Second quarter summary:
- GAAP revenue increased 8.0% and GAAP operating income increased
10.8% for the fiscal three months ended December 31, 2023, compared to the prior fiscal
year quarter.
- Non-GAAP adjusted revenue increased 8.4% and non-GAAP adjusted
operating income increased 14.4% for the fiscal three months ended
December 31, 2023, compared to the
prior fiscal year quarter.1
- GAAP EPS was $1.26 per diluted
share for the fiscal three months ended December 31, 2023, compared to $1.10 in the prior fiscal year quarter.
Fiscal year-to-date summary:
- GAAP revenue increased 8.0% and GAAP operating income increased
1.4% for the fiscal six months ended December 31, 2023, compared to the prior fiscal
year period.
- Non-GAAP adjusted revenue increased 8.1% and non-GAAP adjusted
operating income increased 13.6% for the fiscal six months ended
December 31, 2023, compared to the
prior fiscal year period.1
- GAAP EPS was $2.65 per diluted
share for the fiscal six months ended December 31, 2023, compared to $2.56 in the prior fiscal year period.
- Cash was $27 million at
December 31, 2023, and $26 million at December
31, 2022.
- Debt related to credit facilities was $255 million at December
31, 2023, and $275 million at
December 31, 2022.
Full year fiscal 2024 guidance:2
|
Current
|
|
Previous
|
GAAP
|
Low
|
High
|
|
Low
|
High
|
Revenue
updated
|
$2,215
|
$2,228
|
|
$2,211
|
$2,232
|
Operating
margin
|
21.8 %
|
21.9 %
|
|
21.8 %
|
21.9 %
|
EPS updated
|
$5.09
|
$5.13
|
|
$4.98
|
$5.04
|
|
|
|
|
|
|
Non-GAAP3
|
|
|
|
|
|
Adjusted revenue
updated
|
$2,197
|
$2,210
|
|
$2,193
|
$2,214
|
Adjusted operating
margin updated
|
22.3 %
|
22.3 %
|
|
22.2 %
|
22.3 %
|
MONETT,
Mo., Feb. 6, 2024 /PRNewswire/ -- Jack Henry & Associates, Inc. (Nasdaq:
JKHY), a leading financial technology provider, today announced
results for the fiscal second quarter ended December 31,
2023.
According to David
Foss, Board Chair and CEO, "We are very pleased to report
overall strong performance for the second quarter of our fiscal
year. We had a record second quarter for sales bookings and
replenished our robust sales pipeline. We continue to see strong
interest in our broad array of innovative solutions and
differentiated technology modernization strategy. We remain very
well positioned in the industry through our unwavering focus on
helping community and regional financial institutions compete and
meet the evolving needs of their accountholders by delivering
modern solutions, seamless execution, and exceptional
service."
|
1 See tables below on page 4 reconciling non-GAAP
financial measures to GAAP.
2 The full year guidance assumes no acquisitions are
made during fiscal year 2024.
3 See tables below on page 9 reconciling fiscal
year 2024 GAAP to non-GAAP guidance.
4 See table below on page 15 reconciling net income
to non-GAAP EBITDA.
Operating Results
Revenue, operating expenses, operating income, and net income
for the three and six months ended December 31, 2023, compared
to the three and six months ended December 31, 2022, were as
follows (all dollar amounts in this section are in thousands,
except per share amounts):
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, In
Thousands)
|
Three Months
Ended
December
31,
|
|
% Change
|
|
Six Months
Ended
December
31,
|
|
% Change
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Services and
Support
|
$
311,992
|
|
$
290,700
|
|
7.3 %
|
|
$
654,197
|
|
$
610,849
|
|
7.1 %
|
Percentage of Total
Revenue
|
57.2 %
|
|
57.5 %
|
|
|
|
58.6 %
|
|
59.0 %
|
|
|
Processing
|
233,709
|
|
214,614
|
|
8.9 %
|
|
462,872
|
|
423,667
|
|
9.3 %
|
Percentage of Total
Revenue
|
42.8 %
|
|
42.5 %
|
|
|
|
41.4 %
|
|
41.0 %
|
|
|
REVENUE
|
$
545,701
|
|
$
505,314
|
|
8.0 %
|
|
$
1,117,069
|
|
$
1,034,516
|
|
8.0 %
|
- Services and support revenue increased for the three months
ended December 31, 2023, primarily
driven by growth in data processing and hosting revenue of 11.0%.
Another driver was the increase in user group revenue due to the
timing of the user group meetings this year compared to the prior
year. Processing revenue increased for the three months ended
December 31, 2023, primarily driven
by growth in Jack Henry digital
revenue (including Banno) and card revenue of 29.6% and 5.6%,
respectively. Other drivers were increases in remote capture and
ACH, other processing, and payment processing revenues.
- Services and support revenue increased for the six months ended
December 31, 2023, primarily driven
by growth in data processing and hosting revenue of 10.7%. Other
drivers were increases in software usage and hardware revenues.
Processing revenue increased for the six months ended December 31, 2023, primarily driven by growth in
card and Jack Henry digital
(including Banno) revenues of 5.6% and 28.5%, respectively. Other
drivers were increases in other processing, payment processing, and
remote capture and ACH revenues.
