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JKHY Q1 Earnings Beat Estimates on Cloud & Payments Growth
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Key Takeaways
JKHY's Q1 EPS rose 15.6% to $2.28, beating estimates by 12.32%, while revenues grew 8.8% to $701.6M.
Jack Henry's cloud revenues rose 11.3%, while faster payments surged 43.8%, fueling strong quarterly growth.
JKHY raised its fiscal 2027 revenue outlook to $2.698-$2.718B and EPS guidance to $7.47-$7.51.
Jack Henry & Associates, Inc. (JKHY - Free Report) reported better-than-expected first-quarter fiscal 2027 results. Earnings of $2.28 per share surpassed the Zacks Consensus Estimate by 12.32%. The bottom line increased 15.6% year over year.
Revenues climbed 8.8% year over year to $701.6 million, beating the consensus mark by 2.6%. Excluding deconversion revenues of $17.9 million and acquisition-related revenues of $1.45 million, non-GAAP adjusted revenues were $682.2 million, up 7.2%. Growth in cloud services, card processing, digital transactions and faster payments supported the top line. Faster payments revenues surged 43.8% year over year.
JKHY's Revenue Growth Benefits From Cloud & Processing
Services and Support revenues increased 7.5% year over year to $405 million. Growth was primarily driven by an 11.7% increase in hosting revenues as clients continued migrating to private cloud solutions. Software usage revenues rose 9.9%, while higher deconversion revenues contributed to growth. The timing of the annual Connect conference partially offset these gains.
Processing revenues advanced 10.7% to $296.6 million. Card revenues increased 9.4%, supported by monthly service and risk management fees. Digital and transaction revenues grew 13.3%, benefiting from increased active users and additional product adoption. Cloud services revenues rose 11.3% to $217.7 million, accounting for 31% of total revenues.
Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise
Jack Henry's Segment Revenues Rise Across the Board
Core segment revenues increased 7.1% year over year to $203.4 million. Non-GAAP adjusted revenues grew 4.9%. Growth was affected by lower nonrecurring revenues from on-premise implementations and consulting services. Excluding these items, key recurring Core revenues advanced 8.6%.
Payments revenues climbed 9.2% to $252.1 million, while Complementary revenues increased 10.4% to $220.18 million. Corporate Services revenues rose 6.2% to $25.9 million. On a non-GAAP basis, Payments, Complementary and Corporate Services revenues jumped 8.3%, 8.4% and 5.2%, respectively. Strong card processing, faster payments and cloud-related demand contributed to segment performance.
JKHY's Operating Income Improves Despite Higher Costs
GAAP operating expenses increased 7.3% year over year to $494.5 million. Cost of revenues rose 7.9% to $376.1 million, reflecting higher personnel expenses, cloud consumption costs, infrastructure investments and amortization. Research and development expenses jumped 16.6% to $45.8 million, primarily due to increased personnel costs.
Selling, general and administrative expenses declined 0.2% to $72.7 million, benefiting from the timing of the Connect conference. GAAP operating income increased 12.5% to $207.1 million, while operating margin expanded 100 basis points to 29.5%. Non-GAAP adjusted operating income rose 11.2% to $192.6 million, with adjusted operating margin expanding 100 basis points to 28.2%.
Jack Henry's Core Wins and Digital Adoption Stay Strong
Jack Henry secured nine competitive core wins during the quarter, more than double the four recorded a year earlier. Approximately 89% of new core deals included Banno, while 63% of eligible core wins combined core, digital and card solutions. Management reiterated its expectation of 58-65 competitive core wins for fiscal 2027.
The Banno Digital Platform recorded 25 signings, including 13 retail and 12 business contracts. Registered users increased 11% year over year to more than 16.3 million. The company also sold 367 Gladiator security solutions, triple the year-ago volume. Rapid Transfers was live at more than 170 financial institutions, with another 140 undergoing onboarding.
Operating cash flow increased 33.7% year over year to $161.3 million. Free cash flow rose 19.4% to $82.9 million, reflecting improved operating cash generation, partly offset by higher capitalized expenditures. Return on invested capital improved to 23.2% from 21.9% a year earlier.
As of Sept. 30, 2026, cash and cash equivalents totaled $25.4 million compared with $36.2 million a year earlier. Debt outstanding stood at $85 million. During the quarter, Jack Henry repurchased approximately $71 million of shares and paid $42.8 million in dividends.
Jack Henry Raises Fiscal 2027 Earnings & Revenue Outlook
For fiscal 2027, Jack Henry now expects GAAP revenues of $2.698-$2.718 billion, implying growth of 6-6.8%. The previous guidance was $2.684-$2.709 billion. Non-GAAP adjusted revenues are projected at $2.667-$2.687 billion, indicating growth of 6.6-7.4%. The updated outlook assumes $30 million in deconversion revenues.
GAAP earnings are now expected between $7.47 and $7.51 per share, up from the previous projection of $7.33-$7.38. GAAP operating margin guidance was raised to 24.7-24.9%, while adjusted operating margin guidance remains at 24.1-24.3%. Management continues to expect adjusted margin expansion of 20-40 basis points despite investments in cybersecurity, artificial intelligence and infrastructure modernization.
JKHY’s Zacks Rank & Stocks to Consider
Jack Henry currently carries a Zacks Rank #3 (Hold).
Advanced Energy Industries shares have gained 1.5% year to date (YTD). The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of AMETEK have jumped 15.5% YTD. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 13.2%. Estimates have been revised upward in the past 30 days.
ASE Technology shares have surged 132.8% YTD. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been raised in the past seven days.
