FAIR ISAAC CORPORATION SAN JOSE, Calif., Jan. 31, 2017 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2016.
First Quarter Fiscal 2017 GAAP Results
Net income for the quarter totaled $37.9 million, or $1.16 per share, versus $19.2 million, or $0.59 per share, reported in the prior year period.
The current quarter earnings include a reduction to income tax expense of $17.3 million, or $0.53 per share, associated with the adoption of FASB Accounting Standards Update No. 2016-09 ("ASU 2016-09") in the first quarter of fiscal 2017. Under ASU 2016-09, excess tax benefits or deficiencies generated upon the settlement or exercise of stock awards are no longer recognized as additional paid-in capital but are instead recognized as a reduction or increase to income tax expense.
Net cash provided by operating activities for the quarter was $33.0 million versus $50.6 million in the prior year period, and both periods reflect the impact of ASU 2016-09.
First Quarter Fiscal 2017 Non-GAAP Results
Non-GAAP Net Income for the quarter was $33.5 million vs. $32.1 million in the prior year period. Non-GAAP EPS for the quarter was $1.03 vs. $0.99 in the prior year period. Free cash flow for the quarter was $28.0 million vs. $45.7 million in the prior year period. Free cash flow for both periods reflects the impact of ASU 2016-09. These Non-GAAP financial measures are described in the financial table captioned "Non-GAAP Results" and are reconciled to the corresponding GAAP measures in the financial tables at the end of this release.
First Quarter Fiscal 2017 GAAP Revenue
The company reported revenues of $219.6 million for the quarter as compared to $200.1 million reported in the prior year period.
"We had a great start to our fiscal 2017," said Will Lansing, chief executive officer. "We achieved strong top-line growth throughout the company, and are well positioned to continue our momentum."
Revenues for the first quarter of fiscal 2017 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 $134.8 million in the first quarter, compared with $120.2 million
in the prior year quarter, an increase of 12%. This was due to increased
license sales in Fraud Management Solutions, increased services revenues
in Originations Solutions, and increased transactional volumes in
Customer Communications Services.
-- Scores revenues, which include the company's business-to-business (B2B)
scoring solutions and associated professional services, and
business-to-consumer (B2C) service, were $59.4 million in the first
quarter, compared to $56.0 million in the prior year quarter, an
increase of 6%. B2B revenue increased 8% and B2C revenue increased 3%
from the prior year quarter.
-- Decision Management Software revenues, which include FICO(®) Blaze
Advisor(®), FICO(®) Xpress Optimization and related professional
services, were $25.4 million in the first quarter compared to $23.9
million in the prior year quarter, an increase of 6%, due primarily to
increased services revenues from Xpress Optimization.
Outlook
The company is updating its previously provided guidance for fiscal 2017 as a result of the impact of ASU 2016-09 on the current quarter to approximately:
Previous Quarter 1, New Fiscal
Fiscal 2017 2017 Impact of 2017
Guidance ASU 2016-09
Guidance
--------
Revenue $925 million - $925 million
------- ------------ --- ------------
GAAP
Net
Income $109 million $17 million $126 million
------ ------------ ----------- ------------
GAAP
Earnings
Per
Share $3.39 $0.53 $3.92
-------- ----- ----- -----
Non-
GAAP
Net
Income $158 million - $158 million
------ ------------ --- ------------
Non-
GAAP
Earnings
Per
Share $4.92 - $4.92
-------- ----- --- -----
Fiscal 2017 guidance has been updated for the impact from ASU 2016-09 recorded in the current quarter. As a result of the adoption of ASU 2016-09 on October 1, 2016, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $17.3 million for the quarter ended December 31, 2016. Since these favorable tax benefits are largely unrelated to our current year's income before taxes and are unrepresentative of our normal effective tax rate, we excluded the impact of ASU 2016-09 on net income and EPS for the three months ended December 31, 2016 for purposes of calculating the non-GAAP financial measures to facilitate an evaluation of our current performance and a comparison to past performance. We also anticipate the potential for increased periodic volatility in future effective tax rates from the continuing impact of ASU 2016-09. The impact for future periods is not reflected in the fiscal 2017 guidance. The magnitude of the impact, which may be favorable or unfavorable, is dependent upon our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on their grant dates and the exercise behavior of our stock option holders.
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 first quarter fiscal 2017 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 31, 2018.
