Core Viewpoint - Fair Isaac (FICO) reported mixed financial results for Q1 fiscal 2025, with earnings per share missing estimates but revenues showing year-over-year growth. The company is experiencing a positive trend in its stock performance, outperforming the S&P 500, but there are concerns about future earnings guidance and downward estimate revisions [1][2][10]. Financial Performance - Q1 fiscal 2025 earnings were $5.79 per share, missing the Zacks Consensus Estimate by 6.76% but increasing 20.4% year over year [2]. - Revenues reached $440 million, a 15.2% increase year over year, but fell short of consensus estimates by 3.25% [2]. - Software revenues grew 8% year over year to $204.3 million, with Software Annual Recurring Revenues (ARR) increasing 6% [3]. Revenue Breakdown - The Americas contributed 87% to total revenues, while EMEA and Asia Pacific contributed 8% and 5%, respectively [2]. - On-premises and SaaS software revenues accounted for 42.3% of total revenues, increasing 10.3% year over year to $186 million [4]. - Scores, which include B2B and B2C scoring solutions, increased 22.7% year over year to $235.7 million, representing 53.6% of total revenues [4]. Segment Performance - B2B revenues surged 30% year over year, primarily due to higher unit prices and increased mortgage originations, while B2C revenues grew 3% [5]. - Mortgage originations revenues skyrocketed 110% year over year, making up 44% of B2B revenues and 34% of total scores revenues [5]. - Auto originations revenues increased by 5%, while credit card and personal loan revenues declined by 3% year over year [5]. Operating Metrics - Research & development expenses as a percentage of revenues decreased by 90 basis points to 10.3%, while selling, general, and administrative expenses increased by 180 basis points to 29.1% [7]. - Operating margin improved to 40.8%, expanding 120 basis points year over year [7]. Balance Sheet and Cash Flow - As of December 31, 2024, FICO had $184 million in cash and cash equivalents and total debt of $2.4 billion, up from $151 million in cash and $2.2 billion in debt as of September 30, 2024 [8]. - Cash flow from operations was $194 million, down from $226.4 million in the previous quarter, while free cash flow decreased to $187 million from $219.4 million [9]. Future Guidance - For fiscal 2025, FICO anticipates revenues of $1.98 billion and non-GAAP earnings of $28.58 per share [10]. - Recent estimates have trended downward, indicating a potential shift in market sentiment towards the stock [11][13].

Core Viewpoint - Fair Isaac's stock received a nearly 3% increase following a bullish upgrade by RBC Capital's analyst Ashish Sabadra, outperforming the S&P 500 index's marginal gain on the same day [1]. Group 1: Analyst Upgrade - RBC Capital's Ashish Sabadra upgraded Fair Isaac from a sector perform to an outperform rating, raising the price target from $2,040 to $2,170 per share [2]. - The upgrade reflects Sabadra's belief that Fair Isaac's stock is undervalued, particularly due to its dominance in mortgage scoring, which provides strong pricing power [3]. Group 2: Revenue Potential - Sabadra anticipates that Fair Isaac could potentially increase its annual recurring revenue (ARR) by over 30% due to favorable market conditions [3]. Group 3: Company Strengths - Fair Isaac is characterized as a shareholder-friendly company with a solid capital allocation strategy that may help mitigate negative impacts from adverse developments [4]. - The company possesses a strong economic moat and maintains a robust presence in its niche market, making it a worthy investment consideration [4].

Group 1 - The Motley Fool is a financial services company founded in 1993, aiming to make the world smarter, happier, and richer [1] - The company reaches millions of people monthly through various channels including premium investing solutions, free guidance, market analysis, personal finance education, and podcasts [1] - The Motley Fool also operates a non-profit organization, The Motley Fool Foundation, contributing to its mission [1]

