FICO - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Fair Isaac Second Quarter Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Singleton. Please go ahead.

Dave Singleton

you FICO's thank call. quarter and afternoon, for second attending earnings Good CFO, issued Dave Investor financial CEO, by our of Vice results Will Weber. Today, and and I'm prior President today compared Relations, to Singleton, year. that press a release I'm the joined Lansing; Steve describes we our the business. Certain discuss are On an run the understanding also comparison Securities statements in the presentation results Private the this made this under Act call, management prior Reform with forward-looking of rate in will of quarter facilitate Litigation of to XXXX. portion and Those many and that involve the results and SEC, statements of actual contained the Statements to is materially. Information risks company's such risks uncertainties these filings. in could the with Factors particularly concerning cause filings in differ Risk uncertainties Forward-Looking from website certain the from also Copies or Investor call from regarding include Relations statements are available the measures. FICO team. This will financial SEC, non-GAAP our release for measures each G the Please Regulation schedule and to most the to these today issued of GAAP comparable company's refer measure. of reconciliation non-GAAP earnings a financial The and Regulation of our replay on call CEO, page this a Relations at at be release company's will to through April website will are available XXXX. I now schedule webcast turn website SEC's Investor or the the fico.com of available sec.gov. And XX, over on G the earnings the Will Lansing.

William Lansing

some with website, again and resiliency demonstrating posted delivered in second call. In during in full this for year. earnings I'll we quarter the of solid We the Scores referencing presentation highlights both and the Dave, results our we'll quarter's and guidance results, increased today. Today, growth section joining Software. everyone, thanks, of about Relations talk for our Thanks, business our our slides be strong fiscal our us for Investor that financial

second basis, non-GAAP quarter, XX%. net XX%, over net half million GAAP per highlights, million delivered up We in As the fiscal $XXX earnings of share, We earnings from quarter shown reported our last with of share, revenues million, up up the XX% the income Page million and first $XXX of of we free GAAP of XX% $XXX $X.XX per 'XX. QX cash financial year. the was X in on delivered $XX $XXX delivered million QX quarter and income the respectively. We second a of year. prior $X.XX flow of in On up XX%

$X,XXX capital to In return to QX, at shareholders shares continue buybacks. XXX,XXX We of we through per our an average repurchased share. price

million our authorization. have remaining on repurchase Board We $XXX

second revenues Scores In year. Now current XX% quarter in Page versus versus XX% up on our the million, were were of prior $XXX segment, quarter prior our presentation, year. the the X the up revenues BXB,

side, the were down BXC the On quarter year. versus the revenues X% current prior

originations for versus BXB mortgage X%, card, while Mortgage and revenues Scores originations of quarter of and X% revenues prior Auto total revenue. the other versus prior XX% were XX% revenue credit the personal year. were up Second accounted year. revenues origination XX% down originations revenue were down loan

mortgage year, nonconforming of T T. QX adoption software, originations signed XXXX, servicing and revenue, will on billion in the for out mortgage on-premises XX portfolio X% in SaaS by mortgages time business, by million with up offset the and in decline services. a $XXX based clients We the $XXX drive for driven we conforming FICO rolled annualized FICO T line partially last to $XXX our XX be strong Score delivered eligible over growth for in FHFA. In for XX continue professional in FICO about billion Score up Software mortgages. Since from have

customer expand usage. our through driven increased to ARR We in growth land-and-expand by strong continue with drive NRR and strategy,

was XXX%. the total growing and for quarter NRR growing XX% Page was ARR NRR and X%. Total As platform non-platform with ARR ARR Platform shown X, up XXX%, NRR on X, was was Page shown non-platform XX%, XXX%. on

