FICO Announces Earnings of $2.90 per Share for First Quarter Fiscal 2021

SAN JOSE, Calif., Jan. 28, 2021 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2020.

First Quarter Fiscal 2021 GAAP Results
Net income for the quarter totaled $86.5 million, or $2.90 per share, versus $54.9 million, or $1.82 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $77.9 million versus $60.4 million in the prior year period.

First Quarter Fiscal 2021 Non-GAAP Results
Non-GAAP Net Income for the quarter was $81.6 million versus $54.2 million in the prior year period. Non-GAAP EPS for the quarter was $2.74 versus $1.80 in the prior year period. Free cash flow for the quarter was $74.9 million versus $53.9 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.

First Quarter Fiscal 2021 GAAP Revenue
The company reported revenues of $312.4 million for the quarter as compared to $298.5 million reported in the prior year period.

"We are off to a good start in the new year," said Will Lansing, chief executive officer. "We are delivering strong earnings growth as we continue the strategic transition to our SaaS platform."

Revenues for the first quarter of fiscal 2021 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 $135.4 million in the first quarter, compared to $152.2 million in
        the prior year period, a decrease of 11%, due primarily to decreased
        license revenues in our Falcon Fraud products.
    --  Scores revenues, which include the company's business-to-business (B2B)
        scoring solutions and associated professional services, and
        business-to-consumer (B2C) service, were $144.7 million in the first
        quarter, compared to $115.1 million in the prior year period, an
        increase of 26%. B2B revenue increased 20%, driven largely by higher
        mortgage origination volumes and unit price increases. B2C revenue
        increased 40% from the prior year period due to higher volumes at
        myFICO.com, as well as through our partners.
    --  Decision Management Software revenues, which include Blaze Advisor(®),
        Xpress Optimization, Decision Management Platform and related
        professional services, were $32.4 million in the first quarter compared
        to $31.2 million in the prior year period, an increase of 4%, due
        primarily to an increases in SaaS subscription revenue, partially offset
        by a decline in up-front license revenues.

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 first quarter fiscal 2021 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 January 28, 2022.

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 FICO'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, or divestitures, and material adverse developments in global economic conditions or in the markets we serve. Additional information on these risks and uncertainties and other factors that could affect FICO's future results are described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2020 and its subsequent filings with the SEC. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. FICO disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.


                                                            
         
             FAIR ISAAC CORPORATION


                                                          
      
          CONDENSED CONSOLIDATED BALANCE SHEETS


                                                               
         
              (In thousands)


                                                                
         
              (Unaudited)








                                                                                         
            
           December 31,       
     
     September 30,


                                                                                                                        2020                     2020




     
              ASSETS:



     Current assets:



          Cash and cash equivalents                                                                                $144,662                 $157,394



          Accounts receivable, net                                                                                  310,626                  334,180



          Prepaid expenses and other current assets                                                                  53,153                   42,504



               Total current assets                                                                                 508,441                  534,078






     Marketable securities and investments                                                                           29,782                   26,573



     Property and equipment, net                                                                                     39,011                   46,419



     Operating lease right-of-use-assets                                                                             56,030                   57,656



     Goodwill and intangible assets, net                                                                            826,144                  821,600



     Other assets                                                                                                   117,455                  119,914


                                                                                                                  $1,576,863               $1,606,240

                                                                                                                                                 ===




     
              LIABILITIES AND STOCKHOLDERS' EQUITY:



     Current liabilities:



          Accounts payable and other accrued liabilities                                                            $71,003                  $86,400



          Accrued compensation and employee benefits                                                                 73,231                  117,952



          Deferred revenue                                                                                          115,808                  115,159



          Current maturities on debt                                                                                131,000                   95,000



               Total current liabilities                                                                            391,042                  414,511






     Long-term debt                                                                                                 739,831                  739,435



     Operating lease liabilities                                                                                     69,815                   73,207



     Other liabilities                                                                                               52,054                   48,005



               Total liabilities                                                                                  1,252,742                1,275,158






     Stockholders' equity                                                                                           324,121                  331,082


                                                                                                                  $1,576,863               $1,606,240

                                                                                                                                                 ===


                                     
              
                FAIR ISAAC CORPORATION


                          
              
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME


                             
              
                (In thousands, except per share data)


                                          
              
                (Unaudited)






                                                                                                         Quarter Ended


                                                                                              
        
         December 31,


                                                                                                    2020                   2019

                                                                                                                           ---


     Revenues:



          Transactional and maintenance                                                        $252,150               $220,374



          Professional services                                                                  41,425                 44,025



          License                                                                                18,839                 34,105

                                                                                                                           ---


             Total revenues                                                                     312,414                298,504

                                                                                                                           ---




     Operating expenses:



          Cost of revenues                                                                       89,528                 90,758



          Research & development                                                                 40,651                 38,943



          Selling, general and administrative                                                    93,911                112,021



          Amortization of intangible assets                                                         937                  1,796



          Restructuring and impairment charges                                                                          3,104



          Gain on sale of product line assets                                                   (7,334)



             Total operating expenses                                                           217,693                246,622

                                                                                                                           ---


     Operating income                                                                            94,721                 51,882



     Other expense, net                                                                         (6,761)               (9,987)



     Income before income taxes                                                                  87,960                 41,895



     Income taxe provision (benefit)                                                              1,468               (13,026)

