Jack Henry Holds Steady in Fiscal Q1, Boosts Profits

Published: November 9, 2009

by Timothy Prickett Morgan

Banking software and hardware provider Jack Henry and Associates closed out its first quarter of fiscal 2010 in September, and it managed to boost profits while holding revenues steady--a neat trick given how much of a mess the banking industry has been in for the past year.

For the quarter ended September 30, the company posted sales of $182.3 million, down a smidgen from the year ago quarter, while net income rose 17 percent to $26.3 million. Software license sales at Jack Henry, as at most software makers these days, fell in the quarter, in this case by 14 percent, to $11.4 million. Support and services revenues, which include outsourcing, electronic funds transfers, and other support fees, grew 3 percent, to $155.9 million. Hardware sales--which includes the sale of Power Systems i boxes that are supported for Jack Henry's application software--fell by 16 percent, to $15 million.

"Our support and services revenue continues to generate growth and offset the lack of discretionary complementary product license fees and hardware sales caused by the current economic environment," explained Tony Wormington, president at Jack Henry, in a statement accompanying the financial results. "However, the weak license sales also have negatively impacted one-time implementation fees and delayed some work orders."

The company said that its bank systems and services segment accounted for $150.4 million in sales, up a tiny bit, while sales for its credit union systems and services segment declined to $31.9 million, down 4 percent compared to the year-ago quarter.

Jack Henry ended the quarter with $198.5 million in deferred revenues and a $291.2 million backlog--both of which are on the rise. In the past year, the company has more than quadrupled its cash and equivalents, to $109 million as September ended.

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