FICO Announces Earnings of $4.80 per Share for First Quarter Fiscal 2024
- The company reported a revenue increase of 10% from the prior year period.
- Non-GAAP Net Income showed a significant improvement, reaching $121.2 million compared to $108.5 million in the prior year period.
- The company's fiscal 2024 guidance includes double-digit percentage revenue and EPS growth.
- None.
Insights
FICO's first fiscal quarter results indicate a robust financial performance, with significant year-over-year growth in both revenue and net income. The company's reported revenue of $382 million, an 11% increase from the previous year, reflects a strong market demand for their predictive analytics and decision management software solutions. The earnings per share (EPS) growth from $3.84 to $4.80 also suggests efficient cost management and profitability.
From an investment perspective, the double-digit growth in both top-line and bottom-line metrics can be appealing to shareholders and potential investors. The reported increase in free cash flow, from $91.6 million to $120.8 million, provides the company with more liquidity to invest in strategic initiatives or return value to shareholders. The software segment's annual recurring revenue growth of 18% is particularly noteworthy, as it indicates a sustainable revenue stream and customer loyalty.
The non-GAAP measures, which exclude certain one-time expenses, provide investors with an alternative view of the company's performance, showing an even more favorable net income of $121.2 million. However, it is crucial for investors to understand the differences between GAAP and non-GAAP results to make informed decisions.
The detailed segment performance provides insights into the company's strategic positioning. The 8% increase in scores revenues suggests that FICO's scoring solutions remain a core component of their business, with a 12% increase in B2B revenue indicating strong adoption among enterprise clients. However, the 3% decrease in B2C revenue might signal a need for strategic adjustments or increased competition in consumer offerings.
The 14% growth in software revenues, driven by recurring revenue, is a positive indicator for the company's shift towards a subscription-based model, which is increasingly favored in the software industry for its predictability and scalability. The Software Dollar-Based Net Retention Rate of 114% is a strong sign of customer satisfaction and product stickiness, particularly in the platform software segment with a remarkable 136% retention rate.
Investors should note the company's reiteration of its fiscal year 2024 guidance, which forecasts continued double-digit percentage revenue and EPS growth. This confidence in future performance could be a signal of the company's strong market position and effective growth strategy.
The financial results of FICO are reflective of broader economic trends, where digital transformation and data analytics are key drivers of growth in various sectors. The increase in demand for analytics and decision management software is likely fueled by businesses seeking to leverage data for competitive advantage.
The company's performance, particularly in the context of an 18% year-over-year increase in software annual recurring revenue, suggests that the market for analytics software is not only growing but also becoming more entrenched as a critical business tool. The economic implications of such a trend include increased productivity and more data-driven decision-making in the business community.
Furthermore, the positive outlook provided by the company may indicate a stable economic environment for the tech sector, despite potential macroeconomic challenges such as fluctuating interest rates and global trade tensions. The resilience of FICO's business model in this context could be a bellwether for the sector's overall health.
Revenue of
First Quarter Fiscal 2024 GAAP Results
Net income for the quarter totaled
Net cash provided by operating activities for the quarter was
First Quarter Fiscal 2024 Non-GAAP Results
Non-GAAP Net Income for the quarter was
First Quarter Fiscal 2024 GAAP Revenue
The company reported revenues of
“We had a good start to our fiscal year, with another quarter of strong growth,” said Will Lansing, chief executive officer. “We reiterate our fiscal year 2024 guidance, which includes double-digit percentage revenue and EPS growth.”
Revenues for the first quarter of fiscal 2024 for the company’s two operating segments were as follows:
-
Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) solutions, were
$192.1 million $178.0 million 8% . B2B revenue increased12% , primarily attributable to a higher unit price. B2C revenue decreased3% from the prior year period due to lower volumes on myFICO.com business. -
Software revenues, which include the company’s analytics and digital decisioning technology, were
$190.0 million $166.9 million 14% , due to increased recurring revenue, partially offset by decreases in professional services. Software Annual Recurring Revenue was up18% year-over-year, consisting of43% platform ARR growth and11% non-platform growth. Software Dollar-Based Net Retention Rate was114% in the first quarter, with platform software at136% and non-platform software at108% .
