FICO Announces Earnings of $5.16 per Share for Second Quarter Fiscal 2024

Rhea-AI Summary

FICO reported strong second quarter fiscal 2024 results with earnings of $5.16 per share, a revenue of $434 million compared to $380 million in the prior year, and a non-GAAP EPS of $6.14 versus $4.78 in the prior year. The company raised its full-year guidance and updated its 2024 revenue, net income, and EPS expectations.

Positive

• FICO reported a net income of $129.8 million, or $5.16 per share, for the second quarter fiscal 2024, compared to $101.6 million, or $4.00 per share, in the prior year period.
• The company's revenue for the quarter was $433.8 million, up from $380.3 million in the prior year period, indicating a strong growth trend.
• Non-GAAP net income for the quarter was $154.5 million, with an EPS of $6.14, compared to $121.4 million and $4.78 in the prior year period, respectively.
• FICO's software revenues saw an 8% increase to $196.9 million, driven by increased recurring revenue, partially offset by a decrease in professional services.
• The company raised its full-year guidance, with updated expectations for 2024 revenues, net income, and EPS.
• FICO showcased strong performance across all guided metrics, leading to an optimistic outlook for the future.

Negative

• None.

Insights

Financial Analyst

FICO's earnings release indicates a robust performance, with a $54.5 million increase in revenue compared to the previous year. This represents a 14.3% year-over-year growth, a sign of strong market demand for their products and services. The 19% surge in Scores revenues is particularly noteworthy, as it stems from a strategic shift towards higher unit pricing. However, investors should monitor the 4% decline in B2C revenue due to reduced activity on myFICO.com, which could signal changing consumer behaviors or increased competition. The software segment's modest 8% increase may raise questions about the scalability of professional services versus the more predictable recurring revenue streams. The company's updated revenue guidance suggests a confident outlook, but the decrease in free cash flow from $88.3 million to $61.6 million, a 30.2% drop, should be considered when evaluating the company's capital allocation strategy and potential reinvestment into growth initiatives.

Market Research Analyst

The impressive 28% climb in B2B revenue highlights FICO's competitive positioning within the industry. The growth, largely driven by increased unit prices, indicates strong pricing power and product differentiation. This is an essential aspect for investors to consider, as it could insulate the company from potential downturns in specific markets, such as the noted decrease in mortgage origination volumes. The annual recurring revenue for software is key, with platform ARR up 14% year-over-year, showcasing a successful transition towards a subscription-based model. This is reflected in the dollar-based net retention rate of 112%, suggesting effective customer retention and potential upsell capabilities. The differentiation between platform software at 126% retention rate versus non-platform at 106% provides a layered insight into the stickiness of FICO's offerings and where the core growth lies.

Revenue of $434 million vs. $380 million in prior year

BOZEMAN, Mont.--(BUSINESS WIRE)-- FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2024.

Second Quarter Fiscal 2024 GAAP Results

Net income for the quarter totaled $129.8 million, or $5.16 per share, versus $101.6 million, or $4.00 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $71.0 million versus $89.8 million in the prior year period.

Second Quarter Fiscal 2024 Non-GAAP Results

Non-GAAP Net Income for the quarter was $154.5 million versus $121.4 million in the prior year period. Non-GAAP EPS for the quarter was $6.14 versus $4.78 in the prior year period. Free cash flow was $61.6 million for the current quarter versus $88.3 million in the prior year period. The Non-GAAP financial measures are described in the financial table captioned “Non-GAAP Results” and are reconciled to the corresponding GAAP results in the financial tables at the end of this release.

Second Quarter Fiscal 2024 GAAP Revenue

The company reported revenues of $433.8 million for the quarter as compared to $380.3 million reported in the prior year period.

“We delivered a strong second quarter, posting double-digit growth across all our guided metrics,” said Will Lansing, chief executive officer. “We are pleased to announce that we are raising our full year guidance.”

