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 ...

The upcoming report from Fair Isaac (FICO) is expected to reveal quarterly earnings of $4.83 per share, indicating an increase of 13.4% compared to the year-ago period. Analysts forecast revenues of $386.55 million, representing an increase of 12.1% year over year.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted downward by 0.6% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.Prior to a ...

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a great growth stock is not easy at all.That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.However, it's pretty easy to find cutting-edge growth stocks with the help of the Z ...

Fair Isaac (FICO) shares have been on a bull run, thanks to a robust portfolio and an expanding clientele. In the trailing 12 months, the company’s shares have moved up 100.4%, outperforming the Zacks Computer & Technology’s return of 45.3%.FICO is benefiting from the strong adoption of its FICO Scores. The most updated scores — FICO Score 10 and 10 T — were launched by Fair Isaac in January 2020, while FICO Score 9 and FICO Score 8 are the most distributed scores currently.FICO’s Score business remains a d ...

BOZEMAN, Mont.--(BUSINESS WIRE)--Global analytics software leader FICO is expanding its FICO® Educational Analytics Challenge to students at Delaware State University, the third Historically Black College and University (HBCU) to adopt the program. This semester’s Analytics Challenge at Delaware State focuses on identifying and mitigating bias in data and decision models using a historical lending data. The FICO® Educational Analytics Challenge was created to amplify diversity, equity and inclusion in da ...

SAN JOSE, Calif.--(BUSINESS WIRE)--CrossCountry Mortgage (CCM), the nation’s number three retail mortgage lender, has adopted FICO® Score 10 T. As a forward-thinking industry trailblazer, the lender will use FICO’s newest, most innovative, and most predictive scoring model to support origination and decision making for non-confirming loans, ultimately helping more consumers realize the dream of homeownership. Additionally, CCM is the first mortgage lender to commit to issuing mortgage-backed securities ( ...

Financial Data and Key Metrics - Full year non-GAAP net income was $500 million, up 10% YoY, with non-GAAP earnings per share of $19.71, up 14% YoY [5] - Q4 free cash flow reached a record $163 million, with full-year free cash flow of $465 million [5] - Q4 revenue was $390 million, up 12% YoY, while full-year revenue was $1.514 billion, up 10% YoY [9][13] - GAAP net income for Q4 was $101 million, up 12% YoY, and full-year GAAP net income was $429 million, up 15% YoY [13][35] - Non-GAAP operating margin was 51% for both Q4 and the full year, with a 300 basis points expansion for the fiscal year [34] Business Line Data and Key Metrics - Scores segment Q4 revenue was $196 million, up 12% YoY, with full-year revenue of $774 million, up 10% YoY [87][88] - Software segment Q4 revenue was $194 million, up 11% YoY, with full-year revenue of $740 million, up 10% YoY [15][29] - B2B revenues in Q4 were up 21% YoY, driven by mortgage originations, while B2C revenues were down 6% YoY [87][88] - Total software ARR grew 22% YoY to $669 million, with platform ARR growing 53% and non-platform ARR growing 14% [95] Market Data and Key Metrics - Americas region contributed 85% of total revenues, EMEA 9%, and Asia Pacific 6% [30] - Mortgage origination revenues in Q4 were up 147% YoY, accounting for 24% of scores revenues and 12% of total company revenues [14] - Auto origination revenues were up 2% YoY, while credit card and personal loan origination revenues were down 2% YoY [14] Company Strategy and Industry Competition - FICO Score 10 T is gaining traction, with Movement Mortgage adopting it for nonconforming loans, enhancing risk evaluation and cash flow projection [6][27] - The company continues to invest in its FICO Platform, with strong demand and recognition as a leader in AI decisioning platforms [28] - The land-and-expand strategy is driving growth in ARR and NRR, with platform NRR at 145% and non-platform NRR at 111% [7][31] Management Commentary on Operating Environment and Future Outlook - Management expects double-digit growth in both revenue and earnings for fiscal 2024, with revenue guidance of $1.675 billion, up 11% YoY [41] - The company plans to invest in cybersecurity and accelerate the development and distribution of the FICO Platform [89] - Pricing initiatives in fiscal 2024 are expected to have an additional impact beyond guided numbers, though timing and magnitude remain uncertain [40] Other Important Information - The company repurchased 615,000 shares in fiscal 2023 at an average price of $659 per share, totaling $406 million [5][37] - Total debt at quarter-end was $1.86 billion, with a weighted average interest rate of 5.1%, and 70% of the debt is fixed rate [36] - The effective tax rate for fiscal 2023 was 22%, with expectations for fiscal 2024 to remain around 22% [96] Q&A Session Summary Question: 2024 Revenue and EPS Guidance - Management expects lower origination volumes in 2024 compared to 2023, with flat volumes from current levels [21] - Pricing initiatives, including incremental pricing on mortgages, are expected to contribute to growth [20] Question: Expense Growth in 2024 - Expense growth is expected to be moderate, with investments in software, platform development, and cybersecurity [45] Question: Mortgage Pricing Tiers - Management did not provide specific details on mortgage pricing tiers but confirmed that pricing increases are fair and appropriate for the market [100] Question: Software ARR Growth - Software ARR growth accelerated to 22% in Q4, driven by enterprise platform customers and increased usage [64] Question: Sales Cycle Shortening - The sales cycle has shortened significantly, from over a year to two-thirds of that, due to increased demand and operational efficiency [51][68] Question: Software Expense Increase - Q4 software expenses were slightly higher due to one-time incentives and investments, but the run rate is not expected to increase significantly [69] Question: Pricing Assumptions in Guidance - Guidance includes CPI-like pricing increases but excludes specialty pricing due to uncertainty in timing and magnitude [70] Question: Leadership Changes in Software Business - Stephanie Covert, who led the software business, has departed, and CEO Will Lansing will temporarily oversee the division [97][81] Question: Software Growth Components - Software growth is driven by strong demand, a robust pipeline, and increased customer usage, with platform growth expected to continue [58] Question: Debt Management - The company plans to maintain its current debt levels, with flexibility to reduce floating rate debt balances using free cash flow [60]