- For the three months ended December 31,
2023, core segment revenue increased 7.9%, payments segment
revenue increased 6.5%, complementary segment revenue increased
7.3%, and corporate and other segment revenue increased 30.9%.
Non-GAAP adjusted core segment revenue increased 8.1%, non-GAAP
adjusted payments segment revenue increased 6.4%, non-GAAP adjusted
complementary segment revenue increased 8.6%, and non-GAAP adjusted
corporate and other segment revenue increased 30.8% (see revenue
lines of segment break-out tables on pages 5 and 6 below).
- For the six months ended December 31,
2023, core segment revenue increased 7.7%, payments segment
revenue increased 6.7%, complementary segment revenue increased
8.0%, and corporate and other segment revenue increased 22.7%.
Non-GAAP adjusted core segment revenue increased 7.9%, non-GAAP
adjusted payments segment revenue increased 6.2%, non-GAAP adjusted
complementary segment revenue increased 8.6%, and non-GAAP adjusted
corporate and other segment revenue increased 22.7% (see revenue
lines of segment break-out tables on pages 7 and 8 below).
Operating Expenses
and Operating Income
|
|
|
|
|
|
|
|
|
|
(Unaudited, In
Thousands)
|
Three Months
Ended
December
31,
|
|
% Change
|
|
Six Months
Ended
December
31,
|
|
% Change
|
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
|
Cost of
Revenue
|
$
320,979
|
|
$
304,589
|
|
5.4 %
|
|
$
643,981
|
|
$
602,849
|
|
6.8 %
|
|
Percentage of Total
Revenue5
|
58.8 %
|
|
60.3 %
|
|
|
|
57.6 %
|
|
58.3 %
|
|
|
|
Research and
Development
|
35,478
|
|
36,561
|
|
(3.0) %
|
|
72,370
|
|
69,554
|
|
4.0 %
|
|
Percentage of Total
Revenue5
|
6.5 %
|
|
7.2 %
|
|
|
|
6.5 %
|
|
6.7 %
|
|
|
|
Selling, General, and
Administrative
|
70,277
|
|
56,788
|
|
23.8 %
|
|
149,051
|
|
114,013
|
|
30.7 %
|
|
Percentage of Total
Revenue5
|
12.9 %
|
|
11.2 %
|
|
|
|
13.3 %
|
|
11.0 %
|
|
|
|
OPERATING
EXPENSES
|
426,734
|
|
397,938
|
|
7.2 %
|
|
865,402
|
|
786,416
|
|
10.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
$
118,967
|
|
$
107,376
|
|
10.8 %
|
|
$
251,667
|
|
$
248,100
|
|
1.4 %
|
|
Operating
Margin5
|
21.8 %
|
|
21.2 %
|
|
|
|
22.5 %
|
|
24.0 %
|
|
|
|
- Cost of revenue increased for the three months ended
December 31, 2023, primarily due to
higher direct costs consistent with increases in the related
revenue, increased internal licenses and fees, and higher personnel
costs due to an increase in employee headcount in the trailing
twelve months. Cost of revenue increased for the six months ended
December 31, 2023, primarily due to
higher direct costs consistent with increases in the related
revenue, higher personnel costs due to an increase in employee
headcount in the trailing twelve months, and increased internal
licenses and fees.
- Research and development expense decreased for the three months
ended December 31, 2023, primarily
due to lower personnel costs (net of capitalized personnel costs)
from a decrease in employee headcount in the trailing twelve
months. Research and development expense increased for the six
months ended December 31, 2023,
primarily due to higher personnel costs (net of capitalized
personnel costs) related to the Payrailz, LLC ("Payrailz")
acquisition6 and Jack Henry Platform.
- Selling, general, and administrative expense increased for the
three months ended December 31, 2023,
primarily due to higher personnel costs from increased medical
insurance and commissions, increased travel and entertainment, and
meeting expenses, both related to user group meetings during the
current quarter. Selling, general, and administrative expense
increased for the six months ended December
31, 2023, primarily due to higher personnel costs from the
voluntary employee departure incentive payment (VEDIP)
program7 of $16,443,7 and
a decrease in the gain on sale of assets, net, period over
period.
Net Income
(Unaudited, In
Thousands,
Except Per Share
Data)
|
Three Months
Ended
December
31,
|
|
% Change
|
|
Six Months
Ended
December
31,
|
|
% Change
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
Income Before Income
Taxes
|
$
120,223
|
|
$ 105,210
|
|
14.3 %
|
|
$
253,471
|
|
$
244,510
|
|
3.7 %
|
Provision for Income
Taxes
|
28,258
|
|
24,435
|
|
15.6 %
|
|
59,827
|
|
57,186
|
|
4.6 %
|
NET
INCOME
|
$
91,965
|
|
$
80,775
|
|
13.9 %
|
|
$
193,644
|
|
$ 187,324
|
|
3.4 %
|
Diluted earnings per
share
|
$
1.26
|
|
$
1.10
|
|
14.1 %
|
|
$
2.65
|
|
$
2.56
|
|
3.6 %
|
- Effective tax rates for the three months ended December 31, 2023, and 2022 were 23.5% and 23.2%,
respectively. Effective tax rates for the six months ended
December 31, 2023, and 2022 were
23.6% and 23.4%, respectively.
