Latest FICO Earnings Report Q1 2025

Company Overview

Fair Isaac Corporation (FICO) is a leading analytics software company renowned for its development of the FICO Score, a widely used measure of consumer credit risk in the United States. Founded in 1956 by engineer William R. "Bill" Fair and mathematician Earl J. Isaac, the company began with the mission to provide businesses with data-driven decision-making tools. Over the decades, FICO has expanded its offerings to include a diverse range of products and services that enable businesses to automate, enhance, and connect decisions to improve business performance. These solutions are utilized across various industries, including banking, insurance, retail, and healthcare, to manage risk, combat fraud, and optimize operations. As of 2024, FICO reported annual revenues of $1.72 billion, reflecting its significant impact on the financial services sector.

Latest Arm Earnings Comparison (Q1 2025)

Historical FICO Earnings Data Historical

FICO Earnings Call Summary Q1 2025

Highlights

• Strong Revenue Growth: Q1 revenue reached $440M, up 15% YoY, driven by Scores (+23% YoY) and Software (+8% YoY).

• Record Profitability: GAAP net income of $153M (+26% YoY), with EPS at $6.14 (+28% YoY). Non-GAAP EPS was $5.79 (+20% YoY).

• Free Cash Flow Expansion: $187M in Q1 and $673M over the last 4 quarters, a 36% YoY increase.

• Mortgage Scores Growth: Mortgage origination revenue surged 110% YoY, accounting for 44% of B2B revenue.

• B2B Scores Strength: B2B revenue grew 30% YoY, driven by higher pricing & volume in mortgage and auto.

• Software ARR Growth: Total ARR up 6%, with platform ARR growing 20% YoY to $228M.

• Stock Buybacks: Repurchased 126,000 shares between Q1 and January, showing strong capital allocation.

Risks

Despite solid performance, FICO faces several challenges:

1. Interest Rate Uncertainty: Mortgage market remains sensitive to rate fluctuations, impacting future B2B Scores revenue growth.

2. Slower Software ARR Growth: While platform ARR grew 20%, it was below the previous 30% target, affected by slower bookings and FX headwinds.

3. Foreign Exchange Impact: $3M negative impact on total revenue, affecting ARR growth by 2%-3%.

4. B2C Scores Moderation: While growing 3% YoY, B2C revenue may face headwinds if consumer credit activity slows.

5. Delayed FHFA Mortgage Rule Implementation: The GSE credit score model update is postponed indefinitely, impacting the expected adoption timeline of FICO Score 10T.

Opportunities

FICO is positioned for long-term growth across multiple areas:

1. FICO 10T Expansion: Increasing adoption among non-GSE mortgage lenders, with $261B in annualized originations already onboarded.

2. Growing Platform ARR: With higher bookings in prior quarters, ARR growth is expected to accelerate in H2 2025.

3. Buy Now Pay Later (BNPL) Data Integration: A partnership with Affirm demonstrated BNPL’s positive impact on FICO Scores, with potential wider adoption in credit risk modeling.

4. AI & Blockchain for Fraud Detection: Recognized as a leader in AI-powered fraud prevention, with new solutions for financial institutions.

5. FICO World 2025 Event: A major industry event to showcase AI-driven financial decisioning and analytics innovations.

Outlook

• Stable Growth Expectations: FY25 guidance remains unchanged, projecting strong revenue and margin expansion.

• Mortgage Market Sensitivity: While interest rate fluctuations could impact revenue, conservative forecasting ensures stability.

• Software Expansion Acceleration: ARR growth expected to rebound in H2 2025, driven by higher bookings and platform adoption.

• Strategic Capital Allocation: Continued stock buybacks and strong free cash flow reinforce shareholder value creation.

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.