FICO Fair Isaac Inc

Revenue of $448 million vs. $399 million in prior year

FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its third fiscal quarter ended June 30, 2024.

Third Quarter Fiscal 2024 GAAP Results

Net income for the quarter totaled $126.3 million, or $5.05 per share, versus $128.8 million, or $5.08 per share, in the prior year period. The third quarter in Fiscal 2023 included a large one-time favorable expense adjustment.

Net cash provided by operating activities for the quarter was $213.3 million versus $122.6 million in the prior year period.

Third Quarter Fiscal 2024 Non-GAAP Results

Non-GAAP Net Income for the quarter was $156.4 million versus $143.4 million in the prior year period. Non-GAAP EPS for the quarter was $6.25 versus $5.66 in the prior year period. Free cash flow was $205.7 million for the current quarter versus $121.8 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.

Third Quarter Fiscal 2024 GAAP Revenue

The company reported revenues of $447.8 million for the quarter as compared to $398.7 million reported in the prior year period.

“We delivered significant growth throughout the business, with strong adoption of FICO 10 T and FICO Platform,” said Will Lansing, chief executive officer. “We are pleased to announce that we are raising our full year guidance.”

Revenues for the third 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 $241.4 million in the third quarter, compared to $201.8 million in the prior year period, an increase of 20%. B2B revenue increased 27%, driven largely by higher unit prices, which were partially offset by a decrease in mortgage origination volumes. B2C revenue decreased 2% 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 $206.4 million in the third quarter, compared to $196.9 million in the prior year period, an increase of 5%, mainly due to increased recurring revenue, partially offset by a decrease in professional services. Software Annual Recurring Revenue was up 10% year-over-year, consisting of 31% platform ARR growth and 3% non-platform growth. Software Dollar-Based Net Retention Rate was 108% at June 30, 2024, with platform software at 124% and non-platform software at 101%.

Outlook

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

 

Previous 2024 Guidance

Updated 2024 Guidance

Revenues

$1.690 billion

$1.700 billion

GAAP Net Income

$495 million

$500 million

GAAP EPS

$19.70

$19.90

Non-GAAP Net Income

$573 million

$582 million

Non-GAAP EPS

$22.80

$23.16

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 July 31, 2024 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its third 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 July 31, 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)

 

 

June 30, 2024

 

September 30, 2023

 

(In thousands)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

156,043

 

 

$

136,778

 

Accounts receivable, net

 

437,637

 

 

 

387,947

 

Prepaid expenses and other current assets

 

37,455

 

 

 

31,723

 

Total current assets

 

631,135

 

 

 

556,448

 

Marketable securities and investments

 

44,034

 

 

 

34,237

 

Property and equipment, net

 

34,128

 

 

 

10,966

 

Operating lease right-of-use assets

 

26,087

 

 

 

25,703

 

Goodwill and intangible assets, net

 

776,806

 

 

 

774,244

 

Other assets

 

196,641

 

 

 

173,683

 

Total assets

$

1,708,831

 

 

$

1,575,281

 

Liabilities and Stockholders’ Deficit

 

 

 

Current liabilities:

 

 

 

Accounts payable and other accrued liabilities

$

80,226

 

 

$

78,487

 

Accrued compensation and employee benefits

 

92,731

 

 

 

102,471

 

Deferred revenue

 

149,259

 

 

 

136,730

 

Current maturities on debt

 

15,000

 

 

 

50,000

 

Total current liabilities

 

337,216

 

 

 

367,688

 

Long-term debt

 

2,104,943

 

 

 

1,811,658

 

Operating lease liabilities

 

18,420

 

 

 

23,903

 

Other liabilities

 

77,558

 

 

 

60,022

 

Total liabilities

 

2,538,137

 

 

 

2,263,271

 

 

 

 

 

Stockholders’ deficit

 

(829,306

)

 

 

(687,990

)

Total liabilities and stockholders’ deficit

$

1,708,831

 

 

$

1,575,281

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

Quarter Ended June 30,

 

Nine Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

 

(In thousands, except per share data)

Revenues:

 

 

 

 

 

 

 

On-premises and SaaS software

$

183,785

 

 

$

172,059

 

 

$

529,633

 

 

$

471,203

 

Professional services

 

22,614

 

 

 

24,851

 

 

 

63,637

 

 

 

74,348

 

Scores

 

241,450

 

 

 

201,778

 

 

 

670,447

 

 

 

578,273

 

Total revenues

 

447,849

 

 

 

398,688

 

 

 

1,263,717

 

 

 

1,123,824

 

Operating expenses:

 

 

 

 

 

 

 

Cost of revenues

 

88,225

 

 

 

71,846

 

 

 

258,632

 

 

 

228,221

 

Research and development

 

44,217

 

 

 

41,455

 

 

 

127,732

 

 

 

118,354

 

Selling, general and administrative

 

124,881

 

 

 

108,081

 

 

 

340,077

 

 

 

301,234

 

Amortization of intangible assets

 

275

 

 

 

275

 

 

 

825

 

 

 

825

 

Gain on product line asset sale

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,941

)

Total operating expenses

 

257,598

 

 

 

221,657

 

 

 

727,266

 

 

 

646,693

 

Operating income

 

190,251

 

 

 

177,031

 

 

 

536,451

 

 

 

477,131

 

Other expense, net

 

(22,933

)

 

 

(19,244

)

 

 

(65,809

)

 

 

(63,972

)

Income before income taxes

 

167,318

 

 

 

157,787

 

 

 

470,642

 

 

 

413,159

 

Provision for income taxes

 

41,062

 

 

 

29,029

 

 

 

93,522

 

 

 

85,208

 

Net income

$

126,256

 

 

$

128,758

 

 

$

377,120

 