Core Insights - The article provides an update on Fair Isaac Corporation (NYSE: FICO) following a previous recommendation to hold due to high valuation multiples [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on long-term durability and affordability rather than just low multiples [1] Company Analysis - Fair Isaac Corporation is currently viewed as trading at a high valuation multiple, which has led to a hold recommendation [1] - The company is characterized by steady long-term growth, a lack of cyclicality, and a robust balance sheet, making it an attractive investment despite the high valuation [1] Investment Philosophy - The author disagrees with the notion that low multiple stocks are inherently cheap, advocating for a focus on companies with strong fundamentals [1] - There is an acknowledgment of the risks involved in investing in successful companies, particularly the potential to overpay [1] - The author believes that in certain situations, the growth potential of a company can outweigh immediate price concerns [1]

Core Insights - Fair Isaac Corporation (FICO) reported first-quarter fiscal 2025 earnings of $5.79 per share, missing the Zacks Consensus Estimate by 6.76% but showing a year-over-year increase of 20.4% [1] - Revenues reached $440 million, a 15.2% increase year-over-year, but fell short of the consensus mark by 3.25% [2] - FICO raised its fiscal 2025 guidance following strong first-quarter performance, with shares appreciating 43.7% over the past six months, outperforming the Zacks Computer & Technology sector's return of 23.6% [3] Revenue Breakdown - Software revenues, including analytics and digital decisioning technology, increased 8% year-over-year to $204.3 million [4] - Software Annual Recurring Revenues (ARR) grew 6% year-over-year, with platform ARR up 20% and non-platform ARR up 1% [4] - Scores revenues, which include B2B and B2C scoring solutions, increased 22.7% year-over-year to $235.7 million [5] Segment Performance - B2B revenues surged 30% year-over-year, driven by higher unit prices and increased mortgage originations [6] - Mortgage originations revenues skyrocketed 110% year-over-year, accounting for 44% of B2B revenues and 34% of total scores revenues [6] - Professional services revenues decreased 14.1% year-over-year to $18.3 million [5] Operating Metrics - Research & development expenses as a percentage of revenues decreased by 90 basis points year-over-year to 10.3% [8] - Selling, general and administrative expenses increased by 180 basis points year-over-year to 29.1% [8] - Operating margin expanded by 120 basis points year-over-year to 40.8% [8] Financial Position - As of December 31, 2024, FICO had $184 million in cash and cash equivalents and total debt of $2.4 billion, compared to $151 million in cash and $2.2 billion in debt as of September 30, 2024 [9] - Cash flow from operations was $194 million in the first quarter, down from $226.4 million in the previous quarter [10] - Free cash flow was $187 million, compared to $219.4 million reported in the prior quarter [10] Future Guidance - For fiscal 2025, FICO anticipates revenues of $1.98 billion and non-GAAP earnings projected at $28.58 per share [11]

Financial Performance - Total revenues reached $440 million, a 15% increase year-over-year but a 3% decrease quarter-over-quarter[3] - Scores revenues were $235.7 million, up 23% year-over-year but down 5% quarter-over-quarter[3] - Software revenues remained relatively flat quarter-over-quarter at $204.3 million, showing an 8% increase year-over-year[3] - Adjusted EBITDA was $223.1 million, an 18% increase year-over-year but an 8% decrease quarter-over-quarter[3] - Non-GAAP diluted EPS was $5.79, a 20% increase year-over-year but an 11% decrease quarter-over-quarter[3] Software Metrics - Software ARR increased to $729.3 million, a 6% increase year-over-year and a 1% increase quarter-over-quarter[3] - Software ACV Bookings were $21.2 million, a 16% increase year-over-year but a 4% decrease quarter-over-quarter[3] - Platform ARR reached $227.7 million, while Non-Platform ARR was $501.6 million[20] Segment Performance - Scores operating income was $203.8 million, with an 86% operating margin[33] - Software operating income was $60.7 million, with a 30% operating margin[33] Balance Sheet - Cash and investments increased to $230.2 million, a 17% increase both year-over-year and quarter-over-quarter[31]

