- Although the more challenging economic climate has some competitors seeing a slowdown in sales deals, that’s not the case for Jack Henry & Associates, CEO David Foss asserted during the company’s first-quarter fiscal year 2023 earnings call today.
- “The pipeline that we have right now of potential deals is by far larger than it's ever been,” Foss said during a conference call with analysts to discuss quarterly results. “I’ve heard all the things that you’ve heard about the cadence of deals, the pace of deals slowing down,” Foss said. “Jack Henry is not experiencing that.”
- Jack Henry’s fiscal first-quarter net income rose 4%, to $106.5 million, and its revenue climbed 8%, to $529.2 million, according to a company news release.
The Monett, Missouri-based company provides technology and payments processing services to banks and credit unions, and it has been expanding this year with more cloud-based services. Meanwhile, economic headwinds have been bearing down on the industry as interest rates and inflation rise.
The overwhelming majority of the company’s revenue is recurring, and most “is tied to long term contracts for critical processing systems,” Foss said during the call with analysts. Bank CEOs have remained optimistic and continue to spend on technology, he added.
He noted wage inflation pressures felt earlier this year are beginning to ease up, and pointed out the company weathered the Great Recession “with few very bumps and bruises.”
After feeling optimistic about the company’s acquisitions prospects earlier this year, Foss observed that the acquisition pipeline “is not nearly as robust as what I thought it was going to be.” Still, he noted the benefit of the company’s Payrailz acquisition earlier this year.
“We are very bullish on Payrailz and what that does for us and for our customers, the opportunity that it presents long term for us and for our customers, but there aren’t a lot of Payrailz companies sitting out there,” he said.
The company’s new chief financial officer, Mimi Carsely disclosed that Jack Henry paid $230 million for Payrailz. That acquisition, which was announced Aug. 9, closed on Aug. 31. Payrailz gives Jack Henry the opportunity to accelerate its strategy in the payments as a service arena, said President Greg Adelson, who is also the company’s chief operating officer.
The payments company, which handles bill payments and peer-to-peer payments, is expected to contribute about $12 million in revenue to Jack Henry’s fiscal year 2023, Carsley said. “We fully expect it to be accretive in fiscal ‘24,” Carsley said.