8-K
FAIR ISAAC CORP (FICO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 29, 2020
FAIR ISAAC CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 1-11689 | 94-1499887 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
| 181 Metro Drive, Suite 700<br><br><br>San Jose, California | 95110-1346 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code 408-535-1500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | FICO | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405 of this chapter) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b‑2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
TABLE OF CONTENTS
| Item 2.02. | Results of Operations and Financial Condition. |
|---|---|
| Item 9.01. | Financial Statements and Exhibits. |
| Exhibit 99.1 | |
| Signature |
i
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On April 29, 2020, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter ended March 31, 2020. See the Company’s press release dated April 29, 2020, which is furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 2.02.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d)Exhibits.
| Exhibit | Description |
|---|---|
| 99.1 | Press Release dated April 29, 2020 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FAIR ISAAC CORPORATION | |
|---|---|
| By | /s/ MICHAEL I. MCLAUGHLIN |
| Michael I. McLaughlin | |
| Executive Vice President and Chief Financial | |
| Officer |
Date: April 29, 2020
Exhibit 99.1
FICO Announces Earnings of $1.94 per Share for Second Quarter Fiscal 2020
Revenue of $308 million vs. $278 million in prior year
SAN JOSE, Calif., April 29, 2020 /PRNewswire/ -- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2020.
Second Quarter Fiscal 2020 GAAP Results
Net income for the quarter totaled $58.3 million, or $1.94 per share, versus $33.4 million, or $1.10 per share, in the prior year period.
Net cash provided by operating activities for the quarter was $61.5 million versus $47.8 million in the prior year period.
Second Quarter Fiscal 2020 Non-GAAP Results
Non-GAAP Net Income for the quarter was $64.3 million versus $47.3 million in the prior year period. Non-GAAP EPS for the quarter was $2.14 versus $1.56 in the prior year period. Free cash flow for the quarter was $54.8 million versus $43.6 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 2020 GAAP Revenue
The company reported revenues of $308.0 million for the quarter as compared to $278.2 million reported in the prior year period.
"As the world struggles with the pandemic and its economic impact, we are dedicated to standing by our customers to support their decisioning during this critical time," said Will Lansing, chief executive officer. "While we face near-term uncertainty, I'm pleased that our second quarter results were strong and that we are well positioned to manage the challenges in front of us."
Revenues for the second quarter of fiscal 2020 across each of the company's three operating segments were as follows:
- Applications revenues, which include the company's preconfigured decision management applications and associated professional services, were $140.3 million in the second quarter, compared to $141.8 million in the prior year period, a decrease of 1%, due primarily to decreased license and services revenues in Collections and Recovery Solutions.
- Scores revenues, which include the company's business-to-business (B2B) scoring solutions and associated professional services, and business-to-consumer (B2C) service, were $129.2 million in the second quarter, compared to $104.4 million in the prior year period, an increase of 24%. B2B revenue increased 27% and B2C revenue increased 15% from the prior year period.
- Decision Management Software revenues, which include Blaze Advisor^®^, Xpress Optimization, Decision Management Platform and related professional services, were $38.5 million in the second quarter compared to $32.0 million in the prior year period, an increase of 20%, due primarily to increased license and SaaS subscription revenues.
Outlook
Due to the lack of visibility related to the COVID-19 pandemic and recovery, the Company has withdrawn financial guidance at this time.
