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| 8-K - FORM 8-K - FAIR ISAAC CORP | v351268_8k.htm |
FICO Announces Earnings for Third Quarter Fiscal 2013
Revenue of $184 million vs. $160 million in prior year
Earnings per Share of $0.54, including noncash tax charge of $0.07 per share
SAN JOSE, Calif., July 30, 2013 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced financial results for its third fiscal quarter ended June 30, 2013.
Third Quarter Fiscal 2013 GAAP Results
Net income for the quarter totaled $19.6 million, or $0.54 per share, versus $20.7 million, or $0.59 per share, reported in the prior year period. The current quarter earnings include a noncash tax charge of $2.5 million, or $0.07 per share, associated with establishing a valuation allowance related to a deferred tax asset. This valuation allowance was required due to recent tax law changes in a state in which the company conducts operations.
Third Quarter Fiscal 2013 Non-GAAP Results
Non-GAAP net income for the quarter was $29.3 million vs. $25.8 million in the prior year period. Non-GAAP EPS for the quarter was $0.80 vs. $0.73 in the prior year period. Free cash flow for the quarter was $27.2 million vs. $16.0 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.
Third Quarter Fiscal 2013 GAAP Revenue
The company reported revenues of $183.8 million for the quarter as compared to $160.5 million reported in the prior year period, an increase of 15%.
"We saw continued strength in our Scores and Tools segments this quarter, fortifying the confidence we have in our overall strategic direction," said Will Lansing, chief executive officer. "Recurring revenues from our Applications segment were strong again this quarter, though we did experience some disappointing delays in applications license sales to North American banks. All in all, we remain confident about our prospects, and focused on executing against our plan."
Revenues for the third quarter fiscal 2013 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 $115.0 million in the third quarter compared to $98.3 million in the prior year quarter, an increase of 17%. This was due to revenue associated with the acquisitions of Adeptra, Ltd. and CR Software.
- 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 third quarter compared to $41.9 million in the prior year quarter, an increase of 12%. The B2B revenue increased 10% and the B2C revenue increased 21% from the prior year quarter.
- Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $21.6 million in the third quarter compared to $20.2 million in the prior year quarter, an increase of 7%, primarily due to increased revenue from professional services.
Outlook
The company is updating the previously issued guidance for fiscal 2013 to include the impact of the noncash tax adjustment recorded in the current quarter and potential continued delays in license revenue, as follows:
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| New Fiscal 2013 Guidance | Previous Fiscal 2013
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Revenue | $755 million - $765 million | $760 million - $770 million |
GAAP Net Income (a) | $94-$97 million | $100 million |
GAAP Earnings Per Share (a) | $2.61-$2.70 | $2.80 |
Non-GAAP Net Income | $125-$128 million | $128 million |
Non-GAAP Earnings Per Share | $3.48-3.57 | $3.60 |
(a) GAAP net income and earnings per share include the impact of the tax valuation allowance of $2.5 million, or $0.07 per share. The new guidance reflects an annual diluted share count of approximately 36.0 million shares.
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 third quarter fiscal 2013 results and provide various strategic and operational updates. The call can be accessed at FICO's Web site at www.FICO.com (follow the instructions on the Investor Relations page). A replay of the webcast will be available through August 30, 2013.
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, 2012 and Form 10-Q for the quarter ended March 31, 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.
FICO, myFICO and Blaze Advisor are all trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.