Our total million. $XX were the for quarter bookings ACV

Our strong, offerings. with especially platform pipeline remains

we XXX companies prospective Steve power World, about FICO through innovations event open market and responded reducing turn collaborative outcomes. demand platform. Current API business representing take open from platform globe we innovation The FICO included from FICO year an decisions together these customers of to future profits, employee and We of -- the environment discuss event to around hosted FICO than customers I talk XX last I'd announced a framework, acquisition [ with cases creating transparency increased more improved customer the customers to reduced of World it to financial deployed countries. about last our improved Through brought the variety Together, in benefits real at detail, customers World talk product several over foster like moments week. FICO into FICO demonstrations Before to and FICO the and be scale more to the offerings real-time by of X,XXX use platform. At experienced marketplace ecosystem benefits X-day explained that the efficiency. the center, innovations. costs, few retention, the and using ] new making can growth attendees, in a examples a silos of composability.

our presentations of technology. I'll but the for of Steve innovative our all of understand for the from talk view details. to to further year, World the me excitement it increased available and in let better YouTube demonstrations outlook our first, will the balance to channel. the FICO I'd this our Some around including coming be you turn on customers' content weeks guidance, about encourage

Steven Weber

Will, Thanks, everyone. good and afternoon,

increase were $XXX revenues with revenues. were $XXX prior the year. Scores quarter mortgage total up of XXXX. mentioned, segment BXB good of million, Will from million, the QX up XX% As we revenues primarily for driven had very over by another an of XX% XX%, quarter originations revenue

prior our revenues in Our due business. year BXC the down volume were versus to myFICO.com X% declines

revenues declined. second On-premises services million, professional X% and up $XXX in SaaS QX year-over-year, revenues the grew Software revenue quarter while versus software were XXXX.

Americas Latin America were and America our of XX% combination company regions. total region, our of quarter, is This North derived a from revenues which

region EMEA XX% revenues, Asia Pacific of region and X%. the delivered generated Our

ARR total at total ARR software increase XX% for XX% Our while XXXX. $XXX in was year, our year. the and $XXX this a million prior X% ARR, time topped Platform this million the versus million, XX% first grew nonplatform of of year ARR of represented $XXX the XX% the QX ARR prior total Platform to QX up from grew $XXX over quarter. million

very Our continues platform be land-and-expand to strategy successful.

XXX% and increased CPI in by retention increased driven was cases and driven usage. net the XXX%. by NRR and was Our our new a dollar-based increases. Platform while Platform NRR use was XXX%. of Non-platform price was NRR nonplatform combination quarter rate usage by customers' was

bookings $XX.X were ACV quarter the software Our for million.

reminder, a Software exclude professional the sales only services. bookings ACV As include annual of value and

Turning to expenses.

$XXX million the total expenses $XXX prior this quarter million Our were in versus year. operating

are increase Our the prior quarter. current a expenses over X%

modest FICO we of incremental relatively indicated quarter, maintained on our and investment built As last guidance. we is the platform, accelerate to that into focus development and investments

for Our year's XXX was income and point non-GAAP represents prior as the shown the basis increase operating quarter million, a was in same last from margin, the from XX% our quarter. quarter this quarter, up schedule, net G $XXX that XX% Reg year. GAAP

tax before income was rate rate is in compared prior $XX.X that the year XX% a other quarter. reminder, for year. a rate The $XXX quarter, XX%. XXXX items quarter free million [ Our excess is flow effective from XX% $XXX prior investments. non-GAAP decrease to effective XX-month around up the expected quarter. The expected cash in And we the to our were believe year's from the net $XXX next We our was was as had end the net tax was fiscal $XXX be XX%. tax ] for be million do tax recognized. Free million, quarter, is the to to quarter cash cash tax rate benefit in prior around and recurring the million flow level discrete flow while any free -- for recurring marketable the XX%, expect and trailing the We cash in the of the quarters. At X accelerate QX XXX% million

at our quarter is total X.X%. was XX% Our end rate. with debt of [ average fixed weighted $X.XX ] total billion Currently, of interest debt rate a

rate in debt at debt the time, free giving to cash to flow any floating periods. Our balances us reduce use rate floating is future prepayable flexibility outstanding

year of return Board an average in on of I'll rest the still of remaining share. $XXX had authorization. And second price $X,XXX And the turn to at year the quarter, per the full shares back Will million XXX,XXX information with quarter it give did guidance. at on of thoughts increase back the the that, for we in terms In buy we to end the capital, on of the our and his

