10-QPeriod: Q1 FY2007

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2006

Filed February 7, 2007For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported its financial results for the quarter ended December 31, 2006. The company saw a modest increase in total revenues, reaching $208.2 million, up 3% from the prior year's quarter. Net income also saw a positive trend, increasing by 10% to $31.2 million. This growth was driven by a strong performance in the Professional Services and Analytic Software Tools segments, which offset slight declines in Strategy Machine Solutions and Scoring Solutions. The company's balance sheet reflects increased cash and cash equivalents and a substantial repurchase of common stock during the quarter, funded in part by a new revolving credit facility. FICO continues to advance its Enterprise Decision Management (EDM) strategy, focusing on delivering integrated solutions to clients. While overall revenue growth was moderate, the company highlighted increased revenues from professional services and analytic software tools, indicating progress in its strategic shift. Management expressed confidence in its liquidity and capital resources, expecting them to be sufficient for operating requirements and future strategic initiatives. The company also addressed ongoing legal proceedings, asserting that none are expected to have a material adverse impact on its financial condition.

Key Highlights

  • 1Total revenues increased by 3% to $208.2 million for the quarter ended December 31, 2006.
  • 2Net income grew by 10% to $31.2 million compared to the same quarter in the prior year.
  • 3The Professional Services segment revenue increased by 17% and Analytic Software Tools segment revenue increased by 20%, indicating progress in strategic service and software offerings.
  • 4The company repurchased $154.5 million of its common stock during the quarter under a new $500 million repurchase program.
  • 5FICO drew $70 million on its new $300 million revolving credit facility, enhancing its liquidity.
  • 6Goodwill remained substantial at $701.1 million, indicating significant past acquisitions.
  • 7The company provided a positive outlook on its liquidity, believing current resources are sufficient for the next twelve months and beyond.

Frequently Asked Questions

For the quarter ended December 31, 2006, Fair Isaac Corporation (FICO) reported total revenues of $208.2 million, a 3% increase from the $202.8 million in the prior year's quarter. Net income rose by 10% to $31.2 million, up from $28.5 million in the same period last year.

FICO highlighted progress with its EDM strategy, particularly noting strong revenue growth in its Professional Services (up 17%) and Analytic Software Tools (up 20%) segments. While Strategy Machine Solutions and Scoring Solutions saw slight revenue decreases, the growth in services and tools suggests a positive shift towards integrated solutions.

FICO's balance sheet shows a healthy increase in cash and cash equivalents to $99.1 million. The company demonstrated a commitment to shareholder returns by repurchasing $154.5 million of its common stock during the quarter under a new $500 million repurchase program. Additionally, FICO has a $300 million revolving credit facility, of which $70 million was drawn, to support general business purposes and strategic initiatives.

FICO is involved in several legal proceedings, including customer claims and a putative consumer class action lawsuit related to its credit score products. However, the company states that it believes these claims are without merit and does not expect them to result in a material adverse impact on its consolidated financial condition. The company also lists various risk factors, including reliance on key customers and credit reporting agencies, the competitive landscape, and the evolving regulatory environment.