10-KPeriod: FY2012

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2012

Filed November 16, 2012For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid revenue growth and improved profitability in fiscal year 2012, driven by its Decision Management strategy. The company saw revenue increase by 9% to $676.4 million, with growth across all three segments: Applications, Scores, and Tools. This performance was largely fueled by significant multi-year license transactions, particularly in fraud and customer management solutions within the Applications segment. FICO also successfully integrated two key acquisitions, Adeptra and Entiera, during the year, which are expected to enhance its product offerings and market reach in the rapidly evolving mobile and customer engagement sectors. The company's financial health appears robust, with significant operating income and cash flow from operations. FICO continues to return value to shareholders through dividends and share repurchases, underscoring its financial stability and confidence in future performance. While the company acknowledges ongoing economic challenges and competitive pressures, its strategic focus on analytics and decision management, coupled with a diversified customer base primarily in the banking and insurance industries, positions it well for continued growth.

Financial Highlights

56 data points
Beta

Revenue

$676.42M

70.7% Gross Margin

Net Income

$92.00M

13.6% Net Margin

EPS (Diluted)

$2.55

Total Assets

$1.16B

Cash & Equivalents

$71.61M

Free Cash Flow

$104.26M

Financial Statements
Beta
Revenue$676.42M
Cost of Revenue$197.95M
Gross Profit$478.48M
R&D Expenses$59.53M
SG&A Expenses$238.52M
Operating Expenses$508.06M
Operating Income$168.36M
Interest Expense$31.42M
Net Income$92.00M
EPS (Basic)$2.64
EPS (Diluted)$2.55
Shares Outstanding (Basic)34.91M
Shares Outstanding (Diluted)36.06M

Key Highlights

  • 1Revenue increased by 9% to $676.4 million in fiscal year 2012, indicating strong demand for FICO's Decision Management solutions.
  • 2Acquisitions of Adeptra and Entiera were completed, expanding FICO's capabilities in mobile economy and customer engagement.
  • 3Operating income saw a significant increase of 32% to $168.4 million, demonstrating improved operational efficiency and profitability.
  • 4The Applications segment, driven by fraud and customer management solutions, showed robust revenue growth, up 11%.
  • 5International revenues continued to grow, reaching 39% of total revenues, highlighting FICO's expanding global presence.
  • 6The company maintained a strong financial position with $93.6 million in cash, cash equivalents, and short-term marketable securities, and ample availability under its revolving line of credit.
  • 7FICO returned capital to shareholders through dividends and share repurchases, totaling $184.3 million in share repurchases for fiscal year 2012.

Frequently Asked Questions

FICO's revenue growth in fiscal year 2012 was primarily driven by large multi-year license transactions, particularly in its Applications segment for fraud and customer management solutions. Growth was also supported by transactions in its Scores segment (business-to-business scores) and Tools segment (license sales and services for Blaze Advisor and Xpress Optimization).

The acquisitions of Adeptra and Entiera were strategic moves to enhance FICO's Decision Management capabilities, particularly in the mobile economy and customer engagement sectors. Adeptra's SaaS platform and Entiera's customer dialogue management solutions are expected to accelerate growth and expand FICO's offerings to clients.

FICO anticipates continued challenges in the operating environment but expects modest growth driven by improvements in the credit economy and strategic acquisitions. The company anticipates that cost of revenues as a percentage of revenue will increase due to the integration of lower-margin products from recent acquisitions, while R&D and SG&A expenses as a percentage of revenue are expected to remain consistent with fiscal year 2012.

FICO manages financial risks through various strategies, including maintaining a strong cash position, utilizing a revolving line of credit for flexibility, and not employing derivative financial instruments for speculative purposes. They also monitor interest rate and foreign currency exchange rate risks, with forward foreign currency contracts used to mitigate risks related to foreign-denominated receivables and cash balances.