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Fair Isaac (FICO) Up 8.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Fair Isaac (FICO - Free Report) . Shares have added about 8.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fair Isaac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fair Isaac Q3 Earnings Miss Estimates, Revenues Increase
Fair Isaac 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%.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Fair Isaac has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Fair Isaac has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Fair Isaac belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Roper Technologies (ROP - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Roper Technologies reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of +12.1%. EPS of $4.48 for the same period compares with $4.12 a year ago.
For the current quarter, Roper Technologies is expected to post earnings of $4.53 per share, indicating a change of +4.9% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
Roper Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Fair Isaac (FICO) Up 8.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Fair Isaac (FICO - Free Report) . Shares have added about 8.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fair Isaac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fair Isaac Q3 Earnings Miss Estimates, Revenues Increase
Fair Isaac 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%.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Fair Isaac has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Fair Isaac has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Fair Isaac belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Roper Technologies (ROP - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Roper Technologies reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of +12.1%. EPS of $4.48 for the same period compares with $4.12 a year ago.
For the current quarter, Roper Technologies is expected to post earnings of $4.53 per share, indicating a change of +4.9% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
Roper Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.