Outlook
The company is re-iterating its previously provided guidance for fiscal 2024:
|
Fiscal 2024 Guidance |
Revenues |
|
GAAP Net Income |
|
GAAP EPS |
|
Non-GAAP Net Income |
|
Non-GAAP EPS |
|
The Non-GAAP financial measures are described in the financial table captioned “Reconciliation of Non-GAAP Guidance.”
Company to Host Conference Call
The company will host a webcast on January 25, 2024 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its first quarter fiscal 2024 results and provide various strategic and operational updates. The call can be accessed at FICO's web site at www.fico.com/investors. A replay of the webcast will be available at our Past Events page through January 25, 2025.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 215 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail, and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by
Learn more at http://www.fico.com
Join the conversation at https://twitter.com/fico & http://www.fico.com/en/blogs/
For FICO news and media resources, visit www.fico.com/news.
FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Software segment’s business strategy, the Company’s ability to continue to develop new and enhanced products and services, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, disruptions and uncertainties with respect to global economic conditions as well as in industries and markets of the Company and its customers, the Company’s ability to keep up with rapidly changing technologies, its ability to recruit and retain qualified personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to protect such data, the failure to realize the anticipated benefits of any acquisitions, or divestitures, and material adverse developments in global economic conditions or the occurrence of certain other world events such as geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, the continuing effects of the COVID-19 pandemic, an actual recession or fears of a recession, trade policies and tariffs, and political and governmental instability. Additional information on these risks and uncertainties and other factors that could affect FICO's future results are described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2023 and its subsequent filings with the SEC. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. FICO disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.
| FAIR ISAAC CORPORATION | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| December 31, | September 30, | ||||||
|
2023 |
|
|
2023 |
|
||
| ASSETS: | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
160,421 |
|
$ |
136,778 |
|
|
| Accounts receivable, net |
|
367,478 |
|
|
387,947 |
|
|
| Prepaid expenses and other current assets |
|
37,364 |
|
|
31,723 |
|
|
| Total current assets |
|
565,263 |
|
|
556,448 |
|
|
| Marketable securities and investments |
|
38,213 |
|
|
34,237 |
|
|
| Property and equipment, net |
|
10,406 |
|
|
10,966 |
|
|
| Operating lease right-of-use-assets |
|
18,916 |
|
|
25,703 |
|
|
| Goodwill and intangible assets, net |
|
777,837 |
|
|
774,244 |
|
|
| Other assets |
|
182,883 |
|
|
173,683 |
|
|
$ |
1,593,518 |
|
$ |
1,575,281 |
|
||
| LIABILITIES AND STOCKHOLDERS' DEFICIT: | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ |
65,071 |
|
$ |
78,487 |
|
|
| Accrued compensation and employee benefits |
|
68,216 |
|
|
102,471 |
|
|
| Deferred revenue |
|
146,822 |
|
|
136,730 |
|
|
| Current maturities on debt |
|
153,000 |
|
|
50,000 |
|
|
| Total current liabilities |
|
433,109 |
|
|
367,688 |
|
|
| Long-term debt |
|
1,808,655 |
|
|
1,811,658 |
|
|
| Operating lease liabilities |
|
11,899 |
|
|
23,903 |
|
|
| Other liabilities |
|
65,620 |
|
|
60,022 |
|
|
| Total liabilities |