William Lansing

Thank you, Steve.

environment Our growth as in strategy an volumes the lower. strong environment. macroeconomic We're despite consistent Scores even business, our rate uncertain has driven remains current experiencing

platform. cases is particularly This and invest Throughout see our we customer use as continue business, FICO growing expanded adoption in innovation. to evident we of

the customers revenue solutions that back to with delighted in raising $XX.XX. raising is that our to net income We're per composable fiscal optimize their expected now million, to full share share turn are customers of guidance $XX.XX, earnings be Q&A non-GAAP GAAP Non-GAAP earnings we're billion. share report with to second data-driven to to as $XXX guidance year. to session. year now pleased that, income is net $XX.XX. With our per executed call are be we today, expected real with to Our be million, time. I'm full the enter half able of interactions through end of I'll $X.XX earnings per our year the GAAP Dave open of non-GAAP $XXX

Dave Singleton

our Will. questions. Operator, lines. the now This prepared please to take concludes open we're Thanks, ready remarks, and

Operator

from comes question first Patnaik Our Instructions] with Barclays. [Operator Manav

Manav Patnaik

Clearly, But World second a us your understand the Software side. or segment platform I'll you both Maybe of appreciate just help first, comments, and we the Will. bullish. FICO pretty are start in with quarter were row just the at on can deceleration and

last in was think said some quarter, or there movement cetera. the I timing, you et bookings

of if on? more new us So help any there there's something Just help Is be would level the just XX% now? going appreciated. that

William Lansing

Yes, absolutely.

we slowed sustainable reasonable know, growth had for and the as the in of in to had quarters we XXs. and I that's then now many, we're future. and you XXs think level foreseeable So the over platform, And the many XX% a

it or we'd anything any gets think always anticipated that's think because caused number seeing concern bigger, level not for all I inevitable. And as I really just We're of is. that slowing that's alarm. kind was some that of

use bigger don't pointing they've really cases expanding anything there's the is it's the second timing in, than deals, the significant. but Our a probably platform first half. once platform. buying the worth of the the always bit I got issues various year that customers guess around little out of They're think are I half

more year. to there's so come this And

Steven Weber

comp I a we just And had this Manav, really would quarter difficult say too.

Second grew XX%. quarter last platform year, the

of number. than quarter. off growing up step year So big XX% pretty more the a a in big we're was It last second

Manav Patnaik

the like on think Steve, volumes origination one on the just maybe And then the maybe moving how your then just the or And as quarter pieces mortgage versus well, what about helpful. this guidance you Scores, raise, in when there, the That's it. pieces were moving there Got Okay. side expectations? did please? come

Steven Weber

not Yes. about we're cuts pretty better it's I think mean, conservative. We mean guide. anticipating banking people when and we the soon. that -- how guidance I talking don't I year, we I think know weren't last we're that. in even we year, X We're rate you gave at anytime point getting

depend ] such it's we is at better thought. ] look things to we in a than that to If us the our and year. obviously, a [ the going mortgage, do being get the because higher way are but that that or [ it's they expect fiscal big of anybody the piece longer don't to on for obviously, -- So be guidance great, rates hard

of So we that's that. kind look how at

we on come enjoy but do benefit, time we'll a line down, So to they don't that put when try that.

