FICO Announces Earnings of $0.58 per Share for Second Quarter Fiscal 2015

Revenue of $207 million vs. $185 million in prior year

News provided by

FICO

Apr 23, 2015, 04:05 ET

SAN JOSE, Calif., April 23, 2015 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2015.

Second Quarter Fiscal 2015 GAAP Results
Net income for the quarter totaled $18.9 million, or $0.58 per share, versus $20.8 million, or $0.59 per share, reported in the prior year period.

Second Quarter Fiscal 2015 Non-GAAP Results
Non-GAAP Net Income for the quarter was $29.7 million vs. $28.7 million in the prior year period. Non-GAAP EPS for the quarter was $0.91 vs. $0.81 in the prior year period. Free cash flow for the quarter was $36.7 million vs. $43.9 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.

Second Quarter Fiscal 2015 GAAP Revenue
The company reported revenues of $207.1 million for the quarter as compared to $185.5 million reported in the prior year period, an increase of 12%. 

"We drove growth throughout all of our segments, particularly in Applications," said Will Lansing, chief executive officer. "I'm also pleased with the strong quarter in our Consumer Scores business, and encouraged by the strength we're seeing in our B2B Scores driven by new originations."

Revenues for the second 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 $134.4 million in the second quarter compared to $115.6 million in the prior year quarter, an increase of 16%. This was due to increased revenues in Fraud Solutions and revenues from the TONBELLER acquisition, which contributed $3.2 million in the quarter.
  • 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 $49.9 million in the second quarter, up 4% from the prior year quarter. The B2B revenue decreased 2% compared to the prior year, which included a royalty true up, while the B2C revenue increased 24% from the prior year quarter. Excluding the prior year royalty true up, B2B revenues increased 7%.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $22.8 million in the second quarter compared to $22.0 million in the prior year quarter, an increase of 4%, due primarily to an increase in transactional and maintenance revenue.

Outlook 
The company is reiterating its previously provided guidance for fiscal 2015, which is as follows:

Fiscal 2015 Guidance

Revenue

$830 million - $835 million

GAAP Net Income

$92 million - $95 million

GAAP Earnings Per Share

$2.78 - $2.88

Non-GAAP Net Income

$131 million - $134 million

Non-GAAP Earnings Per Share

$3.97 - $4.06

The Non-GAAP financial measures are described in the financial tables captioned "Non-GAAP Results" and "Reconciliation of Non-GAAP Guidance".

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 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 April 23, 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 and Form 10-Q for the quarter ended December 31, 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)













March 31,

September 30,

2015

2014

ASSETS:


Current assets:


     Cash and cash equivalents

$        86,841

$            105,075

     Accounts receivable, net

169,932

155,295

     Prepaid expenses and other current assets

44,982

28,157

          Total current assets

301,755

288,527




Marketable securities and investments

20,664

19,784

Property and equipment, net

40,011

36,677

Goodwill and intangible assets, net

862,699

827,842

Other assets

11,522

19,468

$   1,236,651

$         1,192,298




LIABILITIES AND STOCKHOLDERS' EQUITY:


Current liabilities:


     Accounts payable and other accrued liabilities

$        69,173

$              58,235

     Accrued compensation and employee benefits

37,301

56,650

     Deferred revenue

67,609

56,519

     Current maturities on debt

82,000

170,000

          Total current liabilities

256,083

341,404




Long-term debt

576,000

376,000

Other liabilities

23,406

20,280

          Total liabilities

855,489

737,684




Stockholders' equity

381,162

454,614

$   1,236,651

$         1,192,298

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)

















Quarter Ended 

Six Months Ended

March 31,

March 31,

2015

2014

2015

2014








Revenues:






     Transactional and maintenance

$ 138,683

$ 132,369

$ 270,093

$ 262,024

     Professional services

37,946

34,619

73,144

68,905

     License

30,480

18,474

53,422

38,876

        Total revenues

207,109

185,462

396,659

369,805








Operating expenses:






     Cost of revenues

70,991

58,183

137,291

115,502

     Research & development

24,341

19,690

46,978

37,782

     Selling, general and administrative

73,863

65,944

146,664

132,933

     Amortization of intangible assets

3,515

2,908

6,447

5,921

     Restructuring and acquisition-related

-

-

-

3,660

172,710

146,725

337,380

295,798

Operating income

34,399

38,737

59,279

74,007

Other expense, net

(8,366)

(7,450)

(14,922)

(15,537)

Income before income taxes

26,033

31,287

44,357

58,470

Provision for income taxes

7,163

10,536

11,080

20,742

Net income

$   18,870

$   20,751

$   33,277

$   37,728
























Basic earnings per share:

$       0.60

$       0.60

$       1.05

$       1.09

Diluted earnings per share:

$       0.58

$       0.59

$       1.01

$       1.06








Shares used in computing earnings per share:






     Basic

31,335

34,500

31,639

34,705

     Diluted

32,448

35,311

32,791

35,670

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)









 Six Months Ended 

 March 31, 

2015

2014

Cash flows from operating activities:


Net income

$  33,277

$  37,728

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


      Depreciation and amortization

17,047

16,012

      Share-based compensation

20,596

16,286

      Changes in operating assets and liabilities

(30,793)

9,921

      Other, net

3,155

(4,860)

         Net cash provided by operating activities

43,282

75,087




Cash flows from investing activities:


Purchases of property and equipment

(10,251)

(4,296)

Cash paid for acquisitions, net of cash acquired

(56,621)

-

Other, net

75

-

         Net cash used in investing activities

(66,797)

(4,296)




Cash flows from financing activities:


Proceeds from revolving line of credit

152,000

23,000

Payments on revolving line of credit

(40,000)

(10,000)

Proceeds from issuances of common stock

11,853

13,256

Taxes paid related to net share settlement of equity awards

(15,992)

(9,571)

Repurchases of common stock

(100,713)

(67,141)

Other, net

7,356

3,688

         Net cash provided by (used in) financing activities

14,504

(46,768)




Effect of exchange rate changes on cash

(9,223)

975




Increase (decrease) in cash and cash equivalents

(18,234)

24,998

Cash and cash equivalents, beginning of period

105,075

83,178

Cash and cash equivalents, end of period

$  86,841

$108,176

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

















Quarter Ended 

Six Months Ended

March 31,

March 31,

2015

2014

2015

2014








Applications revenues:






     Transactional and maintenance

$   80,315

$   76,898

$ 158,866

$ 154,677

     Professional services

30,992

28,373

59,491

55,160

     License

23,081

10,339

31,529

17,689

          Total applications revenues

$ 134,388

$ 115,610

$ 249,886

$ 227,526








Scores revenues:






     Transactional and maintenance

$   47,814

$   46,560

$   90,751

$   89,878

     Professional services

966

777

1,754

1,366

     License

1,157

521

1,373

3,794

          Total scores revenues

$   49,937

$   47,858

$   93,878

$   95,038








Tools revenues:






     Transactional and maintenance

$   10,554

$     8,911

$   20,476

$   17,469

     Professional services

5,988

5,469

11,899

12,379

     License

6,242

7,614

20,520

17,393

          Total tools revenues

$   22,784

$   21,994

$   52,895

$   47,241








Total revenues:






     Transactional and maintenance

$ 138,683

$ 132,369

$ 270,093

$ 262,024

     Professional services

37,946

34,619

73,144

68,905

     License

30,480

18,474

53,422

38,876

          Total revenues

$ 207,109

$ 185,462

$ 396,659

$ 369,805

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

















Quarter Ended 

Six Months Ended

March 31,

March 31,

2015

2014

2015

2014








GAAP net income

$ 18,870

$ 20,751

$ 33,277

$ 37,728

Amortization of intangible assets (net of tax)

2,478

1,930

4,528

3,926

Restructuring and acquisition-related (net of tax)

-

-

-

2,424

Stock-based compensation expense (net of tax)

8,320

6,008

14,469

10,800

    Non-GAAP net income

$ 29,668

$ 28,689

$ 52,274

$ 54,878
















GAAP diluted earnings per share

$     0.58

$     0.59

$     1.01

$     1.06

Amortization of intangible assets (net of tax)

0.08

0.05

0.14

0.11

Restructuring and acquisition-related (net of tax)

-

-

-

0.07

Stock-based compensation expense (net of tax)

0.26

0.17

0.44

0.30

    Non-GAAP diluted earnings per share

$     0.91

$     0.81

$     1.59

$     1.54








Free cash flow






Net cash provided by operating activities

$ 41,922

$ 46,710

$ 43,282

$ 75,088

Capital expenditures

(4,584)

(2,143)

(10,251)

(4,297)

Dividends paid

(626)

(696)

(1,261)

(1,389)

    Free cash flow

$ 36,712

$ 43,871

$ 31,770

$ 69,402

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

$     92

$     95

Amortization of intangible assets (net of tax)

9

9

Stock-based compensation expense (net of tax)

31

31

    Non-GAAP net income

$   131

$   134








GAAP diluted earnings per share

$  2.78

$  2.88

Amortization of intangible assets (net of tax)

0.26

0.26

Stock-based compensation expense (net of tax)

0.94

0.94

    Non-GAAP diluted earnings per share

$  3.97

$  4.06








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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http://www.fico.com