Press Release | |||||
Mimi L. Carsley | Chief Financial Officer | mcarsley@jackhenry.com |
Current | Previous | ||||||||||||||||
GAAP | Low | High | Low | High | |||||||||||||
Revenue updated | $2,211 | $2,232 | $2,208 | $2,229 | |||||||||||||
Operating margin updated | 21.8% | 21.9% | 21.6% | 21.7% | |||||||||||||
EPS updated | $4.98 | $5.04 | $4.92 | $4.99 | |||||||||||||
Non-GAAP3 | |||||||||||||||||
Adjusted revenue updated | $2,193 | $2,214 | $2,190 | $2,210 | |||||||||||||
Adjusted operating margin updated | 22.2% | 22.3% | 22.1% | 22.2% | |||||||||||||
1st Qtr FY 2024 Revenue | 1st Qtr FY 2024 Operating Income | 1st Qtr FY 2024 | ||||||||||||||||||
GAAP | Non-GAAP1 | GAAP | Non-GAAP1 | GAAP Net Income | Non-GAAP EBITDA4 | |||||||||||||||
increased | increased | decreased | increased | decreased | increased | |||||||||||||||
8.0% | 7.7% | 5.7% | 13.0% | 4.6% | 10.5% | |||||||||||||||
According to David Foss, Board Chair and CEO, “We are very pleased to report overall strong financial performance for the first quarter of our new fiscal year. Our sales teams continue to see strong demand for our innovative financial technology solutions, including the Banno BusinessTM and AI-powered Financial Crimes DefenderTM cloud-native solutions that we introduced in the first quarter. Our sales pipeline is the highest it’s ever been, and we recently hosted a record number of clients and prospects at our annual Jack Henry Connect conference in Indianapolis. We are proud to help community and regional financial institutions across the U.S. innovate, compete, and strengthen connections with their accountholders through delivering a broad range of modern technology and exceptional service.” | |||||||||||||||||
1 |
Revenue | Three Months Ended September 30, | % Change | |||||||||||||||
(Unaudited, In Thousands) | 2023 | 2022 | |||||||||||||||
Revenue | |||||||||||||||||
Services and Support | $ | 342,205 | $ | 320,149 | 6.9 | % | |||||||||||
Percentage of Total Revenue | 59.9 | % | 60.5 | % | |||||||||||||
Processing | 229,163 | 209,053 | 9.6 | % | |||||||||||||
Percentage of Total Revenue | 40.1 | % | 39.5 | % | |||||||||||||
REVENUE | $ | 571,368 | $ | 529,202 | 8.0 | % |
Operating Expenses and Operating Income | Three Months Ended September 30, | % Change | |||||||||||||||
(Unaudited, In Thousands) | 2023 | 2022 | |||||||||||||||
Cost of Revenue | $ | 323,002 | $ | 298,261 | 8.3 | % | |||||||||||
Percentage of Total Revenue5 | 56.5 | % | 56.4 | % | |||||||||||||
Research and Development | 36,892 | 32,993 | 11.8 | % | |||||||||||||
Percentage of Total Revenue5 | 6.5 | % | 6.2 | % | |||||||||||||
Selling, General, and Administrative | 78,774 | 57,225 | 37.7 | % | |||||||||||||
Percentage of Total Revenue5 | 13.8 | % | 10.8 | % | |||||||||||||
OPERATING EXPENSES | 438,668 | 388,479 | 12.9 | % | |||||||||||||
OPERATING INCOME | $ | 132,700 | $ | 140,723 | (5.7) | % | |||||||||||
Operating Margin5 | 23.2 | % | 26.6 | % |
2 |
(Unaudited, In Thousands, Except Per Share Data) | Three Months Ended September 30, | % Change | ||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Income Before Income Taxes | $ | 133,248 | $ | 139,299 | (4.3) | % | ||||||||||||||
Provision for Income Taxes | 31,569 | 32,750 | (3.6) | % | ||||||||||||||||
NET INCOME | $ | 101,679 | $ | 106,549 | (4.6) | % | ||||||||||||||
Diluted earnings per share | $ | 1.39 | $ | 1.46 | (4.4) | % |
According to Mimi Carsley, CFO and Treasurer, “For the first quarter of the fiscal year, our private cloud and processing services continued to drive strong revenue growth. Overall, revenue grew 8.0% on both a GAAP and non-GAAP basis. On a GAAP basis, operating income was down due to the one-time effect of our VEDIP program in the current period but was up 13.0% after removing the effect of that and our other non-GAAP items from both periods. These results reflect the Jack Henry team’s continued focus on growing revenues and controlling costs.” | |||||||||||||||||