According to Mimi
Carsley, CFO and Treasurer, "Our solid second quarter results
began with 8% non-GAAP revenue growth driven by sustained demand
for our private cloud and processing services. As a consequence of
that strong organic revenue growth and the SaaS nature of our
business, non-GAAP operating income grew over 14%."
|
5 Operating margin is calculated by dividing
operating income by revenue. Operating margin plus operating
expense components as a percentage of total revenue may not equal
100% due to rounding.
6 On August 31, 2022, the Company acquired all
the equity interest in Payrailz.
7 The VEDIP program was a voluntary separation
program offered by the Company to certain eligible employees
beginning in July 2023.
Impact of Non-GAAP Adjustments
The tables below show our revenue, operating income, and net
income (in thousands) for the three and six months ended
December 31, 2023, compared to the three and six months ended
December 31, 2022, excluding the impacts of deconversions,
acquisitions, the VEDIP program expense,* and the gain on sale of
assets, net.
On August 31, 2022, the Company acquired all the equity
interest in Payrailz (the "acquisition"). Payrailz related revenue,
operating expenses, operating income, and net income excluded in
the tables below in the column for the six months ended
December 31, 2023, include Payrailz activity for the first two
months of the fiscal year only.
(Unaudited, In
Thousands)
|
Three Months
Ended
December 31,
|
|
% Change
|
|
Six Months Ended
December 31,
|
|
% Change
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Revenue
|
$
545,701
|
|
$
505,314
|
|
8.0 %
|
|
$
1,117,069
|
|
$
1,034,516
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Deconversion
revenue
|
(4,882)
|
|
(6,380)
|
|
|
|
(9,018)
|
|
(10,899)
|
|
|
Revenue from
acquisition
|
—
|
|
—
|
|
|
|
(1,945)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
REVENUE
|
$
540,819
|
|
$
498,934
|
|
8.4 %
|
|
$
1,106,106
|
|
$
1,023,617
|
|
8.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
$
118,967
|
|
$
107,376
|
|
10.8 %
|
|
$
251,667
|
|
$
248,100
|
|
1.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income from
deconversions
|
(3,803)
|
|
(5,463)
|
|
|
|
(7,558)
|
|
(9,330)
|
|
|
Operating loss from
acquisition
|
—
|
|
—
|
|
|
|
2,237
|
|
—
|
|
|
VEDIP program
expense*
|
—
|
|
—
|
|
|
|
16,443
|
|
—
|
|
|
Gain on sale of assets,
net
|
—
|
|
(1,207)
|
|
|
|
—
|
|
(7,383)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME
|
$
115,164
|
|
$
100,706
|
|
14.4 %
|
|
$
262,789
|
|
$
231,387
|
|
13.6 %
|
Non-GAAP Adjusted
Operating Margin**
|
21.3 %
|
|
20.2 %
|
|
|
|
23.8 %
|
|
22.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
91,965
|
|
$
80,775
|
|
13.9 %
|
|
$
193,644
|
|
$
187,324
|
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
deconversions
|
(3,803)
|
|
(5,463)
|
|
|
|
(7,558)
|
|
(9,330)
|
|
|
VEDIP program
expense*
|
—
|
|
—
|
|
|
|
16,443
|
|
—
|
|
|
Net loss from
acquisition
|
—
|
|
—
|
|
|
|
4,656
|
|
—
|
|
|
Gain on sale of assets,
net
|
—
|
|
(1,207)
|
|
|
|
—
|
|
(7,383)
|
|
|
Tax impact of
adjustments***
|
913
|
|
1,600
|
|
|
|
(3,250)
|
|
4,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
NET INCOME
|
$
89,075
|
|
$
75,705
|
|
17.7 %
|
|
$
203,935
|
|
$
174,622
|
|
16.8 %
|
*The VEDIP program expense for the six months ended December 31, 2023, was related to a voluntary
separation program offered by the Company to certain eligible
employees beginning in July 2023.
**Non-GAAP adjusted operating margin is calculated by dividing
non-GAAP adjusted operating income by non-GAAP adjusted
revenue.
***The tax impact of adjustments is calculated using a tax rate
of 24% for the three and six months periods of 2023 and for the
three and six month periods of 2022. Our tax rate for
non-GAAP adjustment items takes a broad look at our recurring tax
adjustments and applies them to non-GAAP revenue that does not have
its own specific tax impacts.
The tables below show the segment break-out of revenue and cost
of revenue for each period presented, as adjusted for the items
above, and include a reconciliation to non-GAAP adjusted operating
income presented above.
