Business Wire

FICO Announces Earnings of $5.08 per Share for Third Quarter Fiscal 2023

8 Mins read
Business Wire

FICO Announces Earnings of $5.08 per Share for Third Quarter Fiscal 2023

8 Mins read

Revenue of $399 million vs. $349 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 third fiscal quarter ended June 30, 2023.


Third Quarter Fiscal 2023 GAAP Results

Net income for the quarter totaled $128.8 million, or $5.08 per share, versus $93.5 million, or $3.61 per share, in the prior year period. The current quarter earnings include a noncash reduction to income tax expense of $9.5 million, or $0.37 per share, associated with the valuation of our research and development tax credits.

Net cash provided by operating activities for the quarter was $122.6 million versus $117.1 million in the prior year period.

Third Quarter Fiscal 2023 Non-GAAP Results

Non-GAAP Net Income for the quarter was $143.4 million versus $115.7 million in the prior year period. Non-GAAP EPS for the quarter was $5.66 versus $4.47 in the prior year period. Free cash flow was $121.8 million for the current quarter versus $115.2 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.

Third Quarter Fiscal 2023 GAAP Revenue

The company reported revenues of $398.7 million for the quarter as compared to $349.0 million reported in the prior year period.

“We delivered another excellent quarter, with record-setting results throughout the business,” said Will Lansing, chief executive officer. “We posted solid growth in our Scores segment, and again delivered strong ARR growth in Software.”

Revenues for the third 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 $201.8 million in the third quarter, compared to $179.4 million in the prior year period, an increase of 13%. B2B revenue increased 24%, driven largely by unit price increases partially offset by declines in mortgage originations volumes. B2C revenue decreased 11% from the prior year period due to lower volumes at myFICO.com.
  • Software revenues, which include the company’s analytics and digital decisioning technology, as well as associated professional services, were $196.9 million in the third quarter, compared to $169.6 million in the prior year period, an increase of 16%, due to increased recurring and point-in-time revenues, partially offset by decreases in services revenue. Software Annual Recurring Revenue was up 20% year-over-year, consisting of 53% platform ARR growth and 11% non-platform growth. Software Dollar-Based Net Retention Rate was 117% in the third quarter, with platform software at 142% and non-platform software at 109%.

Outlook

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

 

Previous 2023 Guidance

Updated 2023 Guidance

Revenues

$1.48 billion

$1.50 billion

GAAP Net Income

$406 million

$428 million

GAAP EPS

$16.15

$16.90

Non-GAAP Net Income

$489 million

$500 million

Non-GAAP EPS

$19.45

$19.70

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 third 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 August 2, 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 https://www.fico.com/en

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

For FICO news and media resources, visit https://www.fico.com/en/newsroom

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)
 
 
 
June 30, September 30,

 

2023

 

 

2022

 

ASSETS:
Current assets:
Cash and cash equivalents

$

163,022

 

$

133,202

 

Accounts receivable, net

 

384,024

 

 

322,410

 

Prepaid expenses and other current assets

 

27,965

 

 

29,103

 

Total current assets

 

575,011

 

 

484,715

 

 
Marketable securities and investments

 

33,300

 

 

25,650

 

Property and equipment, net

 

11,799

 

 

17,580

 

Operating lease right-of-use-assets

 

26,597

 

 

36,688

 

Goodwill and intangible assets, net

 

777,812

 

 

763,084

 

Other assets

 

160,050

 

 

114,317

 

$

1,584,569

 

$

1,442,034

 

 
LIABILITIES AND STOCKHOLDERS’ DEFICIT:
Current liabilities:
Accounts payable and other accrued liabilities

$

67,101

 

$

83,521

 

Accrued compensation and employee benefits

 

83,546

 

 

97,893

 

Deferred revenue

 

127,299

 

 

120,045

 

Current maturities on debt

 

115,000

 

 

30,000

 

Total current liabilities

 

392,946

 

 

331,459

 

 
Long-term debt

 

1,814,660

 

 

1,823,669

 

Operating lease liabilities

 

24,619

 

 

39,192

 

Other liabilities

 

56,320

 

 

49,661

 

Total liabilities

 

2,288,545

 

 

2,243,981

 

 
Stockholders’ deficit

 

(703,976

)

 

(801,947

)

$

1,584,569

 

$

1,442,034

 

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
 
Quarter Ended Nine Months Ended
June 30, June 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:
On-premises and SaaS software

$

172,059

 

$

142,537

 

$

471,203

 

$

417,963

 

Professional services

 

24,851

 

 

27,074

 

 

74,348

 

 

77,975

 

Scores

 

201,778

 

 

179,355

 

 

578,273

 

 

532,584

 

Total revenues

 

398,688

 

 

348,966

 

 

1,123,824

 

 

1,028,522

 

 
Operating expenses:
Cost of revenues

 

71,846

 

 

78,691

 

 

228,221

 

 

219,688

 

Research & development

 

41,455

 

 

35,880

 

 

118,354

 

 

111,247

 

Selling, general and administrative

 

108,081

 

 

93,248

 

 

301,234

 

 

287,710

 

Amortization of intangible assets

 

275

 

 

532

 

 

825

 

 

1,619

 

Gain on product line asset sale

 

 

 

 

 

(1,941

)

 

 

Total operating expenses

 

221,657

 

 

208,351

 

 

646,693

 

 

620,264

 

Operating income

 

177,031

 

 

140,615

 

 

477,131

 

 

408,258

 

Other expense, net

 

(19,244

)

 

(19,721

)

 

(63,972

)

 

(50,059

)

Income before income taxes

 

157,787

 

 

120,894

 

 

