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Fair Isaac (FICO) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Fair Isaac (FICO - Free Report) reported second-quarter fiscal 2024 earnings of $6.14 per share, beating the Zacks Consensus Estimate by 5.86% and rising 28.5% year over year.
Revenues of $433.8 million increased 14.1% on a year-over-year basis and beat the consensus mark by 1.85%. Americas, EMEA and Asia Pacific contributed 85%, 9% and 6% to total revenues, respectively.
Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 8.3% year over year to $196.9 million.
Software Annual Recurring Revenues (ARR) increased 14% year over year, consisting of 32% platform ARR growth and 81% non-platform growth. Software Dollar-Based Net Retention Rate was 112% in the fiscal second quarter, with platform software at 126% and non-platform software at 106%.
On-premises and SaaS Software (40.8% of revenues) increased 14.6% year over year to $177.2 million. Professional services (4.6% of revenues) were $19.7 million, down 27.3% year over year.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Scores (54.6% of revenues) increased 19.3% year over year to $236.9 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 28% year over year, driven primarily by unit price increases, partially offset by declines in mortgage origination volumes. B2C revenues dropped 4% year over year due to lower volumes on myFICO.com business.
Mortgage originations revenues increased 85%. It accounted for 46% of B2B revenues and 36% of total scores revenues. Auto originations revenues declined 1% year over year. Credit card and personal loan revenues declined 9%.
Operating Details
Research & development expenses, as a percentage of revenues, decreased 120 basis points (bps) on a year-over-year basis to 9.4%.
Selling, general and administrative expenses, as a percentage of revenues, decreased 80 bps year over year to 25.6%.
Operating margin was 44.9% in the reported quarter, which expanded 290 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, FICO had $135.7 million in cash and cash equivalents and total debt was $2.04 billion. In comparison, as of Dec 31, 2023, FICO had $160.4 million in cash and cash equivalents and total debt of $1.87 billion.
Cash flow from operations was $71.04 million in the fiscal second quarter compared with $122.1 million in the previous quarter. Free cash flow was $61.6 million compared with $120.8 million reported in the previous quarter.
In the fiscal second quarter, FICO repurchased 144K shares and had $367 million remaining under the current authorization.
Guidance
For fiscal 2024, FICO anticipates revenues to be $1.69 billion.
Non-GAAP earnings are still projected to be $22.80 per share.
Zacks Rank & Stocks to Consider
Currently, FICO carries a Zacks Rank #3 (Hold).
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While FICO’s shares have gained 2.5%, the Computer & Technology sector has increased 7.7%.
Image: Shutterstock
Fair Isaac (FICO) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Fair Isaac (FICO - Free Report) reported second-quarter fiscal 2024 earnings of $6.14 per share, beating the Zacks Consensus Estimate by 5.86% and rising 28.5% year over year.
Revenues of $433.8 million increased 14.1% on a year-over-year basis and beat the consensus mark by 1.85%. Americas, EMEA and Asia Pacific contributed 85%, 9% and 6% to total revenues, respectively.
Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 8.3% year over year to $196.9 million.
Software Annual Recurring Revenues (ARR) increased 14% year over year, consisting of 32% platform ARR growth and 81% non-platform growth. Software Dollar-Based Net Retention Rate was 112% in the fiscal second quarter, with platform software at 126% and non-platform software at 106%.
On-premises and SaaS Software (40.8% of revenues) increased 14.6% year over year to $177.2 million. Professional services (4.6% of revenues) were $19.7 million, down 27.3% year over year.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
Scores (54.6% of revenues) increased 19.3% year over year to $236.9 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 28% year over year, driven primarily by unit price increases, partially offset by declines in mortgage origination volumes. B2C revenues dropped 4% year over year due to lower volumes on myFICO.com business.
Mortgage originations revenues increased 85%. It accounted for 46% of B2B revenues and 36% of total scores revenues. Auto originations revenues declined 1% year over year. Credit card and personal loan revenues declined 9%.
Operating Details
Research & development expenses, as a percentage of revenues, decreased 120 basis points (bps) on a year-over-year basis to 9.4%.
Selling, general and administrative expenses, as a percentage of revenues, decreased 80 bps year over year to 25.6%.
Operating margin was 44.9% in the reported quarter, which expanded 290 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, FICO had $135.7 million in cash and cash equivalents and total debt was $2.04 billion. In comparison, as of Dec 31, 2023, FICO had $160.4 million in cash and cash equivalents and total debt of $1.87 billion.
Cash flow from operations was $71.04 million in the fiscal second quarter compared with $122.1 million in the previous quarter. Free cash flow was $61.6 million compared with $120.8 million reported in the previous quarter.
In the fiscal second quarter, FICO repurchased 144K shares and had $367 million remaining under the current authorization.
Guidance
For fiscal 2024, FICO anticipates revenues to be $1.69 billion.
Non-GAAP earnings are still projected to be $22.80 per share.
Zacks Rank & Stocks to Consider
Currently, FICO carries a Zacks Rank #3 (Hold).
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While FICO’s shares have gained 2.5%, the Computer & Technology sector has increased 7.7%.
Pinterest (PINS - Free Report) , Advanced Micro Devices (AMD - Free Report) , and NVIDIA (NVDA - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While Pinterest sports a Zacks Rank #1 (Strong Buy) at present, AMD and NVIDIA carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pinterest shares have declined 11.9% year to date. PINS is set to report its first-quarter 2024 results on Apr 30.
AMD shares have gained 4.3% year to date. AMD is set to report its first-quarter 2024 results on Apr 30.
NVIDIA shares have gained 66.9% year to date. NVDA is set to report its first-quarter fiscal 2025 results on May 22.