Fourth Quarter Fiscal 2007 Results

The company reported fourth quarter revenues of $207.2 million in fiscal 2007 compared to $207.3 million reported in the prior year period. Net income for the fourth quarter of fiscal 2007 totaled $28.2 million, or $0.52 per diluted share, compared to $22.1 million, or $0.35 per diluted share, reported in the prior year period.

Fourth quarter fiscal 2007 results included the following one-time items: a $7.3 million tax benefit, or $0.13 per diluted share, arising from adjustments to income tax reserves resulting from the conclusion of a tax audit, costs associated with the resolution of a customer lawsuit involving our insurance solutions business of $3.8 million after-tax, or $0.07 per diluted share, and restructuring costs of $1.6 million after-tax, or $0.03 per diluted share.

Fourth quarter fiscal 2006 results included $4.9 million in revenues from the mortgage product line which was sold in March 2007, as well as lease exit costs of $8.3 million after-tax, or $0.13 per diluted share.

Fourth Quarter Fiscal 2007 Revenues Highlights

Revenues for fourth quarter fiscal 2007 across each of the company's four operating segments were as follows:

• Strategy Machine Solutions revenues were $106.1 million in the fourth quarter compared to $110.6 million in the prior year quarter, or a decrease of 4.1%, primarily due to the divestiture of the mortgage product line in the second quarter and a decline associated with insurance solutions products. The declines were partially offset by an increase in revenues derived from collections and recovery products, and consumer products.
• Scoring Solutions revenues increased to $46.0 million in the fourth quarter compared to $45.5 million in the prior year quarter, or by 1.1%, primarily due to an increase in revenues from risk scoring services at the credit reporting agencies.
• Professional Services revenues were $37.4 million in the fourth quarter compared to $38.0 million in the prior year quarter, or a decrease of 1.4%, primarily due to a decline associated with Blaze Advisor™ implementation and consulting services.
• Analytic Software Tools revenues increased to $17.7 million in the fourth quarter compared to $13.2 million in the prior year quarter, or by 33.8%, due to an increase in revenues generated from sales of the Blaze Advisor™ and Model Builder products.

"We are pleased with our performance this quarter, and we remain firmly focused on achieving sustainable growth for 2008 and beyond," said Mark Greene, CEO of Fair Isaac. "We are confident we can achieve this growth and drive shareholder value through our continued strategic focus on Enterprise Decision Management (EDM), ongoing innovation, elevated success with cross-selling, international expansion, and our determined focus on customer satisfaction. With a solid strategic and operational foundation in place, we are now strongly positioned to answer the growing global demand for proven analytic solutions and technology tools that drive smarter decisions and business growth."

Fiscal 2007 Full Year Results

The company reported full year revenues of $822.2 million in fiscal 2007 compared to $825.4 million reported in the prior year. Net income for full year fiscal 2007 totaled $104.7 million, or $1.82 per diluted share, compared to $103.5 million, or $1.59 per diluted share, reported in the prior year.

Fiscal 2007 Full Year Revenues Highlights

Revenues for full year fiscal 2007 across each of the company's four operating segments were as follows:

• Strategy Machine Solutions revenues were $439.3 million compared to $453.2 million in the prior year, or a decrease of 3.1%, primarily due to a decline associated with originations, customer management and insurance bill review products, and the sale of the mortgage product line, partially offset by an increase in revenues derived from collections and recovery products.
• Scoring Solutions revenues were $180.4 million compared to $177.2 million in the prior year, or an increase of 1.9%, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies.
• Professional Services revenues increased to $151.1 million compared to $149.3 million in the prior year, or by 1.2%, primarily due to an increase in revenues derived from customer management, Blaze Advisor™ implementation services and model development services, partially offset by a decline associated with collections and recovery implementation services, and industry consulting.
• Analytic Software Tools revenues increased to $51.4 million compared to $45.7 million in the prior year, or by 12.5%, due to an increase in revenues generated from sales of the Blaze Advisor™ product.

Bookings Highlights

The bookings for the fourth quarter were $94.5 million compared to $112.6 million in the same period last year. The company defines "bookings" as estimated future contractual revenues, including agreements with perpetual, multi-year and annual terms. Management regards the volume of 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 investments were $246.8 million at September 30, 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 $179.2 million, $84.1 million received from the exercise of stock options and stock issued under an employee stock purchase plan, borrowings under the revolving credit facility of $170.0 million, and $15.8 million received on the sale of the mortgage product line. Cash used during fiscal 2007 includes $451.1 million to repurchase common stock, $22.7 million related to purchases of property and equipment, a $9.0 million repayment on our senior convertible notes, and a $10.0 million minority investment in a company that operates in the healthcare market.

Operational Updates

Key fourth-quarter successes in driving towards our growth initiatives included the completion of our leadership team with the appointment of new Chief Marketing Officer, Tracey Stout, execution against our new sales disciplines and elevated penetration into client organizations. As a result, the company begins fiscal 2008 with a healthy sales pipeline and encouraging growth momentum. Major clients are making large-scale commitments to achieve the benefits of automating, improving and connecting their decisions through Enterprise Decision Management (EDM).

The company has also significantly advanced its client advisory, delivery and service capabilities. Some recent enhancements include the addition of more professional services employees, bringing the total added over the full fiscal year to almost 100. This will help us to better capture revenue opportunities. The company has also doubled its client relationship staff in recent months, to more than 78 expert, service-focused professionals.

Finally, Fair Isaac continues to gain traction in its expansion into China with the recent signing of another major financial services institution in that promising market. The company expects more than 200 financial services leaders to attend its November InterACT conference in Shanghai.

Outlook

The company expects revenues for first quarter fiscal 2008 to be approximately $205.0 million and earnings per diluted share to be approximately $0.45. The company expects revenues for fiscal 2008 to be approximately $850.0 million and earnings per diluted share to be approximately $2.00.

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