PR Newswire | Jul 29, 2020 04:15PM EDT

07/29 15:15 CDT

FICO Announces Earnings of $2.15 per Share for Third Quarter Fiscal 2020Revenue of $314 million vs. $314 million in prior year SAN JOSE, Calif., July 29, 2020

SAN JOSE, Calif., July 29, 2020 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its third fiscal quarter ended June 30, 2020.

Third Quarter Fiscal 2020 GAAP ResultsNet income for the quarter totaled $64.1 million, or $2.15 per share, versus $64.2 million, or $2.12 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $106.9 million versus $68.3 million in the prior year period.

Third Quarter Fiscal 2020 Non-GAAP ResultsNon-GAAP Net Income for the quarter was $76.7 million versus $75.6 million in the prior year period. Non-GAAP EPS for the quarter was $2.58 versus $2.50 in the prior year period. Free cash flow for the quarter was $99.0 million versus $60.8 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.

Third Quarter Fiscal 2020 GAAP RevenueThe company reported revenues of $313.7 million for the quarter as compared to $314.2 million reported in the prior year period.

"I am pleased to report we posted a very solid quarter, which again shows the resiliency of our business even in these uncertain times," said Will Lansing, chief executive officer. "We continued to perform well in all parts of our business, and delivered record cash flow."

Revenues for the third 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 $141.5 million in the third quarter, compared to $165.6 million in the prior year period, a decrease of 15%, due primarily to decreased license sales in our Falcon Fraud product. * Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $131.6 million in the third quarter, compared to $115.1 million in the prior year period, an increase of 14%. B2B revenue increased 12% and B2C revenue increased 21% from the prior year period. * Decision Management Software revenues, which include Blaze Advisor(r), Xpress Optimization, Decision Management Platform and related professional services, were $40.7 million in the third quarter, compared to $33.5 million in the prior year period, an increase of 22%, due primarily to SaaS subscription revenues.

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 third 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 Events Page under Past Events through July 29, 2021.

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 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)

June 30, September 30,

2020 2019

ASSETS:

Current assets:

Cash and cash equivalents $ $ 125,673 106,426

Accounts receivable, net 303,558 297,427

Prepaid expenses and other current 53,780 51,853assets

Total current assets 483,011 455,706

Marketable securities and investments 25,136 21,865

Property and equipment, net 60,336 53,027

Operating lease right-of-use-assets 84,106 -

Goodwill and intangible assets, net 814,647 817,681

Other assets 96,884 85,169

$ $ 1,564,120 1,433,448

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable and other accrued $ $ liabilities 70,680 55,572

Accrued compensation and employee 95,674 106,240benefits

Deferred revenue 105,833 111,016

Current maturities on debt 188,000 218,000

Total current liabilities 460,187 490,828

Long-term debt 739,039 606,790

Operating lease liabilities 74,000 -

Other liabilities 43,608 46,063

Total liabilities 1,316,834 1,143,681

Stockholders' equity 247,286 289,767

$ $ 1,564,120 1,433,448

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenues:

Transactional $ 246,829 $ 226,040 $ 707,905 $ 632,012and maintenance

Professional 43,633 44,594 135,563 135,957services

License 23,269 43,615 76,738 86,770

Total 313,731 314,249 920,206 854,739revenues

Operating expenses:

Cost of 88,569 87,215 267,466 248,849revenues

Research & 41,411 36,972 119,793 110,082development

Selling,general and 99,832 102,906 315,318 308,094administrative

Amortizationof intangible 1,048 1,448 4,046 4,453assets

Restructuringand - - 3,104 -acquisition-related

Total 230,860 228,541 709,727 671,478operating expenses

Operating income 82,871 85,708 210,479 183,261

Other expense, net (6,663) (7,654) (29,912) (28,077)

Income before 76,208 78,054 180,567 155,184income taxes

Provision for 12,132 13,902 3,282 17,644income taxes

Net income $ 64,076 $ 64,152 $ 177,285 $ 137,540

Basic earnings per $ 2.21 $ 2.21 $ 6.10 $ 4.74share:

