10-QPeriod: Q1 FY2013

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2012

Filed January 30, 2013For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported its quarterly results for the period ending December 31, 2012. The company demonstrated revenue growth of 12% year-over-year, reaching $190 million. This growth was primarily driven by the Applications segment, which saw a 13% increase in revenue, partly due to the recent acquisition of Adeptra. Despite the revenue increase, operating income declined by 17% to $43 million. This decline was influenced by a significant increase in operating expenses, including higher cost of revenues, selling, general, and administrative expenses, and a substantial rise in restructuring and acquisition-related costs. FICO's balance sheet shows an increase in cash and cash equivalents to $90.8 million, up from $71.6 million in the prior quarter, indicating improved liquidity. The company also reported a significant increase in goodwill, largely attributed to the CR Software acquisition. While the company faces challenges related to increased operating expenses and integration costs from acquisitions, the consistent revenue growth, particularly in the Applications segment, suggests ongoing demand for its decision management solutions.

Financial Highlights

52 data points
Beta

Revenue

$190.02M

70.5% Gross Margin

Net Income

$23.42M

12.3% Net Margin

EPS (Diluted)

$0.65

Total Assets

$1.18B

Cash & Equivalents

$90.84M

Free Cash Flow

$19.72M

Financial Statements
Beta
Revenue$190.02M
Cost of Revenue$56.15M
Gross Profit$133.87M
R&D Expenses$14.55M
SG&A Expenses$69.67M
Operating Expenses$147.03M
Operating Income$42.99M
Interest Expense$7.88M
Net Income$23.42M
EPS (Basic)$0.67
EPS (Diluted)$0.65
Shares Outstanding (Basic)35.04M
Shares Outstanding (Diluted)36.15M

Key Highlights

  • 1Total revenues increased by 12% to $190.02 million compared to the prior year's quarter.
  • 2The Applications segment revenue grew by 13% to $124.71 million, boosted by the Adeptra acquisition.
  • 3Operating income decreased by 17% to $42.99 million due to increased operating expenses.
  • 4Cost of revenues rose by 22% to $56.15 million, and SG&A expenses increased by 22% to $69.67 million.
  • 5Restructuring and acquisition-related expenses were $3.29 million in the current quarter, compared to zero in the prior year.
  • 6Cash and cash equivalents increased significantly to $90.84 million from $71.61 million at the end of the previous quarter.
  • 7The company completed the acquisition of CR Software, LLC for $28.82 million, adding to goodwill and intangible assets.

Frequently Asked Questions

FICO's revenue growth of 12% was primarily driven by its Applications segment, which saw a 13% increase in revenue. This growth was partly attributed to the acquisition of Adeptra in September 2012 and increased revenues from mobility, customer management, and marketing solutions.

Operating income decreased by 17% primarily due to a significant increase in operating expenses. This included a 22% rise in cost of revenues, a 22% increase in selling, general, and administrative expenses, and the recognition of $3.29 million in restructuring and acquisition-related expenses, which were not present in the prior year's quarter.

FICO's liquidity has improved, with cash and cash equivalents increasing to $90.84 million as of December 31, 2012, up from $71.61 million at the end of the previous quarter. The company also has a $200 million revolving line of credit available and anticipates sufficient operating cash flows to meet its obligations, including a $49 million debt payment due in May 2013.

FICO completed the acquisition of CR Software, LLC for $28.82 million. This acquisition contributed to an increase in goodwill by $13.19 million and intangible assets by $16.5 million. The acquisition also led to increased costs in cost of revenues and SG&A due to integration and personnel related to the acquired entity.