|
2,319,283 |
|
|
2,263,271 |
|
|
| Stockholders' deficit |
|
(725,765 |
) |
|
(687,990 |
) |
|
$ |
1,593,518 |
|
$ |
1,575,281 |
|
||
| FAIR ISAAC CORPORATION | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
| (In thousands, except per share data) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
| December 31, | |||||||
|
2023 |
|
|
2022 |
|
||
| Revenues: | |||||||
| On-premises and SaaS software | $ |
168,668 |
|
$ |
144,560 |
|
|
| Professional services |
|
21,279 |
|
|
22,322 |
|
|
| Scores |
|
192,112 |
|
|
177,988 |
|
|
| Total revenues |
|
382,059 |
|
|
344,870 |
|
|
| Operating expenses: | |||||||
| Cost of revenues |
|
83,461 |
|
|
76,569 |
|
|
| Research & development |
|
42,635 |
|
|
36,633 |
|
|
| Selling, general and administrative |
|
104,329 |
|
|
92,995 |
|
|
| Amortization of intangible assets |
|
275 |
|
|
275 |
|
|
| Gain on product line asset sale |
|
- |
|
|
(1,941 |
) |
|
| Total operating expenses |
|
230,700 |
|
|
204,531 |
|
|
| Operating income |
|
151,359 |
|
|
140,339 |
|
|
| Other expense, net |
|
(20,769 |
) |
|
(22,436 |
) |
|
| Income before income taxes |
|
130,590 |
|
|
117,903 |
|
|
| Provision for income taxes |
|
9,525 |
|
|
20,260 |
|
|
| Net income | $ |
121,065 |
|
$ |
97,643 |
|
|
| Basic earnings per share: | $ |
4.89 |
|
$ |
3.90 |
|
|
| Diluted earnings per share: | $ |
4.80 |
|
$ |
3.84 |
|
|
| Shares used in computing earnings per share: | |||||||
| Basic |
|
24,764 |
|
|
25,045 |
|
|
| Diluted |
|
25,219 |
|
|
25,443 |
|
|
| FAIR ISAAC CORPORATION | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
| December 31, | |||||||
|
2023 |
|
|
2022 |
|
||
| Cash flows from operating activities: | |||||||
| Net income | $ |
121,065 |
|
$ |
97,643 |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization |
|
2,824 |
|
|
4,280 |
|
|
| Share-based compensation |
|
31,574 |
|
|
29,702 |
|
|
| Changes in operating assets and liabilities |
|
(30,343 |
) |
|
(33,250 |
) |
|
| Gain on product line asset sale |
|
- |
|
|
(1,941 |
) |
|
| Other, net |
|
(3,000 |
) |
|
(3,994 |
) |
|
| Net cash provided by operating activities |
|
122,120 |
|
|
92,440 |
|
|
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment |
|
(1,361 |
) |
|
(850 |
) |
|
| Net activity from marketable securities |
|
(1,057 |
) |
|
(2,165 |
) |
|
| Proceeds from product line asset sales, net of cash transferred |
|
- |
|
|
(7,575 |
) |
|
| Net cash used in investing activities |
|
(2,418 |
) |
|
(10,590 |
) |
|
| Cash flows from financing activities: | |||||||
| Proceeds from revolving line of credit and term loan |
|
170,000 |
|
|
169,000 |
|
|
| Payments on revolving line of credit and term loan |
|
(70,750 |
) |
|
(102,750 |
) |
|
| Proceeds from issuance of treasury stock under employee stock plans |
|
4,499 |
|
|
1,995 |
|
|
| Taxes paid related to net share settlement of equity awards |
|
(131,911 |
) |
|
(72,865 |
) |
|
| Repurchases of common stock |
|
(71,704 |
) |
|
(75,004 |
) |
|
| Net cash used in financing activities |
|
(99,866 |
) |
|
(79,624 |
) |
|
| Effect of exchange rate changes on cash |
|
3,807 |
|
|
4,428 |
|
|
| Increase in cash and cash equivalents |
|
23,643 |
|
|
6,654 |
|
|
| Cash and cash equivalents, beginning of period |
|
136,778 |
|
|
133,202 |
|
|
| Cash and cash equivalents, end of period | $ |
160,421 |
|
$ |
139,856 |
|
|
| FAIR ISAAC CORPORATION | |||||||
| NON-GAAP RESULTS | |||||||
| (In thousands, except per share data) | |||||||
| (Unaudited) | |||||||
| Quarter Ended | |||||||
| December 31, | |||||||
|
2023 |
|
|
2022 |
|
||
| GAAP net income | $ |
121,065 |
|
$ |
97,643 |
|
|
| Amortization of intangible assets |
|
275 |
|
|
275 |
|
|
| Gain on product line asset sale |
|
- |
|
|
(1,941 |
) |
|