|
Three Months Ended
December 31, 2023
|
(Unaudited, In
Thousands)
|
Core
|
|
Payments
|
|
Complementary
|
|
Corporate
and Other
|
|
Total
|
GAAP
REVENUE
|
$
165,601
|
|
$ 203,839
|
|
$ 152,466
|
|
$
23,795
|
|
$
545,701
|
Non-GAAP
adjustments*
|
(1,929)
|
|
(1,555)
|
|
(1,355)
|
|
(43)
|
|
(4,882)
|
NON-GAAP ADJUSTED
REVENUE
|
163,672
|
|
202,284
|
|
151,111
|
|
23,752
|
|
540,819
|
|
|
|
|
|
|
|
|
|
|
GAAP COST OF
REVENUE
|
69,370
|
|
111,623
|
|
64,023
|
|
75,963
|
|
320,979
|
Non-GAAP
adjustments*
|
(321)
|
|
(51)
|
|
(249)
|
|
—
|
|
(621)
|
NON-GAAP ADJUSTED
COST OF REVENUE
|
69,049
|
|
111,572
|
|
63,774
|
|
75,963
|
|
320,358
|
|
|
|
|
|
|
|
|
|
|
GAAP SEGMENT
INCOME
|
$
96,231
|
|
$
92,216
|
|
$
88,443
|
|
$
(52,168)
|
|
|
Segment Income
Margin**
|
58.1 %
|
|
45.2 %
|
|
58.0 %
|
|
(219.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
SEGMENT INCOME
|
$
94,623
|
|
$
90,712
|
|
$
87,337
|
|
$
(52,211)
|
|
|
Non-GAAP Adjusted
Segment Income Margin**
|
57.8 %
|
|
44.8 %
|
|
57.8 %
|
|
(219.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
|
|
|
|
|
|
35,478
|
Selling, General, and
Administrative
|
|
|
|
|
|
|
|
|
70,277
|
Non-GAAP adjustments
unassigned to a segment***
|
|
|
|
|
|
|
|
(458)
|
NON-GAAP TOTAL
ADJUSTED OPERATING EXPENSES
|
|
|
|
|
|
|
|
425,655
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME
|
|
|
|
|
|
|
|
$
115,164
|
*Revenue non-GAAP adjustments for all segments were deconversion
revenue. Cost of revenue non-GAAP adjustments for all. segments
were deconversion costs.
**Segment income margin is calculated by dividing segment income
by revenue. Non-GAAP adjusted segment income margin is calculated
by dividing non-GAAP adjusted segment income by non-GAAP adjusted
revenue.
***Non-GAAP adjustments unassigned to a segment were
deconversion costs.
|
Three Months Ended
December 31, 2022
|
(Unaudited, In
Thousands)
|
Core
|
|
Payments
|
|
Complementary
|
|
Corporate
and Other
|
|
Total
|
GAAP
REVENUE
|
$ 153,539
|
|
$
191,477
|
|
$
142,121
|
|
$
18,177
|
|
$
505,314
|
Non-GAAP
adjustments*
|
(2,115)
|
|
(1,336)
|
|
(2,914)
|
|
(15)
|
|
(6,380)
|
NON-GAAP ADJUSTED
REVENUE
|
151,424
|
|
190,141
|
|
139,207
|
|
18,162
|
|
498,934
|
|
|
|
|
|
|
|
|
|
|
GAAP COST OF
REVENUE
|
66,666
|
|
107,413
|
|
58,944
|
|
71,566
|
|
304,589
|
Non-GAAP
adjustments*
|
(277)
|
|
(95)
|
|
(174)
|
|
(9)
|
|
(555)
|
NON-GAAP ADJUSTED
COST OF REVENUE
|
66,389
|
|
107,318
|
|
58,770
|
|
71,557
|
|
304,034
|
|
|
|
|
|
|
|
|
|
|
GAAP SEGMENT
INCOME
|
$
86,873
|
|
$
84,064
|
|
$
83,177
|
|
$ (53,389)
|
|
|
Segment Income
Margin
|
56.6 %
|
|
43.9 %
|
|
58.5 %
|
|
(293.7) %
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
SEGMENT INCOME
|
$
85,035
|
|
$
82,823
|
|
$
80,437
|
|
$ (53,395)
|
|
|
Non-GAAP Adjusted
Segment Income Margin
|
56.2 %
|
|
43.6 %
|
|
57.8 %
|
|
(294.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
|
|
|
|
|
|
36,561
|
Selling, General, and
Administrative
|
|
|
|
|
|
|
|
|
56,788
|
Non-GAAP adjustments
unassigned to a segment**
|
|
|
|
|
|
|
|
845
|
NON-GAAP TOTAL
ADJUSTED OPERATING EXPENSES
|
|
|
|
|
|
|
|
398,228
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME
|
|
|
|
|
|
|
|
$
100,706
|
*Revenue non-GAAP adjustments were all deconversion revenues.
Cost of revenue non-GAAP adjustments were all related to
deconversions.
**Non-GAAP adjustments unassigned to a segment were deconversion
costs of $362 and the gain on sale of
assets, net, of $1,207.
