FICO Announces Fourth Quarter Fiscal 2015

Record revenue of $233 million

GAAP EPS of $1.03/share, including certain items

Nov 05, 2015, 16:15 ET from FICO

SAN JOSE, Calif., Nov. 5, 2015 /PRNewswire/ -- FICO (NYSE: FICO), the predictive analytics and decision management software company, today announced results for its fourth fiscal quarter ended September 30, 2015.

Fourth Quarter Fiscal 2015 GAAP Results

Net income for the quarter totaled $33.3 million, or $1.03 per share, versus $36.6 million, or $1.10 per share, reported in the prior year period.

The current quarter earnings include a restructuring charge, net of tax, of $11.5 million, or $0.35 per share, primarily related to the write-down of facilities, and a reduction to income tax expense of $5.4 million, or $0.17 per share, associated with the favorable resolution of a tax audit. 

Fourth Quarter Fiscal 2015 Non-GAAP Results

Non-GAAP Net Income for the quarter was $50.9 million vs. $44.2 million in the prior year period. Non-GAAP EPS for the quarter was $1.57 vs. $1.33 in the prior year period. Free cash flow for the quarter was $39.2 million vs. $65.1 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.

Fourth Quarter Fiscal 2015 GAAP Revenue

The company reported revenues of $232.8 million for the quarter as compared to $221.6 million reported in the prior year period, an increase of 5%. 

"We delivered record revenue, with particularly strong results in Scores," said Will Lansing, chief executive officer. "Besides delivering meaningful growth in our Scores business, we are pursuing additional opportunities to continue the expansion our market-leading position.  And in our software businesses, we are shifting our focus to distribution to further capitalize on the investments we've made over the last several years."

Revenues for the fourth quarter fiscal 2015 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 $149.3 million in the fourth quarter compared to $146.9 million in the prior year quarter, an increase of 2%. This was due primarily to increased revenue in Customer Communication Solutions, Collections and Recovery Solutions and revenues from the TONBELLER acquisition.
  • 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 $57.4 million in the fourth quarter compared to $46.1 million in the prior year quarter, up 24%. The B2B revenue increased 5% while the B2C revenue increased 86% from the prior year quarter.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $26.1 million in the fourth quarter compared to $28.6 million in the prior year quarter, a decrease of 9%, due primarily to decreased license revenue of Blaze Advisor® and Decision Optimizer.

Outlook 

The company is providing guidance for fiscal 2016, which 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 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 fourth quarter fiscal 2015 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 November 5, 2016.

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, 2014. 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)

September 30,

September 30,

2015

2014

ASSETS:

Current assets:

     Cash and cash equivalents

$                 86,120

$               105,075

     Accounts receivable, net

158,773

155,295

     Prepaid expenses and other current assets

41,709

28,157

          Total current assets

286,602

288,527

Marketable securities and investments

20,525

19,784

Property and equipment, net

38,208

36,677

Goodwill and intangible assets, net

862,071

827,842

Other assets

22,757

19,468

$            1,230,163

$            1,192,298

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

     Accounts payable and other accrued liabilities

$                 50,810

$                 58,235

     Accrued compensation and employee benefits

54,368

56,650

     Deferred revenue

46,697

56,519

     Current maturities on debt

92,000

170,000

          Total current liabilities

243,875

341,404

Long-term debt

516,000

376,000

Other liabilities

33,290

20,280

          Total liabilities

793,165

737,684

Stockholders' equity

436,998

454,614

$            1,230,163

$            1,192,298

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)

Quarter Ended 

Year Ended

September 30,

September 30,

2015

2014

2015

2014

Revenues:

     Transactional and maintenance

$                149,444

$           133,285

$           564,232

$           527,563

     Professional services

40,631

42,407

151,773

149,834

     License

42,681

45,878

122,776

111,588

        Total revenues

232,756

221,570

838,781

788,985

Operating expenses:

     Cost of revenues

67,042

71,027

270,535

249,281

     Research & development

26,236

22,413

98,824

83,435

     Selling, general and administrative

78,693

73,713

300,002

278,203

     Amortization of intangible assets

3,627

2,977

13,673

11,917

     Restructuring and acquisition-related

15,986

-

18,242

4,281

191,584

170,130

701,276

627,117

Operating income

41,172

51,440

137,505

161,868

Other expense, net

(6,755)

(7,080)

(28,267)

(28,737)

Income before income taxes

34,417

44,360

109,238

133,131

Provision for income taxes

1,098

7,757

22,736

38,252

Net income

$                  33,319

$             36,603

$             86,502

$             94,879

Basic earnings per share:

