Robust Financial Performance: GAAP and Non-GAAP Results
FICO, a pioneering predictive analytics and decision management software company, has released its financial results for the third quarter ending June 30, 2023. The company’s performance demonstrates substantial growth and success across its two operating segments.
GAAP Results: Positive Financial Indicators
In Q3 Fiscal 2023, FICO’s net income reached $128.8 million, equivalent to $5.08 per share, showcasing significant growth compared to the prior year period. This impressive performance can be partly attributed to a noncash reduction to income tax expense of $9.5 million associated with the valuation of research and development tax credits.
Additionally, net cash provided by operating activities amounted to $122.6 million, reflecting a solid financial position and consistent cash flow generation.
Non-GAAP Results: Strong Momentum Continues
The company also reported strong non-GAAP results, with net income reaching $143.4 million and earnings per share at $5.66 for the current quarter. Free cash flow stood at $121.8 million, indicating a robust financial foundation.
These non-GAAP financial measures are outlined in the financial table labeled “Non-GAAP Results,” providing a comprehensive comparison to GAAP results.
Revenue Growth in Q3 2023
FICO’s Q3 2023 revenues totaled $398.7 million, a remarkable increase from the prior year period’s $349.0 million. The company’s two operating segments contributed significantly to this growth:
Scores Revenues: Strengthening B2B and B2C Solutions
Scores revenues amounted to $201.8 million, with a notable 13% increase from the prior year period. Business-to-business (B2B) revenue surged by 24%, driven by unit price increases despite slight declines in mortgage originations volumes.
On the other hand, business-to-consumer (B2C) revenue experienced an 11% decrease due to lower volumes at myFICO.com.
Software Revenues: Leveraging Analytics and Digital Decisioning
Software revenues reached $196.9 million, displaying a significant 16% increase from the prior year period. This growth is attributed to augmented recurring and point-in-time revenues, partially offset by a decrease in services revenue.
The Software Annual Recurring Revenue saw a substantial 20% year-over-year growth, fueled by 53% platform ARR growth and 11% non-platform growth. Furthermore, the Software Dollar-Based Net Retention Rate for the third quarter stood at an impressive 117%, with platform software at 142% and non-platform software at 109%.
A Bright Outlook: Upgraded Fiscal 2023 Guidance
FICO is optimistic about its future, updating its previously provided guidance for fiscal 2023:
Positive Revisions: Enhanced Revenue and Earnings Expectations
The updated fiscal 2023 guidance demonstrates even more promising expectations, with revenues projected to reach $1.50 billion. Moreover, GAAP net income is now anticipated to be $428 million, leading to a GAAP EPS of $16.90.
The company’s non-GAAP net income is expected to hit $500 million, translating to a non-GAAP EPS of $19.70. The financial table labeled “Reconciliation of Non-GAAP Guidance” provides detailed insights into these projections.
Conference Call: Sharing Insights and Strategies
FICO will host a webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), providing further details on its third-quarter fiscal 2023 results, strategic updates, and operational insights.
Investors and stakeholders can access the call via FICO’s website at www.fico.com/investors. A replay of the webcast will be available on the Past Events page until August 2, 2024.
FICO: Empowering Global Prosperity
FICO, founded in 1956, plays a pivotal role in powering decisions that enhance the lives of people and businesses worldwide. Pioneering the use of predictive analytics and data science, FICO’s technologies optimize operational decisions, fostering profitability, customer satisfaction, and growth in various industries.
With a diverse portfolio of solutions, the company protects payment cards from fraud, extends credit to individuals, and ensures precise logistical operations, among many other essential services in over 120 countries.
