EX-99.1 2 a5385718-ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 Fair Isaac Announces Second Quarter 2007 Results Total revenue of $201.0 million; Earnings per share of $0.37 MINNEAPOLIS--(BUSINESS WIRE)--April 25, 2007--Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision technology, today announced the financial results for its second quarter ended March 31, 2007. Second Quarter Fiscal 2007 Results The company reported second quarter revenues of $201.0 million in fiscal 2007 versus $208.2 million reported in the prior year period. Net income for the second quarter of fiscal 2007 totaled $21.4 million, or $0.37 per diluted share, versus $27.0 million, or $0.40 per diluted share, reported in the prior year period. Second quarter fiscal 2007 results included a $1.5 million pre-tax operating gain from the previously announced sale of the mortgage product line and an associated $1.9 million increase in tax expense. Fiscal 2007 Year-to-date Results The company reported year-to-date revenues of $409.2 million in fiscal 2007 versus $410.9 million reported in the prior year period. Net income for year-to-date fiscal 2007 totaled $52.7 million, or $0.89 per diluted share, versus $55.4 million, or $0.83 per diluted share, reported in the prior year period. Second Quarter Fiscal 2007 Revenues Highlights Revenues for second quarter fiscal 2007 across each of the company's four operating segments were as follows: -- Strategy Machine(R) Solutions revenues were $111.7 million in the second quarter compared to $118.9 million in the prior year quarter, or a decrease of 6.0%, primarily due to a decline associated with fraud, consumer, customer management, and mortgage products. -- Scoring Solutions revenues increased to $42.3 million in the second quarter compared to $41.8 million in the prior year quarter, or by 1.4%, primarily due to an increase in revenues from risk scoring services at the credit reporting agencies and the FICO Expansion(TM) score. -- Professional Services revenues were $37.5 million in the second quarter compared to $38.7 million in the prior year quarter, or a decrease of 3.0%, primarily due to a decline associated with industry consulting, fraud, and collections and recovery implementation services, offset by an increase in revenues derived from customer management implementation services. -- Analytic Software Tools revenues increased to $9.4 million in the second quarter compared to $8.8 million in the prior year quarter, or by 6.5%, due to an increase in revenues generated from sales of the Model Builder product. Fiscal 2007 Year-to-date Revenues Highlights Revenues for fiscal 2007 year-to-date across each of the company's four operating segments were as follows: -- Strategy Machine(R) Solutions revenues were $222.4 million compared to $230.8 million in the prior year, or a decrease of 3.7%, primarily due to a decline associated with mortgage, consumer, fraud, and originations products, offset by an increase in revenues derived from collections and recovery products. -- Scoring Solutions revenues were $87.3 million compared to $87.9 million in the prior year, or a decrease of 0.8%, primarily due to a decrease in revenues derived from our PreScore(R) Service. -- Professional Services revenues increased to $75.9 million compared to $71.5 million in the prior year, or by 6.2%, primarily due to an increase in revenues derived from customer management and model development services, offset by a decline associated with collections and recovery implementation services, and industry consulting. -- Analytic Software Tools revenues increased to $23.6 million compared to $20.7 million in the prior year, or by 14.4%, due to an increase in revenues generated from sales of the Blaze Advisor(TM) product. Bookings Highlights The bookings for the second quarter were $58.9 million versus $106.0 million in the same period last year. The company defines a "new booking" as estimated future contractual revenues, including agreements with perpetual, multi-year and annual terms. Management regards the volume of new bookings achieved as one indicator of future revenues, but they are not comparable to, nor should they be substituted for, an analysis of the company's revenues. Balance Sheet and Cash Flow Highlights Cash and cash equivalents, and marketable security investments were $303.9 million at March 31, 2007, as compared to $267.8 million at September 30, 2006. Significant changes in cash and cash equivalents from September 30, 2006 include cash provided by operations of $88.4 million, borrowings under the revolving credit facility of $70.0 million, $61.8 million received from the exercise of stock options and stock issued under an employee stock purchase plan, and $13.9 million received on the sale of the mortgage product line. Cash used during fiscal 2007 includes $11.7 million related to purchases of property and equipment and $196.4 million to repurchase common stock. Outlook The company expects revenues for third quarter fiscal 2007 to be approximately $195.0 to $200.0 million and earnings per diluted share to be approximately $0.33 to $0.38. The company expects revenues for fiscal 2007 to be approximately $795.0 to $805.0 million and earnings per diluted share to be approximately $1.55 to $1.65. Company to Host Conference Call The company will host a conference call today at 5:00 p.m. Eastern Time (4:00 p.m. Central Time/2:00 p.m. Pacific Time) to discuss its second quarter fiscal 2007 results, and outlook for the remainder of fiscal 2007. The call can be accessed live on the Investor Relations section of the company's Web site at www.fairisaac.com, and a replay will be available approximately two hours after the completion of the call through May 28, 2007. About Fair Isaac Corporation Fair Isaac Corporation (NYSE:FIC) makes decisions smarter. The company's solutions and technologies for Enterprise Decision Management give businesses the power to automate more processes, and apply more intelligence to every customer interaction. Through increasing the precision, consistency and agility of their decisions, Fair Isaac clients worldwide increase sales, build customer value, cut fraud losses, manage credit risk, reduce operational costs, meet changing compliance demands and enter new markets more profitably. Founded in 