UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  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) April 27, 2022


FAIR ISAAC CORPORATION
(Exact name of registrant as specified in its charter)


Delaware
001-11689
94-1499887
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

5 West Mendenhall, Suite 105
Bozeman, Montana
 
 
59715
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code         406-982-7276


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 of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 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.
Item 9.01.
Financial Statements and Exhibits.

Exhibit 99.1
Signature
 


Item 2.02.
Results of Operations and Financial Condition.

On April 27, 2022, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter ended March 31, 2022. See the Company’s press release dated April 27, 2022, 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
   
   
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)


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:  April 27, 2022



Exhibit 99.1

FICO Announces Earnings of $3.95 per Share for Second Quarter Fiscal 2022

Revenue of $357 million vs. $331 million in prior year

BOZEMAN, Mont.--(BUSINESS WIRE)--April 27, 2022--FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2022.

Second Quarter Fiscal 2022 GAAP Results

Net income for the quarter totaled $104.4 million, or $3.95 per share, versus $68.7 million, or $2.33 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $122.6 million versus $153.5 million in the prior year period.

Second Quarter Fiscal 2022 Non-GAAP Results

Non-GAAP Net Income for the quarter was $123.7 million versus $90.2 million in the prior year period. Non-GAAP EPS for the quarter was $4.68 versus $3.06 in the prior year period. Free cash flow was $120.2 million for the current quarter versus $152.3 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 2022 GAAP Revenue

The company reported revenues of $357.2 million for the quarter as compared to $331.4 million reported in the prior year period.

“We continue to deliver strong results in an uncertain economic environment,” said Will Lansing, chief executive officer. “We’re delivering strong top-line growth, and our focus on efficiency has enabled us to deliver expanded margins.”


Revenues for the second quarter of fiscal 2022 across the company’s two operating segments were as follows:

  • Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions, were $183.7 million in the second quarter, compared to $168.7 million in the prior year period, an increase of 9%. B2B revenue increased 5%, driven largely by unit price increases and increases in unsecured Originations volumes, partially offset by decreases in Mortgage Origination volumes. B2C revenue increased 18% from the prior year period due to growth at myFICO.com, as well as through our partners.
  • Software revenues, which include the company’s analytics and digital decisioning technology, as well as associated professional services, were $173.5 million in the second quarter, compared to $162.6 million in the prior year period, an increase of 7%, primarily attributable to an increase in point-in-time recognition due to a large license deal, partially offset by the sale of the Debt Collections and Recovery product line in June 2021.
    • Year-over-year, Software Annual Recurring Revenue (ARR) was up 11%, consisting of 60% platform ARR growth and 4% non-platform ARR growth. Software Dollar-Based Net Retention Rate was 110% in the second quarter, with platform solutions at 141% and non-platform solutions at 103%.

Outlook

The company is updating its previously provided guidance for fiscal 2022:

 

Previous Fiscal 2022 Guidance

Updated Fiscal 2022 Guidance

Revenues

$1.35 billion

$1.355 billion

GAAP Net Income

$318 million

$350 million

GAAP EPS

$11.29

$13.11

Non GAAP Net Income

$397 million

$429 million

Non GAAP EPS

$14.12

$16.08

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 2022 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 27, 2023.


About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, 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 FICO’s business, operations and personnel, the success of the Company’s business 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, the effects of, and any changes in, laws and regulations applicable to the Company's business or its customers, the failure to protect data privacy and security, the failure to realize the anticipated benefits of any acquisitions or divestitures, and material adverse developments in global economic conditions or in the markets we serve. Additional information on these risks and uncertainties and other factors that could affect FICO's future results are described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2021 and its subsequent filings with the SEC. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. FICO disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.


FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)



 



 



 

March 31,
September 30,

 

2022

 


 

2021

 

ASSETS:


Current assets:


Cash and cash equivalents

$

174,219

 


$

195,354

 

Accounts receivable, net

 

273,356

 


 

312,107

 

Prepaid expenses and other current assets

 

34,634

 


 

43,513

 

Total current assets

 

482,209

 


 

550,974

 




 
Marketable securities and investments

 

32,592

 


 

33,196

 

Property and equipment, net

 

22,897

 


 

27,913

 

Operating lease right-of-use-assets

 

43,256

 


 

47,275

 

Goodwill and intangible assets, net

 

786,751

 


 

792,284

 

Other assets

 

118,780

 


 

116,134

 


$

1,486,485

 


$

1,567,776

 




 
LIABILITIES AND STOCKHOLDERS' DEFICIT:


Current liabilities:


Accounts payable and other accrued liabilities

$

88,456

 


$

100,284

 

Accrued compensation and employee benefits

 

61,825

 


 

103,506

 

Deferred revenue

 

102,481

 


 

105,417

 

Current maturities on debt

 

130,000

 


 

250,000

 

Total current liabilities

 

382,762

 


 

559,207

 




 
Long-term debt

 

1,664,674

 


 

1,009,018

 

Operating lease liabilities

 

47,362

 


 

53,670

 

Other liabilities

 

55,103

 


 

56,823

 

Total liabilities

 

2,149,901

 


 

1,678,718

 




 
Stockholders' deficit

 

(663,416

)


 

(110,942

)


$

1,486,485

 


$

1,567,776

 




 

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)







 







 

Quarter Ended
Six Months Ended

March 31,
March 31,

 

2022

 


 

2021

 


 

2022

 


 

2021

 

Revenues:






On-premises and SaaS software

$

149,088

 


$

125,551

 


$

275,426

 


$

252,006

 

Professional services

 

24,365

 


 

37,091

 


 

50,901

 


 

78,399

 

Scores

 

183,742

 


 

168,719

 


 

353,229

 


 

313,370

 

Total revenues

 

357,195

 


 

331,361

 


 

679,556

 


 

643,775

 








 
Operating expenses:






Cost of revenues

 

71,794

 


 

88,333

 


 

140,997

 


 

177,861

 

Research & development

 

36,387

 


 

43,612

 


 

75,367

 


 

84,263

 

Selling, general and administrative

 

96,414

 


 

97,272

 


 

194,462

 


 

191,183

 

Amortization of intangible assets

 

543

 


 

945

 


 

1,087

 


 

1,882

 

Gains on product line asset sales and business divestiture

 

-

 


 

-

 


 

-

 


 

(7,334

)

Total operating expenses

 

205,138

 


 

230,162

 


 

411,913

 


 

447,855

 

Operating income

 

152,057

 


 

101,199

 


 

267,643

 


 

195,920

 

Other expense, net

 

(19,572

)


 

(9,375

)


 

(30,338

)


 

(16,136

)

Income before income taxes

 

132,485

 


 

91,824

 


 

237,305

 


 

179,784

 

Provision for income taxes

 

28,102

 


 

23,150

 


 

47,963

 


 

24,618

 

Net income

$

104,383

 


$

68,674

 


$

189,342

 


$

155,166

 








 







 







 
Basic earnings per share:

$

3.99

 


$

2.36

 


$

7.10

 


$

5.33

 

Diluted earnings per share:

$

3.95

 


$

2.33

 


$

7.02

 


$

5.23

 








 
Shares used in computing earnings per share:






Basic

 

26,145

 


 

29,087

 


 

26,662

 


 

29,107

 

Diluted

 

26,421

 


 

29,531

 


 

26,978

 


 

29,660

 








 







 

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



 



 

Six Months Ended

March 31,

 

2022

 


 

2021

 

Cash flows from operating activities:


Net income

$

189,342

 


$

155,166

 

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


Depreciation and amortization

 

10,656

 


 

13,701

 

Share-based compensation

 

57,814

 


 

53,338

 

Changes in operating assets and liabilities

 

(25,523

)


 

11,188

 

Other, net

 

15,195

 


 

(1,923

)

Net cash provided by operating activities

 

247,484

 


 

231,470

 




 
Cash flows from investing activities:


Purchases of property and equipment

 

(3,293

)


 

(4,220

)

Net activity from marketable securities

 

(2,628

)


 

(2,115

)

Proceeds from product line asset sales and business divestiture

 

2,257

 


 

8,291

 

Other, net

 

-

 


 

(210

)

Net cash provided by (used in) investing activities

 

(3,664

)


 

1,746

 




