A month has gone by since the last earnings report for Jack Henry (
JKHY Quick Quote JKHY - Free Report) . Shares have added about 1.2% 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's Q2 Earnings Beat
Jack Henry & Associates reported second-quarter fiscal 2022 earnings of $1.30 per share, which surpassed the Zacks Consensus Estimate by 12.1%. Further, the bottom line increased 38.3% year over year.
Revenues improved 17% year over year to $493.9 million. Further, the top line beat the Zacks Consensus Estimate of $472.2 million. The company’s non-GAAP revenues were $466.9 million, up 11% from the year-ago quarter. Top-line growth was driven by growing processing, and services and support revenues. Additionally, strength across the Core, Payments, Complementary and Corporate segments drove the results. Top Line in Detail Services & Support: The company generated revenues of $296.2 million from the category (60% of revenues). Notably, the figure rose 18% from the year-ago quarter, owing to growth in data processing and hosting fees, and conversion/merger revenues. Also, accelerating deconversion fee revenues were tailwinds. Processing: The category yielded revenues of $197.7 million (40% of revenues) in the reported quarter, up 15% year over year. This can be attributed to 14% growth in card-processing fee revenues. Segments in Detail Core: The company generated revenues of $154.9 million from the segment (31.4% of total revenues), increasing 15% year over year. Payments: The segment yielded revenues of $182.5 million (36.9% of total revenues), increasing 18% from the year-ago quarter. Complementary: The segment generated $141.7 million in revenues (28.7% of total revenues), increasing 17% year over year. Corporate & Other: The company generated revenues of $14.8 million from the segment (3% of total revenues), up 36% from the prior-year quarter. Operating Details
In second-quarter fiscal 2022, total operating expenses were $368.2 million, reflecting a year-over-year increase of 12%. 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 contracted 320 basis points (bps) year over year to 74.6%. Notably, the operating margin was 25% in the reported quarter, which expanded 300 bps on a year-over-year basis. Balance Sheet
As of Dec 31, 2021, cash and cash equivalents totaled $29.1 million, which decreased from $44.3 million as of Sep 30, 2021.
Trade receivables were $236.1 million in the reported quarter, down from $253.2 million in the previous quarter. The current and long-term debt stood at $240.1 million at the end of the fiscal second quarter compared with $65.2 million at the end of the fiscal first quarter. Guidance
For fiscal 2022, the company raised its guidance for GAAP revenues from $1.910-$1.919 billion to $1.939-$1.942 billion, indicating year-over-year growth of 10.3-10.5%.
The company’s expectation for non-GAAP revenues increased from $1.866-$1.875 billion to $1.889-$1.892 billion, suggesting growth of 8.8-9% from that reported in 2021. It has also raised the guidance for earnings from $4.64-$4.73 to $4.75-$4.82 per share, indicating year-over-year growth of 15.3-17%. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
At this time, Jack Henry has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Jack Henry has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.