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FICO Announces Earnings of $1.64 per Share for Fourth Quarter Fiscal 2018

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FICO Announces Earnings of $1.64 per Share for Fourth Quarter Fiscal 2018

Revenues of $280 million vs. $253 million in prior year

PR Newswire

SAN JOSE, Calif., Nov. 1, 2018 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its fourth fiscal quarter ended September 30, 2018.

FICO Corporate logo. (PRNewsFoto/FICO)

Fourth Quarter Fiscal 2018 GAAP Results
Net income for the quarter totaled $50.5 million, or $1.64 per share, versus $40.0 million, or $1.25 per share, reported in the prior year period.

The current quarter net income includes a pretax non-operating gain of $10.0 million, or $0.23 per share after tax, related to the divestiture of a minority interest investment. In addition, the company recorded an additional charge of $6.8 million, or $0.22 per share, related to the Tax Cuts and Jobs Act.  The charge encompasses the impact of recently issued tax reform guidance.   

Net cash provided by operating activities for the quarter was $60.0 million versus $54.2 million in the prior year period.

Fourth Quarter Fiscal 2018 Non-GAAP Results
Non-GAAP Net Income for the quarter was $57.9 million versus $52.7 million in the prior year period. Non-GAAP EPS for the quarter was $1.89 versus $1.65 in the prior year period. Free cash flow for the quarter was $52.9 million versus $49.2 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.

Fourth Quarter Fiscal 2018 GAAP Revenues
The company reported revenues of $279.8 million for the quarter as compared to $253.2 million reported in the prior year period. 

"We had a strong finish to our best year ever," said Will Lansing, chief executive officer. "We delivered double-digit revenue and earnings growth, and are expanding our recurring cloud revenue."

Revenues for the fourth 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 $155.9 million in the fourth quarter, compared to $150.3 million in the prior year quarter, up 4% from the prior year, primarily due to increased transactional revenue in Customer Communication Services and Customer Management Solutions; as well as increased license sales in Banking Fraud Solutions.
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, as well as its business-to-consumer (B2C) service, were $92.7 million in the fourth quarter, compared to $72.0 million in the prior year quarter, an increase of 29%. B2B revenue increased 38% and B2C revenue increased 12% from the prior year quarter.
  • Decision Management Software revenues, which include Blaze Advisor®, Xpress Optimization and related professional services, were $31.2 million in the fourth quarter, flat with the prior year quarter.

Outlook 
The company is providing guidance for fiscal 2019 of approximately:


Fiscal 2019 Guidance*

Revenues

$1.125 billion

GAAP Net Income

$168 million

GAAP EPS

$5.53

Non GAAP Net Income

$209 million

Non GAAP EPS

$6.88

 

 

 

* Fiscal 2019 Guidance includes excess tax benefits associated with stock compensation of $25.0 million, or $0.82 per share.

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 fourth 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 November 1, 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)














September 30,


September 30,


2018


2017

ASSETS:




Current assets:




     Cash and cash equivalents

$                90,023


$                  105,618

     Accounts receivable, net

208,865


168,586

     Prepaid expenses and other current assets

39,624


36,727

          Total current assets

338,512


310,931





Marketable securities and investments

19,756


25,515

Property and equipment, net

48,837


40,703

Goodwill and intangible assets, net

815,426


825,599

Other assets

32,548


52,872


$            1,255,079


$               1,255,620





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                50,708


$                    51,614

     Accrued compensation and employee benefits

84,292


77,610

     Deferred revenue

52,215


55,431

     Current maturities on debt

235,000


142,000

          Total current liabilities

422,215


326,655





Long-term debt

528,944


462,801

Other liabilities

40,183


39,627

          Total liabilities

991,342


829,083





Stockholders' equity

263,737


426,537


$            1,255,079


$               1,255,620

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Year Ended


September 30,


September 30,


2018


2017


2018


2017









Revenues:








     Transactional and maintenance

$            200,711


$         171,056


$ 766,059


$       652,660

     Professional services

44,891


50,871


176,804


179,569

     License

34,189


31,278


89,612


99,940

        Total revenues

279,791


253,205


1,032,475


932,169









Operating expenses:








     Cost of revenues

79,431


75,202


310,699


287,123

     Research & development

34,407


30,226


128,383


110,870

     Selling, general and administrative

94,324


84,262


380,362


339,796

     Amortization of intangible assets

1,551


2,712


6,594


12,709

     Restructuring and acquisition-related

-


-


-


4,471

        Total operating expenses

209,713


192,402


826,038


754,969

Operating income

70,078


60,803


206,437


177,200

Other expense, net

1,432


(6,601)


(18,427)


(25,876)

Income before income taxes

71,510


54,202


188,010


151,324

Provision for income taxes

21,030


14,158


45,595


23,068

Net income

$             50,480


$           40,044


$ 142,415


$       128,256

























Basic earnings per share:

$                 1.74


$              1.31


$      4.79


$            4.16

Diluted earnings per share:

$                 1.64


$              1.25


$      4.57


$            3.98









Shares used in computing earnings per share:








     Basic

29,077


30,534


29,711


30,862

     Diluted

30,702


31,963


31,180


32,245

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)










 Year Ended 


 September 30, 


2018


2017

Cash flows from operating activities:




 Net income 

$           142,415


$            128,256

 Adjustments to reconcile net income to net cash provided by  




   operating activities: 




       Depreciation and amortization 

30,182


36,214

       Share-based compensation 

74,814


61,222

       Changes in operating assets and liabilities 

(39,493)


4,347

       Other, net 

15,134


(4,395)

          Net cash provided by operating activities 

223,052


225,644





 Cash flows from investing activities: 




 Purchases of property and equipment 

(31,299)


(19,828)

 Net activity from marketable securities 

(2,820)


-

 Other, net 

20,000


(777)

          Net cash used in investing activities 

(14,119)


(20,605)





 Cash flows from financing activities: 




 Proceeds from revolving line of credit 

427,000


190,000

 Payments on revolving line of credit 

(531,000)


(84,000)

 Proceeds from issuance of senior notes 

400,000


-

 Payment on senior notes 

(131,000)


(72,000)

 Proceeds from issuances of common stock 

11,023


14,474

 Taxes paid related to net share settlement of equity awards 

(44,205)


(40,232)

 Repurchases of common stock 

(342,596)


(187,629)

 Other, net 

(7,849)


(1,238)

          Net cash used in financing activities 

(218,627)


(180,625)





 Effect of exchange rate changes on cash 

(5,901)


5,278





 Increase (decrease) in cash and cash equivalents 

(15,595)


29,692

 Cash and cash equivalents, beginning of year 

105,618


75,926

 Cash and cash equivalents, end of year 

$             90,023


$            105,618

 

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)























Quarter Ended 



Year Ended



September 30,



September 30,



2018


2017



2018


2017











Applications revenues:










     Transactional and maintenance


$  96,668


$  90,524



$   381,109


$ 348,861

     Professional services


35,366


38,886



142,908


141,857

     License


23,811


20,873



61,554


62,449

          Total Applications revenues


$ 155,845


$ 150,283



$   585,571


$ 553,167











Scores revenues:










     Transactional and maintenance


$  91,596


$  69,524



$   337,530


$ 259,780

     Professional services


286


847



1,751


2,849

     License


836


1,654



3,367


3,725

          Total Scores revenues


$  92,718


$  72,025



$   342,648


$ 266,354











Decision Management Software revenues:










     Transactional and maintenance


$  12,447


$  11,008



$     47,420


$  44,019

     Professional services


9,239


11,138



32,145


34,863

     License


9,542


8,751



24,691


33,766

          Total Decision Management Software revenues


$  31,228


$  30,897



$   104,256


$ 112,648











Total revenues:










     Transactional and maintenance


$ 200,711


$ 171,056



$   766,059


$ 652,660

     Professional services


44,891


50,871



176,804


179,569

     License


34,189


31,278



89,612


99,940

          Total revenues


$ 279,791


$ 253,205



$ 1,032,475


$ 932,169

 

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Year Ended


September 30,


September 30,


2018


2017


2018


2017









GAAP net income

$ 50,480


$ 40,044


$ 142,415


$ 128,256

Amortization of intangible assets

1,551


2,712


6,594


12,709

Restructuring and acquisition-related

-


-


-


4,471

Stock-based compensation expense

20,183


17,676


74,813


61,222

Realized gain on cost-method investment

(10,000)


-


(10,000)


-

Income tax adjustments

(3,503)


(6,515)


(18,860)


(24,316)

Excess tax benefit

(7,556)


(1,198)


(22,253)


(24,746)

Tax Cuts and Jobs Act

6,774


-


21,614


-

Non-GAAP net income

$ 57,929


$ 52,719


$ 194,323


$ 157,596

















GAAP diluted earnings per share

$    1.64


$    1.25


$      4.57


$      3.98

Amortization of intangible assets

0.05


0.08


0.21


0.39

Restructuring and acquisition-related

-


-


-


0.14

Stock-based compensation expense

0.66


0.55


2.40


1.90

Realized gain on cost-method investment

(0.33)


-


(0.32)


-

Income tax adjustments

(0.11)


(0.20)


(0.60)


(0.75)

Excess tax benefit

(0.25)


(0.04)


(0.71)


(0.77)

Tax Cuts and Jobs Act

0.22


-


0.69


-

Non-GAAP diluted earnings per share

$    1.89


$    1.65


$      6.23


$      4.89









Free cash flow








Net cash provided by operating activities

$ 59,963


$ 54,221


$ 223,052


$ 225,644

Capital expenditures

(7,079)


(5,036)


(31,299)


(19,828)

Dividends paid

-


-


-


(1,238)

Free cash flow

$ 52,884


$ 49,185


$ 191,753


$ 204,578









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.

 

FAIR ISAAC CORPORATION

RECONCILIATION OF NON-GAAP GUIDANCE

(In millions, except per share data)

(Unaudited)




Fiscal 2019 Guidance



GAAP net income

$                          168

Amortization of intangible assets

6

Stock-based compensation expense

85

Income tax adjustments

(25)

Excess tax benefit

(25)

Non-GAAP net income

$                          209





GAAP diluted earnings per share

$                         5.53

Amortization of intangible assets

0.20

Stock-based compensation expense

2.79

Income tax adjustments

(0.81)

Excess tax benefit

(0.82)

Non-GAAP diluted earnings per share

$                         6.88





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.

 

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SOURCE FICO

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