10-QPeriod: Q1 FY2023

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2022

Filed January 26, 2023For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported a solid performance for the quarter ended December 31, 2022, with total revenues increasing by 7% year-over-year to $344.9 million. This growth was driven by a 5% increase in the Scores segment and a strong 9% rise in the Software segment's revenue, which includes both on-premises and SaaS offerings. The company also demonstrated robust operating income growth of 21% and a 15% increase in net income, resulting in diluted Earnings Per Share (EPS) of $3.84, up 24% from the prior year period. Key financial metrics highlight the company's positive trajectory. Annual Recurring Revenue (ARR) for the Software segment saw an 11% increase, and the Dollar-Based Net Retention Rate (DBNRR) remained strong at 110%, indicating effective customer retention and expansion. While cash flow from operations decreased compared to the prior year, the company maintains a healthy cash position and ample borrowing capacity. Management expects these resources to be sufficient for operational needs and future growth initiatives.

Financial Highlights

50 data points
Beta

Revenue

$344.87M

77.8% Gross Margin

Net Income

$97.64M

28.3% Net Margin

EPS (Diluted)

$3.84

Total Assets

$1.46B

Cash & Equivalents

$139.86M

Free Cash Flow

$91.59M

Financial Statements
Beta
Revenue$344.87M
Cost of Revenue$76.57M
Gross Profit$268.30M
R&D Expenses$36.63M
SG&A Expenses$93.00M
Operating Expenses$204.53M
Operating Income$140.34M
Interest Expense$22.80M
Net Income$97.64M
EPS (Basic)$3.90
EPS (Diluted)$3.84
Shares Outstanding (Basic)25.05M
Shares Outstanding (Diluted)25.44M

Key Highlights

  • 1Total revenue increased by 7% year-over-year to $344.9 million in Q4 2022.
  • 2Software segment revenue grew by 9%, with on-premises and SaaS software revenue up 14%.
  • 3Scores segment revenue increased by 5%, driven by business-to-business scores.
  • 4Operating income rose by 21% to $140.3 million, reflecting strong revenue growth and improved operating expense management.
  • 5Diluted EPS increased by 24% to $3.84.
  • 6Annual Recurring Revenue (ARR) for the Software segment grew by 11% year-over-year.
  • 7Dollar-Based Net Retention Rate (DBNRR) for the Software segment remained healthy at 110%.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the Software segment, specifically from on-premises and SaaS software revenue which rose by 14%. The Scores segment also contributed positively with a 5% increase, largely due to business-to-business scores.

Operating expenses increased by approximately 1% year-over-year, but as a percentage of revenue, they decreased from 64% to 59%. This improvement was due to a decrease in Selling, General & Administrative (SG&A) expenses and Research & Development (R&D) expenses, partially offset by an increase in Cost of Revenues.

FICO maintains a strong liquidity position with $139.9 million in cash and cash equivalents as of December 31, 2022. Coupled with its $600 million revolving line of credit, the company expects to fund its working capital requirements and future growth initiatives for the foreseeable future.

Total debt remained stable at approximately $1.9 billion as of December 31, 2022. The company's financing activities showed a decrease in net cash used compared to the prior year, primarily due to significantly lower common stock repurchases and reduced net payments on its revolving line of credit and term loan.