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FICO Announces Earnings of $1.80 per Share for Fourth Quarter Fiscal 2019

November 4, 2019 at 4:15 PM EST
Revenue of $305 million vs. $257 million in prior year

SAN JOSE, Calif., Nov. 4, 2019 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its fourth fiscal quarter ended September 30, 2019.

FICO Corporate logo.  (PRNewsFoto/FICO)

Fourth Quarter Fiscal 2019 GAAP Results
Net income for the quarter totaled $54.6 million, or $1.80 per share, versus $32.7 million, or $1.07 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $95.4 million versus $60.0 million in the prior year period.

Fourth Quarter Fiscal 2019 Non-GAAP Results
Non-GAAP Net Income for the quarter was $60.8 million versus $41.1 million in the prior year period. Non-GAAP EPS for the quarter was $2.01 versus $1.34 in the prior year period. Free cash flow for the quarter was $89.6 million versus $52.9 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.

Fourth Quarter Fiscal 2019 GAAP Revenue
The company reported revenues of $305.3 million for the quarter as compared to $256.5 million reported in the prior year period. 

"Our strong fourth quarter capped off another great year," said Will Lansing, chief executive officer. "We delivered double-digit revenue and earnings growth while expanding our margins."

Revenues for the fourth 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 $149.9 million in the fourth quarter, compared to $139.0 million in the prior year period, an increase of 8%, due primarily to increased transactional volumes and license sales in Falcon Fraud Solutions.
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $115.9 million in the fourth quarter, compared to $89.5 million in the prior year period, an increase of 30%. B2B revenue increased 40% and B2C revenue increased 7% from the prior year period.
  • Decision Management Software revenues, which include Blaze Advisor®, Xpress Optimization, Decision Management Platform and related professional services, were $39.5 million in the fourth quarter compared to $28.0 million in the prior year period, an increase of 41%, due primarily to increased license sales and services revenue.

Outlook 
The company is providing the following guidance for fiscal 2020:


Fiscal 2020 Guidance

Revenues

$1.245 billion

GAAP Net Income

$204 million

GAAP EPS

$6.75

Non GAAP Net Income

$251 million

Non GAAP EPS

$8.30

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 fourth 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 Events Page under Past Events through November 4, 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)














September 30,


September 30,


2019


2018




* As Adjusted

ASSETS:




Current assets:




     Cash and cash equivalents

$              106,426


$                      90,023

     Accounts receivable, net

297,427


266,742

     Prepaid expenses and other current assets

51,853


39,624

          Total current assets

455,706


396,389





Marketable securities and investments

21,865


19,756

Property and equipment, net

53,027


48,837

Goodwill and intangible assets, net

817,681


815,426

Other assets

85,169


50,059


$            1,433,448


$                  1,330,467





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                55,572


$                      51,276

     Accrued compensation and employee benefits

106,240


84,292

     Deferred revenue

111,016


103,335

     Current maturities on debt

218,000


235,000

          Total current liabilities

490,828


473,903





Long-term debt

606,790


528,944

Other liabilities

46,063


40,183

          Total liabilities

1,143,681


1,043,030





Stockholders' equity

289,767


287,437


$            1,433,448


$                  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 


Year Ended


September 30,


September 30,


2019


2018


2019


2018




* As Adjusted




* As Adjusted

Revenues:








     Transactional and maintenance

$              228,936


$        195,266


$ 860,948


$       750,603

     Professional services

48,138


44,215


184,095


176,910

     License

28,270


17,051


115,040


72,633

        Total revenues

305,344


256,532


1,160,083


1,000,146









Operating expenses:








     Cost of revenues

87,996


79,962


336,845


312,898

     Research & development

39,396


34,407


149,478


128,383

     Selling, general and administrative

105,992


93,054


414,086


376,912

     Amortization of intangible assets

1,673


1,551


6,126


6,594

        Total operating expenses

235,057


208,974


906,535


824,787

Operating income

70,287


47,558


253,548


175,359

Other expense, net

(9,399)


1,432


(37,476)


(18,427)

Income before income taxes

60,888


48,990


216,072


156,932

Provision for income taxes

6,304


16,277


23,948


30,450

Net income

$                54,584


$         32,713


$ 192,124


$       126,482

























Basic earnings per share:

$                   1.89


$             1.13


$      6.63


$            4.26

Diluted earnings per share:

$                   1.80


$             1.07


$      6.34


$            4.06









Shares used in computing earnings per share:








     Basic

28,918


29,077


28,980


29,711

     Diluted

30,290


30,702


30,294


31,180

















* 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)










Year Ended


 September 30, 


2019


2018




* As Adjusted

Cash flows from operating activities:




 Net income 

$           192,124


$             126,482

 Adjustments to reconcile net income to net cash provided by  




   operating activities: 




       Depreciation and amortization 

31,612


30,182

       Share-based compensation 

82,973


74,814

       Changes in operating assets and liabilities 

(55,466)


(8,415)

       Other, net 

9,107


(11)

          Net cash provided by operating activities 

260,350


223,052





 Cash flows from investing activities: 