(Unaudited, In Thousands) | Three Months Ended September 30, | % Change | ||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Revenue (GAAP) | $ | 571,368 | $ | 529,202 | 8.0 | % | ||||||||||||||
Adjustments: | ||||||||||||||||||||
Deconversion revenue | (4,136) | (4,518) | ||||||||||||||||||
Revenue from acquisition | (1,945) | — | ||||||||||||||||||
NON-GAAP ADJUSTED REVENUE | $ | 565,287 | $ | 524,684 | 7.7 | % | ||||||||||||||
Operating Income (GAAP) | $ | 132,700 | $ | 140,723 | (5.7) | % | ||||||||||||||
Adjustments: | ||||||||||||||||||||
Operating income from deconversions | (3,755) | (3,865) | ||||||||||||||||||
Operating loss from acquisition | 2,237 | — | ||||||||||||||||||
VEDIP program expense * | 16,443 | — | ||||||||||||||||||
Gain on disposal of assets, net | — | (6,176) | ||||||||||||||||||
NON-GAAP ADJUSTED OPERATING INCOME | $ | 147,625 | $ | 130,682 | 13.0 | % |
3 |
Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||||
(Unaudited, In Thousands) | Core | Payments | Complementary | Corporate and Other | Total | ||||||||||||||||||||||||
REVENUE | $ | 186,439 | $ | 199,358 | $ | 161,366 | $ | 24,205 | $ | 571,368 | |||||||||||||||||||
Non-GAAP adjustments* | (1,665) | (2,951) | (1,451) | (14) | (6,081) | ||||||||||||||||||||||||
NON-GAAP ADJUSTED REVENUE | 184,774 | 196,407 | 159,915 | 24,191 | 565,287 | ||||||||||||||||||||||||
COST OF REVENUE | 75,927 | 108,826 | 62,275 | 75,974 | 323,002 | ||||||||||||||||||||||||
Non-GAAP adjustments** | (103) | (3,361) | (118) | (22) | (3,604) | ||||||||||||||||||||||||
NON-GAAP ADJUSTED COST OF REVENUE | 75,824 | 105,465 | 62,157 | 75,952 | 319,398 | ||||||||||||||||||||||||
NON-GAAP ADJUSTED SEGMENT INCOME | $ | 108,950 | $ | 90,942 | $ | 97,758 | $ | (51,761) | |||||||||||||||||||||
Research and Development | 36,892 | ||||||||||||||||||||||||||||
Selling, General, and Administrative | 78,774 | ||||||||||||||||||||||||||||
Non-GAAP adjustments unassigned to a segment*** | (17,402) | ||||||||||||||||||||||||||||
NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES | 417,662 | ||||||||||||||||||||||||||||
NON-GAAP ADJUSTED OPERATING INCOME | $ | 147,625 |
Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||
(Unaudited, In Thousands) | Core | Payments | Complementary | Corporate and Other | Total | ||||||||||||||||||||||||
REVENUE (GAAP) | $ | 173,316 | $ | 186,533 | $ | 148,417 | $ | 20,936 | $ | 529,202 | |||||||||||||||||||
Non-GAAP adjustments* | (1,818) | (1,435) | (1,235) | (30) | (4,518) | ||||||||||||||||||||||||
NON-GAAP ADJUSTED REVENUE | 171,498 | 185,098 | 147,182 | 20,906 | 524,684 | ||||||||||||||||||||||||
COST OF REVENUE | 70,604 | 100,553 | 58,105 | 68,999 | 298,261 | ||||||||||||||||||||||||
Non-GAAP adjustments** | (141) | (64) | (198) | (7) | (410) | ||||||||||||||||||||||||
NON-GAAP ADJUSTED COST OF REVENUE | 70,463 | 100,489 | 57,907 | 68,992 | 297,851 | ||||||||||||||||||||||||
NON-GAAP ADJUSTED SEGMENT INCOME | $ | 101,035 | $ | 84,609 | $ | 89,275 | $ | (48,086) | |||||||||||||||||||||
Research and Development | 32,993 | ||||||||||||||||||||||||||||
Selling, General, and Administrative | 57,225 | ||||||||||||||||||||||||||||
Non-GAAP adjustments unassigned to a segment*** | 5,933 | ||||||||||||||||||||||||||||
NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES | 394,002 | ||||||||||||||||||||||||||||
NON-GAAP ADJUSTED OPERATING INCOME | $ | 130,682 |
4 |
GAAP to Non-GAAP GUIDANCE (In Millions, except per share data) | Annual FY24** | ||||||||||||||||
Low | High | ||||||||||||||||
REVENUE (GAAP) | $ | 2,211 | $ | 2,232 | |||||||||||||
Growth | 6.4 | % | 7.4 | % | |||||||||||||
Deconversions*** | $ | 16 | $ | 16 | |||||||||||||
Acquisition | 2 | 2 | |||||||||||||||
NON-GAAP ADJUSTED REVENUE** | $ | 2,193 | $ | 2,214 | |||||||||||||
Non-GAAP Adjusted Growth | 7.2 | % | 8.2 | % | |||||||||||||
OPERATING EXPENSES (GAAP) | $ | 1,729 | $ | 1,744 | |||||||||||||
Growth | 8.3 | % | 9.2 | % | |||||||||||||
Deconversion costs*** | $ | 3 | $ | 3 | |||||||||||||
Acquisition costs | 4 | 4 | |||||||||||||||