-Financial tables follow-
FAIR ISAAC CORPORATION | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
June 30, 2013 and September 30, 2012 | |||
(In thousands) | |||
(Unaudited) | |||
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| June 30, |
| September 30, |
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| 2013 |
| 2012 |
ASSETS: |
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Current assets: |
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Cash and cash equivalents | $ 93,019 |
| $ 71,609 |
Marketable securities | - |
| 22,008 |
Accounts receivable, net | 132,717 |
| 142,595 |
Prepaid expenses and other current assets | 21,026 |
| 23,113 |
Total current assets | 246,762 |
| 259,325 |
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Marketable securities and investments | 17,817 |
| 16,500 |
Property and equipment, net | 47,140 |
| 41,080 |
Goodwill and intangible assets, net | 824,960 |
| 809,803 |
Other assets | 27,464 |
| 31,903 |
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| $ 1,164,143 |
| $ 1,158,611 |
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LIABILITIES AND STOCKHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable and other accrued liabilities | $ 54,779 |
| $ 62,603 |
Accrued compensation and employee benefits | 37,944 |
| 50,043 |
Deferred revenue | 50,522 |
| 47,959 |
Current maturities on long-term debt | 38,000 |
| 49,000 |
Total current liabilities | 181,245 |
| 209,605 |
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Senior notes | 447,000 |
| 455,000 |
Other liabilities | 20,661 |
| 19,600 |
Total liabilities | 648,906 |
| 684,205 |
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Stockholders' equity | 515,237 |
| 474,406 |
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| $ 1,164,143 |
| $ 1,158,611 |
FAIR ISAAC CORPORATION | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
For the Quarters and Nine Months Ended June 30, 2013 and 2012 | |||||||
(In thousands, except per share data) | |||||||
(Unaudited) | |||||||
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| Quarter Ended |
| Nine Months Ended | ||||
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| June 30, |
| June 30, | ||||
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
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Revenues: |
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Transactional and maintenance | $ 129,422 |
| $ 113,708 |
| $ 385,759 |
| $ 342,734 |
Professional services | 32,306 |
| 31,993 |
| 98,752 |
| 91,147 |
License | 22,044 |
| 14,777 |
| 68,606 |
| 56,467 |
Total revenues | 183,772 |
| 160,478 |
| 553,117 |
| 490,348 |
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Operating expenses: |
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Cost of revenues | 57,655 |
| 47,832 |
| 172,659 |
| 142,620 |
Research & development | 18,570 |
| 14,890 |
| 49,143 |
| 41,925 |
Selling, general and administrative | 68,665 |
| 59,123 |
| 205,968 |
| 173,482 |
Amortization of intangible assets | 3,477 |
| 1,465 |
| 10,453 |
| 4,885 |
Restructuring and acquisition-related | 197 |
| - |
| 3,486 |
| - |
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| 148,564 |
| 123,310 |
| 441,709 |
| 362,912 |
Operating income | 35,208 |
| 37,168 |
| 111,408 |
| 127,436 |
Other expense, net | (6,587) |
| (6,914) |
| (22,357) |
| (23,873) |
Income from operations before income taxes | 28,621 |
| 30,254 |
| 89,051 |
| 103,563 |
Provision for income taxes | 8,999 |
| 9,505 |
| 27,513 |
| 32,805 |
Net income | $ 19,622 |
| $ 20,749 |
| $ 61,538 |
| $ 70,758 |
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Basic earnings per share: | 0.55 |
| 0.61 |
| 1.74 |
| 2.01 |
Diluted earnings per share: | 0.54 |
| 0.59 |
| 1.69 |
| 1.95 |
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Shares used in computing earnings per share: |
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Basic | 35,499 |
| 34,004 |
| 35,400 |
| 35,126 |
Diluted | 36,385 |
| 35,293 |
| 36,340 |
| 36,247 |
FAIR ISAAC CORPORATION | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
For the Nine Months Ended June 30, 2013 and 2012 | |||
(In thousands) | |||
(Unaudited) | |||
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| Nine Months Ended | ||
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| June 30, | ||
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| 2013 |
| 2012 |
Cash flows from operating activities: |
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Net income | $ 61,538 |
| $ 70,758 |
Adjustments to reconcile net income to net cash provided by |
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operating activities: |
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Depreciation and amortization | 25,160 |
| 14,555 |
Share-based compensation | 18,897 |
| 15,466 |
Changes in operating assets and liabilities | 2,230 |
| 7,985 |
Other, net | (7,648) |
| (2,356) |
Net cash provided by operating activities | 100,177 |
| 106,408 |
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Cash flows from investing activities: |
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Purchases of property and equipment | (20,435) |
| (19,616) |
Net activity from marketable securities | 22,000 |
| 73,592 |
Cash paid for acquisitions, net of cash acquired | (32,874) |
| (18,192) |
Other, net | 50 |
| (149) |
Net cash proivded by (used in) investing activities | (31,259) |
| 35,635 |
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Cash flows from financing activities: |
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Proceeds from revolving line of credit | 30,000 |
| - |
Payment on Senior Notes | (49,000) |
| (8,000) |
Proceeds from issuances of common stock | 23,790 |
| 39,609 |