 Purchases of property and equipment 

(23,981)


(31,299)

 Net activity from marketable securities 

(2,924)


(2,820)

 Cash paid for acquisitions, net of cash acquired 

(15,855)


-

 Other, net 

-


20,000

          Net cash used in investing activities 

(42,760)


(14,119)





 Cash flows from financing activities: 




 Proceeds from revolving line of credit 

229,000


427,000

 Payments on revolving line of credit 

(141,000)


(531,000)

 Proceeds from issuance of senior notes 

-


400,000

 Payment on senior notes 

(28,000)


(131,000)

 Proceeds from issuances of common stock 

22,788


11,023

 Taxes paid related to net share settlement of equity awards 

(52,996)


(44,205)

 Repurchases of common stock 

(228,894)


(342,596)

 Other, net 

(945)


(7,849)

          Net cash used in financing activities 

(200,047)


(218,627)





 Effect of exchange rate changes on cash 

(1,140)


(5,901)





 Increase (decrease) in cash and cash equivalents 

16,403


(15,595)

 Cash and cash equivalents, beginning of year 

90,023


105,618

 Cash and cash equivalents, end of year 

$           106,426


$               90,023









* 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 



Year Ended



September 30,



September 30,



2019


2018



2019


2018





* As Adjusted





* As Adjusted











Applications revenues:










     Transactional and maintenance


$      100,774


$        94,540



$      395,398


$      372,283

     Professional services


35,826


34,448



137,258


142,736

     License


13,323


10,059



72,378


49,356

          Total applications revenues


$      149,923


$      139,047



$      605,034


$      564,375











Scores revenues:










     Transactional and maintenance


$      115,155


$        88,339



$      415,288


$      331,662

     Professional services


163


287



2,157


1,900

     License


627


881



3,732


2,308

          Total scores revenues


$      115,945


$        89,507



$      421,177


$      335,870











Decision Management Software revenues:










     Transactional and maintenance


$        13,007


$        12,387



$        50,262


$        46,658

     Professional services


12,149


9,480



44,680


32,274

     License


14,320


6,111



38,930


20,969

          Total decision management software revenues


$        39,476


$        27,978



$      133,872


$        99,901











Total revenues:










     Transactional and maintenance


$      228,936


$      195,266



$      860,948


$      750,603

     Professional services


48,138


44,215



184,095


176,910

     License


28,270


17,051



115,040


72,633

          Total revenues


$      305,344


$      256,532



$    1,160,083


$    1,000,146











* 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 


Year Ended


September 30,


September 30,


2019


2018


2019


2018




* As Adjusted




* As Adjusted









GAAP net income

$                 54,584


$                 32,713


$               192,124


$               126,482

Amortization of intangible assets

1,673


1,551


6,126


6,594

Stock-based compensation expense

21,042


20,183


82,973


74,813

Realized gain on cost-method investment

-


(10,000)


-


(10,000)

Income tax adjustments

(5,836)


(3,654)


(22,939)


(18,948)

Excess tax benefit

(10,643)


(7,556)


(30,666)


(22,253)

Tax Cuts and Jobs Act

-


7,848


-


14,754

Non-GAAP net income

$                 60,820


$                 41,085


$               227,618


$               171,442

















GAAP diluted earnings per share

$                    1.80


$                    1.07


$                    6.34


$                    4.06

Amortization of intangible assets

0.06


0.05


0.20


0.21

Stock-based compensation expense

0.69


0.66


2.74


2.40

Realized gain on cost-method investment

-


(0.33)


-


(0.32)

Income tax adjustments

(0.19)


(0.12)


(0.76)


(0.61)

Excess tax benefit

(0.35)


(0.25)


(1.01)


(0.71)

Tax Cuts and Jobs Act

-


0.26


-


0.47

Non-GAAP diluted earnings per share

$                    2.01


$                    1.34


$                    7.51


$                    5.50









Free cash flow








Net cash provided by operating activities

$                 95,414


$                 59,963


$               260,350


$               223,052

Capital expenditures

(5,811)


(7,079)


(23,981)


(31,299)

Free cash flow

$                 89,603


$                 52,884


$               236,369


$               191,753









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)




Fiscal 2020 Guidance



GAAP net income

$                                               204

Amortization of intangible assets

5

Restructuring and acquisition-related

4

Stock-based compensation expense

90

Income tax adjustments

(26)

Excess tax benefit

(25)

Non-GAAP net income

$                                               251





GAAP diluted earnings per share

$                                              6.75

Amortization of intangible assets

0.15

Restructuring and acquisition-related

0.12

Stock-based compensation expense

2.96

Income tax adjustments

(0.85)

Excess tax benefit

(0.83)

Non-GAAP diluted earnings per share

$                                              8.30





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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/fico-announces-earnings-of-1-80-per-share-for-fourth-quarter-fiscal-2019--300950842.html

SOURCE FICO

Investors/Analysts, Steve Weber, (800) 213-5542, investor@fico.com; Media, Greg Jawski, Porter Novelli, (212) 601-8248, greg.jawski@porternovelli.com