Fiscal year-to-date summary:

• GAAP revenue increased 5% and GAAP operating income decreased 4% for the six months ended December 31, 2022, compared to the prior-year period.

• Non-GAAP adjusted revenue increased 7% and non-GAAP adjusted operating income increased 3% for the six months ended December 31, 2022, compared to the prior-year period.¹

• GAAP EPS was $2.56 per diluted share for the six months ended December 31, 2022, compared to $2.68 in the prior-year period.

• Cash at December 31, 2022, was $26 million and $29 million at December 31, 2021.

• Debt related to the revolving credit line was $275 million at December 31, 2022, and $240 million at December 31, 2021.

Second quarter summary:

• GAAP revenue increased 2% and GAAP operating income decreased 15% for the three months ended December 31, 2022, compared to the prior-year period.

• Non-GAAP adjusted revenue increased 6% and non-GAAP adjusted operating income increased 4% for the three months ended December 31, 2022, compared to the prior-year period.¹

• GAAP EPS was $1.10 per diluted share for the three months ended December 31, 2022, compared to $1.30 for the prior-year period.

Full-year fiscal 2023 guidance:²

• GAAP revenue $2,048 million to $2,055 million

• GAAP operating margin 22.8% to 22.9%

• GAAP EPS $4.79 to $4.83

• Non-GAAP revenue $2,021 million to $2,028 million³

• Non-GAAP operating margin 22.8% to 22.9%³

MONETT, Mo., Feb. 7, 2023 /PRNewswire/ -- Jack Henry & Associates, Inc. (Nasdaq: JKHY), a leading financial technology provider, today announced results for the fiscal second quarter ended December 31, 2022.

¹ See tables below reconciling non-GAAP financial measures to GAAP.
² The guidance assumes no additional acquisitions are made during the year.
³ See tables below reconciling fiscal year 2023 GAAP to non-GAAP guidance.
⁴ See tables below on page 12 reconciling Net Income to non-GAAP EBITDA.

Operating Results

Revenue, operating expenses, operating income, and net income for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, were as follows (all dollar amounts in this section are in thousands, except for per share amounts):

• Services and support revenue decreased for the three months ended December 31, 2022, primarily driven by a decrease of 64% in deconversion fees, partially offset by growth in data processing and hosting fees of 12%. Processing revenue increased for the three months ended December 31, 2022, primarily driven by growth in card processing revenue of 7%. Other drivers were increases in payment processing, Jack Henry digital, and other processing fee revenues.

• Services and support revenue increased for the six months ended December 31, 2022, primarily driven by growth in data processing and hosting fees of 12%. Other drivers were increases in software usage fee revenues, partially offset by a decrease in deconversion fees. Processing revenue increased for the six months ended December 31, 2022, primarily driven by growth in card processing revenue of 8%. Other drivers were increases in Jack Henry digital and payment processing revenues.

• For the three months ended December 31, 2022, core segment revenue remained consistent, payments segment revenue increased 3%, complementary segment revenue increased 4%, and corporate and other segment revenue decreased 5%. Non-GAAP adjusted core segment revenue increased 6%, non-GAAP adjusted payments segment revenue increased 6%, non-GAAP adjusted complementary segment revenue increased 8%, and non-GAAP adjusted corporate and other segment revenue decreased 4% (see revenue lines of segment break-out tables on page 5 below).

• For the six months ended December 31, 2022, core segment revenue increased 3%, payments segment revenue increased 6%, complementary segment revenue increased 6%, and corporate and other segment revenue increased 20%. Non-GAAP adjusted core segment revenue increased 6%, non-GAAP adjusted payments segment revenue increased 6%, non-GAAP adjusted complementary segment revenue increased 8%, and non-GAAP adjusted corporate and other segment revenue increased 21% (see revenue lines of segment break-out tables on page 5 below).

Operating Expenses and Operating Income

• Cost of revenue increased for the three months ended December 31, 2022, primarily due to higher personnel costs, higher direct costs in line with related increases in revenue, and increased amortization of intangibles. Cost of revenue increased for the six months ended December 31, 2022, primarily due to higher direct costs in line with related increases in revenue, higher personnel costs, and increased amortization of intangibles.

• Research and development expense increased for the three and six, months ended December 31, 2022, primarily due to higher personnel costs (net of capitalized personnel costs) and higher internal licenses and fees.

• Selling, general, and administrative expense increased for the three months ended December 31, 2022, primarily due to higher personnel costs, partially offset by the increase in gain on sale of assets. Selling, general, and administrative expense increased for the six months ended December 31, 2022, primarily due to higher personnel costs, increased travel expenses, and higher consulting and other professional services,, partially offset by the increase in gain on sale of assets.

Net Income

• Effective tax rates for the three months ended December 31, 2022, and 2021 were 23.2% and 23.6%, respectively. Effective tax rates for the six months ended December 31, 2022, and 2021 were 23.4% and 23.5%, respectively.

⁵ Operating margin is calculated by dividing operating income by revenue. Operating margin plus operating expense components as a percentage of total revenue may not equal 100% due to rounding.

Impact of Non-GAAP Adjustments

The table below shows our revenue and operating income (in thousands) for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, excluding the impacts of deconversion fees,  acquisitions, and gain/loss.

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.

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments for the Core segment were $277 related to deconversion fees, for the Payments segment were $95 related to deconversion fees and $5,803 related to the acquisition, for the Complementary segment were $174 related to deconversion fees, and for the Corporate and Other segment were $9 related to deconversion fees and $58 related to the acquisition.
***Non-GAAP adjustments unassigned to a segment were $362 related to deconversion fees, $1,046 related to the acquisition, and $1,207 related to a gain on sale of assets.

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments were all related to deconversion fees.
*** Non-GAAP adjustments unassigned to a segment were all related to deconversion fees.

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments for the Core segment were $418 related to deconversion fees, for the Payments segment were $160 related to deconversion fees and $7,341 related to the acquisition, for the Complementary segment were $372 related to deconversion fees, and for the Corporate and Other segment were $16 related to deconversion fees and $58 related to the acquisition.
***Non-GAAP adjustments unassigned to a segment were $604 related to deconversion fees, $2,042 related to the acquisition, and $7,383 related to a gain on sale of assets.