10-QPeriod: Q3 FY2024

FAIR ISAAC CORP Quarterly Report for Q3 Ended Jun 30, 2024

Filed July 31, 2024For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported a solid fiscal third quarter for 2024, demonstrating robust revenue growth driven by its Scores segment. Total revenues increased by 12% year-over-year for both the quarter and the first nine months, reaching $447.8 million and $1.3 billion, respectively. The Scores segment, in particular, saw a substantial 20% revenue increase in the quarter, highlighting strong demand for its B2B scoring solutions. While the company maintained strong operating income growth, net income and diluted Earnings Per Share (EPS) saw a slight decrease in the current quarter compared to the prior year, though they remain strong for the nine-month period. FICO continues to actively manage its capital structure, significantly increasing its share repurchases during the nine months. The company also secured an additional $450 million term loan, enhancing its liquidity. Management anticipates sufficient resources to fund operations and anticipates continued growth.

Financial Highlights

51 data points
Beta

Revenue

$447.85M

80.3% Gross Margin

Net Income

$126.26M

28.2% Net Margin

EPS (Diluted)

$5.05

Total Assets

$1.71B

Cash & Equivalents

$156.04M

Free Cash Flow

$211.60M

Financial Statements
Beta
Revenue$447.85M
Cost of Revenue$88.22M
Gross Profit$359.62M
R&D Expenses$44.22M
SG&A Expenses$124.88M
Operating Expenses$257.60M
Operating Income$190.25M
Interest Expense$26.87M
Net Income$126.26M
EPS (Basic)$5.12
EPS (Diluted)$5.05
Shares Outstanding (Basic)24.65M
Shares Outstanding (Diluted)25.02M

Key Highlights

  • 1Total revenues grew 12% year-over-year to $447.8 million for the quarter and $1.3 billion for the nine months, driven by both segments.
  • 2The Scores segment revenue surged by 20% year-over-year in the quarter, indicating strong performance in B2B scoring solutions.
  • 3Software segment ARR reached $709.6 million, a 10% increase year-over-year, with a DBNRR of 108%.
  • 4Operating income increased by 7% year-over-year for the quarter and 12% for the nine months, demonstrating operational efficiency.
  • 5Net income decreased slightly by 2% for the quarter but increased by 15% for the nine months, while diluted EPS saw a minor dip of 1% in the quarter and a 16% rise year-to-date.
  • 6Cash flows from operating activities significantly improved, increasing by $101.6 million to $406.5 million for the nine months.
  • 7The company substantially increased share repurchases, spending $506.8 million in the first nine months of 2024, and secured a new $450 million term loan, bolstering its financial flexibility.

Frequently Asked Questions

FICO reported a 12% increase in total revenues for both the quarter ended June 30, 2024 ($447.8 million) and the nine months ended June 30, 2024 ($1.3 billion) compared to the same periods in the prior year. The Scores segment was a key driver of this growth, with a 20% revenue increase in the quarter.

FICO maintains a strong liquidity position with $156.0 million in cash and cash equivalents as of June 30, 2024. The company also has access to a $600 million revolving line of credit. Operating cash flows remain robust, and management expects these resources to be sufficient for its working capital needs and foreseeable future requirements.

FICO's total debt stands at $2.1 billion. The company recently amended its credit agreement to include a new $450 million term loan. FICO has actively repurchased shares, with $506.8 million spent in the first nine months of fiscal 2024, and has approved an open-ended $1.0 billion stock repurchase program, indicating a commitment to returning capital to shareholders.

For the Software segment, Annual Recurring Revenue (ARR) reached $709.6 million as of June 30, 2024, representing a 10% year-over-year increase. The Dollar-Based Net Retention Rate (DBNRR) was 108% as of June 30, 2024, indicating that existing customers are increasing their spending over time. While revenue growth was present, the segment's operating income saw a slight decrease quarter-over-quarter, attributed to strategic shifts and a one-time reimbursement in the prior year.