fico-8k_20200729.htm
false 0000814547 0000814547 2020-07-29 2020-07-29

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)   July 29, 2020

 

FAIR ISAAC CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

1-11689

94-1499887

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

181 Metro Drive, Suite 700

San Jose, California

 

95110-1346

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code         408-535-1500

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405 of this chapter) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b‑2 of this chapter).

 

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.

 

 

 

 


 

TABLE OF CONTENTS

 

Item 2.02.

 

Results of Operations and Financial Condition

1

 

 

 

 

Item 9.01.

 

Financial Statements and Exhibits.

1

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

 

Signature

2

 

 

 

i


 

Item 2.02.

Results of Operations and Financial Condition.

 

On July 29, 2020, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter ended June 30, 2020. See the Company’s press release dated July 29, 2020, which is furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 2.02.  

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)Exhibits.

 

Exhibit

 

Description

 

 

 

99.1

 

Press Release dated July 29, 2020

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

1


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

FAIR ISAAC CORPORATION

 

 

 

 

By

/s/ MICHAEL I. MCLAUGHLIN

 

 

Michael I. McLaughlin

 

 

Executive Vice President and Chief Financial

 

 

Officer

 

Date:  July 29, 2020

2

Exhibit 99.1

FICO Announces Earnings of $2.15 per Share for Third Quarter Fiscal 2020



Revenue of $314 million vs. $314 million in prior year

SAN JOSE, Calif., July 29, 2020 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its third fiscal quarter ended June 30, 2020.

Third Quarter Fiscal 2020 GAAP Results
Net income for the quarter totaled $64.1 million, or $2.15 per share, versus $64.2 million, or $2.12 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $106.9 million versus $68.3 million in the prior year period.

Third Quarter Fiscal 2020 Non-GAAP Results
Non-GAAP Net Income for the quarter was $76.7 million versus $75.6 million in the prior year period. Non-GAAP EPS for the quarter was $2.58 versus $2.50 in the prior year period. Free cash flow for the quarter was $99.0 million versus $60.8 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 2020 GAAP Revenue
The company reported revenues of $313.7 million for the quarter as compared to $314.2 million reported in the prior year period.

"I am pleased to report we posted a very solid quarter, which again shows the resiliency of our business even in these uncertain times," said Will Lansing, chief executive officer. "We continued to perform well in all parts of our business, and delivered record cash flow."

Revenues for the third quarter of fiscal 2020 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 $141.5 million in the third quarter, compared to $165.6 million in the prior year period, a decrease of 15%, due primarily to decreased license sales in our Falcon Fraud product.
  • Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $131.6 million in the third quarter, compared to $115.1 million in the prior year period, an increase of 14%. B2B revenue increased 12% and B2C revenue increased 21% from the prior year period.
  • Decision Management Software revenues, which include Blaze Advisor®, Xpress Optimization, Decision Management Platform and related professional services, were $40.7 million in the third quarter, compared to $33.5 million in the prior year period, an increase of 22%, due primarily to SaaS subscription revenues.

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 2020 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 Events Page under Past Events through July 29, 2021.

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 impact of COVID-19 on macroeconomic conditions and the Company's business, operations and personnel, 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, 2019 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)














June 30,


September 30,


2020


2019

ASSETS:




Current assets:




     Cash and cash equivalents

$              125,673


$              106,426

     Accounts receivable, net

303,558


297,427

     Prepaid expenses and other current assets

53,780


51,853

          Total current assets

483,011


455,706





Marketable securities and investments

25,136


21,865

Property and equipment, net

60,336


53,027

Operating lease right-of-use-assets

84,106


-

Goodwill and intangible assets, net

814,647


817,681

Other assets

96,884


85,169


$           1,564,120


$           1,433,448





LIABILITIES AND STOCKHOLDERS' EQUITY:




Current liabilities:




     Accounts payable and other accrued liabilities

$                70,680


$                55,572

     Accrued compensation and employee benefits

95,674


106,240

     Deferred revenue

105,833


111,016

     Current maturities on debt

188,000


218,000

          Total current liabilities

460,187


490,828





Long-term debt

739,039


606,790

Operating lease liabilities

74,000


-

Other liabilities

43,608


46,063

          Total liabilities

1,316,834


1,143,681





Stockholders' equity

247,286


289,767


$           1,564,120


$           1,433,448

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Nine Months Ended


June 30,


June 30,


2020


2019


2020


2019

Revenues:








     Transactional and maintenance

$         246,829


$         226,040


$         707,905


$         632,012

     Professional services

43,633


44,594


135,563


135,957

     License

23,269


43,615


76,738


86,770

        Total revenues

313,731


314,249


920,206


854,739









Operating expenses:








     Cost of revenues

88,569


87,215


267,466


248,849

     Research & development

41,411


36,972


119,793


110,082

     Selling, general and administrative

99,832


102,906


315,318


308,094

     Amortization of intangible assets

1,048


1,448


4,046


4,453

     Restructuring and acquisition-related

-


-


3,104


-

        Total operating expenses

230,860


228,541


709,727


671,478

Operating income

82,871


85,708


210,479


183,261

Other expense, net

(6,663)


(7,654)


(29,912)


