Jack Henry (JKHY) Q3 Earnings Top Estimates, Revenues Rise Y/Y
Jack Henry & Associates, Inc. JKHY released third-quarter fiscal 2023 earnings of $1.12 per share, which beat the Zacks Consensus Estimate by 2.8%. The bottom line decreased 3.4% from the year-ago quarter’s reported figure.
Revenues improved 6% from the year-ago quarter’s reading to $508.6 million. The figure surpassed the Zacks Consensus Estimate of $501.2 million.
JKHY’s non-GAAP revenues were $499.7 million, up 8% from the year-ago quarter’s level.
Top-line growth was driven by increased processing revenues. A rise in services and support revenues contributed well.
Strong momentum across the Core, Payments, Complementary and Corporate segments drove the results further.
Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise
Jack Henry & Associates, Inc. price-consensus-eps-surprise-chart | Jack Henry & Associates, Inc. Quote
Top-Line Performance
Services & Support: Jack Henry generated revenues of $291.9 million from the category (57% of revenues). The figure grew 3% from the year-ago quarter’s level, owing to a 12% rise in data processing and hosting fees. Also, accelerating hardware revenues were positives.
However, a 65% decline in deconversion fees was concerning.
Processing: The category yielded $216.6 million (43% of revenues) in the reported quarter, up 11% from the year-ago quarter’s actuals. This can be attributed to 9% growth in Jack Henry's card-processing revenues. Also, an increase in payment processing and digital revenues contributed well.
Segments in Detail
Core: Revenues totaled $156.9 million (30.9% of top line), up 4% from the year-ago quarter.
Payments: Revenues summed up to $191.8 million (37.7% of the total revenues), increasing 6% from the year-ago quarter.
Complementary: Revenues were $142.1 million (27.9% of the total revenues), up 6% from the year-earlier quarter.
Corporate & Other: Revenues grossed $17.7 million (3.5% of the total revenues) and rose 35% from the prior-year quarter.
Operating Details
In third-quarter fiscal 2023, total operating expenses were $400.2 million, reflecting a 9% increase from the prior-year quarter. This can primarily be attributed to rising third-party development, personnel and travel costs.
As a percentage of revenues, the figure expanded by 200 basis points (bps) from the year-ago quarter to 78.7%.
The operating margin was 21%, down 200 bps from the year-ago quarter.
Balance Sheet
As of Mar 31, 2023, cash and cash equivalents totaled $26.6 million compared with $26 million as of Dec 31, 2022.
Trade receivables were $238.4 million in the reported quarter, down from $246.4 million in the previous quarter.
The current and long-term debt stood at $375 million at the end of third-quarter fiscal 2023 compared with $275.02 million at the end of the second quarter of fiscal 2023.
Guidance
For fiscal 2023, Jack Henry raised its guidance for GAAP revenues from $2.048-$2.055 billion to $2.050-$2.057 billion. The Zacks Consensus Estimate for revenues is pegged at $2.05 billion.
It reaffirmed its guidance for non-GAAP revenues at $2.021-$2.028 billion.
Management raised the earnings guidance from $4.79-$4.83 per share to $4.85-$4.87 per share. The Zacks Consensus Estimate for earnings is pegged at $4.82 per share.
Zacks Rank & Stocks to Consider
Jack Henry currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like Agilent Technologies A, DigitalOcean DOCN and Arista Networks ANET, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, suggesting growth of 12.4% from the year-ago quarter’s reported figure. The company has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pinned at 29 cents per share, indicating a jump from the 7 cents reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Arista Networks is scheduled to report first-quarter 2023 results on May 1. The Zacks Consensus Estimate for ANET’s earnings is pegged at $1.35 per share, suggesting an increase of 60.7% from the prior-year quarter’s reported figure. ANET has gained 26% in the year-to-date period.
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