Good afternoon. My name is Rob, and I will your conference operator today. At this time, I would like to welcome everyone to the FICO Fourth Quarter 2011 Earnings Call. [Operator Instructions] Mr. Steve Weber, you may begin your call.

Thank you, Rob. Good afternoon, and thank you for joining FICO's fourth quarter earnings call. I'm Steve Weber, Head of Investor Relations, and I'm joined today by CEO, Mark Greene; and CFO, Mike Pung. You'll find on the Investor Relations portion of the FICO website a copy of today's news release, our Regulation G Disclosure schedule and our financial highlights. While our press release describes financial results compared to the prior year, today, management will also discuss results in comparison to the prior quarter to facilitate understanding of the run rate of our business. Certain statements made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Those statements involve many uncertainties that could cause actual results to differ materially. Information concerning these uncertainties is contained in the company's filings with the SEC, in particular, in the Risk Factors and Forward-looking Statements portions of such filings. Copies are available from the SEC, from the FICO website or from our Investor Relations team. In order to provide additional information to investors, we will use certain non-GAAP financial measures on this call. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, entitled Regulation G Disclosure, is available on the Investor page of our website under the Presentations tab. A replay of this webcast will be available through December 2, 2011. Now I'll turn the call over to Mark Greene.

Thanks, Steve, and good afternoon. We'll proceed as usual today in 3 parts. First, I'll summarize the quarterly results and discuss the state of our business as we ended our fiscal year in September. Mike Pung will then provide financial details and discuss the effects of the structural changes we made over the past year. Finally, I'll discuss our business outlook and financial guidance for the new fiscal year before we take your questions. I'm pleased to report that we finished fiscal 2011 on a solid note, meeting the metrics we guided to. This quarter, we delivered $25 million of net income or $0.64 per share on $160 million of revenue. We delivered $106 million of bookings, the largest total in 5 years. For the full year, we delivered non-GAAP net income of $80 million on revenues of $620 million and bookings of $298 million, while producing free cash flows of $119 million. Mike will dive into these numbers in a few moments, but I'd like to emphasize that we're very much on the path that we laid out when we announced our restructuring back in February. We've made it a priority to allocate resources towards product innovation, client service and revenue-producing activity. And we're now seeing the fruits of those efforts. Let me break out our quarterly performance according to the 3 segments of our Decision Management portfolio. First, the Decision Management Application segment consists of business software used by clients to better understand and predict consumer behavior in order to make smarter decisions over a customer life cycle. Revenue from these applications was solid this quarter, up both sequentially and year-over-year, as we saw good results throughout the portfolio. Our strongest performers continue to be in the Fraud Management business, where we saw a year-over-year revenue growth of…

Thanks, Mark. We had a solid fourth quarter and delivered against both our revenue and net income guidance for fiscal 2011. We also made significant financial structural improvements during this past year. Today, I will summarize how we improved our operating performance and strengthened our balance sheet and explain why we're confident in our position as we enter fiscal 2012. First, our operating leverage increased 600 basis points since the beginning of the year, driven by modest top line growth and the restructuring efforts announced earlier in the year. Non-GAAP operating margins were 26% for the full fiscal 2011 compared to 24% last year, and we anticipate our margin in fiscal 2012 to approximate our quarter 4 exit rate. Second, we generated $119 million of free cash flow during the year, an increase of 40% from last year. We believe share repurchases are a responsible use of our cash. And this year, we repurchased 3.6 million shares of our stock, reducing our share count by 9% from last year. All the while, we strengthened our balance sheet. We have $242 million of cash at the end of the year. We refinanced our revolving line of credit, and our leverage is 1.8x, also a significant improvement from last year. We repurchased an additional 1.4 million shares of our stock in the month of October, further reducing our share count to about 35.6 million shares outstanding. And today, our board authorized a new repurchase plan for another $150 million. Finally, we are providing 2012 guidance at a level that reflects a confident yet cautious view of our business in light of ongoing economic uncertainty in the world markets. Now I'll discuss the quarterly results in more detail. Revenue for the quarter was $160 million, a $10 million increase over the prior quarter…

