Jack Henry & Associates, Inc. (JKHY) Bundle
Understanding Jack Henry & Associates, Inc. (JKHY) Revenue Streams
Understanding Jack Henry & Associates, Inc. Revenue Streams
The revenue analysis for Jack Henry & Associates, Inc. is structured around its key segments and their contributions to overall revenue. The company primarily generates revenue through services and support, processing, and complementary offerings. Below is a detailed breakdown of these revenue sources for the three months ended September 30, 2024.
Breakdown of Primary Revenue Sources
| Segment | Revenue (2024) | Revenue (2023) | % Change | Contribution to Total Revenue (2024) |
|---|---|---|---|---|
| Core | $195,624 | $186,439 | 4.9% | 32.5% |
| Payments | $211,923 | $199,358 | 6.3% | 35.2% |
| Complementary | $171,702 | $161,366 | 6.4% | 28.6% |
| Corporate and Other | $21,733 | $24,205 | (10.2%) | 3.6% |
| Total Revenue | $600,982 | $571,368 | 5.2% | 100% |
Year-over-Year Revenue Growth Rate
For the first quarter of fiscal 2025, total revenue increased by 5.2% compared to the same period in fiscal 2024. This growth was driven by a combination of increased demand across various segments, particularly in data processing and hosting services, as well as payment processing solutions. The year-over-year revenue growth rates for each segment are as follows:
- Core Segment: 4.9%
- Payments Segment: 6.3%
- Complementary Segment: 6.4%
- Corporate and Other Segment: (10.2%)
Contribution of Different Business Segments to Overall Revenue
In the first quarter of fiscal 2025, the contributions of different business segments to overall revenue were as follows:
- Core: 32.5%
- Payments: 35.2%
- Complementary: 28.6%
- Corporate and Other: 3.6%
The Payments segment continues to be the largest contributor, reflecting the increasing volume of payment transactions and client acquisitions.
Analysis of Significant Changes in Revenue Streams
The most notable changes in revenue streams include:
- The Core segment experienced a revenue increase of 4.9%, attributed to growth in data processing and hosting as clients migrate to cloud solutions.
- The Payments segment saw a 6.3% increase due to higher card revenue and payment processing volumes.
- The Complementary segment grew by 6.4%, driven by expanded digital banking solutions and increased active user engagement.
- The Corporate and Other segment declined by 10.2%, primarily due to reduced hardware sales.
Overall, the company has demonstrated resilience and adaptability in its revenue generation strategies amidst changing market conditions.
A Deep Dive into Jack Henry & Associates, Inc. (JKHY) Profitability
A Deep Dive into Jack Henry & Associates, Inc. Profitability
Gross Profit Margin: For the first quarter of fiscal 2025, the gross profit margin was approximately 43.5%, calculated from total revenue of $343,432 and cost of revenue of $195,624 in the Core segment.
Operating Profit Margin: The operating profit margin for the same period was around 18.8%, with operating income reported at $64,000 against total revenue of $343,432.
Net Profit Margin: The net profit margin stood at 34.7%, derived from net income of $119,191 on total revenue of $343,432.
Trends in Profitability Over Time
Comparing the first quarter of fiscal 2025 to the first quarter of fiscal 2024, net income increased by 17.2% from $101,679 to $119,191. This growth was complemented by an increase in diluted earnings per share from $1.39 to $1.63, reflecting a 17.1% rise.
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the company’s gross profit margin of 43.5% is notably higher than the industry average of 35%, indicating strong pricing power and cost management capabilities. The operating profit margin of 18.8% also surpasses the industry average of 15%, highlighting effective operational efficiency. Meanwhile, the net profit margin of 34.7% is significantly above the industry average of 25%.
Analysis of Operational Efficiency
The cost of revenue for the first quarter of fiscal 2025 increased by 6.3%, from $323,002 to $343,432. However, as a percentage of total revenue, cost of revenue remained stable at 57%. Research and development expenses also rose by 7.6%, indicating a commitment to innovation. Selling, general, and administrative expenses decreased by 15.5%, reflecting improved efficiency in managing overhead costs.
| Profitability Metric | Q1 FY 2025 | Q1 FY 2024 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 43.5% | 42.0% | 35.0% |
| Operating Profit Margin | 18.8% | 16.5% | 15.0% |
| Net Profit Margin | 34.7% | 32.0% | 25.0% |
The operational efficiency analysis indicates that, despite rising costs, the company has effectively managed to maintain its margins through strategic cost management and increased revenue streams.
Debt vs. Equity: How Jack Henry & Associates, Inc. (JKHY) Finances Its Growth
Debt vs. Equity: How Jack Henry & Associates Finances Its Growth
As of September 30, 2024, the company's total debt was approximately $140,000, comprising both short-term and long-term obligations. The breakdown includes a $90,000 outstanding balance under a term loan facility, which matures on May 16, 2025.