Core Insights - Fair Isaac reported strong year-over-year growth in revenue and net income but fell short of analyst expectations for adjusted EPS and revenue [2][3] Financial Performance - Revenue for Q1 2025 was $440 million, a 15% increase from $382.1 million in Q1 2024, but below the expected $452 million [2][4] - Adjusted EPS was $5.79, missing the analysts' estimate of $6.09, but up 20% from $4.81 in the previous year [2][4] - GAAP net income reached $152.5 million, a 26% increase from $121.1 million in the same quarter last year [2][4] - Free cash flow improved significantly to $186.8 million, a 55% increase from $120.8 million year-over-year [4] Business Overview - Fair Isaac is recognized for its FICO Scores, a key measure of consumer credit risk in the U.S., and focuses on scoring solutions and software for credit risk management [5] - The company is expanding its service offerings through the FICO Platform, a cloud-based solution that centralizes analytics and decision-making capabilities [5] Strategic Focus - The company aims to transition current software offerings to the FICO Platform and leverage innovations in analytics and decision management [6] - Strategic partnerships are being formed to expand distribution channels and capture new customer segments while maintaining market leadership [6] Segment Performance - The Scores segment generated $235.7 million in revenue, reflecting a 23% growth from $192.1 million last year, driven by a 30% increase in business-to-business scores [7] - The Software segment reported $204.3 million in revenue, an 8% increase from $189.9 million, attributed to higher recurring revenues and license fees [8] - The FICO Platform contributed to a 20% increase in annual recurring revenue (ARR), indicating successful customer engagement [8] Technological Advancements - Fair Isaac is leveraging artificial intelligence (AI) and machine learning (ML) to enhance its competitive position and adapt to market changes [9] Financial Outlook - Management projects revenue of approximately $1.98 billion for fiscal 2025, with GAAP net income targeted at $624 million, indicating optimism for double-digit growth [11] - The strategic vision emphasizes sustained growth in software and scoring solutions amidst evolving economic conditions [12]

Core Insights - FICO plans to incorporate buy now, pay later (BNPL) data into its credit score analysis following a joint study with Affirm, indicating a shift in credit scoring methodologies [1][2] - The study revealed that over 85% of consumers who opened a new BNPL account experienced a consistent impact on their FICO scores, suggesting potential benefits for both consumers and lenders [3] Group 1: Study Findings - The study compared FICO scores of over 500,000 consumers with at least one new Affirm BNPL loan against a benchmark population without such loans, demonstrating the potential positive impact of BNPL data on credit scores [2][3] - The inclusion of BNPL data could lead to score increases for some consumers while enhancing model risk performance for lenders, highlighting the importance of BNPL data in the credit ecosystem [2][3] Group 2: Consumer Trends - Over 56% of consumers reported using BNPL options last year, with 76% of these users expressing high satisfaction levels, indicating a growing acceptance and reliance on BNPL services [4] - Consumers living paycheck-to-paycheck are four times more likely to utilize BNPL options compared to those who are not, showcasing the demographic's dependence on such financial solutions [4]

Core Insights - Fair Isaac (FICO) reported revenue of $439.97 million for the quarter ended December 2024, reflecting a year-over-year increase of 15.2% [1] - Earnings per share (EPS) for the quarter was $5.79, up from $4.81 in the same quarter last year [1] - The reported revenue was below the Zacks Consensus Estimate of $454.73 million by 3.25%, and the EPS fell short of the consensus estimate of $6.21 by 6.76% [1] Revenue Breakdown - On-premises and SaaS software revenue was $186.01 million, slightly below the average estimate of $186.12 million, representing a year-over-year increase of 10.3% [4] - Scores revenue reached $235.68 million, compared to the estimated $251.58 million, marking a 22.7% increase year-over-year [4] - Professional services revenue was $18.28 million, below the average estimate of $20.61 million, showing a decline of 14.1% year-over-year [4] - Software revenue was reported at $204.29 million, slightly below the estimate of $206.72 million, with a year-over-year increase of 7.6% [4] Stock Performance - Fair Isaac's shares have returned -7.1% over the past month, contrasting with a +1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Fair Isaac (FICO) came out with quarterly earnings of $5.79 per share, missing the Zacks Consensus Estimate of $6.21 per share. This compares to earnings of $4.81 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -6.76%. A quarter ago, it was expected that this financial services company would post earnings of $6.60 per share when it actually produced earnings of $6.54, delivering a surprise of -0.91%.Over the last four quarters ...