8-K
FAIR ISAAC CORP (FICO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) November 9, 2022
FAIR ISAAC CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-11689 | 94-1499887 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 5 West Mendenhall, Suite 105<br><br> <br>Bozeman, Montana | 59715 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code 406-982-7276
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<br><br> <br>Symbol(s) | Name of each exchange on which<br><br> <br>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 of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 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 November 9, 2022, Fair Isaac Corporation (the “Company”) reported its financial results for the quarter ended September 30, 2022. See the Company’s press release dated November 9, 2022, 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 November 9, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
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: November 9, 2022
Exhibit 99.1
FICO Announces Earnings of $3.55 per Share for Fourth Quarter Fiscal 2022
Revenue of $349 million vs. $335 million in prior year
BOZEMAN, Mont.--(BUSINESS WIRE)--November 9, 2022--FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its fourth fiscal quarter ended September 30, 2022.
Fourth Quarter Fiscal 2022 GAAP Results
Net income for the quarter totaled $90.7 million, or $3.55 per share, versus $85.7 million, or $3.00 per share, in the prior year period.
Net cash provided by operating activities for the quarter was $144.8 million versus $91.8 million in the prior year period.
Fourth Quarter Fiscal 2022 Non-GAAP Results
Non-GAAP Net Income for the quarter was $112.5 million versus $111.9 million in the prior year period. Non-GAAP EPS for the quarter was $4.40 versus $3.92 in the prior year period. **** Free cash flow was $144.0 million for the current quarter versus $90.0 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.
Fourth Quarter Fiscal 2022 GAAP Revenue
The company reported revenues of $348.7 million for the quarter as compared to $334.6 million reported in the prior year period.
“We had another strong finish to a great year, posting strong growth across all our metrics,” said Will Lansing, chief executive officer. “We are also pleased to provide double-digit percentage EPS growth in our 2023 guidance, which again demonstrates the remarkable resilience of our business model even in a turbulent market.”
Revenues for the fourth quarter of fiscal 2022 for the company’s two operating segments were as follows:
- Software revenues, which include the company’s analytics and digital decisioning technology, as well as associated professional services, were $174.7 million in the fourth quarter, compared to $166.0 million in the prior year period, an increase of 5%, due to increased recurring revenue, partially offset by decreases in professional services. Software Annual Recurring Revenue was up 9% year-over-year, consisting of 52% platform ARR growth and 1% non-platform growth. Software Dollar-Based Net Retention Rate was 107% in the fourth quarter, with platform software at 128% and non-platform software at 100%.
- Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions, were $174.1 million in the fourth quarter, compared to $168.6 million in the prior year period, an increase of 3%. B2B revenue increased 6%, driven largely by unit price increases and increases in card and personal loan originations volumes, partially offset by declines in mortgage originations volumes. B2C revenue decreased 3% from the prior year period due to lower volumes at myFICO.com.
Outlook
The company is providing the following guidance for fiscal 2023:
| Fiscal 2023 Guidance | |
|---|---|
| Revenues | $1.475 billion |
| GAAP Net Income | $401 million |
| GAAP EPS | $16.00 |
| Non-GAAP Net Income | $487 million |
| Non-GAAP EPS | $19.42 |
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 fourth quarter fiscal 2022 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 November 9, 2023.
