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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 10-Q
 
  (Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 1-11689  
 
 
Fair Isaac Corp oration
(Exact name of registrant as specified in its charter)
 
 
Delaware
94-1499887
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
 
 
181 Metro Drive, Suite 700
95110-1346
San Jose,
California
 
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: 408 - 535-1500
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
FICO
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes    ☒     No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☒
Accelerated filer
☐
 
 
 
 
Non-accelerated filer
☐
Smaller reporting company
☐
 
 
 
 
 
 
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
☐
Yes
☒
No
The number of shares of common stock outstanding on April 17, 2020 was 29,003,489 (excluding 59,853,294 shares held by us as treasury stock).
 


TABLE OF CONTENTS
 
 



i

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2020
 
September 30, 2019
 
(In thousands, except par value data)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
108,966

 
$
106,426

Accounts receivable, net
307,307

 
297,427

Prepaid expenses and other current assets
67,398

 
51,853

Total current assets
483,671

 
455,706

Marketable securities
19,544

 
20,222

Other investments
1,594

 
1,643

Property and equipment, net
59,491

 
53,027

Operating lease right-of-use assets
87,142

 
—

Goodwill
804,650

 
803,542

Intangible assets, net
11,177

 
14,139

Deferred income taxes
7,097

 
6,006

Other assets
77,766

 
79,163

Total assets
$
1,552,132

 
$
1,433,448

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
25,306

 
$
23,118

Accrued compensation and employee benefits
68,507

 
106,240

Other accrued liabilities
62,605

 
32,454

Deferred revenue
114,406

 
111,016

Current maturities on debt
209,000

 
218,000

Total current liabilities
479,824

 
490,828

Long-term debt
738,632

 
606,790

Operating lease liabilities
77,485

 
—

Other liabilities
42,040

 
46,063

Total liabilities
1,337,981

 
1,143,681

Commitments and contingencies

 

Stockholders’ equity:
 
 
 
Preferred stock ($0.01 par value; 1,000 shares authorized; none issued and outstanding)
—

 
—

Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and 29,082 and 28,944 shares outstanding at March 31, 2020 and September 30, 2019, respectively)
291

 
289

Additional paid-in-capital
1,169,217

 
1,225,365

Treasury stock, at cost (59,775 and 59,913 shares at March 31, 2020 and September 30, 2019, respectively)
( 2,930,165
)
 
( 2,802,450
)
Retained earnings
2,069,857

 
1,956,648

Accumulated other comprehensive loss
( 95,049
)
 
( 90,085
)
Total stockholders’ equity
214,151

 
289,767

Total liabilities and stockholders’ equity
$
1,552,132

 
$
1,433,448



See accompanying notes.

1

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

 
Quarter Ended March 31,
 
Six Months Ended March 31,
 
2020
 
2019
 
2020
 
2019
 
(In thousands, except per share data)
Revenues:
 
 
 
 
 
 
 
Transactional and maintenance
$
240,702

 
$
211,779

 
$
461,076

 
$
405,972

Professional services
47,905

 
50,555

 
91,930

 
91,363

License
19,364

 
15,900

 
53,469

 
43,155

Total revenues
307,971

 
278,234

 
606,475

 
540,490

Operating expenses:
 
 
 
 
 
 
 
Cost of revenues
88,139

 
85,568

 
178,897

 
161,634

Research and development
39,439

 
37,684

 
78,382

 
73,110

Selling, general and administrative
103,465

 
104,930

 
215,486

 
205,188

Amortization of intangible assets
1,202

 
1,503

 
2,998

 
3,005

Restructuring and acquisition-related
—

 
—

 
3,104

 
—

Total operating expenses
232,245

 
229,685

 
478,867

 
442,937

Operating income
75,726

 
48,549

 
127,608

 
97,553

Interest expense, net
( 11,254
)
 
( 10,008
)
 
( 21,022
)
 
( 19,684
)
Other income (expense), net
( 2,008
)
 
1,433

 
( 2,227
)
 
( 739
)
Income before income taxes
62,464

 
39,974

 
104,359

 
77,130

Income tax provision (benefit)
4,176

 
6,593

 
( 8,850
)
 