Operator

Our with comes from Deutsche question Alwy Faiza Bank. next

Faiza Alwy

wanted follow mortgage. I on up So to

about years. lot about some pricing from that some plan are the have your strategic how other And that? creation considering last of you taken noise plan as factors You've what you value the know you obviously here. pricing? successfully And long-term a bodies. think And on long-term regulators, of you're of think couple been strategic a there's of curious I I'm

William Lansing

past, XX we've frozen from we're up as the of catching pricing. in discussed Well, years

way so gap criticism, think And relative in space you're about in noise, putting it about really price value this charge. The we our The about the once provide a a way increases the matter is what is that we through noise to think our is to close transparency because right, there of on we is every while, price friend. increases. trying we

of And the such we interested been so and part what increasingly is exactly to overall have our willing share small bundle. because a pricing it's

or regulators important associated in consumer Congress score, understand concern, it's FICO about bundle single-digit for it's third-party dollars level So the to whether talking everyone or the expense groups if about cost that of the that a from we're mortgage a is $X,XXX. about with

point between think we gap reside. transparency we in the bundle it. We and gigantic think So charge And the it's we that's which that, is do -- out what friend. our we way the to

Faiza Alwy

just and of for pricing? then you're follow here? terms the auto macro originations. on talk if the you maybe And adjusted environment card about to And like? Great. what's can versus your other what environment the volumes overall seeing given Sort on in Maybe of side expectations up volumes just you've

William Lansing

don't know I really adjusted we've our that expectations.

a with of did of seeing the kind I think function and what we're in that line environment. what it is macro we is expect

any and auto the I it's little card other. and we of down surprise environment. more As credit out, pointed But in little bit think in a kind don't given macro bit we're a

Operator

line comes question with the of next Jefferies. Surinder Thind from Our

Surinder Thind

to kind how there you has like more that client and specifically, should the we an macro I'd you've much to quite bookings. the of slowdown. conversations about been attribute obviously, think Software business the revisit positive, overall been but because just having, When

commentary not is -- So related to macro slowdown is the the any extent? that earlier you

William Lansing

put because we competition. longer. projects little seeing not taking some on environment So losses What we're deferred or are is I is think seeing to to that it's the fair of a explanation what bit macro

think that And fair so to it's attribute the of I macro environment. some to very

Surinder Thind

pricing, how to this mostly you think CPI, the should Or how turning provide? does should is mentioned like When work can then it pricing about other how color versus I just growth Or within but Is volumes that's continue? you just think we number, it Falcon? about any think Is CPI And here? it. and piece. Got right that? that you nonplatform guess, I the

William Lansing

know, and the nonplatform embedded, renew. business renew deeply as our yet we're mature, and customers and very prefer So renew you often is and to

cycle with of And software. our so software a licensed typically with and there's our nonplatform associated multiple legacy and renewals

pricing years. -- and to is same will relationship limits on philosophy have the there. are Our These platform the from with not who next buying customers us the customers for a the XX XX push customers that are are or

keeping we're done really what of And and the prices We product so adding harvesting there really and current. the pushing cover to. features to our price cybersecurity costs about it's not But of intend gouging. raise and not don't and be on limits functionality and could

Operator

Our Needham. question Peterson the line comes next from Kyle of with

Kyle Peterson

about just accelerate given over few in that quarters? on quarter bought I free I wanted want to shares some to of bit year? a thinking start on you've comments more and a how progresses. the on pullback your flow capital also return. Obviously, pace it next looks back are you And quarter. little your think like market you past just the of back buybacks of seen such. in get we Obviously, How half potential the guys first of a then for the guys the to the the than cash opinion should of year bit as about the

William Lansing

it our don't our to We would on as free have committed continue buyback as remain I change. cash ever And to And spend flow free and year. in we least is flow expect often at intent excess to every buyback cash our that of been.

have that guess increased the profitable. earnings up. more in of a gone bit bonus that's of fullness see happy being our has leverage buyback. slipped you'll in a reflected Our as And time, I And

Kyle Peterson

margin. past I kind forward guess, to million it services sense I below your in of $XX that was it, That dragged off business, is a you quarter that it. But [indiscernible]? bit this are makes a of to it's want And onetime good piece range guys lower this, moving call given on that falling bit. to follow-up, kind sense, $XX that of just is selling? professional revenue the a of anything that there million get just quarter, the I kind mix down is business guess as a use helpful. Or of the guess a to and I Got that's the

