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) January 26, 2023


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 January 26, 2023, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter ended December 31, 2022. See the Company’s press release dated January 26, 2023, 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/ STEVEN P. WEBER
 
 
Steven P. Weber
 
 
Vice President and Interim Chief Financial Officer 
 
 
 
 
 
 
Date:  January 26, 2023
 
 

Exhibit 99.1

FICO Announces Earnings of $3.84 per Share for First Quarter Fiscal 2023

Revenue of $345 million vs. $322 million in prior year

BOZEMAN, Mont.--(BUSINESS WIRE)--January 26, 2023--FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2022.

First Quarter Fiscal 2023 GAAP Results

Net income for the quarter totaled $97.6 million, or $3.84 per share, versus $85.0 million, or $3.09 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $92.4 million versus $124.9 million in the prior year period.

First Quarter Fiscal 2023 Non-GAAP Results

Non-GAAP Net Income for the quarter was $108.5 million versus $101.9 million in the prior year period. Non-GAAP EPS for the quarter was $4.26 versus $3.70 in the prior year period. Free cash flow was $91.6 million for the current quarter versus $124.0 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.

First Quarter Fiscal 2023 GAAP Revenue

The company reported revenues of $344.9 million for the quarter as compared to $322.4 million reported in the prior year period.

“We had a strong start to our Fiscal 2023,” said Will Lansing, chief executive officer. “We continue to deliver earnings growth, and are pleased with the progress we are making on our strategic initiatives.”

Revenues for the first quarter of fiscal 2023 for the company’s two operating segments were as follows:

  • Software revenues, which include the company’s analytics and digital decisioning technology, as well as associated professional services, were $166.9 million in the first quarter, compared to $152.9 million in the prior year period, an increase of 9%, due to increased recurring revenue, partially offset by a decrease in professional services. Software Annual Recurring Revenue was up 11% year-over-year, consisting of 46% platform ARR growth and 4% non-platform growth. Software Dollar-Based Net Retention Rate was 110% in the first quarter, with platform software at 130% and non-platform software at 103%.
  • Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions, were $178.0 million in the first quarter, compared to $169.5 million in the prior year period, an increase of 5%. B2B revenue increased 11%, driven largely by a multi-year license renewal as well as increases in unit prices and in card and personal loan originations volumes, partially offset by declines in mortgage originations volumes. B2C revenue decreased 6% from the prior year period due to lower volumes at myFICO.com.

Outlook

The company is reiterating the following guidance for fiscal 2023:

 

Fiscal 2023 Guidance

Revenues

$1.463 billion

GAAP Net Income

$401 million

GAAP EPS

$16.00

Non-GAAP Net Income

$487 million

Non-GAAP EPS

$19.42

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 first quarter fiscal 2023 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 January 26, 2024.

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 200 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 120 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/

For FICO news and media resources, visit www.fico.com/news.


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, 2022 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)



 



 



 

December 31,
September 30,

2022


2022

ASSETS:


Current assets:


Cash and cash equivalents

$

139,856

 


$

133,202

 

Accounts receivable, net

 

308,234

 


 

322,410

 

Prepaid expenses and other current assets

 

35,732

 


 

29,103

 

Total current assets

 

483,822

 


 

484,715

 




 
Marketable securities and investments

 

27,538

 


 

25,650

 

Property and equipment, net

 

14,976

 


 

17,580

 

Operating lease right-of-use-assets

 

32,366

 


 

36,688

 

Goodwill and intangible assets, net

 

773,197

 


 

763,084

 

Other assets

 

126,794

 


 

114,317

 


$

1,458,693

 


$

1,442,034

 




 
LIABILITIES AND STOCKHOLDERS' DEFICIT:


Current liabilities:


Accounts payable and other accrued liabilities

$

68,216

 


$

83,521

 

Accrued compensation and employee benefits

 

59,876

 


 

97,893

 

Deferred revenue

 

126,896

 


 

120,045

 

Current maturities on debt

 

100,000

 


 

30,000

 

Total current liabilities

 

354,988

 


 

331,459

 




 
Long-term debt

 

1,820,666

 


 

1,823,669

 

Operating lease liabilities

 

32,400

 


 

39,192

 

Other liabilities

 

52,734

 


 

49,661

 

Total liabilities

 

2,260,788

 


 

2,243,981

 




 
Stockholders' deficit

 

(802,095

)


 

(801,947

)


$

1,458,693

 


$

1,442,034

 


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



 



 

Quarter Ended

December 31,

2022


2021

Revenues:


On-premises and SaaS software

$

144,560

 


$

126,338

 

Professional services

 

22,322

 


 

26,536

 

Scores

 

177,988

 


 

169,487

 

Total revenues

 

344,870

 


 

322,361

 




 
Operating expenses:


Cost of revenues

 