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
December 31, 2023
|
(Unaudited, In
Thousands)
|
Core
|
|
Payments
|
|
Complementary
|
|
Corporate
and Other
|
|
Total
|
GAAP
REVENUE
|
$ 352,041
|
|
$
403,195
|
|
$
313,833
|
|
$
48,000
|
|
$
1,117,069
|
Non-GAAP
adjustments*
|
(3,595)
|
|
(4,505)
|
|
(2,806)
|
|
(57)
|
|
(10,963)
|
NON-GAAP ADJUSTED
REVENUE
|
348,446
|
|
398,690
|
|
311,027
|
|
47,943
|
|
1,106,106
|
|
|
|
|
|
|
|
|
|
|
GAAP COST OF
REVENUE
|
145,296
|
|
220,449
|
|
126,298
|
|
151,938
|
|
643,981
|
Non-GAAP
adjustments*
|
(425)
|
|
(3,411)
|
|
(367)
|
|
(21)
|
|
(4,224)
|
NON-GAAP ADJUSTED
COST OF REVENUE
|
144,871
|
|
217,038
|
|
125,931
|
|
151,917
|
|
639,757
|
|
|
|
|
|
|
|
|
|
|
GAAP SEGMENT
INCOME
|
$ 206,745
|
|
$
182,746
|
|
$
187,535
|
|
$ (103,938)
|
|
|
Segment Income
Margin
|
58.7 %
|
|
45.3 %
|
|
59.8 %
|
|
(216.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
SEGMENT INCOME
|
$ 203,575
|
|
$
181,652
|
|
$
185,096
|
|
$ (103,974)
|
|
|
Non-GAAP Adjusted
Segment Income Margin
|
58.4 %
|
|
45.6 %
|
|
59.5 %
|
|
(216.9) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
|
|
|
|
|
|
72,370
|
Selling, General, and
Administrative
|
|
|
|
|
|
|
|
|
149,051
|
Non-GAAP adjustments
unassigned to a segment**
|
|
|
|
|
|
|
|
(17,861)
|
NON-GAAP TOTAL
ADJUSTED OPERATING EXPENSES
|
|
|
|
|
|
|
|
843,317
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME
|
|
|
|
|
|
|
|
$
262,789
|
*Revenue non-GAAP adjustments for the Core, Complementary, and
Corporate and Other segments were deconversion revenue. Revenue
non-GAAP adjustments for the Payments segment were deconversion
revenue of $(2,560) and acquisition
revenue of $(1,945). Cost of revenue
non-GAAP adjustments for the Core and Complementary.segments were
deconversion costs. Cost of revenue non-GAAP adjustments for the
Payments and Corporate and Other segments were deconversion costs
of $(98) and $(1), respectively, and acquisition costs of
$(3,313) and $(20), respectively.
**Non-GAAP adjustments unassigned to a segment were VEDIP
expenses of $(16,443), acquisition
costs of $(848), and deconversion
costs of $(570).
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
December 31, 2022
|
(Unaudited, In
Thousands)
|
Core
|
|
Payments
|
|
Complementary
|
|
Corporate
and Other
|
|
Total
|
GAAP
REVENUE
|
$ 326,853
|
|
$ 378,010
|
|
$
290,539
|
|
$
39,114
|
|
$
1,034,516
|
Non-GAAP
adjustments*
|
(3,933)
|
|
(2,771)
|
|
(4,149)
|
|
(46)
|
|
(10,899)
|
NON-GAAP ADJUSTED
REVENUE
|
322,920
|
|
375,239
|
|
286,390
|
|
39,068
|
|
1,023,617
|
|
|
|
|
|
|
|
|
|
|
GAAP COST OF
REVENUE
|
137,270
|
|
207,965
|
|
117,049
|
|
140,565
|
|
602,849
|
Non-GAAP
adjustments*
|
(418)
|
|
(159)
|
|
(372)
|
|
(16)
|
|
(965)
|
NON-GAAP ADJUSTED
COST OF REVENUE
|
136,852
|
|
207,806
|
|
116,677
|
|
140,549
|
|
601,884
|
|
|
|
|
|
|
|
|
|
|
GAAP SEGMENT
INCOME
|
$ 189,583
|
|
$ 170,045
|
|
$
173,490
|
|
$
(101,451)
|
|
|
Segment Income
Margin
|
58.0 %
|
|
45.0 %
|
|
59.7 %
|
|
(259.4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
SEGMENT INCOME
|
$ 186,068
|
|
$ 167,433
|
|
$
169,713
|
|
$
(101,481)
|
|
|
Non-GAAP Adjusted
Segment Income Margin
|
57.6 %
|
|
44.6 %
|
|
59.3 %
|
|
(259.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
Development
|
|
|
|
|
|
|
|
|
69,554
|
Selling, General, and
Administrative
|
|
|
|
|
|
|
|
|
114,013
|
Non-GAAP adjustments
unassigned to a segment**
|
|
|
|
|
|
|
|
6,779
|
NON-GAAP TOTAL
ADJUSTED OPERATING EXPENSES
|
|
|
|
|
|
|
|
792,230
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME
|
|
|
|
|
|
|
|
$
231,387
|
*Revenue non-GAAP adjustments for all segments were deconversion
revenue. Cost of revenue non-GAAP adjustments for all segments were
deconversion costs.
**Non-GAAP adjustments unassigned to a segment were
deconversion costs of $(604) and the
gain on sale of assets, net, of $7,383.
The table below shows our GAAP to non-GAAP guidance for the
fiscal year ending June 30, 2024.