 
Cash flows from financing activities:


Proceeds from revolving line of credit and term loan

 

800,000

 


 

251,000

 

Payments on revolving line of credit and term loan

 

(806,750

)


 

(121,000

)

Proceeds from issuance of senior notes

 

550,000

 


 

-

 

Proceeds from issuance of treasury stock under employee stock plans

 

11,117

 


 

10,390

 

Taxes paid related to net share settlement of equity awards

 

(47,849

)


 

(86,653

)

Repurchases of common stock

 

(760,861

)


 

(250,356

)

Other, net

 

(8,819

)


 

(176

)

Net cash used in financing activities

 

(263,162

)


 

(196,795

)




 
Effect of exchange rate changes on cash

 

(1,793

)


 

4,021

 




 
Increase (decrease) in cash and cash equivalents

 

(21,135

)


 

40,442

 

Cash and cash equivalents, beginning of period

 

195,354

 


 

157,394

 

Cash and cash equivalents, end of period

$

174,219

 


$

197,836

 




 

FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)







 







 

Quarter Ended
Six Months Ended

March 31,
March 31,

 

2022

 


 

2021

 


 

2022

 


 

2021

 








 
GAAP net income

$

104,383

 


$

68,674

 


$

189,342

 


$

155,166

 

Amortization of intangible assets

 

543

 


 

945

 


 

1,087

 


 

1,882

 

Gains on product line asset sales and business divestiture

 

-

 


 

-

 


 

-

 


 

(7,334

)

Stock-based compensation expense

 

27,936

 


 

28,206

 


 

57,814

 


 

53,338

 

Income tax adjustments

 

(6,677

)


 

(7,271

)


 

(14,170

)


 

(11,757

)

Excess tax benefit

 

(2,495

)


 

(329

)


 

(8,452

)


 

(19,512

)

Non-GAAP net income

$

123,690

 


$

90,225

 


$

225,621

 


$

171,783

 








 







 
GAAP diluted earnings per share

$

3.95

 


$

2.33

 


$

7.02

 


$

5.23

 

Amortization of intangible assets

 

0.02

 


 

0.03

 


 

0.04

 


 

0.06

 

Gains on product line asset sales and business divestiture

 

-

 


 

-

 


 

-

 


 

(0.25

)

Stock-based compensation expense

 

1.06

 


 

0.96

 


 

2.14

 


 

1.80

 

Income tax adjustments

 

(0.25

)


 

(0.25

)


 

(0.53

)


 

(0.40

)

Excess tax benefit

 

(0.09

)


 

(0.01

)


 

(0.31

)


 

(0.66

)

Non-GAAP diluted earnings per share

$

4.68

 


$

3.06

 


$

8.36

 


$

5.79

 








 
Free cash flow






Net cash provided by operating activities

$

122,603

 


$

153,523

 


$

247,484

 


$

231,470

 

Capital expenditures

 

(2,398

)


 

(1,175

)


 

(3,293

)


 

(4,220

)

Free cash flow

$

120,205

 


$

152,348

 


$

244,191

 


$

227,250

 








 
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)



 

Previous Fiscal 2022 Guidance Updated Fiscal 2022 Guidance



 
GAAP net income

$

318

 

 

350

 


Amortization of intangible assets

 

2

 

 

2

 


Stock-based compensation expense

 

115

 

 

115

 


Income tax adjustments

 

(30

)

 

(30

)


Excess tax benefit

 

(8

)

 

(8

)


Non-GAAP net income

$

397

 

$

429

 





 



 
GAAP diluted earnings per share

$

11.29

 

$

13.11

 


Amortization of intangible assets

 

0.07

 

 

0.08

 


Stock-based compensation expense

 

4.09

 

 

4.31

 


Income tax adjustments

 

(1.06

)

 

(1.12

)


Excess tax benefit

 

(0.28

)

 

(0.29

)


Non-GAAP diluted earnings per share

$

14.12

 

$

16.08

 





 



 
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.

 

Contacts

Investors/Analysts:

Steve Weber
(800) 213-5542
investor@fico.com

Media:

Greg Jawski
Porter Novelli
(212) 601-8248
greg.jawski@porternovelli.com