Feb 3 (Reuters) – Jack Henry & Associates reported a higher second-quarter profit on Tuesday, driven by strong demand for its banking technology offerings.
The Monett, Missouri-based company provides banks and credit unions with technology and payment processing services for day-to-day operations such as taking deposits, opening accounts and recording interest.
Smaller financial institutions depend on banking technology providers such as Jack Henry, unlike Wall Street’s biggest banks, which invest billions of dollars in developing proprietary tech stacks.
The company’s revenue rose 7.9% to $619.3 million in the reported quarter. Revenue from services and support increased 7.1%, while processing rose 9.1%.
Profit was $124.7 million, or $1.72 per share, in the three months ended December 31, compared with $97.8 million, or $1.34 per share, a year earlier.
Analysts have said Jack Henry’s narrow focus on bank tech has helped it maintain a competitive advantage against larger peers such as Fiserv and FIS.
Bank tech stocks weakened last year amid investor concerns over increased financial institution consolidation and competitive threats, analysts have said.
Analysts see the selloff in bank tech stocks as an opportunity for investors, given their business models benefit from a large base of recurring revenue.
Its deconversion revenue, or the one-time contract termination fee generated when a client is acquired by another financial institution, rose more than 90-fold to $6.2 million during the quarter from a year earlier, underscoring accelerating banking M&A activity.
Last year, Jack Henry announced the acquisition of embedded payments offerings provider Victor Technologies, as it looks to expand its presence in the rapidly growing payments-as-a-service market.
(Reporting by Arasu Kannagi Basil and Ateev Bhandari in Bengaluru; Editing by Tasim Zahid)
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