FICO Announces Earnings of $0.59 per Share for Second Quarter Fiscal 2014 Revenue of $185 million vs. $179 million in prior year

SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2014.

Second Quarter Fiscal 2014 GAAP Results
Net income for the quarter totaled $20.8 million, or $0.59 per share, versus $18.5 million, or $0.51 per share, reported in the prior year period.

Second Quarter Fiscal 2014 Non-GAAP Results
Non-GAAP Net Income for the quarter was $28.7 million vs. $25.4 million in the prior year period. Non-GAAP EPS for the quarter was $0.81 vs. $0.69 in the prior year period. Free cash flow for the quarter was $43.9 million vs. $31.4 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 2014 GAAP Revenue
The company reported revenues of $185.5 million for the quarter as compared to $179.3 million reported in the prior year period, an increase of 3%. 

"Our year-over-year revenues increased as we drove growth in our Scores and Tools businesses," said Will Lansing, chief executive officer. "Our Applications revenues were flat, but the large bookings this quarter will increase our backlog in that segment. At the same time, we are holding the line on expenses and delivering increased cash flows."

Revenues for the second quarter fiscal 2014 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 $115.6 million in the second quarter compared to $117.2 million in the prior year quarter, a decrease of 1%. This was due to declines in license revenue in Banking Fraud.
  • 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 $47.9 million in the second quarter compared to $44.1 million in the prior year quarter, an increase of 9%. The B2C revenue increased 11% and the B2B revenue increased 8% from the prior year quarter, mainly due to a true-up associated with an underpayment of royalties over a multi-year period.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization, Models and related professional services, were $22.0 million in the second quarter compared to $18.0 million in the prior year quarter, an increase of 22%, due to increased license sales of Model Central and Optimization solutions.

Outlook 
The company is reiterating its previously provided guidance for fiscal 2014, which follows:


Fiscal 2014 Guidance

Revenue

$763 million -  $773 million

GAAP Net Income

$91 million - $94 million

GAAP Earnings Per Share

$2.50-$2.60

Non-GAAP Net Income

$125-$128 million

Non-GAAP Earnings Per Share

$3.46-$3.56

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 2014 results and provide various strategic and operational updates. The call can be accessed at FICO's Web site at www.FICO.com/en/about-us/investors/corporate-info/.  A replay of the webcast will be available through April 24, 2015.

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, 2013 and Form 10-Q for the quarter ended December 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.

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)














March 31,


September 30,


2014


2013

ASSETS:




Current assets:




     Cash and cash equivalents

$               108,176


$                 83,178

     Accounts receivable, net

140,368


143,733

     Prepaid expenses and other current assets

21,082


22,277

          Total current assets

269,626


249,188





Marketable securities and investments

19,333


18,140

Property and equipment, net

39,232


45,155

Goodwill and intangible assets, net

830,539


831,292

Other assets

18,523


17,772


$            1,177,253


$            1,161,547





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                 50,866


$                 54,418

     Accrued compensation and employee benefits

36,709


39,281

     Deferred revenue

55,586


49,181

     Current maturities on debt

36,000


23,000

          Total current liabilities

179,161


165,880





Senior notes

447,000


447,000

Other liabilities

17,511


17,990

          Total liabilities

643,672


630,870





Stockholders' equity

533,581


530,677


$            1,177,253


$            1,161,547

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Six Months Ended


March 31,


March 31,


2014


2013


2014


2013









Revenues:








     Transactional and maintenance

$           132,369


$           126,439


$           262,024


$           256,337

     Professional services

34,619


34,109


68,905


66,446

     License

18,474


18,777


38,876


46,562

        Total revenues

185,462


179,325


369,805


369,345









Operating expenses:








     Cost of revenues

58,183


58,856


115,502


115,004

     Research & development

19,690


16,021


37,782


30,573

     Selling, general and administrative

65,944


67,638


132,933


137,303

     Amortization of intangible assets

2,908


3,604


5,921


6,976

     Restructuring and acquisition-related

-


-


3,660


3,289


146,725


146,119


295,798


293,145

Operating income

38,737


33,206


74,007


76,200

Other expense, net

(7,450)


(7,819)


(15,537)


(15,770)

Income before income taxes

31,287


25,387


58,470


60,430

Provision for income taxes

10,536


6,892


20,742


18,514

Net income

$             20,751


$             18,495


$             37,728


$             41,916

























Basic earnings per share:

