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Fair Isaac (FICO) Q3 Earnings call transcript Jul 31, 2024

AInvestThursday, Aug 1, 2024 4:24 pm ET
1min read

In the latest FICO earnings call, the company's executives provided insights into their financial performance for the third quarter of 2024 and discussed their outlook for the future. The call, led by CEO Will Lansing and CFO Steve Weber, highlighted the company's strong financial position and strategic growth initiatives.

Financial Highlights

FICO reported a 12% increase in total revenues for the third quarter, reaching $448 million, driven by impressive growth in their ACV bookings and free cash flow. The company's net income decreased slightly year-over-year, but the non-GAAP net income showed a 9% increase. FICO's record free cash flow of $206 million and $551 million over the last 4 quarters underscore the company's financial strength.

Scores Segment

In the Scores segment, FICO achieved significant growth, particularly in mortgage origination revenues, which saw an 80% increase compared to the previous year. The company's focus on driving adoption for FICO Score 10 T for non-GSE mortgages is paying off, with over $126 billion in annualized mortgage originations and about $380 billion in eligible mortgage portfolio servicing already on board. This adoption is expected to continue, as FICO 10 T is being rolled out for conforming mortgages based on the FHFA's implementation timeline.

Software Segment

FICO's software segment also showed impressive growth, with a 5% increase in revenue. This growth is attributed to the expansion of SaaS software, partially offset by a decline in professional services. The company's focus on driving strong growth in ARR and NRR through their land and expand strategy is paying off, with platform ARR growing 31% and non-platform ARR growing 3%. FICO's total ARR was up 10%, and platform NRR was 124%, showcasing the success of the company's strategic initiatives.

Future Outlook

FICO's outlook for the rest of the year is optimistic, with increased guidance for the full fiscal year. The company is raising its full-year revenue guidance to $1.70 billion, reflecting its strong financial performance and strategic initiatives. FICO's focus on innovation and providing value to its customers is expected to continue, with a commitment to financial knowledge and financial inclusion through partnerships and initiatives like the Field of Financial Empowerment summer tour.

Conclusion

FICO's earnings call for the third quarter of 2024 highlighted the company's financial strength and strategic growth initiatives. The company's focus on innovation, customer satisfaction, and financial inclusion is expected to continue driving its success in the future. With a strong financial position and strategic growth initiatives, FICO is well-positioned to continue its trajectory of success in the financial services industry.

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