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Jack Henry (JKHY) Q1 Earnings Top Estimates, Revenues Rise Y/Y

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Jack Henry & Associates, Inc. (JKHY - Free Report) reported first-quarter fiscal 2021 earnings of $1.19per share, which surpassed the Zacks Consensus Estimate by 11.2%. Further, the bottom line inched up 2.6% from the year-ago quarter and also rose 48.7% from the previous quarter.

Revenues too improved 3% year over year and 10.1% sequentially to $451.8 million. Further, the top line outpaced the Zacks Consensus Estimate of $443.6 million.

Moreover, the company’s non-GAAP revenues were $445.9 million, up 5% on a year-over-year basis and 11.5% sequentially.

The top line was driven by a solid performance of Core, Payments and Complementary segments during the reported quarter. Additionally, accelerating processing, and services and support revenues contributed to the results.

However, sluggishness inthe Corporate segment remained an overhang.

Coming to the price performance, Jack Henry stock has returned 11.5% in the year-to-date period compared with the industry’s rally of 10.4%.

 

Top Line in Detail

Services & Support: The company generated revenues of $280.9 million from this category (62% of revenues). Notably, the figure improved 1% from the year-ago quarter, courtesy of higher data processing, software usage fees and hosting fees.

Processing: This category yielded revenues worth $170.8 million (38% of revenues) during the reported quarter, up 7% year over year. This can be attributed to growth in card processing transaction volumes and a hike in associated fee revenues.Further, the rising Jack Henry digital revenues contributed well.

Segmental Details

Core: The company generated revenues of $159.03 million from this segment (35.2% of total revenues), improving 2% year over year.

Payments: This segment yielded revenues of$156.7 million (34.7% of total revenues), increasing 5% from the year-ago quarter.

Complementary: This segment generated $124.5 million revenues (27.6% of total revenues), increasing 6% year over year.

Corporate & Other: The company generated revenues of $11.6 million from this segment (2.5% of total revenues), down 23.8% from the prior-year quarter.

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

Operating Details

In first-quarter fiscal 2021, total operating expenses were $334.2 million, reflecting an increase of 5% year over year. This can primarily be attributed to rising headcounts, which induced higher personnel costs and salaries.

As a percentage of revenues, the figure expanded 90 basis points (bps) year over year to 73.9%.

Notably, research and development expenses rose 6% year over year to $26.1 million. Selling, general and administrative expenses were $45.2 million, down 9% from the year-ago quarter.

Notably, operating margin was 26% in the reported quarter, which contracted 100 bps year over year.

Balance Sheet

As of Sep 30, 2020, cash and cash equivalents totaled $195.3 million, which decreased from $213.3 million as of Jun 30, 2020.

Trade receivables were nearly $223 million, downfrom $300.9million in the previous quarter.

Further, the current and long-term debt stood at $295,000 at the end of the fiscal first quarter compared with $323,000 at the end of the fourth-quarter fiscal 2020.

Guidance

For fiscal 2021, the company projects GAAP revenues between $1.76 billion and $1.77 billion. Notably, the company raised the lower end of the guided range, which previously stood at $1.75 billion. The Zacks Consensus Estimate for revenues is also projected at $1.75 billion.

The company narrowed the guided range for year-over-year growth in its non-GAAP revenues from 5.5-6.5% to 6-6.5%.

Further, the company upped the earnings per share outlook for fiscal 2021 to $3.75-$3.80 from the range of $3.70-$3.75. The Zacks Consensus Estimate for the same is pegged at $3.73 per share.

Zacks Rank & Stocks to Consider

Jack Henry currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader sector are Himax Technologies (HIMX - Free Report) , NVIDIA (NVDA - Free Report) and Covetrus , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Covetrus is set to report on Nov 10 while Himax and NVIDIA are scheduled to report earnings on Nov 12 and Nov 18, respectively.

The long-term earnings growth rate for NVIDIA and Covetrus is currently pegged at 20.1% and 31.6%, respectively. Meanwhile, Himax’s current-year earnings projection of 13 cents per share, indicate growth of 285.7% from the year-ago reported figure.

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