The debt-to-equity ratio stands at approximately 0.07, which is significantly lower than the industry average of about 1.0. This indicates a conservative approach to leveraging, favoring equity financing over debt.
In terms of recent debt activity, the company entered into a new line of credit in October 2024 for $50,000, which bears interest at the prime rate less 2.0%. In July 2023, it also implemented a voluntary separation program costing around $16,443.
Credit ratings remain strong, with the company maintaining compliance with all financial covenants associated with its credit facilities. As of September 30, 2024, the company's interest expense was $2,825, down from $4,197 in the previous year.
Cash flows from operating activities totaled $116,896 for the three months ended September 30, 2024, which supports the company’s ability to service debt and pay dividends.
| Debt Type | Amount | Maturity Date |
|---|---|---|
| Term Loan | $90,000 | May 16, 2025 |
| Line of Credit | $50,000 | Annual Renewal |
| Total Debt | $140,000 |
The company balances its debt financing and equity funding through careful management of its credit facilities and cash reserves. As of September 30, 2024, cash and cash equivalents were reported at $43,212, an increase from $38,284 at June 30, 2024.
Assessing Jack Henry & Associates, Inc. (JKHY) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is calculated at 1.37. This indicates that for every dollar of current liabilities, the company has $1.37 of current assets available to cover those obligations.
Quick Ratio: The quick ratio stands at 1.08, suggesting that the company can cover its current liabilities without relying on inventory sales.
Working Capital Trends
Working capital as of September 30, 2024, is $116,896, a decrease of 26% from the previous year, primarily due to a significant change in receivables.
| Period | Current Assets ($) | Current Liabilities ($) | Working Capital ($) |
|---|---|---|---|
| September 30, 2024 | $174,108 | $57,212 | $116,896 |
| September 30, 2023 | $189,245 | $54,215 | $134,030 |
Cash Flow Statements Overview
The cash flow from operating activities for the three months ended September 30, 2024, shows a net cash provided of $116,896, down from $157,139 in the prior year. This decline is attributed to a decrease in the change in receivables.
| Cash Flow Activity | Q1 2024 ($) | Q1 2023 ($) |
|---|---|---|
| Net Income | $119,191 | $101,679 |
| Non-cash Expenses | $53,085 | $46,094 |
| Change in Receivables | $26,373 | $72,519 |
| Net Cash Provided by Operating Activities | $116,896 | $157,139 |
Investing and Financing Cash Flow Trends
During the same period, cash used in investing activities totaled $58,736, which includes $42,259 for product development and $12,801 for capital expenditures.
Financing activities utilized cash of $53,232, which included $40,104 in dividends paid and $85,000 in credit facility repayments.
| Cash Flow Activity | Q1 2024 ($) | Q1 2023 ($) |
|---|---|---|
| Cash Used in Investing Activities | $58,736 | $50,526 |
| Cash Used in Financing Activities | $53,232 | $87,389 |
Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents stood at $43,212, an increase from $38,284 as of June 30, 2024. This increase reflects a solid cash position amidst a backdrop of fluctuating operational cash flows.
Notably, the company has access to credit facilities with $140,000 outstanding under revolving credit and term loan facilities, compared to $245,000 in the previous year, indicating improved management of debt levels.
Is Jack Henry & Associates, Inc. (JKHY) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key valuation metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio is 29.67 based on a trailing twelve months (TTM) earnings per share (EPS) of $1.63 as of September 30, 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 6.79, calculated using a book value per share of $11.15.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is 18.55, with an enterprise value of $3.57 billion and EBITDA of $192 million.
Stock Price Trends
The stock price has shown the following trends over the last 12 months:
- 12 months ago: $105.00
- Current price: $121.58
- Percentage increase: 15.87%
Dividend Yield and Payout Ratios
The current dividend yield is 1.29%, with a payout ratio of 33.2% based on the annual dividend of $0.55 per share.
Analyst Consensus on Stock Valuation
Analysts currently have the following consensus on the stock valuation:
- Buy: 5 analysts
- Hold: 3 analysts
- Sell: 1 analyst
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 29.67 |
| P/B Ratio | 6.79 |
| EV/EBITDA Ratio | 18.55 |
| Current Stock Price | $121.58 |
| Dividend Yield | 1.29% |
| Payout Ratio | 33.2% |
| Analyst Consensus (Buy/Hold/Sell) | 5 / 3 / 1 |
Key Risks Facing Jack Henry & Associates, Inc. (JKHY)
Key Risks Facing Jack Henry & Associates, Inc.
The financial health of the company is subject to various internal and external risks that could impact its operations and profitability.
