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Fair Isaac (FICO) Q2 Earnings Miss, Revenues Improve Y/Y
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Fair Isaac (FICO - Free Report) reported second-quarter fiscal 2023 earnings of $4.78 per share, which missed the Zacks Consensus Estimate by 8.08% but climbed 2.1% year over year.
Revenues of $380.3 million increased 6.5% on a year-over-year basis and surpassed the consensus mark by 0.79%. Americas, EMEA and Asia Pacific accounted for 84%, 11% and 5% of total revenues, respectively.
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 4.8% year over year to $181.8 million.
Software Annual Recurring Revenues (ARR) increased 17% year over year, consisting of 60% platform ARR growth and 7% non-platform growth. Software Dollar-Based Net Retention Rate was 114% in the fiscal second quarter, with platform software at 146% and non-platform software at 105%.
Mortgage, Auto, and Credit card, personal loan and other originations revenues were up 90%, 13% and 12%, respectively, on a year-over-year basis.
Fair Isaac Corporation Price, Consensus and EPS Surprise
On-premises and SaaS Software (40.7% of revenues) increased 3.7% year over year to $154.6 million. Professional services (7.1% of revenues) were $27.2 million, up 11.5% year over year.
Scores (52.2% of revenues) increased 8% year over year to $198.5 million. Scores include FICO’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 16% year over year, driven primarily by unit price increases, partially offset by declines in mortgage originations volumes. B2C revenues decreased 8% year over year.
Operating Details
Research & development expenses, as a percentage of revenues, increased 40 basis points (bps) on a year-over-year basis to 10.6%.
Selling, general and administrative expenses, as a percentage of revenues, declined 70 bps year over year to 26.3%.
Operating margin was 42% in the reported quarter, which contracted 60 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2023, FICO had $137.8 million in cash and cash equivalents. Total debt as of Mar 31, 2023, was $1.92 billion.
Cash flow from operations was $89.8 million in the fiscal second quarter. Free cash flow was $88.3 million.
FICO bought back 170,000 shares in the fiscal second quarter at an average price of $684 per share. At the end of the quarter, the company had $335 million remaining as part of its current authorization.
Guidance Raised
For fiscal 2023, FICO anticipates revenues to be $1.48 billion, up from the previous guidance of $1.46 billion.
Non-GAAP earnings are now projected to be $19.45 per share, up from the previous guidance of $19.42 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #3 (Hold).
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While FICO shares have gained 22.8%, the Computer & Technology sector increased 16.4%.
Image: Bigstock
Fair Isaac (FICO) Q2 Earnings Miss, Revenues Improve Y/Y
Fair Isaac (FICO - Free Report) reported second-quarter fiscal 2023 earnings of $4.78 per share, which missed the Zacks Consensus Estimate by 8.08% but climbed 2.1% year over year.
Revenues of $380.3 million increased 6.5% on a year-over-year basis and surpassed the consensus mark by 0.79%. Americas, EMEA and Asia Pacific accounted for 84%, 11% and 5% of total revenues, respectively.
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 4.8% year over year to $181.8 million.
Software Annual Recurring Revenues (ARR) increased 17% year over year, consisting of 60% platform ARR growth and 7% non-platform growth. Software Dollar-Based Net Retention Rate was 114% in the fiscal second quarter, with platform software at 146% and non-platform software at 105%.
Mortgage, Auto, and Credit card, personal loan and other originations revenues were up 90%, 13% and 12%, respectively, on a year-over-year basis.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
On-premises and SaaS Software (40.7% of revenues) increased 3.7% year over year to $154.6 million. Professional services (7.1% of revenues) were $27.2 million, up 11.5% year over year.
Scores (52.2% of revenues) increased 8% year over year to $198.5 million. Scores include FICO’s business-to-business (B2B) scoring solutions, and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 16% year over year, driven primarily by unit price increases, partially offset by declines in mortgage originations volumes. B2C revenues decreased 8% year over year.
Operating Details
Research & development expenses, as a percentage of revenues, increased 40 basis points (bps) on a year-over-year basis to 10.6%.
Selling, general and administrative expenses, as a percentage of revenues, declined 70 bps year over year to 26.3%.
Operating margin was 42% in the reported quarter, which contracted 60 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2023, FICO had $137.8 million in cash and cash equivalents. Total debt as of Mar 31, 2023, was $1.92 billion.
Cash flow from operations was $89.8 million in the fiscal second quarter. Free cash flow was $88.3 million.
FICO bought back 170,000 shares in the fiscal second quarter at an average price of $684 per share. At the end of the quarter, the company had $335 million remaining as part of its current authorization.
Guidance Raised
For fiscal 2023, FICO anticipates revenues to be $1.48 billion, up from the previous guidance of $1.46 billion.
Non-GAAP earnings are now projected to be $19.45 per share, up from the previous guidance of $19.42 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #3 (Hold).
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While FICO shares have gained 22.8%, the Computer & Technology sector increased 16.4%.
Asure Software (ASUR - Free Report) , Fortinet (FTNT - Free Report) and Cambium Networks (CM - Free Report) are some better-ranked stocks that investors can consider in the broader sector. All three sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Asure shares have gained 41.3% year to date. ASUR is set to report its first-quarter 2023 results on May 8.
Fortinet shares have gained 29% year to date. FTNT is set to report its first-quarter 2023 results on May 4.
Cambium shares have declined 34% year to date. CMBM is set to report its first-quarter 2023 results on May 8.