Today, we are breaking down Jack Henry. If you're not familiar with it, Mark Leonard of Constellation Software once referred to this business as their ‘gold standard.’ Jack Henry is a true best in class operator within the vertical market software space.

To break down the business, I'm joined by Bob Desmond, Portfolio Manager and Head of Claremont Global. Jack Henry sells full operating system software that powers small and mid-sized banks. Like many great vertical market software businesses, M&A has been a piece of the puzzle, but Jack Henry puts a very deliberate focus on organic growth particularly in their core product. The stock has appreciated 480x since its IPO in the mid-eighties, but more recently, has been essentially flat over the past five years, and we get into great business dynamics versus stock dynamics. Please enjoy this Breakdown of Jack Henry.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).

Show Notes

(00:00:00) Learn About Finley

(00:05:42) Jack Henry's Business Model and Market Position

(00:06:22) Colossus Review Announcement

(00:07:04) Deep Dive into Jack Henry's Operations

(00:09:43) Jack Henry's History and Culture

(00:12:44) Customer Focus and Competitive Advantage

(00:16:23) Growth Strategy and Market Dynamics

(00:19:37) Technology and Innovation at Jack Henry

(00:24:08) Customer Integration and Market Share

(00:34:50) Revenue Uplift and Customer Benefits

(00:38:57) Financial Metrics and Margins

(00:40:35) Cash Flow and Dividend Growth

(00:41:53) Cyclicality and Resilience

(00:48:04) Fintech Competition and Partnerships

(00:53:20) Customer Base and Market Shifts

(00:56:17) Risks and Cybersecurity Concerns

(00:59:22) Valuation and Long-Term Growth

(01:02:14) Key Lessons from Jack Henry

Grow, Sell and Retire: Make your business Repulsive