(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Ticker symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | JKHY | Nasdaq Global Select Market |
JACK HENRY & ASSOCIATES, INC. | |||
(Registrant) | |||
Date: | November 4, 2019 | /s/ Kevin D. Williams | |
Kevin D. Williams | |||
Chief Financial Officer and Treasurer |
Jack Henry & Associates, Inc. | Kevin D. Williams | |
Press Release | Chief Financial Officer | |
(417) 235-6652 |
• | GAAP revenue increased 12% and operating income increased 14% for the quarter. |
• | Non-GAAP revenue increased 9% and operating income increased 9% for the quarter. |
• | GAAP EPS was $1.16 per diluted share for the quarter, compared to $1.08 in the prior year quarter. |
Revenue (Unaudited) | |||||||||
(In Thousands) | Three Months Ended September 30, | % Change | |||||||
2019 | 2018 | ||||||||
Revenue | |||||||||
Services & Support | $ | 278,808 | $ | 246,568 | 13 | % | |||
Percentage of Total Revenue | 64 | % | 63 | % | |||||
Processing | 159,197 | 145,975 | 9 | % | |||||
Percentage of Total Revenue | 36 | % | 37 | % | |||||
Total Revenue | $ | 438,005 | $ | 392,543 | 12 | % |
• | The increased revenue in the services and support line for the first quarter of fiscal 2020 was primarily due to organic growth in software usage and subscription fees within 'in-house support' revenue and data processing and hosting fees, which fall within our 'outsourcing and cloud' revenue stream. The increase in processing revenue was mainly driven by increased transaction volumes within the 'card' and 'remittance' components of processing revenue. Deconversion fees, which are included within services and support, increased $7.0 million compared to the first quarter of the prior year. Excluding deconversion fees from both periods, and revenue from the fiscal 2020 acquisition, total revenue increased 9% for the first quarter of fiscal 2020 compared to the same quarter of fiscal 2019. |
• | For the first quarter of fiscal 2020, core segment revenue increased 12% to $155.9 million from $139.2 million in the first quarter of fiscal 2019. Payments segment revenue increased 12% to $149.7 million, from $134.2 million in the same quarter last year. |
(Unaudited, In Thousands) | Three Months Ended September 30, | % Change | |||||||
2019 | 2018 | ||||||||
Cost of Revenue | $ | 245,791 | $ | 220,112 | 12 | % | |||
Percentage of Total Revenue | 56 | % | 56 | % | |||||
Research and Development | 24,591 | 24,026 | 2 | % | |||||
Percentage of Total Revenue | 6 | % | 6 | % | |||||
Selling, General, & Administrative | 49,436 | 45,183 | 9 | % | |||||
Percentage of Total Revenue | 11 | % | 12 | % | |||||
Total Operating Expenses | 319,818 | 289,321 | 11 | % | |||||
Operating Income | $ | 118,187 | $ | 103,222 | 14 | % | |||
Operating Margin | 27 | % | 26 | % |
• | Cost of revenue increased 12% for the first quarter of fiscal 2020 compared to the first quarter of fiscal 2019, but remained consistent as a percentage of revenue. Excluding costs related to deconversions and the fiscal 2020 acquisition, the cost of revenue increase was 11%. Overall, costs increased commensurate with increases in revenue. |
• | Research and development expense increased 2% for the first quarter of fiscal 2020. This increase was primarily due to increased salary and personnel costs. Headcount increased 5% at September 30, 2019 compared to a year ago. The quarter remained consistent with the prior year as a percentage of total revenue. |
• | Selling, general, and administrative expenses for the first quarter of fiscal 2020 increased mainly due to increased salaries and benefits primarily due to a 2% increase in headcount over the prior year quarter and pay raises during the trailing twelve-month period. Selling, general, and administrative expense decreased as a percentage of revenue for the first quarter. |
• | For the first quarter of fiscal 2020, operating income increased 14% to $118.2 million, or 27% of revenue, compared to $103.2 million, or 26% of revenue in the first quarter of fiscal 2019. |