Non-GAAP guidance excludes the impacts of deconversion revenue
and related operating expenses, acquisition revenue and costs
related to the August 31, 2022,
Payrailz acquisition,* costs related to the July 2023 VEDIP program, and assumes no
acquisitions or dispositions are made during fiscal year 2024.
|
GAAP to Non-GAAP
GUIDANCE (In Millions, except per share data)
|
|
Annual
FY24**
|
|
|
|
Low
|
|
High
|
|
GAAP
REVENUE
|
|
$
2,215
|
|
$
2,228
|
|
Growth
|
|
6.6 %
|
|
7.2 %
|
|
Deconversions***
|
|
16
|
|
16
|
|
Acquisition
|
|
2
|
|
2
|
|
NON-GAAP ADJUSTED
REVENUE**
|
|
$
2,197
|
|
$
2,210
|
|
Non-GAAP Adjusted
Growth
|
|
7.4 %
|
|
8.0 %
|
|
|
|
|
|
|
|
GAAP OPERATING
EXPENSES
|
|
$
1,731
|
|
$
1,740
|
|
Growth
|
|
8.4 %
|
|
9.0 %
|
|
Deconversion
costs***
|
|
3
|
|
3
|
|
Acquisition
costs
|
|
4
|
|
4
|
|
VEDIP
Program****
|
|
16
|
|
16
|
|
NON-GAAP ADJUSTED
OPERATING EXPENSES**
|
|
$
1,708
|
|
$
1,717
|
|
Non-GAAP Adjusted
Growth
|
|
6.9 %
|
|
7.5 %
|
|
|
|
|
|
|
|
GAAP OPERATING
INCOME
|
|
$
484
|
|
$
488
|
|
Growth
|
|
0.7 %
|
|
1.5 %
|
|
|
|
|
|
|
|
GAAP OPERATING
MARGIN
|
|
21.8 %
|
|
21.9 %
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING INCOME**
|
|
$
490
|
|
$
494
|
|
Non-GAAP Adjusted
Growth
|
|
9.1 %
|
|
10.0 %
|
|
|
|
|
|
|
|
NON-GAAP ADJUSTED
OPERATING MARGIN
|
|
22.3 %
|
|
22.3 %
|
|
|
|
|
|
|
|
GAAP
EPS
|
|
$
5.09
|
|
$
5.13
|
|
Growth
|
|
1.4 %
|
|
2.2 %
|
*Excluded acquisition revenue and costs are for the first two
months of the fiscal year only (see "Impact of Non-GAAP
Adjustments") on page 4.
**GAAP to Non-GAAP revenue, operating expenses, and operating
income may not foot due to rounding.
***Deconversion revenue and related operating expenses are based
on actual results for the six months ended December 31, 2023 and estimates for the remainder
of fiscal year 2024 based on the lowest actual recent historical
results. See the Company's Form 8-K filed with the Securities and
Exchange Commission on January 29,
2024.
****This cost relates to the group of employees who participated
in a VEDIP program offered by the Company in July 2023 to certain employees of a specified
minimum age who had reached a specified minimum number of years of
service with the Company.
Balance Sheet and Cash Flow Review
- At December 31, 2023, cash and
cash equivalents increased to $27
million from $26 million at
December 31, 2022.
- Trade receivables totaled $271
million at December 31, 2023,
compared to $246 million at
December 31, 2022.
- The Company had $255 million of
borrowings at December 31, 2023
compared to $275 million of
borrowings at December 31, 2022.
- Total deferred revenue decreased to $269
million at December 31, 2023,
compared to $285 million a year
ago.
- Stockholders' equity increased to $1,724
million at December 31, 2023,
compared to $1,511 million a year
ago.
*See table below for Net Cash Provided by Operating Activities
and on page 15 for Return on Average Shareholders' Equity. Tables
reconciling the non-GAAP measures Free Cash Flow and Return on
Invested Capital (ROIC) to GAAP measures are also on page 15. See
the Use of Non-GAAP Financial Information section below for the
definitions of Free Cash Flow and ROIC.
The following table summarizes net cash from operating
activities:
(Unaudited, In
Thousands)
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
Net income
|
$
193,644
|
|
$
187,324
|
Depreciation
|
23,765
|
|
24,766
|
Amortization
|
75,366
|
|
68,946
|
Change in deferred
income taxes
|
(16,532)
|
|
(27,611)
|
Other non-cash
expenses
|
15,693
|
|
7,304
|
Change in
receivables
|
90,702
|
|
102,672
|
Change in deferred
revenue
|
(130,529)
|
|
(125,433)
|
Change in other assets
and liabilities
|
(13,437)
|
|
(47,257)
|
NET CASH FROM
OPERATING ACTIVITIES
|
$
238,672
|
|
$
190,711
|
The following table summarizes net cash from investing
activities:
(Unaudited, In
Thousands)
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
Payment for
acquisitions, net of cash acquired*
|
$
—
|
|
$
(229,628)
|
Capital
expenditures
|
(24,458)
|
|
(17,376)
|
Proceeds from
dispositions
|
878
|
|
27,885
|
Purchased
software
|
(2,971)
|
|
(1,027)
|
Computer software
developed
|
(83,408)
|
|
(81,046)
|
Purchase of
investments
|
(1,000)
|
|
—
|
NET CASH FROM
INVESTING ACTIVITIES
|
$
(110,959)
|
|
$
(301,192)
|
*During first quarter fiscal 2023, the Company completed its
acquisition of Payrailz.
