Jack Henry & Associates, Inc. Reports Fiscal 2020 Results
MONETT, Mo., Aug. 18, 2020 /PRNewswire/ --
-- Fiscal year summary:
-- GAAP revenue increased 9% and operating income increased 10% for the
year ended June 30, 2020.
-- Non-GAAP adjusted revenue increased 7% and adjusted operating income
increased 5% for the year ended June 30, 2020.
-- GAAP EPS was $3.86 and $3.52 per diluted share for the years ended
June 30, 2020 and 2019, respectively.
-- Cash at June 30, 2020 was $213.3 million, an increase of 128%
compared to June 30, 2019.
-- Debt related to the revolving credit line and other lines of credit
was zero for the years ended June 30, 2020 and 2019.
-- Fourth quarter summary:
-- GAAP revenue increased 4% and operating income decreased 3% for the
quarter compared to the prior-year quarter.
-- Non-GAAP adjusted revenue increased 4% and adjusted operating income
decreased 2% for the quarter compared to the prior-year quarter.
-- GAAP EPS was $0.80 per diluted share for the quarter, compared to
$0.79 in the prior-year quarter.
-- Full-year fiscal 2021 GAAP guidance:
-- GAAP revenue $1,750 million to $1,770 million (assumes deconversion
fee decrease of $33 million)
-- GAAP EPS $3.70 to $3.75
-- Non-GAAP revenue growth 5.5% to 6.5%
Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading provider of technology solutions and payment processing services primarily for the financial services industry, today announces results for the fourth quarter of fiscal 2020 and discusses its continued response to the novel coronavirus (COVID-19) pandemic.
According to David Foss, President and CEO, "We are very pleased to report another quarter of record revenue to finish off a very solid year of financial performance for our company. Despite the challenges associated with conducting business in the midst of a global pandemic, our sales teams persevered and set a monthly sales record in June and a quarterly sales record in our fiscal fourth quarter. At the same time, our operations teams continued to deliver new solutions and outstanding customer service for our clients. Even in the current business environment, the resiliency of our business model and the ongoing commitment of our associates have put us in a position to continue to successfully execute as we look forward to the new fiscal year."
GAAP Results for the Quarter and Year
Revenue for the quarter ended June 30, 2020 increased to $410.5 million, which is 4% growth over the fourth quarter of fiscal 2019. Operating income decreased 3% to $76.8 million and net income increased 1% to $61.3 million, or $0.80 per diluted share, compared to the fourth quarter of fiscal 2019. The decrease in operating income for the quarter was primarily due to a slower growth rate of processing revenue as a result of headwinds related to the impact of COVID-19 (see "COVID-19 Impact and Response" section below). The net income increase was primarily driven by the decrease in effective tax rate compared to the prior-year quarter.
For the fiscal year ended June 30, 2020, revenue increased to $1,697.1 million, which is 9% growth over the fiscal year ended June 30, 2019. Operating income increased 10% over the prior fiscal year to $380.6 million. Net income totaled $296.7 million, or $3.86 per diluted share, an increase of 9% compared to the fiscal year ended June 30, 2019. The increase in operating income was driven by organic growth in both our services and support and processing lines of revenue and higher deconversion fees during the fiscal year over the prior fiscal year. The increase in net income is primarily attributable to the growth in both our lines of revenue and higher deconversion fees discussed above, partially offset by the increase in effective tax rate compared to the prior fiscal year.
Non-GAAP Results for the Quarter and Year
For the quarter ended June 30, 2020, adjusted revenue increased 4% to $399.8 million and adjusted operating income decreased 2% to $71.3 million, compared to the prior-year quarter.
For the fiscal year ended June 30, 2020, adjusted revenue increased 7% to $1,634.2 million and adjusted operating income increased 5% to $335.7 million compared to the fiscal year ended June 30, 2019 (see Non-GAAP Impact of Deconversion Fees, Acquisition, and Disposals on page 4).
