10-QPeriod: Q2 FY2020

FAIR ISAAC CORP Quarterly Report for Q2 Ended Mar 31, 2020

Filed April 29, 2020For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported strong financial results for the quarter ended March 31, 2020, with total revenues increasing by 11% year-over-year to $308.0 million. This growth was primarily driven by a significant 24% increase in the Scores segment, which benefited from higher unit prices and increased mortgage volumes. Net income saw a substantial 75% surge to $58.3 million, largely due to the robust revenue growth, improved operating margins, and favorable excess tax benefits related to stock-based compensation. The company continued its commitment to returning value to shareholders through a stock repurchase program, demonstrating financial health and confidence in future prospects, even while navigating the emerging uncertainties of the COVID-19 pandemic.

Financial Highlights

49 data points
Beta

Revenue

$307.97M

71.4% Gross Margin

Net Income

$58.29M

18.9% Net Margin

EPS (Diluted)

$1.94

Total Assets

$1.55B

Cash & Equivalents

$108.97M

Free Cash Flow

$54.83M

Financial Statements
Beta
Revenue$307.97M
Cost of Revenue$88.14M
Gross Profit$219.83M
R&D Expenses$39.44M
SG&A Expenses$103.47M
Operating Expenses$232.25M
Operating Income$75.73M
Interest Expense$11.25M
Net Income$58.29M
EPS (Basic)$2.00
EPS (Diluted)$1.94
Shares Outstanding (Basic)29.19M
Shares Outstanding (Diluted)29.98M

Key Highlights

  • 1Total revenues increased 11% year-over-year to $308.0 million for the quarter ended March 31, 2020.
  • 2The Scores segment was a key growth driver, with revenues up 24% year-over-year, fueled by strong business-to-business scores and consumer services.
  • 3Net income surged 75% to $58.3 million for the quarter, showcasing improved profitability and operational efficiency.
  • 4Operating income grew significantly by 56% to $75.7 million compared to the prior year quarter.
  • 5The company repurchased approximately 0.3 million shares for $96.0 million during the quarter, demonstrating a commitment to shareholder returns.
  • 6FICO adopted new lease accounting standards (Topic 842) as of October 1, 2019, which resulted in the recognition of operating lease assets and liabilities on the balance sheet, but had an immaterial impact on income and cash flows.
  • 7The company is monitoring the impact of the COVID-19 pandemic, which has led to some early signs of adverse effects on purchasing decisions in specific segments, but overall financial performance remained strong for the reported period.

Frequently Asked Questions

The primary driver of revenue growth was the Scores segment, which experienced a 24% increase year-over-year. This was attributed to higher unit prices in unsecured originations, increased mortgage volumes, and growth in business-to-consumer services.

Profitability improved significantly. Net income increased by 75% to $58.3 million, and operating income rose by 56% to $75.7 million, driven by higher revenues and improved operating margins, particularly in the Scores segment.

FICO continues to return value to shareholders through its stock repurchase program. During the quarter, the company repurchased approximately 0.3 million shares for $96.0 million and had $64.3 million remaining under its current repurchase program as of March 31, 2020.

While FICO's financial performance remained strong for the reported quarter, the company acknowledged that COVID-19 has led to early signs of adverse effects on customer purchasing decisions in the Applications and Decision Management Software segments. The Scores segment may also be affected by declining credit origination volumes. The full extent and duration of the impact remain uncertain.