PR Newswire | Aug 3, 2021 04:16PM EDT

08/03 15:15 CDT

FICO Announces Earnings of $5.18 per Share for Third Quarter Fiscal 2021Revenue of $338 million vs. $314 million in prior year SAN JOSE, Calif., Aug. 3, 2021

SAN JOSE, Calif., Aug. 3, 2021 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its third fiscal quarter ended June 30, 2021.

Third Quarter Fiscal 2021 GAAP ResultsNet income for the quarter totaled $151.2 million, or $5.18 per share, versus $64.1 million, or $2.15 per share, in the prior year period. The results included a pre-tax gain of $92.8 million on the previously-announced sale of the Debt Collections and Recovery product line, or $2.52 per share after tax.

Net cash provided by operating activities for the quarter was $100.6 million versus $106.9 million in the prior year period.

Third Quarter Fiscal 2021 Non-GAAP ResultsNon-GAAP Net Income for the quarter was $98.8 million versus $76.7 million in the prior year period. Non-GAAP EPS for the quarter was $3.38 versus $2.58 in the prior year period. Free cash flow was $99.0 million for both the current quarter and 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.

Third Quarter Fiscal 2021 GAAP RevenueThe company reported revenues of $338.2 million for the quarter as compared to $313.7 million reported in the prior year period.

"I'm pleased to report we delivered another solid quarter," said Will Lansing, chief executive officer. "We had another record Scores quarter, and are making great progress in our SaaS transition."

Revenues for the third 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 $133.2 million in the third quarter, compared to $141.5 million in the prior year period, a decrease of 6%, due primarily to decreased services revenues, and the sale of the Debt Collections and Recovery product line in early June. * Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $172.2 million in the third quarter, compared to $131.6 million in the prior year period, an increase of 31%. B2B revenue increased 23%, driven largely by unit price increases and higher origination volumes. B2C revenue increased 50% 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 $32.8 million in the third quarter compared to $40.7 million in the prior year period, a decrease of 20%, due primarily to decreased 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 third 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 August 3, 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)

June 30, September 30,

2021 2020

ASSETS:

Current assets:

Cash and cash equivalents $ 237,612 $ 157,394

Accounts receivable, net 280,598 334,180

Prepaid expenses and other current assets 38,670 42,504

Total current assets 556,880 534,078

Marketable securities and investments 34,394 26,573

Property and equipment, net 31,565 46,419

Operating lease right-of-use-assets 49,250 57,656

Goodwill and intangible assets, net 797,870 821,600

Other assets 119,196 119,914

$ 1,589,155 $ 1,606,240

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable and other accrued liabilities $ 102,649 $ 86,400

Accrued compensation and employee benefits 92,363 117,952

Deferred revenue 99,757 115,159

Current maturities on debt 250,000 95,000

Total current liabilities 544,769 414,511

Long-term debt 806,622 739,435

Operating lease liabilities 56,815 73,207

Other liabilities 56,111 48,005

Total liabilities 1,464,317 1,275,158

Stockholders' equity 124,838 331,082

$ 1,589,155 $ 1,606,240

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Transactional and maintenance $ 288,078 $ 246,829 $ 821,147 $ 707,905

Professional services 35,918 43,633 115,137 135,563

License 14,188 23,269 45,675 76,738

Total revenues 338,184 313,731 981,959 920,206

Operating expenses:

Cost of revenues 82,240 88,569 260,101 267,466

Research & development 45,826 41,411 130,089 119,793

Selling, general and administrative 107,729 99,832 298,912 315,318

Amortization of intangible assets 810 1,048 2,692 4,046

Restructuring and impairment charges - - - 3,104

Gains on product line asset sales and business divestiture (92,805) - (100,139) -

Total operating expenses 143,800 230,860 591,655 709,727

Operating income 194,384 82,871 390,304 210,479

Other expense, net (6,492) (6,663) (22,628) (29,912)

Income before income taxes 187,892 76,208 367,676 180,567

Provision for income taxes 36,694 12,132 61,312 3,282

Net income $ 151,198 $ 64,076 $ 306,364 $ 177,285

Basic earnings per share: $ 5.27 $ 2.21 $ 10.58 $ 6.10

Diluted earnings per share: $ 5.18 $ 2.15 $ 10.38 $ 5.92

Shares used in computing earnings per share:

Basic 28,687 29,005 28,967 29,075

Diluted 29,195 29,744 29,505 29,966

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

June 30,

2021 2020

Cash flows from operating activities:

Net income $ 306,364 $ 177,285

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 20,066 23,549

Share-based compensation 84,099 68,197

Changes in operating assets and liabilities 24,728 (55,873)

Gains on product line asset sales and business divestiture (100,139) -

Other, net (3,056) 15,572

Net cash provided by operating activities 332,062 228,730

Cash flows from investing activities:

Purchases of property and equipment (5,792) (21,073)

Net activity from marketable securities (2,827) (2,328)

Proceeds from product line asset sales and business divestiture 146,428 -

Other, net (210) 55

Net cash provided by (used in) investing activities 137,599 (23,346)

Cash flows from financing activities:

Proceeds from revolving line of credit 429,000 193,000

Payments on revolving line of credit (208,000) (435,000)

Proceeds from issuance of senior notes - 350,000

Proceeds from issuances of common stock 14,580 26,235

Taxes paid related to net share settlement of equity awards (88,770) (100,067)

Repurchases of common stock (541,205) (210,000)

Other, net (177) (7,651)

Net cash used in financing activities (394,572) (183,483)

Effect of exchange rate changes on cash 5,129 (2,654)

Increase in cash and cash equivalents 80,218 19,247

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

Cash and cash equivalents, end of period $ 237,612 $ 125,673

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2021 2020 2021 2020

Applications revenues:

Transactional and maintenance $ 99,822 $ 98,476 $ 294,240 $ 295,102

Professional services 26,381 32,364 84,613 101,521

License 7,010 10,620 19,235 37,294

Total applications revenues $ 133,213 $ 141,460 $ 398,088 $ 433,917

Scores revenues:

Transactional and maintenance $ 170,415 $ 130,268 $ 476,217 $ 365,324

Professional services 166 58 986 1,141

License 1,621 1,224 8,369 9,371

Total scores revenues $ 172,202 $ 131,550 $ 485,572 $ 375,836

Decision Management Software revenues:

Transactional and maintenance $ 17,841 $ 18,085 $ 50,690 $ 47,479

Professional services 9,371 11,211 29,538 32,901

License 5,557 11,425 18,071 30,073

Total decision management software revenues $ 32,769 $ 40,721 $ 98,299 $ 110,453

Total revenues:

Transactional and maintenance $ 288,078 $ 246,829 $ 821,147 $ 707,905

Professional services 35,918 43,633 115,137 135,563

License 14,188 23,269 45,675 76,738

Total revenues $ 338,184 $ 313,731 $ 981,959 $ 920,206

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2021 2020 2021 2020

GAAP net income $ 151,198 $ 64,076 $ 306,364 $ 177,285

Amortization of intangible assets 810 1,048 2,692 4,046

Restructuring and impairment charges - - - 3,104

Gains on product line asset sales and business divestiture (92,805) - (100,139) -

Stock-based compensation expense 30,761 22,265 84,099 68,198

Income tax adjustments 11,391 (5,739) (366) (18,546)

Excess tax benefit (2,561) (4,902) (22,073) (38,845)

Non-GAAP net income $ 98,794 $ 76,748 $ 270,577 $ 195,242

GAAP diluted earnings per share $ 5.18 $ 2.15 $ 10.38 $ 5.92

Amortization of intangible assets 0.03 0.04 0.09 0.14

Restructuring and impairment charges - - - 0.10

Gains on product line asset sales and business divestiture (3.18) - (3.39) -

Stock-based compensation expense 1.05 0.75 2.85 2.28

Income tax adjustments 0.39 (0.19) (0.01) (0.62)

Excess tax benefit (0.09) (0.16) (0.75) (1.30)

Non-GAAP diluted earnings per share $ 3.38 $ 2.58 $ 9.17 $ 6.52

Free cash flow

Net cash provided by operating activities $ 100,592 $ 106,871 $ 332,062 $ 228,730

Capital expenditures (1,572) (7,907) (5,792) (21,074)

Free cash flow $ 99,020 $ 98,964 $ 326,270 $ 207,656

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