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FICO Announces Earnings of $0.58 per Share for Third Quarter Fiscal 2014 - WCAX.COM Local Vermont News, Weather and Sports-

FICO Announces Earnings of $0.58 per Share for Third Quarter Fiscal 2014

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SOURCE FICO

Revenue of $198 million vs. $184 million in prior year

SAN JOSE, Calif., July 24, 2014 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its third fiscal quarter ended June 30, 2014.

FICO Corporate logo

Third Quarter Fiscal 2014 GAAP Results
Net income for the quarter totaled $20.5 million, or $0.58 per share, versus $19.6 million, or $0.54 per share, reported in the prior year period.

Third Quarter Fiscal 2014 Non-GAAP Results
Non-GAAP Net Income for the quarter was $29.2 million vs. $29.3 million in the prior year period. Non-GAAP EPS for the quarter was $0.83 vs. $0.80 in the prior year period. Free cash flow for the quarter was $25.3 million vs. $27.2 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 2014 GAAP Revenue
The company reported revenues of $197.6 million for the quarter as compared to $183.8 million reported in the prior year period, an increase of 8%. 

"Our year-over-year revenues increased throughout our Applications business lines, as we drove solid growth in license sales and services revenue," said Will Lansing, chief executive officer. "We continue to use our strong cash flows to fund our long-term strategic initiatives and fund our share repurchase plan."

Revenues for the third quarter fiscal 2014 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 $129.9 million in the third quarter compared to $115.0 million in the prior year quarter, an increase of 13%. This was due to increased license and services revenue in Banking Fraud, Marketing and Originations Solutions and an increase in transactional revenue in Mobility.          
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and the myFICO® business-to-consumer (B2C) service, were $45.3 million in the third quarter compared to $47.2 million in the prior year quarter, a decrease of 4%The B2C revenue increased 6% while the B2B revenue decreased 7% from the prior year quarter.
  • Tools revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $22.4 million in the third quarter compared to $21.6 million in the prior year quarter, an increase of 4%, due to increased license and services revenue of Blaze Advisor.

Outlook 
The company is updating its previously provided guidance for fiscal 2014, which follows:


New Fiscal 2014

Guidance

Previous Fiscal 2014 Guidance

Revenue

$773 million - $776 million

$763 million -  $773 million

GAAP Net Income

$88 million - $90 million

$91 million - $94 million

GAAP Earnings Per Share

$2.53 - $2.60

$2.50-$2.60

Non-GAAP Net Income

$122 million - $124 million

$125 million - $128 million

Non-GAAP Earnings

Per Share

$3.51 - $3.56

$3.46-$3.56

The Non-GAAP financial measures are described in the financial table captioned "Non-GAAP Results".

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 2014 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 through July 24, 2015.

The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. The webcast can be accessed via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

About FICO
FICO (NYSE:FICO) delivers superior predictive analytics that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the FICO® Score - the standard measure of consumer credit risk in the United States - along with the industry-leading solutions for managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharma businesses and government agencies rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. FICO also helps millions of individuals manage their personal credit health through www.myFICO.com. Learn more at www.fico.com. FICO: Make every decision count.  

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 realize the anticipated benefits of any acquisitions, continuing 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, 2013 and Form 10-Q for the quarter ended March 31, 2014. 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,


2014


2013

ASSETS:




Current assets:




     Cash and cash equivalents

$                  93,109


$                 83,178

     Accounts receivable, net

155,495


143,733

     Prepaid expenses and other current assets

24,691


22,277

          Total current assets

273,295


249,188





Marketable securities and investments

19,722


18,140

Property and equipment, net

37,280


45,155

Goodwill and intangible assets, net

839,262


831,292

Other assets

16,188


17,772


$             1,185,747


$            1,161,547





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                  62,519


$                 54,418

     Accrued compensation and employee benefits

42,634


39,281

     Deferred revenue

53,849


49,181

     Current maturities on debt

154,000


23,000

          Total current liabilities

313,002


165,880





Senior notes

376,000


447,000

Other liabilities

17,571


17,990

          Total liabilities

706,573


630,870





Stockholders' equity

479,174


530,677


$             1,185,747


$            1,161,547





 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Nine Months Ended


June 30,


June 30,


2014


2013


2014


2013









Revenues:








     Transactional and maintenance

$                132,254


$           129,422


$ 394,278


$           385,759

     Professional services

38,522


32,306


107,427


98,752

     License

26,834


22,044


65,710


68,606

        Total revenues

197,610


183,772


567,415


553,117









Operating expenses:








     Cost of revenues

62,752


57,655


178,254


172,659

     Research & development

23,240


18,570


61,022


49,143

     Selling, general and administrative

71,557


68,665


204,490


205,968

     Amortization of intangible assets

3,019


3,477


8,940


10,453

     Restructuring and acquisition-related

621


197


4,281


3,486


161,189


148,564


456,987


441,709

Operating income

36,421


35,208


110,428


111,408

Other expense, net

(6,120)