Operating Results
Revenue, operating expenses, operating income, and net income for the three months and fiscal year ended June 30, 2020, as compared to the three months and fiscal year ended June 30, 2019, were as follows:
Revenue (Unaudited)
(In Thousands)
Three Months Ended %
Year Ended %
June 30, Change
June 30, Change
2020 2019 2020 2019
Revenue
Services and Support $
247,235 $
240,476 3 $
1,051,451 $
958,489 10
% %
Percentage of Total Revenue 60 61 62
% %
% % 62
Processing 163,302 153,033 7 645,616 594,202 9
% %
Percentage of Total Revenue 40 39 38
% %
% % 38
Total Revenue $
410,537 $
393,509 4 $
1,697,067 $
1,552,691 9
% %
-- Total revenue increased 4% for the fourth quarter of fiscal 2020
compared to the same quarter last year. The increased revenue in the
services and support line for the fourth quarter of fiscal 2020 was
primarily driven by the growth in data processing and hosting fees,
quarter over quarter. The increase in processing revenue was mainly
driven by increased transaction and digital revenue related to our new
Paycheck Protection Program lending line related to the CARES Act (see
"COVID-19 Impact and Response" section below), as well as increased
transaction volumes within card processing and the associated fee
revenue, quarter over quarter. Deconversion fees, which are included
within services and support, increased $0.8 million compared to the
fourth quarter of last year. Excluding deconversion fees from both
periods and revenue from the fiscal 2020 acquisition, total adjusted
revenue also increased 4% for the fourth quarter of fiscal 2020 compared
to the same quarter of fiscal 2019.
-- Total revenue increased 9% for the fiscal year ended June 30, 2020
compared to the same period last year. For the fiscal year ended June
30, 2020, deconversion fees increased $23.7 million compared to the
prior fiscal year. Excluding deconversion fees from both years and
revenue from the fiscal 2020 acquisition, total adjusted revenue
increased 7%. The adjusted increase in the services and support line was
primarily driven by the growth in data processing and hosting fees, as
well as increased software usage revenue, and higher implementation fees
primarily related to our private cloud offerings when compared to the
prior fiscal year. All components of processing revenue increased for
the year, despite the impact of COVID-19 late in the third quarter and
into the fourth quarter (see "COVID-19 Impact and Response" section
below), with increased transaction volumes within card processing and
the associated fee revenue being the largest driver.
-- For the fourth quarter of fiscal 2020, core segment revenue increased 4%
to $141.5 million from $136.5 million in the fourth quarter of fiscal
2019. Payments segment revenue increased 3% to $145.5 million, from
$141.6 million in the same quarter last year. Revenue from the
complementary segment increased 9% to $114.0 million in the fourth
quarter of fiscal 2020 from $104.6 million in the same quarter of fiscal
2019. Revenue in the corporate and other segment decreased to $9.5
million, from $10.8 million in the fourth quarter of fiscal 2019.
-- For the fiscal year ended June 30, 2020, revenue in the core segment
increased 9% to $582.2 million, compared to $536.0 million for the
fiscal year ended June 30, 2019. Payments segment revenue increased 9%
to $597.7 million from $549.3 million for the prior fiscal year.
Complementary segment revenue increased 11% to $463.3 million, up from
$415.6 million in the prior fiscal year. Revenue from the corporate and
other segment increased 4% to $53.9 million for the fiscal year ended
June 30, 2020 from $51.7 million for the fiscal year ended June 30,
2019.
Operating Expenses and Operating Income
(Unaudited, In Thousands) Three Months Ended %
Year Ended %
June 30, Change
June 30, Change
2020 2019 2020 2019
Cost of Revenue $
254,835 $
240,040 6 $
1,008,464 $
923,030 9
% %
Percentage of Total Revenue 62
% 61
% 59
% 59
%
Research and Development 29,902 24,920 20 109,988 96,378 14
% %
Percentage of Total Revenue 7
% 6
% 6
% 6
%
Selling, General, and Administrative 49,002 49,131 % 197,988 185,998 6
%
Percentage of Total Revenue 12
% 12
% 12
% 12
%
Total Operating Expenses 333,739 314,091 6 1,316,440 1,205,406 9
% %
Operating Income $
76,798 $
79,418 (3) $
380,627 $
347,285 10
% %
Operating Margin 19
% 20
% 22
% 22
%
-- Cost of revenue increased 6% for the fourth quarter of fiscal 2020
compared to the fourth quarter of fiscal 2019 and increased 1% as a
percentage of revenue. Excluding costs related to deconversions for both
years and the fiscal 2020 acquisition, the adjusted cost of revenue
increase was also 6%. The adjusted increase was primarily due to higher
costs associated with our card processing platform, higher salaries and
personnel costs related to organic growth within our product lines, and
increased amortization expense primarily related to capitalized
software. The adjusted increase for the quarter was partially offset by
travel expense savings as a result of COVID-19 travel restrictions (see
"COVID-19 Impact and Response" section below).