In this concluding section, I'll discuss our prospects and guidance for fiscal 2012. In our Applications and Tools businesses, we continue to see signs of improved spending on technology, especially this class of software, along with a strong pipeline of opportunities worldwide. Concerning prospects for our Scores business, I’ve said before that our B2B Scores business is closely tied to the U.S. economic growth outlook. While we had very good volumes and revenues in the fourth quarter, we're not yet ready to call this a trend. With the current high unemployment rate and sluggishness in the housing market, we remain cautious about our B2B Scores outlook until we can see sustained economic growth in the United States. For our B2C business, Scores revenue growth will continue to be tied to the success of our marketing efforts through myFICO.com, and we expect that our new leadership in that part of the business will have favorable impact in the months ahead. Now to guidance for FY '12. We expect revenues between $640 million and $645 million or roughly a 3% to 4% increase for the year, compared with the $620 million of revenue generated in fiscal 2011. We expect net income between $86 million and $89 million on a GAAP basis or up 19% to 24% from the $72 million of net income generated last year. This translates to GAAP earnings per share of between $2.45 and $2.55 based on 35 million shares outstanding or an increase between 37% and 42% versus the prior year. In summary, we are pleased with the results of this quarter and the fiscal year. We're now realizing the benefits of our restructuring efforts in the form of earnings growth and margin expansion. Our business model now deliveries strong operating leverage, and we expect to continue generating…

Thanks, Mark. This concludes our prepared remarks, and we're now ready to take your questions. Rob, please open the line.

[Operator Instructions] Your first question comes from the line of Thomas Ernst from Deutsche Bank.

This is Nandan Amladi on behalf of Tom. Just a couple of questions. On the bookings front, clearly you had a decent quarter seasonally up, but the year-on-year basis, a fairly modest increase. But the number of large deals, both the $3 million and greater and $1 million greater, dropped. So how much of this was kind of macro related versus anything that's company specific?

Nandan, it's Mike here. I wouldn't say any of them are really macro conditions. We just frankly had several very, very large deals this quarter that drove a lot of the bookings growth that you see in the numbers. And we also had a lot of exceptionally midsized deals, if you will. And so the overall volume of deals is roughly the same. The big whales were really more limited to several that are very large in size.

Okay. And how about your efforts to expand geographically? Clearly, there's economic opportunity in the BRIC countries, and I know you had spent some resources expanding to China, Russia, Brazil. How are those efforts going?

Nandan, it's Mark. Well, we actually had 18% growth in our Asia business, so they had a record quarter last quarter, and China's an important part of that growth story. So I think, particularly, our China expansion is going well. We are in the early stages of a similar expansion in Russia, where I expect to be able to report similar progress in the near future.

Your next question comes from the line of Manav Patnaik from Barclays Capital.

On the Scores front, the growth, after 5 negative quarters, finally growth. I just wanted to dig a little bit more in terms of -- I know you guys said it's a little too early, if you could just make a call. But you provided the PreScore growth. Can you give a little color on the Originations Score growth? And I guess previously you talked about the lag of 6 to 8 months before you see the PreScores convert. What's your thought process there from what you see today?

Manav, it's Mark. I think we like what we're still seeing and especially at the front end of the life cycle. So you're correct that the PreScore or what we sometimes call acquisition Scores continues to have healthy growth there. We saw 18% growth in that part of the business. Originations is also growing, and that's the next phase, although not as strongly. It was a 2% growth. We have not yet seen that translate on a year-over-year basis into growth on account management. Although in the last couple of quarters, account management, which is the next phase of the life cycle, has begun to come up as well, so there's some early evidence that if you will that pig is moving through the python in the fashion that we hope to see it. But there remains quite a bit of livelihood and activity at the front end of the life cycle, which is encouraging. And if that's sustained, I'm feeling increasingly confident about what will happen later in the life cycle. The caveat in my remarks about fiscal '12 is that when I look out at the macro environment, I still see [indiscernible] around housing and unemployment. So while our Scoring business is holding up well and showing signs of life, it will require a sustained economic recovery that we don't quite yet see before I will feel more bullish about the prospects for B2B Scores.

Got it. So I guess, by the commentary then, is it right to assume that the 3% to 4% growth that you're projecting on the top line is -- seems to be, going to be driven more by the Applications and Tools business?

That's correct. We've taken what I hope will prove to be a conservative view that our Scores business will be essentially flat overall for the coming year. As I say, I hope that's the floor on what actually happens, and I hope I can report upside progress against that. But you're exactly right. The 3% to 4% growth that we're projecting is substantially driven from Apps and Tools.

Got it. And then lastly, in terms of -- thank you for the guidance for 2012, the clarity. On the free cash flow front though, I mean, should we still assume it's the $25 million a quarter run rate? Or do you guys have the projections in mind?

So I would say we're expecting free cash flow to grow somewhere between 5% to 10% next year. First quarter, we have some CapEx expenditures that I was expecting to have in the fourth quarter that will probably hit in the first quarter for a data center rebuild. So overall, that puts free cash flow for the year, next year to be somewhere around $125 million to $130 million range [indiscernible] about those numbers.

And the total CapEx embedded in that?

Well, total CapEx embedded for next year, roughly $15 million to $17 million.

[Operator Instructions] Your next question comes from the line of Carter Malloy from Stephens Inc.

Congrats on the bottom line controls and the good outlook for next year. My questions will center around that. First is, in light of the big EPS guidance for '12, what's your approach towards the buyback right now? Are you guys going at it opportunistically or very methodically? Because it sounded like there was not much of that built into your guidance. I just want to make sure that's correct.

Yes, you are correct. We were quite aggressive in the month of October. Our stock price took a dip, and we went in and picked up 1.4 million shares as I made in my comment. So we started the year quite aggressive. We're just over 35.5 million shares as we sit today, and we've modeled in at least for now some modest buyback over the remaining course of the quarter. And that's why we've guided shares at roughly 35 million. We'll continue to buy opportunistically as the year goes on, but we started out, I would say, with a bang.

Okay. And then on the R&D line, last quarter, we were talking about that coming down to 10% or being around 10% long term. This quarter we did way under that. Guidance implies you're keeping a cap on the OpEx going forward. So how should we think about modeling that line? And also how should we think about any potential business impacts or where you're actually making those cuts in R&D?

Well, we're not making any further cuts in R&D. I mean, we have basically brought our R&D spend down to roughly 8% in the fourth quarter. And for the year, we were somewhere around 9% to 10%. And then I think it's pretty safe to say on a go-forward basis that 9% to 10% is where we're continuing to run the R&D line. We're not cutting back on any of our investment. In fact, we think we're investing in all the right areas across the portfolio to drive our growth for next year, but I would suggest you model it out around 9% to 10%.

Carter, it's Mark. One additional comment I'd offer is we're far enough into the buildout of our next-generation applications that we’re in some sense sort of over a hump that we climbed over in the past year. And so I agree with Mike's comment that 9% or 10% is probably the right number, but you'd be surprised how much we can get done with that level of spend given the infrastructure we've already poured and the retooling of most of our major applications that’s already taken place.

Sure. That's very helpful. Then lastly, can you just talk about your conversations recently with clients and potential clients? Everyone is looking over their shoulders at volatile markets and volatile CapEx spend. Are you seeing any lengthening of deal timelines? Or what are the conversations like there?

We haven't yet seen lengthening of deal times. I would say that in the last 30, 45 days, we've seen, especially in Europe, increased skittishness from consumers. No deals have been pulled. All deals continue to progress through the pipeline. But as we get down to the short straws of sort of deal signing and so on, they're checking their checkbook twice. They're running through extra review processes, or they may be poised to do so. And so we stay in close contact, especially in certain European countries where we have big ambitions over the next couple of months because the nervousness in Europe is growing, and that could be a risk factor to worry about on a go-forward basis here. The risk profile here in the states is also elevated, but not distinctly more so than it's been earlier this year. It remains a nervous environment, but I wouldn't say it's more so than it was 2 or 3 quarters ago. Europe is a different story. Europe's become more nervous.

Okay. And so on Europe, how much of your revenues is EU specifically? And I assume that most of that's with the big banks, so can you talk about the recurring nature of some of that revenue and how much of it is potentially affected by a slowdown, especially with those banks?

Yes, so we roughly have about 28% to 30% of our revenue coming out of the EMEA region, most of it coming out of Western Europe. We have a fair amount of recurring revenue that's been driven from Falcon and TRIAD installations that have been in our baseline business for many years. I would say where probably the biggest risk is, is signing new deals, license deals. In our view, the baseline seems pretty solid, but the timing of new deals in particular is probably less clear than it was 3 months ago.

And I think Mike's right. It's timing. It's when, not if, in our discussions with those customers. They're very committed to going forward with the projects, some of them quite substantial that we've been tracking for some months. But will it close in December or January or March? There's a little bit of wait-and-see taking place, but nobody has suggested to us that they're taking deals off the table.

And if those deals get pushed by a couple of quarters, are we talking about impacts to the top line? I'm just trying to gauge the variable revenue there, so are we talking about impacts to the top line in your European business of $1 million or $2 million or $10 million?

So net new revenue in any particular quarter for our EMEA region can run anywhere $5 million to $8 million, plus or minus. So that's the sort of variability we would be talking about, some percentage of that number.

There are no further questions at this time. I'll turn the call back over to the presenters.

Thank you, Rob. As a reminder, we'll be holding an Investor Day tomorrow in conjunction with our FICO World Conference. That event will also be webcast, and the Investor page on our website has more information on that. Thank you all for joining today's call.

This concludes today's conference call. You may now disconnect.