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 2020 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 29, 2021.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 165 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 100 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/
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 the Company's business, operations and personnel, the success of the Company's Decision Management 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, regulatory changes applicable to the use of consumer credit and other data, the failure to protect such data, the failure to realize the anticipated benefits of any acquisitions, material adverse developments in global economic conditions or in the markets we serve, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2019 and subsequent quarterly reports on Form 10-Q. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
| FAIR ISAAC CORPORATION | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| March 31, | September 30, | |||||
| 2020 | 2019 | |||||
| ASSETS: | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ <br> 108,966 | $ 106,426 | ||||
| Accounts receivable,<br>net | 307,307 | 297,427 | ||||
| Prepaid expenses and other current assets | 67,398 | 51,853 | ||||
| Total current assets | 483,671 | 455,706 | ||||
| Marketable securities and investments | 21,138 | 21,865 | ||||
| Property and equipment, net | 59,491 | 53,027 | ||||
| Operating lease right-of-use-assets | 87,142 | - | ||||
| Goodwill and intangible assets, net | 815,827 | 817,681 | ||||
| Other assets | 84,863 | 85,169 | ||||
| $ 1,552,132 | $ 1,433,448 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||
| Current liabilities: | ||||||
| Accounts payable and other accrued liabilities | $ <br> 87,911 | $ 55,572 | ||||
| Accrued compensation and<br>employee benefits | 68,507 | 106,240 | ||||
| Deferred revenue | 114,406 | 111,016 | ||||
| Current maturities on debt | 209,000 | 218,000 | ||||
| Total current liabilities | 479,824 | 490,828 | ||||
| Long-term debt | 738,632 | 606,790 | ||||
| Operating lease liabilities | 77,485 | - | ||||
| Other liabilities | 42,040 | 46,063 | ||||
| Total liabilities | 1,337,981 | 1,143,681 | ||||
| Stockholders' equity | 214,151 | 289,767 | ||||
| $ 1,552,132 | $ 1,433,448 | |||||
| FAIR ISAAC CORPORATION | ||||||
| --- | --- | --- | --- | --- | ||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||
| (In thousands, except per share data) | ||||||
| (Unaudited) | ||||||
| Quarter Ended | Six Months Ended | |||||
| March 31, | March 31, | |||||
| 2020 | 2019 | 2020 | 2019 | |||
| Revenues: | ||||||
| Transactional and maintenance | $ <br> 240,702 | $ 211,779 | $ 461,076 | $ 405,972 | ||
| Professional<br>services | 47,905 | 50,555 | 91,930 | 91,363 | ||
| License | 19,364 | 15,900 | 53,469 | 43,155 | ||
| Total revenues | 307,971 | 278,234 | 606,475 | 540,490 | ||
| Operating expenses: | ||||||
| Cost of revenues | 88,139 | 85,568 | 178,897 | 161,634 | ||
| Research & development | 39,439 | 37,684 | 78,382 | 73,110 | ||
| Selling, general and administrative | 103,465 | 104,930 | 215,486 | 205,188 | ||
| Amortization of intangible assets | 1,202 | 1,503 | 2,998 | 3,005 | ||
| Restructuring and acquisition-related | - | - | 3,104 | - | ||
| Total operating expenses | 232,245 | 229,685 | 478,867 | 442,937 | ||
| Operating income | 75,726 | 48,549 | 127,608 | 97,553 | ||
| Other expense, net | (13,262) | (8,575) | (23,249) | (20,423) | ||
| Income before income taxes | 62,464 | 39,974 | 104,359 | 77,130 | ||
| Income tax provision (benefit) | 4,176 | 6,593 | (8,850) | 3,742 | ||
| Net income | $ 58,288 | $ 33,381 | $ 113,209 | $ 73,388 | ||
| Basic earnings per share: | $ <br> 2.00 | $ 1.15 | $ 3.89 | $ 2.53 | ||
| Diluted earnings per<br>share: | $ 1.94 | $ 1.10 | $ 3.76 | $ 2.42 | ||
| Shares used in computing earnings per share: | ||||||
| Basic | 29,194 | 29,074 | 29,109 | 29,017 | ||
| Diluted | 29,985 | 30,259 | 30,076 | 30,297 | ||
| FAIR ISAAC CORPORATION | ||||||
| --- | --- | --- | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| Six Months Ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ 113,209 | $ 73,388 | ||||
| Adjustments to reconcile net income to net<br>cash provided by | ||||||
| operating activities: | ||||||
| Depreciation and amortization | 15,535 | 15,786 | ||||
| Share-based compensation | 45,933 | 42,336 | ||||
| Changes in operating assets and<br>liabilities | (66,649) | (36,624) | ||||
| Other, net | 13,831 | 1,760 | ||||
| Net cash provided by operating<br>activities | 121,859 | 96,646 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (13,166) | (10,644) | ||||