-- For the fiscal year ended June 30, 2020, cost of revenue increased 9%
compared to the equivalent period of the prior fiscal year, but remained
consistent as a percentage of revenue. Excluding costs related to
deconversions for both years and the fiscal 2020 acquisition, adjusted
cost of revenue also increased 9%. The adjusted increase was primarily
due to higher costs associated with our card processing platform,
increases in related revenue, and higher salaries and personnel costs
primarily due to a headcount increase of 5% at June 30, 2020 compared to
a year ago reflecting organic growth within our product lines, and
increased amortization expense primarily related to capitalized
software.
-- Research and development expense increased 20% for the fourth quarter of
fiscal 2020 and 14% for full fiscal year 2020 compared to the equivalent
periods of the prior fiscal year. Excluding costs related to the fiscal
2020 acquisition from the fourth quarter of fiscal 2020 of $560 and from
the full fiscal year 2020 of $1,980, adjusted research and development
expense increased 18% for the quarter and 12% for the full fiscal year.
The adjusted increases were primarily due to increased salaries and
personnel costs partially due to a headcount increase of 4% at June 30,
2020 compared to a year ago reflecting organic growth within our product
lines, as well as an increase in licenses and fees. A portion of the
adjusted research and development expense is a result of our investment
in digital platforms. Research and development expense for the quarter
increased 1% as a percentage of total revenue compared to the prior-year
quarter. Research and development expense for fiscal 2020 remained
consistent with the prior fiscal year as a percentage of total revenue.
-- Selling, general, and administrative expense remained consistent for the
fourth quarter of fiscal 2020 and increased 6% for full fiscal year 2020
compared to the equivalent prior fiscal year periods. Excluding costs
related to deconversions, the fiscal 2020 acquisition, and the loss on
disposal of certain assets, net, from the fourth quarter of fiscal 2020
of $2,231 and from the full fiscal year 2020 of $7,825, adjusted
selling, general, and administrative expense decreased 5% for the
quarter and increased 2% for the full fiscal year 2020 compared to the
equivalent prior fiscal year periods. The adjusted increase for the full
fiscal year was mainly due to increased personnel costs primarily due to
a 5% increase in headcount over the prior fiscal year and salary
increases during the trailing twelve-month period. Selling, general, and
administrative expense for the quarter and fiscal year remained
consistent as a percentage of total revenue compared to the prior fiscal
year.
-- For the fourth quarter of fiscal 2020, operating income decreased 3% to
$76.8 million, which is 19% of revenue, compared to $79.4 million, which
was 20% of revenue for the fourth quarter of fiscal 2019. For the fiscal
year, operating income increased 10% to $380.6 million, which is 22% of
revenue, compared to operating income of $347.3 million, which was also
22% of revenue for the year ended June 30, 2019.
Net Income
(Unaudited, In Thousands, Three Months Ended %
Year Ended %
Except Per Share Data)
June 30, Change
June 30, Change
2020 2019 2020 2019
Income Before Income Taxes $
76,673 $
79,189 (3) $
381,076 $
347,235 10
% %
Provision for Income Taxes 15,328 18,196 (16) 84,408 75,350 12
% %
Net Income $
61,345 $
60,993 1 $
296,668 $
271,885 9
%
%
Diluted earnings per share $
0.80 $
0.79 1 $
3.86 $
3.52 10
%
%
-- Provision for income taxes decreased in the fourth quarter of fiscal
2020 compared to the fourth quarter of fiscal 2019, with an effective
tax rate of 20.0% of income before income taxes, compared to 23.0% in
the prior-year quarter. The decrease in the effective tax rate quarter
over quarter was primarily due to the changes in the estimated state tax
rate as a result of effective state planning strategies inclusive of the
adjustment to deferred taxes and the true up of prior-year state tax
expense to the actual state tax returns filed.
