PART I – FINANCIAL INFORMATION [Item 1. Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) This section presents Fair Isaac Corporation's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, for periods ending March 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes the company's financial position, showing assets, liabilities, and stockholders' deficit as of March 31, 2024, and September 30, 2023 | | March 31, 2024 (In thousands) | September 30, 2023 (In thousands) | | :--- | :--- | :--- | | **Total current assets** | $641,472 | $556,448 | | **Total assets** | $1,703,117 | $1,575,281 | | **Total current liabilities** | $315,120 | $367,688 | | **Total liabilities** | $2,438,777 | $2,263,271 | | **Total stockholders' deficit** | $(735,660) | $(687,990) | [Condensed Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Presents the company's revenues, operating income, net income, and diluted EPS for the three and six-month periods ended March 31, 2024 and 2023 Financial Performance (Quarter Ended March 31) | Metric | 2024 (In thousands) | 2023 (In thousands) | YoY Change | | :--- | :--- | :--- | :--- | | **Total revenues** | $433,809 | $380,266 | +14.1% | | **Operating income** | $194,841 | $159,761 | +22.0% | | **Net income** | $129,799 | $101,550 | +27.8% | | **Diluted EPS** | $5.16 | $4.00 | +29.0% | Financial Performance (Six Months Ended March 31) | Metric | 2024 (In thousands) | 2023 (In thousands) | YoY Change | | :--- | :--- | :--- | :--- | | **Total revenues** | $815,868 | $725,136 | +12.5% | | **Operating income** | $346,200 | $300,100 | +15.4% | | **Net income** | $250,864 | $199,193 | +26.0% | | **Diluted EPS** | $9.96 | $7.83 | +27.2% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Details the company's cash flows from operating, investing, and financing activities for the six months ended March 31, 2024 and 2023 Cash Flow Summary (Six Months Ended March 31) | Activity | 2024 (In thousands) | 2023 (In thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $193,155 | $182,244 | | **Net cash used in investing activities** | $(12,040) | $(11,887) | | **Net cash used in financing activities** | $(183,222) | $(173,245) | | **Increase (decrease) in cash and cash equivalents** | $(1,111) | $4,569 | | **Cash and cash equivalents, end of period** | $135,667 | $137,771 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, financial statement components, debt structure, segment performance, and revenue recognition [Note 6. Debt](index=13&type=section&id=Note%206.%20Debt) Details the company's debt composition, totaling approximately **$2.04 billion** as of March 31, 2024, and compliance with financial covenants Debt Composition (at carrying value) | Debt Component | March 31, 2024 (In thousands) | September 30, 2023 (In thousands) | | :--- | :--- | :--- | | Revolving line of credit | $488,000 | $300,000 | | Term loan | $266,250 | $273,750 | | Senior Notes (2018, 2019, 2021) | $1,300,000 | $1,300,000 | | **Total debt (before issuance costs)** | **$2,054,250** | **$1,873,750** | - The company has a **$600 million** unsecured revolving line of credit and a **$300 million** unsecured term loan, both maturing in August 2026[43](index=43&type=chunk) [Note 7. Revenue from Contracts with Customers](index=15&type=section&id=Note%207.%20Revenue%20from%20Contracts%20with%20Customers) Disaggregates revenue by geography and customer concentration, highlighting Americas as the primary region and significant revenue from major consumer reporting agencies Revenue by Geography (Quarter Ended March 31, 2024) | Region | Revenue (In thousands) | Percentage | | :--- | :--- | :--- | | Americas | $364,017 | 84% | | Europe, Middle East and Africa | $42,257 | 10% | | Asia Pacific | $27,535 | 6% | | **Total** | **$433,809** | **100%** | - Revenues from the three major consumer reporting agencies (TransUnion, Equifax, Experian) accounted for **47% of total revenues** in Q2 2024, up from **43%** in Q2 2023[53](index=53&type=chunk) - Revenue allocated to remaining performance obligations was **$481.7 million** as of March 31, 2024, with approximately **50%** expected to be recognized over the next 16 months[58](index=58&type=chunk) [Note 10. Segment Information](index=18&type=section&id=Note%2010.