76,569

 


 

69,203

 

Research & development

 

36,633

 


 

38,980

 

Selling, general and administrative

 

92,995

 


 

98,048

 

Amortization of intangible assets

 

275

 


 

544

 

Gain on product line asset sale

 

(1,941

)


 

-

 

Total operating expenses

 

204,531

 


 

206,775

 

Operating income

 

140,339

 


 

115,586

 

Other expense, net

 

(22,436

)


 

(10,766

)

Income before income taxes

 

117,903

 


 

104,820

 

Provision for income taxes

 

20,260

 


 

19,861

 

Net income

$

97,643

 


$

84,959

 




 



 



 
Basic earnings per share:

$

3.90

 


$

3.13

 

Diluted earnings per share:

$

3.84

 


$

3.09

 




 
Shares used in computing earnings per share:


Basic

 

25,045

 


 

27,167

 

Diluted

 

25,443

 


 

27,524

 


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



 



 

Quarter Ended

December 31,

2022


2021

Cash flows from operating activities:


Net income

$

97,643

 


$

84,959

 

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


Depreciation and amortization

 

4,280

 


 

5,227

 

Share-based compensation

 

29,702

 


 

29,878

 

Changes in operating assets and liabilities

 

(33,250

)


 

(4,171

)

Gain on product line asset sale

 

(1,941

)


 

-

 

Other, net

 

(3,994

)


 

8,988

 

Net cash provided by operating activities

 

92,440

 


 

124,881

 




 
Cash flows from investing activities:


Purchases of property and equipment

 

(850

)


 

(895

)

Net activity from marketable securities

 

(2,165

)


 

(2,634

)

Proceeds from product line asset sales, net of cash transferred

 

(7,575

)


 

2,257

 

Net cash used in investing activities

 

(10,590

)


 

(1,272

)




 
Cash flows from financing activities:


Proceeds from revolving line of credit and term loan

 

169,000

 


 

620,000

 

Payments on revolving line of credit and term loan

 

(102,750

)


 

(788,000

)

Proceeds from issuance of senior notes

 

-

 


 

550,000

 

Proceeds from issuance of treasury stock under employee stock plans

 

1,995

 


 

550

 

Taxes paid related to net share settlement of equity awards

 

(72,865

)


 

(47,024

)

Repurchases of common stock

 

(75,004

)


 

(482,755

)

Other, net

 

-

 


 

(8,200

)

Net cash used in financing activities

 

(79,624

)


 

(155,429

)




 
Effect of exchange rate changes on cash

 

4,428

 


 

(1,377

)




 
Increase (decrease) in cash and cash equivalents

 

6,654

 


 

(33,197

)

Cash and cash equivalents, beginning of period

 

133,202

 


 

195,354

 

Cash and cash equivalents, end of period

$

139,856

 


$

162,157

 


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



 



 

Quarter Ended

December 31,

2022


2021




 
GAAP net income

$

97,643

 


$

84,959

 

Amortization of intangible assets

 

275

 


 

544

 

Gain on product line asset sale

 

(1,941

)


 

-

 

Share-based compensation expense

 

29,702

 


 

29,878

 

Income tax adjustments

 

(6,914

)


 

(7,493

)

Excess tax benefit

 

(10,304

)


 

(5,957

)

Non-GAAP net income

$

108,461

 


$

101,931

 




 



 
GAAP diluted earnings per share

$

3.84

 


$

3.09

 

Amortization of intangible assets

 

0.01

 


 

0.02

 

Gain on product line asset sale

 

(0.08

)


 

-

 

Share-based compensation expense

 

1.17

 


 

1.09

 

Income tax adjustments

 

(0.27

)


 

(0.27

)

Excess tax benefit

 

(0.40

)


 

(0.22

)

Non-GAAP diluted earnings per share

$

4.26

 


$

3.70

 




 
Free cash flow


Net cash provided by operating activities

$

92,440

 


$

124,881

 

Capital expenditures

 

(850

)


 

(895

)

Free cash flow

$

91,590

 


$

123,986

 




 
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, to the extent applicable, such items as 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. 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 2023 Guidance

 
GAAP net income

$

401

 

Amortization of intangible assets

 

1

 

Share-based compensation expense

 

120

 

Income tax adjustments

 

(30

)

Excess tax benefit

 

(5

)

Non-GAAP net income

$

487

 


 

 
GAAP diluted earnings per share

$

16.00

 

Amortization of intangible assets

 

0.04

 

Share-based compensation expense

 

4.78

 

Income tax adjustments

 

(1.21

)

Excess tax benefit

 

(0.20

)

Non-GAAP diluted earnings per share

$

19.42

 


 

 
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, to the extent applicable, such items as 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. 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
Fair Isaac Corporation
(800) 459-7125
investor@fico.com