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, 2021 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) | ||||||
| September 30, | September 30, | |||||
| 2022 | 2021 | |||||
| ASSETS: | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 133,202 | $ | 195,354 | ||
| Accounts receivable, net | 322,410 | 312,107 | ||||
| Prepaid expenses and other current assets | 29,103 | 43,513 | ||||
| Total current assets | 484,715 | 550,974 | ||||
| Marketable securities and investments | 25,650 | 33,196 | ||||
| Property and equipment, net | 17,580 | 27,913 | ||||
| Operating lease right-of-use-assets | 36,688 | 47,275 | ||||
| Goodwill and intangible assets, net | 763,084 | 792,284 | ||||
| Other assets | 114,317 | 116,134 | ||||
| $ | 1,442,034 | $ | 1,567,776 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT: | ||||||
| Current liabilities: | ||||||
| Accounts payable and other accrued liabilities | $ | 83,521 | $ | 100,284 | ||
| Accrued compensation and employee benefits | 97,893 | 103,506 | ||||
| Deferred revenue | 120,045 | 105,417 | ||||
| Current maturities on debt | 30,000 | 250,000 | ||||
| Total current liabilities | 331,459 | 559,207 | ||||
| Long-term debt | 1,823,669 | 1,009,018 | ||||
| Operating lease liabilities | 39,192 | 53,670 | ||||
| Other liabilities | 49,661 | 56,823 | ||||
| Total liabilities | 2,243,981 | 1,678,718 | ||||
| Stockholders' deficit | (801,947 | ) | (110,942 | ) | ||
| $ | 1,442,034 | $ | 1,567,776 |
| FAIR ISAAC CORPORATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Quarter Ended | Year Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenues: | ||||||||||||
| On-premises and SaaS software | $ | 146,788 | $ | 135,652 | $ | 564,751 | $ | 517,888 | ||||
| Professional services | 27,901 | 30,350 | 105,876 | 144,501 | ||||||||
| Scores | 174,059 | 168,575 | 706,643 | 654,147 | ||||||||
| Total revenues | 348,748 | 334,577 | 1,377,270 | 1,316,536 | ||||||||
| Operating expenses: | ||||||||||||
| Cost of revenues | 82,486 | 72,361 | 302,174 | 332,462 | ||||||||
| Research & development | 35,511 | 41,142 | 146,758 | 171,231 | ||||||||
| Selling, general and administrative | 96,153 | 97,369 | 383,863 | 396,281 | ||||||||
| Amortization of intangible assets | 442 | 563 | 2,061 | 3,255 | ||||||||
| Restructuring and impairment charges | - | 7,957 | - | 7,957 | ||||||||
| Gains on product line asset sales and business divestiture | - | - | - | (100,139 | ) | |||||||
| Total operating expenses | 214,592 | 219,392 | 834,856 | 811,047 | ||||||||
| Operating income | 134,156 | 115,185 | 542,414 | 505,489 | ||||||||
| Other expense, net | (21,046 | ) | (9,719 | ) | (71,105 | ) | (32,347 | ) | ||||
| Income before income taxes | 113,110 | 105,466 | 471,309 | 473,142 | ||||||||
| Provision for income taxes | 22,411 | 19,746 | 97,768 | 81,058 | ||||||||
| Net income | $ | 90,699 | $ | 85,720 | $ | 373,541 | $ | 392,084 | ||||
| Basic earnings per share: | $ | 3.60 | $ | 3.06 | $ | 14.34 | $ | 13.65 | ||||
| Diluted earnings per share: | $ | 3.55 | $ | 3.00 | $ | 14.18 | $ | 13.40 | ||||
| Shares used in computing earnings per share: | ||||||||||||
| Basic | 25,221 | 28,043 | 26,042 | 28,734 | ||||||||
| Diluted | 25,573 | 28,531 | 26,347 | 29,260 |
| FAIR ISAAC CORPORATION | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| Year Ended | ||||||
| September 30, | ||||||
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 373,541 | $ | 392,084 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 20,465 | 25,592 | ||||
| Share-based compensation | 115,355 | 112,457 | ||||
| Changes in operating assets and liabilities | (35,911 | ) | (12,740 | ) | ||
| Gains on product line asset sales and business divestiture | - | (100,139 | ) | |||
| Other, net | 36,000 | 6,563 | ||||
| Net cash provided by operating activities | 509,450 | 423,817 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (6,029 | ) | (7,569 | ) | ||
