2014 Dynamic Dozen No. 10: Jack Henry & Associates Inc.
Brian Brown
Posted online
For companies the size of financial technology software giant Jack Henry & Associates Inc. (Nasdaq: JKHY), significant revenue growth doesn’t come easily. But for Jack Henry, come it did.
The Monett-based company services around 2,100 core customers and its software is used by more than 11,000 banks and credit unions in all. Between 2011 and 2013, Jack Henry saw its gross revenue climb by 17 percent to $1.13 billion from $967 million.
Chief Financial Officer Kevin Williams says customer dependence on debit cards and electronic banking are providing fertile ground for revenue growth.
“Probably the two biggest drivers of our growth has been our continued success in all of our various electronic payment processing services that we offer – which is online bill pay, ATM, and debit and credit card transaction processing, remote-deposit capture – all of those have been driving a lot of growth,” Williams says. “And those represent a little more than one-third of our total revenue.”
Williams says back-office business has been an important growth sector, as well, with data and item processing for banks and credit unions representing 20 percent of Jack Henry’s revenue.
“And both of those have been growing in the low to mid-teens in terms of percentage annual growth,” he says.
Tony Wormington, president of Jack Henry since 2004, says finding new ways to service existing clients, and targeting midtier and larger firms as new customers, is a strategy that has paid dividends in recent years.
“With the larger you get, the law of numbers gets bigger and it becomes difficult to grow at a sizable pace annually,” Wormington says.
He added institutions that also are in growth mode are increasingly interested in paying Jack Henry to run and maintain or merge its banking systems, and that’s good for the bottom line.
“The customers we have today in-house that are running our software that make the decision to turn to an outsourced environment, tend to pay us more in terms of top-line revenue when they are running it as a service as opposed to running it as their own in-house system,” Wormington says.
Jack Henry, which was founded in 1976, offers more than 300 financial software products across five operating platforms. Three branded product lines – Jack Henry Banking, ProfitStars and Symitar – respectively support commercial banking operations, payment processing enterprises and credit union management. These days, one in five midtier banks – with assets up to $30 billion – are supported by Jack Henry technology and the firm claims more than 35 percent of U.S. credit unions with more than $1 billion in assets are now automated by its Episys platform. Williams says of the roughly 14,000 financial institutions nationwide, 11,500 use one of the company’s ProfitStars solutions.
He says gross revenue was up about 9 percent in the first half of fiscal 2014, in line with the company’s projections to shareholders and Wall Street analysts for roughly similar growth in the current fiscal year.
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