(Unaudited, In Thousands, Except Per Share Data) | Three Months Ended September 30, | % Change | |||||||
2019 | 2018 | ||||||||
Income Before Income Taxes | $ | 118,539 | $ | 103,366 | 15 | % | |||
Provision for Income Taxes | 29,169 | 19,815 | 47 | % | |||||
Net Income | $ | 89,370 | $ | 83,551 | 7 | % | |||
Diluted earnings per share | $ | 1.16 | $ | 1.08 | 8 | % |
• | Provision for income taxes increased in the first quarter, with an effective tax rate at 24.6% of income before income taxes, compared to 19.2% for the same quarter of the prior year. The increase in the effective tax rate in the first quarter of fiscal 2020 was primarily due to the change in the impact of share-based compensation quarter-over-quarter. A significant excess tax benefit was recognized in the prior year quarter from share-based compensation, and share-based compensation resulted in an excess tax deficiency in the current quarter. |
(Unaudited, In Thousands) | Three Months Ended September 30, | % Change | ||||||||
2019 | 2018 | |||||||||
Reported Revenue (GAAP) | $ | 438,005 | $ | 392,543 | 12 | % | ||||
Adjustments: | ||||||||||
Deconversion fees | (14,886 | ) | (7,882 | ) | ||||||
Revenue from fiscal 2020 acquisition | (2,392 | ) | — | |||||||
Non-GAAP Revenue | $ | 420,727 | $ | 384,661 | 9 | % | ||||
Reported Operating Income (GAAP) | $ | 118,187 | $ | 103,222 | 14 | % | ||||
Adjustments: | ||||||||||
Deconversion fees | (13,649 | ) | (7,683 | ) | ||||||
Operating (income)/ loss from fiscal 2020 acquisition | (50 | ) | — | |||||||
Non-GAAP Operating Income | $ | 104,488 | $ | 95,539 | 9 | % |
(Unaudited, In Thousands) | Three Months Ended September 30, 2019 | ||||||||||||||||||
Core | Payments | Complementary | Corporate & Other | Total | |||||||||||||||
Revenue | $ | 155,896 | $ | 149,746 | $ | 117,195 | $ | 15,168 | $ | 438,005 | |||||||||
Deconversion Fees | (7,133 | ) | (4,970 | ) | (2,768 | ) | (15 | ) | (14,886 | ) | |||||||||
Revenue from fiscal 2019 acquisitions | — | — | (2,392 | ) | — | (2,392 | ) | ||||||||||||
Non-GAAP Revenue | 148,763 | 144,776 | 112,035 | 15,153 | 420,727 | ||||||||||||||
Cost of Revenue | 63,306 | 76,624 | 46,674 | 59,187 | 245,791 | ||||||||||||||
Non-GAAP Adjustments | (753 | ) | (98 | ) | (1,480 | ) | (72 | ) | (2,403 | ) | |||||||||
Non-GAAP Cost of Revenue | 62,553 | 76,526 | 45,194 | 59,115 | 243,388 | ||||||||||||||
Non- GAAP Segment Income | $ | 86,210 | $ | 68,250 | $ | 66,841 | $ | (43,962 | ) | ||||||||||
Research & Development | 24,591 | ||||||||||||||||||
Selling, General, & Administrative | 49,436 | ||||||||||||||||||
Other Non-GAAP Adjustments | (1,176 | ) | |||||||||||||||||
Non-GAAP Total Operating Expenses | 316,239 | ||||||||||||||||||
Non-GAAP Operating Income | $ | 104,488 |
(Unaudited, In Thousands) | Three Months Ended September 30, 2018 | ||||||||||||||||||
Core | Payments | Complementary | Corporate & Other | Total | |||||||||||||||
Revenue | $ | 139,155 | $ | 134,197 | $ | 105,705 | $ | 13,486 | $ | 392,543 | |||||||||
Deconversion Fees | (3,985 | ) | (2,073 | ) | (1,792 | ) | (32 | ) | (7,882 | ) | |||||||||
Non-GAAP Revenue | 135,170 | 132,124 | 103,913 | 13,454 | 384,661 | ||||||||||||||
Cost of Revenue | 59,216 | 65,707 | 41,830 | 53,359 | 220,112 | ||||||||||||||
Non-GAAP Adjustments | (2 | ) | (13 | ) | — | (184 | ) | (199 | ) | ||||||||||
Non-GAAP Cost of Revenue | 59,214 | 65,694 | 41,830 | 53,175 | 219,913 | ||||||||||||||
Non- GAAP Segment Income | $ | 75,956 | $ | 66,430 | $ | 62,083 | $ | (39,721 | ) | ||||||||||
Research & Development | 24,026 | ||||||||||||||||||
Selling, General, & Administrative | 45,183 | ||||||||||||||||||
Non-GAAP Total Operating Expenses | 289,122 | ||||||||||||||||||
Non-GAAP Operating Income | $ | 95,539 |
• | At September 30, 2019, cash and cash equivalents decreased to $96.7 million from $114.9 million at September 30, 2018. |
• | Trade receivables totaled $234.4 million at September 30, 2019 compared to $198.6 million at September 30, 2018. |
• | The company had no borrowings at September 30, 2019 or at September 30, 2018. |