VEDIP Program**** | 16 | 16 | |||||||||||||||
NON-GAAP ADJUSTED OPERATING EXPENSES** | $ | 1,706 | $ | 1,721 | |||||||||||||
Non-GAAP Adjusted Growth | 6.8 | % | 7.7 | % | |||||||||||||
OPERATING INCOME (GAAP) | $ | 482 | $ | 488 | |||||||||||||
Growth | 0.3 | % | 1.5 | % | |||||||||||||
OPERATING MARGIN (GAAP) | 21.8 | % | 21.9 | % | |||||||||||||
NON-GAAP ADJUSTED OPERATING INCOME | $ | 488 | $ | 493 | |||||||||||||
Non-GAAP Adjusted Growth | 8.7 | % | 10.0 | % | |||||||||||||
NON-GAAP ADJUSTED OPERATING MARGIN | 22.2 | % | 22.3 | % | |||||||||||||
EPS (GAAP) | $ | 4.98 | $ | 5.04 | |||||||||||||
Growth | (0.7) | % | 0.5 | % |
5 |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||||||
2023 | 2022 | ||||||||||
Net income | $ | 101,679 | $ | 106,549 | |||||||
Depreciation | 12,052 | 12,416 | |||||||||
Amortization | 37,183 | 33,194 | |||||||||
Change in deferred income taxes | (10,178) | (12,345) | |||||||||
Other non-cash expenses | 7,037 | 874 | |||||||||
Change in receivables | 72,519 | 101,509 | |||||||||
Change in deferred revenue | (66,322) | (65,130) | |||||||||
Change in other assets and liabilities | 3,169 | (40,236) | |||||||||
NET CASH FROM OPERATING ACTIVITIES | $ | 157,139 | $ | 136,831 |
6 |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||||||
2023 | 2022 | ||||||||||
Payment for acquisitions, net of cash acquired* | $ | — | $ | (228,986) | |||||||
Capital expenditures | (7,612) | (7,737) | |||||||||
Proceeds from dispositions | 852 | 26,252 | |||||||||
Purchased software | (2,280) | (408) | |||||||||
Computer software developed | (41,486) | (38,715) | |||||||||
NET CASH FROM INVESTING ACTIVITIES | $ | (50,526) | $ | (249,594) |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||||||
2023 | 2022 | ||||||||||
Borrowings on credit facilities* | $ | 135,000 | $ | 280,000 | |||||||
Repayments on credit facilities and financing leases | (165,000) | (150,022) | |||||||||
Purchase of treasury stock | (20,000) | — | |||||||||
Dividends paid | (37,863) | (35,709) | |||||||||
Net cash from issuance of stock and tax related to stock-based compensation | 474 | 1,677 | |||||||||
NET CASH FROM FINANCING ACTIVITIES | $ | (87,389) | $ | 95,946 |
7 |
About Jack Henry & Associates, Inc.® | Quarterly Conference Call | |||||||||||||
Jack HenryTM (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity — offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 47 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com. | The Company will hold a conference call on November 8, 2023, at 7:45 a.m. Central Time, and investors are invited to listen at www.jackhenry.com. A webcast replay will be available approximately one hour after the event at ir.jackhenry.com/corporate-events-and-presentations and will remain available for one year. | |||||||||||||
Statements made in this news release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise. | MEDIA CONTACT | |||||||||||||
Mark Folk | ||||||||||||||
Corporate Communications | ||||||||||||||
Jack Henry & Associates, Inc. | ||||||||||||||
704-890-5323 | ||||||||||||||
MFolk@jackhenry.com | ||||||||||||||
ANALYST CONTACT | ||||||||||||||
Vance Sherard, CFA | ||||||||||||||
Investor Relations | ||||||||||||||
Jack Henry & Associates, Inc. | ||||||||||||||
417-235-6652 | ||||||||||||||
VSherard@jackhenry.com |
8 |
Condensed Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||
(In Thousands, except per share data) | Three Months Ended September 30, | % Change | ||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
REVENUE | $ | 571,368 | $ | 529,202 | 8.0 | % | ||||||||||||||
Cost of Revenue | 323,002 | 298,261 | 8.3 | % | ||||||||||||||||
Research and Development | 36,892 | 32,993 | 11.8 | % | ||||||||||||||||
Selling, General, and Administrative | 78,774 | 57,225 | 37.7 | % | ||||||||||||||||
EXPENSES | 438,668 | 388,479 | 12.9 | % | ||||||||||||||||
OPERATING INCOME | 132,700 | 140,723 | (5.7) | % | ||||||||||||||||
Interest income | 4,745 | 152 | 3,021.7 | % | ||||||||||||||||