3,742

Net income
58,288

 
33,381

 
113,209

 
73,388

Other comprehensive gain (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments
( 19,056
)
 
2,925

 
( 4,964
)
 
( 340
)
Comprehensive income
$
39,232

 
$
36,306

 
$
108,245

 
$
73,048

Earnings per share:
 
 
 
 
 
 
 
Basic
$
2.00

 
$
1.15

 
$
3.89

 
$
2.53

Diluted
$
1.94

 
$
1.10

 
$
3.76

 
$
2.42

Shares used in computing earnings per share:
 
 
 
 
 
 
 
Basic
29,194

 
29,074

 
29,109

 
29,017

Diluted
29,985

 
30,259

 
30,076

 
30,297



See accompanying notes.


2

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 
Common Stock
 
Additional
Paid-in-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Total
Stockholders’ Equity
(In thousands) 
Shares
 
Par Value
 
 
 
 
 
Balance at December 31, 2019
29,186

 
$
292

 
$
1,148,190

 
$
( 2,843,097
)
 
$
2,011,569

 
$
( 75,993
)
 
$
240,961

Share-based compensation
—

 
—

 
22,788

 
—

 
—

 
—

 
22,788

Issuance of treasury stock under employee stock plans
186

 
2

 
( 1,761
)
 
8,930

 
—

 
—

 
7,171

Repurchases of common stock
( 290
)
 
( 3
)
 
—

 
( 95,998
)
 
—

 
—

 
( 96,001
)
Net income
—

 
—

 
—

 
—

 
58,288

 
—

 
58,288

Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
( 19,056
)
 
( 19,056
)
Balance at March 31, 2020
29,082

 
$
291

 
$
1,169,217

 
$
( 2,930,165
)
 
$
2,069,857

 
$
( 95,049
)
 
$
214,151

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Total
Stockholders’ Equity
(In thousands) 
Shares
 
Par Value
 
 
 
 
 
Balance at December 31, 2018
29,056

 
$
291

 
$
1,176,770

 
$
( 2,674,011
)
 
$
1,804,531

 
$
( 79,686
)
 
$
227,895

Share-based compensation
—

 
—

 
20,482

 
—

 
—

 
—

 
20,482

Issuance of treasury stock under employee stock plans
150

 
2

 
( 6,911
)
 
6,727

 
—

 
—

 
( 182
)
Repurchases of common stock
( 150
)
 
( 2
)
 
—

 
( 37,021
)
 
—

 
—

 
( 37,023
)
Net income
—

 
—

 
—

 
—

 
33,381

 
—

 
33,381

Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
2,925

 
2,925

Balance at March 31, 2019
29,056

 
$
291

 
$
1,190,341

 
$
( 2,704,305
)
 
$
1,837,912

 
$
( 76,761
)
 
$
247,478

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Total
Stockholders’ Equity
(In thousands) 
Shares
 
Par Value
 
 
 
 
 
Balance at September 30, 2019
28,944

 
$
289

 
$
1,225,365

 
$
( 2,802,450
)
 
$
1,956,648

 
$
( 90,085
)
 
$
289,767

Share-based compensation
—

 
—

 
45,933

 
—

 
—

 
—

 
45,933

Issuance of treasury stock under employee stock plans
596

 
6

 
( 102,081
)
 
28,291

 
—

 
—

 
( 73,784
)
Repurchases of common stock
( 458
)
 
( 4
)
 
—

 
( 156,006
)
 
—

 
—

 
( 156,010
)
Net income
—

 
—

 
—

 
—

 
113,209

 
—

 
113,209

Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
( 4,964
)
 
( 4,964
)
Balance at March 31, 2020
29,082

 
$
291

 
$
1,169,217

 
$
( 2,930,165
)
 
$
2,069,857

 
$
( 95,049
)
 
$
214,151

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Total
Stockholders’ Equity
(In thousands) 
Shares
 
Par Value
 
 
 
 
 
Balance at September 30, 2018 (As Adjusted)
29,015

 
$
290

 
$
1,211,051

 
$
( 2,612,007
)
 
$
1,764,524

 
$
( 76,421
)
 
$
287,437

Share-based compensation
—

 
—

 
42,336

 
—

 
—

 
—

 
42,336

Issuance of treasury stock under employee stock plans
616

 
6

 
( 63,046
)
 
27,420

 
—

 
—

 
( 35,620
)
Repurchases of common stock
( 575
)
 
( 5
)
 
—

 
( 119,718
)
 
—

 
—

 
( 119,723
)
Net income
—

 
—

 
—

 
—

 
73,388

 
—

 
73,388

Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
( 340
)
 
( 340
)
Balance at March 31, 2019
29,056

 
$
291

 
$
1,190,341

 
$
( 2,704,305
)
 
$
1,837,912

 
$
( 76,761
)
 
$
247,478

See accompanying notes.

