FICO Announces Earnings of $0.51 per Share for Second Quarter Fiscal 2013 Revenue of $179 million vs. $160 million in prior year

SAN JOSE, Calif., April 24, 2013 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced financial results for its second fiscal quarter ended March 31, 2013.

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Second Quarter Fiscal 2013 GAAP Results
Net income for the quarter totaled $18.5 million, or $0.51 per share, versus $20.0 million, or $0.55 per share, reported in the prior year period.

Second Quarter Fiscal 2013 Non-GAAP Results
Non-GAAP Net Income for the quarter was $25.4 million vs. $24.1 million in the prior year period. Non-GAAP EPS for the quarter was $0.69 vs. $0.66 in the prior year period. Free cash flow for the quarter was $31.4 million vs. $36.0 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.

Second Quarter Fiscal 2013 GAAP Revenue
The company reported revenues of $179.3 million for the quarter as compared to $159.5 million reported in the prior year period, an increase of 12%. 

"We continue to pursue initiatives that will propel our growth and generate recurring revenue streams within and beyond our core financial services business," said Will Lansing, chief executive officer. "Despite the softness we saw in license sales this quarter, we remain committed to our guidance for the year, and confident in our long-term strategy to capitalize upon the enormous opportunities we see in Big Data analytics."

Revenues for the second 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 $117.2 million in the second quarter compared to $96.1 million in the prior year quarter, an increase of 22%. This was due to revenues associated with last year's acquisition of Adeptra, Ltd. and increases in Fraud Solutions revenues.         
  • 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 $44.1 million in the second quarter compared to $44.4 million in the prior year quarter, a decrease of 1%.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $18.0 million in the second quarter compared to $19.0 million in the prior year quarter, a decrease of 5%, primarily due to fewer license sales recorded during the quarter.

Outlook 
The company is reiterating the previously issued GAAP guidance for fiscal 2013, as follows:


Fiscal 2013 GAAP Guidance

Revenue

$760 million -  $770 million

GAAP Net Income

$100 million

GAAP Earnings Per Share

$2.80

In addition, the company is providing Non-GAAP guidance for fiscal 2013, as follows:


New Fiscal 2013

Non-GAAP Guidance

Non-GAAP Net Income

$128 million

Non-GAAP Earnings Per Share

$3.60

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 second 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 May 24, 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 December 31, 2012. 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

March 31, 2013 and September 30, 2012

(In thousands)

(Unaudited)














March 31,


September 30,


2013


2012

ASSETS:




Current assets:




     Cash and cash equivalents

$                131,150


$                 71,609

     Marketable securities

-


22,008

     Accounts receivable, net

132,906


142,595

     Prepaid expenses and other current assets

21,174


23,113

          Total current assets

285,230


259,325





Marketable securities and investments

17,525


16,500

Property and equipment, net

48,630


41,080

Goodwill and intangible assets, net

821,021


809,803

Other assets

25,935


31,903


$             1,198,341


$            1,158,611





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                  53,885


$                 62,603

     Accrued compensation and employee benefits

36,585


50,043

     Deferred revenue

51,803


47,959

     Current maturities on long-term debt

49,000


49,000

          Total current liabilities

191,273


209,605





Senior notes

455,000


455,000

Other liabilities

21,843


19,600

          Total liabilities

668,116


684,205





Stockholders' equity

530,225


474,406


$             1,198,341


$            1,158,611

    

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

For the Quarters and Six Months Ended March 31, 2013 and 2012

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Six Months Ended


March 31,


March 31,


2013


2012


2013


2012









Revenues:








     Transactional and maintenance

$                126,439


$           114,843


$ 256,337


$           229,026

     Professional services

34,109


30,461


66,446


59,154

     License

18,777


14,217


46,562


41,690

        Total revenues

179,325


159,521


369,345


329,870









Operating expenses:








     Cost of revenues

58,856


48,814


115,004


94,788

     Research & development

16,021


13,986


30,573


27,035

     Selling, general and administrative

67,638


57,035


137,303


114,359

     Amortization of intangible assets

3,604


1,490


6,976


3,420

     Restructuring and acquisition-related

-


-


3,289


-


146,119


121,325


293,145


239,602

Operating income

33,206


38,196


76,200


90,268

Other expense, net

(7,819)


(8,512)


(15,770)


(16,959)

Income from operations before income taxes

25,387


29,684


60,430


73,309

Provision for income taxes

6,892


9,672


18,514


23,300

Net income

$                  18,495


$             20,012


$   41,916


$             50,009

























Basic earnings per share:

$                      0.52


$                 0.57


$       1.19


$                 1.40

Diluted earnings per share:

$                      0.51


$                 0.55


$       1.15


$                 1.36









Shares used in computing earnings per share:








     Basic

35,664


35,331


35,350


35,685

     Diluted

36,492


36,552


36,318


36,721

    

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended March 31, 2013 and 2012

(In thousands)

(Unaudited)














 Six Months Ended 


 March 31, 


2013


2012

Cash flows from operating activities:




Net income

$        41,916


$                 50,009

Adjustments to reconcile net income to net cash provided by operating activities:







      Depreciation and amortization

16,433


10,049

      Share-based compensation

12,245


9,384

      Changes in operating assets and liabilities

3,954


16,075

      Other, net

(5,594)


(2,041)

         Net cash provided by operating activities

68,954


83,476





Cash flows from investing activities:




Purchases of property and equipment

(17,123)


(13,364)

Net activity from marketable securities

22,000


60,588

Cash paid for acquisitions, net of cash acquired

(28,438)


-

Other, net

50


(199)

         Net cash provided by (used in) investing activities

(23,511)


47,025





Cash flows from financing activities:




Proceeds from issuances of common stock

15,998


33,401

Repurchases of common stock

-


(156,773)

Other, net

(98)


1,988

         Net cash provided by (used in) financing activities

15,900


(121,384)





Effect of exchange rate changes on cash

(1,802)


1,167





Increase in cash and cash equivalents

59,541


10,284

Cash and cash equivalents, beginning of period

71,609


135,752

Cash and cash equivalents, end of period

$      131,150


$               146,036

    

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

For the Quarters and Six Months Ended March 31, 2013 and 2012

(In thousands)

(Unaudited)























Quarter Ended 



Six Months Ended



March 31,



March 31,



2013


2012



2013


2012











Applications revenues:










    Transactional and maintenance


$         76,012


$         63,523



$        155,637


$        127,795

     Professional services


27,315


25,756



53,474


50,083

     License


13,888


6,855



32,811


28,472

          Total applications revenues


$       117,215


$         96,134



$        241,922


$        206,350











Scores revenues:










    Transactional and maintenance


$         42,206


$         43,636



$          84,643


$          85,833

     Professional services


1,624


521



2,527


809

     License


232


268



339


325

          Total scores revenues


$         44,062


$         44,425



$          87,509


$          86,967











Tools revenues:










    Transactional and maintenance


$           8,221


$           7,684



$          16,057


$          15,398

     Professional services


5,170


4,184



10,445


8,262

     License


4,657


7,094



13,412


12,893

          Total tools revenues


$         18,048


$         18,962



$          39,914


$          36,553











Total revenues:










    Transactional and maintenance


$       126,439


$       114,843



$        256,337


$        229,026

     Professional services


34,109


30,461



66,446


59,154

     License


18,777


14,217



46,562


41,690

          Total revenues


$       179,325


$       159,521



$        369,345


$        329,870

    

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

For the Quarters and Six Months Ended March 31, 2013 and 2012

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Six Months Ended


March 31,


March 31,


2013


2012


2013


2012









GAAP net income

$      18,495


$  20,012


$      41,916


$  50,009

Amortization of intangible assets (net of tax)

2,467


985


4,732


2,293

Restructuring and acquisition-related (net of tax)

-


-


2,209


-

Stock-based compensation expense (net of tax)

4,389


3,058


8,306


6,282

Non-GAAP net income

$      25,351


$  24,055


$      57,163


$  58,584

















GAAP diluted earnings per share

$          0.51


$      0.55


$          1.15


$      1.36

Amortization of intangible assets (net of tax)

0.07


0.03


0.13


0.06

Restructuring and acquisition-related (net of tax)

-


-


0.06


-

Stock-based compensation expense (net of tax)

0.12


0.08


0.23


0.17

Non-GAAP diluted earnings per share

$          0.69


$      0.66


$          1.57


$      1.60









Free cash flow








Net cash provided by operating activities

$      40,224


$  42,327


$      68,953


$  83,476

Capital expenditures

(8,110)


(5,607)


(17,122)


(13,364)

Dividends paid

(715)


(710)


(1,417)


(1,427)

Free cash flow

$      31,399


$  36,010


$      50,414


$  68,685

    

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, and restructuring and acquisition-related 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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