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Fair Isaac Corporation (NYSE:FICO) Q1 2024 Earnings Conference Call January 25, 2024 5:00 PM ET Company Participants Dave Singleton - Vice President, Investor Relations Will Lansing - Chief Executive Officer Steve Weber - Chief Financial Officer Conference Call Participants Faiza Alwy - Deutsche Bank Surinder Thind - Jefferies Manav Patnaik - Barclays Kyle Peterson - Needham George Tong - Goldman Sachs Seth Weber - Wells Fargo Securities Ashish Sabadra - RBC Capital Markets Jeff Meuler - Baird Rajiv Bhatia ...

Fair Isaac (FICO) reported first-quarter fiscal 2024 earnings of $4.81 per share, missing the Zacks Consensus Estimate by 0.41% but rising 13% year over year.Revenues of $382.1 million increased 10.8% on a year-over-year basis but lagged the consensus mark by 1.16%. Americas, EMEA and Asia Pacific contributed 85%, 9% and 6% to total revenues, respectively.Mortgage originations revenues increased 188%. Auto originations revenues declined 3% year over year. Credit card and personal loan revenues declined 5%.T ...

Fair Isaac (FICO) reported $382.06 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 10.8%. EPS of $4.81 for the same period compares to $4.26 a year ago.The reported revenue represents a surprise of -1.16% over the Zacks Consensus Estimate of $386.55 million. With the consensus EPS estimate being $4.83, the EPS surprise was -0.41%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall S ...

BOZEMAN, Mont.--(BUSINESS WIRE)--FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its first fiscal quarter ended December 31, 2023. First Quarter Fiscal 2024 GAAP Results Net income for the quarter totaled $121.1 million, or $4.80 per share, versus $97.6 million, or $3.84 per share, in the prior year period. Net cash provided by operating activities for the quarter was $122.1 million versus $92.4 million in the prior year period. Fi ...

One stock that might be an intriguing choice for investors right now is Fair Isaac Corporation (FICO) . This is because this security in the Computers - IT Services space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place in ...

