FICO-Fair Isaac Q2 Earnings Top Estimates, Revenues Rise Y/Y, Shares Fall

Core Insights - Fair Isaac (FICO) reported second-quarter fiscal 2025 earnings of $7.81 per share, exceeding the Zacks Consensus Estimate by 5.68% and showing a year-over-year increase of 27.2% [1] - Revenues reached$ 498.7 million, surpassing the consensus mark by 0.51% and increasing 15% year over year, with contributions from the Americas (86%), EMEA (9%), and Asia Pacific (5%) [1] Financial Performance - Software revenues rose 2.4% year over year to $201.7 million, driven by higher license revenue [3] - Software Annual Recurring Revenues (ARR) grew 3% year over year, with platform ARR increasing by 17% and non-platform declining by 3% [4] - Scores revenues increased 25.4% year over year to$ 297 million, with B2B revenues up 31% and B2C revenues up 6% [5] - Mortgage originations revenues surged 48% year over year, accounting for 54% of B2B revenues and 44% of total scores revenues [6] Operating Metrics - Research and development expenses as a percentage of revenues decreased by 40 basis points to 9% [8] - Selling, general and administrative expenses as a percentage of revenues fell by 140 basis points to 24.1% [8] - Adjusted EBITDA increased 21.6% year over year to $287.8 million, with an adjusted EBITDA margin of 57.7% [8] Balance Sheet and Cash Flow - As of March 31, 2025, FICO had$ 146.6 million in cash and cash equivalents and total debt of $2.5 billion, compared to$ 184.3 million in cash and $2.4 billion in debt as of December 31, 2024 [11] - Cash flow from operations was$ 74.9 million, down from $194 million in the previous quarter, with free cash flow at$ 65.5 million compared to $186.8 million in the prior quarter [11] Guidance - For fiscal 2025, FICO anticipates revenues of$ 1.98 billion and non-GAAP earnings projected at $28.58 per share [13]