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Fair Isaac (FICO) Q3 Earnings Beat, Revenues Improve Y/Y
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Fair Isaac (FICO - Free Report) reported third-quarter 2022 earnings of $4.47 per share, which beat the Zacks Consensus Estimate by 10.10% and improved 32% year over year.
Revenues of $349 million increased 3% on a year-over-year basis and surpassed the consensus mark by 1.59%. The sluggish growth in revenues was due to headwinds in the mortgage market on account of an interest rate hike.
Top Line Details
The Scores Business segment revenues (51.4% of total revenues) in the third quarter of 2022 were $179.4 million, which increased 4% year over year.
The B2B revenues of the Scores business segment were impacted by the negative impact of Mortgage Originations revenues, which were down by 25% from the year-ago quarter.
Auto Originations revenues and Card and Personal Loan Originations revenues were up 12% and 37%, respectively, year over year.
Fair Isaac Corporation Price, Consensus and EPS Surprise
The B2C revenues of the Scores business segment increased 7% year over year, primarily due to growth in its partner channel. However, the growth slowed down due to sluggish customer growth in the company’s myFICO.com channel.
The Software Business segment revenues (48.6% of total revenues) in the third quarter of 2022 were $170 million, which increased 2% year over year. The growth can be attributed to an increase in platform software revenues; however, the growth was partially offset by the sale of the Debt Collections and Recovery product line in June 2021 and reduced Professional Services revenues. Professional services revenues were $27 million, which slumped 24% year over year.
Software Annual Recurring Revenue (ARR) of $561 million was up 9% year over year, consisting of 60% platform ARR growth and 1% non-platform ARR growth. Software Dollar-Based Net Retention Rate was 108% in the third quarter, up by 300 bps year over year, with platform solutions at 135% and non-platform solutions at 101%.
In the third quarter of 2022, 84% of total company revenues stemmed from Americas region. Asia Pacific region generated 5%, while the remaining 11% was from EMEA.
Operating Details
Non-GAAP operating margin was 49% for the third quarter of 2022, which expanded by 1,000 basis points over the same period last year.
Adjusted EBITDA was $173.5 million in the third quarter of 2022, which expanded 26% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, FICO had $182 million in cash and investments compared with $207 million as of Mar 31, 2022. Total debt as of Jun 30, 2022, was $1.96 million compared with $1.7 billion as of Mar 31, 2022.
Cash flow from operations was $364.6 million in the third quarter compared with second-quarter 2022’s figure of $ 247.4 million.
Free cash flow for the third quarter was $115 million compared with second-quarter 2022’s figure of $120.2 million.
Guidance
For fiscal 2022, FICO anticipates revenues to be $1.355 billion. Non GAAP EPS is projected to be $16.08.
Zacks Rank & Other Stocks to Consider
FICO currently carries a Zacks Rank #2 (Buy).
FICO’s shares have returned 8.5% against the Zacks Computer and Technology sector’s decline of 24.5% in the year-to-date period.
Here are some other top-ranked stocks worth considering in the broader sector.
ASUR’s shares have decreased 30.2% in the year-to-date period compared with the Zacks Internet - Delivery Services industry’s decline of 6%. ASUR is scheduled to report second-quarter 2022 results on Aug 8.
BLNK’s shares have fallen 16.8% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 15.5%. Blink is scheduled to report second-quarter 2022 results on Aug 8.
ANGI’s shares have slumped 36.6% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 31.8%. ANGI is scheduled to report second-quarter 2022 results on Aug 9.
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Fair Isaac (FICO) Q3 Earnings Beat, Revenues Improve Y/Y
Fair Isaac (FICO - Free Report) reported third-quarter 2022 earnings of $4.47 per share, which beat the Zacks Consensus Estimate by 10.10% and improved 32% year over year.
Revenues of $349 million increased 3% on a year-over-year basis and surpassed the consensus mark by 1.59%. The sluggish growth in revenues was due to headwinds in the mortgage market on account of an interest rate hike.
Top Line Details
The Scores Business segment revenues (51.4% of total revenues) in the third quarter of 2022 were $179.4 million, which increased 4% year over year.
The B2B revenues of the Scores business segment were impacted by the negative impact of Mortgage Originations revenues, which were down by 25% from the year-ago quarter.
Auto Originations revenues and Card and Personal Loan Originations revenues were up 12% and 37%, respectively, year over year.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
The B2C revenues of the Scores business segment increased 7% year over year, primarily due to growth in its partner channel. However, the growth slowed down due to sluggish customer growth in the company’s myFICO.com channel.
The Software Business segment revenues (48.6% of total revenues) in the third quarter of 2022 were $170 million, which increased 2% year over year. The growth can be attributed to an increase in platform software revenues; however, the growth was partially offset by the sale of the Debt Collections and Recovery product line in June 2021 and reduced Professional Services revenues. Professional services revenues were $27 million, which slumped 24% year over year.
Software Annual Recurring Revenue (ARR) of $561 million was up 9% year over year, consisting of 60% platform ARR growth and 1% non-platform ARR growth. Software Dollar-Based Net Retention Rate was 108% in the third quarter, up by 300 bps year over year, with platform solutions at 135% and non-platform solutions at 101%.
In the third quarter of 2022, 84% of total company revenues stemmed from Americas region. Asia Pacific region generated 5%, while the remaining 11% was from EMEA.
Operating Details
Non-GAAP operating margin was 49% for the third quarter of 2022, which expanded by 1,000 basis points over the same period last year.
Adjusted EBITDA was $173.5 million in the third quarter of 2022, which expanded 26% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, FICO had $182 million in cash and investments compared with $207 million as of Mar 31, 2022. Total debt as of Jun 30, 2022, was $1.96 million compared with $1.7 billion as of Mar 31, 2022.
Cash flow from operations was $364.6 million in the third quarter compared with second-quarter 2022’s figure of $ 247.4 million.
Free cash flow for the third quarter was $115 million compared with second-quarter 2022’s figure of $120.2 million.
Guidance
For fiscal 2022, FICO anticipates revenues to be $1.355 billion. Non GAAP EPS is projected to be $16.08.
Zacks Rank & Other Stocks to Consider
FICO currently carries a Zacks Rank #2 (Buy).
FICO’s shares have returned 8.5% against the Zacks Computer and Technology sector’s decline of 24.5% in the year-to-date period.
Here are some other top-ranked stocks worth considering in the broader sector.
Asure Software (ASUR - Free Report) carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ASUR’s shares have decreased 30.2% in the year-to-date period compared with the Zacks Internet - Delivery Services industry’s decline of 6%. ASUR is scheduled to report second-quarter 2022 results on Aug 8.
Blink Charging (BLNK - Free Report) carries a Zacks Rank #2.
BLNK’s shares have fallen 16.8% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 15.5%. Blink is scheduled to report second-quarter 2022 results on Aug 8.
Angi (ANGI - Free Report) carries a Zacks Rank #2.
ANGI’s shares have slumped 36.6% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 31.8%. ANGI is scheduled to report second-quarter 2022 results on Aug 9.