View the Zacks #1 Rank List
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JKHY Q1 Earnings Beat Estimates on Cloud & Payments Growth
Key Takeaways
Jack Henry & Associates, Inc. (JKHY - Free Report) reported better-than-expected first-quarter fiscal 2027 results. Earnings of $2.28 per share surpassed the Zacks Consensus Estimate by 12.32%. The bottom line increased 15.6% year over year.
Revenues climbed 8.8% year over year to $701.6 million, beating the consensus mark by 2.6%. Excluding deconversion revenues of $17.9 million and acquisition-related revenues of $1.45 million, non-GAAP adjusted revenues were $682.2 million, up 7.2%. Growth in cloud services, card processing, digital transactions and faster payments supported the top line. Faster payments revenues surged 43.8% year over year.
JKHY's Revenue Growth Benefits From Cloud & Processing
Services and Support revenues increased 7.5% year over year to $405 million. Growth was primarily driven by an 11.7% increase in hosting revenues as clients continued migrating to private cloud solutions. Software usage revenues rose 9.9%, while higher deconversion revenues contributed to growth. The timing of the annual Connect conference partially offset these gains.
Processing revenues advanced 10.7% to $296.6 million. Card revenues increased 9.4%, supported by monthly service and risk management fees. Digital and transaction revenues grew 13.3%, benefiting from increased active users and additional product adoption. Cloud services revenues rose 11.3% to $217.7 million, accounting for 31% of total revenues.
Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise
Jack Henry & Associates, Inc. price-consensus-eps-surprise-chart | Jack Henry & Associates, Inc. Quote
Jack Henry's Segment Revenues Rise Across the Board
Core segment revenues increased 7.1% year over year to $203.4 million. Non-GAAP adjusted revenues grew 4.9%. Growth was affected by lower nonrecurring revenues from on-premise implementations and consulting services. Excluding these items, key recurring Core revenues advanced 8.6%.
Payments revenues climbed 9.2% to $252.1 million, while Complementary revenues increased 10.4% to $220.18 million. Corporate Services revenues rose 6.2% to $25.9 million. On a non-GAAP basis, Payments, Complementary and Corporate Services revenues jumped 8.3%, 8.4% and 5.2%, respectively. Strong card processing, faster payments and cloud-related demand contributed to segment performance.
JKHY's Operating Income Improves Despite Higher Costs
GAAP operating expenses increased 7.3% year over year to $494.5 million. Cost of revenues rose 7.9% to $376.1 million, reflecting higher personnel expenses, cloud consumption costs, infrastructure investments and amortization. Research and development expenses jumped 16.6% to $45.8 million, primarily due to increased personnel costs.
Selling, general and administrative expenses declined 0.2% to $72.7 million, benefiting from the timing of the Connect conference. GAAP operating income increased 12.5% to $207.1 million, while operating margin expanded 100 basis points to 29.5%. Non-GAAP adjusted operating income rose 11.2% to $192.6 million, with adjusted operating margin expanding 100 basis points to 28.2%.
Jack Henry's Core Wins and Digital Adoption Stay Strong
Jack Henry secured nine competitive core wins during the quarter, more than double the four recorded a year earlier. Approximately 89% of new core deals included Banno, while 63% of eligible core wins combined core, digital and card solutions. Management reiterated its expectation of 58-65 competitive core wins for fiscal 2027.
The Banno Digital Platform recorded 25 signings, including 13 retail and 12 business contracts. Registered users increased 11% year over year to more than 16.3 million. The company also sold 367 Gladiator security solutions, triple the year-ago volume. Rapid Transfers was live at more than 170 financial institutions, with another 140 undergoing onboarding.
JKHY's Cash Flow Strength Supports Shareholder Returns
Operating cash flow increased 33.7% year over year to $161.3 million. Free cash flow rose 19.4% to $82.9 million, reflecting improved operating cash generation, partly offset by higher capitalized expenditures. Return on invested capital improved to 23.2% from 21.9% a year earlier.
As of Sept. 30, 2026, cash and cash equivalents totaled $25.4 million compared with $36.2 million a year earlier. Debt outstanding stood at $85 million. During the quarter, Jack Henry repurchased approximately $71 million of shares and paid $42.8 million in dividends.
Jack Henry Raises Fiscal 2027 Earnings & Revenue Outlook
For fiscal 2027, Jack Henry now expects GAAP revenues of $2.698-$2.718 billion, implying growth of 6-6.8%. The previous guidance was $2.684-$2.709 billion. Non-GAAP adjusted revenues are projected at $2.667-$2.687 billion, indicating growth of 6.6-7.4%. The updated outlook assumes $30 million in deconversion revenues.
GAAP earnings are now expected between $7.47 and $7.51 per share, up from the previous projection of $7.33-$7.38. GAAP operating margin guidance was raised to 24.7-24.9%, while adjusted operating margin guidance remains at 24.1-24.3%. Management continues to expect adjusted margin expansion of 20-40 basis points despite investments in cybersecurity, artificial intelligence and infrastructure modernization.
JKHY’s Zacks Rank & Stocks to Consider
Jack Henry currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Computer and Technology sector include Advanced Energy Industries (AEIS - Free Report) , AMETEK (AME - Free Report) and ASE Technology (ASX - Free Report) . Advanced Energy Industries, AMETEK and ASE Technology sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Energy Industries shares have gained 1.5% year to date (YTD). The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of AMETEK have jumped 15.5% YTD. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 13.2%. Estimates have been revised upward in the past 30 days.
ASE Technology shares have surged 132.8% YTD. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been raised in the past seven days.