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Jack Henry & Associates, Inc. Reports Full-Year Fiscal 2022 Results

MONETT, Mo., Aug. 16, 2022 /PRNewswire/ -- Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading, well-rounded provider of technology solutions and payment processing services primarily for the financial services industry, today announces results for the fourth quarter and full fiscal year ended June 30, 2022.

Fiscal year summary:

  • GAAP revenue increased 11% and GAAP operating income increased 19% for the fiscal year ended June 30, 2022 compared to the prior fiscal year.

  • Non-GAAP adjusted revenue increased 9% and non-GAAP adjusted operating income increased 13% for the fiscal year ended June 30, 2022 compared to the prior fiscal year.1

  • GAAP EPS was $4.94 per diluted share for the fiscal year ended June 30, 2022, compared to $4.12 for the prior fiscal year.

  • Cash at June 30, 2022 was $48.8 million and $51.0 million at June 30, 2021.

  • Debt related to the revolving credit line was $115 million at June 30, 2022 and $100 million at June 30, 2021.

Fourth quarter summary:

  • GAAP revenue increased 7% and GAAP operating income increased 8% for the fiscal quarter ended June 30, 2022 compared to the prior-year fiscal quarter.

  • Non-GAAP adjusted revenue increased 8% and non-GAAP adjusted operating income increased 13% for the fiscal quarter ended June 30, 2022 compared to the prior-year fiscal quarter.1

  • GAAP EPS was $1.10 per diluted share for the fiscal quarter ended June 30, 2022, compared to $1.04 in the prior-year fiscal quarter.

Full-year fiscal 2023 guidance:

  • GAAP revenue $2,080 million to $2,087 million

  • GAAP EPS $5.05 to $5.09

  • Non-GAAP revenue $2,045 million to $2,052 million2

Key Call Outs
Key Call Outs

According to David Foss, Board Chair and CEO, "We are very pleased to report another quarter of record revenue, operating income, and total sales bookings. Among many other successes, our sales teams secured 17 new core clients and sold 48 new digital banking systems in the quarter. Additionally, we have recently announced the addition of a new CFO to our team, a refreshed brand for our company, and the pending acquisition of Payrailz. As we begin the new fiscal year, our sales pipeline remains strong, and we see significant opportunities to continue growing our company through the successful execution of our technology modernization and One Jack Henry operational strategies. As a well-rounded financial technology provider, we remain optimistic about the strength of our innovative technology solutions around digital, lending, payments, core solutions and open banking as well as our ability to deliver outstanding service in a market that is widely expected to continue to increase technology and digital investments in the future."

1 See tables below reconciling non-GAAP financial measures to GAAP.
2 See tables below reconciling fiscal year 2023 GAAP to non-GAAP guidance.
3 See tables below on page 12 reconciling Net Income to non-GAAP EBITDA.

Operating Results

Revenue, operating expenses, operating income, and net income for the three months and fiscal year ended June 30, 2022, as compared to the three months and fiscal year ended June 30, 2021, were as follows (all dollar amounts in this section are in thousands, except for per share amounts):

Revenue (Unaudited)












(In Thousands)

Three Months Ended

June 30,


%
Change


Year Ended

June 30,


%
Change


2022


2021




2022


2021



Revenue












Services and Support

$  279,740


$   261,697


7 %


$ 1,156,365


$  1,048,206


10 %

Percentage of Total Revenue

58 %


58 %




60 %


60 %



Processing

202,932


188,590


8 %


786,519


710,019


11 %

Percentage of Total Revenue

42 %


42 %




40 %


40 %



REVENUE

$  482,672


$   450,287


7 %


$ 1,942,884


$  1,758,225


11 %

 

  • Services and support revenue increased for fourth quarter fiscal 2022 primarily driven by growth in cloud processing revenue of 12.3% and increased implementation fee revenue, partially offset by a decrease in deconversion fees of $3,009. Processing revenue increased for the fourth quarter fiscal 2022 primarily driven by growth in Jack Henry digital revenue of 31.3%, and increased card processing revenue. Other increases were in payment processing and remote capture and automated clearinghouse (ACH) fee revenues.

  • Services and support revenue increased for fiscal 2022 primarily driven by growth in cloud processing revenue of 12.0% and an increase in deconversion fees of $32,644. Other increases were in implementation fee and software usage fee revenues. Processing revenue increased for fiscal 2022 primarily driven by growth in card processing of 8.1%. Other increases were in Jack Henry digital, remote capture and ACH fee, and payment processing revenues.

  • For fourth quarter fiscal 2022, core segment revenue increased 8%, payments segment revenue increased 5%, complementary segment revenue increased 9%, and corporate and other segment revenue increased 22%. Non-GAAP adjusted core segment revenue increased 9%, non-GAAP adjusted payments segment revenue increased 5%, non-GAAP adjusted complementary segment revenue increased 10%, and non-GAAP adjusted corporate and other segment revenue increased 21% (see revenue lines of segment break-out tables on page 5 below).