Revenues for the second 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 $236.9 million in the second quarter, compared to $198.5 million in the prior year period, an increase of 19%. B2B revenue increased 28%, driven largely by higher unit prices, which were partially offset by a decrease in mortgage origination volumes. B2C revenue decreased 4% 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 $196.9 million in the second quarter, compared to $181.8 million in the prior year period, an increase of 8%, due to increased recurring revenue, partially offset by a decrease in professional services. Software Annual Recurring Revenue was up 14% year-over-year, consisting of 32% platform ARR growth and 8% non-platform growth. Software Dollar-Based Net Retention Rate was 112% at March 31, 2024, with platform software at 126% and non-platform software at 106%.

Outlook

The company is updating its previously provided guidance for fiscal 2024:

	Previous 2024 Guidance	Updated 2024 Guidance
Revenues	$1.675 billion	$1.690 billion
GAAP Net Income	$490 million	$495 million
GAAP EPS	$19.45	$19.70
Non-GAAP Net Income	$566 million	$573 million
Non-GAAP EPS	$22.45	$22.80

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 April 25, 2024 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its second 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 April 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 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency.

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
(Unaudited)
	March 31, 2024				September 30, 2023
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	135,667			$	136,778
Accounts receivable, net		469,025				387,947
Prepaid expenses and other current assets		36,780				31,723
Total current assets		641,472				556,448
Marketable securities and investments		42,659				34,237
Property and equipment, net		27,224				10,966
Operating lease right-of-use assets		28,283				25,703
Goodwill and intangible assets, net		776,743				774,244
Other assets		186,736				173,683
Total assets	$	1,703,117			$	1,575,281
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and other accrued liabilities	$	87,771			$	78,487
Accrued compensation and employee benefits		68,805				102,471
Deferred revenue		143,544				136,730
Current maturities on debt		15,000				50,000
Total current liabilities		315,120				367,688
Long-term debt		2,028,652				1,811,658
Operating lease liabilities		20,558				23,903
Other liabilities		74,447				60,022
Total liabilities		2,438,777				2,263,271
Stockholders’ deficit		(735,660	)			(687,990	)
Total liabilities and stockholders’ deficit	$	1,703,117			$	1,575,281

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Quarter Ended March 31,								Six Months Ended March 31,
		2024				2023				2024				2023
	(In thousands, except per share data)
Revenues:
On-premises and SaaS software	$	177,180			$	154,584			$	345,848			$	299,144
Professional services		19,744				27,175				41,023				49,497
Scores		236,885				198,507				428,997				376,495
Total revenues		433,809				380,266				815,868				725,136
Operating expenses:
Cost of revenues		86,946				79,806				170,407				156,375
Research and development		40,880				40,266				83,515				76,899
Selling, general and administrative		110,867				100,158				215,196				193,153
Amortization of intangible assets		275				275				550				550
Gain on product line asset sale		—				—				—				(1,941	)
Total operating expenses		238,968				220,505				469,668				425,036
Operating income		194,841				159,761				346,200				300,100
Other expense, net		(22,107	)			(22,292	)			(42,876	)			(44,728	)
Income before income taxes		172,734				137,469				303,324				255,372
Provision for income taxes		42,935				35,919				52,460				56,179
Net income	$	129,799			$	101,550			$	250,864			$	199,193
Earnings per share:
Basic	$	5.23			$	4.04			$	10.12			$	7.94
Diluted	$	5.16			$	4.00			$	9.96			$	7.83
Shares used in computing earnings per share:
Basic		24,819				25,116				24,791				25,080
Diluted		25,154				25,419				25,186				25,431

