10-QPeriod: Q1 FY2024

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2023

Filed January 25, 2024For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported strong financial performance for the quarter ended December 31, 2023. Total revenues increased by 11% year-over-year to $382.1 million, driven by robust growth in both the Scores and Software segments. The Scores segment saw an 8% increase, primarily due to higher business-to-business scores revenue, while the Software segment experienced a significant 14% revenue growth, boosted by on-premises and SaaS software sales, with Annual Recurring Revenue (ARR) growing 18% year-over-year to $687.7 million. Profitability also showed substantial improvement, with net income rising 24% to $121.1 million and diluted Earnings Per Share (EPS) increasing by 25% to $4.80. This growth was supported by effective cost management, as operating expenses increased at a slower pace than revenue. The company generated strong operating cash flow of $122.1 million, demonstrating its ability to fund operations and growth initiatives. Furthermore, FICO announced a new, open-ended $500 million stock repurchase program, signaling confidence in its future prospects and commitment to returning value to shareholders.

Financial Highlights

50 data points
Beta

Revenue

$382.06M

78.2% Gross Margin

Net Income

$121.06M

31.7% Net Margin

EPS (Diluted)

$4.80

Total Assets

$1.59B

Cash & Equivalents

$160.42M

Free Cash Flow

$120.76M

Financial Statements
Beta
Revenue$382.06M
Cost of Revenue$83.46M
Gross Profit$298.60M
R&D Expenses$42.63M
SG&A Expenses$104.33M
Operating Expenses$230.70M
Operating Income$151.36M
Interest Expense$24.16M
Net Income$121.06M
EPS (Basic)$4.89
EPS (Diluted)$4.80
Shares Outstanding (Basic)24.76M
Shares Outstanding (Diluted)25.22M

Key Highlights

  • 1Total revenue increased 11% year-over-year to $382.1 million.
  • 2Net income grew 24% to $121.1 million, with diluted EPS up 25% to $4.80.
  • 3Software segment ARR increased 18% year-over-year to $687.7 million, indicating strong subscription revenue growth.
  • 4Dollar-Based Net Retention Rate (DBNRR) for the Software segment was healthy at 114%, showing effective customer retention and expansion.
  • 5Operating cash flow was robust at $122.1 million, up significantly from the prior year's quarter.
  • 6The company announced a new $500 million stock repurchase program, demonstrating financial strength and shareholder return commitment.
  • 7Goodwill increased slightly to $777.2 million, primarily due to foreign currency translation adjustments.

Frequently Asked Questions

The Software segment's revenue grew by 14% to $189.9 million, primarily driven by a $24.1 million increase in on-premises and SaaS software revenue. This growth was largely attributed to an increase in over-time recognition, fueled by strong SaaS growth.

As of December 31, 2023, FICO had total debt of $1.96 billion, comprising $1.3 billion in Senior Notes and $658 million in revolving line of credit and term loans. The company was in compliance with all financial covenants associated with its debt. The company's strong operating cash flow provides coverage for its debt obligations.

FICO expects its current cash and cash equivalents, available credit lines, and anticipated operating cash flows to be sufficient to meet its working capital requirements for at least the next 12 months and the foreseeable future. The company also has the flexibility to raise additional funds through debt or equity issuance if needed for strategic activities or refinancing.

In January 2024, FICO's Board of Directors approved a new, open-ended stock repurchase program authorizing up to $500.0 million in share repurchases. This program replaced a previous one and underscores the company's confidence in its financial position and its commitment to returning capital to shareholders.