10-QPeriod: Q1 FY2016

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2015

Filed January 28, 2016For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid financial results for the quarter ended December 31, 2015. Total revenues increased by 6% year-over-year to $200.1 million, driven primarily by a strong performance in the Scores segment, which saw a 27% revenue increase. This growth was largely attributed to the success of new consumer-facing initiatives and increased business-to-business scoring revenue. The Applications segment also showed positive growth of 4%, boosted by compliance solutions following the TONBELLER acquisition. Profitability saw a significant improvement, with operating income rising 24% to $30.8 million and net income increasing 34% to $19.2 million. This was supported by effective cost management, particularly a decrease in cost of revenues as a percentage of total revenue. FICO also continued to return value to shareholders by repurchasing $28.4 million of its common stock during the quarter. The company's liquidity position remains strong with $90.7 million in cash and cash equivalents and an undrawn revolving line of credit, positioning it well for future operations and strategic investments.

Financial Highlights

51 data points
Beta

Revenue

$200.08M

68.9% Gross Margin

Net Income

$19.24M

9.6% Net Margin

EPS (Diluted)

$0.59

Total Assets

$1.22B

Cash & Equivalents

$90.71M

Free Cash Flow

$46.34M

Financial Statements
Beta
Revenue$200.08M
Cost of Revenue$62.19M
Gross Profit$137.88M
R&D Expenses$24.63M
SG&A Expenses$78.84M
Operating Expenses$169.24M
Operating Income$30.83M
Interest Expense$6.72M
Net Income$19.24M
EPS (Basic)$0.62
EPS (Diluted)$0.59
Shares Outstanding (Basic)31.18M
Shares Outstanding (Diluted)32.44M

Key Highlights

  • 1Total revenues increased 6% to $200.1 million.
  • 2Net income grew 34% to $19.2 million ($0.59 per diluted share).
  • 3Scores segment revenue saw a significant 27% increase, driven by new consumer offerings and B2B scores.
  • 4Operating income rose 24% to $30.8 million, with operating margin improving to 15% from 13%.
  • 5FICO repurchased $28.4 million of common stock during the quarter, demonstrating commitment to shareholder returns.
  • 6Cash flow from operating activities significantly improved, reaching $40.6 million compared to $1.4 million in the prior year quarter.
  • 7The TONBELLER acquisition positively impacted the Applications segment revenue.

Frequently Asked Questions

The primary driver of revenue growth was the Scores segment, which experienced a 27% increase, largely due to the successful launch of new consumer services with partners like Experian and continued growth in business-to-business scoring solutions.

FICO demonstrated effective cost management. Cost of revenues as a percentage of revenue decreased, and the company strategically managed its operating expenses. Research and development increased to support cloud and SaaS initiatives, while Selling, General, and Administrative expenses rose primarily due to increased personnel costs and share-based compensation.

FICO returned capital to shareholders through a stock repurchase program, buying back $28.4 million worth of common stock during the quarter. The company also continued to pay a quarterly dividend of two cents per common share.

The company maintains a strong liquidity position with $90.7 million in cash and cash equivalents as of December 31, 2015, and access to its $400 million revolving line of credit. FICO believes these resources, along with anticipated cash flows from operations, are sufficient to meet its working capital requirements and upcoming debt obligations.