Jack Henry & Associates Announces Second Quarter 2024 Deconversion Revenue Results
- None.
- None.
Insights
Deconversion revenue, often a lesser-discussed facet of a technology company's financials, refers to the income derived from clients who are transitioning away from the company's services or products. For Jack Henry & Associates, the reported $4.9 million in deconversion revenue for the fiscal second quarter is a noteworthy figure that warrants attention from investors.
Typically, deconversion revenue can be a double-edged sword. On one hand, it represents immediate income; on the other, it could signal a loss of long-term clients and recurring revenue streams. In this case, the figure aligns with the company's full year fiscal 2024 guidance of $16 million, indicating that this source of revenue is stable and presumably accounted for in their financial planning. Investors should consider the implications of deconversion revenue on the company's future growth and client retention strategies.
Understanding the context within the industry is crucial. Deconversion revenue is not common among all tech companies but is more prevalent in those offering long-term service contracts, such as financial technology. Jack Henry & Associates operates in this niche, providing software solutions to financial institutions. The stability of the deconversion revenue suggests that while some clients are leaving, the company may be effectively managing these transitions without unexpected impacts on their financial projections.
However, stakeholders should probe deeper into the reasons behind these deconversions. Are clients moving to competitors, or are they indicative of a broader industry trend towards different technology solutions? The answers to these questions could provide insights into the company's competitive positioning and potential market shifts.
Deconversion revenue can also reflect the lifecycle of technology and the pace of innovation within a company. For a firm like Jack Henry & Associates, which specializes in banking and financial software, deconversion might occur when clients seek newer, more advanced platforms or when mergers and acquisitions change technology needs.
It's crucial to analyze whether the deconversion revenue is a result of market dynamics or a lag in the company's innovation cycle. If it's the latter, there could be long-term implications for the company's market share and growth. Continuous investment in R&D and staying ahead of industry trends is key for technology firms to maintain and grow their client base.
The majority of deconversion revenue is generated when one of Jack Henry's customers agrees to be acquired by another financial institution, resulting in the termination of the customer's contract with Jack Henry. In these circumstances, Jack Henry's recognition of deconversion revenue is driven by factors outside Jack Henry's control, and this revenue does not represent the true operations of Jack Henry's ongoing business of providing services to customers. As a result, Jack Henry excludes deconversion revenue from non-GAAP revenue reported in its quarterly and annual earnings releases.
Statements made in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in Jack Henry's Securities and Exchange Commission filings, including Jack Henry's most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Any forward-looking statement made in this current report speaks only as of the date of the current report, and Jack Henry's expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.
About Jack Henry & Associates, Inc.®
Jack HenryTM (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity – offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 47 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com.
Company: Jack Henry & Associates, Inc.
663 Highway 60, P.O. Box 807
View original content to download multimedia:https://www.prnewswire.com/news-releases/jack-henry--associates-announces-second-quarter-2024-deconversion-revenue-results-302047143.html
SOURCE Jack Henry & Associates, Inc.
FAQ
What was Jack Henry & Associates, Inc.'s deconversion revenue for the fiscal second quarter ended December 31, 2023?
What are the estimates for full year fiscal 2024 deconversion revenue for Jack Henry & Associates, Inc.?
What is the ticker symbol for Jack Henry & Associates, Inc.?
