10-QPeriod: Q2 FY2013

FAIR ISAAC CORP Quarterly Report for Q2 Ended Mar 31, 2013

Filed April 29, 2013For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported its first quarter 2013 results, showing a 12% increase in total revenues to $179.3 million compared to the same period last year. This growth was primarily driven by the Applications segment, which saw a 22% increase in revenue, boosted by acquisitions and strong performance in mobility and fraud solutions. Despite revenue growth, net income for the quarter decreased by 8% to $18.5 million, or $0.51 per diluted share, primarily due to increased operating expenses, including higher cost of revenues and selling, general, and administrative costs, largely influenced by recent acquisitions. The company maintained a strong liquidity position with $131.2 million in cash and cash equivalents and an undrawn revolving line of credit.

Financial Highlights

52 data points
Beta

Revenue

$179.32M

67.2% Gross Margin

Net Income

$18.50M

10.3% Net Margin

EPS (Diluted)

$0.51

Total Assets

$1.20B

Cash & Equivalents

$131.15M

Free Cash Flow

$32.11M

Financial Statements
Beta
Revenue$179.32M
Cost of Revenue$58.86M
Gross Profit$120.47M
R&D Expenses$16.02M
SG&A Expenses$67.64M
Operating Expenses$146.12M
Operating Income$33.21M
Interest Expense$7.86M
Net Income$18.50M
EPS (Basic)$0.52
EPS (Diluted)$0.51
Shares Outstanding (Basic)35.66M
Shares Outstanding (Diluted)36.49M

Key Highlights

  • 1Total revenues increased by 12% year-over-year to $179.3 million for the quarter ended March 31, 2013.
  • 2The Applications segment was the primary growth driver, with revenues up 22% to $117.2 million, aided by recent acquisitions.
  • 3Net income decreased by 8% to $18.5 million, impacted by increased operating expenses, particularly in cost of revenues and SG&A, partly due to acquisitions.
  • 4Diluted earnings per share were $0.51, down from $0.55 in the prior year's quarter.
  • 5The company acquired CR Software, LLC for $29.6 million in November 2012, which is expected to contribute to future revenue streams.
  • 6FICO maintained a healthy cash position with $131.2 million in cash and cash equivalents and $200 million in available revolving credit facility.
  • 7Subsequent to the quarter, FICO acquired Infoglide Software, Inc. for approximately $7 million to enhance its fraud detection and entity resolution capabilities.

Frequently Asked Questions

Revenue growth was primarily driven by the Applications segment, which saw a 22% increase year-over-year. This growth was significantly boosted by recent acquisitions, particularly in mobility solutions (due to the Adeptra acquisition) and fraud solutions (driven by a large multi-year license transaction).

Net income declined by 8% primarily due to a significant increase in operating expenses. Cost of revenues rose by 21% due to higher third-party software/data costs and personnel expenses related to acquisitions. Selling, general, and administrative expenses also increased by 19%, driven by higher labor costs and acquisition integration expenses. Amortization of intangible assets also increased substantially due to recent acquisitions.

FICO maintains a strong liquidity position with $131.2 million in cash and cash equivalents as of March 31, 2013. The company also has an undrawn $200 million revolving credit facility. Management believes these resources, along with anticipated operating cash flows, are sufficient to meet working capital needs and upcoming debt obligations, including a $49 million principal payment due in May 2013.

FICO acquired CR Software, LLC in November 2012 for $29.6 million to strengthen its enterprise-class collections and recovery solutions. Subsequently, after the quarter ended March 31, 2013, FICO acquired Infoglide Software, Inc. for approximately $7 million to enhance its fraud detection, entity resolution, and social network analysis capabilities. These acquisitions are expected to contribute to future revenue growth and expand FICO's solution offerings.