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A month has gone by since the last earnings report for Fair Isaac (FICO). Shares have added about 1.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fair Isaac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fair Isaac Q1 Earnings Miss Estimates, Revenues Increase
Fair Isaac reported first-quarter fiscal 2025 earnings of $5.79 per share, which missed the Zacks Consensus Estimate by 6.76% but rose 20.4% year over year.
Revenues of $440 million increased 15.2% on a year-over-year basis but lagged the consensus mark by 3.25%. The Americas, EMEA and Asia Pacific contributed 87%, 8% and 5% to total revenues, respectively.
FICO’s Top-Line Details
Software revenues, which include Fair Isaac’s analytics and digital decisioning technology, as well as associated professional services, increased 8% year over year to $204.3 million.
Software Annual Recurring Revenues (ARR) increased 6% year over year, consisting of 20% platform ARR growth and 1% growth in non-platform. Software Dollar-Based Net Retention Rate was 105% in the fiscal first quarter, with platform software at 112% and non-platform software at 100%.
On-premises and SaaS Software (42.3% of revenues) increased 10.3% year over year to $186 million. Professional services (4.2% of revenues) were $18.3 million, down 14.1% year over year.
Scores (53.6% of revenues) increased 22.7% year over year to $235.7 million. Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions.
B2B revenues increased 30% year over year, driven primarily by higher unit prices and an increase in the volume of mortgage originations. B2C revenues increased 3% year over year due to increased revenues from indirect channel partners.
Mortgage originations revenues surged 110% year over year. It accounted for 44% of B2B revenues and 34% of total scores revenues. Auto originations revenues increased 5% year over year. Credit card and personal loan revenues declined 3% year over year.
In the first quarter of fiscal 2025, FICO experienced continued customer adoption, particularly for FICO Score 10 T in mortgage origination. The company also signed new customers and increased adoption from existing ones, enhancing its leadership in the mortgage industry.
FICO’s Operating Details
Research & development expenses, as a percentage of revenues, contracted 90 basis points (bps) on a year-over-year basis to 10.3%.
Selling, general and administrative expenses, as a percentage of revenues, increased 180 bps year over year to 29.1%.
Operating margin was 40.8% in the reported quarter, expanding 120 bps year over year.