Fair Isaac Corporation

Greetings and welcome to the Fair Isaac Corporation Quarterly Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will 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. Should you require operator assistance at any time, please press star 0. As a reminder, this conference is being recorded Thursday, April 27, 2023. I'd now like to turn the conference over to Steve Weber. Please go ahead.

Good afternoon, and thank you for joining FICO's second quarter earnings call. I'm Steve Weber, interim CFO, and I'm joined today by our CEO, Will Lansing. 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 that can cause actual results to differ materially. Information concerning those uncertainties is contained in the company's filings to the SEC, in particular in 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 sheet 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, 2024. And now I'll turn the call over to Will Lantz.

Thanks, Steve. And thank you, everyone, for 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 am pleased to report that we continue to deliver strong results with record revenue and growth throughout our business. Today, I'll talk about this quarter's results and our expectations for the rest of the year. As you can see on page two of the presentation, we reported revenues of $380 million, an increase of 6% over the same period last year. We delivered $102 million of GAAP net income and GAAP earnings of $4 per share. On a non-GAAP basis, net income was $121 million with earnings per share of $4.78. On the score side of the business, we continue to perform well. Scores delivered a record quarter with $198 million of revenue, up 8% in the quarter versus the prior year, as you can see on page 6. On the B2B side, revenues were up 16%, driven primarily by increased originations revenues. Mortgage originations revenues were up 90% versus last year. Auto originations revenues were up 13%. Credit card, personal loan, and other originations revenues were up 12%. Our B2C revenues continue to face difficult comps, and while up slightly versus last quarter, we're down 8% versus the same period last year. In our software business, our FICO platform provides the power of analytics and AI to enable smarter business decisions at scale. We're focused on helping clients maximize the customer experience by predicting, analyzing, and optimizing customer interactions in real time to make better customer decisions across the enterprise. These better decisions build trust and loyalty by delivering hyper-personalized experiences through holistic customer management. And the strong results we're delivering demonstrated an industry hungry for these solutions. As you can see on page seven, we delivered overall ARR growth of 17% and platform ARR growth of 60%. This represents our 14th straight quarter of platform ARR growth in excess of 40%. Again, our customers continue to increase volumes and find new use cases, as you can see from our net retention rates shown on page 8. Overall net retention rate was 114%. Legacy off-platform NRR was 105%, as volumes grew in many of our customers. Platform net retention rate was 146% due to expanded use cases driven by the success of our land and expand strategy. As you can see on page nine, our ACV bookings were up 16% over the same period last year. We continue to see a strong pipeline of opportunities as we help our customers to look at strategic mission-critical decisioning as they pursue their digital transformation. Finally, I'd like to talk a little bit about our FICO World customer event next month. FICO World attendees will be able to discover how to design, build, and deliver a hyper-personalized customer experience across every touchpoint and within every interaction. Attendees will have access to scheduled meetings with FICO's leading pot leaders and experts to discuss best practices and innovative solutions designs to solve business challenges. General session presenters at FICO World include leading financial services providers from North America, Latin America, Europe, and Asia Pacific. The conference will reveal new products, FICO score alternative data innovations, software capabilities on the FICO platform, as well as the company's flagship solutions for AI-powered decisions. We'll also announce a new partnership and other new FICO solutions. We'll talk more next quarter about the event and give more details about how leading financial services providers are using the FICO platform to design innovative solutions to solve business challenges. I'll have some final comments, including a revision of our guidance, in a few minutes. But first, let me turn the call over to Steve for further financial details.