just one last one. If you guys could just talk to us about your business investment strategy in terms of expense dollar allocation as you look forward. We’ve obviously — at least versus my model, the expenses were much better than what I was expecting for the quarter. And I know there’s some seasonality, but talk about the expense investment versus accelerating revenue strategy.
Mimi Carsley : So, Dom, I would say a couple of things this quarter and that will also impact the full year and therefore, the guide. 2 things. One is the — not just the timing of the Connect conference, but the Connect conference was even more successful than last year. So, from a profitability perspective, that helped for margins and expenses being lower. The other is the decision we made around a onetime change in the change in timing of our merit for our associate population. And so that also helps from a straight through to the bottom line from an expense perspective. But as always, and with consistency, we not only zero-based budget, but we look and think about the investments, the amount of spend going to our top projects and top products, the amount from a capitalization in R&D.
You saw the consistency of the 14% of R&D spend. So, we’re always thinking about how to invest for our future, thinking about what those business plans look like and what that ROI looks like and the bandwidth of the organization. So, I think there’ll be more consistency from a spending towards future that you’ve seen in the past. And I think some of the margin expansion was just due to a heightened focus on cost control, and that some of the changes that we’ve made from the merit timing.
Operator: And next, we have a question from Ben Varga of Autonomous Research.
Ben Varga : I just wanted to echo everyone else’s congratulations on the leadership transition. My first question is about Banno business. It’s great to see the initial client interest, I guess. In terms of the implementations that you have in the Q, how long does it typically take until those opportunities start contributing to revenue?
David Foss : Yes, it’s really a timing thing based on the client themselves. Honestly, an implementation of Banno business is less than 60 days. So, some of those are tied to core deals. Some of those are tied to other product implementations. So really, it’s dependent more on the client than it is on Jack Henry. And kind of back to the question earlier, that James had related to that. So, some of that is really — we try to push the clients along, but it’s not necessarily a Jack Henry lag as it is waiting for the client. So — but it’s 60 days or less if they’re ready to go.
