FAIR ISAAC CORPORATION FORWARD-LOOKING STATEMENTS Statements contained in this report that are not statements of historical fact should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). In addition, certain statements in our future filings with theSecurities and Exchange Commission ("SEC"), in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the PSLRA. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, expenses, earnings or loss per share, the payment or nonpayment of dividends, share repurchases, capital structure and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, research and development, and the sufficiency of capital resources; (iii) statements of assumptions underlying such statements, including those related to economic conditions; (iv) statements regarding results of business combinations or strategic divestitures; (v) statements regarding business relationships with vendors, customers or collaborators, including the proportion of revenues generated from international as opposed to domestic customers; and (vi) statements regarding products, their characteristics, performance, sales potential or effect in the hands of customers. Words such as "believes," "anticipates," "expects," "intends," "targeted," "should," "potential," "goals," "strategy," "outlook," "plan," "estimated," "will," variations of these terms and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Forward-looking statements are qualified by some or all of these risk factors. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Such forward-looking statements speak only as of the date on which statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances. Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with theSEC , including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. OVERVIEW We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO's software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in nearly 120 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive companies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO Scores - the standard measure in theU.S. of consumer credit risk - empowering them to increase financial literacy and manage their financial health. Our business consists of two operating segments: Scores and Software. Our Scores segment includes our business-to-business ("B2B") scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction workflows and decision-making processes. This segment also includes our business-to-consumer ("B2C") scoring solutions, including our myFICO.com subscription offerings. Our Software segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process - such as account origination, customer management, customer engagement, fraud detection, financial crimes compliance, and marketing - as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. Our offerings are available to our customers as software-as-a-service ("SaaS") or as on-premises software. 18 -------------------------------------------------------------------------------- Table of Contents Due to the COVID-19 pandemic, we continue to conduct business with substantial modifications to employee travel and work locations and also the virtualization of sales and marketing events. We expect these modifications to remain in place throughout calendar year 2022, along with substantially modified interactions with customers and suppliers, among other adjustments. As certain offices reopened due to the lifting of local government restrictions and a small number of employees started returning to work locations on a limited basis during fiscal 2021, we have maintained a "Voluntary Work-From-Home Policy" providing our employees with valued flexibility. While we have not experienced material disruptions to our operations from the COVID-19 pandemic, we are unable to predict the full impact that the COVID-19 pandemic will have on our operations and future financial performance, including demand for our offerings, impact to our customers and partners, actions that may be taken by governmental authorities, and other factors identified in "Risk Factors" in Part II, Item 1A of this Report. Highlights from the quarter endedDecember 31, 2021 •Total revenue was$322.4 million during the quarter endedDecember 31, 2021 , a 3% increase from the quarter endedDecember 31, 2020 . •Total revenue for our Scores segment was$169.5 million during the quarter endedDecember 31, 2021 , a 17% increase from the quarter endedDecember 31, 2020 . •Annual Recurring Revenue for our Software segment as ofDecember 31, 2021 was$546.6 million , a 10% increase fromDecember 31, 2020 , excluding divestitures. •Dollar-Based Net Retention Rate for our Software segment during the quarter endedDecember 31, 2021 was 109%, excluding divestitures. •Cash and cash equivalents was$162.2 million as ofDecember 31, 2021 , compared with$195.4 million as ofSeptember 30, 2021 . •Operating income was$115.6 million during the quarter endedDecember 31, 2021 , a 22% increase from the quarter endedDecember 31, 2020 . •Net income was$85.0 million during the quarter endedDecember 31, 2021 , a 2% decrease from the quarter endedDecember 31, 2020 . •EPS was$3.09 during the quarter endedDecember 31, 2021 , a 7% increase from the quarter endedDecember 31, 2020 . •Cash flows from operations was$124.9 during the quarter endedDecember 31, 2021 , compared with$77.9 million generated during the quarter endedDecember 31, 2020 . •Total debt balance was$1.65 billion as ofDecember 31, 2021 , compared with$1.27 billion as ofSeptember 30, 2021 . •Total amount of share repurchases was$493.6 million during the quarter endedDecember 31, 2021 , compared with$50.0 million during the quarter endedDecember 31, 2020 . Key performance metrics for Software segment Annual Contract Value Bookings ("ACV Bookings") Management regards ACV Bookings as an important indicator of future revenues, but they are not comparable to, nor are they a substitute for, an analysis of our revenues and other GAAP measures. We define ACV Bookings as the average annualized value of software