FICO Announces Earnings of $1.10 per Share for Second Quarter Fiscal 2019

Revenue of $278 million vs. $256 million in prior year

News provided by

FICO

Apr 30, 2019, 16:15 ET

SAN JOSE, Calif., April 30, 2019 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2019.

Second Quarter Fiscal 2019 GAAP Results
Net income for the quarter totaled $33.4 million, or $1.10 per share, versus $31.2 million, or $1.00 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $47.8 million versus $49.2 million in the prior year period.

Second Quarter Fiscal 2019 Non-GAAP Results
Non-GAAP Net Income for the quarter was $47.3 million versus $47.0 million in the prior year period. Non-GAAP EPS for the quarter was $1.56 versus $1.50 in the prior year period. Free cash flow for the quarter was $43.6 million versus $42.2 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 2019 GAAP Revenue
The company reported revenues of $278.2 million for the quarter as compared to $256.3 million reported in the prior year period. 

"We had another strong quarter of both revenues and bookings," said Will Lansing, chief executive officer. "We are pleased to be able to raise our full-year guidance."

Revenues for the second quarter of fiscal 2019 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 $141.8 million in the second quarter, compared to $146.5 million in the prior year quarter, a decrease of 3%, due primarily to reduced services revenues from implementations and decreased license sales.
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $104.4 million in the second quarter, compared to $87.1 million in the prior year quarter, an increase of 20%. B2B revenue increased 27% and B2C revenue increased 5% from the prior year quarter.
  • Decision Management Software revenues, which include Blaze Advisor®, Xpress Optimization, Decision Management Platform and related professional services, were $32.0 million in the second quarter compared to $22.7 million in the prior year quarter, an increase of 41%, due primarily to increased services and license revenues related to Xpress Optimization.

Outlook 
The company is updating guidance for fiscal 2019:

Previous Fiscal 2019
Guidance

Updated Fiscal 2019
Guidance

Revenues

$1.125 billion

$1.14 billion

GAAP Net Income

$168 million

$173 million

GAAP EPS

$5.53

$5.75

Non GAAP Net Income

$209 million

$214 million

Non GAAP EPS

$6.88

$7.12

The Non-GAAP financial measures are described in the financial table captioned "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 2019 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 at our Past Events page through April 30, 2020.

About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 165 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at http://www.fico.com

Join the conversation at https://twitter.com/fico & http://www.fico.com/en/blogs/

FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.

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 protect such data, the failure to realize the anticipated benefits of any acquisitions, 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, 2018 and subsequent quarterly reports on Form 10-Q. 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,

2019

2018



* As Adjusted

ASSETS:


Current assets:


     Cash and cash equivalents

$                 76,885

$                 90,023

     Accounts receivable, net

271,632

266,742

     Prepaid expenses and other current assets

48,483

39,624

          Total current assets

397,000

396,389




Marketable securities and investments

20,590

19,756

Property and equipment, net

44,760

48,837

Goodwill and intangible assets, net

812,118

815,426

Other assets

53,643

50,059

$            1,328,111

$            1,330,467




LIABILITIES AND STOCKHOLDERS' EQUITY:


Current liabilities:


     Accounts payable and other accrued liabilities

$                 44,996

$                 51,276

     Accrued compensation and employee benefits

67,349

84,292

     Deferred revenue

106,275

103,335

     Current maturities on debt

218,000

235,000

          Total current liabilities

436,620

473,903




Long-term debt

604,369

528,944

Other liabilities

39,644

40,183

          Total liabilities

1,080,633

1,043,030




Stockholders' equity

247,478

287,437

$            1,328,111

$            1,330,467




* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on October 1, 2018.

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)

















Quarter Ended 

Six Months Ended

March 31,

March 31,

2019

2018

2019

2018



* As Adjusted


* As Adjusted

Revenues:






     Transactional and maintenance

$           211,779

$           192,791

$           405,972

$           363,194

     Professional services

50,555

46,731

91,363

89,859

     License

15,900

16,738

43,155

35,568

        Total revenues

278,234

256,260

540,490

488,621








Operating expenses:






     Cost of revenues

85,568

79,493

161,634

153,925

     Research & development

37,684

32,519

73,110

61,493

     Selling, general and administrative

104,930

96,125

205,188

186,467

     Amortization of intangible assets

1,503

1,684

3,005

3,472

        Total operating expenses

229,685

209,821

442,937

405,357

Operating income

48,549

46,439

97,553

83,264

Other expense, net

(8,575)

(7,277)

(20,423)

(13,224)

Income before income taxes

39,974

39,162

77,130

70,040

Provision for income taxes

6,593

7,993

3,742

5,992

Net income

$             33,381

$             31,169

$             73,388

$             64,048
























Basic earnings per share:

$                 1.15

$                 1.04

$                 2.53

$                 2.13

Diluted earnings per share:

$                 1.10

$                 1.00

$                 2.42

$                 2.04








Shares used in computing earnings per share:






     Basic

29,074

29,985

29,017

30,032

     Diluted

30,259

31,300

30,297

31,431








* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on October 1, 2018.