-- For the year ended June 30, 2020, provision for income taxes increased,
with an effective tax rate at 22.1% of income before income taxes,
compared to 21.7% for the last year. The increase to the Company's tax
rate was primarily due to the difference in the tax benefits recognized
from stock-based compensation between the two periods.
According to Kevin Williams, CFO and Treasurer, "Our private cloud offerings, transactional processing and digital continue to drive revenue growth for both the quarter and fiscal year. We continue to have headwinds on revenue from decreased license and hardware sales as almost every new core customer selects our cloud offering along with the continued shift of our existing customers migrating from on-premise to our private cloud. The three primary reported operating segments showed nice revenue growth for the quarter on both a GAAP and Non-GAAP basis considering some headwinds caused by COVID-19, especially in our payments segment. Operating margins in our payments segment continue to be impacted by the additional costs related to the migration of our debit card customers to the new processing platform, while margins in core and complementary segments were steady for both the quarter and fiscal year. I would like to express my gratitude to all of our associates for taking extremely good care of themselves and our customers during these unusual times, they have and continue to perform at incredibly high levels."
Non-GAAP Impact of Deconversion Fees, Acquisition, and Disposals
The table below shows our revenue and operating income (in thousands) for the three months and fiscal year ended June 30, 2020 compared to the three months and fiscal year ended June 30, 2019, excluding the impacts of deconversion fees, the fiscal 2020 acquisition and the loss on disposal of certain assets, net.
(Unaudited, In Thousands) Three Months Ended June 30, % Year Ended June 30, %
Change Change
2020 2019 2020 2019
4 9
%
Reported Revenue (GAAP) $
410,537 $
393,509 $
1,697,067 $
1,552,691 %
Adjustments:
Deconversion fees (8,530) (7,685) (53,914) (30,230)
Revenue from fiscal 2020 acquisition (2,182) (8,969)
4 7
%
Non-GAAP Adjusted Revenue $
399,825 $
385,824 $
1,634,184 $
1,522,461 %
.
(3) 10
%
Reported Operating Income (GAAP) $
76,798 $
79,418 $
380,627 $
347,285 %
Adjustments:
Deconversion fees (6,925) (6,529) (48,885) (28,038)
Operating (income)/ loss from fiscal 2020 acquisition (175) (872)
Loss on disposal of certain assets, net* 1,631 4,788
(2) 5
%
Non-GAAP Adjusted Operating Income $
71,329 $
72,889 $
335,658 $
319,247 %
*For the quarter, the loss includes the write-off of a portion of the Payments Hub development. This occurred as part of a technology directional change in an effort to accelerate bringing customers live on The Clearing House's Real-Time Payments Network (RTP). For the year, this includes the write-off of the Company's investments in Enterprise Risk Mitigation Solution and Payments Hub, partially offset by the gain on the sale of the Company's Houston, TX facility.
The tables below show the segment break-out of revenue and cost of revenue for each period presented, as adjusted for the items above, and include a reconciliation to non-GAAP adjusted operating income presented above.
(Unaudited, In Thousands)
Three Months Ended June 30, 2020
Core Payments Complementary Corporate Total
and Other
Revenue $
141,462 $
145,542 $
114,007 $
9,526 $
410,537
Deconversion Fees (4,356) (1,933) (2,135) (106) (8,530)
Revenue from fiscal 2020 acquisition - (2,182) (2,182)
Non-GAAP Adjusted Revenue 137,106 143,609 109,690 9,420 399,825
Cost of Revenue 62,189 83,013 48,193 61,440 254,835
Non-GAAP Adjustments (920) (147) (1,328) (57) (2,452)
Non-GAAP Adjusted Cost of Revenue 61,269 82,866 46,865 61,383 252,383
Non- GAAP Adjusted Segment Income $
75,837 $
60,743 $
62,825 $
(51,963)
Research and Development 29,902
Selling, General, and Administrative 49,002
Other Non-GAAP Adjustments (2,791)
Non-GAAP Total Adjusted Operating Expenses 328,496
Non-GAAP Adjusted Operating Income $
71,329
(Unaudited, In Thousands)
Three Months Ended June 30, 2019
Core Payments Complementary Corporate Total