contracts signed in the current reporting period that generate current and future on-premises and SaaS software revenue. We only include contracts with an initial term of at least 24 months and we exclude perpetual licenses and other revenues that are non-recurring in nature. For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings. ACV Bookings is calculated by dividing the total expected contract value by the contract term in years. The expected contract value equals the fixed amount - including guaranteed minimums - stated in the contract, plus estimates of future usage-based fees. We develop estimates from discussions with our customers and examinations of historical data from similar products and customer arrangements. Differences between estimates and actual results occur due to variability in the estimated usage. This variability is primarily caused by the economic trends in our customers' industries; individual performance of our customers relative to their competitors; and regulatory and other factors that affect the business environment in which our customers operate. We disclose estimated revenue expected to be recognized in the future related to remaining performance obligations in Note 8 to the accompanying condensed consolidated financial statements. However, we believe ACV Bookings is a more meaningful measure of our business as it includes estimated revenues and future billings excluded from Note 8, such as usage-based fees and guaranteed minimums derived from our on-premises software licenses, among others. The following table summarizes our ACV Bookings during the periods indicated: 19
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Quarter Ended December 31,
2021 2020
(In millions)
Total on-premises and SaaS software * $ 16.6 $ 12.4 (*) During fiscal 2021, we sold all assets related to our cyber risk score
operations, sold certain assets related to our Software segment to an affiliated
joint venture in
Annual Recurring Revenue ("ARR")
Accounting Standards Codification 606 requires us to recognize a significant
portion of revenue from our on-premises software subscriptions at the point in
time when the software is first made available to the customer, or at the
beginning of the subscription term, despite the fact that our contracts
typically call for billing these amounts ratably over the life of the
subscription. The remaining portion of our on-premises software subscription
revenue including maintenance and usage-based fees are recognized over the life
of the contract. This point-in-time recognition of a portion of our on-premises
software subscription revenue creates significant variability in the revenue
recognized period to period based on the timing of the subscription start date
and the subscription term. Furthermore, this point-in-time revenue recognition
can create a significant difference between the timing of our revenue
recognition and the actual customer billing under the contract. We use ARR to
measure the underlying performance of our subscription-based contracts and
mitigate the impact of this variability. ARR is defined as the annualized
revenue run-rate of on-premises and SaaS software agreements within a quarterly
reporting period, and as such, is different from the timing and amount of
revenue recognized. All components of our software licensing and subscription
arrangements that are not expected to recur (primarily perpetual licenses) are
excluded. We calculate ARR as the quarterly recurring revenue run-rate
multiplied by four.
The following table summarizes our ARR at each of the dates presented:
March 31, 2020 June 30 , September 30, 2020 December 31, 2020 March 31, 2021 June 30 , September 30, 2021 December 31, 2021
2020 2021
ARR (*) (In millions)
Platform (**) $ 41.1 $ 43.8 $ 47.7 $ 55.1 $ 60.2 $ 67.7 $ 75.2 $ 92.2
Non-platform 450.3 438.5 443.6 439.9 437.1 445.9 448.8 454.4
Total $ 491.4 $ 482.3 $ 491.3 $ 495.0 $ 497.3 $ 513.6 $ 524.0 $ 546.6
Percentage
Platform 8 % 9 % 10 % 11 % 12 % 13 % 14 % 17 %
Non-platform 92 % 91 % 90 % 89 % 88 % 87 % 86 % 83 %
Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
YoY Change
Platform 48 % 44 % 45 % 38 % 47 % 54 % 58 % 67 %
Non-platform 5 % (3) % (2) % (2) % (3) % 2 % 1 % 3 %
Total on-premises and
SaaS software 7 % - % 1 % 2 % 1 % 7 % 7 % 10 %
(*) During fiscal 2021, we sold all assets related to our cyber risk score
operations, sold certain assets related to our Software segment to an affiliated
joint venture in China , and divested our C&R business. The amounts and
percentages above excluded these divested product lines and businesses for all
periods presented.
(**) The FICO platform software is a set of interoperable services which use
software assets owned and/or governed by FICO for building solutions and which
conform to FICO architectural standards based on key elements of Cloud Native
Computing design principles. These standards encompass shared security context
and pre-integration using FICO standard application programming interfaces for
all services.
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Dollar-Based Net Retention Rate ("DBNRR")
We consider DBNRR to be an important measure of our success in retaining and
growing revenue from our existing customers. To calculate DBNRR for any period,
we compare the ARR at the end of the prior comparable quarter ("base ARR") to
the ARR from that same cohort of customers at the end of the current quarter
("retained ARR"); we then divide the retained ARR by the base ARR to arrive at
the DBNRR. Our calculation includes the positive impact among this cohort of
customers of selling additional products, price increases and increases in
usage-based fees, and the negative impact of customer attrition, price
decreases, and decreases in usage-based fees during the period. However, the
calculation does not include the positive impact from sales to any new customers
acquired during the period. Our DBNRR may increase or decrease from period to
period as a result of various factors, including the timing of new sales and
customer renewal rates.
