FICO Announces Earnings for Third Quarter Fiscal 2013

SAN JOSE, CA – July 30, 2013 – FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced financial results for its third fiscal quarter ended June 30, 2013.

Third Quarter Fiscal 2013 GAAP Results
Net income for the quarter totaled $19.6 million, or $0.54 per share, versus $20.7 million, or $0.59 per share, reported in the prior year period. The current quarter earnings include a noncash tax charge of $2.5 million, or $0.07 per share, associated with establishing a valuation allowance related to a deferred tax asset. This valuation allowance was required due to recent tax law changes in a state in which the company conducts operations.

Third Quarter Fiscal 2013 Non-GAAP Results
Non-GAAP net income for the quarter was $29.3 million vs. $25.8 million in the prior year period. Non-GAAP EPS for the quarter was $0.80 vs. $0.73 in the prior year period. Free cash flow for the quarter was $27.2 million vs. $16.0 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.

Third Quarter Fiscal 2013 GAAP Revenue
The company reported revenues of $183.8 million for the quarter as compared to $160.5 million reported in the prior year period, an increase of 15%.

“We saw continued strength in our Scores and Tools segments this quarter, fortifying the confidence we have in our overall strategic direction,” said Will Lansing, chief executive officer. “Recurring revenues from our Applications segment were strong again this quarter, though we did experience some disappointing delays in applications license sales to North American banks. All in all, we remain confident about our prospects, and focused on executing against our plan.”

Revenues for the third quarter fiscal 2013 across each of the company’s three operating segments were as follows:

• Applications revenues, which include the company’s preconfigured Decision Management applications and associated professional services, were $115.0 million in the third quarter compared to $98.3 million in the prior year quarter, an increase of 17%. This was due to revenue associated with the acquisitions of Adeptra, Ltd. and CR Software.
• Scores revenues, which include the company’s business-to-business (B2B) scoring solutions and associated professional services, and the myFICO^® business-to-consumer (B2C) service, were $47.2 million in the third quarter compared to $41.9 million in the prior year quarter, an increase of 12%. The B2B revenue increased 10% and the B2C revenue increased 21% from the prior year quarter.
• Tools revenues, which include Blaze Advisor^®, Xpress Optimization and related professional services, were $21.6 million in the third quarter compared to $20.2 million in the prior year quarter, an increase of 7%, primarily due to increased revenue from professional services.

Outlook
The company is updating the previously issued guidance for fiscal 2013 to include the impact of the noncash tax adjustment recorded in the current quarter and potential continued delays in license revenue, as follows:

New Fiscal 2013
Guidance

Previous Fiscal 2013 Guidance

Revenue

$755 million - $765 million

$760 million - $770 million

GAAP Net Income (a)

$94-$97 million

$100 million

GAAP Earnings Per Share (a)

$2.61-$2.70

$2.80

Non-GAAP Net Income

$125-$128 million

$128 million

Non-GAAP Earnings Per Share

$3.48-3.57

$3.60

(a) GAAP net income and earnings per share include the impact of the tax valuation allowance of $2.5 million, or $0.07 per share. The new guidance reflects an annual diluted share count of approximately 36.0 million shares.

The non-GAAP financial measures are described in the financial table captioned “Non-GAAP Results”.

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 2013 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 through August 30, 2013.

The webcast will also be distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

About FICO
FICO (NYSE:FICO) delivers superior predictive analytics that drive smarter decisions. The company’s groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO’s innovative solutions include the FICO^® Score — the standard measure of consumer credit risk in the United States — along with the industry-leading solutions for managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world’s top banks, as well as leading insurers, retailers, pharma businesses and government agencies rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. FICO also helps millions of individuals manage their personal credit health through www.myFICO.com.

FICO: Make every decision count™.

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 success of the Company’s Decision Management 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, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions or in the markets we serve, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and Form 10-Q for the quarter ended March 31, 2013. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.

FICO, myFICO and Blaze Advisor are all trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.

FICO 3rd Quarter 2013 Earnings Release Financials