Jack Henry & Associates, Inc. Reports First Quarter Fiscal 2025 Results
First quarter summary:
GAAP revenue increased 5.2% and GAAP operating income increased 14.0% for the fiscal three months ended September 30, 2024, compared to the prior fiscal year quarter.
Non-GAAP adjusted revenue increased 5.3% and non-GAAP adjusted operating income increased 1.6% for the fiscal three months ended September 30, 2024, compared to the prior fiscal year quarter.1
GAAP EPS was $1.63 per diluted share for the fiscal three months ended September 30, 2024, compared to $1.39 per diluted share in the prior fiscal year quarter.
Cash and cash equivalents were $43 million at September 30, 2024, and $31 million at September 30, 2023.
Debt outstanding related to credit facilities was $140 million at September 30, 2024, and $245 million at September 30, 2023.
Full year fiscal 2025 guidance:2
Current
GAAP
Low
High
Revenue
$2,369
$2,391
Operating margin3
23.0 %
23.2 %
EPS
$5.78
$5.87
Non-GAAP4
Adjusted revenue
$2,353
$2,375
Adjusted operating margin
22.7 %
22.8 %
MONETT, Mo., Nov. 5, 2024 /PRNewswire/ -- Jack Henry & Associates, Inc. (NASDAQ:JKHY), a leading financial technology provider, today announced results for fiscal first quarter ended September 30, 2024.
According to Greg Adelson, President and CEO, "We are pleased to report another quarter of solid financial performance, which was slightly better than the outlook provided in August for FY Q1. Our sales team maintained positive momentum in the quarter with a new record sales attainment for Q1 and increased our sales pipeline to an all-time high. We had an outstanding Jack Henry Connect conference last month in Phoenix, where we strengthened relationships with clients and prospects and demonstrated our execution over the past year. We are energized and remain focused on our key differentiators: culture, service, and innovation."
1 See tables below on page 4 reconciling non-GAAP financial measures to GAAP.2 The full fiscal year guidance assumes no acquisitions or dispositions are made during fiscal year 2025.3Operating margin is calculated by dividing operating income by revenue.4 See tables below on page 7 reconciling fiscal year 2025 GAAP to non-GAAP guidance.5See table below on page 12 reconciling net income to non-GAAP EBITDA.
Operating Results
Revenue, operating expenses, operating income, and net income for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, were as follows:
Revenue
(Unaudited, In Thousands)
Three Months Ended
September 30,
%Change
2024
2023
Revenue
Services and Support
$ 356,679
$ 342,205
4.2 %
Percentage of Total Revenue
59.3 %
59.9 %
Processing
244,303
229,163
6.6 %
Percentage of Total Revenue
40.7 %
40.1 %
REVENUE
$ 600,982
$ 571,368
5.2 %
Services and support revenue increased for the three months ended September 30, 2024, primarily driven by growth in data processing and hosting revenue of 12.6%, partially offset by a decrease in license and hardware revenue of 35.9%. Processing revenue increased for the three months ended September 30, 2024, primarily driven by growth in card revenue of 5.1% and transaction and digital revenue of 10.9%. Other drivers were increases in payment processing and remote capture and ACH revenues.
For the three months ended September 30, 2024, core segment revenue increased 4.9%, payments segment revenue increased 6.3%, complementary segment revenue increased 6.4%, and corporate and other segment revenue decreased 10.2%. For the three months ended September 30, 2024, core segment non-GAAP adjusted revenue increased 5.2%, payments segment non-GAAP adjusted revenue increased 5.9%, complementary segment non-GAAP adjusted revenue increased 7.1%, and corporate and other non-GAAP adjusted segment revenue decreased 10.3% (see revenue lines of segment break-out tables on pages 5 and 6 below for a reconciliation of segment non-GAAP adjusted revenue to GAAP segment revenue).