The following table summarizes net cash from financing
activities:
(Unaudited, In
Thousands)
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
Borrowings on credit
facilities*
|
$
220,000
|
|
$
365,000
|
Repayments on credit
facilities and financing leases
|
(240,000)
|
|
(205,042)
|
Purchase of treasury
stock
|
(20,000)
|
|
—
|
Dividends
paid
|
(75,722)
|
|
(71,454)
|
Net cash from issuance
of stock and tax related to stock-based compensation
|
2,475
|
|
(1,047)
|
NET CASH FROM
FINANCING ACTIVITIES
|
$
(113,247)
|
|
$
87,457
|
*The Company's acquisition of Payrailz during first quarter
fiscal 2023 was primarily funded by new borrowings under the
Company's credit facilities.
Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used
to refer to the standard framework of guidelines for financial
accounting in the United States.
GAAP includes the standards, conventions, and rules accountants
follow in recording and summarizing transactions in the preparation
of financial statements. In addition to reporting financial results
in accordance with GAAP, we have provided certain non-GAAP
financial measures, including adjusted revenue, adjusted operating
income, adjusted segment income, adjusted cost of revenue, adjusted
operating expenses, adjusted operating margin, adjusted segment
income margin, non-GAAP earnings before interest, taxes,
depreciation, and amortization (non-GAAP EBITDA), free cash flow,
return on invested capital (ROIC), and non-GAAP adjusted net
income.
We believe non-GAAP financial measures help investors better
understand the underlying fundamentals and true operations of our
business. Adjusted revenue, adjusted operating income, adjusted
operating margin, adjusted segment income, adjusted segment income
margin, adjusted cost of revenue, adjusted operating expenses, and
adjusted net income eliminate one-time deconversion revenue and
associated costs, the effects of acquisitions and divestitures, the
VEDIP program expense, and the gain on sale of assets, net, all of
which management believes are not indicative of the Company's
operating performance. Such adjustments give investors further
insight into our performance. Non-GAAP EBITDA is defined as net
income attributable to the Company before the effect of interest
expense, taxes, depreciation, and amortization, adjusted for net
income before the effect of interest expense, taxes, depreciation,
and amortization attributable to eliminated one-time deconversions,
acquisitions and divestitures, the VEDIP program expense, and the
gain on sale of assets, net. Free cash flow is defined as net cash
from operating activities, less capitalized expenditures, internal
use software, and capitalized software, plus proceeds from the sale
of assets. ROIC is defined as net income divided by average
invested capital, which is the average of beginning and ending
long-term debt and stockholders' equity for a given period.
Management believes that non-GAAP EBITDA is an important measure of
the Company's overall operating performance and excludes certain
costs and other transactions that management deems one time or
non-operational in nature; free cash flow is useful to measure the
funds generated in a given period that are available for debt
service requirements and strategic capital decisions; and ROIC is a
measure of the Company's allocation efficiency and effectiveness of
its invested capital. For these reasons, management also uses these
non-GAAP financial measures in its assessment and management of the
Company's performance.
Non-GAAP financial measures used by the Company may not be
comparable to similarly titled non-GAAP measures used by other
companies. Non-GAAP financial measures have no standardized meaning
prescribed by GAAP and therefore, are unlikely to be comparable
with calculations of similar measures for other companies.
Any non-GAAP financial measures should be considered in context
with the GAAP financial presentation and should not be considered
in isolation or as a substitute for GAAP measures. Reconciliations
of the non-GAAP financial measures to related GAAP measures are
included.
Quarterly Conference Call
The Company will hold a conference call on February 7, 2024, 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.
About Jack Henry &
Associates, Inc.®
Jack Henry™ (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.
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.
Condensed
Consolidated Statements of Income (Unaudited)
|
|
(In Thousands, except
per share data)
|
Three Months Ended
December 31,
|
|
% Change
|
|
Six Months Ended
December 31,
|
|
% Change
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
545,701
|
|
$
505,314
|
|
8.0 %
|
|
$
1,117,069
|
|
$
1,034,516
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Revenue
|
320,979
|
|
304,589
|
|
5.4 %
|
|
643,981
|
|
602,849
|
|
6.8 %
|
Research and
Development
|
35,478
|
|
36,561
|
|
(3.0) %
|
|
72,370
|
|
69,554
|
|
4.0 %
|
Selling, General, and
Administrative
|
70,277
|
|
56,788
|
|
23.8 %
|
|
149,051
|
|
114,013
|
|
30.7 %
|
EXPENSES
|
