FICO Announces Earnings of $1.25 per Share for Fourth Quarter Fiscal 2017
SAN JOSE, Calif., Nov. 1, 2017 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its fourth fiscal quarter ended September 30, 2017.
Fourth Quarter Fiscal 2017 GAAP Results
Net income for the quarter totaled $40.0 million, or $1.25 per share, versus $32.1 million, or $1.00 per share, reported in the prior year period. The current quarter earnings include a reduction to income tax expense of $1.2 million, or $0.04 per share, associated with the adoption of FASB Accounting Standards Update No. 2016-09 ("ASU 2016-09").
Net cash provided by operating activities for the quarter was $54.2 million versus $32.5 million in the prior year period.
Fourth Quarter Fiscal 2017 Non-GAAP Results
Non-GAAP Net Income for the quarter was $52.7 million vs. $41.4 million in the prior year period. Non-GAAP EPS for the quarter was $1.65 vs. $1.28 in the prior year period. Free cash flow for the quarter was $49.2 million vs. $22.5 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 2017 GAAP Revenues
The company reported revenues of $253.2 million for the quarter as compared to $235.8 million reported in the prior year period.
"We had an outstanding finish to our fiscal 2017," said Will Lansing, chief executive officer. "We had record revenues, record bookings, and have strong momentum entering 2018."
Revenues for the fourth 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 $150.3 million in the fourth quarter, up 1% from the prior year. -- Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $72.0 million in the fourth quarter, compared to $62.8 million in the prior year quarter, an increase of 15%. B2B revenue increased 13% and B2C revenue increased 17% from the prior year quarter. -- Decision Management Software revenues, which include Blaze Advisor(®), Xpress Optimization and related professional services, were $30.9 million in the fourth quarter compared to $24.0 million in the prior year quarter, an increase of 29%, due primarily to increased license sales and services of Xpress Optimization.
Outlook
The company is providing guidance for fiscal 2018 of approximately:
Fiscal 2018 without Estimated Impact of Fiscal 2018 Excess Tax Benefit Excess Tax Benefit * Guidance ------------------ ------------------- -------- Revenue $990 million $990 million ------- ------------ ------------ GAAP Net Income $119 million $20 million $139 million --------------- ------------ ----------- ------------ GAAP EPS $3.71 $0.62 $4.33 -------- ----- ----- ----- Non GAAP Net Income $171 million $171 million ------------------- ------------ ------------ Non GAAP EPS $5.32 $5.32 ------------ ----- -----
*The impact of Excess Tax Benefit (ASU 2016-09) on fiscal 2017 results increased GAAP Net Income by $25 million and GAAP EPS by $0.77 per share.
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 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 November 1, 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 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, 2016 and Form 10-Q for the quarter ended June 30, 2017. 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, 2017 2016 ---- ---- ASSETS: Current assets: Cash and cash equivalents $105,618 $75,926 Accounts receivable, net 168,586 167,786 Prepaid expenses and other current assets 36,727 23,926 Total current assets 310,931 267,638 ------- ------- Marketable securities and investments 25,515 21,936 Property and equipment, net 40,703 45,122 Goodwill and intangible assets, net 825,599 832,034 Other assets 52,872 53,946 $1,255,620 $1,220,676 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $51,614 $50,732 Accrued compensation and employee benefits 77,610 71,216 Deferred revenue 55,431 47,129 Current maturities on debt 142,000 77,000 Total current liabilities 326,655 246,077 ------- ------- Long-term debt 462,801 493,624 Other liabilities 39,627 34,147 Total liabilities 829,083 773,848 ------- ------- Stockholders' equity 426,537 446,828 $1,255,620 $1,220,676 ========== ==========
FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Quarter Ended Year Ended September 30, September 30, ------------- ------------- 2017 2016 2017 2016 ---- ---- ---- ---- Revenues: Transactional and maintenance $171,056 $154,218 $652,660 $605,919 Professional services 50,871 51,940 179,569 169,738 License 31,278 29,666 99,940 105,699 ------ ------ ------ ------- Total revenues 253,205 235,824 932,169 881,356 ------- ------- ------- ------- Operating expenses: Cost of revenues 75,202 74,298 287,123 265,173 Research & development 30,226 27,773 110,870 103,669 Selling, general and administrative 84,262 85,429 339,796 328,940 Amortization of intangible assets 2,712 3,409 12,709 13,982 Restructuring and acquisition- related - - 4,471 - Total operating expenses 192,402 190,909 754,969 711,764 ------- ------- ------- ------- Operating income 60,803 44,915 177,200 169,592 Other expense, net (6,601) (6,556) (25,876) (25,023) Income before income taxes 54,202 38,359 151,324 144,569 Provision for income taxes 14,158 6,255 23,068 35,121 ------ ----- ------ ------ Net income $40,044 $32,104 $128,256 $109,448 ======= ======= ======== ======== Basic earnings per share: $1.31 $1.04 $4.16 $3.52 ===== ===== ===== ===== Diluted earnings per share: $1.25 $1.00 $3.98 $3.39 ===== ===== ===== ===== Shares used in computing earnings per share: Basic 30,534 30,916 30,862 31,129 ====== ====== ====== ====== Diluted 31,963 32,221 32,245 32,308 ====== ====== ====== ======
FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended September 30, ------------- 2017 2016 ---- ---- Cash flows from operating activities: Net income $128,256 $109,448 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,214 31,633 Share- based compensation 61,222 55,509 Changes in operating assets and liabilities 4,347 13,484 Other, net (4,395) 194 Net cash provided by operating activities (1) 225,644 210,268 ------- ------- Cash flows from investing activities: Purchases of property and equipment (19,828) (21,969) Cash paid for acquisitions, net of cash acquired - (5,683) Other, net (777) 37 Net cash used in investing activities (20,605) (27,615) ------- ------- Cash flows from financing activities: Proceeds from revolving line of credit 190,000 122,000 Payments on revolving line of credit (84,000) (99,000) Payment on Senior Notes (72,000) (60,000) Proceeds from issuances of common stock 14,474 17,828 Taxes paid related to net share settlement of equity awards (40,232) (29,955) Repurchases of common stock (187,629) (138,399) Other, net (1,238) (2,489) Net cash used in financing activities (1) (180,625) (190,015) -------- -------- Effect of exchange rate changes on cash 5,278 (2,832) ----- ------ Increase (decrease) in cash and cash equivalents 29,692 (10,194) Cash and cash equivalents, beginning of year 75,926 86,120 Cash and cash equivalents, end of year $105,618 $75,926 ======== =======
(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 year ended September 30, 2016 was $25.0 million.
