Fair Isaac Q2 net income down on 2006

Source: Fair Isaac

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 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 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 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 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 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.

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