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)









Six Months Ended

 March 31, 

2019

2018



* As Adjusted

Cash flows from operating activities:


 Net income 

$                 73,388

$                 64,048

 Adjustments to reconcile net income to net cash provided by  


   operating activities: 


       Depreciation and amortization 

15,786

15,095

       Share-based compensation 

42,336

35,749

       Changes in operating assets and liabilities 

(36,624)

(34,041)

       Other, net 

1,760

(2,841)

          Net cash provided by operating activities 

96,646

78,010




 Cash flows from investing activities: 


 Purchases of property and equipment 

(10,644)

(11,111)

 Net activity from marketable securities 

(2,129)

(2,145)

          Net cash used in investing activities 

(12,773)

(13,256)




 Cash flows from financing activities: 


 Proceeds from revolving line of credit 

138,000

147,000

 Payments on revolving line of credit 

(80,000)

(48,000)

 Proceeds from issuances of common stock 

12,850

1,706

 Taxes paid related to net share settlement of equity awards 

(48,470)

(40,448)

 Repurchases of common stock 

(119,723)

(124,715)

 Other, net 

-

(240)

          Net cash used in financing activities 

(97,343)

(64,697)




 Effect of exchange rate changes on cash 

332

2,193




 Increase (decrease) in cash and cash equivalents 

(13,138)

2,250

 Cash and cash equivalents, beginning of period 

90,023

105,618

 Cash and cash equivalents, end of period 

$                 76,885

$               107,868




* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on October 1, 2018.

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)






















Quarter Ended 

Six Months Ended


March 31,

March 31,


2019

2018

2019

2018




* As Adjusted



* As Adjusted










Applications revenues:








     Transactional and maintenance

$         97,074

$         95,515

$        194,239

$        186,641

     Professional services

35,981

39,131

67,443

74,505

     License

8,760

11,850

27,792

25,524

          Total applications revenues

$       141,815

$       146,496

$        289,474

$        286,670










Scores revenues:








     Transactional and maintenance

$       102,363

$         85,451

$        187,184

$        153,447

     Professional services

901

757

1,602

1,054

     License

1,139

895

1,300

1,033

          Total scores revenues

$       104,403

$         87,103

$        190,086

$        155,534










Decision Management Software revenues:








     Transactional and maintenance

$         12,342

$         11,825

$          24,549

$          23,106

     Professional services

13,673

6,843

22,318

14,300

     License

6,001

3,993

14,063

9,011

          Total decision management software revenues

$         32,016

$         22,661

$          60,930

$          46,417










Total revenues:








     Transactional and maintenance

$       211,779

$       192,791

$        405,972

$        363,194

     Professional services

50,555

46,731

91,363

89,859

     License

15,900

16,738

43,155

35,568

          Total revenues

$       278,234

$       256,260

$        540,490

$        488,621










* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on October 1, 2018.

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

















Quarter Ended 

Six Months Ended

March 31,

March 31,

2019

2018

2019

2018



* As Adjusted


* As Adjusted








GAAP net income

$ 33,381

$           31,169

$ 73,388

$           64,048

Amortization of intangible assets

1,503

1,684

3,005

3,472

Stock-based compensation expense

20,482

19,238

42,336

35,748

Income tax adjustments

(5,594)

(5,141)

(11,813)

(9,845)

Excess tax benefit

(2,501)

(1,551)

(15,734)

(13,062)

Tax Cuts and Jobs Act

-

1,634

-

5,470

Non-GAAP net income

$ 47,271

$           47,033

$ 91,182

$           85,831
















GAAP diluted earnings per share

$     1.10

$               1.00

$     2.42

$               2.04

Amortization of intangible assets

0.05

0.05

0.10

0.11

Stock-based compensation expense

0.68

0.61

1.40

1.14

Income tax adjustments

(0.18)

(0.16)

(0.39)

(0.31)

Excess tax benefit

(0.08)

(0.05)

(0.52)

(0.42)

Tax Cuts and Jobs Act

-

0.05

-

0.17

Non-GAAP diluted earnings per share

$     1.56

$               1.50

$     3.01

$               2.73








Free cash flow






Net cash provided by operating activities

$ 47,789

$           49,233

$ 96,646

$           78,010

Capital expenditures

(4,170)

(7,067)

(10,644)

(11,111)

Free cash flow

$ 43,619

$           42,166

$ 86,002

$           66,899








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

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on October 1, 2018.


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, excess tax benefit, 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)


Previous Fiscal 2019 Guidance

Updated Fiscal 2019 Guidance



GAAP net income

$                                                168

$                                              173

Amortization of intangible assets

6

6

Stock-based compensation expense

85

85

Income tax adjustments

(25)

(25)

Excess tax benefit

(25)

(25)

Non-GAAP net income

$                                                209

$                                              214






GAAP diluted earnings per share

$                                               5.53

$                                             5.75

Amortization of intangible assets

0.20

0.20

Stock-based compensation expense

2.79

2.82

Income tax adjustments

(0.81)

(0.81)

Excess tax benefit

(0.82)

(0.83)

Non-GAAP diluted earnings per share

$                                               6.88

$                                             7.12






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, excess tax benefit, 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.

SOURCE FICO

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