| Net activity from marketable securities | (1,900 | ) | (1,802 | ) | ||
| Proceeds from product line asset sales and business divestiture | 2,258 | 147,431 | ||||
| Other, net | - | (210 | ) | |||
| Net cash provided by (used in) investing activities | (5,671 | ) | 137,850 | |||
| Cash flows from financing activities: | ||||||
| Proceeds from revolving line of credit and term loan | 1,039,000 | 682,000 | ||||
| Payments on revolving line of credit and term loan | (988,250 | ) | (259,000 | ) | ||
| Proceeds from issuance of senior notes | 550,000 | - | ||||
| Proceeds from issuance of treasury stock under employee stock plans | 16,026 | 20,881 | ||||
| Taxes paid related to net share settlement of equity awards | (50,942 | ) | (91,609 | ) | ||
| Repurchases of common stock | (1,104,180 | ) | (874,179 | ) | ||
| Other, net | (8,819 | ) | (1,664 | ) | ||
| Net cash used in financing activities | (547,165 | ) | (523,571 | ) | ||
| Effect of exchange rate changes on cash | (18,766 | ) | (136 | ) | ||
| Increase (decrease) in cash and cash equivalents | (62,152 | ) | 37,960 | |||
| Cash and cash equivalents, beginning of period | 195,354 | 157,394 | ||||
| Cash and cash equivalents, end of period | $ | 133,202 | $ | 195,354 |
| FAIR ISAAC CORPORATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NON-GAAP RESULTS | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Quarter Ended | Year Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| GAAP net income | $ | 90,699 | $ | 85,720 | $ | 373,541 | $ | 392,084 | ||||
| Amortization of intangible assets | 442 | 563 | 2,061 | 3,255 | ||||||||
| Restructuring and impairment charges | - | 7,957 | - | 7,957 | ||||||||
| Gains on product line asset sales and business divestiture | - | - | - | (100,139 | ) | |||||||
| Share-based compensation expense | 28,991 | 28,358 | 115,354 | 112,457 | ||||||||
| Income tax adjustments | (7,043 | ) | (8,724 | ) | (28,055 | ) | (9,090 | ) | ||||
| Excess tax benefit | (595 | ) | (1,925 | ) | (9,125 | ) | (23,998 | ) | ||||
| Non-GAAP net income | $ | 112,494 | $ | 111,949 | $ | 453,776 | $ | 382,526 | ||||
| GAAP diluted earnings per share | $ | 3.55 | $ | 3.00 | $ | 14.18 | $ | 13.40 | ||||
| Amortization of intangible assets | 0.02 | 0.02 | 0.08 | 0.11 | ||||||||
| Restructuring and impairment charges | - | 0.28 | - | 0.27 | ||||||||
| Gains on product line asset sales and business divestiture | - | - | - | (3.42 | ) | |||||||
| Share-based compensation expense | 1.13 | 0.99 | 4.38 | 3.84 | ||||||||
| Income tax adjustments | (0.28 | ) | (0.31 | ) | (1.06 | ) | (0.31 | ) | ||||
| Excess tax benefit | (0.02 | ) | (0.07 | ) | (0.35 | ) | (0.82 | ) | ||||
| Non-GAAP diluted earnings per share | $ | 4.40 | $ | 3.92 | $ | 17.22 | $ | 13.07 | ||||
| Free cash flow | ||||||||||||
| Net cash provided by operating activities | $ | 144,826 | $ | 91,755 | $ | 509,450 | $ | 423,817 | ||||
| Capital expenditures | (797 | ) | (1,777 | ) | (6,029 | ) | (7,569 | ) | ||||
| Free cash flow | $ | 144,029 | $ | 89,978 | $ | 503,421 | $ | 416,248 | ||||
| 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) | |||
| Fiscal 2023 Guidance | |||
| GAAP net income | $ | 401 | |
| Amortization of intangible assets | 1 | ||
| Share-based compensation expense | 120 | ||
| Income tax adjustments | (30 | ) | |
| Excess tax benefit | (5 | ) | |
| Non-GAAP net income | $ | 487 | |
| GAAP diluted earnings per share | $ | 16.00 | |
| Amortization of intangible assets | 0.04 | ||
| Share-based compensation expense | 4.78 | ||
| Income tax adjustments | (1.21 | ) | |
| Excess tax benefit | (0.20 | ) | |
| Non-GAAP diluted earnings per share | $ | 19.42 | |
| 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.
Contacts
Investors/Analysts:
Steve Weber
Fair Isaac Corporation
\(800\) 213-5542
investor@fico.com