FICO Announces Earnings of $1.94 per Share for Second Quarter Fiscal 2020

SAN JOSE, Calif., April 29, 2020 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2020.

Second Quarter Fiscal 2020 GAAP Results
Net income for the quarter totaled $58.3 million, or $1.94 per share, versus $33.4 million, or $1.10 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $61.5 million versus $47.8 million in the prior year period.

Second Quarter Fiscal 2020 Non-GAAP Results
Non-GAAP Net Income for the quarter was $64.3 million versus $47.3 million in the prior year period. Non-GAAP EPS for the quarter was $2.14 versus $1.56 in the prior year period. Free cash flow for the quarter was $54.8 million versus $43.6 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.

Second Quarter Fiscal 2020 GAAP Revenue
The company reported revenues of $308.0 million for the quarter as compared to $278.2 million reported in the prior year period.

"As the world struggles with the pandemic and its economic impact, we are dedicated to standing by our customers to support their decisioning during this critical time," said Will Lansing, chief executive officer. "While we face near-term uncertainty, I'm pleased that our second quarter results were strong and that we are well positioned to manage the challenges in front of us."

Revenues for the second quarter of fiscal 2020 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 $140.3 million in the second quarter, compared to $141.8 million in
        the prior year period, a decrease of 1%, due primarily to decreased
        license and services revenues in Collections and Recovery 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 $129.2 million in the second
        quarter, compared to $104.4 million in the prior year period, an
        increase of 24%. B2B revenue increased 27% and B2C revenue increased 15%
        from the prior year period.
    --  Decision Management Software revenues, which include Blaze Advisor(®),
        Xpress Optimization, Decision Management Platform and related
        professional services, were $38.5 million in the second quarter compared
        to $32.0 million in the prior year period, an increase of 20%, due
        primarily to increased license and SaaS subscription revenues.

Outlook
Due to the lack of visibility related to the COVID-19 pandemic and recovery, the Company has withdrawn financial guidance at this time.

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 second quarter fiscal 2020 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 Past Events page through April 29, 2021.

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 impact of COVID-19 on macroeconomic conditions and the Company's business, operations and personnel, 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, 2019 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)








                                                       
         
              March 31,                  
     
     September 30,


                                                                                     2020                              2019




     
              ASSETS:



     Current assets:


           Cash and cash equivalents                                             $108,966                          $106,426


           Accounts receivable, net                                               307,307                           297,427


           Prepaid expenses and other
            current assets                                                         67,398                            51,853


                Total current assets                                              483,671                           455,706





      Marketable securities and
       investments                                                                 21,138                            21,865


      Property and equipment, net                                                  59,491                            53,027


      Operating lease right-of-
       use-assets                                                                  87,142                                 -


      Goodwill and intangible
       assets, net                                                                815,827                           817,681



     Other assets                                                                 84,863                            85,169


                                                                               $1,552,132                        $1,433,448

                                                                                                                       ===




     
              LIABILITIES AND STOCKHOLDERS' EQUITY:



     Current liabilities:


           Accounts payable and other
            accrued liabilities                                                   $87,911                           $55,572


           Accrued compensation and
            employee benefits                                                      68,507                           106,240



          Deferred revenue                                                       114,406                           111,016


           Current maturities on debt                                             209,000                           218,000


                Total current liabilities                                         479,824                           490,828






     Long-term debt                                                              738,632                           606,790


      Operating lease liabilities                                                  77,485                                 -



     Other liabilities                                                            42,040                            46,063


                Total liabilities                                               1,337,981                         1,143,681






     Stockholders' equity                                                        214,151                           289,767


                                                                               $1,552,132                        $1,433,448

                                                                                                                       ===


                                       
              
               FAIR ISAAC CORPORATION


                             
              
               CONDENSED CONSOLIDATED STATEMENTS OF INCOME


                                
              
               (In thousands, except per share data)


                                             
             
                (Unaudited)






                                                     
              
                Quarter Ended                               Six Months Ended


                                                     
              
                March 31,                 
     
               March 31,

                                                                                                                    ---

                                                                    2020                          2019           2020                            2019

                                                                                                                                               ---


     Revenues:


           Transactional and
            maintenance                                         $240,702                      $211,779       $461,076                        $405,972


           Professional
            services                                              47,905                        50,555         91,930                          91,363


           License                                                19,364                        15,900         53,469                          43,155

                                                                                                                                               ---

              Total revenues                                     307,971                       278,234        606,475                         540,490

                                                                                                                                               ---




     Operating expenses:


           Cost of revenues                                       88,139                        85,568        178,897                         161,634


           Research &
            development                                           39,439                        37,684         78,382                          73,110


           Selling, general
            and administrative                                   103,465                       104,930        215,486                         205,188


           Amortization of
            intangible assets                                      1,202                         1,503          2,998                           3,005


           Restructuring and
            acquisition-
            related                                                                                           3,104                               -


              Total operating
               expenses                                          232,245                       229,685        478,867                         442,937

                                                                                                                                               ---

      Operating income                                            75,726                        48,549        127,608                          97,553


      Other expense, net                                        (13,262)                      (8,575)      (23,249)                       (20,423)


      Income before
       income taxes                                               62,464                        39,974        104,359                          77,130


      Income tax
       provision
       (benefit)                                                   4,176                         6,593        (8,850)                          3,742

                                                                                                                                               ---

      Net income                                                 $58,288                       $33,381       $113,209                         $73,388









      Basic earnings per
       share:                                                      $2.00                         $1.15          $3.89                           $2.53



      Diluted earnings
       per share:                                                  $1.94                         $1.10          $3.76                           $2.42






     Shares used in computing earnings per share:


           Basic                                                  29,194                        29,074         29,109                          29,017

                                                                                                                                               ===

           Diluted                                                29,985                        30,259         30,076                          30,297

                                                                                                                                               ===


                     
              
                FAIR ISAAC CORPORATION


        
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                         
              
                (In thousands)


                          
              
                (Unaudited)






                                                                                        Six Months Ended


                                                                      
              
           March 31,



                                                                                   2020                        2019

                                                                                                               ---


     
                Cash flows from operating activities:



      Net income                                                              $113,209                     $73,388



      Adjustments to reconcile net income to net cash provided by



        operating activities:


             Depreciation and amortization                                       15,535                      15,786


             Share-based compensation                                            45,933                      42,336


             Changes in operating assets and
              liabilities                                                      (66,649)                   (36,624)



            Other, net                                                          13,831                       1,760


                Net cash provided by operating
                 activities                                                     121,859                      96,646

                                                                                                               ---




     
                 Cash flows from investing activities:


       Purchases of property and
        equipment                                                              (13,166)                   (10,644)


       Net activity from marketable
        securities                                                              (1,847)                    (2,129)



      Other, net                                                                    55


                Net cash used in investing
                 activities                                                    (14,958)                   (12,773)

                                                                                                               ---




     
                 Cash flows from financing activities:


       Proceeds from revolving line of
        credit                                                                  156,000                     138,000


       Payments on revolving line of
        credit                                                                (377,000)                   (80,000)


       Proceeds from issuance of senior
        notes                                                                   350,000


       Proceeds from issuances of common
        stock                                                                    23,216                      12,850


       Taxes paid related to net share
        settlement of equity awards                                            (97,000)                   (48,470)


       Repurchases of common stock                                            (148,008)                  (119,723)



      Other, net                                                               (7,552)


                Net cash used in financing
                 activities                                                   (100,344)                   (97,343)

                                                                                                               ---



                    Effect of exchange rate changes on
                     cash                                                       (4,017)                        332

                                                                                                               ---



       Increase (decrease) in cash and
        cash equivalents                                                          2,540                    (13,138)


       Cash and cash equivalents,
        beginning of period                                                     106,426                      90,023


       Cash and cash equivalents, end of
        period                                                                 $108,966                     $76,885


                                               
              
         REVENUE BY SEGMENT


                                                 
              
         (In thousands)


                                                   
              
         (Unaudited)






                                            Quarter Ended                                   Six Months Ended


                                              March 31,                                     March 31,



                                                     2020                              2019                    2020     2019





      Applications revenues:


           Transactional and
            maintenance                           $97,789                           $97,074                $196,626 $194,239


           Professional services                   35,134                            35,981                  69,157   67,443



          License                                  7,356                             8,760                  26,674   27,792


                Total applications revenues      $140,279                          $141,815                $292,457 $289,474






     Scores revenues:


           Transactional and
            maintenance                          $127,610                          $102,363                $235,056 $187,184


           Professional services                      819                               901                   1,083    1,602



          License                                    719                             1,139                   8,147    1,300


                Total scores revenues            $129,148                          $104,403                $244,286 $190,086





      Decision Management
       Software revenues:


           Transactional and
            maintenance                           $15,303                           $12,342                 $29,394  $24,549


           Professional services                   11,952                            13,673                  21,690   22,318



          License                                 11,289                             6,001                  18,648   14,063


                Total decision management
                 software revenues                $38,544                           $32,016                 $69,732  $60,930






     Total revenues:


           Transactional and
            maintenance                          $240,702                          $211,779                $461,076 $405,972


           Professional services                   47,905                            50,555                  91,930   91,363



          License                                 19,364                            15,900                  53,469   43,155


                Total revenues                   $307,971                          $278,234                $606,475 $540,490


                       
          
                FAIR ISAAC CORPORATION


                          
          
                NON-GAAP RESULTS


               
              
            (In thousands, except per share data)


                            
          
                (Unaudited)






                                                      Quarter Ended                     Six Months Ended


                                                      March 31,                     March 31,

                                                                          ---

                                    2020                    2019               2020                      2019

                                                                                                       ---



      GAAP net income            $58,288                 $33,381           $113,209                   $73,388


      Amortization of
       intangible assets           1,202                   1,503              2,998                     3,005


      Restructuring and
       acquisition-
       related                                                              3,104                         -


      Stock-based
       compensation
       expense                    22,788                  20,482             45,933                    42,336


      Income tax
       adjustments               (6,045)                (5,594)          (12,807)                 (11,813)


      Excess tax benefit        (11,925)                (2,501)          (33,943)                 (15,734)


      Non-GAAP net income        $64,308                 $47,271           $118,494                   $91,182

                                                                                                       ---





      GAAP diluted
       earnings per share          $1.94                   $1.10              $3.76                     $2.42


      Amortization of
       intangible assets            0.04                    0.05               0.10                      0.10


      Restructuring and
       acquisition-
       related                                                               0.10                         -


      Stock-based
       compensation
       expense                      0.76                    0.68               1.53                      1.40


      Income tax
       adjustments                (0.20)                 (0.18)            (0.43)                   (0.39)


      Excess tax benefit          (0.40)                 (0.08)            (1.13)                   (0.52)


      Non-GAAP diluted
       earnings per share          $2.14                   $1.56              $3.94                     $3.01






     Free cash flow


      Net cash provided by
       operating
       activities                $61,494                 $47,789           $121,859                   $96,646


      Capital expenditures       (6,667)                (4,170)          (13,167)                 (10,644)


      Free cash flow             $54,827                 $43,619           $108,692                   $86,002

                                                                                                       ---



               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