Diluted earnings $ 2.15 $ 2.12 $ 5.92 $ 4.54per share:

Shares used incomputing earningsper share:

Basic 29,005 28,967 29,075 29,000

Diluted 29,744 30,292 29,966 30,295

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

June 30,

2020 2019

Cash flows from operating activities:

Net income $ $ 177,285 137,540

Adjustments to reconcile net income to netcash provided by

operating activities:

Depreciation and amortization 23,549 23,734

Share-based compensation 68,197 61,931

Changes in operating assets and (55,873) (59,682)liabilities

Other, net 15,572 1,413

Net cash provided by operating 228,730 164,936activities

Cash flows from investing activities:

Purchases of property and equipment (21,073) (18,170)

Net activity from marketable securities (2,328) (2,630)

Other, net 55 -

Net cash used in investing (23,346) (20,800)activities

Cash flows from financing activities:

Proceeds from revolving line of credit 193,000 167,000

Payments on revolving line of credit (435,000) (109,000)

Proceeds from issuance of senior notes 350,000 -

Proceeds from issuances of common stock 26,235 16,073

Taxes paid related to net share settlement (100,067) (51,208)of equity awards

Repurchases of common stock (210,000) (178,926)

Other, net (7,651) -

Net cash used in financing (183,483) (156,061)activities

Effect of exchange rate changes on cash (2,654) 710

Increase (decrease) in cash and cash 19,247 (11,215)equivalents

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

Cash and cash equivalents, end of period $ $ 125,673 78,808

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Applicationsrevenues:

Transactional $ 98,476 $ 100,385 $ 295,102 $ 294,624andmaintenance

Professional 32,364 33,989 101,521 101,432services

License 10,620 31,263 37,294 59,055

Total $ 141,460 $ 165,637 $ 433,917 $ 455,111applicationsrevenues

Scoresrevenues:

Transactional $ 130,268 $ 112,949 $ 365,324 $ 300,133andmaintenance

Professional 58 392 1,141 1,994services

License 1,224 1,805 9,371 3,105

Total scores $ 131,550 $ 115,146 $ 375,836 $ 305,232revenues

DecisionManagementSoftwarerevenues:

Transactional $ 18,085 $ 12,706 $ 47,479 $ 37,255andmaintenance

Professional 11,211 10,213 32,901 32,531services

License 11,425 10,547 30,073 24,610

Totaldecision $ 40,721 $ 33,466 $ 110,453 $ 94,396managementsoftwarerevenues

Totalrevenues:

Transactional $ 246,829 $ 226,040 $ 707,905 $ 632,012andmaintenance

Professional 43,633 44,594 135,563 135,957services

License 23,269 43,615 76,738 86,770

Total $ 313,731 $ 314,249 $ 920,206 $ 854,739revenues

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

Quarter Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

GAAP net income $ 64,076 $ 64,152 $ 177,285 $ 137,540

Amortization of intangible assets 1,048 1,448 4,046 4,453

Restructuring and - - 3,104 -acquisition-related

Stock-based compensation expense 22,265 19,595 68,198 61,931

Income tax adjustments (5,739) (5,290) (18,546) (17,103)

Excess tax benefit (4,902) (4,289) (38,845) (20,023)

Non-GAAP net income $ 76,748 $ 75,616 $ 195,242 $ 166,798

GAAP diluted earnings per share $ $ $ $ 2.15 2.12 5.92 4.54

Amortization of intangible assets 0.04 0.05 0.14 0.15

Restructuring and - - 0.10 -acquisition-related

Stock-based compensation expense 0.75 0.65 2.28 2.04

Income tax adjustments (0.19) (0.17) (0.62) (0.56)

Excess tax benefit (0.16) (0.14) (1.30) (0.66)

Non-GAAP diluted earnings per $ $ $ $ share 2.58 2.50 6.52 5.51

Free cash flow

Net cash provided by operating $ 106,871 $ 68,290 $ 228,730 $ 164,936activities

Capital expenditures (7,907) (7,526) (21,074) (18,170)

Free cash flow $ 98,964 $ 60,764 $ 207,656 $ 146,766

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 thefollowing 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 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