Financial Analysis

"BUSINESS ACQUISITION Victor Technologies, Inc. On September 30, 2025, the Company acquired substantially all the assets of Victor Technologies, Inc. (""Victor"") for $42,390 paid in cash. The primary reason for the acquisition was to expand the Company's capabilities in the Payments-as-a-Service market. Victor is a cloud-native, API-first provider of direct-to-core embedded payments solutions. Management has completed a preliminary purchase price allocation and assessment of the fair value of acquired assets and liabilities assumed. The recognized amounts of identifiable assets acquired, and liabilities assumed, based on their fair values as of September 30, 2025, are set forth below: Current assets $ 1,866 Identifiable intangible assets 18,800 Total liabilities assumed (1,219) Total identifiable net assets 19,447 Goodwill 22,943 Net assets acquired $ 42,390 Measurement period adjustments were made during the second quarter of fiscal 2026, which resulted in an adjustment to the amount recorded for goodwill. The goodwill of $22,943 arising from this acquisition consists largely of the growth potential, synergies, and economies of scale expected from combining the operations of the Company with the acquired operations of Victor, together with the value of Victor's assembled workforce. The goodwill from this acquisition has been allocated to our Payments segment and $22,943 is expected to be deductible for income tax purposes. Identifiable intangible assets from this acquisitio …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

DEBT Credit facilities On August 31, 2022, the Company entered into a five-year senior, unsecured amended and restated credit agreement. The credit agreement allows for borrowings of up to $600,000, which may be increased to $1,000,000 by the Company at any time until maturity. The credit agreement bears interest at a variable rate equal to (a) a rate based on an adjusted Secured Overnight Financing Rate (SOFR) term rate or (b) an alternate base rate (the highest of (i) 0%, (ii) the Prime Rate for such day, (iii) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (iv) the Adjusted Term SOFR Screen Rate (without giving effect to the Applicable Margin) for a one month Interest Period on such day for Dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit agreement is guaranteed by certain subsidiaries of the Company and is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the credit agreement. As of December 31, 2025, the Company was in compliance with all such covenants. The credit facility terminates August 31, 2027. There was $20,000 and $0 outstanding under the credit facility at December 31, 2025, and June 30, 2025, respectively. Other lines of credit On October 31, 2024, the Company entered into a discretionary line of credit demand note, which provided for funding of up to $50,000 and bore interest at the prime rate …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Disaggregation of Revenue The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note 11, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Companys revenue is earned domestically, with revenue from clients outside the United States comprising less than 1% of total revenue. Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Private and Public Cloud $ 202,717 $ 187,139 $ 398,325 $ 369,398 Product Delivery and Services 64,051 56,278 139,863 113,942 On-Premise Support 79,041 79,610 184,471 196,366 Services and Support 345,809 323,027 722,659 679,706 Processing 273,525 250,821 541,412 495,123 Total Revenue $ 619,334 $ 573,848 $ 1,264,071 $ 1,174,829 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

"STOCK-BASED COMPENSATION Our operating income for the fiscal three months ended December 31, 2025, and 2024, included $8,438 and $8,834 of stock-based compensation costs, respectively. Our operating income for the fiscal six months ended December 31, 2025, and 2024, included $14,756 and $15,539 of stock-based compensation costs, respectively. On November 10, 2015, the Company adopted the 2015 Equity Incentive Plan (2015 EIP) for its associates and non-employee directors. The plan expired on November 10, 2025. The plan allowed for grants of stock options, stock appreciation rights, restricted stock shares or units, and performance shares or units. The maximum number of shares that were authorized for issuance under the plan was 3,000. On November 12, 2025, the Company adopted the 2025 Equity Incentive Plan (""2025 EIP"") for its associates and non-employee directors. The plan allows for grants of stock options, restricted stock shares or units, and performance shares or units. The maximum number of shares authorized for issuance under the plan is 4,700. Restricted stock unit and performance unit awards The Company issued unit awards under the 2015 EIP for fiscal 2026 until November 10, 2025, the date on which the 2015 EIP expired. Subsequent to this expiration, unit awards were issued under the 2025 EIP. Restricted stock unit awards (which are unit awards that have service requirements only and are not tied to performance measures) generally vest over a period of 1 to 3 years …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

