FICO(US:FICO)2023-01-28 01:11Financial Data and Key Metrics Changes - The company reported revenues of $345 million in Q1, up 7% from the prior year [37] - GAAP net income was $98 million, up 15% over the prior year, with GAAP EPS of $3.84, up 24% [37] - Non-GAAP net income was $108 million, up 6% from the prior year, and non-GAAP EPS was $4.26, up 15% [37] - Free cash flow for the quarter was $92 million, with trailing 12 months free cash flow at $471 million [30] Business Line Data and Key Metrics Changes - In the Scores segment, revenues were $178 million, up 5% from the same period last year, with B2B Scores revenues up 11% [41] - B2C revenues were down 6% due to challenging economic conditions, particularly in the myFICO business [25][41] - Software segment revenues were $167 million, up 9% year-over-year, with annual contract value bookings at $21.5 million, an increase of 31% [28][29] Market Data and Key Metrics Changes - In the U.S., auto originations revenues were up 24%, and card and personal loan originations revenues were up 19% [38] - Mortgage origination revenues were down about 40% year-over-year [38] - The Americas region generated 85% of total company revenues, with EMEA at 9% and Asia Pacific at 6% [42] Company Strategy and Development Direction - The company aims to become the preeminent platform player in decisioning analytics, focusing on expanding capabilities and market penetration [40] - The strategic focus has led to the exit of non-strategic products, such as the Siron compliance business, to concentrate resources on the FICO platform [40] - The company continues to see strong demand for its software, with a commitment to delivering value to shareholders through share repurchases [19][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and the resilience of its assets despite uncertain economic conditions [23][32] - The macro environment is impacting performance, but the management team is focused on marketing and customer acquisition to sustain growth [9] - The company expects B2C revenues to remain modestly lower throughout the fiscal year due to the economic climate [25][39] Other Important Information - The effective tax rate for the quarter was 17%, including $10 million of reduced tax expense from excess tax benefits [43] - Total operating expenses were $205 million, slightly down from the prior year, but expected to trend up due to salary increases and headcount growth [67] - The company has $166 million in cash and marketable investments, with total debt at $1.92 billion, 67% of which is fixed rate [68] Q&A Session Summary Question: Can you provide additional color on the licensing deals and their revenue impact? - The licensing deal referenced is typical, with variability in timing and size, contributing to revenue fluctuations [52] Question: What is the expectation for B2C revenues going forward? - B2C revenues are expected to be modestly lower, primarily due to challenges in the myFICO side, which is more sensitive to market conditions [53][54] Question: How does the company view capital allocation in the current environment? - The company plans to continue share repurchases but will monitor interest rates and adjust as necessary [55][99] Question: What is the outlook for the software side and any potential slowdown in spending? - The platform software is considered mission-critical, making it less susceptible to budget cuts, although overall budget pressure exists [73] Question: How does the company plan to manage expenses in light of revenue projections? - The company has flexibility in managing expenses and can delay headcount increases if revenues do not meet expectations [14][109]