Fair Isaac Corporation

Greetings. Thank you for standing by. Welcome to the Fair Isaac Corporation quarterly earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. This conference is being recorded Wednesday, April 27, 2022. And now I'd like to turn the conference over to Steve Weber. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining FICO's second quarter earnings call. I'm Steve Weber, Vice President of Investor Relations, and I'm joined today by Will Lansing, our CEO, and our CFO, Mike McLaughlin. Today, we issued a press release that describes financial results compared to the prior year. On this call, management will also discuss results in comparison to the prior quarter in order to facilitate understanding of the run rate of our business. Certain statements made in this presentation may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve many uncertainties, including the impact of COVID-19 on macroeconomic conditions and the company's business, operations, and personnel that could cause actual results to differ materially. Information concerning these uncertainties is contained in the company's filings with the SEC, in particular the risk factors and forward-looking statements portions of such filings. Copies are available from the SEC, from the FICO website, or from our investor relations team. This call will also include statements regarding certain non-GAAP financial measures. Please refer to the company's earnings release and Regulation G schedule issued today for a reconciliation of each of these non-GAAP financial measures to the most comparable GAAP measure. The earnings release and Regulation G schedule are available on the investor relations page of the company's website at FICO.com or on the SEC's website at SEC.gov. A replay of this webcast will be available through April 27, 2023. And now I'll turn the call over to Will Lansing.

Thanks, Steve, and thanks to all of you who are joining us for our second quarter earnings call. On the investor relations section of our website, we posted some slides that offer financial highlights of our second quarter. I'm pleased to report that we continue to deliver strong results as we pursue our strategic initiatives in both scores and software. Today, I'll talk about this quarter's results and how we view our business at the midpoint of our fiscal year. As you can see on page two of the presentation, we reported revenues of $357 million. which is an increase of 8% over the same period last year. We delivered $104 million of GAAP net income and GAAP earnings of $3.95 per share, up 52% and 70% respectively. On a non-GAAP basis, net income was $124 million, up 37%, and earnings per share of $4.68 were up 53% from last year. On the score side, the business continues to perform well. Scores were up 9% in the quarter versus the prior year, as you can see on page six. On the B2B side, revenues were up 5%. As others have reported, we continue to see a slowdown in mortgage activity as interest rates rise. Mortgage origination revenues were down 23% versus last year. Mortgage revenues account for about 14% of our scores revenues, and 7% of our total company revenues. Auto origination revenues were up 9%. Personal loan origination revenues were up 27%. While the mortgage declines have been significant, we do remain confident in our revenues given other areas of strength and pricing increases. Our B2C revenues continue to be strong, up 18% versus the prior year quarter. We saw strong growth through both our own MyFICO business and also through our channel partners. In our software segment, we delivered $173 million of revenue, up 7% from last year. We continue to drive growth in this segment, particularly on our platform. As you can see on page 7, total ARR was up 11%, and the platform ARR grew 60%. We continue to deliver strong NRR as well, demonstrating our existing customers' eagerness to find new ways to expand their usage. Total NRR for the quarter, which you can see on page 8, was 110%. Platform NRR was 141%. And we continue to sign more deals and bigger deals. Our ACV bookings, as seen on page 9, were up 55% over last year. I'll have some final comments, including a revision of our guidance in a few minutes. But first, I'll turn the call over to Mike for further financial details.