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FICO Announces Earnings of $2.33 per Share for Second Quarter Fiscal 2021

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Revenue of $331 million vs. $308 million in prior year

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.

FICO Corporate logo.  (PRNewsFoto/FICO)
FICO Corporate logo. (PRNewsFoto/FICO)

Second Quarter Fiscal 2021 GAAP Results
Net 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 Results
Non-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 Revenue
The 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®, 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 Business
The 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 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 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 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)














March 31,


September 30,


2021


2020

ASSETS:




Current assets:




Cash and cash equivalents

$ 197,836


$ 157,394

Accounts receivable, net

264,804


334,180

Prepaid expenses and other current assets

40,335


42,504

Assets held for sale

48,843


-

Total current assets

551,818


534,078





Marketable securities and investments

31,777


26,573

Property and equipment, net

34,897


46,419

Operating lease right-of-use-assets

50,986


57,656

Goodwill and intangible assets, net

796,560


821,600

Other assets

113,570


119,914


$ 1,579,608


$ 1,606,240





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




Accounts payable and other accrued liabilities

$ 79,829


$ 86,400

Accrued compensation and employee benefits

71,347


117,952

Deferred revenue

100,396


115,159

Current maturities on debt

225,000


95,000

Liabilities related to assets held for sale

23,989


-

Total current liabilities

500,561


414,511





Long-term debt

740,226


739,435

Operating lease liabilities

59,100


73,207

Other liabilities

56,418


48,005

Total liabilities

1,356,305


1,275,158





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 and maintenance

$ 280,919


$ 240,702


$ 533,069


$ 461,076

Professional services

37,794


47,905


79,219


91,930

License

12,648


19,364


31,487


53,469

Total revenues

331,361


307,971


643,775


606,475









Operating expenses:








Cost of revenues

88,333


88,139


177,861


178,897

Research & development

43,612


39,439


84,263


78,382

Selling, general and administrative

97,272


103,465


191,183


215,486

Amortization of intangible assets

945


1,202


1,882


2,998

Restructuring and impairment charges

-


-


-


3,104

Gain on sale of product line assets

-


-


(7,334)


-

Total operating expenses

230,162


232,245


447,855


478,867

Operating income

101,199


75,726


195,920


127,608

Other expense, net

(9,375)


(13,262)


(16,136)


(23,249)

Income before income taxes

91,824


62,464


179,784


104,359

Income taxe provision (benefit)

23,150


4,176


24,618


(8,850)

Net income

$ 68,674


$ 58,288


$ 155,166


$ 113,209

























Basic earnings per share:

$ 2.36


$ 2.00


$ 5.33


$ 3.89

Diluted earnings per share:

$ 2.33


$ 1.94


$ 5.23


$ 3.76









Shares used in computing earnings per share:








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 operating activities:




Net income

$ 155,166


$ 113,209

Adjustments to reconcile net income to net cash provided by




operating activities:




Depreciation and amortization

13,701


15,535

Share-based compensation

53,338


45,933

Changes in operating assets and liabilities

11,188


(66,649)

Other, net

(1,923)


13,831

Net cash provided by operating activities

231,470


121,859





Cash flows from investing activities:




Purchases of property and equipment

(4,220)


(13,166)

Net activity from marketable securities

(2,115)


(1,847)

Other, net

8,081


55

Net cash provided by (used in) investing activities

1,746


(14,958)





Cash flows from financing activities:




Proceeds from revolving line of credit

251,000


156,000

Payments on revolving line of credit

(121,000)


(377,000)

Proceeds from issuance of senior notes

-


350,000

Proceeds from issuances of common stock

10,390


23,216

Taxes paid related to net share settlement of equity awards

(86,653)


(97,000)

Repurchases of common stock

(250,356)


(148,008)

Other, net

(176)


(7,552)

Net cash used in financing activities

(196,795)


(100,344)





Effect of exchange rate changes on cash

4,021


(4,017)





Increase in cash and cash equivalents

40,442


2,540

Cash and cash equivalents, beginning of period

157,394


106,426

Cash and cash equivalents, end of period

$ 197,836


$ 108,966

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)























Quarter Ended



Six Months Ended



March 31,



March 31,



2021


2020



2021


2020











Applications revenues:










Transactional and maintenance


$ 96,687


$ 97,789



$ 194,418


$ 196,626

Professional services


27,627


35,134



58,232


69,157

License


5,200


7,356



12,225


26,674

Total applications revenues


$ 129,514


$ 140,279



$ 264,875


$ 292,457











Scores revenues:










Transactional and maintenance


$ 167,212


$ 127,610



$ 305,802


$ 235,056

Professional services


703


819



820


1,083

License


804


719



6,748


8,147

Total scores revenues


$ 168,719


$ 129,148



$ 313,370


$ 244,286











Decision Management Software revenues:










Transactional and maintenance


$ 17,020


$ 15,303



$ 32,849


$ 29,394

Professional services


9,464


11,952



20,167


21,690

License


6,644


11,289



12,514


18,648

Total decision management software revenues

$ 33,128


$ 38,544



$ 65,530


$ 69,732











Total revenues:










Transactional and maintenance


$ 280,919


$ 240,702



$ 533,069


$ 461,076

Professional services


37,794


47,905



79,219


91,930

License


12,648


19,364



31,487


53,469

Total revenues


$ 331,361


$ 307,971



$ 643,775


$ 606,475

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 intangible assets

945


1,202


1,882


2,998

Restructuring and acquisition-related

-


-


-


3,104

Gain on sale of product line assets

-


-


(7,334)


-

Stock-based compensation expense

28,206


22,788


53,338


45,933

Income tax adjustments

(7,271)


(6,045)


(11,757)


(12,807)

Excess tax benefit

(329)


(11,925)


(19,512)


(33,943)

Non-GAAP net income

$ 90,225


$ 64,308


$ 171,783


$ 118,494

















GAAP diluted earnings per share

$ 2.33


$ 1.94


$ 5.23


$ 3.76

Amortization of intangible assets

0.03


0.04


0.06


0.10

Restructuring and acquisition-related

-


-


-


0.10

Gain on sale of product line assets

-


-


(0.25)


-

Stock-based compensation expense

0.96


0.76


1.80


1.53

Income tax adjustments

(0.25)


(0.20)


(0.40)


(0.43)

Excess tax benefit

(0.01)


(0.40)


(0.66)


(1.13)

Non-GAAP diluted earnings per share

$ 3.06


$ 2.14


$ 5.79


$ 3.94









Free cash flow








Net cash provided by operating activities

$ 153,523


$ 61,494


$ 231,470


$ 121,859

Capital expenditures

(1,175)


(6,667)


(4,220)


(13,167)

Free cash flow

$ 152,348


$ 54,827


$ 227,250


$ 108,692









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.

Cision
Cision

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SOURCE FICO