10-QPeriod: Q3 FY2005

FAIR ISAAC CORP Quarterly Report for Q3 Ended Jun 30, 2005

Filed August 8, 2005For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid revenue growth of 18% year-over-year for the quarter ended June 30, 2005, reaching $203.8 million, driven by strong performance in its Strategy Machine Solutions and Scoring Solutions segments. The company also saw significant growth in its Professional Services and Analytic Software Tools segments, partly due to recent acquisitions. Net income increased by 27% to $36.6 million for the quarter. The company's liquidity remains strong, with $308.2 million in cash, cash equivalents, and marketable securities. However, operating cash flows saw a slight decrease due to an increase in trade receivables and slower collections, partly attributed to customer consolidation. FICO also announced a new stock repurchase program, indicating confidence in its financial position and a commitment to returning value to shareholders.

Key Highlights

  • 1Total revenues increased by 18% to $203.8 million for the quarter ended June 30, 2005, compared to the prior year period.
  • 2Net income rose by 27% to $36.6 million ($0.55 per diluted share) for the quarter ended June 30, 2005.
  • 3The Strategy Machine Solutions segment showed strong revenue growth of 9%, and Professional Services segment revenue grew by 43%, indicating successful integration of acquisitions and demand for consulting services.
  • 4The company's cash, cash equivalents, and marketable securities stood at $308.2 million as of June 30, 2005, providing a strong liquidity position.
  • 5Operating cash flows decreased slightly year-over-year due to increased receivables and slower collections, potentially linked to customer consolidation.
  • 6FICO repurchased approximately $231.8 million of its common stock during the nine months ended June 30, 2005, and initiated a new $250 million repurchase program.
  • 7The company completed an exchange offer for its Senior Convertible Notes, converting approximately 99.9% of existing notes into new Series B notes with similar terms.

Frequently Asked Questions

Revenue growth was primarily driven by an 18% increase to $203.8 million, fueled by strong performance in the Strategy Machine Solutions and Scoring Solutions segments. The acquisitions of London Bridge and Braun also contributed significantly to the top-line growth, particularly in Professional Services and Analytic Software Tools.

Profitability saw a healthy increase, with net income rising by 27% to $36.6 million for the quarter ended June 30, 2005. Diluted earnings per share also increased to $0.53 from $0.37 in the prior year's comparable quarter. This improvement was supported by revenue growth and effective expense management, despite increases in certain operating expenses.

FICO maintains a strong liquidity position with $308.2 million in cash, cash equivalents, and marketable securities as of June 30, 2005. The company generated $150.2 million in net cash from operating activities during the first nine months of the fiscal year, indicating a solid ability to fund operations and investments.

Yes, the company completed an exchange offer for its Senior Convertible Notes, effectively converting nearly all existing notes to a new series with similar terms. Additionally, FICO repurchased a substantial amount of its common stock and announced a new $250 million stock repurchase program, signaling management's confidence in the company's value.