FAIR VALUE OF FINANCIAL INSTRUMENTS For cash equivalents, certificates of deposit, amounts receivable or payable, and short-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets and liabilities. The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows: Level 1: inputs to the valuation are quoted prices in an active market for identical assets. Level 2: inputs to the valuation include quoted prices for similar assets in active markets that are observable either directly or indirectly. Level 3: valuation is based on significant inputs that are unobservable in the market and the Company's own estimates of assumptions that we believe market participants would use in pricing the asset. Fair values of financial assets and liabilities are as follows: Estimated Fair Value Measurements Total Fair Level 1 Level 2 Level 3 Value December 31, 2025 Financial Assets: Certificates of Deposit $ $ 9,652 $ $ 9,652 Financial Liabilities: Credit facilities $ $ 20,000 $ $ 20,000 June 30, 2025 Financial Assets: Certificates of Deposit $ $ 4,620 $ $ 4,620 Financial Liabilities: Credit facilities $ $ $ $ …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"INCOME TAXES The effective tax rate increased for the fiscal three months ended December 31, 2025, compared to the fiscal three months ended December 31, 2024, with an effective tax rate of 24.1% of income before income taxes, compared to 23.2% in the prior fiscal year quarter. The increase in the Company's effective tax rate was primarily due to differences in the tax impacts of stock-based compensation between the two periods and the tax benefits from the purchase of investment tax credits during the prior fiscal year quarter. For the fiscal six months ended December 31, 2025, the effective tax rate increased compared to the fiscal six months ended December 31, 2024, with an effective tax rate of 24.2% of income before income taxes, compared to 23.6% for the same period last fiscal year. The increase in the effective tax rate for the fiscal six months ended December 31, 2025, was primarily due to differences in the tax impacts of stock-based compensation between the two periods and the tax benefits from the purchase of investment tax credits during the prior fiscal year. The Company paid income taxes, net of refunds, of $24,835 and $65,833 in the fiscal six months ended December 31, 2025, and 2024, respectively. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, introducing significant changes to U.S. federal income tax law. Key provisions affecting the Company include the permanent restoration of immediate expensing for domestic research and development …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES The Company determines if an arrangement is a lease, or contains a lease, at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Right-of-use (ROU) assets represent the Companys right to use an underlying asset for the lease term and lease liabilities represent the Companys obligation to make lease payments arising from the lease. Lease agreements with lease and non-lease components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the Companys leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based upon the information available at commencement date. The determination of the incremental borrowing rate requires judgment and is determined by using the Companys current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease. The Company leases certain office space, data centers, and equipment with remaining terms of 3 months to 7 years. Certain leases contain renewal options for varying periods, which are at the Companys sole discretion. For …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

REVENUE AND DEFERRED COSTS Revenue Recognition The Company generates revenue from data processing and hosting, transaction processing, software licensing and related services, professional services, and hardware sales. Disaggregation of Revenue The tables below present the Company's revenue disaggregated by type of revenue. Refer to Note 11, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Companys revenue is earned domestically, with revenue from clients outside the United States comprising less than 1% of total revenue. Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Private and Public Cloud $ 202,717 $ 187,139 $ 398,325 $ 369,398 Product Delivery and Services 64,051 56,278 139,863 113,942 On-Premise Support 79,041 79,610 184,471 196,366 Services and Support 345,809 323,027 722,659 679,706 Processing 273,525 250,821 541,412 495,123 Total Revenue $ 619,334 $ 573,848 $ 1,264,071 $ 1,174,829 Contract Balances The following table provides information about contract assets and contract liabilities from contracts with clients. December 31, 2025 June 30, 2025 Receivables, net $ 298,458 $ 317,977 Contract Assets - Current 36,860 36,221 Contract Assets - Non-current 122,708 121,675 Contract Liabilities (Deferred Revenue) - Current 193,027 290,485 Contract Liabilities (Deferred Revenue) - Non-current 77,967 72,889 Contract assets primarily result from client discounts (contract incentives) …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"REPORTABLE SEGMENT INFORMATION The Company is a well-rounded financial technology company and is a leading provider of technology solutions and payment processing services primarily to community and regional banks and credit unions. The Companys operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized accountholder information. The Payments segment provides secure payment processing tools and services, including ATM, debit, and credit card processing services, online and mobile bill pay solutions, money movement and embedded payment capabilities, remote deposit capture processing, and risk management products and services. The Complementary segment provides additional software, hosted processing platforms, and services, including digital/mobile banking, treasury services, online account opening, fraud/anti-money laundering (AML) and lending/deposit solutions that can be integrated with the Company's Core solutions, and many can be used independently. The Corporate and Other segment includes revenue and costs from hardware and other products not attributed to any of the other three segments, as well as operating expenses not directly attributable to the other three segments. The Company's Chief Exec …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

SUBSEQUENT EVENTS None.

SubsequentEventsTextBlock