Fair Isaac (FICO) Up 1.4% Since Last Earnings Report: Can It Continue?

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].