Back to top

Image: Bigstock

Jack Henry (JKHY) Q3 Earnings & Revenues Beat Estimates

Read MoreHide Full Article

Jack Henry & Associates, Inc. (JKHY - Free Report) reported third-quarter fiscal 2020 earnings of 96 cents per share, which surpassed the Zacks Consensus Estimate by 18.5%. Further, the bottom line surged 25% from the year-ago quarter.

Revenues improved 13% year over year to $429.41 million. The figure also outpaced the Zacks Consensus Estimate of $409.65 million.

Further, the company’s non-GAAP revenues came in $404.27 million, up 9% on a year-over-year basis.

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

Further, Jack Henry has returned 16.8% in the year-to-date period, outperforming the industry’s rally of 8.3%.



 

Top-Line in Detail

Services & Support: The company generated $270.2 million revenues in this category (63% of revenues). Notably, the figure improved 15% from the year-ago quarter, courtesy of increase in data processing and hosting fees. Moreover, hike in implementation fees of the company’s private cloud offerings and accelerating software usage revenues contributed to the upside.

Processing: Revenues worth $159.2 million came from this category (37% of revenues) during the reported quarter, up 9% year over year. This can be attributed to hike in remittance fees and growth in card processing transaction volumes.

Segments in Detail

Core: The company generated $146.4 million revenues from this segment (34% of total revenues), improved 12% year over year.

Payments: This segment yielded $150.4 million revenues (35% of total revenues), climbing 11% from the year-ago quarter.

Complementary: This segment generated $118.7 million revenues (28% of total revenues), increasing 16% year over year.

Corporate & Other: The company generated $13.9 million revenues from this segment (3% of total revenues), up 13.9% from the prior-year quarter.


Operating Details

In third-quarter fiscal 2020, total operating expenses were $337.5 million, reflecting an improvement of 11% year over year. This can primarily be attributed to rising headcounts, which led to an increase in personnel costs and salaries, and rising costs related to the company’s card processing platform.

As a percentage of revenues, the figure contracted 130 basis points (bps) year over year to 78.6%. This was due to contraction of 100 bps year over year in the selling, general, & administrative expenses, which as a percentage of revenues came in at 11%.

Research and Development expenses expanded 100 bps year over year to 7% as a percentage of revenues.

Notably, operating margin came in at 21%, expanding 100 bps year over year.

Balance Sheet

As of Mar 31, 2020, cash and cash equivalents totaled $109.5 million, which improved from $72.5 million as of Dec 31, 2019.

Trade receivables were nearly $212.1 million, up from $204.7 million in the previous quarter.

Further, current and long-term debt stood at $55.2 million at the end of the fiscal third quarter.

Guidance

For fourth-quarter fiscal 2020, Jack Henry expects revenues between $408 million and $415 million. The Zacks Consensus Estimate for the same is projected at $419.87 million.

For fiscal year 2020, the company projects revenues between $1.695 billion and $1.702 billion. The Zacks Consensus Estimate for the same is projected at $1.69 billion.

The company anticipates coronavirus pandemic to impact sales bookings and revenues in the near term.

Nevertheless, its growing initiatives to combat the disruptions caused by this novel virus remain noteworthy.

Zacks Rank & Key Picks

Jack Henry currently has a Zacks Rank #3 (Hold).

Netlist, Inc. (NLST - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and InterDigital, Inc. (IDCC - Free Report) are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for both Netlist and InterDigital is pegged at 15%, while the same for Pixelworks is 20%.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>