 

$

327,951

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

5.12

 

 

$

5.16

 

 

$

15.24

 

 

$

13.10

 

Diluted

$

5.05

 

 

$

5.08

 

 

$

15.01

 

 

$

12.91

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

Basic

 

24,646

 

 

 

24,959

 

 

 

24,743

 

 

 

25,040

 

Diluted

 

25,015

 

 

 

25,337

 

 

 

25,129

 

 

 

25,399

 

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended June 30,

 

2024

 

2023

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$

377,120

 

 

$

327,951

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

10,012

 

 

 

11,642

 

Share-based compensation

 

109,457

 

 

 

89,750

 

Changes in operating assets and liabilities

 

(74,700

)

 

 

(93,763

)

Gain on product line asset sale

 

—

 

 

 

(1,941

)

Other, net

 

(15,403

)

 

 

(28,773

)

Net cash provided by operating activities

 

406,486

 

 

 

304,866

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(7,130

)

 

 

(3,169

)

Capitalized internal-use software costs

 

(11,298

)

 

 

—

 

Net activity from marketable securities

 

(2,006

)

 

 

(3,679

)

Cash transferred, net of proceeds, from product line asset sale

 

—

 

 

 

(6,126

)

Net cash used in investing activities

 

(20,434

)

 

 

(12,974

)

Cash flows from financing activities:

 

 

 

Proceeds from revolving line of credit and term loans

 

795,000

 

 

 

339,000

 

Payments on revolving line of credit and term loans

 

(538,250

)

 

 

(265,250

)

Proceeds from issuance of treasury stock under employee stock plans

 

15,680

 

 

 

15,615

 

Taxes paid related to net share settlement of equity awards

 

(137,223

)

 

 

(75,443

)

Repurchases of common stock

 

(498,171

)

 

 

(285,158

)

Other, net

 

(2,017

)

 

 

—

 

Net cash used in financing activities

 

(364,981

)

 

 

(271,236

)

Effect of exchange rate changes on cash

 

(1,806

)

 

 

9,164

 

Increase in cash and cash equivalents

 

19,265

 

 

 

29,820

 

Cash and cash equivalents, beginning of period

 

136,778

 

 

 

133,202

 

Cash and cash equivalents, end of period

$

156,043

 

 

$

163,022

 

FAIR ISAAC CORPORATION

NON-GAAP RESULTS

(Unaudited)

 

 

Quarter Ended June 30,

 

Nine Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

 

(In thousands, except per share data)

GAAP net income

$

126,256

 

 

$

128,758

 

 

$

377,120

 

 

$

327,951

 

Amortization of intangible assets

 

275

 

 

 

275

 

 

 

825

 

 

 

825

 

Gain on product line asset sale

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,941

)

Share-based compensation expense

 

42,435

 

 

 

32,995

 

 

 

109,457

 

 

 

89,750

 

Income tax adjustments

 

(10,939

)

 

 

(8,314

)

 

 

(27,949

)

 

 

(22,046

)

Excess tax benefit

 

(1,636

)

 

 

(818

)

 

 

(27,345

)

 

 

(11,734

)

Adjustment to tax reserves and valuation allowance

 

—

 

 

 

(9,500

)

 

 

—

 

 

 

(9,500

)

Non-GAAP net income

$

156,391

 

 

$

143,396

 

 

$

432,108

 

 

$

373,305

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

$

5.05

 

 

$

5.08

 

 

$

15.01

 

 

$

12.91

 

Amortization of intangible assets

 

0.01

 

 

 

0.01

 

 

 

0.03

 

 

 

0.03

 

Gain on product line asset sale

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.08

)

Share-based compensation expense

 

1.70

 

 

 

1.30

 

 

 

4.36

 

 

 

3.53

 

Income tax adjustments

 

(0.44

)

 

 

(0.33

)

 

 

(1.11

)

 

 

(0.87

)

Excess tax benefit

 

(0.07

)

 

 

(0.03

)

 

 

(1.09

)

 

 

(0.46

)

Adjustment to tax reserves and valuation allowance

 

—

 

 

 

(0.37

)

 

 

—

 

 

 

(0.37

)

Non-GAAP diluted earnings per share

$

6.25

 

 

$

5.66

 

 

$

17.20

 

 

$

14.70

 

 

 

 

 

 

 

 

 

Free cash flow

 

 

 

 

 

 

 

Net cash provided by operating activities

$

213,331

 

 

$

122,623

 

 

$

406,486

 

 

$

304,866

 

Capital expenditures

 

(7,645

)

 

 

(793

)

 

 

(18,428

)

 

 

(3,169

)

Free cash flow

$

205,686

 

 

$

121,830

 

 

$

388,058

 

 

$

301,697

 

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

 

$

495

 

 

$

500

 

Amortization of intangible assets

 

 

1

 

 

 

1

 

Share-based compensation expense

 

 

140

 

 

 

149

 

Income tax adjustments

 

 

(35

)

 

 

(39

)

Excess tax benefit

 

 

(28

)

 

 

(29

)

Non-GAAP net income

 

$

573

 

 

$

582

 

 

 

 

 

 

GAAP diluted earnings per share

 

$

19.70

 

 

$

19.90

 

Amortization of intangible assets

 

 

0.04

 

 

 

0.04

 

Share-based compensation expense

 

 

5.57

 

 

 

5.93

 

Income tax adjustments

 

 

(1.39

)

 

 

(1.55

)

Excess tax benefit

 

 

(1.11

)

 

 

(1.15

)

Non-GAAP diluted earnings per share

 

$

22.80

 

 

$

23.16

 

 

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/20240731354164/en/

Investors/Analysts: Dave Singleton Fair Isaac Corporation (800) 459-7125 investor@fico.com