Original Source: FD (FAIR DISCLOSURE) WIRE
. JD Bergquist Wood, Fair Isaac Corporation, Director, IR . Tom Grudnowski, Fair Isaac Corporation, CEO . Chuck Osborne, Fair Isaac Corporation, VP & CFO
FIC reported earnings of $27.9m or $0.39 per share in 1Q05. Revenue was $195.5m. Total headcount at the end of 1Q05 was 2,929. The Co. expects revenue to be in the range of $198-203m in 2Q05. Revenue estimates remains at $818-848m for FY05. Q&A Focus: Guidance, IBM relationship, and FICO scoring.
A. Key Data From Call 1. 1Q05 revenue = $195.5m. 2. 1Q05 earnings = $27.9m. 3. 1Q05 EPS = $0.39. 4. 1Q05 total operating expenses = $144.3m. 5. 1Q05 net other income = $330,000. 6. 1Q05 net AR = $142m.
S1. Operational Review (T.G.) 1. 1Q05 Highlights: 1. Revenue came in at $195.5m, which exceeded the Co.'s guidance provided in 4Q04. 2. Earnings of $27.9m or $0.39 per share, $0.03 better than analyst consensus. 1. This is prior to the impact from dilution caused by new accounting rules around the Co.'s convertible note. 3. FIC saw growth in revenues in Strategy Machines, Scoring and Professional Services vs. 4Q04. 4. Had a slight dip in revenue in the tools segment. 5. Scoring, customer management, and fraud, together grew organically around $10m vs. 4Q04.
6. Marketing, origination, and predictive analytics were at or
slightly above plan. 7. Consumer, mortgage, collections, and insurance were slightly under plan. 8. The only area that was off a bit more was the EDM group, primarily because the Co. had a very strong 4Q. 9. Hit $115.4m of bookings. 10. Generated $19.9m of new revenue from those bookings. 11. Had seven deals over $3m. 1. Of that, one was over $10m and one was over $20m. 12. Operating income before amortization and acquisition costs as a percent of revenue increased from 24% in 4Q04 to over 26% in 1Q05, and are well on the way to hitting the goal of at least 30% by 3Q05. 13. Expects revenue of $198-203m and EPS of $0.40-0.42 in 2Q05. 14. Bookings goal for 2Q05 will be approx. $125m. 15. Reported operating free cash flow of $76.8m.
1. This amount is mainly attributed to the net income after adding back non-cash expenses such as depreciation and amortization plus positive changes in the working capital for 1Q05, including a large prepayment on a three-year scoring contract. 2. Other Highlights:
1. Integration of London Bridge and Braun Consulting is going
very wall. 2. Steve Braun has now assumed responsibility for Professional Services across all of FIC, and all of the London Bridge product groups have been integrated into the FIC organization. 3. Reduced London Bridge and Braun headcounts since the last qtr. by over 130. 4. On track to meeting the financial goals for the year in these areas. 5. Created two new management leadership positions in 1Q05. 6. Paul Perleberg is now responsible for all non-US operations. 7. About $160m of the Co.'s total revenue this FY is non-U.S. 8. Growth in non-US revenue was about 32% QoverQ.
9. FIC does about $140m of consulting around its products. 10. Steve Braun's objective will be to generate new demand and
new markets for new analytic services and products. 1. Has now grown that group 70% to 200 people. 2. Expects the impact of this to be seen in earnings in 3Q05 and beyond as bookings increase beyond those planned at the beginning of the year. 3. Scoring:
1. Up 5% sequentially. 2. Traditional scoring products are doing very well and new products in this area are gaining traction.
3. Completed a very large contract for the new Qualify marketing
score with a major credit card company. 4. Completed a large deal with another major credit card company around the new FICO Expansion score. 5. Renewed PreScore contracts with volume projections larger than last year's. 6. New world FICO score is now in production in Poland, Mexico, Sweden, and South Africa, with Singapore and Saudi Arabia soon to follow this qtr. 4. Fraud:
1. Had the strongest bookings and revenue qtr. ever. 2. A very large major retail bank in the US just signed up for the new Falcon ID product introduced last qtr. 3. Another major US debit card company signed up for Falcon Debit. 4. MasterCard is now using FIC's fraud products for their ATM fraud. 5. Originations:
1. Had a strong qtr. in revenue bookings and pipeline, caused by
an increasing client base as well as high revenues from
transaction processing and existing clients. 2. IBM helped with a win in Japan. 6. Insurance and Healthcare: 1. Rolled out SmartAdvisor and Payment Optimizer. 2. Had 26 bookings vs. goal of 15, including the signing of the largest Workmen's Comp carrier in the US and California. 7. Customer Management: 1. Had a solid qtr. in account management area, including the sale of the new transaction scoring products around TRIAD to a major US card issuer. 2. In the non-US, the Co. had several large TRIAD wins in Turkey,
Portugal, and Australia. 8. Marketing Services: 1. The Co.'s strength here is becoming one where it combines its marketing services and customer account management services. 2. The Co. is seeing the use of its credit and debit card transactional data becoming very key for its clients. 9. Consumer Segment: 1. FIC's myFICO revenues were up 30% over 4Q04. 2. FACT Act, which started Dec. 1 has had no negative impact on myFICO traffic. 3. Traffic at the Web site continues to grow. 4. Came out with a new product called Score Watch, in conjunction with Equifax. 10. Collections and Recovery: 1. In 1Q05, the Co. had the most license sales of Debt Manager ever. 2. Had three substantial sales internationally. 3. Capital One has the new version of Debt Manager now working in production. 11. Mortgage: 1. Revenues were slightly below plan in 1Q05. 2. Made progress integrating scoring and analytic technologies into the core market software arena that came with London Bridge. 3. Seeing lots of new opportunities and pipeline is growing. 4. Did have a significant order from a Top 10 mortgage banker. 5. The Co. sees a lot of opportunities in changing its business model with its Diamond product by bringing in more services to help reduce the risk in the mortgage market.
12. Precision Marketing: 1. Signed a huge business partner, Coca-Cola.
13. Enterprise Decision Management: 1. Down a bit from 4Q04.
2. Sun …