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) 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 170 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 and Blaze Advisor are registered trademarks of Fair Isaac Corporation in the U.S. 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 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, 2016 and Form 10-Q for the quarter ended December 31, 2016. 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,
2016 2016
---- ----
ASSETS:
Current assets:
Cash and
cash
equivalents $88,101 $75,926
Accounts
receivable,
net 155,714 167,786
Prepaid
expenses
and
other
current
assets 40,929 23,926
Total
current
assets 284,744 267,638
------- -------
Marketable
securities
and
investments 23,182 21,936
Property
and
equipment,
net 43,959 45,122
Goodwill
and
intangible
assets,
net 818,930 832,034
Other
assets 53,583 53,946
$1,224,398 $1,220,676
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts
payable
and
other
accrued
liabilities $48,744 $50,732
Accrued
compensation
and
employee
benefits 41,506 71,216
Deferred
revenue 57,465 47,129
Current
maturities
on debt 102,000 77,000
Total
current
liabilities 249,715 246,077
------- -------
Long-
term
debt 518,672 493,624
Other
liabilities 34,105 34,147
Total
liabilities 802,492 773,848
------- -------
Stockholders'
equity 421,906 446,828
$1,224,398 $1,220,676
========== ==========
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
------------
2016 2015
---- ----
Revenues:
Transactional and maintenance $153,660 $147,072
Professional services 43,543 34,152
License 22,397 18,852
------ ------
Total revenues 219,600 200,076
------- -------
Operating expenses:
Cost of revenues 69,997 62,193
Research & development 26,142 24,631
Selling, general and administrative 85,214 78,838
Amortization of intangible assets 3,320 3,580
Total operating expenses 184,673 169,242
------- -------
Operating income 34,927 30,834
Other expense, net (6,272) (7,058)
Income before income taxes 28,655 23,776
Provision for income taxes (9,246) 4,535
------ -----
Net income $37,901 $19,241
======= =======
Basic earnings per share: $1.22 $0.62
===== =====
Diluted earnings per share: $1.16 $0.59
===== =====
Shares used in computing earnings per share:
Basic 30,989 31,185
====== ======
Diluted 32,536 32,436
====== ======
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter Ended
December 31,
------------
2016 2015
---- ----
Cash flows from operating activities:
Net income $37,901 $19,241
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation and
amortization 9,058 7,441
Share-based
compensation 14,519 14,700
Changes in
operating
assets and
liabilities (28,963) (6,792)
Other, net 463 16,039
Net cash
provided by
operating
activities (1) 32,978 50,629
------ ------
Cash flows from investing activities:
Purchases of
property and
equipment (4,319) (4,294)
Net cash used in
investing
activities (4,319) (4,294)
------ ------
Cash flows from financing activities:
Proceeds from
revolving line
of credit 60,000 26,000
Payments on
revolving line
of credit (10,000) (15,000)
Proceeds from
issuances of
common stock 3,663 1,199
Taxes paid
related to net
share
settlement of
equity awards (35,598) (24,462)
Repurchases of
common stock (30,442) (28,382)
Other, net (618) (622)
Net cash used in
financing
activities (1) (12,995) (41,267)
------- -------
Effect of
exchange rate
changes on cash (3,489) (478)
------ ----
Increase in cash
and cash
equivalents 12,175 4,590
Cash and cash
equivalents,
beginning of
period 75,926 86,120
Cash and cash
equivalents,
end of period $88,101 $90,710
======= =======
(1) During the quarter ended December 31,
2016, we adopted Accounting
Standards Update No. 2016-09 which
addresses, among other items,
updates to the presentation of
excess tax benefits related to stock
based compensation. Excess tax
benefits are no longer classified as
a reduction of operating cash flows.
We have adopted changes to our
condensed consolidated statements of
cash flows on a retrospective basis.
The impact to net cash provided by
operating activities and net cash
used in financing activities for the
quarter ended December 31, 2015 was
$10.1 million.
FAIR ISAAC CORPORATION
REVENUE BY SEGMENT
(In thousands)
(Unaudited)
Quarter Ended
December 31,
------------
2016 2015
---- ----
Applications revenues:
Transactional and maintenance $84,881 $80,983
Professional services 34,341 27,126
License 15,543 12,032
Total Applications revenues $134,765 $120,141
======== ========
Scores revenues:
Transactional and maintenance $58,252 $55,217
Professional services 521 748
License 609 37
Total Scores revenues $59,382 $56,002
======= =======
Decision Management Software revenues:
Transactional and maintenance $10,527 $10,872
Professional services 8,681 6,278
License 6,245 6,783
Total Decision Management Software
revenues $25,453 $23,933
======= =======
Total revenues:
Transactional and maintenance $153,660 $147,072
Professional services 43,543 34,152
License 22,397 18,852
Total revenues $219,600 $200,076
======== ========
FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
------------
2016 2015
---- ----
GAAP net income $37,901 $19,241
Amortization of intangible
assets 3,320 3,580
Stock-based compensation
expense 14,519 14,700
Income tax adjustments (4,987) (5,414)
Excess tax benefit (17,261) -
Non-GAAP net income $33,492 $32,107
------- -------
GAAP diluted earnings per
share $1.16 $0.59
Amortization of intangible
assets 0.10 0.11
Stock-based compensation
expense 0.45 0.45
Income tax adjustments (0.15) (0.17)
Excess tax benefit (0.53) -
Non-GAAP diluted earnings
per share $1.03 $0.99
----- -----
Free cash flow
Net cash provided by
operating activities $32,978 $50,629
Capital expenditures (4,319) (4,294)
Dividends paid (618) (622)
---- ----
Free cash flow $28,041 $45,713
------- -------
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.
FAIR ISAAC CORPORATION
RECONCILIATION OF NON-GAAP GUIDANCE
(In millions, except per share data)
(Unaudited)
Previous Fiscal 2017 Quarter 1, 2017 New Fiscal 2017
Guidance Impact of ASU 2016- Guidance
09
GAAP net income $109 $17 $126
Amortization of
intangible assets 14 - 14
Stock-based
compensation expense 56 - 56
Income tax adjustments (21) - (21)
Excess tax benefit - (17) (17)
Non-GAAP net income $158 $ - $158
==== =============================== ====
GAAP diluted earnings
per share $3.39 $0.53 $3.92
Amortization of
intangible assets 0.43 - 0.43
Stock-based
compensation expense 1.75 - 1.75
Income tax adjustments (0.65) - (0.65)
Excess tax benefit - (0.53) (0.53)
Non-GAAP diluted
earnings per share $4.92 $0.53 $4.92
===== ===== =====
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.
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SOURCE FICO
