FICO(FICO) - 2024 Q2 - Quarterly Results

FICO Q2 Fiscal 2024 Earnings Release Financial Highlights 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 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] Non-GAAP Results 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] Segment Performance 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 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] - B2C revenue decreased 4% from the prior year period due to lower volumes on myFICO.com business[5] Software Segment 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] - 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] Fiscal 2024 Outlook 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 The financial statements detail FICO's position, including a rise in total assets and quarterly revenue Condensed Consolidated Balance Sheets 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 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 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] Non-GAAP Reconciliation 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][25] - Non-GAAP measures exclude items such as amortization expense, share-based compensation, restructuring costs, and certain tax benefits[20][24] Reconciliation of Non-GAAP Results 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 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 |