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Fair Isaac (FICO) Q3 Earnings Miss Estimates, Revenues Increase
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Fair Isaac (FICO - Free Report) reported third-quarter fiscal 2024 earnings of $6.25 per share, missing the Zacks Consensus Estimate by 1.88% but rising 10.4% year over year.
Revenues of $448 million increased 12.3% on a year-over-year basis but lagged the consensus mark by 0.15%. Americas, EMEA and Asia Pacific contributed 85%, 10% and 5% 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 5% year over year to $206.4 million.
Software Annual Recurring Revenues (ARR) increased 10% year over year, consisting of 31% platform ARR growth and 3% non-platform growth. Software Dollar-Based Net Retention Rate was 108% in the fiscal third quarter, with platform software at 124% and non-platform software at 101%.
Fair Isaac Corporation Price, Consensus and EPS Surprise
On-premises and SaaS Software (41% of revenues) increased 6.8% year over year to $183.8 million. Professional services (5% of revenues) were $22.6 million, down 9% year over year.
Scores (53.9% of revenues) increased 19.7% year over year to $241.5 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 27% year over year, driven primarily by unit price increases, partially offset by declines in mortgage origination volumes. B2C revenues dropped 2% year over year due to lower volumes on myFICO.com business.
Mortgage originations revenues surged 80%. It accounted for 49% of B2B revenues and 39% of total scores revenues. Auto originations revenues fell 3% year over year. Credit card and personal loan revenues declined 7%.
Operating Details
Research & development expenses, as a percentage of revenues, contracted 50 basis points (bps) on a year-over-year basis to 9.9%.
Selling, general and administrative expenses, as a percentage of revenues, increased 80 bps year over year to 27.9%.
Operating margin was 42.5% in the reported quarter, contracting 190 basis points year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2024, FICO had $156 million in cash and cash equivalents and total debt was $2.11 billion. In comparison, as of Mar 31, 2024, FICO had $135.7 million in cash and cash equivalents and total debt of $2.04 billion.
Cash flow from operations was $213.3 million in the fiscal third quarter compared with $71.04 million in the previous quarter. Free cash flow was $20.5 million compared with $61.6 million reported in the previous quarter.
In the fiscal third quarter, FICO repurchased 196K shares and a new Board authorization for $1 billion of share repurchase was announced.
Guidance Raised
For the fiscal 2024, FICO anticipates revenues to be $1.7 billion.
Non-GAAP earnings are still projected to be $23.16 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #4 (Sell).
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. The stock has rallied 37.4% compared with the sector’s increase of 16.4%.
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Fair Isaac (FICO) Q3 Earnings Miss Estimates, Revenues Increase
Fair Isaac (FICO - Free Report) reported third-quarter fiscal 2024 earnings of $6.25 per share, missing the Zacks Consensus Estimate by 1.88% but rising 10.4% year over year.
Revenues of $448 million increased 12.3% on a year-over-year basis but lagged the consensus mark by 0.15%. Americas, EMEA and Asia Pacific contributed 85%, 10% and 5% 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 5% year over year to $206.4 million.
Software Annual Recurring Revenues (ARR) increased 10% year over year, consisting of 31% platform ARR growth and 3% non-platform growth. Software Dollar-Based Net Retention Rate was 108% in the fiscal third quarter, with platform software at 124% and non-platform software at 101%.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
On-premises and SaaS Software (41% of revenues) increased 6.8% year over year to $183.8 million. Professional services (5% of revenues) were $22.6 million, down 9% year over year.
Scores (53.9% of revenues) increased 19.7% year over year to $241.5 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 27% year over year, driven primarily by unit price increases, partially offset by declines in mortgage origination volumes. B2C revenues dropped 2% year over year due to lower volumes on myFICO.com business.
Mortgage originations revenues surged 80%. It accounted for 49% of B2B revenues and 39% of total scores revenues. Auto originations revenues fell 3% year over year. Credit card and personal loan revenues declined 7%.
Operating Details
Research & development expenses, as a percentage of revenues, contracted 50 basis points (bps) on a year-over-year basis to 9.9%.
Selling, general and administrative expenses, as a percentage of revenues, increased 80 bps year over year to 27.9%.
Operating margin was 42.5% in the reported quarter, contracting 190 basis points year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2024, FICO had $156 million in cash and cash equivalents and total debt was $2.11 billion. In comparison, as of Mar 31, 2024, FICO had $135.7 million in cash and cash equivalents and total debt of $2.04 billion.
Cash flow from operations was $213.3 million in the fiscal third quarter compared with $71.04 million in the previous quarter. Free cash flow was $20.5 million compared with $61.6 million reported in the previous quarter.
In the fiscal third quarter, FICO repurchased 196K shares and a new Board authorization for $1 billion of share repurchase was announced.
Guidance Raised
For the fiscal 2024, FICO anticipates revenues to be $1.7 billion.
Non-GAAP earnings are still projected to be $23.16 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #4 (Sell).
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. The stock has rallied 37.4% compared with the sector’s increase of 16.4%.
Shopify (SHOP - Free Report) , Analog Devices (ADI - Free Report) and Digital Ocean (DOCN - Free Report) are some better-ranked stocks that investors can consider in the broader sector. DigitalOcean sports a Zacks Rank #1 (Strong Buy) at present, while Analog Devices and Shopify carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify’s shares have declined 21.2% year to date. SHOP is set to report its second-quarter 2024 results on Aug 7.
Analog Devices shares have increased 16.5% year to date. ADI is set to report third-quarter fiscal 2024 results on Aug 21.
DigitalOcean’s shares have moved down 9.7% year to date. DOCN is set to report second-quarter 2024 results on Aug 8.