%20Segment%20Information) Provides financial performance details for the Scores and Software segments, including revenue and operating income for the quarter ended March 31, 2024 Segment Performance (Quarter Ended March 31, 2024 vs 2023) | Segment | Revenue 2024 (In thousands) | Revenue 2023 (In thousands) | Operating Income 2024 (In thousands) | Operating Income 2023 (In thousands) | | :--- | :--- | :--- | :--- | :--- | | **Scores** | $236,885 | $198,507 | $212,208 | $175,405 | | **Software** | $196,924 | $181,759 | $64,162 | $54,867 | - The Scores segment includes B2B and B2C scoring solutions, while the Software segment includes decision management solutions, FICO Platform, and associated professional services[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for the quarter and six months ended March 31, 2024, covering revenue growth, segment results, and liquidity Q2 2024 Financial Highlights (YoY) | Metric | Q2 2024 | Change vs Q2 2023 | | :--- | :--- | :--- | | Total Revenue | $433.8M | +14% | | Scores Revenue | $236.9M | +19% | | Operating Income | $194.8M | +22% | | Net Income | $129.8M | +28% | | Diluted EPS | $5.16 | +29% | [Key Performance Metrics for Software Segment](index=22&type=section&id=Key%20performance%20metrics%20for%20Software%20segment) Presents key non-GAAP performance metrics for the Software segment, including Annual Recurring Revenue, Dollar-Based Net Retention Rate, and ACV Bookings Software Segment Key Metrics | Metric | As of March 31, 2024 | YoY Change | | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $697.0 million | +14% | | Dollar-Based Net Retention Rate (DBNRR) | 112% | -2 p.p. | | ACV Bookings (Q2) | $16.8 million | -27.9% | [Results of Operations](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the company's revenue and operating income performance, detailing segment-specific drivers and operating expense trends for the quarter - Scores B2B revenue growth was driven by higher unit prices, which offset a decrease in mortgage origination volume[88](index=88&type=chunk) - The decrease in professional services revenue is attributed to a strategic emphasis on higher-margin software products[89](index=89&type=chunk) - Operating expenses increased **8% YoY**, slower than the **14% revenue growth**, leading to operating margin expansion. The main drivers of expense growth were personnel and labor costs, including increased share-based compensation[92](index=92&type=chunk)[99](index=99&type=chunk) [Capital Resources and Liquidity](index=30&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) Discusses the company's cash position, cash flows from operations, share repurchase activities, and overall liquidity and capital resources Six-Month Cash Flow Summary (Ended March 31) | Flow | 2024 (In millions) | 2023 (In millions) | | :--- | :--- | :--- | | Operating activities | $193.2 | $182.2 | | Investing activities | $(12.0) | $(11.9) | | Financing activities | $(183.2) | $(173.2) | - The company repurchased **$179.5 million** of its common stock in the quarter ended March 31, 2024, and **$251.3 million** in the six-month period[128](index=128&type=chunk) - The company believes existing cash, available borrowings from its **$600 million** revolving line of credit, and operating cash flows will be sufficient to fund capital requirements for at least the next 12 months[122](index=122&type=chunk) PART II – OTHER INFORMATION [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) States that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K[144](index=144&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's repurchases of its own equity securities during the quarter and the status of its stock repurchase programs Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2024 | 42,512 | $1,182.34 | | February 2024 | 50,154 | $1,277.94 | | March 2024 | 52,830 | $1,266.00 | | **Total** | **145,496** | **$1,245.67** | - As of March 31, 2024, **$366.7 million** remained available for repurchase under the current open-ended program authorized in January 2024[145](index=145&type=chunk)[146](index=146&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting - The CEO and CFO concluded that FICO's disclosure controls and procedures were effective as of March 31, 2024[140](index=140&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, internal controls[141](index=141&type=chunk)