| Share-based compensation expense |
|
31,574 |
|
|
29,702 |
|
|
| Income tax adjustments |
|
(7,915 |
) |
|
(6,914 |
) |
|
| Excess tax benefit |
|
(23,775 |
) |
|
(10,304 |
) |
|
| Non-GAAP net income | $ |
121,224 |
|
$ |
108,461 |
|
|
| GAAP diluted earnings per share | $ |
4.80 |
|
$ |
3.84 |
|
|
| Amortization of intangible assets |
|
0.01 |
|
|
0.01 |
|
|
| Gain on product line asset sale |
|
- |
|
|
(0.08 |
) |
|
| Share-based compensation expense |
|
1.25 |
|
|
1.17 |
|
|
| Income tax adjustments |
|
(0.31 |
) |
|
(0.27 |
) |
|
| Excess tax benefit |
|
(0.94 |
) |
|
(0.40 |
) |
|
| Non-GAAP diluted earnings per share | $ |
4.81 |
|
$ |
4.26 |
|
|
| Free cash flow | |||||||
| Net cash provided by operating activities | $ |
122,120 |
|
$ |
92,440 |
|
|
| Capital expenditures |
|
(1,361 |
) |
|
(850 |
) |
|
| Free cash flow | $ |
120,759 |
|
$ |
91,590 |
|
|
| Note: The numbers may not sum to total due to rounding. | |||||||
About Non-GAAP Financial Measures
To supplement the consolidated GAAP financial statements, the company uses the following non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, and free cash flow. Non-GAAP net income and non-GAAP EPS exclude, to the extent applicable, such items as the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, excess tax benefit, and adjustment to tax valuation allowance items. Free cash flow excludes capital expenditures. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Management uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of recurring business results including significant non-cash expenses. We believe management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key measures used by management in its financial and operating decision-making.
| FAIR ISAAC CORPORATION | |||
| RECONCILIATION OF NON-GAAP GUIDANCE | |||
| (In millions, except per share data) | |||
| (Unaudited) | |||
| Fiscal 2024 Guidance | |||
| GAAP net income | $ |
490 |
|
| Amortization of intangible assets |
|
1 |
|
| Share-based compensation expense |
|
140 |
|
| Income tax adjustments |
|
(35 |
) |
| Excess tax benefit |
|
(30 |
) |
| Non-GAAP net income | $ |
566 |
|
| GAAP diluted earnings per share | $ |
19.45 |
|
| Amortization of intangible assets |
|
0.04 |
|
| Share-based compensation expense |
|
5.55 |
|
| Income tax adjustments |
|
(1.40 |
) |
| Excess tax benefit |
|
(1.19 |
) |
| Non-GAAP diluted earnings per share | $ |
22.45 |
|
| Note: The numbers may not sum to total due to rounding. | |||
About Non-GAAP Financial Measures
To supplement the consolidated GAAP financial statements, the company uses the following non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, and free cash flow. Non-GAAP net income and non-GAAP EPS exclude, to the extent applicable, such items as the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, excess tax benefit, and adjustment to tax valuation allowance items. Free cash flow excludes capital expenditures. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Management uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of recurring business results including significant non-cash expenses. We believe management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key measures used by management in its financial and operating decision-making.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240125347623/en/
Investors/Analysts:
Dave Singleton
Fair Isaac Corporation
(800) 459-7125
investor@fico.com
Source: FICO
FAQ
What was FICO's revenue for the first fiscal quarter ended December 31, 2023?
What was the GAAP net income for FICO in the first fiscal quarter?
What is FICO's Non-GAAP Net Income for the first fiscal quarter?
What is FICO's fiscal 2024 guidance for revenues and Non-GAAP EPS?
