Fair Isaac Announces Fourth Quarter and Fiscal 2005 Results

Fair Isaac Corporation, the leading provider of analytics and decision technology, today announced financial results for its fourth quarter and fiscal year ended September 30, 2005.

Fourth Quarter Fiscal 2005 Results
The company reported fourth quarter revenues of $203.3 million in fiscal 2005 versus $190.4 million reported in the prior year period. Net income for the fourth quarter of fiscal 2005 totaled $35.7 million, or $0.53 per diluted share, compared with net income of $14.4 million, or $0.19 per diluted share, reported in the same quarter last year.

Fourth quarter fiscal 2004 results included an after-tax loss of $6.1 million, or $0.08 per diluted share, recorded in connection with the redemption of the company’s convertible subordinated notes.

Fiscal 2005 Results
The company reported revenues of $798.7 million in fiscal 2005 versus $706.2 million last year. Net income totaled $134.5 million, or $1.86 per diluted share, compared with net income of $102.8 million, or $1.31 per diluted share, reported last year. Net income in fiscal 2005 was affected by adjustments made in prior quarters that reduced income tax expense by $10.6 million, or $0.14 per diluted share.

The impact of the adoption of EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share reduced diluted earnings per share by $0.09 in fiscal 2005 and $0.10 in fiscal 2004.

“We are very pleased with our fiscal 2005 results, especially our growth in revenue, our continued operating margin improvement and our earnings per share growth.” said Thomas Grudnowski, Fair Isaac’s chief executive officer. “Looking ahead, we continue to be encouraged by the market’s ever-increasing awareness and appreciation of the unique kinds of value we deliver through our innovative decision management products and consulting services.”

Fourth Quarter Fiscal 2005 Revenues Highlights
Revenues for fourth quarter fiscal 2005 across each of the company’s four operating segments were as follows:

• Strategy Machine Solutions revenues were $109.6 million in the fourth quarter of 2005, compared to $115.1 million in the prior year quarter, or a decrease of 4.8%, primarily due to a decline in revenues associated with marketing services and insurance solutions. These declines were partially offset by solid growth in consumer scoring products, collections and recovery solutions, mortgage banking solutions and fraud solutions.
• Scoring Solutions revenues increased to $47.8 million in the fourth quarter from $37.5 million in the prior year quarter, or by 27.5%, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies, and PreScore® Service.
• Professional Services revenues increased to $33.4 million in the fourth quarter from $26.4 million in the prior year quarter, or by 26.5%, primarily due to organic growth driven by the company’s customer management, collections and recovery, and fraud solutions, as well as from the acquisition of Braun Consulting, Inc.
• Analytic Software Tools revenues increased to $12.6 million in the fourth quarter from $11.4 million in the prior year quarter, or by 10.5%, due to revenues generated from the sales of Blaze Advisor and Model Builder products.

Fiscal 2005 Revenues Highlights
Revenues for fiscal 2005 across each of the company’s four operating segments were as follows:

• Strategy Machine Solutions revenues were $453.7 million in fiscal 2005, compared to $427.6 million in fiscal 2004, or an increase of 6.1%, primarily due to an increase in revenues associated with collections and recovery, fraud, mortgage banking and consumer solutions. These increases were partially offset by a decline in marketing services and insurance solutions.
• Scoring Solutions revenues increased to $167.3 million in fiscal 2005 from $142.8 million in fiscal 2004, or by 17.2%, due to an increase in revenues derived from risk scoring services at the credit reporting agencies, as well as from PreScore® Service.
• Professional Services revenues increased to $129.6 million in fiscal 2005 from $96.7 million in fiscal 2004, or by 34.0%, driven by growth in services supporting our Collections and Recovery, Blaze, Customer Management, and Mortgage Banking solutions, as well as from the acquisition of Braun Consulting, Inc.
• Analytic Software Tools revenues increased to $48.0 million in fiscal 2005 from $39.0 million in fiscal 2004, or by 23.1%, mainly due to revenues generated from the sales of Blaze Advisor product, as well as growth from Model Builder product.