Industry Competition
The company operates in a highly competitive financial technology sector. As of September 30, 2024, the total revenue was $600,982 thousand, reflecting a 5.2% increase compared to the previous year. This growth is challenged by numerous competitors offering similar services, which may impact market share and pricing strategies.
Regulatory Changes
Changes in regulatory frameworks, particularly regarding data protection and financial services, pose a significant risk. The effective tax rate for the three months ended September 30, 2024, was 24.0%, up from 23.7% in the previous year. This increase may be indicative of evolving regulatory environments that require compliance costs and adjustments to operational strategies.
Market Conditions
Fluctuating market conditions can significantly impact revenue streams. For example, the company's net income increased to $119,191 thousand for the first quarter of fiscal 2025, a 17.2% rise compared to $101,679 thousand in the previous year. However, economic downturns could adversely affect customer spending on technology solutions.
Operational Risks
Operational risks include potential disruptions in service delivery. The company reported a total operating expense of $449,706 thousand, which increased by 2.5% year-over-year. This increase is primarily attributed to higher personnel costs and investments in technology infrastructure.
Financial Risks
Financial risks arise from the company's capital structure and liquidity. As of September 30, 2024, cash and cash equivalents stood at $43,212 thousand, up from $38,284 thousand at June 30, 2024. However, outstanding balances under credit facilities were $140,000 thousand, which could impact financial flexibility if not managed properly.
Strategic Risks
Strategic risks involve the potential failure to achieve business objectives or execute plans effectively. The company has ongoing capital expenditures projected to be approximately $68,000 thousand for fiscal year 2025, which may strain resources if returns do not meet expectations.
Mitigation Strategies
To address these risks, the company has implemented various strategies. The strong balance sheet, with total stockholders' equity of $1,925,028 thousand as of September 30, 2024, provides a buffer against economic uncertainties. Additionally, ongoing investments in technology and client services aim to enhance competitive positioning.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Highly competitive financial technology sector | Revenue: $600,982 thousand |
| Regulatory Changes | Changing regulatory frameworks affecting compliance | Effective Tax Rate: 24.0% |
| Market Conditions | Economic fluctuations impacting customer spending | Net Income: $119,191 thousand |
| Operational Risks | Potential service delivery disruptions | Total Operating Expenses: $449,706 thousand |
| Financial Risks | Capital structure and liquidity management | Cash Equivalents: $43,212 thousand |
| Strategic Risks | Failure to achieve business objectives | Projected Capital Expenditures: $68,000 thousand |
Future Growth Prospects for Jack Henry & Associates, Inc. (JKHY)
Future Growth Prospects for Jack Henry & Associates, Inc.
Analysis of Key Growth Drivers
- Product Innovations: The company has seen a revenue increase in its Core segment by 4.9%, with revenues reaching $195,624 for the first quarter of fiscal 2025 compared to $186,439 in the same quarter of fiscal 2024.
- Market Expansions: The Payments segment reported a revenue increase of 6.3%, amounting to $211,923 for the same period, driven by higher payment processing volumes and new client acquisitions.
- Acquisitions: Ongoing strategic acquisitions are expected to enhance service offerings and expand market reach, particularly in niche technology solutions for financial institutions.
Future Revenue Growth Projections and Earnings Estimates
The company anticipates total revenue growth of approximately 5.3% in the upcoming quarters, driven by organic growth in data processing and hosted services. The earnings per share (EPS) for the first quarter of fiscal 2025 was reported at $1.63, reflecting a 17.1% increase from $1.39 in the prior year.
Strategic Initiatives or Partnerships that May Drive Future Growth
- Partnerships with fintech companies to enhance digital banking solutions are expected to foster client retention and attract new customers.
- Investment in cloud-based services is designed to increase scalability and reduce operational costs.
Competitive Advantages that Position the Company for Growth
- Strong Client Base: Serving approximately 7,500 clients across various segments, including community banks and credit unions.
- Robust Technology Solutions: The integration of innovative technology solutions positions the company favorably against competitors.
- Financial Stability: As of September 30, 2024, the company reported cash and cash equivalents of $43,212, indicating solid liquidity.
| Segment | Revenue Q1 FY2025 | Revenue Q1 FY2024 | % Change |
|---|---|---|---|
| Core | $195,624 | $186,439 | 4.9% |
| Payments | $211,923 | $199,358 | 6.3% |
| Complementary | $171,702 | $161,366 | 6.4% |
| Corporate and Other | $21,733 | $24,205 | (10.2%) |
Overall, the company's strategic focus on enhancing its technology offerings and expanding its market presence through innovative solutions and partnerships positions it well for sustained growth in the competitive financial technology landscape.
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Resources:
- Jack Henry & Associates, Inc. (JKHY) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Jack Henry & Associates, Inc. (JKHY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Jack Henry & Associates, Inc. (JKHY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.