10-QPeriod: Q1 FY2012

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2011

Filed February 2, 2012For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid financial results for the quarter ended December 31, 2011, with a notable increase in total revenues to $170.3 million, up 9% year-over-year, driven primarily by a significant surge in license revenue within the Applications segment. Operating income saw a substantial increase of 76% to $52.1 million, reflecting improved revenue and effective cost management, including reduced R&D and SG&A expenses. Net income more than doubled to $30.0 million, or $0.81 per diluted share, demonstrating strong operational efficiency. The company's liquidity remains robust, with $175.4 million in cash and cash equivalents and no borrowings outstanding on its revolving credit facility, underscoring a stable financial position. FICO's strategic focus on its Decision Management (DM) strategy appears to be yielding positive results, particularly in its Applications and Scores segments.

Financial Highlights

53 data points
Beta

Revenue

$170.35M

73.0% Gross Margin

Net Income

$30.00M

17.6% Net Margin

EPS (Diluted)

$0.81

Total Assets

$1.13B

Cash & Equivalents

$175.38M

Free Cash Flow

$33.39M

Financial Statements
Beta
Revenue$170.35M
Cost of Revenue$45.97M
Gross Profit$124.38M
R&D Expenses$13.05M
SG&A Expenses$57.32M
Operating Expenses$118.28M
Operating Income$52.07M
Interest Expense$7.99M
Net Income$30.00M
EPS (Basic)$0.83
EPS (Diluted)$0.81
Shares Outstanding (Basic)36.03M
Shares Outstanding (Diluted)36.89M

Key Highlights

  • 1Total revenues increased by 9% year-over-year to $170.3 million, driven by strong performance in the Applications segment, particularly license revenue.
  • 2Operating income surged by 76% to $52.1 million, indicating improved profitability and operational efficiency.
  • 3Net income more than doubled to $30.0 million, leading to a diluted EPS of $0.81, up from $0.40 in the prior year's quarter.
  • 4The Applications segment revenue grew by 13% to $110.2 million, largely due to a significant increase in license revenue from fraud solutions.
  • 5Research and Development expenses decreased by 28% to $13.0 million, and Selling, General, and Administrative expenses decreased by 4% to $57.3 million, contributing to improved operating margins.
  • 6The company maintained a strong liquidity position with $175.4 million in cash and cash equivalents and $0 outstanding on its $200 million revolving credit facility.
  • 7International revenues represented 42% of total revenues, indicating a growing global presence for FICO.

Frequently Asked Questions

Total revenues increased by 9% to $170.3 million, primarily driven by a substantial 244% increase in license revenue within the Applications segment, particularly from fraud solutions, alongside growth in transactional and maintenance revenues in the Scores segment.

Operating expenses decreased by 6% overall. Notably, Research and Development expenses were down 28% and Selling, General, and Administrative expenses were down 4%. These reductions, combined with revenue growth, led to a 76% increase in operating income.

FICO maintained a strong financial position with $175.4 million in cash and cash equivalents as of December 31, 2011. The company had no borrowings outstanding under its $200 million revolving credit facility, indicating ample liquidity and financial flexibility.

While total bookings decreased year-over-year, the mix shifted towards professional services (46% of bookings) and away from transactional and maintenance (33% of bookings). This shift, coupled with continued strength in license revenue within the Applications segment, suggests a potentially more project-based revenue stream, though management expects future R&D and SG&A expenses as a percentage of revenue to remain consistent or slightly higher.