[FICO Q2 Fiscal 2024 Earnings Release](index=1&type=section&id=FICO%20Q2%20Fiscal%202024%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) FICO's Q2 fiscal 2024 saw a 14% revenue increase to $433.8 million, though operating cash flow declined Q2 Fiscal 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $433.8M | $380.3M | +14.1% | | **GAAP Net Income** | $129.8M | $101.6M | +27.8% | | **GAAP EPS (Diluted)** | $5.16 | $4.00 | +29.0% | | **Non-GAAP Net Income** | $154.5M | $121.4M | +27.3% | | **Non-GAAP EPS (Diluted)** | $6.14 | $4.78 | +28.5% | | **Net Cash from Operations** | $71.0M | $89.8M | -20.9% | | **Free Cash Flow** | $61.6M | $88.3M | -30.2% | [GAAP Results](index=1&type=section&id=GAAP%20Results) GAAP net income rose to $129.8 million, while net cash from operating activities decreased to $71.0 million Q2 GAAP Financials (YoY) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Income | $129.8M | $101.6M | | EPS (Diluted) | $5.16 | $4.00 | - Net cash provided by operating activities **decreased to $71.0 million** from $89.8 million in the prior year period[3](index=3&type=chunk) [Non-GAAP Results](index=1&type=section&id=Non-GAAP%20Results) Non-GAAP net income grew to $154.5 million, but free cash flow declined to $61.6 million Q2 Non-GAAP Financials (YoY) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Non-GAAP Net Income | $154.5M | $121.4M | | Non-GAAP EPS (Diluted) | $6.14 | $4.78 | - **Free cash flow decreased to $61.6 million** for the current quarter versus $88.3 million in the prior year period[4](index=4&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) Both Scores and Software segments reported revenue growth, driven by B2B pricing and recurring software revenue Q2 Revenue by Segment (YoY) | Segment | Q2 2024 Revenue | Q2 2023 Revenue | Growth | | :--- | :--- | :--- | :--- | | Scores | $236.9M | $198.5M | +19% | | Software | $196.9M | $181.8M | +8% | [Scores Segment](index=1&type=section&id=Scores%20Segment) Scores segment revenue grew 19% to $236.9 million, led by a 28% increase in B2B revenue - **B2B revenue increased 28%**, driven largely by higher unit prices, which were partially offset by a decrease in mortgage origination volumes[5](index=5&type=chunk) - **B2C revenue decreased 4%** from the prior year period due to lower volumes on myFICO.com business[5](index=5&type=chunk) [Software Segment](index=1&type=section&id=Software%20Segment) Software segment revenue increased 8% to $196.9 million, supported by a 14% rise in Annual Recurring Revenue - **Software Annual Recurring Revenue (ARR) increased 14%** year-over-year, with platform ARR growing 32% and non-platform ARR growing 8%[5](index=5&type=chunk) - The **Software Dollar-Based Net Retention Rate was 112%** as of March 31, 2024, with platform software at 126% and non-platform at 106%[5](index=5&type=chunk) [Fiscal 2024 Outlook](index=2&type=section&id=Fiscal%202024%20Outlook) FICO raised its full-year fiscal 2024 guidance, now expecting revenues of $1.690 billion and Non-GAAP EPS of $22.80 Updated Fiscal 2024 Guidance | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Revenues | $1.675 billion | $1.690 billion | | GAAP Net Income | $490 million | $495 million | | GAAP EPS | $19.45 | $19.70 | | Non-GAAP Net Income | $566 million | $573 million | | Non-GAAP EPS | $22.45 | $22.80 | [Financial Statements](index=4&type=section&id=Financial%20Statements) The financial statements detail FICO's position, including a rise in total assets and quarterly revenue [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $1.703 billion, while the stockholders' deficit widened to $(735.7) million Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Total current assets | $641,472 | $556,448 | | **Total assets** | **$1,703,117** | **$1,575,281** | | Total current liabilities | $315,120 | $367,688 | | **Total liabilities** | **$2,438,777** | **$2,263,271** | | **Stockholders' deficit** | **$(735,660)** | **$(687,990)** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Quarterly revenues increased to $433.8 million, driving growth in operating and net income Q2 Income Statement Highlights (in thousands, YoY) | Account | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total revenues | $433,809 | $380,266 | | Operating income | $194,841 | $159,761 | | Net income | $129,799 | $101,550 | | Diluted EPS | $5.16 | $4.00 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Six-month operating cash flow was $193.2 million, with significant cash used for stock repurchases Six-Month Cash Flow Summary (in thousands, YoY) | Activity | Six Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $193,155 | $182,244 | | Net cash used in investing activities | $(12,040) | $(11,887) | | Net cash used in financing activities | $(183,222) | $(173,245) | | **Increase (decrease) in cash** | **$(1,111)** | **$4,569** | - **Repurchases of common stock amounted to $243.5 million** in the first six months of fiscal 2024, compared to $184.3 million in the same period of 2023[17](index=17&type=chunk) [Non-GAAP Reconciliation](index=7&type=section&id=Non-GAAP%20Reconciliation) This section reconciles GAAP to non-GAAP measures, adjusting for items like share-based compensation - Management uses non-GAAP financial measures for financial and operational decision-making and to evaluate period-to-period comparisons, believing they provide meaningful supplemental information by excluding items not indicative of recurring business results[21](index=21&type=chunk)[25](index=25&type=chunk) - Non-GAAP measures exclude items such as amortization expense, share-based compensation, restructuring costs, and certain tax benefits[20](index=20&type=chunk)[24](index=24&type=chunk) [Reconciliation of Non-GAAP Results](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Results) Q2 GAAP net income of $129.8 million is reconciled to Non-GAAP net income of $154.5 million Q2 2024 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP net income | $129,799 | | Share-based compensation expense | $35,448 | | Other adjustments (Amortization, Tax) | $(10,755) | | **Non-GAAP net income** | **$154,492** | Q2 2024 Free Cash Flow Calculation (in thousands) | Description | Amount | | :--- | :--- | | Net cash provided by operating activities | $71,035 | | Capital expenditures | $(9,422) | | **Free cash flow** | **$61,613** | [Reconciliation of Non-GAAP Guidance](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Guidance) Fiscal 2024 guidance reconciles projected GAAP net income of $495 million to Non-GAAP net income of $573 million Updated FY2024 GAAP to Non-GAAP Guidance Reconciliation (in millions) | Description | Net Income | Diluted EPS | | :--- | :--- | :--- | | **GAAP Guidance** | **$495** | **$19.70** | | Share-based compensation expense | $140 | $5.57 | | Other adjustments (Amortization, Tax) | $(62) | $(2.47) | | **Non-GAAP Guidance** | **$573** | **$22.80** |

