FICO(US:FICO)2021-05-06 02:45Financial Data and Key Metrics Changes - The company reported revenues of $331 million, an increase of 8% over the same period last year [11][25] - GAAP net income was $69 million, up 18%, with GAAP earnings of $2.33 per share, up 20% [11][42] - Non-GAAP net income was $90 million, up 40%, and earnings per share of $3.06 was up 42% [11][42] - Free cash flow reached a record $152 million, up 178% from last year [12][43] - Operating expenses totaled $230 million, compared to $218 million in the prior quarter [39] Business Line Data and Key Metrics Changes - Application segment revenues were $130 million, down 8% due to a 29% decline in upfront license revenues and a 21% decline in professional services revenues [14][25] - Decision management segment revenues were $33 million, down 14% year-over-year, despite a 34% increase in SaaS subscription revenue [14][26] - Scores segment revenues were $169 million, up 31% from the same period last year, with B2B revenues up 25% and B2C revenues up 47% [32][18] Market Data and Key Metrics Changes - 79% of total revenues were derived from the Americas region, with EMEA generating 15% and Asia Pacific contributing 6% [34] - Recurring revenues from transactional and maintenance sources represented 85% of total revenues [34] Company Strategy and Development Direction - The company is focused on migrating more of its business toward a subscription-based model, including SaaS software subscriptions [13] - A strategic divestiture of the collections and recovery product line was announced to enhance focus on the decision management platform [19][46] - The company aims to become a leader in decisioning analytics and is reallocating resources to support this vision [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model, emphasizing long-term value over short-term targets [50] - The company is not providing formal guidance until the credit markets stabilize and the full-year impact of revenue recognition is understood [50] Other Important Information - The company expects to close the divestiture deal in the third fiscal quarter, with proceeds funding a $200 million accelerated share repurchase program [48] - The effective tax rate for the quarter was 25%, with expectations for the fiscal year to be approximately 26% to 27% [42] Q&A Session Summary Question: Any smaller products left that could be candidates for divestiture? - Management indicated that there are no significant divestitures planned in the immediate future [53] Question: Potential for M&A to be a bigger part of the story going forward? - Management stated that the potential for M&A remains the same as in the past, with a focus on investing in internal growth [54] Question: Insights on the sales pipeline by geography? - Management noted strong performance in South America and healthy pipelines across all major regions [55][56] Question: Expense trajectory outlook? - Management expects expenses to increase slightly in the next quarter but does not anticipate a material impact on profitability [59][61] Question: Strength in the scores business? - Management attributed strength primarily to volume rather than pricing, with continued strong performance in mortgage and B2C segments [62] Question: Implications of the divestiture on customer retention? - Management reassured that customers will continue to receive support and innovation, with resources redirected to focus on the platform [72][73]