• | Total deferred revenue increased to $325.6 million at September 30, 2019, compared to $317.8 million a year ago. |
• | Stockholders' equity increased to $1,476.7 million at September 30, 2019, compared to $1,368.6 million a year ago. |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||
2019 | 2018 | ||||||
Net income | $ | 89,370 | $ | 83,551 | |||
Depreciation | 12,708 | 10,903 | |||||
Amortization | 29,380 | 27,827 | |||||
Change in deferred income taxes | 2,359 | 730 | |||||
Other non-cash expenses | 2,861 | 1,801 | |||||
Change in receivables | 77,123 | 98,708 | |||||
Change in deferred revenue | (68,939 | ) | (52,151 | ) | |||
Change in other assets and liabilities | (21,810 | ) | (24,635 | ) | |||
Net cash provided by operating activities | $ | 123,052 | $ | 146,734 |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||
2019 | 2018 | ||||||
Payment for acquisitions, net of cash acquired | $ | (30,285 | ) | $ | — | ||
Capital expenditures | (13,101 | ) | (24,001 | ) | |||
Proceeds from the sale of assets | 10 | 33 | |||||
Purchased software | (2,424 | ) | (1,626 | ) | |||
Computer software developed | (28,475 | ) | (26,669 | ) | |||
Purchase of investments | (1,150 | ) | — | ||||
Net cash from investing activities | $ | (75,425 | ) | $ | (52,263 | ) |
• | On July 1, 2019, the Company acquired all of the equity interest of Geezeo for $30,285, net of cash acquired. Geezeo is a Boston-based provider of retail and business digital financial management solutions. |
(Unaudited, In Thousands) | Three Months Ended September 30, | ||||||
2019 | 2018 | ||||||
Purchase of treasury stock | $ | (14,145 | ) | $ | — | ||
Dividends paid | (30,771 | ) | — | ||||
Net cash from issuance of stock and tax related to stock-based compensation | 340 | (11,039 | ) | ||||
Net cash from financing activities | $ | (44,576 | ) | $ | (11,039 | ) |
Condensed Consolidated Statements of Income (Unaudited) | ||||||||||
(In Thousands, Except Per Share Data) | Three Months Ended September 30, | % Change | ||||||||
2019 | 2018 | |||||||||
REVENUE | $ | 438,005 | $ | 392,543 | 12 | % | ||||
EXPENSES | ||||||||||
Cost of Revenue | 245,791 | 220,112 | 12 | % | ||||||
Research & Development | 24,591 | 24,026 | 2 | % | ||||||
Selling, General, & Administrative | 49,436 | 45,183 | 9 | % | ||||||
Total Expenses | 319,818 | 289,321 | 11 | % | ||||||
OPERATING INCOME | 118,187 | 103,222 | 14 | % | ||||||
INTEREST INCOME (EXPENSE) | ||||||||||
Interest income | 508 | 291 | 75 | % | ||||||
Interest expense | (156 | ) | (147 | ) | 6 | % | ||||
Total | 352 | 144 | 144 | % | ||||||
INCOME BEFORE INCOME TAXES | 118,539 | 103,366 | 15 | % | ||||||
PROVISION FOR INCOME TAXES | 29,169 | 19,815 | 47 | % | ||||||
NET INCOME | $ | 89,370 | $ | 83,551 | 7 | % | ||||
Diluted net income per share | $ | 1.16 | $ | 1.08 | ||||||
Diluted weighted average shares outstanding | 77,067 | 77,537 | ||||||||
Consolidated Balance Sheet Highlights (Unaudited) | ||||||||||
(In Thousands) | September 30, | % Change | ||||||||
2019 | 2018 | |||||||||
Cash and cash equivalents | $ | 96,679 | $ | 114,872 | (16 | )% | ||||
Receivables | 234,362 | 198,564 | 18 | % | ||||||
Total assets | 2,225,978 | 2,033,103 | 9 | % | ||||||
Accounts payable and accrued expenses | $ | 120,373 | $ | 123,551 | (3 | )% | ||||
Deferred revenue | 325,554 | 317,765 | 2 | % | ||||||
Stockholders' equity | 1,476,660 | 1,368,564 | 8 | % | ||||||
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Cover Page |
Nov. 04, 2019 |
---|---|
Cover page. | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | Nov. 04, 2019 |
Entity Central Index Key | 0000779152 |
Entity Registrant Name | HENRY JACK & ASSOCIATES INC |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 0-14112 |
Entity Tax Identification Number | 43-1128385 |
Entity Address, Address Line One | 663 Highway 60, P.O. Box 807 |
Entity Address, City or Town | Monett |
Entity Address, State or Province | MO |
Entity Address, Postal Zip Code | 65708 |
City Area Code | 417 |
Local Phone Number | 235-6652 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |