FICO Announces Earnings of $3.84 per Share for First Quarter Fiscal 2023
FICO (NYSE:FICO) reported strong financial results for its first fiscal quarter ending December 31, 2022. Revenue reached $345 million, up from $322 million in the prior year. Net income was $97.6 million or $3.84 per share, compared to $85 million or $3.09 last year. Non-GAAP net income increased to $108.5 million, with EPS at $4.26. Free cash flow decreased to $91.6 million from $124 million. The company reported a strong annual recurring revenue growth of 11%, with software dollar-based net retention at 110%. FICO maintains its fiscal 2023 guidance of $1.463 billion in revenue and $16.00 EPS.
- Revenue increased to $345 million from $322 million year-over-year.
- Net income rose to $97.6 million, or $3.84 per share, compared to $85 million and $3.09 per share last year.
- Non-GAAP net income increased to $108.5 million, with EPS at $4.26, up from $3.70.
- Annual recurring revenue grew by 11%, contributing to a strong software dollar-based net retention rate of 110%.
- Free cash flow decreased to $91.6 million from $124 million in the prior year.
- B2C revenue declined by 6% due to lower volumes at myFICO.com.
Revenue of
First Quarter Fiscal 2023 GAAP Results
Net income for the quarter totaled
Net cash provided by operating activities for the quarter was
First Quarter Fiscal 2023 Non-GAAP Results
Non-GAAP Net Income for the quarter was
First Quarter Fiscal 2023 GAAP Revenue
The company reported revenues of
“We had a strong start to our Fiscal 2023,” said
Revenues for the first quarter of fiscal 2023 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
$166.9 million $152.9 million 9% , due to increased recurring revenue, partially offset by a decrease in professional services. Software Annual Recurring Revenue was up11% year-over-year, consisting of46% platform ARR growth and4% non-platform growth. Software Dollar-Based Net Retention Rate was110% in the first quarter, with platform software at130% and non-platform software at103% . -
Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions, were
$178.0 million $169.5 million 5% . B2B revenue increased11% , driven largely by a multi-year license renewal as well as increases in unit prices and in card and personal loan originations volumes, partially offset by declines in mortgage originations volumes. B2C revenue decreased6% from the prior year period due to lower volumes at myFICO.com.
Outlook
The company is reiterating the following guidance for fiscal 2023:
|
Fiscal 2023 Guidance |
Revenues |
|
GAAP Net Income |
|
GAAP EPS |
|
Non-GAAP Net Income |
|
Non-GAAP EPS |
|
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
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
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
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
2022 |
2022 |
||||||
| ASSETS: | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
139,856 |
|
$ |
133,202 |
|
|
| Accounts receivable, net |
|
308,234 |
|
|
322,410 |
|
|
| Prepaid expenses and other current assets |
|
35,732 |
|
|
29,103 |
|
|
| Total current assets |
|
483,822 |
|
|
484,715 |
|
|
| Marketable securities and investments |
|
27,538 |
|
|
25,650 |
|
|
| Property and equipment, net |
|
14,976 |
|
|
17,580 |
|
|
| Operating lease right-of-use-assets |
|
32,366 |
|
|
36,688 |
|
|
|
773,197 |
|
|
763,084 |
|
||
| Other assets |
|
126,794 |
|
|
114,317 |
|
|
$ |
1,458,693 |
|
$ |
1,442,034 |
|
||
| LIABILITIES AND STOCKHOLDERS' DEFICIT: | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ |
68,216 |
|
$ |
83,521 |
|
|
| Accrued compensation and employee benefits |
|
59,876 |
|
|
97,893 |
|
|
| Deferred revenue |
|
126,896 |
|
|
120,045 |
|
|
| Current maturities on debt |
|
100,000 |
|
|
30,000 |
|
|
| Total current liabilities |
|
354,988 |
|
|
331,459 |
|
|
| Long-term debt |
|
1,820,666 |
|
|
1,823,669 |
|
|
| Operating lease liabilities |
|
32,400 |
|
|
39,192 |
|
|
| Other liabilities |
|
52,734 |
|
|
49,661 |
|
|
| Total liabilities |
|
2,260,788 |
|
|
2,243,981 |
|
|
| Stockholders' deficit |
|
(802,095 |
) |
|
(801,947 |
) |
|
$ |
1,458,693 |
|
$ |
1,442,034 |
|
||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
| (In thousands, except per share data) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
2022 |
2021 |
||||||
| Revenues: | |||||||
| On-premises and SaaS software | $ |
144,560 |
|
$ |
126,338 |
|
|
| Professional services |
|
22,322 |
|
|
26,536 |
|
|
| Scores |
|
177,988 |
|
|
169,487 |
|
|
| Total revenues |
|
344,870 |
|
|
322,361 |
|
|
| Operating expenses: | |||||||
| Cost of revenues |
|
76,569 |
|
|
69,203 |
|
|
| Research & development |
|
36,633 |
|
|
38,980 |
|
|
| Selling, general and administrative |
|
92,995 |
|
|
98,048 |
|
|
| Amortization of intangible assets |
|
275 |
|
|
544 |
|
|
| Gain on product line asset sale |
|
(1,941 |
) |
|
- |
|
|
| Total operating expenses |
|
204,531 |
|
|
206,775 |
|
|
| Operating income |
|
140,339 |
|
|
115,586 |
|
|
| Other expense, net |
|
(22,436 |
) |
|
(10,766 |
) |
|
| Income before income taxes |
|
117,903 |
|
|
104,820 |
|
|
| Provision for income taxes |
|
20,260 |
|
|
19,861 |
|
|
| Net income | $ |
97,643 |
|
$ |
84,959 |
|
|
| Basic earnings per share: | $ |
3.90 |
|
$ |
3.13 |
|
|
| Diluted earnings per share: | $ |
3.84 |
|
$ |
3.09 |
|
|
| Shares used in computing earnings per share: | |||||||
| Basic |
|
25,045 |
|
|
27,167 |
|
|
| Diluted |
|
25,443 |
|
|
27,524 |
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
2022 |
2021 |
||||||
| Cash flows from operating activities: | |||||||
| Net income | $ |
97,643 |
|
$ |
84,959 |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization |
|
4,280 |
|
|
5,227 |
|
|
| Share-based compensation |
|
29,702 |
|
|
29,878 |
|
|
| Changes in operating assets and liabilities |
|
(33,250 |
) |
|
(4,171 |
) |
|
| Gain on product line asset sale |
|
(1,941 |
) |
|
- |
|
|
| Other, net |
|
(3,994 |
) |
|
8,988 |
|
|
| Net cash provided by operating activities |
|
92,440 |
|
|
124,881 |
|
|
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment |
|
(850 |
) |
|
(895 |
) |
|
| Net activity from marketable securities |
|
(2,165 |
) |
|
(2,634 |
) |
|
| Proceeds from product line asset sales, net of cash transferred |
|
(7,575 |
) |
|
2,257 |
|
|
| Net cash used in investing activities |
|
(10,590 |
) |
|
(1,272 |
) |
|
| Cash flows from financing activities: | |||||||
| Proceeds from revolving line of credit and term loan |
|
169,000 |
|
|
620,000 |
|
|
| Payments on revolving line of credit and term loan |
|
(102,750 |
) |
|
(788,000 |
) |
|
| Proceeds from issuance of senior notes |
|
- |
|
|
550,000 |
|
|
| Proceeds from issuance of treasury stock under employee stock plans |
|
1,995 |
|
|
550 |
|
|
| Taxes paid related to net share settlement of equity awards |
|
(72,865 |
) |
|
(47,024 |
) |
|
| Repurchases of common stock |
|
(75,004 |
) |
|
(482,755 |
) |
|
| Other, net |
|
- |
|
|
(8,200 |
) |
|
| Net cash used in financing activities |
|
(79,624 |
) |
|
(155,429 |
) |
|
| Effect of exchange rate changes on cash |
|
4,428 |
|
|
(1,377 |
) |
|
| Increase (decrease) in cash and cash equivalents |
|
6,654 |
|
|
(33,197 |
) |
|
| Cash and cash equivalents, beginning of period |
|
133,202 |
|
|
195,354 |
|
|
| Cash and cash equivalents, end of period | $ |
139,856 |
|
$ |
162,157 |
|
|
| NON-GAAP RESULTS | |||||||
| (In thousands, except per share data) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
2022 |
2021 |
||||||
| GAAP net income | $ |
97,643 |
|
$ |
84,959 |
|
|
| Amortization of intangible assets |
|
275 |
|
|
544 |
|
|
| Gain on product line asset sale |
|
(1,941 |
) |
|
- |
|
|
| Share-based compensation expense |
|
29,702 |
|
|
29,878 |
|
|
| Income tax adjustments |
|
(6,914 |
) |
|
(7,493 |
) |
|
| Excess tax benefit |
|
(10,304 |
) |
|
(5,957 |
) |
|
| Non-GAAP net income | $ |
108,461 |
|
$ |
101,931 |
|
|
| GAAP diluted earnings per share | $ |
3.84 |
|
$ |
3.09 |
|
|
| Amortization of intangible assets |
|
0.01 |
|
|
0.02 |
|
|
| Gain on product line asset sale |
|
(0.08 |
) |
|
- |
|
|
| Share-based compensation expense |
|
1.17 |
|
|
1.09 |
|
|
| Income tax adjustments |
|
(0.27 |
) |
|
(0.27 |
) |
|
| Excess tax benefit |
|
(0.40 |
) |
|
(0.22 |
) |
|
| Non-GAAP diluted earnings per share | $ |
4.26 |
|
$ |
3.70 |
|
|
| Free cash flow | |||||||
| Net cash provided by operating activities | $ |
92,440 |
|
$ |
124,881 |
|
|
| Capital expenditures |
|
(850 |
) |
|
(895 |
) |
|
| Free cash flow | $ |
91,590 |
|
$ |
123,986 |
|
|
| 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.
| 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230126005680/en/
Investors/Analysts:
(800) 459-7125
investor@fico.com
Source: FICO
FAQ
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