426,734
|
|
397,938
|
|
7.2 %
|
|
865,402
|
|
786,416
|
|
10.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
118,967
|
|
107,376
|
|
10.8 %
|
|
251,667
|
|
248,100
|
|
1.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
5,121
|
|
1,240
|
|
313.0 %
|
|
9,866
|
|
1,392
|
|
608.8 %
|
Interest
expense
|
(3,865)
|
|
(3,406)
|
|
13.5 %
|
|
(8,062)
|
|
(4,982)
|
|
61.8 %
|
Interest Income
(Expense), net
|
1,256
|
|
(2,166)
|
|
(158.0) %
|
|
1,804
|
|
(3,590)
|
|
(150.3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
120,223
|
|
105,210
|
|
14.3 %
|
|
253,471
|
|
244,510
|
|
3.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
28,258
|
|
24,435
|
|
15.6 %
|
|
59,827
|
|
57,186
|
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
$ 91,965
|
|
$ 80,775
|
|
13.9 %
|
|
$
193,644
|
|
$
187,324
|
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share
|
$
1.26
|
|
$
1.10
|
|
|
|
$
2.65
|
|
$ 2.56
|
|
|
Diluted weighted
average shares outstanding
|
72,984
|
|
73,144
|
|
|
|
72,999
|
|
73,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance
Sheet Highlights (Unaudited)
|
(In
Thousands)
|
|
|
|
|
|
|
December
31,
|
|
% Change
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
$ 26,709
|
|
$ 25,763
|
|
3.7 %
|
Receivables
|
|
|
|
|
|
|
270,551
|
|
246,378
|
|
9.8 %
|
Total assets
|
|
|
|
|
|
|
2,753,976
|
|
2,578,277
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
|
|
|
$
207,230
|
|
$
192,774
|
|
7.5 %
|
Current and long-term
debt
|
|
|
|
|
|
|
255,000
|
|
275,021
|
|
(7.3) %
|
Deferred
revenue
|
|
|
|
|
|
|
269,200
|
|
284,843
|
|
(5.5) %
|
Stockholders'
equity
|
|
|
|
|
|
|
1,724,387
|
|
1,510,990
|
|
14.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Non-GAAP Earnings Before Income Taxes, Depreciation and
Amortization (Non-GAAP EBITDA)
|
|
|
Three Months
Ended
December 31,
|
|
% Change
|
|
Six Months Ended
December 31,
|
|
% Change
|
(in
thousands)
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
|
|
Net income
|
$ 91,965
|
|
$ 80,775
|
|
|
|
$
193,644
|
|
$
187,324
|
|
|
Net interest
|
(1,256)
|
|
2,166
|
|
|
|
(1,804)
|
|
3,590
|
|
|
Taxes
|
28,258
|
|
24,435
|
|
|
|
59,827
|
|
57,186
|
|
|
Depreciation and
amortization
|
49,896
|
|
48,102
|
|
|
|
99,131
|
|
93,712
|
|
|
Less: Net income before
interest expense, taxes, depreciation and amortization attributable
to
eliminated one-time adjustments*
|
(3,803)
|
|
(6,670)
|
|
|
|
9,000
|
|
(16,713)
|
|
|
NON-GAAP
EBITDA
|
$
165,060
|
|
$
148,808
|
|
10.9 %
|
|
$
359,798
|
|
$
325,099
|
|
10.7 %
|
*The fiscal second
quarter adjustments for net income before interest expense, taxes,
depreciation and amortization were for deconversions. The
fiscal year-to-date period adjustments were for deconversions, the
VEDIP program expense, and the acquisition, and were $(7,557),
$16,443, and $114, respectively. The prior fiscal second quarter
adjustments for net income before interest expense,
taxes, depreciation and amortization were for deconversions and the
gain on sale of assets, net, and were $5,463 and $1,207,
respectively. The prior fiscal year-to-date period adjustments were
for deconversions and a gain on sale of assets, net, and
were $9,329 and $7,384, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Free
Cash Flow (Non-GAAP)
|
|
|
|
|
|
Six Months Ended
December 31,
|
|
|
(in
thousands)
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Net cash from operating
activities
|
|
|
|
|
|
$
238,672
|
|
$ 190,712
|
|
|
Capitalized
expenditures
|
|
|
|
|
|
|
(24,458)
|
|
(17,376)
|
|
|
Internal use
software
|
|
|
|
|
|
|
(2,971)
|
|
(1,027)
|
|
|
Proceeds from sale of
assets
|
|
|
|
|
|
|
878
|
|
27,885
|
|
|
Capitalized
software
|
|
|
|
|
|
|
(83,408)
|
|
(81,046)
|
|
|
FREE CASH
FLOW
|
|
|
|
|
|
|
$
128,713
|
|
$ 119,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of the
Return on Average Shareholders' Equity
|
|
|
|
December
31,
|
|
|
(in
thousands)
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Net income (trailing
four quarters)
|
|
|
|
|
|
$
372,966
|
|
$
352,457
|
|
|
Average stockholder's
equity (period beginning and ending balances)
|
|
|
|
1,617,689
|
|
1,391,493
|
|
|
RETURN ON AVERAGE
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
23.1 %
|
|
25.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Return on Invested Capital (ROIC) (Non-GAAP)
|
|
|
December
31,
|
|
|
(in
thousands)
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Net income (trailing
four quarters)
|
|
|
|
|
|
$
372,966
|
|
$
352,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholder's
equity (period beginning and ending balances)
|
|
|
|
1,617,689
|
|
1,391,493
|
|
|
Average current
maturities of long-term debt (period beginning and ending
balances)
|
|
11
|
|
62
|
|
|
Average long-term debt
(period beginning and ending balances)
|
|
265,000
|
|
257,513
|
|
|
Average invested
capital
|
|
|
|
|
|
|
$
1,882,700
|
|
$
1,649,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROIC
|
|
|
|
|
|
|
19.8 %
|
|
21.4 %
|
|
|
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SOURCE Jack Henry &
Associates, Inc.