FRI - FICO Announces Earnings of $5.16 per Share for Second Quarter Fiscal 2024

April, 25 2024 04:15 PM First Trust S&P REIT Index Fund

Revenue of $434 million vs. $380 million in prior year

FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced results for its second fiscal quarter ended March 31, 2024.

Second Quarter Fiscal 2024 GAAP Results

Net income for the quarter totaled $129.8 million, or $5.16 per share, versus $101.6 million, or $4.00 per share, in the prior year period.

Net cash provided by operating activities for the quarter was $71.0 million versus $89.8 million in the prior year period.

Second Quarter Fiscal 2024 Non-GAAP Results

Non-GAAP Net Income for the quarter was $154.5 million versus $121.4 million in the prior year period. Non-GAAP EPS for the quarter was $6.14 versus $4.78 in the prior year period. Free cash flow was $61.6 million for the current quarter versus $88.3 million in the prior year period. The Non-GAAP financial measures are described in the financial table captioned “Non-GAAP Results” and are reconciled to the corresponding GAAP results in the financial tables at the end of this release.

Second Quarter Fiscal 2024 GAAP Revenue

The company reported revenues of $433.8 million for the quarter as compared to $380.3 million reported in the prior year period.

“We delivered a strong second quarter, posting double-digit growth across all our guided metrics,” said Will Lansing, chief executive officer. “We are pleased to announce that we are raising our full year guidance.”

Revenues for the second quarter of fiscal 2024 for the company’s two operating segments were as follows:

Scores revenues, which include the company’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) solutions, were $236.9 million in the second quarter, compared to $198.5 million in the prior year period, an increase of 19%. B2B revenue increased 28%, driven largely by higher unit prices, which were partially offset by a decrease in mortgage origination volumes. B2C revenue decreased 4% from the prior year period due to lower volumes on myFICO.com business.
Software revenues, which include the company’s analytics and digital decisioning technology, were $196.9 million in the second quarter, compared to $181.8 million in the prior year period, an increase of 8%, due to increased recurring revenue, partially offset by a decrease in professional services. Software Annual Recurring Revenue was up 14% year-over-year, consisting of 32% platform ARR growth and 8% non-platform growth. Software Dollar-Based Net Retention Rate was 112% at March 31, 2024, with platform software at 126% and non-platform software at 106%.

Outlook

The company is updating its previously provided guidance for fiscal 2024:

Previous 2024 Guidance

Updated 2024 Guidance

Revenues

$1.675 billion

$1.690 billion

GAAP Net Income

$490 million

$495 million

GAAP EPS

$19.45

$19.70

Non-GAAP Net Income

$566 million

$573 million

Non-GAAP EPS

$22.45

$22.80

The Non-GAAP financial measures are described in the financial table captioned “Reconciliation of Non-GAAP Guidance.”

Company to Host Conference Call

The company will host a webcast on April 25, 2024 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to report its second quarter fiscal 2024 results and provide various strategic and operational updates. The call can be accessed at FICO's web site at www.fico.com/investors . A replay of the webcast will be available at our Past Events page through April 25, 2025.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 215 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail, and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency.

Learn more at http://www.fico.com

Join the conversation at https://twitter.com/fico & http://www.fico.com/en/blogs/

For FICO news and media resources, visit www.fico.com/news

FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.

