(Reuters) -Jack Henry reported a 26% jump in fourth-quarter profit on Tuesday, buoyed by robust demand for its banking technology offerings.
While heavy hitters such as JPMorgan Chase have poured billions into developing their infrastructure, small- and mid-sized financial institutions turn to the likes of Jack Henry for tech modernization.
Technology is crucial for banking firms to meet the evolving needs of their account holders and to stay competitive with their larger rivals.
Monett, Missouri-based Jack Henry provides technology and payment processing services to banks and credit unions.
Analysts said the company’s narrow focus on bank tech has allowed it to maintain a competitive advantage against larger peers such as Fiserv and FIS.
“Our strong fourth-quarter sales wins for core, complementary and payment solutions, along with our ongoing success winning larger financial institutions and maintaining a very healthy pipeline for fiscal year 2026, demonstrate the continued strength in technology spending,” Jack Henry CEO Greg Adelson said.
The company’s fourth-quarter revenue jumped 9.9% to $615.4 million from a year ago.
Profit rose to $127.6 million, or $1.75 per share, in the three months ended June 30, compared with $101 million, or $1.38, a year earlier.
Jack Henry expects its fiscal 2026 profit per share to be between $6.32 and $6.44. It projected annual revenue of $2.48 billion to $2.50 billion.
FEES BOOST
Jack Henry’s deconversion revenue roughly tripled to $20.5 million in the fourth quarter from a year earlier, underscoring an uptick in banking M&A activity.
Bulk of the deconversion revenue, or one-time contract termination fee, is generated when one of Jack Henry’s clients agrees to be acquired by another financial institution.
Such fees tend to be volatile and tied closely with the banking cycle.
In recent years, Jack Henry has had to contend with fluctuations on the deconversion revenue front as the pandemic and the regional banking crisis stalled M&A activity.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shreya Biswas)