The following table summarizes our DBNRR for each of the periods presented:
Quarter Ended
March 31, 2020 June 30, September 30, December 31, March 31, June 30, September 30, December 31,
2020 2020 2020 2021 2021 2021 2021
DBNRR (*)
Platform 112 % 108 % 116 % 123 % 130 % 137 % 143 % 143 %
Non-platform 103 % 95 % 96 % 97 % 96 % 100 % 100 % 102 %
Total on-premises and
SaaS software 105 % 98 % 99 % 100 % 100 % 105 % 106 % 109 %
(*) During fiscal 2021, we sold all assets related to our cyber risk score
operations, sold certain assets related to our Software segment to an affiliated
joint venture in China , and divested our C&R business. The percentages above
excluded these divested product lines and businesses for all periods presented.
RESULTS OF OPERATIONS
We are organized into the following two reportable segments: Scores and
Software. Although we sell solutions and services into a large number of end
user product and industry markets, our reportable business segments reflect the
primary method in which management organizes and evaluates internal financial
information to make operating decisions and assess performance.
Segment revenues, operating income, and related financial information, including
disaggregation of revenue are set forth in Note 8 and Note 12 to the
accompanying condensed consolidated financial statements.
Revenues
The following tables set forth certain summary information on a segment basis
related to our revenues for the quarters ended December 31, 2021 and 2020:
Quarter Ended December 31, Percentage of Revenues Period-to-Period Period-to-Period
Segment 2021 2020 2021 2020 Change Percentage Change
(In thousands) (In thousands)
Scores $ 169,487 $ 144,651 53 % 46 % $ 24,836 17 %
Software 152,874 167,763 47 % 54 % (14,889) (9) %
Total $ 322,361 $ 312,414 100 % 100 % 9,947 3 %
Scores
Scores segment revenues increased $24.8 million due to an increase of $12.8
million in our business-to-business scores revenue and $12.0 million in our
business-to-consumer revenue. The increase in business-to-business scores
revenue was primarily attributable to a higher unit price across several
business-to-business offerings, as well as higher aggregate volumes during the
quarter ended December 31, 2021 . The increase in business-to-consumer revenue
was attributable to an increase in both royalties derived from scores sold
indirectly to consumers through credit reporting agencies and direct sales
generated from the myFICO.com website.
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Revenues collectively generated by agreements with the three major consumer
reporting agencies, TransUnion , Equifax, and Experian accounted for 38% and 34%
of our total revenues in the quarters ended December 31, 2021 and 2020,
respectively, with two consumer reporting agencies each contributing more than
10% of our total revenues in each of the quarters ended December 31, 2021 and
2020.
Software
Quarter Ended December 31, Period-to-Period Period-to-Period
2021 2020 Change Percentage Change
(In thousands) (In thousands)
On-premises and SaaS software $ 126,338 $ 126,455 $ (117) - %
Professional services 26,536 41,308 (14,772) (36) %
Total $ 152,874 $ 167,763 (14,889) (9) %
Software segment revenues decreased $14.9 million due to a $14.8 million
decrease in services revenue and a $0.1 million decrease in our on-premises and
SaaS software revenue. The decrease in services revenue was primarily
attributable to our strategic shift to emphasize software over services, as well
as the divestiture of our C&R business in June 2021 . The decrease in our
on-premises and SaaS software revenue was primarily attributable to the C&R
business divestiture, partially offset by an increase in our platform software
revenue. In total, $16.3 million of the quarter-over-prior year quarter decrease
- $8.3 million from on-premises and SaaS software and $8.0 million from services
- in our Software segment revenue was attributable to the divestiture of our C&R
business.
