FICO Announces Earnings of $0.59 per Share for First Quarter Fiscal 2016

Revenue of $200 million vs. $190 million in prior year

Jan 28, 2016, 16:15 ET from FICO

SAN JOSE, Calif., Jan. 28, 2016 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2015.

First Quarter Fiscal 2016 GAAP Results
Net income for the quarter totaled $19.2 million, or $0.59 per share, versus $14.4 million, or $0.43 per share, reported in the prior year period.

First Quarter Fiscal 2016 Non-GAAP Results
Non-GAAP net income for the quarter was $32.1 million vs. $22.6 million in the prior year period. Non-GAAP EPS for the quarter was $0.99 vs. $0.68 in the prior year period. Free cash flow for the quarter was $35.6 million vs. negative $4.9 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.

First Quarter Fiscal 2016 GAAP Revenue
The company reported revenues of $200.1 million for the quarter as compared to $189.5 million reported in the prior year period, an increase of 6%. 

"We're off to a good start in 2016, as we continue to deliver both top- and bottom-line growth," said Will Lansing, chief executive officer. "Our Scores segment is performing particularly well, as we're seeing increased demand on both the B2B and B2C markets."

Revenues for the first quarter fiscal 2016 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 $120.1 million in the first quarter compared to $115.5 million in the prior year quarter, an increase of 4%. This was due primarily to revenues from our compliance solutions attributed to the TONBELLER acquisition. 
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and the business-to-consumer (B2C) services, were $56.0 million in the first quarter, up 27% from the prior year quarter.  The B2B revenue increased 8% while the B2C revenue increased 88% from the prior year quarter.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $23.9 million in the first quarter compared to $30.1 million in the prior year quarter, a decrease of 21%, due primarily to a one-time favorable settlement in the prior year related to our Blaze product for under-reported royalties.

Outlook 
The company is reiterating its previously provided guidance for fiscal 2016, which is as follows:


Fiscal 2016 Guidance

Revenue

$860 million - $870 million

GAAP Net Income

$94 million - $98 million

GAAP Earnings Per Share

$2.89 - $3.02

Non-GAAP Net Income

$144 million - $148 million

Non-GAAP Earnings Per Share

$4.43 - $4.55

The non-GAAP financial measures are described in the financial table captioned "Non-GAAP Guidance" and are reconciled to the corresponding GAAP financial measures at the end of this release.

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 first quarter fiscal 2016 results and provide various strategic and operational updates. The call can be accessed at FICO's Web site at www.FICO.com/investors. A replay of the webcast will be available through January 28, 2017.

The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. The webcast can be accessed 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, 2015 and Form 10-Q for the quarter ended December 31, 2015. 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.

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)














December 31,


September 30,


2015


2015

ASSETS:




Current assets:




     Cash and cash equivalents

$                 90,710


$                 86,120

     Accounts receivable, net

139,078


158,773

     Prepaid expenses and other current assets

57,757


41,709

          Total current assets

287,545


286,602





Marketable securities and investments

20,620


20,525

Property and equipment, net

38,422


38,208

Goodwill and intangible assets, net

853,081


862,071

Other assets

15,582


22,757


$            1,215,250


$            1,230,163





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                 50,365


$                 50,810

     Accrued compensation and employee benefits

37,837


54,368

     Deferred revenue

51,888


46,697

     Current maturities on debt

103,000


92,000

          Total current liabilities

243,090


243,875





Long-term debt

516,000


516,000

Other liabilities

33,992


33,290

          Total liabilities

793,082


793,165





Stockholders' equity

422,168


436,998


$            1,215,250


$            1,230,163

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)










Quarter Ended 


December 31,


2015


2014





Revenues:




     Transactional and maintenance

$           147,072


$           131,410

     Professional services

34,152


35,198

     License

18,852


22,942

        Total revenues

200,076


189,550





Operating expenses:




     Cost of revenues

62,193


66,300

     Research & development

24,631


22,637

     Selling, general and administrative

78,838


72,801

     Amortization of intangible assets

3,580


2,932


169,242


164,670

Operating income

30,834


24,880

Other expense, net

(7,058)