3

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended March 31,
 
2020
 
2019
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
113,209

 
$
73,388

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
15,535

 
15,786

Share-based compensation
45,933

 
42,336

Deferred income taxes
( 1,213
)
 
74

Net loss on marketable securities
2,526

 
1,300

Non-cash operating lease costs
10,000

 
—

Provision for doubtful accounts, net
2,459

 
391

Net (gain) loss on sales of property and equipment
59

 
( 5
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
( 13,823
)
 
( 5,015
)
Prepaid expenses and other assets
( 19,656
)
 
( 12,219
)
Accounts payable
1,833

 
( 2,210
)
Accrued compensation and employee benefits
( 37,339
)
 
( 16,970
)
Other liabilities
( 4,659
)
 
( 2,672
)
Deferred revenue
6,995

 
2,462

Net cash provided by operating activities
121,859

 
96,646

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
( 13,166
)
 
( 10,644
)
Proceeds from sales of marketable securities
3,385

 
2,267

Purchases of marketable securities
( 5,232
)
 
( 4,396
)
Distribution from other investments
55

 
—

Net cash used in investing activities
( 14,958
)
 
( 12,773
)
Cash flows from financing activities:
 
 
 
Proceeds from revolving line of credit
156,000

 
138,000

Payments on revolving line of credit
( 377,000
)
 
( 80,000
)
Proceeds from issuance of senior notes
350,000

 
—

Payments on debt issuance costs
( 6,840
)
 
—

Payments on finance leases
( 712
)
 
—

Proceeds from issuance of treasury stock under employee stock plans
23,216

 
12,850

Taxes paid related to net share settlement of equity awards
( 97,000
)
 
( 48,470
)
Repurchases of common stock
( 148,008
)
 
( 119,723
)
Net cash used in financing activities
( 100,344
)
 
( 97,343
)
Effect of exchange rate changes on cash
( 4,017
)
 
332

Increase (decrease) in cash and cash equivalents
2,540

 
( 13,138
)
Cash and cash equivalents, beginning of period
106,426

 
90,023

Cash and cash equivalents, end of period
$
108,966

 
$
76,885

Supplemental disclosures of cash flow information:
 
 
 
Cash paid for income taxes, net of refunds
$
4,475

 
$
7,962

Cash paid for interest
$
16,181

 
$
19,686

Supplemental disclosures of non-cash investing and financing activities:
 
 
 
Purchase of property and equipment included in accounts payable
$
1,920

 
$
77

Unsettled repurchases of common stock
$
8,002

 
$
—

Finance lease obligations incurred
$
5,148

 
$
—


See accompanying notes.

4

FAIR ISAAC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Business
Fair Isaac Corporation
Incorporated under the laws of the State of Delaware, Fair Isaac Corporation (“FICO”) is a provider of analytic, software and data management products and services that enable businesses to automate, improve and connect decisions. FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, telecommunications providers, pharmaceutical companies, healthcare organizations, public agencies and organizations in other industries.
In this Quarterly Report on Form 10-Q, Fair Isaac Corporation is referred to as “FICO,” “we,” “us,” “our,” or “the Company.”
Principles of Consolidation and Basis of Presentation
We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the applicable accounting guidance. Consequently, we have not necessarily included all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our financial position and results of operations. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our audited consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 . The interim financial information contained in this report is not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year.
As discussed in New Accounting Pronouncements below and Note 13, effective October 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, “ Leases (Topic 842) ” and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, “Topic 842”) using the modified retrospective approach, under which financial results reported in prior periods were not restated.  As a result, the condensed consolidated balance sheet as of March 31, 2020 is not comparable with that as of September 30, 2019. See our Annual Report on Form 10-K filed with the SEC on November 8, 2019 for lease policies that were in effect in prior periods before adoption of Topic 842.
The condensed consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates
We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the collectability of accounts receivable; the appropriate levels of various accruals; labor hours in connection with fixed-fee service contracts; the amount of our tax provision and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates.
New Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which requires the recognition of operating lease assets and lease liabilities on the balance sheet. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Under the new standard, disclosures are required to enable users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