Operating Expenses and Other Income / Expenses
The following tables set forth certain summary information related to our
condensed consolidated statements of income and comprehensive income for the
quarters ended December 31, 2021 and 2020:
Quarter Ended December 31, Percentage of Revenues Period-to-
Period-to-Period Period
2021 2020 2021 2020 Change Percentage Change
(In thousands, except (In thousands,
employees) except employees)
Revenues $ 322,361 $ 312,414 100 % 100 % $ 9,947 3 %
Operating expenses:
Cost of revenues 69,203 89,528 21 % 29 % (20,325) (23) %
Research and development 38,980 40,651 12 % 13 % (1,671) (4) %
Selling, general and
administrative 98,048 93,911 31 % 30 % 4,137 4 %
Amortization of intangible assets 544 937 - % - % (393) (42) %
Gains on product line asset sales
and business divestiture - (7,334) - % (2) % 7,334 (100) %
Total operating expenses 206,775 217,693 64 % 70 % (10,918) (5) %
Operating income 115,586 94,721 36 % 30 % 20,865 22 %
Interest expense, net (12,195) (9,641) (4) % (3) % (2,554) 26 %
Other income, net 1,429 2,880 - % 1 % (1,451) (50) %
Income before income taxes 104,820 87,960 32 % 28 % 16,860 19 %
Income tax provision 19,861 1,468 6 % - % 18,393 1,253 %
Net income $ 84,959 $ 86,492 26 % 28 % (1,533) (2) %
Number of employees at quarter end 3,516 3,890 (374) (10) %
22-------------------------------------------------------------------------------- Table of Contents Cost of Revenues Cost of revenues consists primarily of employee salaries and benefits for personnel directly involved in delivering software products, operating SaaS infrastructure, and providing support, implementation and consulting services; allocated overhead, facilities and data center costs; software royalty fees; credit bureau data and processing services; third-party hosting fees related to our SaaS services; travel costs; and outside services. The quarter-over-prior year quarter decrease in cost of revenues of$20.3 million was primarily attributable to a$16.6 million decrease in personnel and labor costs and a$4.6 million decrease in allocated facilities and infrastructure costs. Both were largely driven by a decrease in our headcount as a result of the divestiture of our C&R business inJune 2021 , as well as reduced resource requirements associated with decreased services revenue. Cost of revenues as a percentage of revenues decreased to 21% during the quarter endedDecember 31, 2021 from 29% during the quarter endedDecember 31, 2020 , primarily due to increased sales of our higher-margin Scores products and decreased sales of lower-margin professional services. Research and Development Research and development expenses include personnel and related overhead costs incurred in the development of new products and services, including research of mathematical and statistical models and development of new versions of Software products. The quarter-over-prior year quarter decrease in research and development expenses of$1.7 million was primarily attributable to a decrease in third-party cloud computing cost. Research and development expenses as a percentage of revenues decreased to 12% during the quarter endedDecember 31, 2021 from 13% during the quarter endedDecember 31, 2020 . Selling, General and Administrative Selling, general and administrative expenses consist principally of employee salaries, incentives, commissions and benefits; travel costs; overhead costs; advertising and other promotional expenses; corporate facilities expenses; legal expenses; business development expenses. The quarter-over-prior year quarter increase in selling, general and administrative expenses of$4.1 million was primarily attributable to a$1.3 million increase in allocated facilities cost, a$1.1 million increase in personnel and labor costs, and a$0.5 million increase in travel cost. Selling, general and administrative expenses as a percentage of revenues was 31% during the quarter endedDecember 31, 2021 , materially consistent with that incurred during the quarter endedDecember 31, 2020 . Amortization of Intangible Assets Amortization of intangible assets consists of amortization expense related to intangible assets recorded in connection with acquisitions accounted for by the acquisition method of accounting. Our finite-lived intangible assets, consisting primarily of completed technology and customer contracts and relationships, are being amortized using the straight-line method over periods ranging from four to fifteen years. Amortization expense was$0.5 million during the quarter endedDecember 31, 2021 compared to$0.9 million during the quarter endedDecember 31, 2020 . Gains on Product Line Asset Sales and Business Divestiture The$7.3 million gain on product line asset sales and business divestiture during the quarter endedDecember 31, 2020 was attributable to the sale of all assets related to our cyber risk score operations inOctober 2020 and the sale of certain assets related to our Software operations to an affiliated joint venture inChina inDecember 2020 . Interest Expense, Net Interest expense includes interest on the senior notes issued inDecember 2021 ,December 2019 andMay 2018 , as well as interest and credit facility fees on the revolving line of credit and term loan. Our condensed consolidated statements of income and comprehensive income include interest expense netted with interest income, which is derived primarily from the investment of funds in excess of our immediate operating requirements. The quarter-over-prior year quarter increase in interest expense of$2.6 million was primarily attributable to a higher average outstanding debt balance during the quarter endedDecember 31, 2021 . 