(6,556)

Income before income taxes

23,776


18,324

Provision for income taxes

4,535


3,917

Net income

$             19,241


$             14,407













Basic earnings per share:

$                 0.62


$                 0.45

Diluted earnings per share:

$                 0.59


$                 0.43





Shares used in computing earnings per share:




     Basic

31,185


31,936

     Diluted

32,436


33,128

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)










 Quarter Ended 


 December 31, 


2015


2014

Cash flows from operating activities:




Net income

$                 19,241


$                 14,407

Adjustments to reconcile net income to net cash provided by 




  operating activities:




      Depreciation and amortization

7,441


8,107

      Share-based compensation

14,700


8,794

      Changes in operating assets and liabilities

(6,792)


(35,518)

      Other, net

5,960


5,570

         Net cash provided by operating activities

40,550


1,360





Cash flows from investing activities:




Purchases of property and equipment

(4,294)


(5,667)

Other, net

-


75

         Net cash used in investing activities

(4,294)


(5,592)





Cash flows from financing activities:




Proceeds from revolving line of credit

26,000


81,000

Payments on revolving line of credit

(15,000)


(20,000)

Proceeds from issuances of common stock

1,199


6,713

Taxes paid related to net share settlement of equity awards

(24,462)


(15,007)

Repurchases of common stock

(28,382)


(60,593)

Other, net

9,457


5,850

         Net cash used in financing activities

(31,188)


(2,037)





Effect of exchange rate changes on cash

(478)


(4,155)





Increase (decrease) in cash and cash equivalents

4,590


(10,424)

Cash and cash equivalents, beginning of period

86,120


105,075

Cash and cash equivalents, end of period

$                 90,710


$                 94,651

 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)













Quarter Ended 



December 31,



2015


2014






Applications revenues:





     Transactional and maintenance


$         80,983


$         78,551

     Professional services


27,126


28,499

     License


12,032


8,448

          Total applications revenues


$       120,141


$       115,498






Scores revenues:





     Transactional and maintenance


$         55,217


$         42,937

     Professional services


748


788

     License


37


216

          Total scores revenues


$         56,002


$         43,941






Tools revenues:





     Transactional and maintenance


$         10,872


$           9,922

     Professional services


6,278


5,911

     License


6,783


14,278

          Total tools revenues


$         23,933


$         30,111






Total revenues:





     Transactional and maintenance


$       147,072


$       131,410

     Professional services


34,152


35,198

     License


18,852


22,942

          Total revenues


$       200,076


$       189,550

 

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)










Quarter Ended 


December 31,


2015


2014





GAAP net income

$                    19,241


$                    14,407

Amortization of intangible assets (net of tax)

2,520


2,050

Stock-based compensation expense (net of tax)

10,346


6,149

Non-GAAP net income

$                    32,107


$                    22,606









GAAP diluted earnings per share

$                        0.59


$                        0.43

Amortization of intangible assets (net of tax)

0.08


0.06

Stock-based compensation expense (net of tax)

0.32


0.19

Non-GAAP diluted earnings per share

$                        0.99


$                        0.68





Free cash flow




Net cash provided by operating activities

$                    40,550


$                      1,360

Capital expenditures

(4,294)


(5,667)

Dividends paid

(622)


(635)

Free cash flow

$                    35,634


$                    (4,942)





Note: The numbers may not sum to total due to rounding.








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.

 

FAIR ISAAC CORPORATION

RECONCILIATION OF NON-GAAP GUIDANCE

(In millions, except per share data)

(Unaudited)






Low


High





GAAP net income

$                           94


$                           98

Amortization of intangible assets (net of tax)

10


10

Stock-based compensation expense (net of tax)

40


40

Non-GAAP net income

$                         144


$                         148









GAAP diluted earnings per share

$                        2.89


$                        3.02

Amortization of intangible assets (net of tax)

0.31


0.31

Stock-based compensation expense (net of tax)

1.23


1.23

Non-GAAP diluted earnings per share

$                        4.43


$                        4.55









Note: The numbers may not sum to total due to rounding.








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.

 

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SOURCE FICO



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