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01/10 16:59
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with a 15% revenue increase and optimistic guidance, yet concerns about economic volatility, customer conservatism, and substantial debt persist. The Q&A highlights management's cautious stance on growth and lack of real-time data, which tempers enthusiasm. Although shareholder returns and revenue growth are positive, the mixed signals and economic uncertainties suggest a neutral stock price reaction over the next two weeks.
Revenue $499,000,000, up 15% over last year.
GAAP Net Income $163,000,000, up 25% from the prior year.
GAAP Earnings Per Share $6.59, up 28% from the prior year.
Non-GAAP Net Income $193,000,000, up 25% from the prior year.
Non-GAAP Earnings Per Share $7.81, up 27% from the prior year.
Free Cash Flow $65,000,000, a 6% increase from the prior year.
Total Free Cash Flow (last four quarters) $677,000,000, an increase of 45% over the trailing twelve month period ending 03/31/2024.
Scores Segment Revenue $297,000,000, up 25% from the prior year.
B2B Revenue Up 31% versus the prior year, primarily driven by mortgage originations revenues.
B2C Revenue Up 6% versus the prior year, primarily driven by revenue from indirect channel partners.
Mortgage Origination Revenue Up 48% versus the prior year, accounting for 54% of B2B revenue and 44% of total Scores revenue.
Auto Origination Revenue Up 16% versus the prior year.
Software Segment Revenue $202,000,000, up 2% from the prior year.
Total Software ARR $715,000,000, a 3% increase over the prior year.
Platform ARR $235,000,000, up 17% versus the prior year.
Non-Platform ARR Declined 3% to $480,000,000 this quarter.
Total NRR 102%, with platform NRR at 110% and non-platform at 96%.
ACV Bookings $21,800,000 compared to $16,800,000 in the prior year.
Operating Expenses $253,000,000, a decrease of 3% from the prior quarter.
Non-GAAP Operating Margin 58%, compared with 53% in the same quarter last year.
Cash and Marketable Investments $192,000,000.
Total Debt $2,530,000,000 with a weighted average interest rate of 5%.
Share Repurchases 112,000 shares at an average price of $18.49 per share.
FICO Score mortgage simulator: Now available for lender use through Exactus, allowing mortgage professionals to leverage insights for smarter decisions.
FICO Score 10T: Strong adoption for non-GSE loans, with lenders receiving it for free to evaluate advantages before full utilization.
Kenya specific FICO Score: Announced to empower lenders to serve previously underserved consumers and small enterprises.
B2B revenue growth: Quarter two revenues up 31% driven primarily by mortgage originations.
B2C revenue growth: Quarter two revenues up 6% primarily driven by revenue from indirect channel partners.
Partnership with Fujitsu: To accelerate digital transformation for Japanese financial institutions.
Partnership with Dakado: Integrating FICO platform with Dakado’s health risk quantification engine for personalized insurance products.
Free cash flow: Delivered $65 million in Q2, totaling $677 million over the last four quarters, a 45% increase.
Operating expenses: Total operating expenses decreased by 3% to $253 million this quarter.
Share repurchases: 112,000 shares repurchased at an average price of $18.49 per share.
Focus on innovation: Continued emphasis on financial inclusion and raising awareness of financial literacy.
Land and expand strategy: Driving growth in ARR and NRR through increased customer usage.
FICO World Conference: Upcoming event to showcase innovations and customer success stories.
Macroeconomic Environment: The macroeconomic environment remains fluid, leading to uncertainty in business operations and customer behavior. This uncertainty has caused customers to be conservative in their spending and decision-making.
Competitive Pressures: There is a noted competitive pressure in the software segment, particularly with the growth in usage of CCS (Customer Communication Solutions) being lower than expected, reflecting customer conservatism.
Regulatory Issues: The regulatory environment is evolving post-election, but FICO remains in good standing with regulators and views the current regulatory landscape positively.
Supply Chain Challenges: No specific supply chain challenges were mentioned, but the overall economic volatility may impact supply chain dynamics indirectly.
Economic Factors: Economic volatility is affecting customer outreach programs, leading to a slowdown in CCS usage and potentially impacting revenue growth.
Customer Behavior: There is a noted slowdown in customer decision-making and implementation of new use cases due to macroeconomic factors, although existing customers are not canceling services.
Professional Services Revenue: Professional services revenue has seen a decline, attributed to timing issues and the need for milestones to be met before revenue recognition.
Debt Management: FICO has a significant amount of debt ($2.53 billion) with a weighted average interest rate of 5%, which could pose risks if economic conditions worsen.
Financial Inclusion Initiative: FICO announced a Kenya specific FICO Score in partnership with TransUnion to empower lenders to serve previously underserved consumers and small enterprises.
Innovation Focus: FICO continues to focus on innovation, including the launch of the FICO Score mortgage simulator and the adoption of FICO Score 10T for non-GSE loans.
Partnership Expansion: FICO partnered with Fujitsu to support digital transformation for Japanese financial institutions and with Dakado to enhance life insurance offerings.
FICO World Conference: The upcoming FICO World Conference will showcase innovations and customer success stories, serving as a key sales pipeline building event.
Fiscal Year 2025 Guidance: FICO reiterated its fiscal year 2025 guidance, maintaining a conservative outlook due to macroeconomic uncertainties.
Revenue Expectations: FICO reported Q2 revenues of $499 million, up 15% year-over-year, and expects free cash flow to accelerate in the second half of the fiscal year.
Operating Margin: Non-GAAP operating margin expanded to 58% for the quarter, up from 53% year-over-year.
Debt Management: FICO has $2.53 billion in total debt, with 51% fixed rate, allowing flexibility to reduce floating rate debt using free cash flow.
Share Repurchase: FICO repurchased 112,000 shares in the second quarter at an average price of $18.49 per share.
The earnings call presents a mixed outlook. Positive elements include a 23% increase in non-GAAP net income, strong ACV bookings, and constructive discussions with FHFA. However, conservative guidance due to macro uncertainties, sequential revenue decline, and lack of clarity on FICO 10T release and pricing strategies temper optimism. The Q&A reveals cautious sentiment, with management avoiding direct answers on key issues. No market cap data prevents precise impact assessment, but overall, the sentiment is neutral with limited short-term catalysts.
The earnings call summary shows strong financial performance with positive adoption of FICO 10 T, new partnerships, and an optimistic fiscal year guidance. The Q&A reveals positive sentiment towards FICO's strategies and market position, despite some unclear responses. The reiterated guidance and free cash flow expectations, along with a strong market share, suggest a positive outlook. The absence of negative trends or significant risks further supports a positive sentiment. Overall, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks.
The earnings call reveals strong financial performance with a 15% revenue increase and optimistic guidance, yet concerns about economic volatility, customer conservatism, and substantial debt persist. The Q&A highlights management's cautious stance on growth and lack of real-time data, which tempers enthusiasm. Although shareholder returns and revenue growth are positive, the mixed signals and economic uncertainties suggest a neutral stock price reaction over the next two weeks.
The earnings call highlights strong financial performance with significant year-over-year growth in revenue, net income, and earnings per share. The positive sentiment is reinforced by a share repurchase plan, indicating confidence in the stock's value. Despite macroeconomic uncertainties and competitive pressures, the company shows resilience with conservative guidance and strategic investments in platform growth. However, concerns about debt and supply chain challenges moderate the outlook slightly. Overall, the positive financial metrics and strategic initiatives outweigh the negative factors, suggesting a positive stock price movement in the coming weeks.
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