23 -------------------------------------------------------------------------------- Table of Contents Other Income, Net Other income, net consists primarily of realized investment gains/losses, exchange rate gains/losses resulting from remeasurement of foreign-currency-denominated receivable and cash balances into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts, and other non-operating items. The quarter-over-prior year quarter decrease in other income, net of$1.5 million was primarily attributable to a decrease in net unrealized gains on our supplemental retirement and savings plan. Income Tax Provision The effective income tax rate was 18.9% and 1.7% during the quarters endedDecember 31, 2021 and 2020, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective tax rates for the quarters endedDecember 31, 2021 and 2020 were both impacted favorably by the recording of excess tax benefits relating to stock awards. The impact is dependent upon grants of share-based compensation and the future stock price in relation to the fair value of awards on the grant date. The decrease in stock price for awards that vested inDecember 2021 has resulted in a decreased net excess tax benefit for the quarter endedDecember 31, 2021 . Operating Income The following tables set forth certain summary information on a segment basis related to our operating income for the quarters endedDecember 31, 2021 and 2020: Quarter Ended December 31, Period-to-Period Period-to-Period Segment 2021 2020 Change Percentage Change (In thousands) (In thousands) Scores$ 147,503 $ 123,025 $ 24,478 20 % Software 34,293 20,684 13,609 66 % Unallocated corporate expenses (35,788) (30,253) (5,535) 18 % Total segment operating income 146,008 113,456 32,552 29 % Unallocated share-based compensation (29,878) (25,132) (4,746) 19 % Unallocated amortization expense (544) (937) 393 (42) % Unallocated gains on product line asset sales and business divestiture - 7,334 (7,334) (100) % Operating income$ 115,586 $ 94,721 20,865 22 % Scores Quarter Ended Percentage of December 31, Revenues 2021 2020 2021 2020 (In thousands) Segment revenues$ 169,487 $ 144,651 100 % 100 % Segment operating expense (21,984) (21,626) (13) % (15) % Segment operating income$ 147,503 $ 123,025 87 %
85 %
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Software
Quarter Ended Percentage of
December 31, Revenues
2021 2020 2021 2020
(In thousands)
Segment revenues $ 152,874 $ 167,763 100 % 100 %
Segment operating expense (118,581) (147,079) (78) % (88) %
Segment operating income $ 34,293 $ 20,684 22 % 12 %
The quarter-over-prior year quarter $20.9 million increase in operating income
was primarily attributable to a $28.2 million decrease in segment operating
expenses and a $9.9 million increase in segment revenues, partially offset by a
$7.3 million gain on product line asset sales during the quarter ended December
31, 2020 , a $5.5 million increase in corporate expenses, and a $4.7 million
increase in share-based compensation cost.
At the segment level, the quarter-over-prior year quarter $32.6 million increase
in segment operating income was the result of a $24.5 million increase in our
Scores segment operating income and a $13.6 million increase in our Software
segment operating income, partially offset by a $5.5 million increase in
corporate expenses.
The quarter-over-prior year quarter $24.5 million increase in Scores segment
operating income was due to a $24.8 million increase in segment revenue,
partially offset by a $0.3 million increase in segment operating expenses.
Segment operating income as a percentage of segment revenue for Scores increased
to 87% from 85%.
The quarter-over-prior year quarter $13.6 million increase in Software segment
operating income was due to a $28.5 million decrease in segment operating
expenses, partially offset by a $14.9 million decrease in segment revenue.
Segment operating income as a percentage of segment revenue for Software
increased to 22% from 12%, primarily attributable to the divestiture of our
lower-margin C&R business, and a reduction in lower-margin services revenue.
CAPITAL RESOURCES AND LIQUIDITYOutlook
As ofDecember 31, 2021 , we had$162.2 million in cash and cash equivalents, which included$95.5 million held by our foreign subsidiaries. Our cash position could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled "Risk Factors" of this Quarterly Report on Form 10-Q. However, based on our current business plan and revenue prospects, we believe our cash and cash equivalents balances, as well as available borrowings from our$600 million revolving line of credit and anticipated cash flows from operating activities, will be sufficient to fund our working and other capital requirements as well as the$15.0 million principal payments on our term loan over the next twelve months. Under our current financing arrangements, we have no other significant debt obligations maturing over the next twelve months. Our undistributed earnings outside theU.S. are deemed to be permanently reinvested in foreign jurisdictions. We currently do not foresee a need to repatriate cash and cash equivalents held by our foreign subsidiaries. If these funds are needed for our operations in theU.S. , we may be required to accrue for state income or foreign withholding taxes on the distributed foreign earnings, which we expect to be immaterial. In the normal course of business, we evaluate the merits of acquiring technology or businesses, or establishing strategic relationships with or investing in these businesses. We may elect to use available cash and cash equivalents to fund such activities in the future. In the event additional needs for cash arise, or if we refinance our existing debt, we may raise additional funds from a combination of sources, including the potential issuance of debt or equity securities. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to take advantage of unanticipated opportunities or respond to competitive pressures could be limited. 25
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