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FICO Announces Earnings of $3.55 per Share for Fourth Quarter Fiscal 2022

Revenue of $349 million vs. $335 million in prior year

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

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