Sales and Profits Up at Jack Henry in Fiscal Q4
August 27, 2007 Timothy Prickett Morgan
Jack Henry & Associates, a hardware and software supplier to banks, credit unions, and other financial organizations that has a sizable presence in the i5/OS and OS/400 ecosystem, last week reported its financial results for its year end and fourth quarter of fiscal 2007. As has been the case for a number of years, Jack Henry continues to be a bright spot.
For the fiscal fourth quarter ended June 30, Jack Henry reported sales of $181.3 million, up 12 percent, with net income of $78.2 million, up 15 percent. Software license sales fell by 5 percent in the quarter, to $24.3 million, but support and services sales rose by 17 percent to $133.2 million, more than making up the decline. Growth for various electronic funds transfer services, ATM and debit card processing, bill pay, remote capture, and Check 21 transaction processing, rose by 33 percent to $7.2 million. Hardware sales, including the distribution of System i hardware, rose by 3 percent to $23.7 million.
For the full 2007 fiscal year, software license sales at Jack Henry fell by 9 percent to $76.4 million, but service and support sales rose by 18 percent to $503.3 million. For the year, electronic funds transfer services grew by 38 percent to $28.9 million, and hardware sales rose by 7 percent to $88.3 million. Total sales for fiscal 2007 came to $668.1 million, up 13 percent, with net income of $104.7 million, up 16 percent. Jack Henry ended the fiscal year with $89.6 million in cash, up 17 percent, too.
In the IT sector, with the exception of companies that have monopolies, that is about as good as it gets in terms of growth and percent of revenue that drops to the bottom line.
Jack Prim, the company’s chief executive officer, said that software license sales in the quarter were below expectations, and that the growth that the company did get came through sales to existing customers, not through acquisitions.
In an effort to quell Wall Street’s jitters–and Wall Street is nervous about anything to do with financial institutions these days–Jack Henry’s president, Tony Wormington, tried to assure investors that the company was still in a good position. “We continue to experience strong demand in both of our banking and credit union segments for our products and services,” said Wormington in a statement accompanying the financial results. “This strong demand is both inside our core base of financial institutions through our Jack Henry Banking and Symitar brands and through the products marketed under our ProfitStars brand to non-core customers.”
Only a month ago, Jack Henry has acquired Gladiator Technology Services, a provider of security services specifically tailored to banks and other financial institutions, which shows that the company is looking for other things to sell to those organizations besides traditional hardware and software. Gladiator Technology sells various services, including network intrusion prevention, firewalls, server intrusion prevention and event logging, risk assessments, compliance and regulatory solutions, and email filtering and encryption.