Fair Isaac Corporation

Good day and thank you for standing by. Welcome to the second quarter 2025 FICO earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today. Dave Singleton, please go ahead.

Good afternoon, and thank you for attending FICO's second quarter earnings call. I'm Dave Singleton, Vice President of Investor Relations, and I'm joined today by our CEO, Will Lansing, and our CFO, Steve Weber. 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 with the prior quarter to facilitate an understanding of the run rate of the business. Certain statements made in this presentation are forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve any risks and uncertainties that could cause actual results to differ materially. Information concerning these risks and uncertainties is contained in the company's filings with the SEC, particularly in the risks, forwards, and forward-looking statements portion 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 on the company's website at FICO.com or on the SEC's website at SEC.gov. A replay of this webcast will also be available through April 29, 2026. I will now turn the call over to our CEO, Will Ansage.

Thanks, Dave. Thank you, everyone, for joining us for our second quarter earnings call. In the investor relations section of our website, we've posted some financial highlight slides. We'll be referring to them during this earnings announcement. We had another strong quarter, and we are reiterating our fiscal 25 guidance. As shown on page two of the second quarter financial highlights, we reported quarter two revenues of $499 million, up 15% over last year. We reported $163 million in GAAP net income in the quarter, up 25%. We reported GAAP earnings of $6.59 per share, up 28% from the prior year. We reported $193 million in non-GAAP net income in the quarter, up 25%. and non-GAAP earnings of $7.81 per share, up 27% from the prior year. As you can see on page 10, we delivered free cash flow of $65 million in our second quarter. Over the last four quarters, we delivered $677 million of free cash flow, which would be an increase of 45% over the trailing 12-month period ending March 31, 2024. We continue to return capital to our shareholders through buybacks, by repurchasing 112,000 shares in quarter two. In our score segment, which you can see on page six of the presentation, our second quarter revenues were 297 million, up 25% versus the prior year. On the B2B side, quarter two revenues were up 31% versus the prior year, primarily driven by mortgage originations revenues. On the B2C side, quarter two revenues were up 6% versus the prior year, primarily driven by revenue from indirect channel partners. Second quarter mortgage origination revenues were up 48% versus the prior year. Mortgage origination revenue accounted for 54% of B2B revenue and 44% of total scores revenue. Auto origination revenues were up 16%, while credit card, personal loan, and other originations revenues were flat versus the prior year. FICO continues to build financial inclusion globally. In the quarter, we announced a Kenya-specific FICO score. Through our partnership with TransUnion, the FICO score is part of a credit risk solution which empowers lenders to serve previously underserved consumers in small, micro, and medium-sized enterprises. We also continue to raise awareness of financial literacy. One way we do it is by encouraging consumers to manage their financial health by checking their free FICO score at myfico.com slash free. Over the last year, FICO has seen nearly 70% increase in users accessing their free FICO scores via myFICO. I hope you'll tell all of your friends to get their free FICO score at myFICO. Most importantly, we continue to focus on innovation. FICO Score Mortgage Simulator is now available for lender use through Exactus, the largest credit reseller in the mortgage industry. Mortgage professionals can leverage valuable insight from the simulator to help drive smarter decisions that can present more loan options and favorable interest rates for customers. We continue to drive strong adoption of FICO Score 10T for non-GFC loans, and we're seeing strong results from our early adopter program. Lenders who use the classic FICO Score today can receive FICO Score 10T for free, through this program so they can evaluate the advantages before fully moving to utilizing FICO's newest and most predictive score. Lenders in the program have been able to validate the power of FICO Score 10T in real-world mortgage underwriting, loan production, execution, and servicing. Refer to the February 24th post in our FICO newsroom to see a list of recent additions to our growing list of FICO 10T adopters. As of today, we have clients with over $284 billion in annualized mortgage originations, and about $1.43 trillion in eligible mortgage portfolio servicing that have signed up for FICO Score 10-T. In our software segment, we delivered $202 million in Q2 revenue, up 2% from the prior year. The revenue increase was driven mainly by growth in license revenue recognized at a point in time, partially offset by a decline in professional services. We continue to drive growth in ARR and NRR through our land and expand strategy with expand driven by increased customer usage. As shown on page 7, the total ARR was up 3%, with platform ARR growing 17% and non-platform ARR declining 3%. Total NRR for the quarter, shown on page 8, was 102%, with platform NRR at 110% and non-platform at 96%. ACV bookings for the quarter were 21.8 million compared to 16.8 million in the prior year. In our software business, we continue to expand our partner channels. FICO recently partnered with Fujitsu, a top digital servicing company in Japan. Together, we will accelerate digital transformation support for Japanese financial institutions, delivering a future of smarter, more connected banking and payments. This quarter, we announced a partnership with DAKADU to bring AI-powered precision to the life insurance industry. DAKADU is a Swiss-based technology company that develops solutions for digital health engagement and health risk quantification. By integrating FICO platform with DAKADU's health risk quantification risk engine, we create a solution that enables insurers to target their life insurance products specific profiles. This allows Dockadood to design highly personalized insurance products for their customers using advanced decision science. Later in the call, I'll talk about our upcoming FICO World Conference, but first let me pass it to Steve to provide further financial details.