FICO Announces Earnings for Third Quarter Fiscal 2013 Revenue of $184 million vs. $160 million in prior year

Earnings per Share of $0.54, including noncash tax charge of $0.07 per share

SAN JOSE, Calif., July 30, 2013 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced financial results for its third fiscal quarter ended June 30, 2013.

Third Quarter Fiscal 2013 GAAP Results
Net income for the quarter totaled $19.6 million, or $0.54 per share, versus $20.7 million, or $0.59 per share, reported in the prior year period. The current quarter earnings include a noncash tax charge of $2.5 million, or $0.07 per share, associated with establishing a valuation allowance related to a deferred tax asset. This valuation allowance was required due to recent tax law changes in a state in which the company conducts operations.

Third Quarter Fiscal 2013 Non-GAAP Results
Non-GAAP net income for the quarter was $29.3 million vs. $25.8 million in the prior year period. Non-GAAP EPS for the quarter was $0.80 vs. $0.73 in the prior year period. Free cash flow for the quarter was $27.2 million vs. $16.0 million in the prior year period. The non-GAAP financial measures are described in the financial table captioned "Non-GAAP Results" and are reconciled to the corresponding GAAP results in the financial tables at the end of this release.

Third Quarter Fiscal 2013 GAAP Revenue
The company reported revenues of $183.8 million for the quarter as compared to $160.5 million reported in the prior year period, an increase of 15%. 

"We saw continued strength in our Scores and Tools segments this quarter, fortifying the confidence we have in our overall strategic direction," said Will Lansing, chief executive officer. "Recurring revenues from our Applications segment were strong again this quarter, though we did experience some disappointing delays in applications license sales to North American banks.  All in all, we remain confident about our prospects, and focused on executing against our plan."

Revenues for the third quarter fiscal 2013 across each of the company's three operating segments were as follows:

  • Applications revenues, which include the company's preconfigured Decision Management applications and associated professional services, were $115.0 million in the third quarter compared to $98.3 million in the prior year quarter, an increase of 17%. This was due to revenue associated with the acquisitions of Adeptra, Ltd. and CR Software.      
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and the myFICO® business-to-consumer (B2C) service, were $47.2 million in the third quarter compared to $41.9 million in the prior year quarter, an increase of 12%The B2B revenue increased 10% and the B2C revenue increased 21% from the prior year quarter.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $21.6 million in the third quarter compared to $20.2 million in the prior year quarter, an increase of 7%, primarily due to increased revenue from professional services.

Outlook 
The company is updating the previously issued guidance for fiscal 2013 to include the impact of the noncash tax adjustment recorded in the current quarter and potential continued delays in license revenue, as follows:


New Fiscal 2013

Guidance

Previous Fiscal 2013
Guidance

Revenue

$755 million -  $765 million

$760 million -  $770 million

GAAP Net Income (a)

$94-$97 million

$100 million

GAAP Earnings Per Share (a)

$2.61-$2.70

$2.80

Non-GAAP Net Income

$125-$128 million

$128 million

Non-GAAP Earnings Per Share

$3.48-3.57

$3.60

(a) GAAP net income and earnings per share include the impact of the tax valuation allowance of $2.5 million, or $0.07 per share.  The new guidance reflects an annual diluted share count of approximately 36.0 million shares.

The non-GAAP financial measures are described in the financial table captioned "Non-GAAP Results".

Company to Host Conference Call
The company will host a webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its third quarter fiscal 2013 results and provide various strategic and operational updates. The call can be accessed at FICO's Web site at www.FICO.com (follow the instructions on the Investor Relations page). A replay of the webcast will be available through August 30, 2013.

The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

About FICO
FICO (NYSE: FICO) delivers superior predictive analytics that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the FICO® Score — the standard measure of consumer credit risk in the United States — along with the industry-leading solutions for managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharma businesses and government agencies rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. FICO also helps millions of individuals manage their personal credit health through www.myFICO.com. Learn more at www.fico.com. FICO: Make every decision count.  

Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company's Decision Management strategy and reengineering initiative, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions or in the markets we serve, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and Form 10-Q for the quarter ended March 31, 2013. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.

FICO, myFICO and Blaze Advisor are all trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.

-Financial tables follow-

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2013 and September 30, 2012

(In thousands)

(Unaudited)














June 30,


September 30,


2013


2012

ASSETS:




Current assets:




     Cash and cash equivalents

$                 93,019


$                 71,609

     Marketable securities

-


22,008

     Accounts receivable, net

132,717


142,595

     Prepaid expenses and other current assets

21,026


23,113

          Total current assets

246,762


259,325





Marketable securities and investments

17,817


16,500

Property and equipment, net

47,140


41,080

Goodwill and intangible assets, net

824,960


809,803

Other assets

27,464


31,903


$            1,164,143


$            1,158,611





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                 54,779


$                 62,603

     Accrued compensation and employee benefits

37,944


50,043

     Deferred revenue

50,522


47,959

     Current maturities on long-term debt

38,000


49,000

          Total current liabilities

181,245


209,605





Senior notes

447,000


455,000

Other liabilities

20,661


19,600

          Total liabilities

648,906


684,205





Stockholders' equity

515,237


474,406


$            1,164,143


$            1,158,611

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

For the Quarters and Nine Months Ended June 30, 2013 and 2012

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Nine Months Ended


June 30,


June 30,


2013


2012


2013


2012









Revenues:








     Transactional and maintenance

$           129,422


$           113,708


$           385,759


$           342,734

     Professional services

32,306


31,993


98,752


91,147

     License

22,044


14,777


68,606


56,467

        Total revenues

183,772


160,478


553,117


490,348









Operating expenses:








     Cost of revenues

57,655


47,832


172,659


142,620

     Research & development

18,570


14,890


49,143


41,925

     Selling, general and administrative

68,665


59,123


205,968


173,482

     Amortization of intangible assets

3,477


1,465


10,453


4,885

     Restructuring and acquisition-related

197


-


3,486


-


148,564


123,310


441,709


362,912

Operating income

35,208


37,168


111,408


127,436

Other expense, net

(6,587)


(6,914)


(22,357)


(23,873)

Income from operations before income taxes

28,621


30,254


89,051


103,563

Provision for income taxes

8,999


9,505


27,513


32,805

Net income

$             19,622


$             20,749


$             61,538


$             70,758

























Basic earnings per share:

0.55


0.61


1.74


2.01

Diluted earnings per share:

0.54


0.59


1.69


1.95









Shares used in computing earnings per share:








     Basic

35,499


34,004


35,400


35,126

     Diluted

36,385


35,293


36,340


36,247

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended June 30, 2013 and 2012

(In thousands)

(Unaudited)














 Nine Months Ended 


 June 30, 


2013


2012

Cash flows from operating activities:




Net income

$                 61,538


$                 70,758

Adjustments to reconcile net income to net cash provided by 




  operating activities:




      Depreciation and amortization

25,160


14,555

      Share-based compensation

18,897


15,466

      Changes in operating assets and liabilities

2,230


7,985

      Other, net

(7,648)


(2,356)

         Net cash provided by operating activities

100,177


106,408





Cash flows from investing activities:




Purchases of property and equipment

(20,435)


(19,616)

Net activity from marketable securities

22,000


73,592

Cash paid for acquisitions, net of cash acquired

(32,874)


(18,192)

Other, net

50


(149)

         Net cash proivded by (used in) investing activities

(31,259)


35,635





Cash flows from financing activities:




Proceeds from revolving line of credit

30,000


-

Payment on Senior Notes

(49,000)


(8,000)

Proceeds from issuances of common stock

23,790


39,609

Repurchases of common stock

(47,811)


(191,056)

Other, net

(726)


2,291

         Net cash provided by (used in) financing activities

(43,747)


(157,156)





