FICO Announces Earnings of $0.72 per Share for Second Quarter Fiscal 2016

Revenue

$860 million - $870 million

GAAP Net Income

$94 million - $98 million

GAAP Earnings Per Share

$2.89 - $3.02

Non-GAAP Net Income

$144 million - $148 million

Non-GAAP Earnings Per Share

$4.43 - $4.55

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

March 31,

September 30,

2016

2015

ASSETS:

Current assets:

     Cash and cash equivalents

$                  85,374

$                        86,120

     Accounts receivable, net

155,207

158,773

     Prepaid expenses and other current assets

36,005

41,709

          Total current assets

276,586

286,602

Marketable securities and investments

21,309

20,525

Property and equipment, net

38,589

38,208

Goodwill and intangible assets, net

847,872

862,071

Other assets

30,585

22,757

$             1,214,941

$                   1,230,163

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

     Accounts payable and other accrued liabilities

$                  47,328

$                        50,810

     Accrued compensation and employee benefits

44,429

54,368

     Deferred revenue

54,574

46,697

     Current maturities on debt

95,000

92,000

          Total current liabilities

241,331

243,875

Long-term debt

516,000

516,000

Other liabilities

32,230

33,290

          Total liabilities

789,561

793,165

Stockholders' equity

425,380

436,998

$             1,214,941

$                   1,230,163

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)

Quarter Ended 

Six Months Ended

March 31,

March 31,

2016

2015

2016

2015

Revenues:

     Transactional and maintenance

$                150,743

$              138,683

$           297,815

$             270,093

     Professional services

39,342

37,946

73,494

73,144

     License

16,593

30,480

35,445

53,422

        Total revenues

206,678

207,109

406,754

396,659

Operating expenses:

     Cost of revenues

62,298

70,991

124,491

137,291

     Research & development

24,848

24,341

49,479

46,978

     Selling, general and administrative

77,501

73,863

156,339

146,664

     Amortization of intangible assets

3,507

3,515

7,087

6,447

168,154

172,710

337,396

337,380

Operating income

38,524

34,399

69,358

59,279

Other expense, net

(6,380)

(8,366)

(13,438)

(14,922)

Income before income taxes

32,144

26,033

55,920

44,357

Provision for income taxes

9,028

7,163

13,563

11,080

Net income

$                  23,116

$                18,870

$             42,357

$               33,277

Basic earnings per share:

$                      0.74

$                    0.60

$                 1.36

$                   1.05

Diluted earnings per share:

$                      0.72

$                    0.58

$                 1.31

$                   1.01

Shares used in computing earnings per share:

     Basic

31,268

31,335

31,226

31,639

     Diluted

32,262

32,448

32,349

32,791

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 Six Months Ended 

 March 31, 

2016

2015

 Cash flows from operating activities: 

 Net income 

$              42,357

$              33,277

 Adjustments to reconcile net income to net cash provided by operating activities: 

       Depreciation and amortization 

15,168

17,047

       Share-based compensation 

28,300

20,596

       Changes in operating assets and liabilities 

(5,813)

(30,793)

       Other, net 

(1,686)

3,155

          Net cash provided by operating activities 

78,326

43,282

 Cash flows from investing activities: 

 Purchases of property and equipment 

(7,807)

(10,251)

 Cash paid for acquisitions, net of cash acquired 

-

(56,621)

 Other, net 

-

75

          Net cash used in investing activities 

(7,807)

(66,797)

 Cash flows from financing activities: 

 Proceeds from revolving line of credit 

44,000

152,000

 Payments on revolving line of credit 

(41,000)

(40,000)

 Proceeds from issuances of common stock 

6,757

11,853

 Taxes paid related to net share settlement of equity awards 

(25,881)

(15,992)

 Repurchases of common stock 

(68,390)

(100,713)

 Other, net 

12,763

7,356

          Net cash provided by (used in) financing activities 

(71,751)

14,504

 Effect of exchange rate changes on cash 

486

(9,223)

 Decrease in cash and cash equivalents 

(746)

(18,234)

 Cash and cash equivalents, beginning of period 

86,120

105,075

 Cash and cash equivalents, end of period 

$              85,374

$              86,841

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)

Quarter Ended 

Six Months Ended

March 31,

March 31,

2016

2015

2016

2015

Applications revenues:

     Transactional and maintenance

$   80,751

$   80,315

$ 161,734

$ 158,866

     Professional services

31,719

30,992

58,845

59,491

     License

9,447

23,081

21,479

31,529

          Total applications revenues

$ 121,917

$ 134,388

$ 242,058

$ 249,886

Scores revenues:

     Transactional and maintenance

$   59,265

$   47,814

$ 114,482

$   90,751

     Professional services

1,112

966

1,860

1,754

     License

739

1,157

776

1,373

          Total scores revenues

$   61,116

$   49,937

$ 117,118

$   93,878

Tools revenues:

     Transactional and maintenance

$   10,727

$   10,554

$   21,599

$   20,476

     Professional services

6,511

5,988

12,789

11,899

     License

6,407

6,242

13,190

20,520

          Total tools revenues

$   23,645

$   22,784

$   47,578

$   52,895

Total revenues:

     Transactional and maintenance

$ 150,743

$ 138,683

$ 297,815

$ 270,093

     Professional services

39,342

37,946

73,494

73,144

     License

16,593

30,480

35,445

53,422

          Total revenues

$ 206,678

$ 207,109

$ 406,754

$ 396,659

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)

Quarter Ended 

Six Months Ended

March 31,

March 31,

2016

2015

2016

2015

GAAP net income

$ 23,116

$ 18,870

$ 42,357

$ 33,277

  Amortization of intangible assets (net of tax)

2,463

2,478

4,983

4,528

  Stock-based compensation expense (net of tax)

9,550

8,320

19,896

14,469

    Non-GAAP net income

$ 35,129

$ 29,668

$ 67,236

$ 52,274

GAAP diluted earnings per share

$     0.72

$     0.58

$     1.31

$     1.01

  Amortization of intangible assets (net of tax)

0.08

0.08

0.15

0.14

  Stock-based compensation expense (net of tax)

0.30

0.26

0.62

0.44

    Non-GAAP diluted earnings per share

$     1.09

$     0.91

$     2.08

$     1.59

Free cash flow

  Net cash provided by operating activities

$ 37,776

$ 41,922

$ 78,326

$ 43,282

  Capital expenditures

(3,513)

(4,584)

(7,807)

(10,251)

  Dividends paid

(623)

(626)

(1,245)

(1,261)

    Free cash flow

$ 33,640

$ 36,712

$ 69,274

$ 31,770

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, 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.

FAIR ISAAC CORPORATION

RECONCILIATION OF NON-GAAP GUIDANCE

(In millions, except per share data)

(Unaudited)

Low

High

GAAP net income

$    94

$    98

  Amortization of intangible assets (net of tax)

10

10

  Stock-based compensation expense (net of tax)

40

40

    Non-GAAP net income

$  144

$  148

GAAP diluted earnings per share

$ 2.89

$ 3.02

  Amortization of intangible assets (net of tax)

0.31

0.31

  Stock-based compensation expense (net of tax)

1.23

1.23

    Non-GAAP diluted earnings per share

$ 4.43

$ 4.55

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, 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.