William Lansing

reasonable software we're company, services, anticipate think professional I a our a first not foremost, We it's we're company. services going love professional yet a and forward. range and to

And to keep imagine to enough quality and with provide of to much bringing also more will our to is the don't PS than have partners that out shrink manage PS partners so from goal delighted our I installation our has. that already happy. We're services installs it professional work. customers some do we're and us, do

of close kind that be going As we're hard you quite level imagine And it base -- at a down below. we're to know, bit. to pretty a it's think I probably would come

Operator

question next with comes RBC. Ashish line from Our of Sabadra the

Ashish Sabadra

just expenses in of I was the on expense the there, year-on-year wondering rest sequential we what trajectory. year? had for question both a -- expect of if either terms should I quick or you in the growth

Steven Weber

Yes.

what we FICO had we quarter. ] had So said World this -- we [

significant So -- that's a there's expense for us. pretty a

QX an spending quarter due expect significant don't relatively associated And basically bit in by FICO be that maybe to in for see rest bit. with you'll held So that. the our a it's down to little uptick Really, or of even we the increase flat the being fourth any World the probably year. a would quarter. But little this expenses then that's

Ashish Sabadra

revenue of color? de-emphasis we maybe And just going from Software of the a color. that why that reasons about helpful there, on-prem has perspective, think that's software, How piece Any That's muted. been should modeling maybe one again, the the the forward?

Steven Weber

software? About the on-prem

Ashish Sabadra

Yes.

Steven Weber

sell we'll expect it So there. we're really would that I cloud-first, focused But it to But the the customers way our cloud. we're right? that to -- focused shrink either to it's the if I are on-prem, because going deeply So in take of those a mean, run to cloud. we not it want are embedded, lot to lot, and a probably to not to probably grow a is it's going lot piece going years move but them on-prem

Operator

Jeff comes Baird. question with from next Meuler Our

Jeffrey Meuler

So I want loan and card other X%. p to go origination revenue back to down the

majority cards. I that think the is of

the based positive card but I are much, to line, that pricing love like So if just reported you... far, that upon bureaus is volumes thus so, down that contributor seem doesn't a have and it that

Steven Weber

apples It's oranges. little and a

and in just the this that I in because our So is we account is lot piece. management. prescreen down much originations of a have card not ] mean the total [

down not subset are scores the low the So this very in it. pricing that. origination There's just of -- is

probably take consideration, actually across bureau compare that of you what to put bureau when board it's card, it's like into So what of think our banks a subset all have. subset a has out. But numbers the we I of hard has the different things every

So there things could banks. be of different a at happening different lot

So this piece. is just on the originations

Jeffrey Meuler

Okay. case. through forget of just how -- use single a out the And expansion a many and And on at [indiscernible] typically talked what their word of how about like broadening kind [ year those, World, FICO talk platform like case the exact ] them forward and then within enterprise typical have use bit I clients takes? then the them your for platform of but is signed many ], maybe path last how clients, of long [ you it

William Lansing

financial globally. XXX more you case, And of in So on of a count it, first their than maybe depending little that. or use on about bit are say, so how XX% institutions top that, I'd the we're XXX

Jeffrey Meuler

year? if those just of expansion can And of like many how about the in you the just landed kind talk you like last path. And with

William Lansing

path to of the very there's would use is eventually in year. to I is move them last landed most case say cases. the -- single-use typical multiple mean the I have

recent. that the are typically And still one ones on most are so the

Operator

Tong Our next Instructions] question comes George Sachs. from with Goldman [Operator

Keen Fai Tong

are gap the can you with What than gap as in and pace to from extent years autos up XX And the frozen same autos what closing what with time? some you're pricing the catching you're Scores, currently. at quickly considerations? the more of over mortgages In cards and charge. gap of with close close mortgage the cards the To pricing