Statement Concerning Forward-Looking Information

Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Software segment’s business strategy, the Company’s ability to continue to develop new and enhanced products and services, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, disruptions and uncertainties with respect to global economic conditions as well as in industries and markets of the Company and its customers, the Company’s ability to keep up with rapidly changing technologies, its ability to recruit and retain qualified personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to protect such data, the failure to realize the anticipated benefits of any acquisitions, or divestitures, and material adverse developments in global economic conditions or the occurrence of certain other world events such as geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, the continuing effects of the COVID-19 pandemic, an actual recession or fears of a recession, trade policies and tariffs, and political and governmental instability. Additional information on these risks and uncertainties and other factors that could affect FICO's future results are described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2023 and its subsequent filings with the SEC. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. FICO disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)





March 31, 2024

September 30, 2023

(In thousands)
Assets



Current assets:



Cash and cash equivalents
$
135,667


$
136,778

Accounts receivable, net

469,025



387,947

Prepaid expenses and other current assets

36,780



31,723

Total current assets

641,472



556,448

Marketable securities and investments

42,659



34,237

Property and equipment, net

27,224



10,966

Operating lease right-of-use assets

28,283



25,703

Goodwill and intangible assets, net

776,743



774,244

Other assets

186,736



173,683

Total assets
$
1,703,117


$
1,575,281

Liabilities and Stockholders’ Deficit



Current liabilities:



Accounts payable and other accrued liabilities
$
87,771


$
78,487

Accrued compensation and employee benefits

68,805



102,471

Deferred revenue

143,544



136,730

Current maturities on debt

15,000



50,000

Total current liabilities

315,120



367,688

Long-term debt

2,028,652



1,811,658

Operating lease liabilities

20,558



23,903

Other liabilities

74,447



60,022

Total liabilities

2,438,777



2,263,271





Stockholders’ deficit

(735,660
)


(687,990
)
Total liabilities and stockholders’ deficit
$
1,703,117


$
1,575,281

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)





Quarter Ended March 31,

Six Months Ended March 31,


2024



2023



2024



2023


(In thousands, except per share data)
Revenues:







On-premises and SaaS software
$
177,180


$
154,584


$
345,848


$
299,144

Professional services

19,744



27,175



41,023



49,497

Scores

236,885



198,507



428,997



376,495

Total revenues

433,809



380,266



815,868



725,136

Operating expenses:







Cost of revenues

86,946



79,806



170,407



156,375

Research and development

40,880



40,266



83,515



76,899

Selling, general and administrative

110,867



100,158



215,196



193,153

Amortization of intangible assets

275



275



550



550

Gain on product line asset sale

—



—



—



(1,941
)
Total operating expenses

238,968



220,505



469,668



425,036

Operating income

194,841



159,761



346,200



300,100

Other expense, net

(22,107
)


(22,292
)


(42,876
)


(44,728
)
Income before income taxes

172,734



137,469



303,324



255,372

Provision for income taxes

42,935



35,919



52,460



56,179

Net income
$
129,799


$
101,550


$
250,864


$
199,193

Earnings per share:







Basic
$
5.23


$
4.04


$
10.12


$
7.94

Diluted
$
5.16


$
4.00


$
9.96


$
7.83

Shares used in computing earnings per share:







Basic

24,819



25,116



24,791



25,080

Diluted

25,154



25,419



25,186



25,431

FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



Six Months Ended March 31,


2024



2023


(In thousands)
Cash flows from operating activities:



Net income
$
250,864


$
199,193

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

6,178



8,294

Share-based compensation

67,022



56,755

Changes in operating assets and liabilities

(119,159
)


(68,391
)
Gain on product line asset sale

—



(1,941
)
Other, net

(11,750
)


(11,666
)
Net cash provided by operating activities

193,155



182,244

Cash flows from investing activities:



Purchases of property and equipment

(5,403
)


(2,377
)
Capitalized internal-use software costs

(5,380
)


—

Net activity from marketable securities

(1,257
)


(3,384
)
Cash transferred, net of proceeds, from product line asset sale

—



(6,126
)
Net cash used in investing activities

(12,040
)


(11,887
)
Cash flows from financing activities:



Proceeds from revolving line of credit and term loan

255,000



228,000

Payments on revolving line of credit and term loan

(74,500
)


(158,500
)
Proceeds from issuance of treasury stock under employee stock plans

14,937



15,217

Taxes paid related to net share settlement of equity awards

(133,786
)


