10-QPeriod: Q1 FY2025

FAIR ISAAC CORP Quarterly Report for Q1 Ended Dec 31, 2024

Filed February 4, 2025For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported a strong fiscal second quarter for 2025, demonstrating robust top-line growth and improved profitability. Total revenues increased by 15% year-over-year to $440.0 million, driven significantly by a 23% surge in the Scores segment to $235.7 million, fueled by higher pricing and volume in mortgage originations. The Software segment also showed healthy growth, with on-premises and SaaS software revenue up 10%, contributing to an 8% overall increase in Software segment revenue. This revenue growth translated into substantial bottom-line improvement, with operating income rising 19% to $179.5 million and net income increasing by 26% to $152.5 million. Diluted earnings per share (EPS) saw a notable 28% jump to $6.14. From a financial health perspective, FICO generated strong operating cash flows of $194.0 million, a significant increase from the prior year's quarter, and ended the period with a healthy cash and cash equivalents balance of $184.3 million. The company continued its commitment to returning capital to shareholders, significantly increasing share repurchases to $159.7 million. While total debt increased to $2.4 billion, largely due to increased borrowings under the revolving credit facility, the company remains in compliance with its financial covenants, indicating a stable liquidity position. Overall, the results reflect effective execution across both business segments and strong financial management.

Financial Highlights

50 data points
Beta

Revenue

$439.97M

80.1% Gross Margin

Net Income

$152.53M

34.7% Net Margin

EPS (Diluted)

$6.14

Total Assets

$1.71B

Cash & Equivalents

$184.25M

Free Cash Flow

$193.16M

Financial Statements
Beta
Revenue$439.97M
Cost of Revenue$87.34M
Gross Profit$352.62M
R&D Expenses$45.15M
SG&A Expenses$127.95M
Operating Expenses$260.44M
Operating Income$179.53M
Interest Expense$29.49M
Net Income$152.53M
EPS (Basic)$6.26
EPS (Diluted)$6.14
Shares Outstanding (Basic)24.38M
Shares Outstanding (Diluted)24.83M

Key Highlights

  • 1Total revenues grew 15% year-over-year to $440.0 million.
  • 2Scores segment revenue surged 23% to $235.7 million, driven by business-to-business scores.
  • 3Software segment revenue increased 8% to $204.3 million, with on-premises and SaaS software up 10%.
  • 4Operating income rose 19% to $179.5 million.
  • 5Net income increased 26% to $152.5 million.
  • 6Diluted EPS grew 28% to $6.14.
  • 7Cash flow from operations significantly increased by $71.8 million to $194.0 million.
  • 8Share repurchases accelerated to $159.7 million, up from $71.7 million in the prior year period.

Frequently Asked Questions

Revenue growth was primarily driven by a 23% increase in the Scores segment, fueled by higher unit prices and increased volume in mortgage originations for business-to-business scores. The Software segment also contributed with a 10% rise in on-premises and SaaS software revenue, largely due to a large license renewal and SaaS growth for Platform products.

Profitability saw significant improvement. Operating income increased by 19% to $179.5 million, and net income grew by 26% to $152.5 million. This was supported by strong revenue growth, a decrease in cost of revenues as a percentage of revenue due to higher-margin Scores products and lower-margin professional services, and efficient management of operating expenses.

FICO maintains a strong liquidity position with $184.3 million in cash and cash equivalents as of December 31, 2024. The company expects its cash balances, anticipated operating cash flows, and its $600 million revolving credit facility to be sufficient to meet its working capital needs for the next 12 months and beyond. Total debt stands at $2.4 billion, with increased borrowings under the revolving credit facility, but the company remains in compliance with all financial covenants.

FICO is actively returning capital to shareholders. Share repurchases significantly increased to $159.7 million in the quarter, compared to $71.7 million in the prior year's quarter. This is supported by an open-ended $1.0 billion stock repurchase program authorized in July 2024, indicating a continued commitment to share buybacks.