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In the first quarter of fiscal 2020, we adopted Topic 842 using the “Comparatives Under 840 Option” approach to transition. In accordance with the standard, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Topic 842 provided a package of practical expedients that allow an entity to not reassess (1) whether any expired or existing contracts contain a lease, (2) the lease classification of any expired or existing lease, and (3) initial direct costs for any existing leases. We elected to apply the package of practical expedients, and did not elect the hindsight practical expedient in determining the lease term for existing leases as of October 1, 2019.
Adoption of Topic 842 did not result in the recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The most significant impact of adoption was the recognition of operating lease assets and operating lease liabilities of $ 89.8 million and $ 98.9 million , respectively, while our accounting for existing capital leases (now referred to as finance leases) remained substantially unchanged. We expect the impact of adoption to be immaterial to our consolidated statements of income and comprehensive income and consolidated statements of cash flows on an ongoing basis. As part of our adoption, we also modified our control procedures and processes, none of which materially affected our internal control over financial reporting. See Note 13 for additional information regarding our accounting policy for leases and additional disclosures.
Recent Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-15, “ Intangibles—Goodwill and Other (Topic 350): Internal-Use Software ” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, which means that it will be effective for our fiscal year beginning October 1, 2020. Early adoption is permitted. We do not believe that adoption of ASU 2018-15 will have a significant impact on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ” and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-11 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, which means it will be effective for our fiscal year beginning October 1, 2020. Early adoption is permitted. We do not believe that adoption of Topic 326 will have a significant impact on our consolidated financial statements.
We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements.
2. Fair Value Measurements
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
 
•
Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. Our Level 1 assets are comprised of money market funds and certain marketable securities. We do not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2020 and September 30, 2019 .
•
Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. We do not have any assets that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2020 and September 30, 2019 . We measure the fair value of the Senior Notes (as defined in Note 7) based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities.

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•
Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. We do not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2020 and September 30, 2019 .
The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2020 and September 30, 2019 :
March 31, 2020
Active Markets for
Identical Instruments
(Level 1)
 
Fair Value as of March 31, 2020
 
(In thousands)
Assets:
 
 
 
Cash equivalents (1)
$
25,166

 
$
25,166

Marketable securities (2)
19,544

 
19,544

Total
$
44,710

 
$
44,710

 
 
 
 
September 30, 2019
Active Markets for
Identical Instruments
(Level 1)
 
Fair Value as of September 30, 2019
 
(In thousands)
Assets:
 
 
 
Cash equivalents (1)
$
28,901

 
$
28,901

Marketable securities (2)
20,222

 
20,222

Total
$
49,123

 
$
49,123

(1)
Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2020 and September 30, 2019 . Not included in these tables are cash deposits of $ 83.8 million and $ 77.5 million at March 31, 2020 and September 30, 2019 , respectively.
(2)
Represents securities held under a supplemental retirement and savings plan for senior management employees, which are distributed upon termination or retirement of the employees. Included in marketable securities on our condensed consolidated balance sheets at March 31, 2020 and September 30, 2019 .
For the fair value of our derivative instruments and senior notes, see Note 3 and Note 7, respectively.
There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and six-month periods ended March 31, 2020 and 2019 .
3. Derivative Financial Instruments
We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their respective functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore dollar.
Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months .

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The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2020 and September 30, 2019 :
 
March 31, 2020
 
Contract Amount
 
Fair Value
 
Foreign
Currency
 
USD
 
USD
 
(In thousands)
Sell foreign currency:
 
 
 
 
 
 
Euro (EUR)
EUR 
10,000

 
$
11,004

 
$
—

Buy foreign currency:
 
 
 
 
 
 
British pound (GBP)
GBP 
21,781

 
$
27,000

 
$
—

S