FICO Announces Earnings of $1.03 per Share for Second Quarter Fiscal 2018


(MENAFNEditorial) SAN JOSE, Calif., April 26, 2018 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2018.

Second Quarter Fiscal 2018 GAAP Results
Net income for the quarter totaled $32.3 million, or $1.03 per share, versus $25.1 million, or $0.78 per share, reported in the prior year period.

Net cash provided by operating activities for the quarter was $49.2 million versus $66.4 million in the prior year period.

Second Quarter Fiscal 2018 Non-GAAP Results
Non-GAAP Net Income for the quarter was $48.1 million vs. $34.0 million in the prior year period. Non-GAAP EPS for the quarter was $1.54 vs. $1.05 in the prior year period.Free cash flow for the quarter was $42.2 million vs. $60.5 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 2018 GAAP Revenues
The company reported revenues of $257.9 million for the quarter as compared to $228.4 million reported in the prior year period.

"We delivered record revenues in our second quarter, and strong growth in net income and EPS," said Will Lansing, chief executive officer. "We are pleased with our progress and are raising our full-year guidance."

Revenues for the second quarter of fiscal 2018 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 $146.7 million in the second quarter, up 9% from the prior year, primarily due to increased transactional volumes of Originations Solutions and Customer Communication Services.
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, as well as business-to-consumer (B2C) service, were $87.9 million in the second quarter, compared to $65.4 million in the prior year quarter, an increase of 34%. B2B revenue increased 47% and B2C revenue increased 13% from the prior year quarter.
  • Decision Management Software revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $23.3 million in the second quarter compared to $28.6 million in the prior year quarter, a decrease of 19%, due primarily to decreased up-front license sales.
  • Outlook
    The company is updating guidance for fiscal 2018:


    Previous Fiscal
    2018 Guidance*

    Updated Fiscal 2018
    Guidance*

    Revenues

    $990 million

    $1.02 billion

    GAAP Net Income

    $136 million

    $140 million

    GAAP EPS

    $4.34

    $4.47

    Non GAAP Net Income

    $191 million

    $200 million

    Non GAAP EPS

    $6.09

    $6.38

    * Previous and Updated Fiscal 2018 Guidance includes excess tax benefits associated with stock compensation of $20.0 million, or $0.64 per share, and a full-year tax charge of $17.0 million, or $0.54 per share, associated with tax reform legislation.

    The Non-GAAP financial measures are described in the financial table captioned "Reconciliation of Non-GAAP Guidance."

    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 2018 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 April 26, 2019.

    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 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, 2017 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)














    March 31,


    September 30,


    2018


    2017

    ASSETS:




    Current assets:




    Cash and cash equivalents

    $ 107,868


    $ 105,618

    Accounts receivable, net

    188,538


    168,586

    Prepaid expenses and other current assets

    36,813


    36,727

    Total current assets

    333,219


    310,931





    Marketable securities and investments

    27,912


    25,515

    Property and equipment, net

    45,111


    40,703

    Goodwill and intangible assets, net

    831,258


    825,599

    Other assets

    53,395


    52,872


    $ 1,290,895


    $ 1,255,620





    LIABILITIES AND STOCKHOLDERS' EQUITY:




    Current liabilities:




    Accounts payable and other accrued liabilities

    $ 55,234


    $ 51,614

    Accrued compensation and employee benefits

    57,294


    77,610

    Deferred revenue

    65,018


    55,431

    Current maturities on debt

    191,000


    142,000

    Total current liabilities

    368,546


    326,655





    Long-term debt

    512,868


    462,801

    Other liabilities

    38,778


    39,627

    Total liabilities

    920,192


    829,083





    Stockholders' equity

    370,703


    426,537


    $ 1,290,895


    $ 1,255,620

    FAIR ISAAC CORPORATION

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME

    (In thousands, except per share data)

    (Unaudited)


