$                      1.07

$                 1.14

$                 2.75

$                 2.80

Diluted earnings per share:

$                      1.03

$                 1.10

$                 2.65

$                 2.72

Shares used in computing earnings per share:

     Basic

31,214

32,123

31,402

33,870

     Diluted

32,494

33,217

32,609

34,864

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 Year Ended 

 September 30, 

2015

2014

Cash flows from operating activities:

Net income

$                 86,502

$                 94,879

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

      Depreciation and amortization

33,889

32,632

      Share-based compensation

45,308

36,362

      Changes in operating assets and liabilities

(27,733)

26,485

      Other, net

(4,989)

(15,324)

         Net cash provided by operating activities

132,977

175,034

Cash flows from investing activities:

Purchases of property and equipment

(24,999)

(12,590)

Cash paid for acquisitions, net of cash acquired

(56,992)

(7,253)

Other, net

75

-

         Net cash used in investing activities

(81,916)

(19,843)

Cash flows from financing activities:

Proceeds from revolving line of credit

249,000

145,000

Payments on revolving line of credit

(116,000)

(61,000)

Payment on Senior Notes

(71,000)

(8,000)

Proceeds from issuances of common stock

18,258

18,851

Taxes paid related to net share settlement of equity awards

(19,461)

(12,297)

Repurchases of common stock

(130,719)

(217,039)

Other, net

11,287

4,094

         Net cash used in financing activities

(58,635)

(130,391)

Effect of exchange rate changes on cash

(11,381)

(2,903)

Increase (decrease) in cash and cash equivalents

(18,955)

21,897

Cash and cash equivalents, beginning of period

105,075

83,178

Cash and cash equivalents, end of period

$                 86,120

$               105,075

 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

Quarter Ended 

Year Ended

September 30,

September 30,

2015

2014

2015

2014

Applications revenues:

     Transactional and maintenance

$         81,999

$         79,724

$        320,596

$        313,316

     Professional services

34,062

34,042

124,562

121,100

     License

33,193

33,108

81,116

69,840

          Total applications revenues

$       149,254

$       146,874

$        526,274

$        504,256

Scores revenues:

     Transactional and maintenance

$         55,420

$         44,068

$        200,426

$        178,023

     Professional services

532

617

2,901

2,784

     License

1,423

1,416

3,680

5,662

          Total scores revenues

$         57,375

$         46,101

$        207,007

$        186,469

Tools revenues:

     Transactional and maintenance

$         12,025

$           9,493

$          43,210

$          36,224

     Professional services

6,037

7,748

24,310

25,950

     License

8,065

11,354

37,980

36,086

          Total tools revenues

$         26,127

$         28,595

$        105,500

$          98,260

Total revenues:

     Transactional and maintenance

$       149,444

$       133,285

$        564,232

$        527,563

     Professional services

40,631

42,407

151,773

149,834

     License

42,681

45,878

122,776

111,588

          Total revenues

$       232,756

$       221,570

$        838,781

$        788,985

 

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

Quarter Ended 

Year Ended

September 30,

September 30,

2015

2014

2015

2014

GAAP net income

$                    33,319

$                    36,603

$                    86,502

$                    94,879

Amortization of intangible assets (net of tax)

2,598

2,064

9,595

8,012

Restructuring and acquisition-related (net of tax)

11,452

-

12,999

2,840

Stock-based compensation expense (net of tax)

8,987

7,440

31,801

24,500

Adjustment to tax reserves and valuation allowance

(5,440)

(1,927)

(5,440)

(1,927)

Non-GAAP net income

$                    50,916

$                    44,180

$                  135,457

$                  128,304

GAAP diluted earnings per share

$                        1.03

$                        1.10

$                        2.65

$                        2.72

Amortization of intangible assets (net of tax)

0.08

0.06

0.29

0.23

Restructuring and acquisition-related (net of tax)

0.35

-

0.40

0.08

Stock-based compensation expense (net of tax)

0.28

0.22

0.98

0.70

Adjustment to tax reserves and valuation allowance

(0.17)

(0.06)

(0.17)

(0.06)

Non-GAAP diluted earnings per share

$                        1.57

$                        1.33

$                        4.15

$                        3.68

Free cash flow

Net cash provided by operating activities

$                    46,577

$                    71,221

$                  132,978

$                  175,034

Capital expenditures

(6,733)

(5,503)

(24,999)

(12,591)

Dividends paid

(626)

(641)

(2,509)

(2,713)

Free cash flow

$                    39,218

$                    65,077

$                  105,470

$                  159,730

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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