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Fair Isaac (FICO) Q3 Earnings Beat, Revenues Improve Y/Y
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Fair Isaac (FICO - Free Report) reported third-quarter fiscal 2023 earnings of $5.66 per share, which beat the Zacks Consensus Estimate by 6.79% and jumped 26.6% year over year.
Revenues of $398.7 million increased 14.2% on a year-over-year basis and surpassed the consensus mark by 4.92%. Americas, EMEA and Asia Pacific accounted for 87%, 8% and 5% of total revenues, respectively.
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While FICO shares have gained 37.4%, the Computer & Technology sector increased 42.8%.
Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 16.1% year over year to $196.9 million.
Software Annual Recurring Revenues (ARR) increased 20% year over year, consisting of 53% platform ARR growth and 11% non-platform growth. Software Dollar-Based Net Retention Rate was 117% in the fiscal third quarter, with platform software at 142% and non-platform software at 109%.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Annual contract value bookings increased 13% year over year to $21 million.
Mortgage, Auto, and Credit card, personal loan and other originations revenues were up 135%, 5% and 2%, respectively, on a year-over-year basis.
On-premises and SaaS Software (40.7% of revenues) increased 20.7% year over year to $172.1 million. Professional services (7.1% of revenues) were $24.9 million, down 8.2% year over year.
Scores (50.6% of revenues) increased 12.5% year over year to $201.8 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 24% year over year, driven primarily by unit price increases, partially offset by declines in mortgage originations volumes. B2C revenues decreased 11% year over year.
Operating Details
Research & development expenses, as a percentage of revenues, increased 10 basis points (bps) on a year-over-year basis to 10.4%.
Selling, general and administrative expenses, as a percentage of revenues, increased 40 bps year over year to 27.1%.
Operating margin was 44.4% in the reported quarter, which expanded 410 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2023, FICO had $163 million in cash and cash equivalents and total debt was $1.93 billion. In comparison, as of Mar 31, 2023, FICO had $137.8 million in cash and cash equivalents and total debt of $1.92 billion.
Cash flow from operations was $122.6 million in the fiscal third quarter compared with $89.8 million in the previous quarter. Free cash flow was $121.8 million compared with $88.3 million reported in the previous quarter.
FICO bought back 130,000 shares in the fiscal third quarter, at an average price of $753 per share. At the end of the quarter, the company had $237 million remaining as part of its current authorization.
Guidance Raised
For fiscal 2023, FICO now anticipates revenues to be $1.50 billion, up from the previous guidance of $1.48 billion.
Non-GAAP earnings are now projected to be $19.70 per share, up from the previous guidance of $19.45 per share.
Image: Bigstock
Fair Isaac (FICO) Q3 Earnings Beat, Revenues Improve Y/Y
Fair Isaac (FICO - Free Report) reported third-quarter fiscal 2023 earnings of $5.66 per share, which beat the Zacks Consensus Estimate by 6.79% and jumped 26.6% year over year.
Revenues of $398.7 million increased 14.2% on a year-over-year basis and surpassed the consensus mark by 4.92%. Americas, EMEA and Asia Pacific accounted for 87%, 8% and 5% of total revenues, respectively.
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While FICO shares have gained 37.4%, the Computer & Technology sector increased 42.8%.
Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 16.1% year over year to $196.9 million.
Software Annual Recurring Revenues (ARR) increased 20% year over year, consisting of 53% platform ARR growth and 11% non-platform growth. Software Dollar-Based Net Retention Rate was 117% in the fiscal third quarter, with platform software at 142% and non-platform software at 109%.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
Annual contract value bookings increased 13% year over year to $21 million.
Mortgage, Auto, and Credit card, personal loan and other originations revenues were up 135%, 5% and 2%, respectively, on a year-over-year basis.
On-premises and SaaS Software (40.7% of revenues) increased 20.7% year over year to $172.1 million. Professional services (7.1% of revenues) were $24.9 million, down 8.2% year over year.
Scores (50.6% of revenues) increased 12.5% year over year to $201.8 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 24% year over year, driven primarily by unit price increases, partially offset by declines in mortgage originations volumes. B2C revenues decreased 11% year over year.
Operating Details
Research & development expenses, as a percentage of revenues, increased 10 basis points (bps) on a year-over-year basis to 10.4%.
Selling, general and administrative expenses, as a percentage of revenues, increased 40 bps year over year to 27.1%.
Operating margin was 44.4% in the reported quarter, which expanded 410 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2023, FICO had $163 million in cash and cash equivalents and total debt was $1.93 billion. In comparison, as of Mar 31, 2023, FICO had $137.8 million in cash and cash equivalents and total debt of $1.92 billion.
Cash flow from operations was $122.6 million in the fiscal third quarter compared with $89.8 million in the previous quarter. Free cash flow was $121.8 million compared with $88.3 million reported in the previous quarter.
FICO bought back 130,000 shares in the fiscal third quarter, at an average price of $753 per share. At the end of the quarter, the company had $237 million remaining as part of its current authorization.
Guidance Raised
For fiscal 2023, FICO now anticipates revenues to be $1.50 billion, up from the previous guidance of $1.48 billion.
Non-GAAP earnings are now projected to be $19.70 per share, up from the previous guidance of $19.45 per share.
Zacks Rank & Stocks to Consider
Currently, FICO has a Zacks Rank #3 (Hold).
BILL Holdings (BILL - Free Report) , CACI International (CACI - Free Report) and Cisco Systems (CSCO - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BILL Holdings shares have gained 7.8% year to date. BILL is set to report its fourth-quarter fiscal 2023 results on Aug 17.
CACI International shares have gained 18% year to date. CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9.
Cisco Systems shares have returned 10.4% year to date. CSCO is set to report its fourth-quarter fiscal 2023 results on Aug 16.