                                                                                                                           ---


     Net income                                                                                 $86,492                $54,921










     Basic earnings per share:                                                                    $2.97                  $1.89




     Diluted earnings per share:                                                                  $2.90                  $1.82






     Shares used in computing earnings per share:



          Basic                                                                                  29,127                 29,025

                                                                                                                           ===


          Diluted                                                                                29,789                 30,169

                                                                                                                           ===


                                                      
              
                FAIR ISAAC CORPORATION


                                         
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                          
              
                (In thousands)


                                                           
              
                (Unaudited)






                                                                                                                 
      
           Quarter Ended


                                                                                                                 
      
           December 31,



                                                                                                                       2020                     2019

                                                                                                                                                ---


     
                Cash flows from operating activities:



      Net income                                                                                                   $86,492                  $54,921



      Adjustments to reconcile net income to net cash provided by



        operating activities:



            Depreciation and amortization                                                                            7,026                    7,856



            Share-based compensation                                                                                25,132                   23,145



            Changes in operating assets and liabilities                                                           (35,584)                (28,419)



            Other, net                                                                                             (5,119)                   2,862



               Net cash provided by operating activities                                                            77,947                   60,365

                                                                                                                                                ---




     
                 Cash flows from investing activities:



      Purchases of property and equipment                                                                          (3,045)                 (6,500)



      Net activity from marketable securities                                                                      (1,174)                 (2,566)



      Proceeds from sale of product line assets                                                                      8,291



      Other, net                                                                                                     (210)                      55



               Net cash provided by (used in) investing activities                                                   3,862                  (9,011)

                                                                                                                                                ---




     
                 Cash flows from financing activities:



      Proceeds from revolving line of credit                                                                       116,000                  117,000



      Payments on revolving line of credit                                                                        (80,000)               (367,000)



      Proceeds from issuance of senior notes                                                                                               350,000



      Proceeds from issuances of common stock                                                                           57                    5,091



      Taxes paid related to net share settlement of equity awards                                                 (85,678)                (86,047)



      Repurchases of common stock                                                                                 (50,011)                (60,009)



      Other, net                                                                                                     (176)                 (7,230)



               Net cash used in financing activities                                                              (99,808)                (48,195)

                                                                                                                                                ---




     
                 Effect of exchange rate changes on cash                                                           5,267                    1,631

                                                                                                                                                ---




      Increase (decrease) in cash and cash equivalents                                                            (12,732)                   4,790



      Cash and cash equivalents, beginning of period                                                               157,394                  106,426



      Cash and cash equivalents, end of period                                                                    $144,662                 $111,216


                                                            
          
          FAIR ISAAC CORPORATION


                                                              
          
          REVENUE BY SEGMENT


                                                                
          
          (In thousands)


                                                                 
          
          (Unaudited)






                                                                                                 Quarter Ended


                                                                                                 December 31,



                                                                                                          2020     2019




     Applications revenues:



          Transactional and maintenance                                                               $97,731  $98,837



          Professional services                                                                        30,605   34,023



          License                                                                                       7,025   19,318



               Total Applications revenues                                                           $135,361 $152,178






     Scores revenues:



          Transactional and maintenance                                                              $138,590 $107,446



          Professional services                                                                           117      264



          License                                                                                       5,944    7,428



               Total Scores revenues                                                                 $144,651 $115,138






     Decision Management Software revenues:



          Transactional and maintenance                                                               $15,829  $14,091



          Professional services                                                                        10,703    9,738



          License                                                                                       5,870    7,359



               Total Decision Management Software revenues                                            $32,402  $31,188






     Total revenues:



          Transactional and maintenance                                                              $252,150 $220,374



          Professional services                                                                        41,425   44,025



          License                                                                                      18,839   34,105



               Total revenues                                                                        $312,414 $298,504


                                                  
              
               FAIR ISAAC CORPORATION


                                                     
             
                NON-GAAP RESULTS


                                          
              
               (In thousands, except per share data)


                                                       
             
                (Unaudited)






                                                                                                       
     
             Quarter Ended


                                                                                                       
     
             December 31,



                                                                                                              2020                    2019

                                                                                                                                      ---




     GAAP net income                                                                                      $86,492                 $54,921



     Amortization of intangible assets                                                                        937                   1,796



     Restructuring and impairment charges                                                                                          3,104



     Gain on sale of product line assets                                                                  (7,334)



     Stock-based compensation expense                                                                      25,132                  23,145



     Income tax adjustments                                                                               (4,486)                (6,762)



     Excess tax benefit                                                                                  (19,183)               (22,018)



     Non-GAAP net income                                                                                  $81,558                 $54,186








     GAAP diluted earnings per share                                                                        $2.90                   $1.82



     Amortization of intangible assets                                                                       0.03                    0.06



     Restructuring and impairment charges                                                                                           0.10



     Gain on sale of product line assets                                                                   (0.25)



     Stock-based compensation expense                                                                        0.84                    0.77



     Income tax adjustments                                                                                (0.15)                 (0.22)



     Excess tax benefit                                                                                    (0.64)                 (0.73)



     Non-GAAP diluted earnings per share                                                                    $2.74                   $1.80






     Free cash flow



     Net cash provided by operating activities                                                            $77,947                 $60,365



     Capital expenditures                                                                                 (3,045)                (6,500)

                                                                                                                                      ---


     Free cash flow                                                                                       $74,902                 $53,865






     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