and Other
Revenue $
136,544 $
141,624 $
104,584 $
10,757 $
393,509
Deconversion Fees (4,158) (2,070) (1,451) (6) (7,685)
Non-GAAP Adjusted Revenue 132,386 139,554 103,133 10,751 385,824
Cost of Revenue 60,508 73,755 44,007 61,770 240,040
Non-GAAP Adjustments (958) (32) (165) (1) (1,156)
Non-GAAP Adjusted Cost of Revenue 59,550 73,723 43,842 61,769 238,884
Non- GAAP Adjusted Segment Income $
72,836 $
65,831 $
59,291 $
(51,018)
Research and Development 24,920
Selling, General, and Administrative 49,131
Non-GAAP Total Adjusted Operating Expenses 312,935
Non-GAAP Adjusted Operating Income $
72,889
(Unaudited, In Thousands)
Year Ended June 30, 2020
Core Payments Complementary Corporate Total
and Other
Revenue $
582,166 $
597,693 $
463,349 $
53,859 $
1,697,067
Deconversion Fees (25,927) (15,411) (12,145) (431) (53,914)
Revenue from fiscal 2020 acquisition - (8,969) (8,969)
Non-GAAP Adjusted Revenue 556,239 582,282 442,235 53,428 1,634,184
Cost of Revenue 252,878 319,739 191,577 244,270 1,008,464
Non-GAAP Adjustments (2,383) (381) (5,087) (258) (8,109)
Non-GAAP Adjusted Cost of Revenue 250,495 319,358 186,490 244,012 1,000,355
Non- GAAP Adjusted Segment Income $
305,744 $
262,924 $
255,745 $
(190,584)
Research and Development 109,988
Selling, General, and Administrative 197,988
Other Non-GAAP Adjustments (9,805)
Non-GAAP Total Adjusted Operating Expenses 1,298,526
Non-GAAP Adjusted Operating Income $
335,658
(Unaudited, In Thousands)
Year Ended June 30, 2019
Core Payments Complementary Corporate Total
and Other
Revenue $
536,032 $
549,330 $
415,601 $
51,728 $
1,552,691
Deconversion Fees (14,907) (8,603) (6,672) (48) (30,230)
Non-GAAP Adjusted Revenue 521,125 540,727 408,929 51,680 1,522,461
Cost of Revenue 243,989 273,261 175,737 230,043 923,030
Non-GAAP Adjustments (1,288) (139) (620) (145) (2,192)
Non-GAAP Adjusted Cost of Revenue 242,701 273,122 175,117 229,898 920,838
Non- GAAP Adjusted Segment Income $
278,424 $
267,605 $
233,812 $
(178,218)
Research and Development 96,378
Selling, General, and Administrative 185,998
Non-GAAP Total Adjusted Operating Expenses 1,203,214
Non-GAAP Adjusted Operating Income $
319,247
Balance Sheet and Cash Flow Review
-- At June 30, 2020, cash and cash equivalents increased to $213.3 million
from $93.6 million at June 30, 2019.
-- Trade receivables totaled $300.9 million at June 30, 2020 compared to
$310.1 million at June 30, 2019.
-- The Company had no borrowings at June 30, 2020 and June 30, 2019.
-- Total deferred revenue decreased to $389.6 million at June 30, 2020,
compared to $394.3 million a year ago.
-- Stockholders' equity increased to $1,549.7 million at June 30, 2020,
compared to $1,429.0 million a year ago.
Cash provided by operations totaled $510.5 million for the year ended June 30, 2020 compared to $431.1 million for the same period last year. The following table summarizes net cash (in thousands) from operating activities:
(Unaudited, In Thousands) Year Ended June 30,
2020 2019
Net income $
296,668 $
271,885
Depreciation 52,206 47,378
Amortization 119,599 113,255
Change in deferred income taxes 24,581 7,604
Other non-cash expenses 21,618 12,750
Change in receivables 10,540 (11,777)
Change in deferred revenue (4,871) 23,656
Change in other assets and liabilities (9,809) (33,623)
Net cash provided by operating activities $
510,532 $
431,128
Cash used in investing activities for the year ended June 30, 2020 totaled $197.9 million, compared to $190.6 million for the same period last year and included the following:
(Unaudited, In Thousands) Year Ended June 30,
2020 2019
Payment for acquisitions, net of cash acquired $
(30,376) $
(19,981)
Capital expenditures (53,538) (53,598)
Proceeds from the sale of assets 11,130 127
Customer contracts acquired (20)
Purchased software (6,710) (6,049)
Computer software developed (117,262) (111,114)
Purchase of investments (1,150)
Net cash from investing activities $
(197,906) $
(190,635)
-- On July 1, 2019, the Company acquired all of the equity interest of
Geezeo for $30,376, net of cash acquired. Geezeo is a Boston-based
provider of retail and business digital financial management solutions.
