Why Is Jack Henry (JKHY) Up 3% Since Last Earnings Report?
It has been about a month since the last earnings report for Jack Henry (JKHY). Shares have added about 3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jack Henry due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jack Henry Q2 Earnings Beat Estimates, Revenues Up Y/Y
Jack Henry & Associates reported second-quarter fiscal 2024 earnings of $1.22 per share, which beat the Zacks Consensus Estimate by 7.02%. The bottom line increased 10.9% from the year-ago fiscal quarter’s reported figure.
Revenues improved 8% from the year-ago fiscal quarter’s reading to $545.7 million. The figure beat the Zacks Consensus Estimate of $539.45 million.
JKHY’s non-GAAP revenues were $540.8 million, up 8.4% from the year-ago fiscal quarter’s level.
Top-line growth was driven by growing services and support and processing revenues.
Strong momentum across the Core, Payments, Complementary and Corporate segments drove the results further.
Top Line in Detail
Services & Support: Jack Henry generated revenues of $311.99 million from the category (57.2% of revenues). The figure grew 7.3% from the year-ago fiscal quarter’s level, owing to an 11% rise in data processing and hosting fees. Further, the increase in user group revenues was a positive.
Processing: The category yielded $233.71 million in revenues (42.8% of revenues), up 8.9% from the year-ago fiscal quarter’s actuals. This can be attributed to a 29.6% and 5.6% increase in Jack Henry's digital and card revenues, respectively. Growing payment-processing revenues contributed well.
Segments in Detail
Core: Revenues totaled $165.6 million (30.3% of total revenues), rising 7.9% from the year-ago fiscal quarter’s figure. However, it lagged the Zacks Consensus Estimate of $166.3 million.
Payments: Revenues summed up to $203.8 million (37.3% of total revenues), increasing 6.5% from the year-ago fiscal quarter’s level. The figure came ahead of the consensus mark of $203.1 million.
Complementary: Revenues came in at $152.5 million (28% of total revenues), up 7.3% from the year-earlier fiscal quarter’s number. The figure beat the Zacks Consensus Estimate of $151.6 million.
Corporate & Other: Revenues grossed $23.8 million (4.4% of the total revenues) and surged 30.9% from the prior-year fiscal quarter’s level. The figure came ahead of the consensus mark of $17.1 million.
Operating Details
In second-quarter fiscal 2024, total operating expenses were $426.7 million, indicating a 7.2% increase from the prior-year fiscal quarter.
As a percentage of revenues, the figure contracted 60 basis points (bps) from the year-ago fiscal quarter’s number to 78.2%.
The operating margin was 21.8%, expanding 60 bps from the year-ago fiscal quarter’s number.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents totaled $26.71 million compared with $31.5 million as of Sep 30, 2023.
Trade receivables were $270.6 million in the reported quarter, down from $288.7 million in the previous fiscal quarter.
The current and long-term debt was $255 million at the end of second-quarter fiscal 2024 compared with $245 million at the end of the first quarter of fiscal 2024.
Guidance
For fiscal 2024, Jack Henry revised its guidance for GAAP revenues from $2.211-$2.232 billion to $2.215-$2.228 billion.
It also updated guidance for non-GAAP revenues from $2.193-2.214 billion to $2.197-2.210 billion.
Management raised the guidance for earnings from $4.98-$5.04 to $5.09-$5.13 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Jack Henry has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise Jack Henry has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Jack Henry & Associates, Inc. (JKHY) : Free Stock Analysis Report
