On July 31, 2024, Fair Isaac Corp (FICO, Financial) released its 8-K filing for the third fiscal quarter ended June 30, 2024. The company reported earnings per share (EPS) of $5.05, slightly below the analyst estimate of $5.34. However, revenue for the quarter came in at $447.8 million, surpassing the estimated $445.45 million.
Founded in 1956, Fair Isaac Corporation is a leading applied analytics company, best known for its FICO credit scores, a widely used industry benchmark for determining consumer creditworthiness. The firm's credit scores business, which includes both business-to-business (B2B) and business-to-consumer (B2C) services, accounts for most of its profits. Additionally, Fair Isaac sells software primarily to financial institutions for analytics, decision-making, customer workflows, and fraud prevention.
Performance and Challenges
Fair Isaac Corp (FICO, Financial) reported net income of $126.3 million, or $5.05 per share, for Q3 2024, compared to $128.8 million, or $5.08 per share, in the same period last year. The slight decline in net income is attributed to a large one-time favorable expense adjustment in the prior year. Despite this, the company demonstrated significant revenue growth, with total revenue increasing to $447.8 million from $398.7 million in the previous year.
Financial Achievements
Fair Isaac Corp (FICO, Financial) achieved notable financial milestones this quarter. The company reported non-GAAP net income of $156.4 million, up from $143.4 million in the prior year period. Non-GAAP EPS also increased to $6.25 from $5.66. Free cash flow for the quarter was $205.7 million, a significant rise from $121.8 million in the previous year.
Segment Performance
Revenue from the Scores segment, which includes B2B and B2C solutions, was $241.4 million, a 20% increase from $201.8 million in the prior year period. B2B revenue saw a 27% rise, driven by higher unit prices, although this was partially offset by a decrease in mortgage origination volumes. B2C revenue decreased by 2% due to lower volumes on myFICO.com.
Software revenues, encompassing analytics and digital decisioning technology, were $206.4 million, up 5% from $196.9 million in the previous year. This growth was primarily due to increased recurring revenue, despite a decrease in professional services. The Software Annual Recurring Revenue (ARR) grew by 10% year-over-year, with platform ARR growth at 31% and non-platform growth at 3%.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $447.8 million | $398.7 million |
| Net Income | $126.3 million | $128.8 million |
| EPS | $5.05 | $5.08 |
| Non-GAAP EPS | $6.25 | $5.66 |
| Free Cash Flow | $205.7 million | $121.8 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Fair Isaac Corp (FICO, Financial) reported total assets of $1.71 billion, up from $1.58 billion as of September 30, 2023. The company's cash and cash equivalents stood at $156.0 million, an increase from $136.8 million at the beginning of the period. Net cash provided by operating activities for the quarter was $213.3 million, compared to $122.6 million in the prior year period.
Analysis and Outlook
Fair Isaac Corp (FICO, Financial) continues to demonstrate robust revenue growth, driven by strong performance in its Scores and Software segments. The company's ability to generate significant free cash flow and maintain a healthy balance sheet positions it well for future growth. However, the slight decline in net income and EPS compared to the prior year highlights the importance of managing one-time expenses and maintaining consistent profitability.
Looking ahead, Fair Isaac Corp (FICO, Financial) has updated its full-year guidance, projecting revenues of $1.70 billion and GAAP EPS of $19.90. The company remains focused on expanding its market presence and enhancing its product offerings to drive long-term value for shareholders.
Explore the complete 8-K earnings release (here) from Fair Isaac Corp for further details.