(6,587)


(21,657)


(22,357)

Income before income taxes

30,301


28,621


88,771


89,051

Provision for income taxes

9,753


8,999


30,495


27,513

Net income

$                  20,548


$             19,622


$   58,276


$             61,538

























Basic earnings per share:

$                     0.60


$                 0.55


$       1.69


$                 1.74

Diluted earnings per share:

$                      0.58


$                 0.54


$       1.65


$                 1.69









Shares used in computing earnings per share:








     Basic

34,210


35,499


34,458


35,400

     Diluted

35,162


36,385


35,420


36,340









 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)














 Nine Months Ended 


 June 30, 


2014


2013

Cash flows from operating activities:




Net income

$        58,276


$                 61,538

Adjustments to reconcile net income to net cash provided by 




  operating activities:




      Depreciation and amortization

24,196


25,161

      Share-based compensation

25,631


18,897

      Changes in operating assets and liabilities

2,375


2,230

      Other, net

(6,665)


(7,649)

         Net cash provided by operating activities

103,813


100,177





Cash flows from investing activities:




Purchases of property and equipment

(7,088)


(20,435)

Net activity from marketable securities

-


22,000

Cash paid for acquisitions, net of cash acquired

(7,253)


(32,874)

Other, net

-


50

         Net cash used in investing activities

(14,341)


(31,259)





Cash flows from financing activities:




Proceeds from revolving line of credit

96,000


30,000

Payments on revolving line of credit and other short-term loans

(28,000)


(3,676)

Payment on Senior Notes

(8,000)


(49,000)

Proceeds from issuances of common stock

7,251


23,790

Repurchases of common stock

(152,329)


(47,811)

Other, net

3,860


2,950

         Net cash used in financing activities

(81,218)


(43,747)





Effect of exchange rate changes on cash

1,677


(3,761)





Increase in cash and cash equivalents

9,931


21,410

Cash and cash equivalents, beginning of period

83,178


71,609

Cash and cash equivalents, end of period

$        93,109


$                 93,019





 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)























Quarter Ended 



Nine Months Ended



June 30,



June 30,



2014


2013



2014


2013











Applications revenues:










     Transactional and maintenance


$   78,915


$   75,537



$ 233,592


$ 231,174

     Professional services


31,898


26,230



87,058


79,704

     License


19,043


13,216



36,732


46,027

          Total applications revenues


$ 129,856


$ 114,983



$ 357,382


$ 356,905











Scores revenues:










     Transactional and maintenance


$   44,077


$   45,915



$ 133,955


$ 130,558

     Professional services


801


806



2,167


3,333

     License


452


431



4,246


770

          Total scores revenues


$   45,330


$   47,152



$ 140,368


$ 134,661











Tools revenues:










     Transactional and maintenance


$     9,262


$     7,970



$   26,731


$   24,027

     Professional services


5,823


5,270



18,202


15,715

     License


7,339


8,397



24,732


21,809

          Total tools revenues


$   22,424


$   21,637



$   69,665


$   61,551











Total revenues:










     Transactional and maintenance


$ 132,254


$ 129,422



$ 394,278


$ 385,759

     Professional services


38,522


32,306



107,427


98,752

     License


26,834


22,044



65,710


68,606

          Total revenues


$ 197,610


$ 183,772



$ 567,415


$ 553,117











 

FAIR ISAAC CORPORATION


NON-GAAP RESULTS


(In thousands, except per share data)


(Unaudited)





















Quarter Ended 


Nine Months Ended



June 30,


June 30,



2014


2013


2014


2013











GAAP net income

$ 20,548


$ 19,622


$   58,276


$   61,538


Amortization of intangible assets (net of tax)

2,022


2,413


5,948


7,145


Restructuring and acquisition-related (net of tax)

416


137


2,840


2,346


Stock-based compensation expense (net of tax)

6,260


4,615


17,060


12,921


Adjustment to tax valuation allowance

-


2,474


-


2,474


Non-GAAP net income

$ 29,246


$ 29,261


$   84,124


$   86,424




















GAAP diluted earnings per share

$     0.58


$     0.54


$       1.65


$       1.69


Amortization of intangible assets (net of tax)

0.06


0.07


0.17


0.20


Restructuring and acquisition-related (net of tax)

0.01


0.00


0.08


0.06


Stock-based compensation expense (net of tax)

0.18


0.13


0.48


0.36


Adjustment to tax valuation allowance

-


0.07


-


0.07


Non-GAAP diluted earnings per share

$     0.83


$     0.80


$       2.38


$       2.38











Free cash flow









Net cash provided by operating activities

$ 28,725


$ 31,224


$ 103,813


$ 100,177


Capital expenditures

(2,791)


(3,312)


(7,088)


(20,434)


Dividends paid

(683)


(706)


(2,072)


(2,123)


Free cash flow

$ 25,251


$ 27,206


$   94,653


$   77,620











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.

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