FICO(US:FICO)2025-07-30 20:16PART I – FINANCIAL INFORMATION Unaudited Financial Statements Fair Isaac Corporation's unaudited condensed consolidated financial statements for Q3 2025 show significant revenue and net income growth, primarily from the Scores segment, alongside balance sheet changes from new debt and stock repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Assets | $1,862,023 | $1,717,884 | | Cash and cash equivalents | $189,049 | $150,667 | | Goodwill | $785,448 | $782,752 | | Total Liabilities | $3,259,469 | $2,680,563 | | Current maturities on debt | $399,345 | $15,000 | | Long-term debt | $2,380,209 | $2,194,021 | | Total Stockholders' Deficit | ($1,397,446) | ($962,679) | Condensed Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | % Change | 9 Months 2025 | 9 Months 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $536,415 | $447,849 | 20% | $1,475,118 | $1,263,717 | 17% | | Scores Revenue | $324,309 | $241,450 | 34% | $857,023 | $670,447 | 28% | | Operating Income | $262,518 | $190,251 | 38% | $687,694 | $536,451 | 28% | | Net Income | $181,789 | $126,256 | 44% | $496,932 | $377,120 | 32% | | Diluted EPS | $7.40 | $5.05 | 47% | $20.12 | $15.01 | 34% | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $555,138 | $406,486 | | Net cash used in investing activities | ($30,390) | ($20,434) | | Net cash used in financing activities | ($486,792) | ($364,981) | | Increase in cash and cash equivalents | $38,382 | $19,265 | - Revenues from the three major consumer reporting agencies (TransUnion, Equifax, Experian) accounted for 54% of total revenues in Q3 2025, up from 47% in Q3 202447 - In May 2025, the company issued $1.5 billion of 6.00% senior notes due 2033 and used the proceeds to repay outstanding term loans and its revolving line of credit41 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q3 2025 financial performance, driven by Scores segment growth, capital allocation strategies including debt issuance and stock repurchases, and Software segment key performance indicators Results of Operations Q3 2025 total revenues grew 20% to $536.4 million and operating income increased 38% to $262.5 million, primarily driven by a 34% revenue increase in the high-margin Scores segment Quarterly Revenue by Segment (in thousands) | Segment | Q3 2025 | Q3 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Scores | $324,309 | $241,450 | $82,859 | 34% | | Software | $212,106 | $206,399 | $5,707 | 3% | | Total | $536,415 | $447,849 | $88,566 | 20% | - The increase in Scores B2B revenue was driven by higher unit prices, increased volume of mortgage originations, and a multi-year license renewal for an insurance score product86 Quarterly Operating Income by Segment (in thousands) | Segment | Q3 2025 | Q3 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Scores | $284,711 | $212,989 | $71,722 | 34% | | Software | $67,942 | $70,340 | ($2,398) | (3)% | | Total Segment Operating Income | $304,448 | $232,961 | $71,487 | 31% | - Cost of revenues as a percentage of total revenues decreased from 20% to 16% year-over-year for the quarter, primarily due to the increased sales mix of higher-margin Scores products92 Key Performance Metrics for Software Segment Key Software segment metrics for Q3 2025 include Annual Recurring Revenue (ARR) growth of 4% to $739.1 million, Platform ARR growth of 18%, and a Dollar-Based Net Retention Rate (DBNRR) of 103% Annual Recurring Revenue (ARR) by Platform (in millions) | Date | Platform ARR | Non-platform ARR | Total ARR | Total YoY Change | | :--- | :--- | :--- | :--- | :--- | | June 30, 2024 | $215.1 | $494.5 | $709.6 | 10% | | June 30, 2025 | $254.2 | $484.9 | $739.1 | 4% | Dollar-Based Net Retention Rate (DBNRR) | Date | Platform DBNRR | Non-platform DBNRR | Total DBNRR | | :--- | :--- | :--- | :--- | | June 30, 2024 | 124% | 101% | 108% | | June 30, 2025 | 115% | 97% | 103% | - Annual Contract Value (ACV) Bookings for on-premises and SaaS software were $26.7 million for the quarter ended June 30, 2025, compared to $27.5 million in the prior-year quarter77 Capital Resources and Liquidity FICO's liquidity as of June 30, 2025, is strong with $189.0 million in cash, supported by increased operating cash flow and an expanded revolving credit facility, alongside significant debt issuance and stock repurchases - Cash flow from operating activities increased by $148.7 million to $555.1 million for the nine months ended June 30, 2025, compared to the prior year period, driven by higher net income119120 - In May 2025, the company amended its credit agreement, increasing its unsecured revolving line of credit from $600 million to $1.0 billion and extending the maturity to 2030. No amount was outstanding as of June 30, 2025125126 - The company repurchased $511.3 million of its common stock during the quarter ended June 30, 2025. A new $1.0 billion stock repurchase program was approved in June 2025123 Quantitative and Qualitative Disclosures About Market Risk FICO manages market risks from interest rate changes on its fixed-rate debt and foreign currency fluctuations through short-term forward contracts, avoiding speculative derivative use - The company's debt is primarily fixed-rate senior notes, with a total face value of $2.8 billion as of June 30, 2025. The fair value of this debt is sensitive to market interest rate changes133 - The company uses foreign currency forward contracts to manage exchange rate risk on balances denominated in British pounds, Euros, and Singapore dollars. All contracts have maturities of less than three months28135 - As of June 30, 2025, there were no borrowings outstanding under the variable-rate unsecured revolving line of credit134 Controls and Procedures FICO's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that FICO's disclosure controls and procedures were effective as of June 30, 2025137 - No material changes to the company's internal control over financial reporting were identified during the quarter138 PART II – OTHER INFORMATION Legal Proceedings FICO is defending against a consolidated class action lawsuit alleging antitrust claims related to FICO Score distribution, with a Sherman Act Section 2 claim proceeding to discovery - FICO is a defendant in a consolidated class action lawsuit alleging antitrust violations in connection with the distribution of FICO Scores139 - A Sherman Act Section 2 claim against FICO is proceeding through the discovery stage, and the company intends to defend against it vigorously139 Risk Factors No material changes to risk factors were reported from the Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024140 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 286,351 shares at an average price of $1,785.97 per share during Q3 2025, following the approval of a new open-ended stock repurchase program in June 2025 Issuer Purchases of Equity Securities (Q3 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Max Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 18,609 | $1,805.58 | 17,865 | $361,938,170 | | May 2025 | 92,990 | $1,753.52 | 91,261 | $202,040,151 | | June 2025 | 174,752 | $1,801.14 | 174,693 | $880,091,733 | | Total | 286,351 | $1,785.97 | 283,819 | $880,091,733 | - In June 2025, the Board of Directors approved a new $1.0 billion stock repurchase program, which is open-ended142 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans or other trading arrangements during Q3 2025 - During Q3 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or other trading arrangements146 Exhibits Exhibits filed with the Form 10-Q include CEO and CFO certifications, XBRL data, and incorporated documents like the 2033 senior notes indenture and amended credit agreement - Exhibits filed include CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and Inline XBRL documents147 - The filing incorporates by reference the Third Amended and Restated Credit Agreement and the Indenture for the 6.000% Senior Notes due 2033147