Financing activities used cash of $192.9 million in the year ended June 30, 2020 and $178.3 million in the same period last year and included the following:
(Unaudited, In Thousands) Year Ended June 30,
2020 2019
Borrowings on credit facilities $
55,000 $
35,000
Repayments on credit facilities and financing leases (55,033) (35,000)
Purchase of treasury stock (71,549) (54,864)
Dividends paid (127,421) (118,745)
Net cash from issuance of stock and tax related to stock-based compensation 6,094 (4,696)
Net cash from financing activities $
(192,909) $
(178,305)
Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures, including adjusted revenue, adjusted operating income, adjusted segment income, adjusted cost of revenue, and adjusted operating expenses.
We believe non-GAAP financial measures help investors better understand the underlying fundamentals and true operations of our business. The non-GAAP financial measures presented eliminate one-time deconversion fees, contributions of the current fiscal year acquisition, and the one-time disposals of certain assets, all items which management believes are not indicative of the Company's operating performance. Such adjustments give investors further insight into our performance. For these reasons, management also uses these non-GAAP financial measures in its assessment and management of the Company's performance.
Any non-GAAP financial measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Reconciliations of these non-GAAP financial measures to related GAAP measures are included.
COVID-19 Impact and Response
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus ("COVID-19") as a pandemic and the President of the United States declared the outbreak as a national emergency. As COVID-19 has rapidly spread, federal, state and local governments have responded by imposing varying degrees of restrictions, including widespread "stay-at-home" orders, social distancing requirements, travel limitations, quarantines, and forced closures or limitations on operations of non-essential businesses. Such restrictions have resulted in significant economic disruptions and uncertainty.
The health, safety, and well-being of our employees and customers is of paramount importance to us. In March 2020, we established an internal task force composed of executive officers and other members of management to frequently assess updates to the COVID-19 situation and recommend Company actions. We offered remote working as a recommended option to employees whose job duties allow them to work off-site. This recommended remote working option is currently extended until at least January 4, 2021, and our internal task force will continue to evaluate recommending further extensions. Based on guidance from the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, the Company was designated as essential critical infrastructure because of our support of the financial services industry. As of August 13, 2020, the majority of our employees were working remotely. Our internal task force considers federal, state and local guidance, as well as employee-specific and facility-specific factors, when recommending Company actions. At such time that our internal task force recommends that our remote employees begin to return to our facilities, we have prepared procedures to assist with a safe, gradual and deliberate approach, including a return-to-office training, enhanced sanitation procedures and face mask requirements, which are currently being utilized by our employees who are required to be on site to perform their required job functions.
We have suspended all non-essential business travel until at least January 4, 2021, and our internal task force will continue to evaluate the need for further extensions. We have put additional safety precautions into place for travel that is essential. We have also updated the health benefits available to our employees by waiving out-of-pocket expenses related to testing and treatment of COVID-19. Despite the move to a principally remote workforce, we honored our 2020 summer internship program through virtual methods.
Customers
We are working closely with our customers who are scheduled for on-site visits to ensure their needs are met while taking necessary safety precautions when our employees are required to be at a customer site. Delays of customer system installations due to COVID-19 have been limited, and we have developed processes to handle remote installations when available. We expect these processes to provide flexibility and value both during and after the COVID-19 pandemic. However, we have experienced delays related to continuing customer migrations to our new card processing platform. We are on track to meet the revised schedule to complete migrations of our core customers by September 30, 2020, and non-core customers by March 31, 2021, to the new platform. We continue to work with our customers to support them during this difficult time, and, to that end, have waived certain late fees in connection with our products and services. We have also enhanced our lending service offerings to support the Paycheck Protection Program that was introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. Even though a substantial portion of our workforce has worked remotely during the outbreak and business travel has been curtailed, we have not yet experienced significant disruption to our operations. We believe our technological capabilities are well positioned to allow our employees to work remotely for the foreseeable future without materially impacting our business.