FAIR ISAAC CORPORATION REVENUE BY SEGMENT (In thousands) (Unaudited) Quarter Ended Year Ended September 30, September 30, ------------- ------------- 2017 2016 2017 2016 ---- ---- ---- ---- Applications revenues: Transactional and maintenance $90,524 $83,813 $348,861 $328,472 Professional services 38,886 43,370 141,857 138,775 License 20,873 21,836 62,449 65,395 Total Applications revenues $150,283 $149,019 $553,167 $532,642 ======== ======== ======== ======== Scores revenues: Transactional and maintenance $69,524 $59,392 $259,780 $233,655 Professional services 847 1,503 2,849 4,185 License 1,654 1,916 3,725 3,219 Total Scores revenues $72,025 $62,811 $266,354 $241,059 ======= ======= ======== ======== Decision Management Software revenues: Transactional and maintenance $11,008 $11,013 $44,019 $43,792 Professional services 11,138 7,067 34,863 26,778 License 8,751 5,914 33,766 37,085 Total Decision Management Software revenues $30,897 $23,994 $112,648 $107,655 ======= ======= ======== ======== Total revenues: Transactional and maintenance $171,056 $154,218 $652,660 $605,919 Professional services 50,871 51,940 179,569 169,738 License 31,278 29,666 99,940 105,699 Total revenues $253,205 $235,824 $932,169 $881,356 ======== ======== ======== ========
FAIR ISAAC CORPORATION NON-GAAP RESULTS (In thousands, except per share data) (Unaudited) Quarter Ended Year Ended September 30, September 30, ------------- ------------- 2017 2016 2017 2016 ---- ---- ---- ---- GAAP net income $40,044 $32,104 $128,256 $109,448 Amortization of intangible assets 2,712 3,409 12,709 13,982 Restructuring and acquisition- related - - 4,471 - Stock-based compensation expense 17,676 13,804 61,222 55,508 Income tax adjustments (6,515) (4,676) (24,316) (20,235) Excess tax benefit (1,198) - (24,746) - Adjustment to foreign tax credit and tax reserves - (3,287) - (3,287) Non-GAAP net income $52,719 $41,355 $157,596 $155,417 ------- ------- -------- -------- GAAP diluted earnings per share $1.25 $1.00 $3.98 $3.39 Amortization of intangible assets 0.08 0.11 0.39 0.43 Restructuring and acquisition- related - - 0.14 - Stock-based compensation expense 0.55 0.43 1.90 1.72 Income tax adjustments (0.20) (0.15) (0.75) (0.63) Excess tax benefit (0.04) - (0.77) - Adjustment to foreign tax credit and tax reserves - (0.10) - (0.10) Non-GAAP diluted earnings per share $1.65 $1.28 $4.89 $4.81 ----- ----- ----- ----- Free cash flow Net cash provided by operating activities $54,221 $32,542 $225,644 $210,266 Capital expenditures (5,036) (9,428) (19,828) (21,969) Dividends paid - (619) (1,238) (2,488) --- ---- ------ ------ Free cash flow $49,185 $22,495 $204,578 $185,809 ------- ------- -------- -------- 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, 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
FAIR ISAAC CORPORATION RECONCILIATION OF NON-GAAP GUIDANCE (In millions, except per share data) (Unaudited) Fiscal 2018 Guidance Estimated Excess Fiscal 2018 Guidance before Excess Tax Tax Benefit Benefit GAAP net income $119 $20 $139 Amortization of intangible assets 7 - 7 Stock-based compensation expense 67 - 67 Income tax adjustments (22) - (22) Excess tax benefit - (20) (20) Non-GAAP net income $171 $ - $171 ==== ========================== ==== GAAP diluted earnings per share $3.71 $0.62 $4.33 Amortization of intangible assets 0.22 - 0.22 Stock-based compensation expense 2.09 - 2.09 Income tax adjustments (0.69) - (0.69) Excess tax benefit - (0.62) (0.62) Non-GAAP diluted earnings per share $5.32 $ - $5.32 ===== ========================== =====
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 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.
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