Effect of exchange rate changes on cash

(3,761)


(1,958)





Increase in cash and cash equivalents

21,410


(17,071)

Cash and cash equivalents, beginning of period

71,609


135,752

Cash and cash equivalents, end of period

$                 93,019


$               118,681

 

 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

For the Quarters and Nine Months Ended June 30, 2013 and 2012

(In thousands)

(Unaudited)





















Quarter Ended 


Nine Months Ended



June 30,


June 30,



2013


2012


2013


2012










Applications revenues:









     Transactional and maintenance


$   75,537


$   64,729


$ 231,174


$ 192,524

     Professional services


26,230


27,109


79,704


77,192

     License


13,216


6,484


46,027


34,956

          Total applications revenues


$ 114,983


$   98,322


$ 356,905


$ 304,672










Scores revenues:









     Transactional and maintenance


$   45,915


$   41,394


$ 130,558


$ 127,227

     Professional services


806


500


3,333


1,309

     License


431


26


770


351

          Total scores revenues


$   47,152


$   41,920


$ 134,661


$ 128,887










Tools revenues:









     Transactional and maintenance


$     7,970


$     7,585


$   24,027


$   22,983

     Professional services


5,270


4,384


15,715


12,646

     License


8,397


8,267


21,809


21,160

          Total tools revenues


$   21,637


$   20,236


$   61,551


$   56,789










Total revenues:









     Transactional and maintenance


$ 129,422


$ 113,708


$ 385,759


$ 342,734

     Professional services


32,306


31,993


98,752


91,147

     License


22,044


14,777


68,606


56,467

          Total revenues


$ 183,772


$ 160,478


$ 553,117


$ 490,348

 

 

FAIR ISAAC CORPORATION






NON-GAAP RESULTS






For the Quarters and Nine Months Ended June 30, 2013 and 2012






(In thousands, except per share data)






(Unaudited)

































Quarter Ended 


Nine Months Ended







June 30,


June 30,







2013


2012


2013


2012



















GAAP net income

$   19,622


$ 20,749


$   61,538


$   70,758






Amortization of intangible assets (net of tax)

2,413


971


7,145


3,264






Restructuring and acquisition-related (net of tax)

137


-


2,346


-






Stock-based compensation expense (net of tax)

4,615


4,030


12,921


10,312






Adjustment to tax valuation allowance

2,474


-


2,474


-






Non-GAAP net income

$   29,261


$ 25,750


$   86,424


$   84,334
































GAAP diluted earnings per share

$       0.54


$     0.59


$       1.69


$       1.95






Amortization of intangible assets (net of tax)

0.06


0.03


0.20


0.09






Restructuring and acquisition-related (net of tax)

0.00


-


0.06


-






Stock-based compensation expense (net of tax)

0.13


0.11


0.36


0.29






Adjustment to tax valuation allowance

0.07


-


0.07


-






Non-GAAP diluted earnings per share

$       0.80


$     0.73


$       2.38


$       2.33



















Free cash flow













Net cash provided by operating activities

$   31,224


$ 22,932


$ 100,177


$ 106,408






Capital expenditures

(3,312)


(6,252)


(20,434)


(19,616)






Dividends paid

(706)


(685)


(2,123)


(2,112)






Free cash flow

$   27,206


$ 15,995


$   77,620


$   84,680













































About Non-GAAP Financial Measures





















To supplement the consolidated GAAP financial statements, the company uses the following non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, and free cash flow. Non-GAAP net income and non-GAAP EPS exclude the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, and adjustment to tax valuation allowance items. Free cash flow excludes capital expenditures and dividends paid.  The presentation of these financial measures is not intended to be considered  in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. 














Management uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons.  Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of recurring business results including significant non-cash expenses.  We believe management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods.  These non-GAAP financial measures also facilitate management's internal comparisons to historical performance and liquidity as well as comparisons to our competitors' operating results.  We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key measures used by management in its financial and operating decision-making.

 

 

SOURCE FICO



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