William Lansing

move every CPI scores the bottom particular elasticity score. past, it scores and than for the thinking Well, the take through entire and move about is that, should top portfolio they to talked not we've we as should what of year, and kind where prices that in that. evaluate more a the than by we of from And demand where more

going prices never same I see would you're to expect so the all for raise And always. to scores. in amount us across variation the portfolio

continue could to you different. to expect yes, So them be

Keen Fai Tong

you Got from much That's platform from Okay. both that respect then XX% with that versus ARR growth helpful. you new existing from in land growth of coming business, it. And down, saw and break is to Can a penetration expand. customers? Software quarter how the business wins wallet the

Steven Weber

the versus to hard I of you bit detail do ARR to it it's kind don't have but NRR, that, mean can versus the looking use about a usage. Yes, into we George. talk the little back by cases at

Keen Fai Tong

say I more guess you you're in land mode maybe then qualitatively, would mode? or expand

Steven Weber

lot Well, -- can business they But it's of it's as to of a -- we lot to find much times. cases easier I I we're Once use it's their lot in, a own as mean, trying land expand. a mean it get in.

out lot use in of and a from amount, coming because expanding cases coming a our growth a initial of small. lot expansion They're really that. of small So very they're are at the is

William Lansing

question. And you're the right on

it's or that's land after that's inevitable, expand think that, today anticipated, coming. I sooner tipping at next the point whether yet. or I think quarter will or that's quite we're quarter don't the later, exceed

but expand, sure. I not I'm exceeds think probably land still

Operator

showing I'm Singleton like Dave I back remarks. you. for questions would further turn at closing this it time. to Thank no now to

Dave Singleton

Did for in, just be Simon X the seconds. you in check more might a want the just time, he queue to question, in last and popped one

Operator

with Atlantic Simon from [indiscernible] ]. question Clinch We do have a [

Unknown Analyst

ask to a couple questions. of wanted I

both all, and So think how about rates should platform the nonplatform? Software for sustainable retention I on the side, of first longer-term

Steven Weber

Yes.

] at the at some platform. are retention to probably to dip below rate nonplatform shift some to is on the XXX% point. [ legacy These the point products net going over So that going are

probably a just slightly we we'll above The it been long at there below as strong it. some dip very it's rate for point. net probably but reported XXX%, could running while, been the and XXX% retention on be platform, that's So as

quarter-to-quarter, there's obviously, vary, trend no it. and can it real to So

You've has some continually other ]. of plus [ been high platform, but in [ ] as fail, almost following the as they as first we year. more been But all it's low quarters as see that the year customers seen $XXX the do quarters, on use the XXX in ], it [ previous the than used without

there's to a So on quite that. We expand lot room that's think still while. a of going to last for

Unknown Analyst

Okay. mean, sort reason. as key thinking managed growth when do And Great. about in kind durable that business? we this And to just business just you're at? this what a looking how with extrapolate of then. rapidly expense decade, the thinking expense are next grow you've growth areas investment the the to follow-up I pretty of we're over minimal I'm thinking

William Lansing

The kind I wrong the of the word. key expense, I would, would say is growth, probably growth

channel. where spending we that with expense go And if rates standpoint that we money our over the nascent time. distribution we're house. And side lot distribution the the partner know, very anything, they'll and think about reasonably have ecosystem and as places I you kind down we R&D a on product, I are happy that we have the think limited because of the of marketplace the on But think indirect and direct distribution, have. broadening also we're a an then have to from

in sales indirect and direct both on investment years. more coming be will there So

Operator

I'll Dave no back closing. Thank showing I'm to you. it for Singleton at turn further this questions now time. And

Dave Singleton

another everyone, to need great That's about Thanks, the for I questions, you. we Thank great and you. had say. Thank all quarter.

Operator

call. concludes participating. Thank for you This conference today's

You may now disconnect.

Fair Isaac (FICO) 25 Apr 242024 Q2 Earnings call transcript