Jack Henry (JKHY) Q2 Earnings Miss Estimates, Revenues Rise Y/Y
Jack Henry & Associates, Inc. JKHY reported second-quarter fiscal 2023 earnings of $1.10 per share, which missed the Zacks Consensus Estimate by 0.9%. Further, the bottom line decreased 15.4% from the year-ago fiscal quarter’s reported figure.
Revenues improved 2% from the year-ago fiscal quarter’s reading to $505.3 million. The figure lagged the Zacks Consensus Estimate of $519.7 million.
JKHY’s non-GAAP revenues were $496.4 million, up 6% from the year-ago fiscal quarter’s level.
Top-line growth was driven by growing processing revenues. Additionally, strong momentum across the Payments and Complementary segments drove the results.
However, declining services and support revenues and weakness in Corporate segment remained concerns.
Jack Henry & Associates, Inc. Price, Consensus and EPS Surprise
Jack Henry & Associates, Inc. price-consensus-eps-surprise-chart | Jack Henry & Associates, Inc. Quote
Top Line in Detail
Services & Support: Jack Henry generated revenues of $290.7 million from the category (58% of revenues). The figure fell 2% from the year-ago fiscal quarter’s level, owing to a 64% decline in deconversion fees.
Processing: The category yielded $214.6 million (42% of revenues) in the reported quarter, up 9% from the year-ago fiscal quarter’s actuals. This can be attributed to 7% growth in Jack Henry's card-processing fee revenues. Also, growing payment processing and digital revenues contributed well.
Segments in Detail
Core: Revenues totaled $155.4 million (31% of the top line), up 0.3% from the year-ago fiscal quarter’s tally.
Payments: Revenues summed $191.5 million (38% of the total revenues), increasing 3% from the year-ago fiscal quarter’s level.
Complementary: Revenues came in at $142.3 million (28% of the total revenues), up 4% from the year-earlier fiscal quarter’s number.
Corporate & Other: Revenues grossed $16.1 million (3% of the total revenues), down 5% from the prior-year fiscal quarter’s level.
In second-quarter fiscal 2023, total operating expenses were $397.9 million, reflecting an 8% increase from the prior-year fiscal quarter. This can primarily be attributed to higher personnel and travel costs.
As a percentage of revenues, the figure expanded 410 basis points (bps) from the year-ago fiscal quarter’s number to 78.7%.
The operating margin was 21% and contracted 400 bps from the year-ago fiscal quarter’s number.
The reported quarter's operating margin was 21%, down 400 basis points from the previous fiscal quarter.
As of Dec 31, 2022, cash and cash equivalents totaled $26 million, which decreased from $32 million as of Sep 30, 2022.
Trade receivables were $246.4 million in the reported quarter, down from $247.5 million in the previous fiscal quarter.
The current and long-term debt stood at $275.02 million at the end of the second-quarter fiscal 2023 compared with $245.04 million at the end of the first quarter of fiscal 2023.
For fiscal 2023, Jack Henry reduced its guidance for GAAP revenues from $2.092-$2.099 billion to $2.048-$2.055 billion. The Zacks Consensus Estimate for revenues is pegged at $2.09 billion.
It also trimmed its guidance for non-GAAP revenues from $2.045-$2.052 billion to $2.021-$2.028 billion.
Management lowered the guidance for earnings from $4.90-$4.94 to $4.79-$4.83 per share. The Zacks Consensus Estimate for the same is pegged at $4.93 per share.
Zacks Rank & Stocks to Consider
Jack Henry currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies A, Arista Networks ANET and Asure Software ASUR. While Agilent Technologies sports a Zacks Rank #1 (Strong Buy), Arista Networks and Asure Software carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is currently projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is currently projected at 17.5%.
Asure Software has gained 51.9% in the past year. The long-term earnings growth rate for ASUR is currently projected at 23%.
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