10-QPeriod: Q1 FY2014

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2013

Filed January 28, 2014For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported its financial results for the quarter ended December 31, 2013. Total revenues decreased by 3% year-over-year to $184.3 million. This decline was primarily driven by a 61% drop in license revenue within the Applications segment, although this was partially offset by growth in the Scores and Tools segments. Operating income decreased by 18% to $35.3 million, reflecting lower revenues and increased investment in research and development, particularly in cloud computing and SaaS. Net income saw a significant decrease of 28% to $17.0 million, or $0.47 per diluted share, compared to $23.4 million, or $0.65 per diluted share, in the prior year quarter. The company continued its stock repurchase program, spending $25.0 million during the quarter, and maintained a consistent dividend payment of $0.02 per share.

Financial Highlights

52 data points
Beta

Revenue

$184.34M

68.9% Gross Margin

Net Income

$16.98M

9.2% Net Margin

EPS (Diluted)

$0.47

Total Assets

$1.17B

Cash & Equivalents

$95.94M

Free Cash Flow

$26.22M

Financial Statements
Beta
Revenue$184.34M
Cost of Revenue$57.32M
Gross Profit$127.02M
R&D Expenses$18.09M
SG&A Expenses$66.99M
Operating Expenses$149.07M
Operating Income$35.27M
Interest Expense$7.13M
Net Income$16.98M
EPS (Basic)$0.49
EPS (Diluted)$0.47
Shares Outstanding (Basic)34.70M
Shares Outstanding (Diluted)35.82M

Key Highlights

  • 1Total revenues declined 3% year-over-year to $184.3 million, impacted by a significant drop in license revenue within the Applications segment.
  • 2Net income decreased by 28% to $17.0 million ($0.47 per diluted share), reflecting revenue pressures and increased R&D spending.
  • 3Operating income fell 18% to $35.3 million, influenced by lower revenues and strategic investments in cloud and SaaS technologies.
  • 4The Scores segment showed resilience with a 9% increase in revenue, driven by both business-to-business and myFICO consumer services.
  • 5Research and Development expenses increased by 24% to $18.1 million, signaling continued investment in future growth areas like cloud computing.
  • 6The company repurchased $25.0 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 7Cash and cash equivalents increased to $95.9 million, providing a solid liquidity position.

Frequently Asked Questions

The primary driver of the revenue decline was a significant 61% decrease in license revenue within the Applications segment, largely due to the early termination of a large customer contract and decreased software and transactional revenues in fraud solutions.

FICO is increasing its investment in Research and Development, particularly focusing on cloud computing and Software-as-a-Service (SaaS) solutions. This strategic investment is intended to enhance its decision management platform and expand market opportunities.

FICO is actively returning capital to shareholders through its stock repurchase program, having repurchased $25.0 million worth of shares in this quarter. They also maintained a consistent quarterly dividend of $0.02 per share.

The Scores segment demonstrated strong performance with a 9% revenue increase. The Tools segment also saw a 15% revenue increase. However, the Applications segment experienced a notable revenue decrease of 10%, primarily impacting overall company revenue.