Interest expense | (4,197) | (1,576) | 166.3 | % | ||||||||||||||||
Interest Income (Expense), net | 548 | (1,424) | (138.5) | % | ||||||||||||||||
INCOME BEFORE INCOME TAXES | 133,248 | 139,299 | (4.3) | % | ||||||||||||||||
Provision for Income Taxes | 31,569 | 32,750 | (3.6) | % | ||||||||||||||||
NET INCOME | $ | 101,679 | $ | 106,549 | (4.6) | % | ||||||||||||||
Diluted net income per share | $ | 1.39 | $ | 1.46 | ||||||||||||||||
Diluted weighted average shares outstanding | 73,014 | 73,138 | ||||||||||||||||||
Consolidated Balance Sheet Highlights (Unaudited) | ||||||||||||||||||||
(In Thousands) | September 30, | % Change | ||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Cash and cash equivalents | $ | 31,467 | $ | 31,970 | (1.6) | % | ||||||||||||||
Receivables | 288,733 | 247,541 | 16.6 | % | ||||||||||||||||
Total assets | 2,734,223 | 2,578,460 | 6.0 | % | ||||||||||||||||
Accounts payable and accrued expenses | $ | 208,909 | $ | 195,518 | 6.8 | % | ||||||||||||||
Current and long-term debt | 245,000 | 245,041 | — | % | ||||||||||||||||
Deferred revenue | 333,407 | 345,146 | (3.4) | % | ||||||||||||||||
Stockholders' equity | 1,659,948 | 1,461,138 | 13.6 | % | ||||||||||||||||
9 |
Calculation of Non-GAAP Earnings Before Income Taxes, Depreciation and Amortization (Non-GAAP EBITDA) | ||||||||||||||||||||
Three Months Ended September 30, | % Change | |||||||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||||||||
Net income | $ | 101,679 | $ | 106,549 | ||||||||||||||||
Net interest | (548) | 1,424 | ||||||||||||||||||
Taxes | 31,569 | 32,750 | ||||||||||||||||||
Depreciation and amortization | 49,235 | 45,610 | ||||||||||||||||||
Less: Net income before interest expense, taxes, depreciation and amortization attributable to eliminated one-time deconversions, VEDIP program expense, the acquisition, and a gain on disposal of assets, net.* | 12,802 | (10,041) | ||||||||||||||||||
NON-GAAP EBITDA | $ | 194,737 | $ | 176,292 | 10.5 | % | ||||||||||||||
*The fiscal first quarter adjustments for net income before interest expense, taxes, depreciation and amortization were for deconversions, VEDIP program expense, and the acquisition, and were $(3,755), $16,443, and $114, respectively, and the prior fiscal year first quarter adjustments were for deconversions and a gain on disposal of assets, net, and were $(3,865)and $(6,176). | ||||||||||||||||||||
Calculation of Free Cash Flow (Non-GAAP) | Three Months Ended September 30, | |||||||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||||||||
Net cash from operating activities | $ | 157,139 | $ | 136,832 | ||||||||||||||||
Capitalized expenditures | (7,612) | (7,737) | ||||||||||||||||||
Internal use software | (2,280) | (408) | ||||||||||||||||||
Proceeds from sale of assets | 852 | 26,252 | ||||||||||||||||||
Capitalized software | (41,486) | (38,715) | ||||||||||||||||||
FREE CASH FLOW | $ | 106,613 | $ | 116,224 | ||||||||||||||||
Calculation of the Return on Average Shareholders’ Equity | September 30, | |||||||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||||||||
Net income (trailing four quarters) | $ | 361,776 | $ | 367,352 | ||||||||||||||||
Average stockholder's equity (period beginning and ending balances) | 1,560,543 | 1,428,401 | ||||||||||||||||||
RETURN ON AVERAGE SHAREHOLDERS’ EQUITY | 23.2% | 25.7% | ||||||||||||||||||
Calculation of Return on Invested Capital (ROIC) (Non-GAAP) | September 30, | |||||||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||||||||
Net income (trailing four quarters) | $ | 361,776 | $ | 367,352 | ||||||||||||||||
Average stockholder's equity (period beginning and ending balances) | 1,560,543 | 1,428,401 | ||||||||||||||||||
Average current maturities of long-term debt (period beginning and ending balances) | 21 | 76 | ||||||||||||||||||
Average long-term debt (period beginning and ending balances) | 245,000 | 155,028 | ||||||||||||||||||
Average invested capital | $ | 1,805,564 | $ | 1,583,505 | ||||||||||||||||
ROIC | 20.0% | 23.2% |
10 |