Repurchases of common stock | (47,811) |
| (191,056) |
Other, net | (726) |
| 2,291 |
Net cash provided by (used in) financing activities | (43,747) |
| (157,156) |
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Effect of exchange rate changes on cash | (3,761) |
| (1,958) |
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Increase in cash and cash equivalents | 21,410 |
| (17,071) |
Cash and cash equivalents, beginning of period | 71,609 |
| 135,752 |
Cash and cash equivalents, end of period | $ 93,019 |
| $ 118,681 |
FAIR ISAAC CORPORATION | ||||||||
REVENUE BY SEGMENT | ||||||||
For the Quarters and Nine Months Ended June 30, 2013 and 2012 | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
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| Quarter Ended |
| Nine Months Ended | ||||
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| June 30, |
| June 30, | ||||
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
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Applications revenues: |
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Transactional and maintenance |
| $ 75,537 |
| $ 64,729 |
| $ 231,174 |
| $ 192,524 |
Professional services |
| 26,230 |
| 27,109 |
| 79,704 |
| 77,192 |
License |
| 13,216 |
| 6,484 |
| 46,027 |
| 34,956 |
Total applications revenues |
| $ 114,983 |
| $ 98,322 |
| $ 356,905 |
| $ 304,672 |
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Scores revenues: |
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Transactional and maintenance |
| $ 45,915 |
| $ 41,394 |
| $ 130,558 |
| $ 127,227 |
Professional services |
| 806 |
| 500 |
| 3,333 |
| 1,309 |
License |
| 431 |
| 26 |
| 770 |
| 351 |
Total scores revenues |
| $ 47,152 |
| $ 41,920 |
| $ 134,661 |
| $ 128,887 |
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Tools revenues: |
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Transactional and maintenance |
| $ 7,970 |
| $ 7,585 |
| $ 24,027 |
| $ 22,983 |
Professional services |
| 5,270 |
| 4,384 |
| 15,715 |
| 12,646 |
License |
| 8,397 |
| 8,267 |
| 21,809 |
| 21,160 |
Total tools revenues |
| $ 21,637 |
| $ 20,236 |
| $ 61,551 |
| $ 56,789 |
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Total revenues: |
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Transactional and maintenance |
| $ 129,422 |
| $ 113,708 |
| $ 385,759 |
| $ 342,734 |
Professional services |
| 32,306 |
| 31,993 |
| 98,752 |
| 91,147 |
License |
| 22,044 |
| 14,777 |
| 68,606 |
| 56,467 |
Total revenues |
| $ 183,772 |
| $ 160,478 |
| $ 553,117 |
| $ 490,348 |
FAIR ISAAC CORPORATION |
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NON-GAAP RESULTS |
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For the Quarters and Nine Months Ended June 30, 2013 and 2012 |
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(In thousands, except per share data) |
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(Unaudited) |
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| Quarter Ended |
| Nine Months Ended |
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| June 30, |
| June 30, |
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
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GAAP net income | $ 19,622 |
| $ 20,749 |
| $ 61,538 |
| $ 70,758 |
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Amortization of intangible assets (net of tax) | 2,413 |
| 971 |
| 7,145 |
| 3,264 |
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Restructuring and acquisition-related (net of tax) | 137 |
| - |
| 2,346 |
| - |
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Stock-based compensation expense (net of tax) | 4,615 |
| 4,030 |
| 12,921 |
| 10,312 |
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Adjustment to tax valuation allowance | 2,474 |
| - |
| 2,474 |
| - |
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Non-GAAP net income | $ 29,261 |
| $ 25,750 |
| $ 86,424 |
| $ 84,334 |
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GAAP diluted earnings per share | $ 0.54 |
| $ 0.59 |
| $ 1.69 |
| $ 1.95 |
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Amortization of intangible assets (net of tax) | 0.06 |
| 0.03 |
| 0.20 |
| 0.09 |
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Restructuring and acquisition-related (net of tax) | 0.00 |
| - |
| 0.06 |
| - |
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Stock-based compensation expense (net of tax) | 0.13 |
| 0.11 |
| 0.36 |
| 0.29 |
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Adjustment to tax valuation allowance | 0.07 |
| - |
| 0.07 |
| - |
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Non-GAAP diluted earnings per share | $ 0.80 |
| $ 0.73 |
| $ 2.38 |
| $ 2.33 |
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Free cash flow |
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Net cash provided by operating activities | $ 31,224 |
| $ 22,932 |
| $ 100,177 |
| $ 106,408 |
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Capital expenditures | (3,312) |
| (6,252) |
| (20,434) |
| (19,616) |
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Dividends paid | (706) |
| (685) |
| (2,123) |
| (2,112) |
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Free cash flow | $ 27,206 |
| $ 15,995 |
| $ 77,620 |
| $ 84,680 |
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About Non-GAAP Financial Measures |
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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. | |||||||||||||
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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. | |||||||||||||
CONTACT: Investors/Analysts, Steve Weber, (800) 213-5542, investor@fico.com, or Media, Steve Astle, (415) 446-6204, stephenastle@fico.com