413,159

 

 

358,199

 

Provision for income taxes

 

29,029

 

 

27,394

 

 

85,208

 

 

75,357

 

Net income

$

128,758

 

$

93,500

 

$

327,951

 

$

282,842

 

 
 
 
Basic earnings per share:

$

5.16

 

$

3.65

 

$

13.10

 

$

10.75

 

Diluted earnings per share:

$

5.08

 

$

3.61

 

$

12.91

 

$

10.63

 

 
Shares used in computing earnings per share:
Basic

 

24,959

 

 

25,634

 

 

25,040

 

 

26,319

 

Diluted

 

25,337

 

 

25,867

 

 

25,399

 

 

26,608

 

 
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Nine Months Ended
June 30,

 

2023

 

 

2022

 

Cash flows from operating activities:
Net income

$

327,951

 

$

282,842

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

11,642

 

 

15,819

 

Share-based compensation

 

89,750

 

 

86,363

 

Changes in operating assets and liabilities

 

(93,763

)

 

(43,489

)

Gain on product line asset sale

 

(1,941

)

 

 

Other, net

 

(28,773

)

 

23,089

 

Net cash provided by operating activities

 

304,866

 

 

364,624

 

 
Cash flows from investing activities:
Purchases of property and equipment

 

(3,169

)

 

(5,232

)

Net activity from marketable securities

 

(3,679

)

 

(1,447

)

Proceeds from product line asset sales, net of cash transferred

 

(6,126

)

 

2,257

 

Net cash used in investing activities

 

(12,974

)

 

(4,422

)

 
Cash flows from financing activities:
Proceeds from revolving line of credit and term loan

 

339,000

 

 

1,010,000

 

Payments on revolving line of credit and term loan

 

(265,250

)

 

(855,500

)

Proceeds from issuance of senior notes

 

 

 

550,000

 

Proceeds from issuance of treasury stock under employee stock plans

 

15,615

 

 

11,117

 

Taxes paid related to net share settlement of equity awards

 

(75,443

)

 

(49,027

)

Repurchases of common stock

 

(285,158

)

 

(1,048,027

)

Other, net

 

 

 

(8,819

)

Net cash used in financing activities

 

(271,236

)

 

(390,256

)

 
Effect of exchange rate changes on cash

 

9,164

 

 

(10,238

)

 
Increase (decrease) in cash and cash equivalents

 

29,820

 

 

(40,292

)

Cash and cash equivalents, beginning of period

 

133,202

 

 

195,354

 

Cash and cash equivalents, end of period

$

163,022

 

$

155,062

 

 
FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(In thousands, except per share data)
(Unaudited)
 
 
Quarter Ended Nine Months Ended
June 30, June 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 
GAAP net income

$

128,758

 

$

93,500

 

$

327,951

 

$

282,842

 

Amortization of intangible assets

 

275

 

 

532

 

 

825

 

 

1,619

 

Gain on product line asset sale

 

 

 

 

 

(1,941

)

 

 

Share-based compensation expense

 

32,995

 

 

28,549

 

 

89,750

 

 

86,363

 

Income tax adjustments

 

(8,314

)

 

(6,842

)

 

(22,046

)

 

(21,012

)

Excess tax benefit

 

(818

)

 

(78

)

 

(11,734

)

 

(8,530

)

Adjustment to tax reserves and valuation allowance

 

(9,500

)

 

 

 

(9,500

)

 

 

Non-GAAP net income

$

143,396

 

$

115,661

 

$

373,305

 

$

341,282

 

 
 
GAAP diluted earnings per share

$

5.08

 

$

3.61

 

$

12.91

 

$

10.63

 

Amortization of intangible assets

 

0.01

 

 

0.02

 

 

0.03

 

 

0.06

 

Gain on product line asset sale

 

 

 

 

 

(0.08

)

 

 

Share-based compensation expense

 

1.30

 

 

1.10

 

 

3.53

 

 

3.25

 

Income tax adjustments

 

(0.33

)

 

(0.26

)

 

(0.87

)

 

(0.79

)

Excess tax benefit

 

(0.03

)

 

(0.00

)

 

(0.46

)

 

(0.32

)

Adjustment to tax reserves and valuation allowance

 

(0.37

)

 

 

 

(0.37

)

 

 

Non-GAAP diluted earnings per share

$

5.66

 

$

4.47

 

$

14.70

 

$

12.83

 

 
Free cash flow
Net cash provided by operating activities

$

122,623

 

$

117,140

 

$

304,866

 

$

364,624

 

Capital expenditures

 

(793

)

 

(1,939

)

 

(3,169

)

 

(5,232

)

Free cash flow

$

121,830

 

$

115,201

 

$

301,697

 

$

359,392

 

 
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

$

406

 

$

428

 

Amortization of intangible assets

 

1

 

 

1

 

Share-based compensation expense

 

124

 

 

124

 

Income tax adjustments

 

(31

)

 

(31

)

Excess tax benefit

 

(11

)

 

(12

)

Adjustment to tax reserves and valuation allowance

 

 

 

(10

)

Non-GAAP net income

$

489

 

$

500

 

 
 
GAAP diluted earnings per share

$

16.15

 

$

16.90

 

Amortization of intangible assets

 

0.04

 

 

0.04

 

Share-based compensation expense

 

4.93

 

 

4.87

 

Income tax adjustments

 

(1.23

)

 

(1.24

)

Excess tax benefit

 

(0.44

)

 

(0.49

)

Adjustment to tax reserves and valuation allowance

 

 

 

(0.37

)

Non-GAAP diluted earnings per share

$

19.45

 

$

19.70

 

 
 
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