Operating Expenses and Operating Income
(Unaudited, In Thousands)
Three Months Ended
September 30,
%Change
2024
2023
Cost of Revenue
$ 343,432
$ 323,002
6.3 %
Percentage of Total Revenue6
57.1 %
56.5 %
Research and Development
39,686
36,892
7.6 %
Percentage of Total Revenue6
6.6 %
6.5 %
Selling, General, and Administrative
66,588
78,774
(15.5) %
Percentage of Total Revenue6
11.1 %
13.8 %
OPERATING EXPENSES
449,706
438,668
2.5 %
OPERATING INCOME
$ 151,276
$ 132,700
14.0 %
Operating Margin6
25.2 %
23.2 %
Cost of revenue increased for the three months ended September 30, 2024, primarily due to higher direct costs generally consistent with increases in the related lines of revenue, higher personnel costs including benefits expenses from an increase in employee headcount in the trailing twelve months, higher internal licenses and fees from increased deployments and prices, and a rise in amortization from capital development projects placed into service in the trailing twelve months.
Research and development expense increased for the three months ended September 30, 2024, primarily due to higher personnel costs (net of capitalization) including benefits expenses from an increase in employee headcount in the trailing twelve months.
Selling, general, and administrative expense decreased for the three months ended September 30, 2024, primarily due to the decrease in non-recurring costs when compared to the prior fiscal year quarter.
Net Income
(Unaudited, In Thousands,
Except Per Share Data)
Three Months Ended
September 30,
%Change
2024
2023
Income Before Income Taxes
$ 156,798
$ 133,248
17.7 %
Provision for Income Taxes
37,607
31,569
19.1 %
NET INCOME
$ 119,191
$ 101,679
17.2 %
Diluted earnings per share
$ 1.63
$ 1.39
17.1 %
Effective tax rates for the three months ended September 30, 2024, and 2023, were 24.0% and 23.7%, respectively.
According to Mimi Carsley, CFO and Treasurer, "For the first quarter of the fiscal year, revenue and operating margins were aligned with our plan and expectations and we continue to expect stronger performance in the second half of our fiscal year. Our private cloud revenue grew over 11% and processing services continued to drive strong revenue growth at over 6%, each contributing to our overall revenue expansion of over 5% and operating income increase of 2% on a non-GAAP basis."
6Operating 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.
Impact of Non-GAAP Adjustments
The tables below show our revenue, operating income, and net income for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, excluding the impacts of deconversions and the VEDIP program expense.*
(Unaudited, In Thousands)
Three Months EndedSeptember 30,
%Change
2024
2023
GAAP Revenue**
$ 600,982
$ 571,368
5.2 %
Adjustments:
Deconversion revenue
(3,697)
(4,136)
NON-GAAP ADJUSTED REVENUE**
$ 597,285
$ 567,232
5.3 %
GAAP Operating Income
$ 151,276
$ 132,700
14.0 %
Adjustments:
Operating income from deconversions
(3,495)
(3,755)
VEDIP program expense*
—
16,443
NON-GAAP ADJUSTED OPERATING INCOME
$ 147,781
$ 145,388
1.6 %
Non-GAAP Adjusted Operating Margin***
24.7 %
25.6 %
GAAP Net Income
$ 119,191
$ 101,679
17.2 %
Adjustments:
Net income from deconversions
(3,495)
(3,755)
VEDIP program expense*
—
16,443
Tax impact of adjustments****
839
(3,045)
NON-GAAP ADJUSTED NET INCOME
$ 116,535
$ 111,322
4.7 %
*The VEDIP program expense for the fiscal three months ended September 30, 2024, was related to a Company voluntary separation program offered to certain eligible employees beginning in July 2023.
**GAAP revenue is comprised of services and support and processing revenues (see page 2). Reducing services and support revenue by deconversion revenue for the three months ended September 30, 2024, and 2023 which was $3,697 for the current fiscal year quarter and $4,136 for the prior fiscal year quarter, results in non-GAAP adjusted services and support revenue growth of 4.4% quarter over quarter. There were no non-GAAP adjustments to processing revenue for the three months ended September 30, 2024, or 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 months ended September 30, 2024, and 2023. The 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 September 30, 2024
(Unaudited, In Thousands)
Core
Payments
Complementary
Corporateand Other
Total
GAAP REVENUE
$ 195,624
$ 211,923
$ 171,702
$ 21,733
$ 600,982
Non-GAAP adjustments*
(1,287)
(1,914)
(473)
(23)
(3,697)
NON-GAAP ADJUSTED REVENUE
194,337
210,009
171,229
21,710
597,285
