FRI - FICO Announces Earnings of $4.00 per Share for Second Quarter Fiscal 2023

April, 27 2023 04:15 PM First Trust S&P REIT Index Fund

Revenue of $380 million vs. $357 million in prior year

FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2023.

Second Quarter Fiscal 2023 GAAP Results

Net income for the quarter totaled $101.6 million, or $4.00 per share, versus $104.4 million, or $3.95 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $89.8 million versus $122.6 million in the prior year period.

Second Quarter Fiscal 2023 Non-GAAP Results

Non-GAAP Net Income for the quarter was $121.4 million versus $123.7 million in the prior year period. Non-GAAP EPS for the quarter was $4.78 versus $4.68 in the prior year period. Free cash flow was $88.3 million for the current quarter versus $120.2 million in the prior year period. The Non-GAAP financial measures are described in the financial table captioned “Non-GAAP Results” and are reconciled to the corresponding GAAP results in the financial tables at the end of this release.

Second Quarter Fiscal 2023 GAAP Revenue

The company reported revenues of $380.3 million for the quarter as compared to $357.2 million reported in the prior year period.

“Halfway through our fiscal year we continue to deliver strong results,” said Will Lansing, chief executive officer. “We had our biggest quarter ever, with record Scores revenues and strong Software ARR growth.”

Revenues for the second quarter of fiscal 2023 for the company’s two operating segments were as follows:

Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions, were $198.5 million in the second quarter, compared to $183.7 million in the prior year period, an increase of 8%. B2B revenue increased 16%, driven largely by unit price increases partially offset by declines in mortgage originations volumes. B2C revenue decreased 8% from the prior year period.
Software revenues, which include the company’s analytics and digital decisioning technology, as well as associated professional services, were $181.8 million in the second quarter, compared to $173.5 million in the prior year period, an increase of 5%, due to increased recurring revenue, partially offset by decreases in point-in-time revenues. Software Annual Recurring Revenue was up 17% year-over-year, consisting of 60% platform ARR growth and 7% non-platform growth. Software Dollar-Based Net Retention Rate was 114% in the second quarter, with platform software at 146% and non-platform software at 105%.

Outlook

The company is updating its previously provided guidance for fiscal 2023:

Previous 2023 Guidance

Updated 2023 Guidance

Revenues

$1.463 billion

$1.48 billion

GAAP Net Income

$401 million

$406 million

GAAP EPS

$16.00

$16.15

Non-GAAP Net Income

$487 million

$489 million

Non-GAAP EPS

$19.42

$19.45

The Non-GAAP financial measures are described in the financial table captioned “Reconciliation of Non-GAAP Guidance.”

Company to Host Conference Call

The company will host a webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its second quarter fiscal 2023 results and provide various strategic and operational updates. The call can be accessed at FICO's web site at www.fico.com/investors . A replay of the webcast will be available at our Past Events page through April 27, 2024.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at http://www.fico.com

Join the conversation at https://twitter.com/fico & http://www.fico.com/en/blogs/

For FICO news and media resources, visit www.fico.com/news .

FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.

Statement Concerning Forward-Looking Information

Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of COVID-19 on macroeconomic conditions and FICO’s business, operations and personnel, the success of the Company’s business strategy and reengineering initiative, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, the effects of, and any changes in, laws and regulations applicable to the Company’s business or its customers, the failure to protect data privacy and security, the failure to realize the anticipated benefits of any acquisitions, or divestitures, and material adverse developments in global economic conditions or in the markets we serve. Additional information on these risks and uncertainties and other factors that could affect FICO's future results are described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2022 and its subsequent filings with the SEC. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. FICO disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)













March 31,

September 30,

2023

2022
ASSETS:



Current assets:



Cash and cash equivalents
$
137,771


$
133,202

Accounts receivable, net

338,239



322,410

Prepaid expenses and other current assets

45,316



29,103

Total current assets

521,326



484,715





Marketable securities and investments

30,812



25,650

Property and equipment, net

13,664



17,580

Operating lease right-of-use-assets

29,638



36,688

Goodwill and intangible assets, net

775,797



763,084

Other assets

131,194



114,317


$
1,502,431


$
1,442,034





LIABILITIES AND STOCKHOLDERS' DEFICIT:



Current liabilities:



Accounts payable and other accrued liabilities
$
82,067


$
83,521

Accrued compensation and employee benefits

65,863



97,893

Deferred revenue

118,348



120,045

Current maturities on debt

107,000



30,000

Total current liabilities

373,278



331,459





Long-term debt

1,817,663



1,823,669

Operating lease liabilities

28,825



39,192

Other liabilities

53,458



49,661

Total liabilities

2,273,224



2,243,981





Stockholders' deficit

(770,793
)


(801,947
)

$
1,502,431


$
1,442,034

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

















Quarter Ended

Six Months Ended

March 31,

March 31,

2023

2022

2023

2022
Revenues:







On-premises and SaaS software
$
154,584


$
149,088


$
299,144


$
275,426

Professional services

27,175



24,365



49,497



50,901

Scores

198,507



183,742



376,495



353,229

Total revenues

380,266



357,195



725,136



679,556









Operating expenses:







Cost of revenues

79,806



71,794



156,375



140,997

Research & development

40,266



36,387



76,899



75,367

Selling, general and administrative

100,158



96,414



193,153



194,462

Amortization of intangible assets

275



543



550



1,087

Gain on product line asset sale

-



-



(1,941
)