1956, Fair Isaac powers hundreds of billions of decisions each year in financial services, insurance, telecommunications, retail, consumer branded goods, healthcare and the public sector. Fair Isaac also helps millions of individuals manage their credit health through the www.myfico.com website. Visit Fair Isaac online at www.fairisaac.com. Statement Concerning Forward-Looking Information Except for historical information contained herein, the statements contained in this news release that relate to Fair Isaac 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 success of the Company's Enterprise Decision Management strategy, its ability to recruit and retain key technical and managerial personnel, 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, competition, regulatory changes applicable to the use of consumer credit and other data, the possibility that the anticipated benefits of acquisitions, including expected synergies, will not be realized and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2006, and its quarterly report on Form 10-Q for the period ended December 31, 2006. If any of these risks or uncertainties materialize, Fair Isaac's results could differ materially from its expectations. Fair Isaac disclaims any intent or obligation to update these forward-looking statements. Fair Isaac, FICO, myFICO, Blaze Advisor, Strategy Machine, FICO Expansion(TM) score, and PreScore are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Quarters and Six Months Ended March 31, 2007 and 2006 (In thousands, except per share data) (Unaudited) Quarter Ended Six Months Ended March 31, March 31, ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Revenues $201,000 $208,157 $409,227 $410,947 --------- --------- --------- --------- Operating expenses: Cost of revenues 74,172 73,144 144,741 140,189 Research and development 17,781 21,694 35,500 44,424 Selling, general and administrative 68,015 64,157 136,663 127,540 Amortization of intangible assets 6,352 6,260 12,742 12,523 Restructuring and acquisition-related - 2,184 - 1,510 Gain on sale of product line assets (1,541) - (1,541) - --------- --------- --------- --------- Total operating expenses 164,779 167,439 328,105 326,186 --------- --------- --------- --------- Operating income 36,221 40,718 81,122 84,761 Other income, net 602 1,495 1,037 2,340 --------- --------- --------- --------- Income before income taxes 36,823 42,213 82,159 87,101 Provision for income taxes 15,385 15,240 29,496 31,671 --------- --------- --------- --------- Net income $21,438 $26,973 $52,663 $55,430 ========= ========= ========= ========= Earnings per share: Basic $0.38 $0.41 $0.92 $0.86 ========= ========= ========= ========= Diluted $0.37 $0.40 $0.89 $0.83 ========= ========= ========= ========= Shares used in computing earnings per share: Basic 56,940 65,052 57,504 64,626 ========= ========= ========= ========= Diluted 58,659 66,834 59,328 66,521 ========= ========= ========= ========= FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2007 and September 30, 2006 (In thousands) (Unaudited) March 31, September 30, 2007 2006 ------------- ------------- ASSETS: Current assets: Cash and cash equivalents $122,447 $75,154 Marketable securities 150,449 152,141 Receivables, net 178,703 165,806 Prepaid expenses and other current assets 22,376 20,209 ------------- ------------- Total current assets 473,975 413,310 Marketable securities and investments 31,039 40,479 Property and equipment, net 53,889 56,611 Goodwill and intangible assets, net 766,341 786,062 Other noncurrent assets 22,048 24,743 ------------- ------------- $1,347,292 $1,321,205 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $54,721 $53,809 Senior convertible notes 400,000 400,000 Revolving credit agreement 70,000 - Accrued compensation and employee benefits 39,608 34,936 Deferred revenue 44,602 48,284 ------------- ------------- Total current liabilities 608,931 537,029 Other noncurrent liabilities 13,356 14,148 ------------- ------------- Total liabilities 622,287 551,177 Stockholders' equity 725,005 770,028 ------------- ------------- $1,347,292 $1,321,205 ============= ============= FAIR ISAAC CORPORATION REVENUES BY SEGMENT For the Quarters and Six Months Ended March 31, 2007 and 2006 (In thousands) (Unaudited) Quarter Ended Six Months Ended March 31, March 31, ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Strategy machine solutions $111,716 $118,852 $222,385 $230,838 Scoring solutions 42,335 41,768 87,253 87,924 Professional services 37,529 38,691 75,946 71,522 Analytic software tools 9,420 8,846 23,643 20,663 --------- --------- --------- --------- Total revenues $201,000 $208,157 $409,227 $410,947 ========= ========= ========= ========= FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended March 31, 2007 and 2006 (In thousands) (Unaudited) Six Months Ended March 31, ------------------- 2007 2006 --------- --------- Cash flows from operating activities: Net income $52,663 $55,430 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,867 24,237 Changes in operating assets and liabilities, net of disposition (17,097) 9,370 Other, net 25,971 20,648 --------- --------- Net cash provided by operating activities 88,404 109,685 --------- --------- Cash flows from investing activities: Purchases of property and equipment (11,651) (8,125) Cash proceeds from disposition of product line assets 13,904 - Net activity from marketable securities 12,737 3,339 Other, net (213) 500 --------- --------- Net cash provided by (used in) investing activities 14,777 (4,286) --------- --------- Cash flows from financing activities: Proceeds from revolving line of credit 70,000 - Proceeds from issuances of common stock 61,838 45,577 Repurchases of common stock (196,443) (12,766) Other, net 7,387 2,708 --------- --------- Net cash provided by (used in) financing activities (57,218) 35,519 --------- --------- Effect of exchange rate changes on cash 1,330 (335) --------- --------- Increase in cash and cash equivalents 47,293 140,583 Cash and cash equivalents, beginning of period 75,154 82,880 --------- --------- Cash and cash equivalents, end of period $122,447 $223,463 ========= ========= CONTACT: Fair Isaac Corporation Investors & Analysts: John D. Emerick, Jr., 800-213-5542 or Marcy K. Oelhafen, 800-213-5542 investorrelations@fairisaac.com