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

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

BOZEMAN, Mont.–(BUSINESS WIRE)–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

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) 459-7125

investor@fico.com