10-QPeriod: Q1 FY2020

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2019

Filed January 30, 2020For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported strong revenue growth and improved profitability for the quarter ended December 31, 2019. Total revenues increased by 14% year-over-year, driven significantly by the "Scores" segment, which saw a 34% surge. This robust performance was also supported by growth in "Applications" and "Decision Management Software" segments, with a notable 16% increase in cloud revenues as the company continues its cloud-first strategy. Net income saw a substantial 37% increase, largely due to higher operating income and a significant increase in excess tax benefits related to stock-based compensation. The company also continued to return value to shareholders through its stock repurchase program, repurchasing $60.0 million of common stock during the quarter. FICO maintains a solid liquidity position, with ample cash and an available revolving line of credit to fund operations and upcoming debt obligations.

Financial Highlights

49 data points
Beta

Revenue

$298.50M

69.6% Gross Margin

Net Income

$54.92M

18.4% Net Margin

EPS (Diluted)

$1.82

Total Assets

$1.55B

Cash & Equivalents

$111.22M

Free Cash Flow

$53.87M

Financial Statements
Beta
Revenue$298.50M
Cost of Revenue$90.76M
Gross Profit$207.75M
R&D Expenses$38.94M
SG&A Expenses$112.02M
Operating Expenses$246.62M
Operating Income$51.88M
Interest Expense$9.77M
Net Income$54.92M
EPS (Basic)$1.89
EPS (Diluted)$1.82
Shares Outstanding (Basic)29.02M
Shares Outstanding (Diluted)30.17M

Key Highlights

  • 1Total revenues increased by 14% to $298.5 million in Q4 2019 compared to the prior year quarter.
  • 2The 'Scores' segment experienced significant growth, with revenues up 34% to $115.1 million, and operating income up 35%.
  • 3Cloud revenues grew by 16% to $73.7 million, reflecting the company's ongoing cloud-first strategy.
  • 4Net income increased by 37% to $54.9 million, driven by higher operating income and favorable tax benefits.
  • 5The company repurchased $60.0 million of its common stock during the quarter, with $160.3 million remaining under its authorization.
  • 6Cash flow from operations increased by $11.5 million to $60.4 million, supported by higher net income.
  • 7The company adopted new lease accounting standards (Topic 842) effective October 1, 2019, resulting in the recognition of operating lease assets and liabilities on the balance sheet.

Frequently Asked Questions

The primary driver of FICO's revenue growth was its 'Scores' segment, which saw a substantial 34% increase in revenue. This growth was further supported by improvements in the 'Applications' and 'Decision Management Software' segments, alongside a strong performance in cloud-based offerings.

FICO's profitability improved significantly, with net income increasing by 37% year-over-year. This was attributed to a combination of higher operating income from increased revenues and a notable increase in excess tax benefits related to stock-based compensation.

FICO maintains a strong financial position. As of December 31, 2019, the company had $111.2 million in cash and cash equivalents. Additionally, it has a $400 million revolving line of credit available. The company believes these resources, along with anticipated operating cash flows, are sufficient to meet its working capital needs and upcoming debt obligations.

Yes, FICO continued its stock repurchase program, buying back $60.0 million worth of its common stock. The company also recently issued $350 million of senior notes in December 2019, with proceeds used to repay a portion of its revolving credit facility.