(28,077)

Income before income taxes

76,208


78,054


180,567


155,184

Provision for income taxes

12,132


13,902


3,282


17,644

Net income

$           64,076


$           64,152


$         177,285


$         137,540

























Basic earnings per share:

$               2.21


$               2.21


$               6.10


$               4.74

Diluted earnings per share:

$               2.15


$               2.12


$               5.92


$               4.54









Shares used in computing earnings per share:








     Basic

29,005


28,967


29,075


29,000

     Diluted

29,744


30,292


29,966


30,295

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)










Nine Months Ended


 June 30, 


2020


2019

Cash flows from operating activities:




 Net income 

$              177,285


$              137,540

 Adjustments to reconcile net income to net cash provided by  




   operating activities: 




       Depreciation and amortization 

23,549


23,734

       Share-based compensation 

68,197


61,931

       Changes in operating assets and liabilities 

(55,873)


(59,682)

       Other, net 

15,572


1,413

          Net cash provided by operating activities 

228,730


164,936





 Cash flows from investing activities: 




 Purchases of property and equipment 

(21,073)


(18,170)

 Net activity from marketable securities 

(2,328)


(2,630)

 Other, net 

55


-

          Net cash used in investing activities 

(23,346)


(20,800)





 Cash flows from financing activities: 




 Proceeds from revolving line of credit 

193,000


167,000

 Payments on revolving line of credit 

(435,000)


(109,000)

 Proceeds from issuance of senior notes 

350,000


-

 Proceeds from issuances of common stock 

26,235


16,073

 Taxes paid related to net share settlement of equity awards 

(100,067)


(51,208)

 Repurchases of common stock 

(210,000)


(178,926)

 Other, net 

(7,651)


-

          Net cash used in financing activities 

(183,483)


(156,061)





 Effect of exchange rate changes on cash 

(2,654)


710





 Increase (decrease) in cash and cash equivalents 

19,247


(11,215)

 Cash and cash equivalents, beginning of period 

106,426


90,023

 Cash and cash equivalents, end of period 

$              125,673


$                78,808

FAIR ISAAC CORPORATION

REVENUE BY SEGMENT

(In thousands)

(Unaudited)























Quarter Ended 



Nine Months Ended



June 30,



June 30,



2020


2019



2020


2019











Applications revenues:










     Transactional and maintenance


$        98,476


$      100,385



$      295,102


$      294,624

     Professional services


32,364


33,989



101,521


101,432

     License


10,620


31,263



37,294


59,055

          Total applications revenues


$      141,460


$      165,637



$      433,917


$      455,111











Scores revenues:










     Transactional and maintenance


$      130,268


$      112,949



$      365,324


$      300,133

     Professional services


58


392



1,141


1,994

     License


1,224


1,805



9,371


3,105

          Total scores revenues


$      131,550


$      115,146



$      375,836


$      305,232











Decision Management Software revenues:










     Transactional and maintenance


$        18,085


$        12,706



$        47,479


$        37,255

     Professional services


11,211


10,213



32,901


32,531

     License


11,425


10,547



30,073


24,610

          Total decision management software revenues


$        40,721


$        33,466



$      110,453


$        94,396











Total revenues:










     Transactional and maintenance


$      246,829


$      226,040



$      707,905


$      632,012

     Professional services


43,633


44,594



135,563


135,957

     License


23,269


43,615



76,738


86,770

          Total revenues


$      313,731


$      314,249



$      920,206


$      854,739

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(In thousands, except per share data)

(Unaudited)


















Quarter Ended 


Nine Months Ended


June 30,


June 30,


2020


2019


2020


2019









GAAP net income

$   64,076


$ 64,152


$ 177,285


$ 137,540

Amortization of intangible assets

1,048


1,448


4,046


4,453

Restructuring and acquisition-related

-


-


3,104


-

Stock-based compensation expense

22,265


19,595


68,198


61,931

Income tax adjustments

(5,739)


(5,290)


(18,546)


(17,103)

Excess tax benefit

(4,902)


(4,289)


(38,845)


(20,023)

Non-GAAP net income

$   76,748


$ 75,616


$ 195,242


$ 166,798

















GAAP diluted earnings per share

$       2.15


$     2.12


$       5.92


$       4.54

Amortization of intangible assets

0.04


0.05


0.14


0.15

Restructuring and acquisition-related

-


-


0.10


-

Stock-based compensation expense

0.75


0.65


2.28


2.04

Income tax adjustments

(0.19)


(0.17)


(0.62)


(0.56)

Excess tax benefit

(0.16)


(0.14)


(1.30)


(0.66)

Non-GAAP diluted earnings per share

$       2.58


$     2.50


$       6.52


$       5.51









Free cash flow








Net cash provided by operating activities

$ 106,871


$ 68,290


$ 228,730


$ 164,936

Capital expenditures

(7,907)


(7,526)


(21,074)


(18,170)

Free cash flow

$   98,964


$ 60,764


$ 207,656


$ 146,766









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.



CONTACT: Investors/Analysts: Steve Weber, (800) 213-5542, investor@fico.com; Media: Greg Jawski, Porter Novelli, (212) 601-8248, greg.jawski@porternovelli.com