-

Total operating expenses

220,505



205,138



425,036



411,913

Operating income

159,761



152,057



300,100



267,643

Other expense, net

(22,292
)


(19,572
)


(44,728
)


(30,338
)
Income before income taxes

137,469



132,485



255,372



237,305

Provision for income taxes

35,919



28,102



56,179



47,963

Net income
$
101,550


$
104,383


$
199,193


$
189,342

























Basic earnings per share:
$
4.04


$
3.99


$
7.94


$
7.10

Diluted earnings per share:
$
4.00


$
3.95


$
7.83


$
7.02









Shares used in computing earnings per share:







Basic

25,116



26,145



25,080



26,662

Diluted

25,419



26,421



25,431



26,978

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)









Six Months Ended

March 31,

2023

2022
Cash flows from operating activities:



Net income
$
199,193


$
189,342

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

8,294



10,656

Share-based compensation

56,755



57,814

Changes in operating assets and liabilities

(68,391
)


(25,523
)
Gain on product line asset sale

(1,941
)


-

Other, net

(11,666
)


15,195

Net cash provided by operating activities

182,244



247,484





Cash flows from investing activities:



Purchases of property and equipment

(2,377
)


(3,293
)
Net activity from marketable securities

(3,384
)


(2,628
)
Proceeds from product line asset sales, net of cash transferred

(6,126
)


2,257

Net cash used in investing activities

(11,887
)


(3,664
)




Cash flows from financing activities:



Proceeds from revolving line of credit and term loan

228,000



800,000

Payments on revolving line of credit and term loan

(158,500
)


(806,750
)
Proceeds from issuance of senior notes

-



550,000

Proceeds from issuance of treasury stock under employee stock plans

15,217



11,117

Taxes paid related to net share settlement of equity awards

(73,672
)


(47,849
)
Repurchases of common stock

(184,290
)


(760,861
)
Other, net

-



(8,819
)
Net cash used in financing activities

(173,245
)


(263,162
)




Effect of exchange rate changes on cash

7,457



(1,793
)




Increase (decrease) in cash and cash equivalents

4,569



(21,135
)
Cash and cash equivalents, beginning of period

133,202



195,354

Cash and cash equivalents, end of period
$
137,771


$
174,219

FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)

















Quarter Ended

Six Months Ended

March 31,

March 31,

2023

2022

2023

2022








GAAP net income
$
101,550


$
104,383


$
199,193


$
189,342

Amortization of intangible assets

275



543



550



1,087

Gain on product line asset sale

-



-



(1,941
)


-

Share-based compensation expense

27,053



27,936



56,755



57,814

Income tax adjustments

(6,818
)


(6,677
)


(13,732
)


(14,170
)
Excess tax benefit

(612
)


(2,495
)


(10,916
)


(8,452
)
Non-GAAP net income
$
121,448


$
123,690


$
229,909


$
225,621

















GAAP diluted earnings per share
$
4.00


$
3.95


$
7.83


$
7.02

Amortization of intangible assets

0.01



0.02



0.02



0.04

Gain on product line asset sale

-



-



(0.08
)


-

Share-based compensation expense

1.06



1.06



2.23



2.14

Income tax adjustments

(0.27
)


(0.25
)


(0.54
)


(0.53
)
Excess tax benefit

(0.02
)


(0.09
)


(0.43
)


(0.31
)
Non-GAAP diluted earnings per share
$
4.78


$
4.68


$
9.04


$
8.36









Free cash flow







Net cash provided by operating activities
$
89,803


$
122,603


$
182,244


$
247,484

Capital expenditures

(1,526
)


(2,398
)


(2,377
)


(3,293
)
Free cash flow
$
88,277


$
120,205


$
179,867


$
244,191









Note: The numbers may not sum to total due to rounding.

About Non-GAAP Financial Measures

To supplement the consolidated GAAP financial statements, the company uses the following non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, and free cash flow. Non-GAAP net income and non-GAAP EPS exclude, to the extent applicable, such items as the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, excess tax benefit, and adjustment to tax valuation allowance items. Free cash flow excludes capital expenditures. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Management uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of recurring business results including significant non-cash expenses. We believe management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key measures used by management in its financial and operating decision-making.

FAIR ISAAC CORPORATION
RECONCILIATION OF NON-GAAP GUIDANCE
(In millions, except per share data)
(Unaudited)




Previous Fiscal 2023 Guidance
Updated Fiscal 2023 Guidance



GAAP net income
$
401

$
406

Amortization of intangible assets

1


1

Share-based compensation expense

120


124

Income tax adjustments

(30
)

(31
)
Excess tax benefit

(5
)

(11
)
Non-GAAP net income
$
487

$
489







GAAP diluted earnings per share
$
16.00

$
16.15

Amortization of intangible assets

0.04


0.04

Share-based compensation expense

4.78


4.93

Income tax adjustments

(1.21
)

(1.23
)
Excess tax benefit

(0.20
)

(0.44
)
Non-GAAP diluted earnings per share
$
19.42

$
19.45







Note: The numbers may not sum to total due to rounding.

About Non-GAAP Financial Measures

View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005636/en/

Investors/Analysts:

Steve Weber
Fair Isaac Corporation
(800) 459-7125
investor@fico.com

Company Name:	First Trust S&P REIT Index Fund
Stock Symbol:	FRI
Market:	NYSE

Twitter