Fair Isaac (FICO) is scheduled to report its second-quarter fiscal 2024 results on Apr 25.The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $425.94 million, suggesting an increase of 12.01% from the year-ago quarter’s reported figure.The consensus mark for earnings is pegged at $5.80 per share, indicating growth of 21.34% from the year-ago quarter’s reported number.The company beat the Zacks Consensus Estimate for earnings in one of the trailing four quarters while missing th ...

Wall Street analysts forecast that Fair Isaac (FICO) will report quarterly earnings of $5.80 per share in its upcoming release, pointing to a year-over-year increase of 21.3%. It is anticipated that revenues will amount to $425.94 million, exhibiting an increase of 12% compared to the year-ago quarter.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted downward by 0.5% to its current level. This demonstrates the covering analysts' collective reassessment of their initial proj ...

MIAMI--(BUSINESS WIRE)--FICO, a leading analytics software firm, has partnered with American tennis star Chris Eubanks in its latest financial literacy initiative. Eubanks, who broke into the sport’s Top 30 last year, has teamed up with FICO to help raise awareness of the need for financial and credit education as the essential first step to achieve financial literacy. The collaboration kicks off as Eubanks takes the court at the Miami Open. “I’m excited to partner with FICO to not only raise awareness a ...

RICHMOND, Va.--(BUSINESS WIRE)--Global analytics software leader, FICO (NYSE: FICO), and U.S. Senator Mark Warner’s office are teaming up to host a series of Score A Better Future™ credit education workshops as part of the “Virginia Financial Empowerment Series” in the Richmond area March 19-21. The Virginia Financial Empowerment Series is an initiative led by Senator Warner's office, dedicated to advancing and fostering best practices in financial literacy among Virginians. Facilitated by FICO’s Score A ...

BOZEMAN, Mont.--(BUSINESS WIRE)--FICO (NYSE: FICO): Highlights: 69% of consumers rank good fraud protection in their top three considerations when choosing a financial service provider. 65% of customers still find value in the information and services available at brick-and-mortar banks. Nearly 70% of customers expect to spend less than 30 minutes opening a checking account; if the identity verification process is too time consuming, almost a quarter of consumers will abandon the application. Lea ...

BOZEMAN, Mont.--(BUSINESS WIRE)--FICO, a leading analytics software firm, has announced that Premier Lending Inc. (Premier Lending), a family-owned Charlotte, N.C. based mortgage leader, will become an early adopter of FICO® Score 10 T to enhance its non-conforming loan origination efforts as well as acquisitions of mortgage whole loans. Premier Lending will use FICO’s newest, most innovative, and most predictive scoring model to provide real-time evaluation to help value repurchased loans. Motivated by ...

Reston, Virginia, Feb. 14, 2024 (GLOBE NEWSWIRE) -- Future Business Leaders of America, Inc. (FBLA), the nation's largest career and technical student organization focused solely on business, announced a partnership with global analytics software leader FICO to promote student understanding of the importance of financial health and credit scores. FICO will provide FBLA members and advisers with micro courses on topics such as the basics of credit and how credit scores impact financial health. The company wi ...

BOZEMAN, Mont.--(BUSINESS WIRE)--FICO, a global analytics software leader, has announced that Primis Bank, an FDIC-insured and backed institution, is the first bank to adopt FICO® Score 10 T. By tapping FICO’s newest, most innovative, and predictive scoring model, Primis Mortgage is positioned to help more borrowers achieve homeownership and continue its impressive 120 percent year-over-year growth trajectory. This move is a demonstration of Primis’ tech-forward strategy and dedication to helping more fi ...