10-QPeriod: Q2 FY2014

FAIR ISAAC CORP Quarterly Report for Q2 Ended Mar 31, 2014

Filed April 28, 2014For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported its financial results for the quarter and six months ended March 31, 2014. Total revenues for the quarter increased by 3% to $185.5 million, and for the six months by a marginal 0.1% to $369.8 million. Net income for the quarter saw a robust 12% increase to $20.8 million, although net income for the six-month period decreased by 10% to $37.7 million compared to the prior year. The company's 'Scores' segment demonstrated strong growth, with revenues up 9% for the quarter and 9% year-to-date. Investments in research and development increased significantly, particularly in cloud computing and SaaS initiatives, signaling a strategic focus on future growth areas. Cash flow from operations remained strong, providing $75.1 million for the six months. FICO also continued its commitment to shareholder returns through stock repurchases, with approximately $65 million spent on buybacks during the first six months of the fiscal year, and a new $150 million repurchase program approved in April 2014. The acquisition of InfoCentricity in early April 2014 for $8.3 million further indicates FICO's strategic intent to broaden its predictive analytics capabilities. Overall, the report highlights steady revenue growth and increased profitability at the quarterly level, coupled with strategic investments for future expansion.

Financial Highlights

53 data points
Beta

Revenue

$185.46M

68.6% Gross Margin

Net Income

$20.75M

11.2% Net Margin

EPS (Diluted)

$0.59

Total Assets

$1.18B

Cash & Equivalents

$108.18M

Free Cash Flow

$44.57M

Financial Statements
Beta
Revenue$185.46M
Cost of Revenue$58.18M
Gross Profit$127.28M
R&D Expenses$19.69M
SG&A Expenses$65.94M
Operating Expenses$146.72M
Operating Income$38.74M
Interest Expense$7.10M
Net Income$20.75M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)34.50M
Shares Outstanding (Diluted)35.31M

Key Highlights

  • 1Total revenues for the quarter ended March 31, 2014, increased by 3% year-over-year to $185.5 million.
  • 2Net income for the quarter increased by 12% to $20.8 million, while year-to-date net income decreased by 10% to $37.7 million.
  • 3The 'Scores' segment showed strong performance with a 9% revenue increase for both the quarter and the six-month period.
  • 4Research and Development expenses increased significantly by 23% for the quarter and 24% year-to-date, reflecting investment in cloud computing and SaaS.
  • 5Net cash provided by operating activities was $75.1 million for the first six months of the fiscal year.
  • 6The company repurchased approximately $65 million of its common stock in the first six months and announced a new $150 million repurchase program.
  • 7FICO acquired InfoCentricity for approximately $8.3 million in cash in April 2014 to enhance its predictive analytics offerings.

Frequently Asked Questions

For the quarter ended March 31, 2014, FICO's total revenues increased by 3% to $185.5 million compared to the same period in the prior year. For the six months ended March 31, 2014, total revenues remained relatively flat, showing a marginal increase of 0.1% to $369.8 million compared to the prior year.

Profitability showed a mixed trend. Net income for the quarter ended March 31, 2014, increased by a strong 12% year-over-year to $20.8 million, outperforming revenue growth for the quarter. However, for the six months ended March 31, 2014, net income decreased by 10% to $37.7 million compared to the same period in the prior year, primarily due to increased operating expenses, particularly in Research and Development.

FICO is making significant strategic investments in future growth areas, notably increasing its Research and Development expenses by 23% for the quarter and 24% year-to-date, focusing on cloud computing and SaaS initiatives. Additionally, FICO acquired InfoCentricity for approximately $8.3 million in cash in April 2014, which is expected to broaden its predictive analytics offerings.

FICO demonstrated a commitment to shareholder returns by repurchasing approximately $65 million of its common stock during the first six months of the fiscal year. Following the expiration of a previous program, the Board of Directors approved a new, open-ended stock repurchase program in April 2014, authorizing up to $150.0 million in repurchases, indicating continued confidence and a strategy to return capital to shareholders.