Oppenheimer: Jack Henry Has Solid Quarter, Sees Growth
February 02, 2011 9:15 AM
Similar to recent trends, Jack Henry's (NASDAQ: JKHY) 2Q:FY11 earnings exceeded Oppenheimer's estimate by $0.06/sh, driven by stronger than expected revenue growth and margins. Revenue was ~$4M above its estimate which, encouragingly, was driven by upside in high-margin software revenue. Operating margins were 120bps above Oppenheimer estimate, reflecting gross margin upside.
Oppenheimer awaits commentary on organic growth, the integration of iPay and an update on FY11 guidance. It believes the bank spending environment bottomed in CY10 and continues to
improve. JKHY reported 2Q:FY11 EPS of $0.42, up 18% Y/Y with $0.04 of upside driven by a R&D tax credit. Revenue increased 15% Y/Y to $243M, and was buoyed by the iPay acquisition.
Margin performance benefited from the license revenue upside and strong Services gross margins. Overall gross margins of 42.4% were up 20 bps Y/Y and 110 bps Q/Q, and compared to Oppeheimer's 41.1% estimate. Bank Systems' gross margin increased to 43%, while Credit Union margins were 39%.
Oppenheimer has a Perform rating on JKHY
JKHY closed Tuesday at $29.77