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Six Months Ended March 31,
		2024				2023
	(In thousands)
Cash flows from operating activities:
Net income	$	250,864			$	199,193
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,178				8,294
Share-based compensation		67,022				56,755
Changes in operating assets and liabilities		(119,159	)			(68,391	)
Gain on product line asset sale		—				(1,941	)
Other, net		(11,750	)			(11,666	)
Net cash provided by operating activities		193,155				182,244
Cash flows from investing activities:
Purchases of property and equipment		(5,403	)			(2,377	)
Capitalized internal-use software costs		(5,380	)			—
Net activity from marketable securities		(1,257	)			(3,384	)
Cash transferred, net of proceeds, from product line asset sale		—				(6,126	)
Net cash used in investing activities		(12,040	)			(11,887	)
Cash flows from financing activities:
Proceeds from revolving line of credit and term loan		255,000				228,000
Payments on revolving line of credit and term loan		(74,500	)			(158,500	)
Proceeds from issuance of treasury stock under employee stock plans		14,937				15,217
Taxes paid related to net share settlement of equity awards		(133,786	)			(73,672	)
Repurchases of common stock		(243,473	)			(184,290	)
Other, net		(1,400	)			—
Net cash used in financing activities		(183,222	)			(173,245	)
Effect of exchange rate changes on cash		996				7,457
Increase (decrease) in cash and cash equivalents		(1,111	)			4,569
Cash and cash equivalents, beginning of period		136,778				133,202
Cash and cash equivalents, end of period	$	135,667			$	137,771

FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(Unaudited)
	Quarter Ended March 31,								Six Months Ended March 31,
		2024				2023				2024				2023
	(In thousands, except per share data)
GAAP net income	$	129,799			$	101,550			$	250,864			$	199,193
Amortization of intangible assets		275				275				550				550
Gain on product line asset sale		—				—				—				(1,941	)
Share-based compensation expense		35,448				27,053				67,022				56,755
Income tax adjustments		(9,096	)			(6,818	)			(17,011	)			(13,732	)
Excess tax benefit		(1,934	)			(612	)			(25,709	)			(10,916	)
Non-GAAP net income	$	154,492			$	121,448			$	275,716			$	229,909
GAAP diluted earnings per share	$	5.16			$	4.00			$	9.96			$	7.83
Amortization of intangible assets		0.01				0.01				0.02				0.02
Gain on product line asset sale		—				—				—				(0.08	)
Share-based compensation expense		1.41				1.06				2.66				2.23
Income tax adjustments		(0.36	)			(0.27	)			(0.68	)			(0.54	)
Excess tax benefit		(0.08	)			(0.02	)			(1.02	)			(0.43	)
Non-GAAP diluted earnings per share	$	6.14			$	4.78			$	10.95			$	9.04
Free cash flow
Net cash provided by operating activities	$	71,035			$	89,803			$	193,155			$	182,244
Capital expenditures		(9,422	)			(1,526	)			(10,783	)			(2,377	)
Free cash flow	$	61,613			$	88,277			$	182,372			$	179,867
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
(Unaudited)
		Previous Fiscal 2024 Guidance				Updated Fiscal 2024 Guidance
		(In millions, except per share data)
GAAP net income		$	490			$	495
Amortization of intangible assets			1				1
Share-based compensation expense			140				140
Income tax adjustments			(35	)			(35	)
Excess tax benefit			(30	)			(28	)
Non-GAAP net income		$	566			$	573
GAAP diluted earnings per share		$	19.45			$	19.70
Amortization of intangible assets			0.04				0.04
Share-based compensation expense			5.55				5.57
Income tax adjustments			(1.40	)			(1.39	)
Excess tax benefit			(1.19	)			(1.11	)
Non-GAAP diluted earnings per share		$	22.45			$	22.80

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/20240425737168/en/

Investors/Analysts:

Dave Singleton

Fair Isaac Corporation

(800) 459-7125

investor@fico.com

Source: FICO

FAQ

What were FICO's earnings per share for the second quarter fiscal 2024?

FICO reported earnings of $5.16 per share for the second quarter fiscal 2024.

What was FICO's revenue in the second quarter fiscal 2024 compared to the prior year?

FICO reported a revenue of $433.8 million for the second quarter fiscal 2024, compared to $380.3 million in the prior year period.

What was FICO's non-GAAP EPS for the second quarter fiscal 2024?

FICO's non-GAAP EPS for the second quarter fiscal 2024 was $6.14, compared to $4.78 in the prior year period.

What was the change in FICO's software revenues in the second quarter fiscal 2024?

FICO's software revenues increased by 8% to $196.9 million in the second quarter fiscal 2024.

Did FICO raise its full-year guidance for fiscal 2024?

Yes, FICO raised its full-year guidance for fiscal 2024, updating expectations for revenues, net income, and EPS.