Fair Isaac (FICO) Q4 Earnings Beat, Revenues Increase Y/Y
Fair Isaac FICO reported fourth-quarter fiscal 2023 earnings of $5.01 per share, missing the Zacks Consensus Estimate by 3.28% but rising 13.9% year over year.
Revenues of $389.7 million increased 11.8% on a year-over-year basis and surpassed the consensus mark by 0.92%. Americas, EMEA and Asia Pacific contributed 85%, 9% and 6% to total revenues, respectively.
Mortgage and Auto revenues were up by 147% and 2%, respectively, year over year. Credit card and personal loan revenues declined by 2%.
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While FICO’s shares have gained 61.7%, the Computer & Technology sector increased 39.1%.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 11.2% year over year to $194.2 million.
Software Annual Recurring Revenues (ARR) increased 22% year over year, consisting of 53% platform ARR growth and 14% non-platform growth. Software Dollar-Based Net Retention Rate was 120% in the fiscal fourth quarter, with platform software at 145% and non-platform software at 111%.
Annual contract value bookings increased 10% year over year to $94 million.
On-premises and SaaS Software (43.4% of revenues) increased 15.1% year over year to $169 million. Professional services (6.5% of revenues) were $25.2 million, down 9.7% year over year.
Scores (50.2% of revenues) increased 12.3% year over year to $195.6 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 21% year over year, driven primarily by unit price increases, partially offset by declines in mortgage origination volumes. B2C revenues dropped 6% year over year.
Operating Details
Research & development expenses, as a percentage of revenues, increased 50 basis points (bps) on a year-over-year basis to 10.7%.
Selling, general and administrative expenses, as a percentage of revenues, increased 210 bps year over year to 25.5%.
Operating margin was 42.5% in the reported quarter, which expanded 400 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Sep 30, 2023, FICO had $136 million in cash and cash equivalents and total debt was $1.87 billion. In comparison, as of Jun 30, 2023, FICO had $163 million in cash and cash equivalents and total debt of $1.93 billion.
Cash flow from operations was $164 million in the fiscal fourth quarter compared with $122.6 million in the previous quarter. Free cash flow was $163 million compared with $121.8 million reported in the previous quarter.
FICO bought back 136,000 shares in the fiscal fourth quarter at an average price of $859 per share. At the end of the quarter, the company had $121 million remaining as part of its current authorization.
Guidance Raised
For fiscal 2023, FICO anticipates revenues to be $1.675 billion.
Non-GAAP earnings are now projected to be $22.45 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #4 (Sell).
Anterix ATEX, ASANA ASAN and Snowflake SNOW are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Anterix’s shares have declined 6.4% year to date. ATEX is set to report its second-quarter fiscal 2024 results on Nov 13.
ASANA shares have gained 44.6% year to date. ASAN is set to report its third-quarter fiscal 2024 results on Dec 5.
Snowflake shares have returned 10.8% year to date. SNOW is set to report its third-quarter fiscal 2024 results on Nov 29.
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