Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fair Isaac Corp (FICO, Financial) reported a 16% increase in fourth-quarter revenues, reaching $454 million.
- The company achieved a 34% increase in GAAP net income for the quarter, with earnings per share up 36% from the prior year.
- FICO delivered record free cash flow of $219 million in the fourth quarter, marking a 31% year-over-year increase.
- The scores segment saw a 27% increase in fourth-quarter revenues, driven primarily by mortgage originations.
- FICO continues to innovate with the upcoming launch of the FICO Score mortgage simulator, enhancing decision-making for mortgage professionals.
Negative Points
- B2C revenues declined by 1% in the fourth quarter and 2% for the full fiscal year, attributed to decreased sales on the myfico.com website.
- Software segment revenue growth was modest at 5% for the quarter, with professional services declining by 9%.
- Total ACV bookings for the year were down 10% year over year, indicating potential challenges in securing new contracts.
- Non-platform ARR remained flat, suggesting limited growth in certain areas of the software business.
- The company faces macroeconomic uncertainties, particularly in predicting mortgage volume recoveries, which could impact future performance.
Q & A Highlights
Q: Do you see more room for the gap in FICO's pricing to close, and what are the key initiatives for the software side?
A: William Lansing, CEO, stated that there is still opportunity for FICO's score to deliver value relative to its pricing. On the software side, FICO is in the early stages of penetrating major financial institutions and plans to expand into other verticals. Continued investment in the platform is expected, with a focus on scalability and margin improvement.
Q: Can you disaggregate the overall guidance for the software component, particularly platform versus non-platform?
A: Steven Weber, CFO, explained that FICO does not guide at the segment level, making it difficult to specify expectations for platform versus non-platform. The distinction between platform and non-platform can be challenging due to the early stages of some deals.
Q: How are you thinking about pricing for non-mortgage scores in 2025?
A: William Lansing, CEO, mentioned that FICO reviews its entire portfolio annually to determine fair and appropriate price increases. While mortgage pricing is a focus, non-mortgage scores also see adjustments based on market conditions.
Q: What are your thoughts on the FHFA's proposal and its potential impact on FICO?
A: William Lansing, CEO, noted that the industry has been slow to move on the FHFA's expected implementation due to unresolved issues. While a new administration could change the timeline, FICO is cooperating with the FHFA and anticipates potential delays.
Q: Could you provide more color on investments and expense growth in fiscal year '25?
A: Steven Weber, CFO, indicated that expense growth in fiscal '25 is expected to be lower than in '24, with a focus on margin expansion. While some growth is built into expenses, it is less than the projected top-line revenue growth, allowing for margin improvement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