PART I – FINANCIAL INFORMATION [Item 1. Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) For the quarter ended December 31, 2023, Fair Isaac Corporation reported total revenues of **$382.1 million**, an **11% increase** year-over-year, and a net income of **$121.1 million**, a **24% increase** Condensed Consolidated Statements of Income (Q1 FY24 vs Q1 FY23) | Metric | Quarter Ended Dec 31, 2023 (in millions) | Quarter Ended Dec 31, 2022 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | $382.1 | $344.9 | 10.8% | | **Operating Income** | $151.4 | $140.3 | 7.8% | | **Net Income** | $121.1 | $97.6 | 24.0% | | **Diluted EPS** | $4.80 | $3.84 | 25.0% | Condensed Consolidated Balance Sheet Highlights | Metric | Dec 31, 2023 (in millions) | Sep 30, 2023 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $160.4 | $136.8 | | Total Assets | $1,593.5 | $1,575.3 | | Total Liabilities | $2,319.3 | $2,263.3 | | Total Stockholders' Deficit | $(725.8) | $(688.0) | Condensed Consolidated Statements of Cash Flows (Q1 FY24 vs Q1 FY23) | Cash Flow Activity | Quarter Ended Dec 31, 2023 (in millions) | Quarter Ended Dec 31, 2022 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $122.1 | $92.4 | | Net cash used in investing activities | $(2.4) | $(10.6) | | Net cash used in financing activities | $(99.9) | $(79.6) | [Note 7: Revenue from Contracts with Customers](index=15&type=section&id=7.%20Revenue%20from%20Contracts%20with%20Customers) Revenue is disaggregated by geography, segment, and product type, with Americas representing **83%** of total revenue and Scores and Software segments each contributing **50%** Revenue by Primary Geographical Market (Q1 FY24) | Region | Revenue (in millions) | Percentage | | :--- | :--- | :--- | | Americas | $318.5 | 83% | | Europe, Middle East and Africa | $36.4 | 10% | | Asia Pacific | $27.2 | 7% | Software Revenue by Deployment Method (Q1 FY24 vs Q1 FY23) | Deployment | Q1 2023 (in millions) | Q1 2022 (in millions) | | :--- | :--- | :--- | | On-premises software | $72.5 | $64.9 | | SaaS software | $96.2 | $79.6 | Scores Revenue by Distribution Method (Q1 FY24 vs Q1 FY23) | Distribution | Q1 2023 (in millions) | Q1 2022 (in millions) | | :--- | :--- | :--- | | Business-to-business Scores | $140.4 | $124.9 | | Business-to-consumer Scores | $51.7 | $53.1 | - Revenues from the three major consumer reporting agencies (TransUnion, Equifax, Experian) accounted for **39% of total revenues** in Q1 FY24, up from 36% in Q1 FY23[91](index=91&type=chunk) - As of December 31, 2023, revenue allocated to remaining performance obligations was **$470.8 million**, with approximately **50%** expected to be recognized over the next 16 months[97](index=97&type=chunk) [Note 6: Debt](index=13&type=section&id=6.%20Debt) As of December 31, 2023, total debt stood at **$1.96 billion**, consisting of a revolving line of credit, a term loan, and three series of Senior Notes, with the company in compliance with all financial covenants Debt Composition (as of Dec 31, 2023) | Debt Component | Carrying Value (in millions) | | :--- | :--- | | Revolving line of credit | $403.0 | | Term loan | $270.0 | | The 2018 Senior Notes | $400.0 | | The 2019 & 2021 Senior Notes | $900.0 | | Less: debt issuance costs | $(11.3) | | **Total Debt** | **$1,961.7** | - As of December 31, 2023, the company had **$403.0 million** outstanding under its revolving line of credit and was in compliance with all financial covenants[58](index=58&type=chunk) [Note 9: Share-Based Employee Benefit Plans](index=18&type=section&id=9.%20Share-Based%20Employee%20Benefit%20Plans) The company maintains the 2021 Long-Term Incentive Plan and the 2019 Employee Stock Purchase Plan, granting **91 thousand restricted stock units**, **18 thousand performance share units**, **64 thousand market share units**, and **6 thousand stock options** during the quarter Equity Award Activity (Q1 FY24, in thousands of shares) | Award Type | Outstanding at Sep 30, 2023 | Granted | Released/Exercised | Forfeited | Outstanding at Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Restricted Stock Units | 376 | 91 | (132) | (11) | 324 | | Performance Share Units | 115 | 18 | (58) | (8) | 67 | | Market Share Units | 87 | 64 | (84) | (5) | 62 | | Stock Options | 227 | 6 | (31) | 0 | 202 | [Note 11: Segment Information](index=20&type=section&id=11.%20Segment%20Information) The company operates in two segments: Scores and Software, with Scores generating **$192.1 million** in revenue and **$168.7 million** in operating income, and Software generating **$189.9 million** in revenue and **$55.1 million** in operating income for Q1 FY24 Segment Performance (Q1 FY24, in millions) | Segment | Total Revenues | Segment Operating Income | Operating Margin | | :--- | :--- | :--- | :--- | | Scores | $192.1 | $168.7 | 87.8% | | Software | $189.9 | $55.1 | 29.0% | | Unallocated Corporate | - | $(40.6) | - | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported an **11% year-over-year revenue increase** to **$382.1 million** for Q1 FY24, driven by growth in both Scores (**+8%**) and Software (**+14%**) segments Financial Highlights (Q1 FY24 vs Q1 FY23) | Metric | Q1 FY24 | Q1 FY23 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $382.1M | $344.9M | +11% | | Scores Revenue | $192.1M | $178.0M | +8% | | Operating Income | $151.4M | $140.3M | +8% | | Net Income | $121.1M | $97.6M | +24% | | Diluted EPS | $4.80 | $3.84 | +25% | [Key Performance Metrics for Software Segment](index=23&type=section&id=Key%20performance%20metrics%20for%20Software%20segment) Software segment performance showed strong growth in recurring revenue but a decline in new bookings, with Annual Recurring Revenue (ARR) growing **18%** year-over-year to **$687.7 million** Annual Recurring Revenue (ARR) Trend | Date | Total ARR (in millions) | YoY Change | | :--- | :--- | :--- | | Dec 31, 2022 | $582.9 | 11% | | Mar 31, 2023 | $613.5 | 17% | | Jun 30, 2023 | $645.9 | 20% | | Sep 30, 2023 | $669.4 | 22% | | Dec 31, 2023 | $687.7 | 18% | - Platform ARR grew **43% YoY** to **$190.3 million**, representing **28% of total ARR** as of December 31, 2023[126](index=126&type=chunk) Annual Contract Value (ACV) Bookings | Period | ACV Bookings (in millions) | | :--- | :--- | | Q1 FY24 | $18.3 | | Q1 FY23 | $21.5 | - The Dollar-Based Net Retention Rate (DBNRR) for the software segment was **114%** for the quarter ended December 31, 2023, down from 120% in the previous quarter but up from 110% in the prior-year quarter[129](index=129&type=chunk) [Results of Operations](index=25&type=section&id=RESULTS%20OF%20OPERATIONS) Total revenues increased **11% YoY**, with Scores revenue up **8%** and Software revenue up **14%**, while total operating expenses rose **13%** to **$230.7 million**, resulting in an **8%** operating income growth to **$151.4 million** - Scores segment revenue increased by **$14.1 million (8%) YoY**, primarily due to higher unit prices in B2B scores, slightly offset by a decrease in B2C revenue from myFICO.com[133](index=133&type=chunk) - Software segment revenue increased by **$23.1 million (14%) YoY**, driven by a **$24.1 million increase** in on-premises and SaaS software revenue, mainly from SaaS growth[134](index=134&type=chunk) - Operating expenses increased by **$26.2 million (13%) YoY**, primarily due to higher personnel and labor costs across Cost of Revenues (**+$3.9M**), R&D (**+$6.0M**), and SG&A (**+$7.4M**)[162](index=162&type=chunk)[188](index=188&type=chunk)[163](index=163&type=chunk) - The effective tax rate for the quarter was **7.3%**, compared to 17.2% in the prior-year quarter, favorably impacted by excess tax benefits relating to stock awards[194](index=194&type=chunk)[80](index=80&type=chunk) [Capital Resources and Liquidity](index=29&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) As of December 31, 2023, the company had **$160.4 million** in cash and cash equivalents, with net cash from operations increasing to **$122.1 million** YoY, and a new **$500 million** stock repurchase program approved in January 2024 - Cash and cash equivalents were **$160.4 million** at quarter-end, with **$114.5 million** held by foreign subsidiaries[173](index=173&type=chunk) - Net cash provided by operating activities increased by **$29.7 million YoY**, primarily due to a **$23.4 million increase** in net income[202](index=202&type=chunk) - The company repurchased **$71.7 million** of common stock during the quarter, and a new **$500.0 million** stock repurchase program was authorized and became effective on January 23, 2024[203](index=203&type=chunk)[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk from changes in interest rates and foreign exchange rates, managing foreign currency risk with short-term forward contracts and not using derivatives for speculative purposes - The company has interest rate risk on its variable-rate debt, which totaled **$673.0 million** as of December 31, 2023, comprising **$403.0 million** from the revolving line of credit and **$270.0 million** from the term loan[209](index=209&type=chunk) - The fair value of the company's **$1.3 billion** in fixed-rate Senior Notes is sensitive to interest rate fluctuations, with the fair value estimated at **$1.242 billion** as of December 31, 2023[233](index=233&type=chunk) - To manage foreign exchange risk, the company uses forward contracts to sell or buy foreign currencies, primarily the Euro, British pound, and Singapore dollar, with all contracts having maturities of less than three months[210](index=210&type=chunk)[43](index=43&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that FICO's disclosure controls and procedures were effective as of December 31, 2023[137](index=137&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[239](index=239&type=chunk) PART II – OTHER INFORMATION [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 - The company states there have been no material changes from the risk factors disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended December 31, 2023, the company repurchased **78,365 shares** for approximately **$71.7 million**, with **$48.8 million** remaining under the then-current program, and a new **$500 million** program approved in January 2024 Issuer Purchases of Equity Securities (Q1 FY24) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Approx. Value Remaining for Repurchase (in millions) | | :--- | :--- | :--- | :--- | | Oct 2023 | 63,365 | $873.57 | $65.2 | | Nov 2023 | 12,000 | $1,081.35 | $52.2 | | Dec 2023 | 3,000 | $1,133.89 | $48.8 | | **Total** | **78,365** | **$1,045.06** | **$48.8** | - In January 2024, the Board of Directors approved a new stock repurchase program authorizing up to **$500.0 million** in share repurchases, replacing the October 2022 program[217](index=217&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) On November 13, 2023, CEO William Lansing entered into a pre-arranged Rule 10b5-1 trading plan for the sale of up to **24,000 shares** of common stock, terminating by August 15, 2024 - CEO William Lansing entered into a Rule 10b5-1 trading plan on November 13, 2023, to sell up to **24,000 shares** of common stock, with the plan terminating on the earlier of August 15, 2024, or when all shares are sold[250](index=250&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed with the SEC, including CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and Inline XBRL documents

BOZEMAN, Mont.--(BUSINESS WIRE)--FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced that its Board of Directors has approved a stock repurchase program to acquire up to $500 million of the company’s outstanding common stock. This new program was approved following completion of FICO’s previous stock repurchase program, which was in effect from October 2022 until adoption of the new program in January 2024. The new stock repurchase program, which is ope ...

Fair Isaac (FICO) is scheduled to report its first-quarter fiscal 2024 results on Jan 25.The Zacks Consensus Estimate for first-quarter fiscal 2024 revenues is pegged at $386.55 million, suggesting an increase of 12.09% from the year-ago quarter’s reported figure.The consensus mark for earnings is pegged at $4.83 per share, indicating growth of 13.38% from the year-ago quarter’s reported number.The company beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missing the ...