Financial impact
We saw a decrease of card processing transaction volumes late in the third quarter of fiscal 2020 and into the early portion of the fourth quarter due to COVID-19, which slowed the rate of growth of our processing revenue for those periods versus a year ago. In addition, installations have been delayed and the associated revenue pushed from the current period to future periods. These headwinds may also impact our processing and installation revenues moving into fiscal 2021. Although transaction levels have since returned to more normal levels, the recurrence of lower-than-normal card processing transaction rates is uncertain and will depend upon when requirements for business closures and other restrictions are normalized and how quickly economic recovery occurs. Despite the changes and restrictions caused by COVID-19, the overall financial and operational impact on our business has been limited and our liquidity, balance sheet, and business trends remain strong. We experienced positive operating cash flows during the fourth quarter, and we do not expect that to change in the near term. However, we are unable to accurately predict the future impact of COVID-19 due to a number of uncertainties, including further government actions, the duration, severity and recurrence of the outbreak, the speed of economic recovery and the potential impact to our customers, vendors, and employees, as well as how the potential impact might affect future customer services, processing revenue, and processes and efficiencies within the Company directly or indirectly impacting financial results. We will continue to monitor COVID-19 and its possible impact on the Company and to take steps necessary to protect the health and safety of our employees and customers.
Quarterly Conference Call
The Company will hold a conference call on August 19, 2020; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.
About Jack Henry & Associates, Inc.®
Jack Henry (NASDAQ: JKHY) is a leading provider of technology solutions primarily for the financial services industry. We are an S&P 500 company that serves approximately 8,700 clients nationwide through three divisions: Jack Henry Banking® supports banks ranging from community banks to multi-billion-dollar institutions; Symitar® provides industry-leading solutions to credit unions of all sizes; and ProfitStars® offers highly specialized solutions to financial institutions of every asset size, as well as diverse corporate entities outside of the financial services industry. With a heritage that has been dedicated to openness, partnership, and user centricity for more than 40 years, we are well-positioned as a driving market force in future-ready digital solutions and payment processing services. We empower our clients and consumers with the human-centered, tech-forward, and insights-driven solutions that will get them where they want to go. Are you future ready? Additional information is available at www.jackhenry.com.
Statements made in this news release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.
Condensed Consolidated Statements
of Income (Unaudited)
(In Thousands, Except Per Share Data) Three Months Ended June 30, % Year Ended June 30, %
Change Change
2020 2019 2020 2019
REVENUE $
410,537 $
393,509 4 $
1,697,067 $
1,552,691 9
% %
EXPENSES
Cost of Revenue 254,835 240,040 6 1,008,464 923,030 9
% %
Research and Development 29,902 24,920 20 109,988 96,378 14
% %
Selling, General, and Administrative 49,002 49,131 % 197,988 185,998 6
%
Total Expenses 333,739 314,091 6 1,316,440 1,205,406 9
% %
OPERATING INCOME 76,798 79,418 (3)
%
% 380,627 347,285 10
INTEREST INCOME (EXPENSE)
Interest income 86 178 (52)
%
% 1,137 876 30
Interest expense (211) (407) (48)
%
% (688) (926) (26)
Total (125) (229) (45) 449 (50) (998)
% %
INCOME BEFORE INCOME TAXES 76,673 79,189 (3)
%
% 381,076 347,235 10
PROVISION FOR INCOME TAXES 15,328 18,196 (16)
%
% 84,408 75,350 12
NET INCOME $
61,345 $
60,993 1 $
296,668 $
271,885 9
% %
Diluted net income per share $
0.80 $
0.79 $
3.86 $
3.52
Diluted weighted average shares 76,849 77,157 76,934 77,347
outstanding
Consolidated Balance Sheet Highlights
(Unaudited)
(In Thousands)
June 30, %
Change
2020 2019
Cash and cash equivalents $
213,345 $
93,628 128
%
Receivables 300,945 310,080 (3)
%
Total assets 2,428,474 2,184,829 11
%
Accounts payable and accrued expenses $
176,569 $
130,210 36
%
Current and long-term debt 323 N/A
Deferred revenue 389,622 394,306 (1)
%
Stockholders' equity 1,549,688 1,429,013 8
%
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SOURCE Jack Henry & Associates, Inc.
