FAIR ISAAC CORPORATION 
By SAN JOSE, Calif., Jan. 22, 2014 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2013.
(Logo: http://photos.prnewswire.com/prnh/20111010/CG83314LOGO)
First Quarter Fiscal 2014 GAAP Results
Net income for the quarter totaled $17.0 million, or $0.47 per share, versus $23.4 million, or $0.65 per share, reported in the prior year period.
First Quarter Fiscal 2014 Non-GAAP Results
Non-GAAP Net Income for the quarter was $26.2 million vs. $31.8 million in the prior year period. Non-GAAP EPS for the quarter was $0.73 vs. $0.88 in the prior year period. Free cash flow for the quarter was $25.5 million vs. $19.0 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.
First Quarter Fiscal 2014 GAAP Revenue
The company reported revenues of $184.3 million for the quarter as compared to $190.0 million reported in the prior year period, a decrease of 3%.
"Our first quarter results were in line with our expectations, and we remain confident in our strategic direction," said Will Lansing, chief executive officer. "We drove very solid growth in both our Scores and Tools segments, but we had a soft quarter in Applications license revenue against an exceptionally strong comparable quarter. So our core franchises are healthy, the roll-out of our cloud-based solutions is on track, we remain disciplined about controlling costs, and we are maintaining our sharp focus on cash flow."
Revenues for the first 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 $111.9 million in the first quarter compared to $124.7 million in
the prior year quarter, a decrease of 10%. This was due to the early
termination of a large Marketing Solutions customer in December 2012,
and declines in Customer Management and Fraud Banking. A revenue
increase in Mobility Solutions partially offset these declines.
-- 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 $47.2 million in the
first quarter compared to $43.4 million in the prior year quarter, an
increase of 9%. The B2C revenue increased 22% and the B2B revenue
increased 5% from the prior year quarter.
-- Tools revenues, which include Blaze Advisor(®), Xpress Optimization and
related professional services, were $25.2 million in the first quarter
compared to $21.9 million in the prior year quarter, an increase of 15%,
due to increased license sales of our 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 tomorrow at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to report its first 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/investors. A replay of the webcast will be available through February 23, 2014.
The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call 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. 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,
2013 2013
---- ----
ASSETS:
Current assets:
Cash and
cash
equivalents $95,937 $83,178
Accounts
receivable,
net 141,112 143,733
Prepaid
expenses
and
other
current
assets 20,639 22,277
Total
current
assets 257,688 249,188
------- -------
Marketable
securities
and
investments 18,709 18,140
Property
and
equipment,
net 41,997 45,155
Goodwill
and
intangible
assets,
net 831,886 831,292
Other
assets 15,996 17,772
$1,166,276 $1,161,547
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts
payable
and
other
accrued
liabilities $53,795 $54,418
Accrued
compensation
and
employee
benefits 28,457 39,281
Deferred
revenue 48,388 49,181
Current
maturities
on debt 31,000 23,000
Total
current
liabilities 161,640 165,880
------- -------
Senior
notes 447,000 447,000
Other
liabilities 18,213 17,990
Total
liabilities 626,853 630,870
------- -------
Stockholders'
equity 539,423 530,677
$1,166,276 $1,161,547
========== ==========
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
------------
2013 2012
---- ----
Revenues:
Transactional and
maintenance $129,655 $129,898
Professional services 34,286 32,337
License 20,402 27,785
------ ------
Total revenues 184,343 190,020
------- -------
Operating expenses:
Cost of revenues 57,319 56,148
Research & development 18,092 14,552
Selling, general and
administrative 66,989 69,665
Amortization of intangible
assets 3,013 3,372
Restructuring and
acquisition-related 3,660 3,289
149,073 147,026
------- -------
Operating income 35,270 42,994
Other expense, net (8,087) (7,951)
Income before income taxes 27,183 35,043
Provision for income taxes 10,206 11,622
------ ------
Net income $16,977 $23,421
======= =======
Basic earnings per share: $0.49 $0.67
===== =====
Diluted earnings per share: $0.47 $0.65
===== =====
Shares used in computing earnings per share:
Basic 34,699 35,043
====== ======
Diluted 35,820 36,151
====== ======
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter Ended
December 31,
------------
2013 2012
---- ----
Cash flows from operating activities:
Net income $16,977 $23,421
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation and
amortization 8,167 7,973
Share-based compensation 7,235 5,832
Changes in operating assets
and liabilities (2,348) (5,492)
Other, net (1,653) (3,005)
Net cash provided by
operating activities 28,378 28,729
------ ------
Cash flows from investing activities:
Purchases of property and
equipment (2,154) (9,012)
Net activity from
marketable securities - 22,000
Cash paid for acquisitions,
net of cash acquired - (27,605)
Other, net - 50
Net cash used in investing
activities (2,154) (14,567)
------ -------
Cash flows from financing activities:
Proceeds from revolving
line of credit 8,000 -
Proceeds from issuances of
common stock 2,011 6,189
Repurchases of common stock (27,125) -
Other, net 3,857 (695)
Net cash provided by (used
in) financing activities (13,257) 5,494
------- -----
Effect of exchange rate
changes on cash (208) (426)
---- ----
Increase in cash and cash
equivalents 12,759 19,230
Cash and cash equivalents,
beginning of period 83,178 71,609
Cash and cash equivalents,
end of period $95,937 $90,839
======= =======
FAIR ISAAC CORPORATION
REVENUE BY SEGMENT
(In thousands)
(Unaudited)
Quarter Ended
December 31,
------------
2013 2012
---- ----
Applications revenues:
Transactional and
maintenance $77,779 $79,625
Professional services 26,787 26,159
License 7,350 18,923
Total applications
revenues $111,916 $124,707
======== ========
Scores revenues:
Transactional and
maintenance $43,318 $42,437
Professional services 589 903
License 3,273 107
Total scores revenues $47,180 $43,447
======= =======
Tools revenues:
Transactional and
maintenance $8,558 $7,836
Professional services 6,910 5,275
License 9,779 8,755
Total tools revenues $25,247 $21,866
======= =======
Total revenues:
Transactional and
maintenance $129,655 $129,898
Professional services 34,286 32,337
License 20,402 27,785
Total revenues $184,343 $190,020
======== ========
FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
------------
2013 2012
---- ----
GAAP net income $16,977 $23,421
Amortization of intangible
assets (net of tax) 1,996 2,265
Restructuring and
acquisition-related (net
of tax) 2,424 2,209
Stock-based compensation
expense (net of tax) 4,792 3,917
Non-GAAP net income $26,189 $31,812
------- -------
GAAP diluted earnings per
share $0.47 $0.65
Amortization of intangible
assets (net of tax) 0.06 0.06
Restructuring and
acquisition-related (net
of tax) 0.07 0.06
Stock-based compensation
expense (net of tax) 0.13 0.11
Non-GAAP diluted earnings
per share $0.73 $0.88
----- -----
Free cash flow
Net cash provided by
operating activities $28,378 $28,729
Capital expenditures (2,154) (9,012)
Dividends paid (693) (702)
---- ----
Free cash flow $25,531 $19,015
------- -------
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.
SOURCE FICO