(73,672
)
Repurchases of common stock

(243,473
)


(184,290
)
Other, net

(1,400
)


—

Net cash used in financing activities

(183,222
)


(173,245
)
Effect of exchange rate changes on cash

996



7,457

Increase (decrease) in cash and cash equivalents

(1,111
)


4,569

Cash and cash equivalents, beginning of period

136,778



133,202

Cash and cash equivalents, end of period
$
135,667


$
137,771

FAIR ISAAC CORPORATION
NON-GAAP RESULTS
(Unaudited)





Quarter Ended March 31,

Six Months Ended March 31,


2024



2023



2024



2023


(In thousands, except per share data)
GAAP net income
$
129,799


$
101,550


$
250,864


$
199,193

Amortization of intangible assets

275



275



550



550

Gain on product line asset sale

—



—



—



(1,941
)
Share-based compensation expense

35,448



27,053



67,022



56,755

Income tax adjustments

(9,096
)


(6,818
)


(17,011
)


(13,732
)
Excess tax benefit

(1,934
)


(612
)


(25,709
)


(10,916
)
Non-GAAP net income
$
154,492


$
121,448


$
275,716


$
229,909









GAAP diluted earnings per share
$
5.16


$
4.00


$
9.96


$
7.83

Amortization of intangible assets

0.01



0.01



0.02



0.02

Gain on product line asset sale

—



—



—



(0.08
)
Share-based compensation expense

1.41



1.06



2.66



2.23

Income tax adjustments

(0.36
)


(0.27
)


(0.68
)


(0.54
)
Excess tax benefit

(0.08
)


(0.02
)


(1.02
)


(0.43
)
Non-GAAP diluted earnings per share
$
6.14


$
4.78


$
10.95


$
9.04









Free cash flow







Net cash provided by operating activities
$
71,035


$
89,803


$
193,155


$
182,244

Capital expenditures

(9,422
)


(1,526
)


(10,783
)


(2,377
)
Free cash flow
$
61,613


$
88,277


$
182,372


$
179,867

















Note: The numbers may not sum to total due to rounding.

About Non-GAAP Financial Measures

To supplement the consolidated GAAP financial statements, the company uses the following non-GAAP financial measures: non-GAAP net income, non-GAAP EPS, and free cash flow. Non-GAAP net income and non-GAAP EPS exclude, to the extent applicable, such items as the impact of amortization expense, share-based compensation expense, restructuring and acquisition-related, excess tax benefit, and adjustment to tax valuation allowance items. Free cash flow excludes capital expenditures. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Management uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of recurring business results including significant non-cash expenses. We believe management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key measures used by management in its financial and operating decision-making.

FAIR ISAAC CORPORATION
RECONCILIATION OF NON-GAAP GUIDANCE
(Unaudited)







Previous Fiscal 2024 Guidance

Updated Fiscal 2024 Guidance


(In millions, except per share data)



GAAP net income

$
490


$
495

Amortization of intangible assets


1



1

Share-based compensation expense


140



140

Income tax adjustments


(35
)


(35
)
Excess tax benefit


(30
)


(28
)
Non-GAAP net income

$
566


$
573






GAAP diluted earnings per share

$
19.45


$
19.70

Amortization of intangible assets


0.04



0.04

Share-based compensation expense


5.55



5.57

Income tax adjustments


(1.40
)


(1.39
)
Excess tax benefit


(1.19
)


(1.11
)
Non-GAAP diluted earnings per share

$
22.45


$
22.80

Note: The numbers may not sum to total due to rounding.

About Non-GAAP Financial Measures

View source version on businesswire.com: https://www.businesswire.com/news/home/20240425737168/en/

Investors/Analysts:
Dave Singleton
Fair Isaac Corporation
(800) 459-7125
investor@fico.com

Company Name:	First Trust S&P REIT Index Fund
Stock Symbol:	FRI
Market:	NYSE

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