| Net activity from marketable securities | (1,847) | (2,129) | ||||
| Other, net | 55 | - | ||||
| Net cash used in investing<br>activities | (14,958) | (12,773) | ||||
| Cash flows from financing activities: | ||||||
| Proceeds from revolving line of credit | 156,000 | 138,000 | ||||
| Payments on revolving line of credit | (377,000) | (80,000) | ||||
| Proceeds from issuance of senior notes | 350,000 | - | ||||
| Proceeds from issuances of common stock | 23,216 | 12,850 | ||||
| Taxes paid related to net share settlement of equity awards | (97,000) | (48,470) | ||||
| Repurchases of common stock | (148,008) | (119,723) | ||||
| Other, net | (7,552) | - | ||||
| Net cash used in financing<br>activities | (100,344) | (97,343) | ||||
| Effect of exchange rate changes on cash | (4,017) | 332 | ||||
| Increase (decrease) in cash and cash equivalents | 2,540 | (13,138) | ||||
| Cash and cash equivalents, beginning of period | 106,426 | 90,023 | ||||
| Cash and cash equivalents, end of period | $ 108,966 | $ 76,885 | ||||
| REVENUE BY SEGMENT | ||||||
| --- | --- | --- | --- | --- | ||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| Quarter Ended | Six Months Ended | |||||
| March 31, | March 31, | |||||
| 2020 | 2019 | 2020 | 2019 | |||
| Applications revenues: | ||||||
| Transactional and maintenance | $ 97,789 | $ 97,074 | $ 196,626 | $ 194,239 | ||
| Professional services | 35,134 | 35,981 | 69,157 | 67,443 | ||
| License | 7,356 | 8,760 | 26,674 | 27,792 | ||
| Total applications revenues | $ 140,279 | $ 141,815 | $ 292,457 | $ 289,474 | ||
| Scores revenues: | ||||||
| Transactional and maintenance | $ 127,610 | $ 102,363 | $ 235,056 | $ 187,184 | ||
| Professional services | 819 | 901 | 1,083 | 1,602 | ||
| License | 719 | 1,139 | 8,147 | 1,300 | ||
| Total scores revenues | $ 129,148 | $ 104,403 | $ 244,286 | $ 190,086 | ||
| Decision Management Software revenues: | ||||||
| Transactional and maintenance | $ 15,303 | $ 12,342 | $ 29,394 | $ 24,549 | ||
| Professional services | 11,952 | 13,673 | 21,690 | 22,318 | ||
| License | 11,289 | 6,001 | 18,648 | 14,063 | ||
| Total decision management software<br>revenues | $ 38,544 | $ 32,016 | $ 69,732 | $ 60,930 | ||
| Total revenues: | ||||||
| Transactional and maintenance | $ 240,702 | $ 211,779 | $ 461,076 | $ 405,972 | ||
| Professional services | 47,905 | 50,555 | 91,930 | 91,363 | ||
| License | 19,364 | 15,900 | 53,469 | 43,155 | ||
| Total revenues | $ 307,971 | $ 278,234 | $ 606,475 | $ 540,490 | ||
| FAIR ISAAC CORPORATION | ||||||
| --- | --- | --- | --- | --- | ||
| NON-GAAP RESULTS | ||||||
| (In thousands, except per share data) | ||||||
| (Unaudited) | ||||||
| Quarter Ended | Six Months Ended | |||||
| March 31, | March 31, | |||||
| 2020 | 2019 | 2020 | 2019 | |||
| GAAP net income | $ 58,288 | $ 33,381 | $ 113,209 | $ 73,388 | ||
| Amortization of intangible assets | 1,202 | 1,503 | 2,998 | 3,005 | ||
| Restructuring and acquisition-related | - | - | 3,104 | - | ||
| Stock-based compensation expense | 22,788 | 20,482 | 45,933 | 42,336 | ||
| Income tax adjustments | (6,045) | (5,594) | (12,807) | (11,813) | ||
| Excess tax benefit | (11,925) | (2,501) | (33,943) | (15,734) | ||
| Non-GAAP net income | $ 64,308 | $ 47,271 | $ 118,494 | $ 91,182 | ||
| GAAP diluted earnings per share | $ 1.94 | $ 1.10 | $ 3.76 | $ 2.42 | ||
| Amortization of intangible assets | 0.04 | 0.05 | 0.10 | 0.10 | ||
| Restructuring and acquisition-related | - | - | 0.10 | - | ||
| Stock-based compensation expense | 0.76 | 0.68 | 1.53 | 1.40 | ||
| Income tax adjustments | (0.20) | (0.18) | (0.43) | (0.39) | ||
| Excess tax benefit | (0.40) | (0.08) | (1.13) | (0.52) | ||
| Non-GAAP diluted earnings per share | $ 2.14 | $ 1.56 | $ 3.94 | $ 3.01 | ||
| Free cash flow | ||||||
| Net cash provided by operating activities | $ 61,494 | $ 47,789 | $ 121,859 | $ 96,646 | ||
| Capital expenditures | (6,667) | (4,170) | (13,167) | (10,644) | ||
| Free cash flow | $ 54,827 | $ 43,619 | $ 108,692 | $ 86,002 | 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 the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, excess tax benefit, and adjustment to tax valuation allowance<br>items. Free cash flow excludes capital expenditures and dividends paid. 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<br>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<br>decision-making. |
CONTACT: Investors/Analysts: Steve Weber, (800) 213-5542, investor@fico.com; Media: Greg Jawski, Porter Novelli, (212) 601-8248, greg.jawski@porternovelli.com