    Quarter Ended


    Six Months Ended


    March 31,


    March 31,


    2018


    2017


    2018


    2017









    Revenues:








    Transactional and maintenance

    $ 195,195


    $ 161,249


    $ 369,857


    $ 314,909

    Professional services

    46,078


    41,284


    88,704


    84,827

    License

    16,585


    25,845


    34,618


    48,242

    Total revenues

    257,858


    228,378


    493,179


    447,978









    Operating expenses:








    Cost of revenues

    78,519


    72,131


    152,878


    142,128

    Research & development

    32,519


    26,663


    61,493


    52,805

    Selling, general and administrative

    97,057


    86,231


    187,353


    171,445

    Amortization of intangible assets

    1,684


    3,312


    3,472


    6,632

    Total operating expenses

    209,779


    188,337


    405,196


    373,010

    Operating income

    48,079


    40,041


    87,983


    74,968

    Other expense, net

    (7,277)


    (6,905)


    (13,224)


    (13,177)

    Income before income taxes

    40,802


    33,136


    74,759


    61,791

    Provision for income taxes

    8,527


    8,052


    15,185


    (1,194)

    Net income

    $ 32,275


    $ 25,084


    $ 59,574


    $ 62,985

























    Basic earnings per share:

    $ 1.08


    $ 0.81


    $ 1.98


    $ 2.03

    Diluted earnings per share:

    $ 1.03


    $ 0.78


    $ 1.90


    $ 1.94









    Shares used in computing earnings per share:








    Basic

    29,985


    31,017


    30,032


    31,003

    Diluted

    31,300


    32,260


    31,431


    32,398

    FAIR ISAAC CORPORATION

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In thousands)

    (Unaudited)










    Six Months Ended


    March 31,


    2018


    2017

    Cash flows from operating activities:




    Net income

    $ 59,574


    $ 62,985

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




    Depreciation and amortization

    15,095


    18,236

    Share-based compensation

    35,749


    29,231

    Changes in operating assets and liabilities

    (38,760)


    (11,990)

    Other, net

    6,352


    935

    Net cash provided by operating activities

    78,010


    99,397





    Cash flows from investing activities:




    Purchases of property and equipment

    (11,111)


    (9,604)

    Net activity from marketable securities

    (2,145)


    -

    Net cash used in investing activities

    (13,256)


    (9,604)





    Cash flows from financing activities:




    Proceeds from revolving line of credit

    147,000


    79,000

    Payments on revolving line of credit

    (48,000)


    (24,000)

    Proceeds from issuances of common stock

    1,706


    9,114

    Taxes paid related to net share settlement of equity awards

    (40,448)


    (36,914)

    Repurchases of common stock

    (124,715)


    (74,647)

    Other, net

    (240)


    (1,238)

    Net cash used in financing activities

    (64,697)


    (48,685)





    Effect of exchange rate changes on cash

    2,193


    (1,186)





    Increase in cash and cash equivalents

    2,250


    39,922

    Cash and cash equivalents, beginning of period

    105,618


    75,926

    Cash and cash equivalents, end of period

    $ 107,868


    $ 115,848

    FAIR ISAAC CORPORATION

    REVENUE BY SEGMENT

    (In thousands)

    (Unaudited)





















    Quarter Ended


    Six Months Ended



    March 31,


    March 31,



    2018


    2017


    2018


    2017










    Applications revenues:









    Transactional and maintenance


    $ 97,630


    $ 86,013


    $ 190,843


    $ 170,894

    Professional services


    38,516


    32,640


    73,369


    66,981

    License


    10,553


    15,684


    23,896


    31,227

    Total applications revenues


    $ 146,699


    $ 134,337


    $ 288,108


    $ 269,102










    Scores revenues:









    Transactional and maintenance


    $ 85,644


    $ 63,628


    $ 155,218


    $ 121,880

    Professional services


    682


    994


    960


    1,515

    License


    1,584


    811


    1,647


    1,420

    Total scores revenues


    $ 87,910


    $ 65,433


    $ 157,825


    $ 124,815










    Decision Management Software revenues:









    Transactional and maintenance


    $ 11,921


    $ 11,608


    $ 23,796


    $ 22,135

    Professional services


    6,880


    7,650


    14,375


    16,331

    License


    4,448


    9,350


    9,075


    15,595

    Total decision management software revenues


    $ 23,249


    $ 28,608


    $ 47,246


    $ 54,061










    Total revenues:









    Transactional and maintenance


    $ 195,195


    $ 161,249


    $ 369,857


    $ 314,909

    Professional services


    46,078


    41,284


    88,704


    84,827

    License


    16,585


    25,845


    34,618


    48,242

    Total revenues


    $ 257,858


    $ 228,378


    $ 493,179


    $ 447,978

    FAIR ISAAC CORPORATION

    NON-GAAP RESULTS

    (In thousands, except per share data)

    (Unaudited)


















    Quarter Ended


    Six Months Ended


    March 31,


    March 31,


    2018


    2017


    2018


    2017









    GAAP net income

    $ 32,275


    $ 25,084


    $ 59,574


    $ 62,985

    Amortization of intangible assets

    1,684


    3,312


    3,472


    6,632

    Stock-based compensation expense

    19,238


    14,712


    35,748


    29,231

    Income tax adjustments

    (5,177)


    (5,542)


    (9,873)


    (10,529)

    Excess tax benefit

    (1,551)


    (3,602)


    (13,062)


    (20,863)

    Tax Cuts and Jobs Act

    1,665


    -


    13,420


    -

    Non-GAAP net income

    $ 48,134


    $ 33,964


    $ 89,279


    $ 67,456

















    GAAP diluted earnings per share

    $ 1.03


    $ 0.78


    $ 1.90


    $ 1.94

    Amortization of intangible assets

    0.05


    0.10


    0.11


    0.20

    Stock-based compensation expense

    0.61


    0.46


    1.14


    0.90

    Income tax adjustments

    (0.17)


    (0.17)


    (0.31)


    (0.32)

    Excess tax benefit

    (0.05)


    (0.11)


    (0.42)


    (0.64)

    Tax Cuts and Jobs Act

    0.05


    -


    0.43


    -

    Non-GAAP diluted earnings per share

    $ 1.54


    $ 1.05


    $ 2.84


    $ 2.08









    Free cash flow








    Net cash provided by operating activities

    $ 49,233


    $ 66,419


    $ 78,010


    $ 99,397

    Capital expenditures

    (7,067)


    (5,284)


    (11,111)


    (9,603)

    Dividends paid

    -


    (620)


    -


    (1,238)

    Free cash flow

    $ 42,166


    $ 60,515


    $ 66,899


    $ 88,556


    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 facilitatemanagement's internal comparisons to historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financialmeasures 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)






    Previous Fiscal 2018 Guidance


    Updated Fiscal 2018 Guidance





    GAAP net income

    $ 136


    $ 140

    Amortization of intangible assets

    7


    7

    Stock-based compensation expense

    67


    76

    Income tax adjustments

    (16)


    (21)

    Excess tax benefit

    (20)


    (20)

    Tax Cuts and Jobs Act

    17


    17

    Non-GAAP net income

    $ 191


    $ 200









    GAAP diluted earnings per share

    $ 4.34


    $ 4.47

    Amortization of intangible assets

    0.22


    0.22

    Stock-based compensation expense

    2.14


    2.44

    Income tax adjustments

    (0.52)


    (0.66)

    Excess tax benefit

    (0.64)


    (0.64)

    Tax Cuts and Jobs Act

    0.54


    0.54

    Non-GAAP diluted earnings per share

    $ 6.09


    $ 6.38


    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, andfree 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. Ourmanagement 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 thesenon-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitatemanagement's internal comparisons to historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financialmeasures 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

    Related Links

    http://www.fico.com

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