$                 0.60


$                 0.52


$                 1.09


$                 1.19

Diluted earnings per share:

$                 0.59


$                 0.51


$                 1.06


$                 1.15









Shares used in computing earnings per share:








     Basic

34,500


35,664


34,705


35,350

     Diluted

35,311


36,492


35,670


36,318

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)














 Six Months Ended 


March 31, 


2014


2013

Cash flows from operating activities:




Net income

$                 37,728


$                 41,916

Adjustments to reconcile net income to net cash provided by 




  operating activities:




      Depreciation and amortization

16,012


16,433

      Share-based compensation

16,286


12,245

      Changes in operating assets and liabilities

9,921


3,954

      Other, net

(4,860)


(5,594)

         Net cash provided by operating activities

75,087


68,954





Cash flows from investing activities:




Purchases of property and equipment

(4,296)


(17,123)

Net activity from marketable securities

-


22,000

Cash paid for acquisitions, net of cash acquired

-


(28,438)

Other, net

-


50

         Net cash used in investing activities

(4,296)


(23,511)





Cash flows from financing activities:




Proceeds from revolving line of credit

23,000


-

Payments on revolving line of credit and other short-term loans

(10,000)


(2,933)

Proceeds from issuances of common stock

3,685


15,998

Repurchases of common stock

(67,141)


-

Other, net

3,688


2,835

         Net cash provided by (used in) financing activities

(46,768)


15,900





Effect of exchange rate changes on cash

975


(1,802)





Increase in cash and cash equivalents

24,998


59,541

Cash and cash equivalents, beginning of period

83,178


71,609

Cash and cash equivalents, end of period

$               108,176


$               131,150

 

 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)























Quarter Ended 



Six Months Ended



March 31,



March 31,



2014


2013



2014


2013











Applications revenues:










     Transactional and maintenance


$         76,898


$         76,012



$        154,677


$        155,637

     Professional services


28,373


27,315



55,160


53,474

     License


10,339


13,888



17,689


32,811

          Total applications revenues


$       115,610


$       117,215



$        227,526


$        241,922











Scores revenues:










     Transactional and maintenance


$         46,560


$         42,206



$          89,878


$          84,643

     Professional services


777


1,624



1,366


2,527

     License


521


232



3,794


339

          Total scores revenues


$         47,858


$         44,062



$          95,038


$          87,509











Tools revenues:










     Transactional and maintenance


$           8,911


$           8,221



$          17,469


$          16,057

     Professional services


5,469


5,170



12,379


10,445

     License


7,614


4,657



17,393


13,412

          Total tools revenues


$         21,994


$         18,048



$          47,241


$          39,914











Total revenues:










     Transactional and maintenance


$       132,369


$       126,439



$        262,024


$        256,337

     Professional services


34,619


34,109



68,905


66,446

     License


18,474


18,777



38,876


46,562

          Total revenues


$       185,462


$       179,325



$        369,805


$        369,345

 

 

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Six Months Ended


March 31,


March 31,


2014


2013


2014


2013









GAAP net income

$                    20,751


$                    18,495


$                    37,728


$                    41,916

Amortization of intangible assets (net of tax)

1,930


2,467


3,926


4,732

Restructuring and acquisition-related (net of tax)

-


-


2,424


2,209

Stock-based compensation expense (net of tax)

6,008


4,389


10,800


8,306

Non-GAAP net income

$                    28,689


$                    25,351


$                    54,878


$                    57,163

















GAAP diluted earnings per share

$                        0.59


$                        0.51


$                        1.06


$                        1.15

Amortization of intangible assets (net of tax)

0.05


0.07


0.11


0.13

Restructuring and acquisition-related (net of tax)

-


-


0.07


0.06

Stock-based compensation expense (net of tax)

0.17


0.12


0.30


0.23

Non-GAAP diluted earnings per share

$                        0.81


$                        0.69


$                        1.54


$                        1.57









Free cash flow








Net cash provided by operating activities

$                    46,710


$                    40,224


$                    75,088


$                    68,953

Capital expenditures

(2,143)


(8,110)


(4,297)


(17,122)

Dividends paid

(696)


(715)


(1,389)


(1,417)

Free cash flow

$                    43,871


$                    31,399


$                    69,402


$                    50,414

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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