Jack Henry Issues Margin Warning Due to Contract Timing Differences

Financial services firm warns it can’t adjust pricing fast enough to offset cost increases.

September 25, 2022

Jack Henry & Associates, Inc. (JKHY), a technology and payments processing company serving banks and credit unions, inserted new language in its latest annual report warning margins may suffer due to differences in timing between vendor and customer contracts. The new language— inserted alongside a boilerplate warning about customer renewals— indicates the same long term customer contracts investors count on for sales and earnings predictability may be an albatross if inflation persists:

“We may experience increased costs for services from our third-party vendors due to inflation or other cost expansion, but because our customer contracts typically have longer terms than our vendor contracts, our ability to pass on those higher costs to customers may be limited.”

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