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Jack Henry & Associates helps community and regional banks and credit unions run accounts, process deposits and loans, and move customers’ money. Its systems include SilverLake System for banks and Symitar for credit unions. Clients can run the software on their own premises or pay Jack Henry to host and operate it in the cloud. The company also supplies digital banking tools that can work with other providers’ core banking systems.
Services and support bring in most of its revenue, with payment processing supplying much of the rest. Hosted clients pay ongoing data-processing and hosting fees under multi-year contracts; clients running software themselves buy licenses and generally pay annual maintenance fees. Financial institutions also pay monthly service and transaction fees for payment processing, so this income depends partly on payment volumes and consumer and business spending.
The business depends on clients renewing their contracts and on a limited group of outside providers that supply significant hosting and technology infrastructure. It also uses third parties for some payment processing and settlement. Parts of its operations face ongoing regulatory supervision and examination, and its software and services must meet the requirements of regulated financial institutions.
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Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Jack Henry’s results hinge on banks’ and credit unions’ demand for processing, digital banking and payments, with privately held Corelation and Finastra also competing for core systems.
Fiserv competes with Jack Henry for banks’ and credit unions’ spending on systems that run their accounts and process payments. Watch Fiserv’s processing and services revenue, largely earned through account- and transaction-based fees under multi-year contracts, for a view of this recurring business.
FIS competes with Jack Henry to supply financial institutions with software that runs banking accounts and services that handle processing for them. Its Banking Solutions recurring revenue from multi-year processing contracts is the business to watch, rather than its Capital Markets offerings.
Q2 Holdings Inc competes with Jack Henry for overlapping banks’ and credit unions’ spending on digital banking, fraud management and lending technology. Watch Q2’s digital banking platform revenue as customers add products and registered users and conduct more transactions—the closest comparison with Jack Henry’s digital business.
EVERTEC, INC. competes with Jack Henry to provide financial institutions with core banking software, outsourced bank operations and payment processing. Its concentration in Latin America and the Caribbean means its bank-software and processing business reflects a different regional customer base.
Q2 Holdings Inc earningsQTWO
Q2 Holdings’ report will show whether banks and credit unions are adding digital banking products and using them more, an area where it competes with Jack Henry for client spending.
Read Q2 Holdings’ digital banking platform revenue alongside product additions, registered users and transaction use. Revenue growing with products and use would show financial institutions spending more on digital services, a stronger demand signal for Jack Henry’s digital business too. Weak revenue or no growth alongside wider use would point to less pressure from competing for digital-services budgets.
Henry (Jack) & Associates earningsThis company
Jack Henry earns from banks and credit unions using its systems, hosted services and payment processing, and this report will show whether client use and transaction activity are both driving the business.
Read services and support revenue alongside processing revenue. The first mainly comes from cloud services, software support and related services; the second includes fees tied to electronic payments, transfers and card transactions. Growth in both would show continued use of Jack Henry’s systems as well as more transaction activity; growth in only one would show that the business is relying more on that revenue stream.
Fidelity National Information Services, Inc. earningsFIS
FIS’s report will show whether financial institutions keep paying for banking software and processing services under multi-year contracts, the same client spending Jack Henry competes for.
Watch recurring revenue in FIS’s Banking Solutions, including revenue from multi-year processing contracts. Steady growth would show financial institutions continuing to pay for banking systems and processing services, supporting the view that demand for Jack Henry’s core and processing businesses remains firm. Weakness would raise the possibility of clients reducing services, switching providers or pressing for lower renewal prices.