  • For fiscal 2022, core segment revenue increased 10%, payments segment revenue increased 10%, complementary segment revenue increased 11%, and corporate and other segment revenue increased 14%. Non-GAAP adjusted core segment revenue increased 8%, non-GAAP adjusted payments segment revenue increased 9%, non-GAAP adjusted complementary segment revenue increased 9%, and non-GAAP adjusted corporate and other segment revenue increased 13% (see revenue lines of segment break-out tables on page 6 below).

Operating Expenses and Operating Income

(Unaudited, In Thousands)

Three Months Ended

June 30,


%
Change


Year Ended

June 30,


%
Change



2022


2021




2022


2021




Cost of Revenue

$  286,815


$   274,918


4 %


$  1,128,614


$  1,063,399


6 %


Percentage of Total Revenue

59 %


61 %




58 %


60 %




Research and Development

33,961


28,814


18 %


121,355


109,047


11 %


Percentage of Total Revenue

7 %


6 %




6 %


6 %




Selling, General, and Administrative

58,124


50,259


16 %


218,296


187,060


17 %


Percentage of Total Revenue

12 %


11 %




11 %


11 %




OPERATING EXPENSES

378,900


353,991


7 %


1,468,265


1,359,506


8 %















OPERATING INCOME

$   103,772


$    96,296


8 %


$  474,619


$   398,719


19 %


Operating Margin4

22 %


21 %




24 %


23 %




  • Cost of revenue increased for fourth quarter fiscal 2022 primarily due to higher costs associated with our card processing platform commensurate with related increases in revenue, operating licenses and fees, and personnel costs. Cost of revenue increased for fiscal 2022 primarily due to higher costs associated with our card processing platform commensurate with related increases in revenue, personnel costs, and operating licenses and fees.

  • Research and development expense increased for fourth quarter and fiscal 2022 primarily due to higher personnel costs (net of capitalized personnel costs).

  • Selling, general, and administrative expense increased for the fourth quarter fiscal 2022 primarily due to higher personnel costs and travel expenses. Selling, general, and administrative expense increased for fiscal 2022 primarily due to higher personnel costs and travel expenses, a smaller gain on sale of assets in the current fiscal year, and an increase in deconversion costs in line with the associated increase in deconversion revenues.

Net Income

(Unaudited, In Thousands,

Except Per Share Data)

Three Months Ended

June 30,


%
Change


Year Ended

June 30,


%
Change


2022


2021




2022


2021



Income Before Income Taxes

$    102,792


$     95,683


7 %


$    472,267


$    397,725


19 %

Provision for Income Taxes

22,366


18,821


19 %


109,351


86,256


27 %

NET INCOME

$    80,426


$     76,862


5 %


$    362,916


$     311,469


17 %

Diluted earnings per share

$        1.10


$       1.04


6 %


$      4.94


$       4.12


20 %

  • Effective tax rates for the fourth quarter of fiscal years 2022 and 2021 were 21.8% and 19.7%, respectively. Effective tax rates for fiscal years 2022 and 2021 were 23.2% and 21.7%, respectively.

  • The Company repurchased 1.25 million shares of common stock during fiscal 2022 and 2.80 million shares of common stock during fiscal 2021. Common stock repurchases during fiscal 2022 contributed $0.02 to diluted earnings per share for the fourth quarter fiscal 2022 and $0.05 for the full fiscal year. Common stock repurchases during fiscal 2021 contributed $0.04 to diluted earnings per share for the fourth quarter fiscal 2021 and $0.07 for the full fiscal year.

4 Operating margin is calculated by dividing operating income by revenue.

According to Kevin Williams, CFO and Treasurer, "For the fourth quarter of the fiscal year, our private cloud and processing services continue to drive revenue growth. As we guided in May our deconversion fees decreased in our fourth fiscal quarter compared to a year ago. We reported solid 7% GAAP and 8% non-GAAP revenue growth compared to the prior year quarter. Operating margins were flat on a GAAP basis due to lower deconversion revenue in the quarter, but nice margin expansion on a non-GAAP basis compared to the prior year. We continue to be pleased to report our Return on Average Shareholders' Equity and Return on Invested Capital (ROIC) of 26.9% and 24.9%, for the trailing twelve months, respectively, which improved nicely from 21.7% and 21.0%, respectively, for those same financial performance metrics a year ago. Our dedicated team continues to follow the company motto of do the right thing and do whatever it takes to ensure the continued success of our customers."

Impact of Non-GAAP Adjustments

The table below shows our revenue and operating income (in thousands) for the three months and fiscal year ended June 30, 2022 compared to the three months and fiscal year ended June 30, 2021, excluding the impacts of deconversion fees and acquisitions, divestitures, and gain/loss.

(Unaudited, In Thousands)

Three Months Ended June 30,


%
Change


Year Ended June 30,


%
Change


2022


2021




2022


2021















Revenue (GAAP)

$    482,672


$    450,287


7 %


$  1,942,884


$  1,758,225


11 %













Adjustments:












Deconversion fee revenue

(5,222)


(8,231)




(53,279)


(20,635)



Revenue from acquisitions and divestitures





(274)


(1,182)















NON-GAAP ADJUSTED REVENUE

$    477,450


$    442,056


8 %


$   1,889,331


$  1,736,408


9 %

























Operating Income (GAAP)

$     103,772


$     96,296


8 %


$    474,619


$    398,719


19 %













Adjustments:












Operating income from deconversion fees

(3,980)


(7,617)




(47,002)


(18,721)



Operating (income)/loss from acquisitions, divestitures, and gain/loss





371


(2,409)















NON-GAAP ADJUSTED OPERATING INCOME

$     99,792


$     88,679


13 %


$   427,988


$   377,589


13 %

 

The tables below show the segment break-out of revenue and cost of revenue for each period presented, as adjusted for the items above, and include a reconciliation to non-GAAP adjusted operating income presented above.

(Unaudited, In Thousands)

Three Months Ended June 30, 2022


Core


Payments


Complementary


Corporate
and Other


Total

REVENUE

$   151,480


$   177,323


$        140,296


$    13,573


$  482,672

Non-GAAP adjustments

(1,872)


(1,236)


(2,035)


(79)


(5,222)

NON-GAAP ADJUSTED REVENUE

149,608


176,087


138,261


13,494


477,450











COST OF REVENUE

63,553


97,531


59,495


66,236


286,815

Non-GAAP adjustments

(341)


(122)


(260)


(3)


(726)

NON-GAAP ADJUSTED COST OF REVENUE

63,212


97,409


59,235


66,233


286,089











NON-GAAP ADJUSTED SEGMENT INCOME

$   86,396


$   78,678


$        79,026


$   (52,739)













Research and Development









33,961

Selling, General, and Administrative









58,124

Non-GAAP adjustments unassigned to a segment








(516)

NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES








377,658











NON-GAAP ADJUSTED OPERATING INCOME








$   99,792

 

(Unaudited, In Thousands)

Three Months Ended June 30, 2021


Core


Payments


Complementary


Corporate
and Other


Total

REVENUE (GAAP)

$  140,843


$   169,551


$        128,735


$     11,158


$  450,287

Non-GAAP adjustments

(3,162)


(1,852)


(3,189)


(28)


(8,231)

NON-GAAP ADJUSTED REVENUE

137,681


167,699


125,546


11,130


442,056











COST OF REVENUE

61,579


93,170


53,990


66,179


274,918

Non-GAAP adjustments

(129)


(107)


(189)



(425)

NON-GAAP ADJUSTED COST OF REVENUE

61,450


93,063


53,801


66,179


274,493











NON-GAAP ADJUSTED SEGMENT INCOME

$    76,231


$   74,636


$         71,745


$  (55,049)













Research and Development









28,814

Selling, General, and Administrative









50,259

Non-GAAP adjustments unassigned to a segment








(189)

NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES








353,377











NON-GAAP ADJUSTED OPERATING INCOME








$   88,679

 











(Unaudited, In Thousands)

Year Ended June 30, 2022


Core


Payments


Complementary


Corporate
and Other


Total

Revenue

$  622,442


$   707,019


$         561,211


$    52,212


$ 1,942,884

Non-GAAP adjustments

(23,048)


(14,319)


(15,863)


(323)


(53,553)

Non-GAAP Adjusted Revenue

599,394


692,700


545,348


51,889


1,889,331











Cost of Revenue

261,585


380,954


232,088


253,987


1,128,614

Non-GAAP adjustments

(1,719)


(439)


(1,510)


(327)


(3,995)

Non-GAAP Adjusted Cost of Revenue

259,866


380,515


230,578


253,660


1,124,619











Non-GAAP Adjusted Segment Income

$  339,528


$   312,185


$        314,770


$   (201,771)













Research and Development









121,355

Selling, General, and Administrative









218,296

Non-GAAP adjustments unassigned to a segment








(2,927)

Non-GAAP Total Adjusted Operating Expenses








1,461,343











Non-GAAP Adjusted Operating Income









$  427,988

 











(Unaudited, In Thousands)

Year Ended June 30, 2021


Core


Payments


Complementary


Corporate
and Other


Total

Revenue

$  564,096


$  642,308


$       505,928


$   45,893


$ 1,758,225

Non-GAAP adjustments

(8,638)


(6,285)


(6,777)


(117)


(21,817)

Non-GAAP Adjusted Revenue

555,458


636,023


499,151


45,776


1,736,408











Cost of Revenue

247,150


353,581


212,627


250,041


1,063,399

Non-GAAP adjustments

(1,178)