PR Newswire | May 5, 2021 04:15PM EDT

05/05 15:15 CDT

FICO Announces Earnings of $2.33 per Share for Second Quarter Fiscal 2021Revenue of $331 million vs. $308 million in prior year SAN JOSE, Calif., May 5, 2021

SAN JOSE, Calif., May 5, 2021 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2021.

Second Quarter Fiscal 2021 GAAP ResultsNet income for the quarter totaled $68.7 million, or $2.33 per share, versus $58.3 million, or $1.94 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $153.5 million versus $61.5 million in the prior year period.

Second Quarter Fiscal 2021 Non-GAAP ResultsNon-GAAP Net Income for the quarter was $90.2 million versus $64.3 million in the prior year period. Non-GAAP EPS for the quarter was $3.06 versus $2.14 in the prior year period. Free cash flow for the quarter was $152.3 million versus $54.8 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 2021 GAAP RevenueThe company reported revenues of $331.4 million for the quarter as compared to $308.0 million reported in the prior year period.

"We had another great quarter, delivering strong revenues and record cash flows," said Will Lansing, chief executive officer. "And we are achieving this as we reduce our reliance on up-front license revenue."

Revenues for the second quarter of fiscal 2021 across each of the company's three operating segments were as follows:

* Applications revenues, which include the company's decision management applications and associated professional services, were $129.5 million in the second quarter, compared to $140.3 million in the prior year period, a decrease of 8%, due primarily to decreased services and up-front license revenues. * Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $168.7 million in the second quarter, compared to $129.1 million in the prior year period, an increase of 31%. B2B revenue increased 25%, driven largely by unit price increases and higher origination volumes. B2C revenue increased 47% 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(r), Xpress Optimization, Decision Management Platform and related professional services, were $33.2 million in the second quarter compared to $38.5 million in the prior year period, a decrease of 14%, due primarily to decreased up-front license and services revenues.

Company to Divest Debt Collection and Recovery BusinessThe company also announced today the signing of a definitive agreement to sell its Debt Collection and Recovery products to Constellation's Jonas Software operating group, a leading provider of enterprise management software solutions. Completion of the acquisition remains subject to mutually agreed closing conditions. FICO Debt Collection and Recovery products represent less than 10 percent of total company revenues. FICO expects the divestiture to have an immaterial impact on future operating profits. FICO intends to include the sale proceeds in a $200 million Accelerated Share Repurchase program following the close of the transaction.

Company to Host Conference CallThe 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 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 May 5, 2022.

About FICOFICO (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 InformationExcept 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)

March 31, September 30,

2021 2020

ASSETS:

Current assets:

Cash and cash $ $ equivalents 197,836 157,394

Accounts receivable, 264,804 334,180net

Prepaid expenses and 40,335 42,504other current assets

Assets held for 48,843 -sale

Total current 551,818 534,078assets

Marketable securities and 31,777 26,573investments

Property and equipment, 34,897 46,419net

Operating lease 50,986 57,656right-of-use-assets

Goodwill and intangible 796,560 821,600assets, net

Other assets 113,570 119,914

$ 1,579,608 $ 1,606,240

LIABILITIES ANDSTOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable and $ $ other accrued liabilities 79,829 86,400

Accrued compensation 71,347 117,952and employee benefits

Deferred revenue 100,396 115,159

Current maturities 225,000 95,000on debt

Liabilities related 23,989 -to assets held for sale

Total current 500,561 414,511liabilities

Long-term debt 740,226 739,435

Operating lease 59,100 73,207liabilities

Other liabilities 56,418 48,005

Total 1,356,305 1,275,158liabilities

Stockholders' equity 223,303 331,082

$ 1,579,608 $ 1,606,240

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Quarter Ended Six Months Ended

March 31, March 31,

2021 2020 2021 2020

Revenues:

Transactional $ 280,919 $ 240,702 $ 533,069 $ 461,076andmaintenance

Professional 37,794 47,905 79,219 91,930services

License 12,648 19,364 31,487 53,469

Total 331,361 307,971 643,775 606,475revenues

Operatingexpenses:

Cost of 88,333 88,139 177,861 178,897revenues

Research 43,612 39,439 84,263 78,382& development

Selling,general and 97,272 103,465 191,183 215,486administrative

Amortization 945 1,202 1,882 2,998of intangibleassets

Restructuring - - - 3,104and impairmentcharges

Gain onsale of - - (7,334) -product lineassets

Totaloperating 230,162 232,245 447,855 478,867expenses

Operating 101,199 75,726 195,920 127,608income

Other expense, (9,375) (13,262) (16,136) (23,249)net

Income before 91,824 62,464 179,784 104,359income taxes

Income taxeprovision 23,150 4,176 24,618 (8,850)(benefit)

Net income $ 68,674 $ 58,288 $ 155,166 $ 113,209

Basic earnings $ 2.36 $ 2.00 $ 5.33 $ 3.89per share:

Dilutedearnings per $ 2.33 $ 1.94 $ 5.23 $ 3.76share:

Shares used incomputingearnings pershare:

Basic 29,087 29,194 29,107 29,109

Diluted 29,531 29,985 29,660 30,076

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended

March 31,

2021 2020

Cash flows from operatingactivities:

Net income $ 155,166 $ 113,209

Adjustments to reconcile netincome to net cash providedby

operating activities:

Depreciation and 13,701 15,535amortization

Share-based 53,338 45,933compensation

Changes in operating 11,188 (66,649)assets and liabilities

Other, net (1,923) 13,831

Net cash provided by 231,470 121,859operating activities

Cash flows from investingactivities:

Purchases of property and (4,220) (13,166)equipment

Net activity from marketable (2,115) (1,847)securities

Other, net 8,081 55

Net cash provided by(used in) investing 1,746 (14,958)activities

Cash flows from financingactivities:

Proceeds from revolving line 251,000 156,000of credit

Payments on revolving line of (121,000) (377,000)credit

Proceeds from issuance of - 350,000senior notes

Proceeds from issuances of 10,390 23,216common stock

Taxes paid related to netshare settlement of equity (86,653) (97,000)awards

Repurchases of common stock (250,356) (148,008)

Other, net (176) (7,552)

Net cash used in (196,795) (100,344)financing activities

Effect of exchange rate 4,021 (4,017)changes on cash

Increase in cash and cash 40,442 2,540equivalents

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

Cash and cash equivalents, $ 197,836 $ 108,966end of period

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

Quarter Ended Six Months Ended

March 31, March 31,

2021 2020 2021 2020

Applicationsrevenues:

Transactional $ 96,687 $ 97,789 $ 194,418 $ 196,626andmaintenance

Professional 27,627 35,134 58,232 69,157services

License 5,200 7,356 12,225 26,674

Total $ 129,514 $ 140,279 $ 264,875 $ 292,457applicationsrevenues

Scoresrevenues:

Transactional $ 167,212 $ 127,610 $ 305,802 $ 235,056andmaintenance

Professional 703 819 820 1,083services

License 804 719 6,748 8,147

Total scores $ 168,719 $ 129,148 $ 313,370 $ 244,286revenues

DecisionManagementSoftwarerevenues:

Transactional $ 17,020 $ 15,303 $ $ and 32,849 29,394maintenance

Professional 9,464 11,952 20,167 21,690services

License 6,644 11,289 12,514 18,648

Total decision $ $ management $ 33,128 $ 38,544 65,530 69,732softwarerevenues

Totalrevenues:

Transactional $ 280,919 $ 240,702 $ 533,069 $ 461,076andmaintenance

Professional 37,794 47,905 79,219 91,930services

License 12,648 19,364 31,487 53,469

Total $ 331,361 $ 307,971 $ 643,775 $ 606,475revenues

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

Quarter Ended Six Months Ended

March 31, March 31,

2021 2020 2021 2020

GAAP net income $ 68,674 $ 58,288 $ 155,166 $ 113,209

Amortization of 945 1,202 1,882 2,998intangible assets

Restructuring and - - - 3,104acquisition-related

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

Stock-basedcompensation 28,206 22,788 53,338 45,933expense

Income tax (7,271) (6,045) (11,757) (12,807)adjustments

Excess tax benefit (329) (11,925) (19,512) (33,943)

Non-GAAP net income $ 90,225 $ 64,308 $ 171,783 $ 118,494

GAAP diluted $ 2.33 $ 1.94 $ 5.23 $ 3.76earnings per share

Amortization of 0.03 0.04 0.06 0.10intangible assets

Restructuring and - - - 0.10acquisition-related

Gain on sale of - - (0.25) -product line assets

Stock-basedcompensation 0.96 0.76 1.80 1.53expense

Income tax (0.25) (0.20) (0.40) (0.43)adjustments

Excess tax benefit (0.01) (0.40) (0.66) (1.13)

Non-GAAP diluted $ 3.06 $ 2.14 $ 5.79 $ 3.94earnings per share

Free cash flow

Net cash providedby operating $ 153,523 $ 61,494 $ 231,470 $ 121,859activities

Capital (1,175) (6,667) (4,220) (13,167)expenditures

Free cash flow $ 152,348 $ 54,827 $ 227,250 $ 108,692

Note: The numbersmay not sum tototal due torounding.

About Non-GAAP Financial Measures

To supplement the consolidated GAAP financial statements, the company uses thefollowing non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, andfree cash flow. Non-GAAP net income and non-GAAP EPS exclude the impact ofamortization expense, share-based compensation expense, restructuring andacquisition-related, excess tax benefit, and adjustment to tax valuationallowance items. Free cash flow excludes capital expenditures and dividendspaid. The presentation of these financial measures is not intended to beconsidered in isolation or as a substitute for, or superior to, the financialinformation prepared and presented in accordance with GAAP.

Management uses these non-GAAP financial measures for financial and operationaldecision-making and as a means to evaluate period-to-period comparisons. Our management believes these non-GAAP financial measures provide meaningfulsupplemental information regarding our performance and liquidity by excludingcertain items that may not be indicative of recurring business resultsincluding significant non-cash expenses. We believe management and investorsbenefit from referring to these non-GAAP financial measures in assessing ourperformance when planning, forecasting and analyzing future periods. Thesenon-GAAP financial measures also facilitate management's internal comparisonsto historical performance and liquidity as well as comparisons to ourcompetitors' operating results. We believe these non-GAAP financial measuresare useful to investors because they allow for greater transparency withrespect to key measures used by management in its financial and operatingdecision-making.

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SOURCE FICO