Jack Henry reports 9 percent revenue gain for quarter
Tax cut legislation provides major boost to company funds
Monett-based Jack Henry and Associates (JHA) announced its financial performance for the third quarter of its 2017-2018 fiscal year, with a 9 percent increase in operating income.
Revenue for the quarter ended March 31, 2018, increased to $384.7 million, a 9 percent improvement over the third quarter of fiscal 2017. Operating income increased to $96.3 million or 6 percent and net income increased 61 percent.
According to a company statement, "The Tax Cuts and Jobs Act enacted Dec. 22, 2017 had a large impact on our provision for income taxes and contributed to the large increase in net income of 21 percent over the third quarter of fiscal 2017 to $72.4 million, or $.93 per diluted share."
"We are happy to report another strong quarter of revenue and operating income growth," said David Foss, JHA president and CEO. "Our sales teams continue to have a very solid year through our third quarter, and our fourth quarter has started out very well as it appears they should exceed their quota target for the fiscal year. We have now migrated 34 financial institutions to the new payment platform, and we continue to see high levels of interest. I want to thank all of our associates for all their efforts to produce these results."
Increased revenue in the services and support revenue line for the third quarter of fiscal 2018 was mainly driven by growth in JHA's "outsourcing and cloud" and "product delivery and services" revenues, said Foss. The increase in outsourcing and cloud and the increase in processing revenue were partially due to revenue from the purchase of the Ensenta company. On Dec. 21, 2017, JHA acquired all equity interest of Ensenta, a California-based provider of realtime, cloud-based solutions for mobile and online payments and deposits, making JHA the leading provider of consumer remote deposit capture services.
Additional revenue continued to come from the previous sale of the Alogent company.
For the third quarter of fiscal year 2018, compared to the third quarter a year ago, core segment revenue increased 7 percent, payments segment revenue increased 12 percent, and revenue from the complementary segment increased 11 percent. Revenue in the corporate and other segment decreased 22 percent.
As for expenses, cost of revenue increased 7 percent but remained consistent as a percentage of revenue. The increased costs were primarily credited to more employees, driving increased salaries and benefits, as well as higher direct costs of product. Additional costs were connected to JHA's new card payment processing platform and faster payments initiatives, and increased amortization of capitalized software.
"The Tax Cuts and Jobs Act impacted the quarter and year-to-date net income as we continue to implement the new rules over our fiscal year, which will continue to adjust the full year to a blended effective rate,” said Kevin Williams, chief financial officer.
JHA is a leading provider of technology solutions and payment processing services primarily for the financial services industry. Its solutions serve approximately 8,900 customers nationwide.