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Jack Henry (JKHY) Q2 Earnings Beat, Revenues Miss Estimates

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Jack Henry & Associates, Inc. JKHY reported second-quarter fiscal 2021 earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate by 6.8%. However, the bottom line fell 21% sequentially and remained flat year over year.

Revenues improved 1% year over year but declined 6.5% sequentially to $422.4 million. Further, the top line missed the Zacks Consensus Estimate of $431.9 million.

The company’s non-GAAP revenues were $420.2 million, up 2.4% from the year-ago quarter but down5.8% from the prior quarter.

Year-over-year revenue growth was driven by strength across Core, Payments and Complementary segments in the reported quarter. Additionally, accelerating processing revenues contributed to the results.

However, sluggishness in the Corporate segment, and declining services and supportrevenues were overhangs.

Notably, Jack Henry’s stock has lost 6% over a year compared with the industry’s rise of 6.2%.

Top Line in Detail

Services & Support: The company generated revenues of $250.9 million from this category (59% of revenues). Notably, the figure declined 2% from the year-ago quarter due to a decrease in deconversion fee revenues. Nevertheless, the company witnessed growth in data processing and hosting fees in the reported quarter.

Processing: The category yielded revenues of $171.5 million (41% of revenues) in the reported quarter, up 5% year over year. This can be attributed to growth in processing transaction volumes,which led toa hike in digital and remittance revenues.

Segments in Detail

Core: The company generated revenues of $134.9 million from the segment (32% of total revenues), improving 1% year over year.

Payments: The segment yielded revenues of $155.2 million (36.7% of total revenues), increasing 2% from the year-ago quarter.

Complementary: The segment generated $121.4 million revenues (28.7% of total revenues), increasing 3% year over year.

Corporate & Other: The company generated revenues of $10.8 million from the segment (2.6% of total revenues), down 28.9% from the prior-year quarter.

Operating Details

In second-quarter fiscal 2021, total operating expenses were $328.7 million, reflecting a year-over-year increase of 1%. This can primarily be attributed to higher personnel costs and rising expenses related to the company’s card processing platform.

As a percentage of revenues, the figure expanded 20 basis points year over year to 77.8%.

Notably, operating margin was 22% in the reported quarter, which remained flat on a year-over-year basis.

Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise

Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise
Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise

Jack Henry & Associates, Inc. price-consensus-eps-surprise-chart | Jack Henry & Associates, Inc. Quote

Balance Sheet

As of Dec 31, 2020, cash and cash equivalents totaled $147.8 million, which decreased from $195.3 million as of Sep 30, 2020.

Trade receivables were $212.9 million in the reported quarter, down from $223 million in the previous quarter.

Further, the current and long-term debt stood at $266,000 at the end of the fiscal second quarter compared with $295,000 at the end of first-quarter fiscal 2021.

Guidance

For fiscal 2021, the company’s projection for GAAP revenues remains unchanged at $1.76 billion-$1.77 billion. Notably, the Zacks Consensus Estimate for revenues is projected at $1.75 billion.

Further, the company expects non-GAAP revenues between $1.73 billion and $1.74 billion.

Further, the company raised the earnings per share outlook for fiscal 2021 from $3.75-$3.80 to $3.85-$3.90. The Zacks Consensus Estimate for the same is pegged at $3.80 per share.

Zacks Rank & Stocks to Consider

Jack Henry currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Take Two Interactive TTWO, CDW Corporation CDW, and CrowdStrike CRWD. All companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for Take Two Interactive, CDW and CrowdStrike are currently pegged at 11.98%, 13.1% and 25%, respectively.

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